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Updated: 2 hours 51 min ago

May 3/Another raid today as the OI on gold was just too high for our crooks/Silver OI is declining/EU slashes growth and that forces all of European stocks southbound/Chinese pMI in contractionary phase as it falls below 50/USA/Yen falls into the 105...

Tue, 05/03/2016 - 18:31

Good evening Ladies and Gentlemen:

Gold:  $1,290.70 down $4.00    (comex closing time)

Silver 17.47  down 19 cents

 

In the access market 5:15 pm

Gold $1286.50

silver:  17.40

Let us have a look at the data for today

.

At the gold comex today we had a GOOD delivery day, registering 26 notices for 2600 ounces for gold,and for silver we had 174 notices for 870,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 228.04 tonnes for a loss of 75 tonnes over that period

.

In silver, the open interest fell by 1911 contracts down to 199,259 despite the fact that the price was silver was down only by  13 cents with respect to yesterday’s trading. In ounces, the OI is still represented by just under 1 BILLLION oz i.e. .996 BILLION TO BE EXACT or 142% of annual global silver production (exRussia &ex China) We are now within spitting distance of all time highs for OI with respect to silver

In silver we had 174 notices served upon for 870,000 oz.

In gold, the total comex gold OI FELL by a TINY 1019 contracts, DOWN to 548,501 contracts DESPITE THE FACT THAT THE PRICE OF GOLD WAS UP $5.90 with YESTERDAY’S TRADING(at comex closing).

We had no change  in tonnes of gold inventory at the GLD; thus the inventory rests tonight at 824.94 tonnes.  This is an absolute fraud as there is noway these guys can locate 20 tonnes of gold in 24 hrs.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 335.580 million oz.

.

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

1. Today, we had the open interest in silver fall by  1911 contracts down to 199,259 despite the fact that the price of silver was DOWN by ONLY 13 cents with YESTERDAY’S trading. The gold open interest FELL by A TINY 1,019 contracts DESPITE THE FACT THAT  gold ROSE by $5.90 YESTERDAY. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver. Also the bankers are resolute in supplying non backed gold paper but they do not want to supply more silver paper. It sure looks like the bankers are getting scared with respect to silver as it looks like they are capitulating as the start to cover their shortfall.

(report Harvey).

 

2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;  Gold pierces 1300 dollars again before the bankers try their raid

 

2c) FRBNY gold movement report

(Harvey)

3. ASIAN AFFAIRS

i)i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP 54.32 PTS OR 1.85%  /  Hang Sang closed DOWN 390.11 OR 1.85%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 2.11% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4795.  Oil FELL  to 44.30 dollars per barrel for WTI and 44.49 for Brent. Stocks in Europe DEEPLY IN THE RED . Offshore yuan trades  6.4915 yuan to the dollar vs 6.4795 for onshore yuan.

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

Last night the USA/Yen penetrated the 105 barrier for the first time in 18 months as it seems Kuroda has no power left to intervene.  The surprise move by the Aussies in lowering its discount rate also contributed to the strength in the yen.This sent most bourses deeply into the red this morning

( zero hedge)

b) REPORT ON CHINA

i)Again Chinese manufacturing PMI disappoints as it has now fallen for the 14th straight month.  April’s PMI tumbled to 49.4  (contractionary) from 49.8 last month.

( zero hedge)

 

ii)The following is why you just cannot believe any data coming out of mg Mainland China

( zero hedge) 4.EUROPEAN AFFAIRS

European stocks tumble after the EU slashes growth and their determination of “inflation” falls.  However what is extremely worrisome to the EU area is the Italian banks which have a huge 360 billion euros of non performing loans to deal with.

( zero hedge)

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)The Saudi foreign minister repeats his warning to the USA not to publish those famous 28 pages.  He states that Saudi Arabia will sell all of its 750 billion in the USA treasuries:

( zero hedge)

6.GLOBAL ISSUES

i)For 3 months the Aussie has rebounded northbound as commodity prices rose with much of that stimulus coming from China’s 1 trillion dollar bonanza.  However inflation in Australia cooled and as such, they had to lower their discount rate last night. However it was not baked into dealer calculations.  This sent the Aussie dollar crashing to .7537 on the uSA dollar from .77.  This is another big win for gold/silver.

( zero hedge)

ii)A terrific commentary from David Stockman has he circles the globe to tell us that all exporting nations are seeing their exports collapse. The big 1 trillion dollar Chinese binge into commodities is a fleeting affair and the resultant effect will be chaos when this wears off in a few months

( David Stockman ContraCorner) 7.OIL ISSUES

i)Oil tumbles to the$43.00 handle:

( zero hedge)

 

ii)Then rises to around the 44 handle

(zero hedge)

8.PHYSICAL MARKETS i)The Australian Financial Review distinguishes between paper gold and real gold (Trevor Sykes/Australian Financial Review/Sydney) ii)Robert Appel: are we on the brink of an economic collapse? And if so how did it happen?

(Robert Appel/Profit Confidential/GATA)

iii)Bill Murphy of GATA interviewed)

(GATA/Goldseek)

iv)A terrific commentary from Chris Powell on our turncoat Dan Norcini

( Chris Powell/GATA)

 

v)Ken Rogoff now states that it would be good for emerging nations to put their reserves in gold instead of other hard currencies

( Ken Rogoff)

 

vi)Dave Kranzler sets the record straight as to when we were at net record short interest as a percentage of total OI in silver.  It was in April  2005 at 82%

( Dave Kranzler/IRD) 9. your more important USA stories which will influence the price of gold/silver

i)Bond yields plummet by 9 basis points on the 10 yr bond as the economy sinks:

( zero hedge)

ii)In the USA expect double digit increases in their premiums and this will occur precisely around one week before the election on November 1

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 548,501 for a LOSS of 1019 contracts DESPITE THE FACT THAT the price of gold UP $5.90 with respect to YESTERDAY’S TRADING. We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses . The month of May saw its OI fall by 14 contracts down to 1782. We had 1 notice filed  YESTERDAY so we lost 13 contracts or 1300 oz will not stand for delivery.The next big active gold contract is June and here the OI FELL by 6010 contracts DOWN to 399,302. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 221,802. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 231,429 contracts. The comex is not in backwardation.

Today we had 26 notices filed for 2600 oz in gold.

 

And now for the wild silver comex results. Silver OI FELL by 1911 contracts from201,170 DOWN to 199,299 DESPITE THE FACT THAT the price of silver was DOWN BY ONLY 13 cents with YESTERDAY’S TRADING. For the first time in over 2 years, we have not witnessed a liquidation of open interest as we ENTERED first day notice .  The next active contract month is May and here the OI FELL by 793 contracts DOWN to 2171. We had 270 notices filed YESTERDAY so we lost 523 contracts or 2,615,000 oz of silver will not stand for delivery in this active month of May. The next non active month of June saw its OI FALL by 89 contracts DOWN to 619  OI.The next big delivery month is July and here the OI fell by 1471 contracts up to 138,396. The volume on the comex today (just comex) came in at 64,373 which is extremely high. The confirmed volume ON FRIDAY (comex + globex) was AGAIN HUGE AT 65,430. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had  174 notices filed for 870,000 oz.  

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY May 3. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  1,473.087 OZ

SCOTIA Deposits to the Dealer Inventory in oz 2599.93 OZ

BRINKS Deposits to the Customer Inventory, in oz  80,375.000 OZ

2500 KILOBARS

BRINKS

SCOTIA No of oz served (contracts) today 26 contract
(100 oz) No of oz to be served (notices) 1756 contracts175,600 oz Total monthly oz gold served (contracts) so far this month 52 contracts (5200 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month  1573.10 OZ

Today we had 1 dealer deposit

i) Into the dealer Brinks:  2,599.93 oz

total dealer deposit:  2599.93 oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

 

Today we had 2 customer deposits:

i) Into Brinks:  48,225.000 oz  1500 kilobars

ii) Into Scotia:  32,150.000 oz  1000 kilobars

total customer deposit:  80,375.000 oz  2500 kilobars

Today we had 1 customer withdrawal:

i) Out of Scotia; 1473.087 oz

Total customer withdrawals:  1473.087 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 26 contract of which 7 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (52) x 100 oz  or 2600 oz , to which we  add the difference between the open interest for the front month of MAY (1752 CONTRACTS) minus the number of notices served upon today (26) x 100 oz   x 100 oz per contract equals 180,800 oz, the number of ounces standing in this non active month.  This number is huge for May. Let us see if this number remains constant throughout themonth   Thus the initial standings for gold for the MAY. contract month: No of notices served so far (52) x 100 oz  or ounces + {OI for the front month (1782) minus the number of  notices served upon today (26) x 100 oz which equals 180,800 oz standing in this non  active delivery month of MAY(5.6236 tonnes). WE LOST 13 CONTRACTS OR 1300 OZ WILL NOT STAND AND NO DOUBT THESE WERE CASH SETTLED. 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 thus have 5.6236 tonnes of gold standing for MAY and 16.50 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 5.6236 TONNES FOR MAY + 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  = 24.521 tonnes still standing against 16.50 tonnes available.  .   Total dealer inventor 530,483,783 or 16.500 tonnes Total gold inventory (dealer and customer) =7,331,771.725 or 228.04 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 228.04 tonnes for a loss of 75 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

MAY INITIAL standings

 May 3.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory  101,372.587 oz

CNT,Delaware Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 449,913.32 oz

Scotia No of oz served today (contracts) 174  CONTRACTS

870,000 OZ No of oz to be served (notices) 1953 contracts

9,765,000 oz Total monthly oz silver served (contracts) 1227 contracts (6,135,000 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  810,255.4 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into Scotia:  449,913.32 oz

 

Total customer deposits: 449,913.32 oz.

We had 2 customer withdrawals

i) Out of CNT  100,383.687

ii) Out of Delaware:  988.900 oz

:

total customer withdrawals:  101,372.587  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the MAY contract month is represented by 174 contracts for 870,000 oz. To calculate the number of silver ounces that will stand for delivery in May., we take the total number of notices filed for the month so far at (1227) x 5,000 oz  = 6,135,000 oz to which we add the difference between the open interest for the front month of MAY (2127) and the number of notices served upon today (174) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the MAY contract month:  1227 (notices served so far)x 5000 oz +(2127{ OI for front month of MAY ) -number of notices served upon today (174)x 5000 oz  equals 15,900,000 oz of silver standing for the MaY contract month. WE LOST ANOTHER ASTRONOMICAL 523 CONTRACTS OR 2,150,000 OZ WILL NOT STAND AS THEY WERE CASH SETTLED.   Total dealer silver:  27.975 million Total number of dealer and customer silver:   152.067 million oz The open interest on silver is now close an all time high with the record of 206,748 being set in the last week of April. The registered silver (dealer silver) is now at multi year lows as silver is being drawn out and heading to China and other destinations.  The total dealer amount of silver is now at a multi year low of 27.975 million oz. end And now the Gold inventory at the GLD May 3/no change in gold inventory at the GLD/Inventory  rests at 824.94 tonnes May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14 April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

May 2.:  inventory rests tonight at 824.94 tonnes

end

Now the SLV Inventory May 3: we had another huge deposit of 1.807 million oz/inventory rests at 338.814 million oz May 2/a huge in silver inventory at the SLV/a deposit of 1.49 million oz/Inventory rests at 337.007 million oz April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580 April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580 aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 . May 3.2016: Inventory 338.814 million oz end     1. Central Fund of Canada: traded at Negative 6.4 percent to NAV usa funds and Negative 6.4% to NAV for Cdn funds!!!! Percentage of fund in gold 61.2% Percentage of fund in silver:37.4% cash .+1.4%( May 3.2016). 2. Sprott silver fund (PSLV): Premium to  FALLS to -.56%!!!! NAV (MAY 3.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.0.59% to NAV  ( MAY 3.2016) Note: Sprott silver trust back  into NEGATIVE territory at -.560%% /Sprott physical gold trust is back into positive territory at +0.59%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.56%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      end FEDERAL RESERVE BANK OF NEW YORK GOLD REPORT Federal Reserve bank of NY:  amount of earmarked gold shipped out: We just received the FRBNY figures for gold: March FRBNY earmarked gold:  7995 million dollars worth of gold at $42.22 dollars per oz April FRBNY earmarked gold:  7981 million dollars worth of gold at $42.22 dollars per oz Total amount of gold shipped out:  14 million dollars @ 42.22 per oz Thus $14 million divided by $42.22 =  331,596 oz of gold or 10.314 tonnes of gold shipped Obviously this is headed for Germany.  This is the first shipment of gold since Nov 2015:

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 (goldcore)

 

Is Craig Wright The Creator Of Bitcoin? Frisby and Matonis On ‘Satoshi Nakamoto’ By Mark O’ByrneMay 3, 20160 Comments

Craig Steven Wright, an Australian computer scientist, self-declared cyber security expert and entrepreneur, has claimed to be the creator of Bitcoin, the elusive ‘Satoshi Nakamoto’.

Yesterday, he published a blog post offering what was claimed to be cryptographic proof, backed up by other information, to make his case. Along with the BBC and GQ, The Economist had access to Mr Wright before the publication of his post. The BBC are definitively saying that Wright is Nakamoto. The Economist is being more cautious and their conclusion is that he could well be Mr Nakamoto,“but that nagging questions remain.”

“In fact, it may never be possible to prove beyond reasonable doubt who really created bitcoin. Whether people, particularly bitcoin cognoscenti, actually believe Mr Wright will depend greatly on what he does next, after going public.”

Wright penned his own blog post claiming to be Nakamoto but also of importance is the fact that Bitcoin Foundation chief scientist Gavin Andresen — a man that used to be the bitcoin project lead and one of the most respected experts in the bitcoin community — wrote that he, too, believed Wright was the elusive bitcoin creator.

There are other very well informed people who believe that Wright is in fact the creator of bitcoin. These include Jon Matonis, Founding Director at Bitcoin Foundation, who blogged about it yesterday here.  Matonis had a “private proof session” in March and said that  he “had the opportunity to review the relevant data along three distinct lines: cryptographic, social, and technical. Based on what I witnessed, it is my firm belief that Craig Steven Wright satisfies all three categories.” 

Our friend Dominic Frisby, the author of  Bitcoin: The Future of Money? also thinks that Wright, with others, may be Satoshi and shared his thoughts with us this morning:

“Anybody who had ever had any interest in bitcoin, has been intrigued by the mystery of Satoshi Nakamoto. 

It has spawned a plethora of online sleuths – your truly included –  but Craig Wright’s name had never really been thrown into the mix. But when the Wired story came out last December – broken by Andy Greenberg – who has his finger on the pulse of the cyber punks more than any journalist and Gwern who I worked with on my own book and know the be extremely thorough, you have to sit up and take notice.

Satoshi Nakamoto appears to have been the work of Wright but also of internet forensics expert, Dave Kleiman who sadly died in 2013.

From what I can deduce, Kleiman did the writing and Wright did the coding. Wrights appears to have been the ideas man and Kleiman the “heavy lifter”. If you read Wrights ‘s prose it is not as error free as Satoshi’s was which confirms my believe that Satoshi was a partnership.

In my book, I outlined how Nick Szabo was likely Satoshi but the story has moved on. Bitcoin and the blockchain are both landmark inventions and enormous credit should go to all those that made it happen. Bitcoin was and is a collaborative effort.”

Bitcoins are now accepted as payment for a vast variety of goods and services – everything from international money transfers to ransoms for data encrypted by computer viruses. There are currently about 15.5 million bitcoins in circulation. Each one is worth about $449.

Satoshi Nakamoto is believed to have amassed about one million Bitcoins which would give him a net worth, if all were converted to cash, of about $450 million.

Jon Matonis sums up the importance of bitcoin and the blockchain on his blog thus:

I believe that the massive tidal wave of decentralisation and future Bitcoin advancements will start to occur more rapidly now, setting the stage for society to realize the plethora of currently imagined innovations. However, at the center of all of this incredible progress will be the unwavering and critical value of the humble digital bearer token known as bitcoin.


Week’s Market Updates
Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards

Property Bubble In Ireland Developing Again

Silver Bullion “Momentum Building” As “Supply Trouble Brewing”

Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

Gold In London Vaults Beneath Bank of England Worth $248 Billion – BBC

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold News and Commentary
Gold Passes $1,300 as Investors See Rates Remaining Low Longer (Bloomberg)
Gold Futures Rally Above $1,300 an Ounce (Video) (Bloomberg)
Gold tops $1,300, hits 15-month high (CNN)
Gold eyes $1,300 again as weaker dollar, fund inflows support (Reuters)
Gold prices gain in Asia as Caixin manufacturing PMI drops (Investing.com)

Gold Keeps Shining as Funds Miss Out on Best Rally in Two Months (Bloomberg)
Gold’s surge is making it feel a lot like late 2007 (CNBC)
Even the Australian Financial Review warns about paper gold (AFR)
Without Price Suppression Gold Would be $5,000 to $10,000 – Holter (Youtube)
Gold Crosses $1,300 Threshold as Rates Outlook Undermines Dollar (Bloomberg)
Read More Here

Gold Prices (LBMA)
03 May: USD 1,296.50, EUR 1,118.15 and GBP 881.32 per ounce
29 April: USD 1,274.50, EUR 1,119.45 and GBP 873.80 per ounce
28 April: USD 1,256.60, EUR 1,106.45 and GBP 861.43 per ounce
27 April: USD 1,244.75, EUR 1,100.79 and GBP 853.58 per ounce
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce

Silver Prices (LBMA)
03 May: USD 17.85, EUR 15.29 and GBP 11.92 per ounce  (To be updated)
29 April: USD 17.85, EUR 15.29 and GBP 11.92 per ounce
28 April: USD 17.35, EUR 15.29 and GBP 11.92 per ounce
27 April: USD 17.34, EUR 15.34 and GBP 11.87 per ounce
26 April: USD 16.95, EUR 15.02 and GBP 11.64 per ounce

Mark O’Byrne Executive Director END Dave Kranzler sets the record straight as to when we were at net record short interest as a percentage of total OI in silver.  It was in April  2005 at 82% (courtesy Dave Kranzler/IRD) The Silver Market And Inaccurate Analysis May 3, 2016Financial Markets, Market Manipulation, Precious Metals, ,

Commentary was posted on Zerohedge today about the silver market that needs to be swatted out of the air. Some investment advisor who for some reason gets air-time on Zerohedge posted an analysis which asserted that commercial hedgers hit their most “extreme net short position ever in silver futures” LINK.  This is at least the fifth “analyst” I’ve come across who’s written, incorrectly, about this topic.

While it’s true that the open interest in silver hit a high as of LAST Tuesday (April 26), the “net short position” by the Commercial trader Bullion Bank segment, the trader segment to which Dana Lyons refers to as “smart money,” did not come close its most “extreme net short position ever.”

Since that COT report was released showing April 26th’s open interest, the open interest in silver futures has declined to 199k.  As of the date of that COT report,  the bullion bank short interest as a percentage of total open interest in silver is 71%.   But the highest this ratio has been going back to April 2005 is 82%.  The average short interest as percentage of total o/i over the time period is 63%.   In fact, from the week ending December 9, 2005 to the week ending January 27, 2006, the short interest as a percentage of total o/i ranged between 78% and 82%, which is quite a bit higher than it is currently

During that week – which was the most extreme net short position taken by the bullion banks – the price of silver actually rose.  More interestingly, that extreme net short interest in silver preceded a huge move that took silver from $9 in early December to  an intra-day high of $15 (futures basis) the week of May 12, 2006.

There’s been plethora of repetitive precious metals market analysis that has proliferated recently.  Many of these so-called “analysts” have not been around the precious metals market very long.   The trader category which Dana Lyons references as “smart” money did not look so smart when its true net short positioning in the context of total silver futures open interest outstanding (Dec 2005 – Jan 2006) is assessed.  And the trader category to which he labels “dumb” money made out like bandits.

Too be sure, there have been several periods in which the short term direction of gold and silver can be anticipated  with better than 50% probability based on assessing the relative long/short distribution across the COT trade classifications.   But a superficial analysis of the nominal open interest positioning is not the right tool to use in analyzing the driver of the gold and silver markets.  And furthermore, the Comex is a small part of the overall global market equation.

The reality is that many of us believe, based on well over a decade – and in some cases several decades – of precious metals market assessment and participation that purveyors of paper derivative silver face a potentially bigger problem than with gold of finding enough actual physical silver to deliver into those paper promises should the “dumb” money in any unexpected quantities decide to stand still with their paper longs and demand physical delivery.   And this why you get long term graph that looks like this:

end The Australian Financial Review distinguishes between paper gold and real gold (Trevor Sykes/Australian Financial Review/Sydney) Even the Australian Financial Review warns about paper gold

Submitted by cpowell on Mon, 2016-05-02 12:18. Section: 

Why Gold Is Still the Pick of the Precious Metals

By Trevor Sykes
Australian Financial Review, Sydney
Monday, May 2, 2016

One of the strongest arguments against investing in gold was that the metal yielded no interest while you were holding it so it stands to reason that the environment of low interest rates should be friendly for investors in precious metals.

That argument, while valid, has lost significant merit, because investors don’t get much of an interest rate holding government bonds or bank deposits. Indeed in several countries interest rates have gone negative, which means that investors are paying governments for the privilege of holding their bonds. …

The price is set every night in derivative trading on Comex in New York. The gold price is also nominally fixed in London. The London market is theoretically a physical market, but in practice it is really a derivative market with very few physical deliveries.

The big holders of gold are in China and other Asian countries. So the price is being set by derivative traders who hold little or no gold, while Asians are continually amassing the physical metal.

If, one day somewhere in the future, the physical holders decide to start setting the price, it will rise quite sharply. So it’s not a bad strategy to buy gold whenever it dips. …

… For the remainder of the commentary:

http://www.afr.com/personal-finance/why-gold-is-still-the-pick-of-the-pr…

END

 

Robert Appel: are we on the brink of an economic collapse? And if so how did it happen?

(courtesy Robert Appel/Profit Confidential/GATA)

Robert Appel: The brink of economic collapse — How did this happen?

Submitted by cpowell on Tue, 2016-05-03 01:39. Section: 

9:38p ET Monday, May 2, 2016

Dear Friend of GATA and Gold:

Profit Confidential’s Robert Appel’s commentary today is headlined “The Brink of Economic Collapse? How Did This Happen?” His answer is the ever-intensifying manipulation and distortion of markets by central banks and their agents. Appel’s commentary is posted at Profit Confidential here:

http://www.profitconfidential.com/economy/the-brink-of-economic-collapse…

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

 

END

 

Bill Murphy of GATA interviewed)

(courtesy GATA/Goldseek)

GoldSeek Radio interviews GATA Chairman Bill Murphy

Submitted by cpowell on Mon, 2016-05-02 19:03. Section: 

3p ET Monday, May 2, 2016

Dear Friend of GATA and Gold:

GoldSeek Radio’s Chris Waltzek interviews GATA Chairman Bill Murphy, discussing, among other things, the refusal of the president of the Federal Reserve Bank of New York, William Dudley, to answer whether the bank is involved in gold swaps; the increasing accumulation of gold by central banks in China and Russia; and the recent strength in monetary metals prices. The interview is 12 minutes long and begins at the 32:07 mark at GoldSeek Radio here:

http://news.goldseek.com/radio/1462213502.php

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

 

END

 

A terrific commentary from Chris Powell on our turncoat Dan Norcini

(courtesy Chris Powell/GATA)

Question for Dan Norcini et al.: Are central banks rigging gold or not?

Submitted by cpowell on Tue, 2016-05-03 04:47. Section: 

12:56a ET Tuesday, May 3, 2016

Dear Friend of GATA and Gold:

Replying to your secretary/treasurer’s speculation last night that central banks lately may have moved from gold price suppression to allowing gold to rise to help devalue currencies and debt -–

http://www.gata.org/node/16427

— market analyst Dan Norcini asserts that GATA has come over to his position:

http://news.goldseek.com/DanNorcini/1462284120.php

Not at all.

In the first place, Norcini had just written that rather than helping central banks avert deflation, a dramatically rising gold price would actually signify the end of the world:

http://news.goldseek.com/DanNorcini/1462129200.php

That is, Norcini wrote: “I still cannot stomach so many of these gold cult members who seem not to understand that when they are cheering predictions of $5,000, $50,000, etc., gold prices, they are cheering the ruin of everything around them.”

Your secretary/treasurer’s speculation had explicitly contradicted Norcini’s assertion. So there’s no agreement there.

Now Norcini writes: “I had been saying for some time that the Fed was not behind weakness in the gold price ever since the dollar embarked on its bull run back in 2014.”

Huh — 2014? But GATA began complaining of gold market manipulation and suppression 15 years earlier, and Norcini goes on to concede that during much of that time he subscribed to GATA’s views.

So do GATA and Norcini disagree only as to exactly when in the last few years central banks generally or the Federal Reserve particularly may have discontinued gold price suppression?

Once again, not really.

In the first place, your secretary/treasurer’s commentary last night was admittedly only speculation. GATA doesn’t know that Federal Reserve policy has changed from gold price suppression to dollar devaluation. Indeed, that speculation arose in large part from suspicion that central banks may not have lost control of the gold market and that, if gold is rising again, it is only because that is what central banks now want it to do and how they are guiding the market with their surreptitious trading.

That the Fed to this day remains up to its neck in gold market manipulation was confirmed at the central bank’s highest levels just a few weeks ago when the president of the Federal Reserve Bank of New York, William Dudley, taking questions at a public forum in Virginia, clumsily refused to answer one about whether the Fed is involved in gold swaps. Then his press spokesman refused even to acknowledge GATA’s follow-up question on the subject:

http://www.gata.org/node/16341

Anyone who doubts that U.S. government policy toward gold prior to 2014 was a policy of suppression is implored to dispute, specifically, document by document, the official records compiled here —

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

— and here:

http://www.gata.org/node/16377

Norcini has not done that, though of course no one else who disparages GATA has done so either. In the absence of such dispute, it may be assumed that the records are genuine and that they are fairly construed as GATA has construed them.

Just as GATA doesn’t care much about price predictions for gold, positive or negative, it doesn’t care much about the “technical analysis” offered by Norcini and other gold market commentators, “technical analysis” of rigged markets being mere hallucination.

Rather, GATA cares mainly about free markets and limited, transparent, and accountable government, and so agreement or disagreement with GATA rests on the answers to these questions:

— Are central banks involved in the gold market surreptitiously or not?

— If central banks are involved in the gold market surreptitiously, is it just for fun — for example, to see which central bank’s trading desk can make the most money by cheating the most investors — or is it for policy purposes?

— If central banks are surreptitiously in the gold market for policy purposes, are these the traditional purposes of defeating a potentially competitive world reserve currency? Or have these purposes lately expanded to include purposes like devaluing currencies and debt to avert a catastrophic worldwide debt deflation, the emergency policy anticipated in 2006 by the Scottish economist Peter Millar, whose study of gold revaluation often has been publicized by GATA?:

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

— If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy again?

Just as Norcini has not challenged GATA’s documentation of gold market rigging, he also seems not to have addressed those questions. But then no other critic of GATA has addressed them either. For as Chesterton wrote a hundred years ago, “As is common in most modern discussions, the unmentionable thing is the pivot of the whole discussion.”

If central banks are surreptitiously trading markets, Norcini’s “technical analysis” is the least of the casualties. In that case markets and even democracy itself are finished.

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

 

END

 

Ken Rogoff now states that it would be good for emerging nations to put their reserves in gold instead of other hard currencies

 

(courtesy Ken Rogoff)

 

Ken Rogoff’s Shockingly Simple Advice To Emerging Markets: Hoard Gold

Authored by Kenneth Rogoff, originally posted at Project Syndicate,

Are emerging-market central banks overweight in dollars and underweight in gold? Given a slowing global economy, in which emerging markets are probably very grateful for any reserves they retain, this might seem an ill-timed question. But there is a good case to be made that a shift in emerging markets toward accumulating gold would help the international financial system function more smoothly and benefit everyone.

Just to be clear, I am not siding with those – usually American far-right crackpots – who favor a return to the gold standard, in which countries fix the value of their currencies in terms of gold. After all, the gold standard’s last reign ended disastrously in the 1930s, and there is no reason to believe that a return to it would turn out any differently.

No, I am just proposing that emerging markets shift a significant share of the trillions of dollars in foreign-currency reserves that they now hold (China alone has official reserves of $3.3 trillion) into gold. Even shifting, say, up to 10% of their reserves into gold would not bring them anywhere near the many rich countries that hold 60-70% of their (admittedly smaller) official reserves in gold.

For some time, the rich countries have argued that it is in everyone’s collective interest to demonetize gold. Sure, we hold a lot of gold, these countries say, but that is a vestige of the pre-World War II gold standard, when central banks needed a stockpile.

Indeed, back in 1999, European central banks, seeing no reason to keep holding so much gold, entered a pact to start reducing their stocks in an orderly fashion. The sales made sense at the time for most of the participating countries: The real backing for their debt was the tax reach of their governments, their high levels of institutional development, and their relative political stability. The 1999 pact has been revisited periodically, though since the most recent edition in 2014, most rich countries have taken a long pause, still leaving them with extremely high gold reserves.

Emerging markets have remained buyers of gold, but at a snail’s pace compared to their voracious appetite for US Treasury bonds and other rich-country debt. As of March 2016, China held just over 2% of its reserves in gold, and the share for India was 5%. Russia is really the only major emerging market to increase its gold purchases significantly, in no small part due to Western sanctions, with holdings now amounting to almost 15% of reserves.

Emerging markets hold reserves because they do not have the luxury of being able to inflate their way out of a financial crunch or a government debt crisis. Simply put, they live in a world where a large fraction of international debt – and an even larger share of global trade – is still denominated in hard currency. So they hold reserves of such currencies as a backstop against fiscal and financial catastrophe. Yes, in principle, it would be a much better world if emerging markets could somehow pool their resources, perhaps through an International Monetary Fund facility; but the trust required to make such an arrangement work simply is not yet there.

Why would the system work better with a larger share of gold reserves? The problem with the status quo is that emerging markets as a group are competing for rich-country bonds, which is helping to drive down the interest rates they receive. With interest rates stuck near zero, rich-country bond prices cannot drop much more than they already have, while the supply of advanced-country debt is limited by tax capacity and risk tolerance.

Gold, despite being in nearly fixed supply, does not have this problem, because there is no limit on its price. Moreover, there is a case to be made that gold is an extremely low-risk asset with average real returns comparable to very short-term debt. And, because gold is a highly liquid asset – a key criterion for a reserve asset – central banks can afford to look past its short-term volatility to longer-run average returns.

True, gold does not pay interest, and there are costs associated with storage. But these costs can be managed relatively efficiently by holding gold offshore if necessary (many countries hold gold at the New York Federal Reserve); and, over time, the price can go up. It is for this reason that the system as a whole can never run out of monetary gold.

I don’t want to create the impression that by shifting into gold, emerging markets would somehow benefit at the expense of advanced economies. After all, the status quo is that advanced-economy central banks and treasuries hold vastly more gold than emerging markets do, and a systematic shift by emerging markets will bid up its price. But this is not a systemic problem; and, in fact, a rise in gold prices would close part of the gap between demand and supply for safe assets that has emerged due to the zero lower bound on interest rates.

There has never been a compelling reason for emerging markets to buy into the rich-country case for completely demonetizing gold. And there isn’t one now.

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 DOWN to 6.4795 / Shanghai bourse  CLOSED  UP 54.32 OR 1.85%  / HANG SANG CLOSED DOWN 390.11 OR 1.85%

2 Nikkei closed FOR HOLIDAY /USA: YEN FALLS TO 105.88

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 92.25/Euro UP to 1.1577

3b Japan 10 year bond yield: FALLS   TO -.124%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.04

3c Nikkei now WELLBELOW 17,000

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

3e WTI::  44.30  and Brent: 45.49

3f Gold DOWN  /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.

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 0.274%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.32%/: 

3j Greek 10 year bond yield RISE to  : 8.67%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1295.00/silver $17.55 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble DOWN 1 in  roubles/dollar) 66.25

3m oil into the 44 dollar handle for WTI and 45 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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9480 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0975 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .274%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.80% early this morning. Thirty year rate  at 2.66% /POLICY ERROR)

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

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

“Unexpected” Australian Rate Cut To Record Low Unleashes FX Havoc, Global “Risk Off”

Three months ago, when Australia unexpectedly revealed that its recent “stellar” job numbers had in fact been cooked we asked, rhetorically, why the sudden admission it was all a lie? Simple: weakness in commodity prices “is far greater than people had been expecting,” the nation’s top economist said. Australia is now “swimming against the tide” because of uncertainties in the global economy, he added. Which we translated as follows: “we need more easing, and to do that, the economy has to go from strong to crap.” And with the Australian economy suddenly desperate for lower rates from the RBA, one can ignore the propaganda lies, and focus once again on the far uglier truth.

Overnight this was finally confirmed when in a surprise move, Australia’s central bank cut its benchmark interest rate for the first time in a year to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world. The move sent the local currency tumbling and local stocks climbing.

Reserve Bank of Australia Governor Glenn Stevens and his board lowered the cash rate by 25 basis points to 1.75 percent Tuesday, a move predicted by just 12 of 27 economists surveyed by Bloomberg. The rest had seen no change. Data last week showed quarterly deflation in the consumer price index and the weakest annual pace on record for core inflation, which the RBA aims to keep between 2 percent and 3 percent on average.

“Inflation has been quite low for some time and recent data were unexpectedly low,” Stevens said in a statement. “These results, together with ongoing very subdued growth in labor costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.”

As Bloomberg reminds us, Australia’s central bank acted after two regional neighbors stood pat last week – New Zealand and Japan. Illustrating the impact of central bank decisions on exchange rates, the Aussie has the weakest performance among the G-10 since last Wednesday, a day before the Bank of Japan and Reserve Bank of New Zealand meetings. The announcement sent the AUDUSD plunging.

 

“They’re saying that there’s no point in messing around, let’s get in and do this, cut the cash rate and get some of the speculative money out of the Australian dollar,” said Chris Weston, chief market strategist at IG Ltd. in Melbourne.

In some way’s Australia rate cut had been telegraphed earlier in the aftermath of last night’s latest disappointing Chinese Manufacturing PMI number, which as we reported contracted for the 14th straight month, and not only missed but dropped to 49.4 after a brief March bounceback from February lows.

 

Perhaps more importantly, the plunge in the AUD caused havoc across other key carry trades, and following a nearly 200 pip plunge in the AUDJPY, the Yen soared once more, this time surging to the highest against the dollar since August 2014, pushing the pair as lows at 105.600, and dragging risk assets lower with it.

As a result, the dollar fell to its weakest level in almost a year and stocks declined while Treasuries rose as evidence of limp economic growth around the world permeated through global financial markets. It also meant that gold once again jumped above $1300, while oil has traded on the backfoot near $45 a barrel despite the accelerating dollar weakness, ahead of weekly U.S. government data forecast to show rising stockpiles.

“We’ve started to take a little bit of money off the table,” said Sean Darby, chief global equity strategist in Hong Kong at Jefferies. “There’s quite a bit for investors to digest now after quite a big run-up in markets, particularly after the disappointment from the Bank of Japan last week.”

It wasn’t just central banks: commercial banks were also responsible for today’s weakness. UBS Group AG fell 5.8% after reporting worse-than-forecast first-quarter net income. Commerzbank AG lost 6% after its profit more than halved. HSBC Holdings Plc erased gains to fall 0.7 percent after posting a drop in profit.

“Weak earnings and a strong euro are the main triggers for the market being down today,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank in Bonn, Germany. “What markets need most right now is to see better numbers from the economic indicators in Europe and a better view from companies on their future earnings.”

So far it has not seen that, and making matters worse, the European Commission said hours ago that growth in the Eurozone and the wider European Union will be slightly weaker this year than previously forecast, as it warned that the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membership could weigh on the economy.

The EU’s economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade, while fundamental problems in many of the bloc’s economies, including high levels of private debt and unemployment, continue to hold back the economic recovery. The commission now expects the rate of inflation in the eurozone to be just 0.2% this year, down from the 0.5% previously forecast. In 2017, inflation in the currency union is now seen at 1.4%, down from the 1.5% predicted earlier and still below the close-to-2% targeted by the ECB.

“We’re into the May doldrums where people are starting to reconsider portfolios and will probably not do too much,” said Sean Darby, chief global equity strategist in Hong Kong at Jefferies Group LLC. “They’ve either missed the rally from the first quarter or they’re getting a little bit too concerned about some of the weakness in the global data.”

Market snapshot

  • S&P 500 futures down 0.7% to 2059
  • Stoxx 600 down 1.3% to 337
  • FTSE 100 down 0.7% to 6196
  • DAX down 1.6% to 9957
  • German 10Yr yield down 2bps to 0.24%
  • Italian 10Yr yield down less than 1bp to 1.47%
  • Spanish 10Yr yieldunchanged at 1.58%
  • S&P GSCI Index down 0.7% to 352.7
  • MSCI Asia Pacific up less than 0.1% to 130
  • Nikkei 225 closed
  • Hang Seng down 1.9% to 20677
  • Shanghai Composite up 1.8% to 2993
  • S&P/ASX 200 up 2.1% to 5354
  • US 10-yr yield down 5bps to 1.82%
  • Dollar Index down 0.54% to 92.12
  • WTI Crude futures down 1% to $44.33
  • Brent Futures down 1% to $45.37
  • Gold spot up 0.5% to $1,298
  • Silver spot up 0.4% to $17.61

Top Global News

  • Australia Cuts Key Rate to Record Low, Pulling Down Currency: Australian dollar slumps as much as 1.5% following decision
  • UBS Profit Misses Estimates on Lower Wealth, Trading Income: Investment-banking unit sees profit slump 67% in first quarter
  • HSBC’s Quarterly Profit Beats Estimates as Costs Contained: Operating expenses fell 6.6% in quarter from year earlier
  • Fairway Group Files for Bankruptcy as Competition Revs Up: Gourmet grocer lists $387m in debt, $230m assets
  • J&J Faces 1,000 More Talc-Cancer Suits After Verdict Loss: Jury awards $55m to woman who blamed talc for cancer
  • Einhorn’s Greenlight Buys Yelp, Takes Macro Bet on Natural Gas: Hedge fund says mobile app company can double revenue by 2019
  • Mylan Sees Profit Rising About 16%, Generic Prices to Drop: CEO committed to closing Meda acquisition
  • Apple CEO Says He ‘Could Not Be More Optimistic About China’: Tim Cook spoke in interview on CNBC
  • Aeropostale Prepares to File for Bankruptcy This Week: WSJ
  • EU Commission Doubts Trade Deal With U.S. Possible: Sueddeutsche
  • U.S. Grain Cos. Plan to Reject New Monsanto GM Soybeans: WSJ
  • ADM, Bunge Not Accepting Soybeans W/ Unapproved Monsanto Trait

Looking at regional markets, Asian equity markets traded mostly positive with ASX 200 (+0.8%) among the leaders, following an RBA rate cut, while poor China PMI figures increase stimulus hopes. ASX 200 was led by financials after Big-4 bank ANZ recovered from opening losses on optimism regarding the bank’s direction, while a 25bps rate cut by the RBA further boosted sentiment. Elsewhere, Chinese markets were mixed with the Shanghai Comp (-1.68%) was weighed by further poor data in which Caixin Manufacturing PMI failed to meet estimates and posted a 14th consecutive month in contraction territory, as the recent data misses increased hopes for additional easing. As a reminder Japanese markets were shut due to Constitution Day and will next re-open on Friday.

Top Asian News

  • China’s Caixin PMI Slips in April as Pockets of Weakness Remain: PMI from Caixin Media and Markit Economics fell to 49.4 vs est. 49.8
  • Short Sellers Under Fire in Australia as RBA Spurs Stock Rally: Banks lead gains after interest-rate cut, ANZ results
  • Yuan Gains After PBOC Sets Strongest Fixing Rate Since December: PBOC raised daily fixing by 0.04% to 6.4565/dollar
  • China Swap Rate Drops Most in Year as Bond Income Escapes Tax: Policy bank bond yields, benchmark repo rates decline
  • PLDT Profit Falls 34% as Losses From Rocket Internet Persist: 1Q net drops to 6.2b pesos
  • ANZ Rallies as Low-Yield Business Cuts Offset Profit Drop: 1H cash profit A$2.782b vs est. A$3.577b
  • DBS First-Quarter Profit Rises 6 Percent, Beats Estimates: 1Q net income S$1.2b vs est. S$1.04b

European equities have also seen significant downside so far this morning (Euro Stoxx: -1.6%), with the DAX slipping back below the 10000 level. While yesterday’s decline in energy prices have helped lead energy names lower today, focus has been some of the high profile earnings from across Europe, with the likes of BMW, UBS, Commerzbank and Lufthansa all seeing downside in the wake of their updates. Bunds have seen upside today, with prices back above 162.00, while peripheral debt markets have seen Portuguese paper lifted by the latest sovereign update from DBRS, which has abated some of fears from last week as this would mean that Portuguese bonds are still eligible for ECB QE. Meanwhile, analysts at Informa note that BTP/Bonos are lower by around 1.5bps in the wake of soft demand for the BP Vicenza IPO, whereas for Spain the EU extension for the nation and their deficit goals has offset some of the concerns following the countries inability to form a government.

Top European News

  • European Commission Sees U.K. Referendum Risks as Forecasts Cut: Predicts 2016 growth will slow to 1.8%, 2017 will be 1.9%
  • U.K. Manufacturing Unexpectedly Shrinks as Firms Hemorrhage Jobs: Markit PMI drops to 49.2 from 50.7 in March
  • BMW First-Quarter Profit Falls 2.5% on Self-Driving Shift: BMW sticks to forecast for slight earnings growth in 2016
  • Commerzbank Profit Halves as Market Turmoil Hurts Revenue: Earnings beat analysts’ estimates even as revenue declined
  • BNP Paribas Profit Unexpectedly Rises on Lower Provisions: Pretax profit at corporate and institutional bank falls 55%
  • Lufthansa Fares Under Pressure as It Grapples With Restructuring: Carrier says revamp is beginning to deliver cost turnaround
  • Philips to List Lighting Unit After Failing to Find Buyer: Dutch manufacturer to list at least 25% stake, will seek to sell remaining shares in coming years

in FX, it has been a lively start to the European session, with the RBA rate turning AUD lower after attaining .7700+ levels vs the USD. Elsewhere though, fresh USD selling has been the early theme against the rest of the majors, led by EUR/USD through the 1.1500’s, tipping 1.1600 by some 15 ticks so far. USD/JPY took out support ahead of 106.00 to extend losses through to 105.55, but some nervousness at these levels sees us some 20 ticks or so higher since. Cable made strong gains through to 1.4770, but a weak UK manufacturing PMI number, below the 50.0 pivot (49.2) has sent GBP reeling, with the EUR/GBP rate through .7870 extending Cable losses to just below 1.4700, though tentatively so as yet. USD/CAD finally took out 1.2500 to trip stops down to 1.2460/61, but we are back above 1.2500 again as Oil takes a hit. Oil prices have already been on the wane, but clearly preceded by stock market weakness, which looks set to impact on FX today. Swedish industrial production much better than expected, knocking USD/SEK down to just under 7.9000.

In commodities, WTI and Brent have shaken off some of their recent gains after the continuation of the fallout from the Genscape report which noted a build in cushing stockpiles, Gold has still be rising after a week USD is helping boost safe haven demand. Silver has been trading sideways after reaching the USD 18.00/oz level yesterday and is currently just shy of that level. Elsewhere, copper and Dalian iron ore futures were weaker following the recent discouraging Chinese PMI releases, with the latter declining by nearly 6% intraday as increasing stockpiles also weigh.

On today’s US calendar, highlights include Redbook weekly sales, the ISM New York, US IBD/TIPP Economic Optimism, API Crude Oil Inventories and earnings from Pfizer and CVS Health.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European bourses slump with sentiment dampened from soft Chinese Caixin Manufacturing PMI figures alongside a slew of weak earnings updates.
  • USD-index briefly slips below 92.00, subsequently lifting EUR/USD above 1.1600, while gains in GBP are capped as Manufacturing PMI figures fall into contractionary territory.
  • Highlights include US IBD/TIPP Economic Optimism, API Crude Oil Inventories and earnings from Pfizer and CVS Health.
  • Treasuries rally in overnight trading amid drop in global equities and oil as evidence of limp economic growth around the world permeated through global financial markets.
  • The European Commission told the euro area’s largest economies to reduce debt and modernize labor markets as it again slashed its inflation forecast and warned of slower- than-predicted growth across the 19-nation bloc;  ECB publishes indicative calendar for TLTRO-II operations
  • U.K. manufacturing unexpectedly shrank for the first time in three years in April, dealing a shock blow to the economy after growth slowed in 1Q. Markit Economics said its factory Purchasing Managers Index dropped to 49.2 from 50.7 in March
  • Australia’s central bank cut its benchmark interest rate to a record low and left the door open for further easing to counter a wave of disinflation that’s swept over the developed world
  • Australia injected a double-dose of stimulus as the government handed down an expansionary budget hours after the central bank eased policy for the first time in a year
  • A private gauge of Chinese manufacturing slipped in April, underscoring pockets of weakness in an economy weighed by overcapacity and weak external demand
  • The Federal Reserve is set to propose so-called stays on derivative contracts that would prevent counterparties from immediately pulling collateral from a failed bank. The plan is meant to give authorities ample time to unwind a firm
  • UBS Group AG said 1Q profit dropped 64%, missing analyst estimates, as market turbulence eroded earnings at the wealth-management and securities units. The shares plunged
  • Commerzbank AG fell as much as 9.4 percent in Frankfurt, the most in almost three months, after market turmoil and a squeeze to margins hurt sales and halved first-quarter profit
  • BNP Paribas SA, France’s largest bank, posted a surprise increase in first-quarter profit as a decline in provisions for bad loans helped outweigh a slump in trading revenue. The shares rose
  • Sovereign 10Y bond yields mostly lower; European equity markets drop, Asian markets lower (Japan closed); U.S. equity-index futures fall. WTI crude oil drops, metals higher

 

DB’s Jim Reid concludes the overnight wrap

 

Over in the markets and much like how the last week of April played out, the first day of May was a poor one for the US Dollar which saw the Dollar index fall another half a percent to mark a fresh year-to-date low. In fact the index has now fallen for six consecutive sessions and is now over 7% off its January highs. The weakness in the Greenback did however help to kick start US equities on a strong footing in May with the S&P 500 returning +0.78% and so wiping out over half of last week’s loss. The Bank Holiday in the UK meant trading volumes were thin in Europe and price action relatively benign. The Stoxx 600 (-0.07%) finished with a very modest loss with peripheral markets generally being the underperformer there.

The main focus yesterday and a contributor to that weakness for the Dollar was the ISM manufacturing data. The reading printed at 50.8 in April which is down a full point from March and more than what the market had expected (consensus expectation was for 51.4). The print also matched the manufacturing PMI after there was no change in the final revision. In terms of the details, the new orders component declined 2.5pts to 55.8 although that is still well above where it printed in December at 48.8. Employment rebounded 0.9pts to 49.2 but still remains in contractionary territory, while inventories declined 1.5pts to 45.5. A positive aspect of the data was the second consecutive print above 50 for new export orders (+0.5pts to 52.5) and in turn marking the best level since November 2014, indicating some stabilisation and positive feed through from the weakness in the currency. We’ll get the ISM non-manufacturing data tomorrow but it’s worth mentioning that the spread between the two series got back to 2.7pts last month which was the least since December 2014. The current market consensus for this month’s non-manufacturing print is 54.8 which implies a spread of 4pts however. If correct, that will be the most since January.

Onto the latest in Asia this morning where bourses in Hong Kong aside it’s actually been a relatively positive start for markets in the region. Gains are being led out of China where the Shanghai Comp and CSI 300 are +1.44% and +1.62% respectively. The Kospi (+0.43%) and ASX (+1.58%) are also in positive territory, but the Hang Seng (-1.19%) has reopened on the back foot after markets were closed for a public holiday yesterday. Markets in Japan are shut for a public holiday of their own today (and will remain shut until Friday) although that hasn’t stopped the Yen from rallying further this morning. It’s close to +0.30% firmer and closing in on breaking though the 106 level.

There’s been some data released overnight too and it’s come in China where the non-official Caixin manufacturing PMI revealed a 0.3pt decline to 49.4 (vs. 49.8 expected). Meanwhile as we go to print the other main news overnight is out of the RBA have who have announced a 25bps cut in the benchmark rate to a new all time low of 1.75%. The move was only expected by 12 of 27 economists according to Bloomberg and has resulted in the Aussie Dollar falling nearly 2% from its pre-decision highs.

Yesterday also saw the release of the Fed’s Senior Loan Officer Opinion Survey. The April survey results showed that on balance, banks tightened lending standards on commercial and industrial loans during Q1, but that lending standards on loans to households were said to have eased. A modest net fraction of banks were also reported as easing standards on credit cards and consumer loans, while there was little change in standards for auto loans. With regards to the energy sector specifically, banks were reported as saying that they expect delinquency and charge-off rates on loans to firms to deteriorate over the reminder of the year and that the majority of banks have taken a variety of actions to mitigate loan losses over the past year, including tightening lending policies on new lines of credit, restructuring outstanding loans or requiring additional collateral.

There was also some Fedspeak for us to digest last night. San Francisco Fed President Williams reiterated that he expects the Fed to move interest rates ‘gradually back to a more normal level over the next couple of years’ but highlighted that the new long-term normal rate could be significantly lower than what the Fed’s dot plots imply.

Switching to the micro and in terms of the corporate earnings results yesterday, of the 12 S&P 500 companies to report 8 exceeded EPS expectations. That’s below the run rate for the year which is unchanged at 77%, while sales beats continue to hover around 57%. Weakness in Oil prices did little to dent moves for the energy sector. WTI (-2.48%) defied the move lower for the US Dollar and declined back below $45/bbl following some bearish OPEC output numbers and also rising oil stockpiles in the latest Genscape data. Elsewhere moves for rates markets were headlined by further weakness for US Treasuries, with 10y yields up another 4bps yesterday and hovering around 1.873%.

The only other remaining data in the US yesterday was the March construction spending numbers (+0.3% mom vs. +0.5% expected). In Europe the main data flow centered on the April manufacturing PMI’s. The Euro area reading was revised up a modest 0.2pts to 51.7 while on a regional basis there were actually downward revisions to both Germany (-0.1pts to 51.8) and France (-0.3pts to 48.0) while the peripherals generally exceeded expectations. Italy printed at 53.9 (vs. 53.0 expected), a rise of 0.4pts, while Spain printed at 53.5 (vs. 53.0 expected), a rise of 0.1pts.

 

END

 

ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP 54.32 PTS OR 1.85%  /  Hang Sang closed DOWN 390.11 OR 1.85%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 2.11% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4795.  Oil FELL  to 44.30 dollars per barrel for WTI and 44.49 for Brent. Stocks in Europe DEEPLY IN THE RED . Offshore yuan trades  6.4915 yuan to the dollar vs 6.4795 for onshore yuan.

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

Last night the USA/Yen penetrated the 105 barrier for the first time in 18 months as it seems Kuroda has no power left to intervene.  The surprise move by the Aussies in lowering its discount rate also contributed to the strength in the yen.This sent most bourses deeply into the red this morning

 

(courtesy zero hedge)

 

Yentertainment Tonight – Kuroda Kollapse Kontinues As USDJPY Nears 105 Handle

Either The BoJ steps in soon and intervenes (even by just “checking levels”) or Kuroda-san is truly terrified of The G-20. USDJPY has now crashed 7 handles since last Thursday’s shock BoJ disappointment crashing to within 5 pips of a 105 handle tonight for the first time in 18 months…

 

 

Erasing the entire devaluation post-Fed, post QQE2…

 

Perhaps Jack Lew’s “currency manipulation” report was enough to stall the Japanese currency war for now? Or is China greatly rotating its Yuan devaluation pressure against another member of its basket…?

 

Charts: Bloomberg

 

end b) CHINA ISSUES

Again Chinese manufacturing PMI disappoints as it has now fallen for the 14th straight month.  April’s PMI tumbled to 49.4  (contractionary) from 49.8 last month.

China Manufacturing PMI Disappoints – In Contraction For 14th Straight Month

Despite a trillion dollars of credit spewed into the Chinese ‘economy’ speculative finance channels, Manufacturing remains in a slump as April’s China PMI tumbled to 49.4 after a brief bounce back up to 49.8 (from the 48.0 low in Feb). This is the 14th month in a row of contraction.

As Caixin reports, relatively weak market conditions and muted client demand contributed to a further solid decline in staff numbers, which seems to put a nail in the coffin of anyone who believes recent price action in industrial commodities is anything but speculative fervor.

 

Commenting on the China General Manufacturing PMI data, Dr. He Fan, Chief Economist at Caixin Insight Group said:

“The Caixin China General Manufacturing PMI for April came in at 49.4, down 0.3 points from March’s reading. All of the index’s categories indicated conditions worsened month-on-month, with output slipping back below the 50-point neutral level. The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn.”

end The following is why you just cannot believe any data coming out of mg Mainland China (courtesy zero hedge) China Threatens Its Economists And Analysts To Only Write Bullish Reports, Or Else

 

When it comes to dealing with the mass media and its impact on public confidence, China has a long and illustrious history of not beating around the bush.  Last summer around the time its stock market bubble started to crack, Beijing banned the use of such terms as “equity disaster” and “rescue the market.” Then earlier this year, China’s president Xi Jingping visited the country’s three big state news organizations, Xinhua, the People’s Daily and China Central Television, to lecture them on the need to toe the party line, “tell China’s stories well” and enhance the nation’s influence in the world.

After all, hinting that not all is as it appears in official propaganda soundbites would merely instill further lack of confidence in the economy and accelerate the stealthy capital outflows from the country (while making the Vancouver real estate market even more entertaining).

Now, according to the WSJ, Chinese authorities have set their sights on a new set of targets: “economists, analysts and business reporters with gloomy views on China’s economy.”

While in the US and the rest of the free world, anyone who holds a less than bullish view of things is simply marginalized as a conspiracy theorist, ridiculed by establishment economists and pundits, is the recipient of mainstream media hit pieces, or denigrated by the president as “peddling fiction”, China has decided to take a more blunt approach: “securities regulators, media censors and other government officials have issued verbal warnings to commentators whose public remarks on the economy are out of step with the government’s upbeat statements.”

Take the example of Lin Caiyi, chief economist at Guotai Junan Securities who has been outspoken about rising corporate debt and a glut of housing and the weakening Chinese currency. According to the WSJ, she received a warning in recent weeks, her second, from her state-owned firm’s compliance department, which instructed her to avoid making “overly bearish” remarks about the economy, particularly the currency.

For now it is just verbal warnings although if past is prologue we expect China will soon incarcerate at least a few of its “rogue” bearish economists to send a very clear signal that any lack of upbeat commentary will not be tolerated.

Meanwhile, China’s economy is doing so well, that as a result of “pressure” by financial regulators bent on stabilizing the market, stock analysts at brokerage firms are becoming wary of issuing critical reports on listed companies. At least one Chinese think tank  was told by propaganda officials not to cast doubt on a planned government program to help state companies reduce debt.

What China really wants is to make sure that every financial and economic expert is on the same page and reinforcing the same message as that uttered by the country’s political leaders.

The WSJ caveats that while evidence of the clampdown is anecdotal, it appears widespread. Government departments didn’t respond to requests for comment or declined to. Commentary about the economy and reporting on business, unlike on politics or many social policies, have been relatively unfettered in China in a tacit acknowledgment by officials that a freer flow of information serves economic vitality.

As noted above, Beijing openly moved to reassert control of the country’s economic story line after stumbles over the stock markets and exchange-rate policies last year fed doubts among investors about the government’s competence in navigating a hard-to-arrest slowdown in growth. During the past two months, the Communist Party leadership has taken to talking up the economy to try to reassure global markets, seemingly not realizing that such “full tilt” propaganda merely confirms everyone’s worries about the just how bad the underlying economy truly is.

“Vigorous debate among economists and public confidence in this conversation is critical if China is to successfully navigate the choppy economic waters,” said Scott Kennedy, a deputy director at the Center for Strategic and International Studies, a Washington think tank. “If the party and government only want to hear good news, then they’d be better off hearing nothing because the value of the words would be less than zero.”

None of this, however, trickles down to the politburo, which just cares about one thing: stopping the naysayers.

Some lower-level government officials describe a siege mentality taking hold among Chinese leaders and senior officials as international financiers like George Soros expressed gloom about the economic outlook early this year. At high-level meetings the past few months in the walled Zhongnanhai compound where the leaders work, some senior officials called for quashing any criticism that might encourage foreigners to “short China”—or bet against the prospects for growth—officials with knowledge of the discussions say.

 

“You can see they’re not happy when you tried to tell them foreign speculators are not your biggest problem,” said one of the officials who attended the meetings.

You can also see it during overnight CNH trading sessions when in its eagerness to destroy Yuan shorts, the PBOC unleashes the artillery to push the currency higher, even if it ultimately means more pain for China’s economy.

Meanwhile, “journalism” in China is now back to levels seen during the peak of the communist regime: non-existent.

“As a Chinese reporter, you can do anything but journalism these days,” said a senior editor at a state-owned media outlet. One colleague, the editor said, was forced by the outlet to take a leave of absence over what senior editors considered the reporter’s aggressive investigation into the causes of last summer’s stock market crash.

It was unclear if a major party mouthpiece had unleashed a hitpiece against the reporter first.

Still, the one aspect of the economy China is most worried about is its currency. In February,as reported here before, the central bank abruptly stopped releasing data on foreign-exchange purchases by commercial banks—long viewed by market analysts as a key snapshot of China’s capital flows—amid growing worries over more money leaving its shores. In a statement days later, the central bank said it took the step because the data were “no longer a true reflection of China’s capital flows.”

Ms. Lin, the economist at Guotai Junan, said she started getting guidance last fall to tone down her public remarks about the Chinese currency, the yuan or renminbi—something she acknowledged at an economic forum held at Shanghai’s Fudan University in October.

“I was told by regulators not to recommend shorting the renminbi,” Ms. Lin told the gathering, “so I’m just going to recommend buying the dollar.” Neither Ms. Lin nor her firm responded to inquiries for comment, nor did the regulator.

Or take the example of another ludicrous plan recently proposed by China: the intention to convert trillions of bad loans into equity, something we dubbed an “unprecedented nationalization of insolvent companies.” Here too Beijing wants to make it clear that no domestic opposition to this “plan” will be accepted:

In the financial hub of Shanghai, the city’s propaganda department recently instructed a local think tank to stop researching a planned debt-for-equity swap program aimed at helping big state companies reduce debt, according to economists familiar with the matter. The reason, these economists said, is that officials don’t want the research to turn up unfavorable evidence after Premier Li Keqiang and others have endorsed the swaps.  The information office of the Shanghai government didn’t respond to requests for comment.

Many analysts have said the plan, which would allow banks to exchange bad loans for equity in companies they lend to, could risk keeping companies afloat when they should sink while leaving banks more strapped for capital. Given the climate, some are changing their tone.

Then, in mid-April, a well-known Chinese economist gave investors in Hong Kong a grim assessment of the economy. It was not meant to last.

Despite recent signs of a rebound, Gao Shanwen, chief economist at brokerage Essence Securities Co., told investors that “a lot of the official data aren’t reliable” and the economy still faces “big problems,” according to people who attended the closed-door event.

 

Words of those remarks crackled across social media. Two days later, Mr. Gao issued a clarification on his public account in the popular Chinese messaging app, WeChat, saying those remarks were “made up.” He then released a report on the economy shorn of critical commentary. Mr. Gao and representatives at his firm didn’t return requests for comment.

And just like that not only is all Chinese “economic data” rubbish and a completely goalseeked fabrication, but henceforth any domestic commentary on said “data” will be just as credible.

Meanwhile, while in the US while the government is not directly threatening anyone who dares to criticize the economy – yet – there are more tacit ways of pressuring critics and contrarians, the most simple of which of course is to simply pay much more to those who do comply with the tacit propaganda line. This, sooner or later, is sufficient to get even the most bearish naysayers to change their tune. After all they have to eat too.

Incidentally, when that fails and when bullish US propaganda has to be as leakproof as that of China, we are confident that any naysayers will get comparable treatment.

Average:

5 .EUROPEAN AFFAIRS

European stocks tumble after the EU slashes growth and their determination of “inflation” falls.  However what is extremely worrisome to the EU area is the Italian banks which have a huge 360 billion euros of non performing loans to deal with.

(courtesy zero hedge)

European Stocks Tumble After EU Slashes Growth, Inflation Guesses

Despite unleashing his bazooka, Mario Draghi – like his colleagues at The BoJ – appears to have hit the limit of his impotence as the European Commission cut its outlook for growth and inflation across the Union for 2016 and 2017. Citing the economic slowdown in China and other emerging markets, geopolitical tensions and uncertainty ahead of the U.K. referendum on EU membershipWSJ reports EU’s economists also cautioned that the strength of factors that have been supporting growth in the region, such as low oil prices and a weaker euro, could start to fade. This sparked modest Euro weakness (after a non-stop surge in the last week) dragging down European stocks and darkening the outlook for the banking system further.

As The Wall Street Journal reports,

According to the forecasts by the European Commission, the EU’s executive arm, the economy of the 19-country eurozone is expected to grow 1.6% this year. This is slightly below the 1.7% expansion the commission had forecast in February, and the 1.7% it expanded in 2015.

In 2017, the eurozone economy will expand by 1.8%, the commission said, slightly lower than earlier predictions which saw it growing 1.9%.

Growth in the 28-country EU is seen at 1.8% this year, down slightly from the commission’s February forecast and lower than the 2% it recorded in 2015. The EU’s economic output will likely expand 1.9% next year, also below the 2.0% forecast earlier this year.

The new, slightly lower forecasts highlight how Europe’s scars from the financial crisis, and the debt crisis that followed, continue to dampen its recovery.

In its forecasts, the commission said that while cheaper oil and easy monetary policy by the European Central Bank have boosted consumption and exports, the pace of growth across the 28-country bloc and the euro area remains relatively moderate.

This sparked a modest drop in EURUSD…

And European stocks continue to tumble…

Led by Italy and Spain to the downside…

As Italian banks collapse again… which should be no surprise one third of the bailout fund has already been depleted…

So having told “savers” to pile a third of their assets into stocks, Draghi apperars powerless to create ‘wealth’ for the repressed as realisation dawns across global investors that it’s all smoke and mirrors.

But don;t worry they are on it…

“Growth in Europe is holding up despite a more difficult global environment,” said Pierre Moscovici, the EU commissioner for economic and financial affairs.

“The recovery in the euro area remains uneven, both between Member States and between the weakest and the strongest in society. That is unacceptable and requires determined action from governments, both individually and collectively,” he added.

end  RUSSIAN AND MIDDLE EASTERN AFFAIRS

The Saudi foreign minister repeats his warning to the USA not to publish those famous 28 pages.  He states that Saudi Arabia will sell all of its 750 billion in the USA treasuries:

(courtesy zero hedge)

Saudi Foreign Minister Repeats Warning To US Over Sept 11 Law

The biggest financial and geopolitical story from mid-April was Saudi Arabia’s threat that should the US pass a bipartisan law which would take away immunity from foreign governments in cases arising from a “terrorist attack that kills an American on American soil” and specifically could hold the Saudi kingdom responsible for its role in the Sept 11, 2001 attacks, then the Saudis would retaliate by selling up to $750 billion in American assets.

Today, the Saudi foreign minister Adel al-Jubeir, while speaking to reporters in Geneva after talks with U.S. Secretary of State John Kerry which mainly focused on Syria, admitted this threat saying passage of the law would “erode global investor confidence in America” by which he was, of course, referring only to Saudi Arabia. However, to avoid another slap in the face of US foreign policy on the record, he denied that Saudi Arabia had “threatened” to withdraw investment from its close ally and instead called it a mere “warning.”

“We say a law like this would cause an erosion of investor confidence. But then to kind of say, ‘My God the Saudis are threatening us’ – ridiculous,” Jubeir hedged according to Reuters.

Saudi Foreign Minister Adel al-Jubeir talks to the media in
Geneva, May 2, 2016

“We don’t use monetary policy and we don’t use energy policy and we don’t use economic policy for political purposes. When we invest, we invest as investors. When we sell oil, we sell oil as traders.”

That said we are confident that Jubeir realizes very well that everyone else uses monetary and energy policy for political purposes – hence the Trasury’s brand new Friday watchlist for currency manipulators – which is why when he calls it “erosion of investor confidence” the world reads clearly between the lines.

When he was pressed whether the Saudia Arabia had suggested the law could affect its investment policies, the Saudi foreign minister said: “I say you can warn. What has happened is that people are saying we threatened. We said that a law like this is going to cause investor confidence to shrink. And so not just for Saudi Arabia, but for everybody.

Ah, so now it is “warn”, not “threaten”… gradually getting warmer. He continued: “In fact what they are doing is stripping the principle of sovereign immunities which would turn the world for international law into the law of the jungle,” Jubeir said.

“That’s why the administration is opposed to it, and that’s why every country in the world is opposed to it.

Well, China not only isn’t opposed to it but China could care less… and China has a little over $1 trillion in US Treasuries. Which implies that all the Saudi was doing was merely trying to avoid a diplomatic threat to its close political ally, one which not even Obama would be able to diffuse.

And then, just to emphasize that Saudi Arabia was not “threatening” the US, he repeated it for the third time: “And then people say ‘Saudi Arabia is threatening the U.S. by pulling our investments’. Nonsense.

No matter how one calls the Saudi threat or warning or gentle nudge, however, the reality is that it has no chance of passing in Congress. Not only at the bill’s sponsors gradually trying to prevent its passage, but Obama himself has lobbied Congress to block passage of the bill, which passed the Senate Judiciary Committee earlier this year. For those Americans who are confused just whose interests Obama is representing in this matter, those of America’s citizens or Saudi Arabia’s, we have a few words of advice: don’t overthink it.

END GLOBAL ISSUES

For 3 months the Aussie has rebounded northbound as commodity prices rose with much of that stimulus coming from China’s 1 trillion dollar bonanza.  However inflation in Australia cooled and as such, they had to lower their discount rate last night. However it was not baked into dealer calculations.  This sent the Aussie dollar crashing to .7537 on the uSA dollar from .77.  This is another big win for gold/silver.

(courtesy zero hedge)

Aussie Dollar Crashes Through Key Support After “Surprise” Rate Cut

As a major leg of many carry trades, the collapse of the Aussie Dollar in the last week has sent ripples through many risk-on positions. Following last week’s plunge in inflation to record lows, one would have assumed that expectations for a ‘stimulating’ rate-cut were baked in to some extent (as AUD plunged then), but this morning’s surprise RBA move has sparked another leg down in the commodity currency, breaking below a crucial uptrend off the January lows as the commodity currency decouples from exuberance in Chinese metals…

Just last week this happened… record low inflation

Which triggered this…

  • *RBA MAY RATE CUT ODDS RISE TO 40% FROM 14% YDAY, FUTURES SHOW

“A pre-emptive May cut is surely now a real possibility,” said Gareth
Berry, a foreign-exchange and rates strategist in Singapore at
Macquarie Bank Ltd. “At the latest, an August cut is now
inevitable. That spells the end of this three-month old Australian
dollar rebound, and the downtrend can now resume in earnest.”

But apparently that was not priced in…

Breaking AUD below a key uptrend…

end A terrific commentary from David Stockman has he circles the globe to tell us that all exporting nations are seeing their exports collapse. The big 1 trillion dollar Chinese binge into commodities is a fleeting affair and the resultant effect will be chaos when this wears off in a few months (courtesy David Stockman ContraCorner) It’s Not Random——The Global Economy’s At Stall Speed, Rapidly Loosing Lift by  • May 2, 2016

South Korea’s exports tumbled to $41 billion in April, marking the 16th consecutive month of declining foreign sales. Last month’s result represented a 11.2% decline from prior year, and an 18% drop from April 2014. Moreover, within that shrinking total, exports to China were down by 18.4% last month, following a 12.2% drop in March.

The Korean export slump is no aberration. The same pattern is evident in the entire East Asia export belt. That’s because the Red Ponzi is in its last innings. Beijing is furiously pumping on the credit accelerator, but to no avail.

As can’t be emphasized enough, printing GDP by means of wanton credit expansion does not create wealth or growth; it just results in an eventual day of reckoning when the speculative excesses inherent in central bank money printing collapse in upon themselves.

Surely, China is close to that kind of implosion. During Q1 total credit, or what Beijing is please to call “social financing”, expanded at a $4 trillion annualized rate. This was up 57% over prior year and represented debt growth at a 38% of GDP annual rate.

Stated differently, during the first 90 days of 2016 China piled another $1 trillion of debt on its existing $30 trillion debt  mountain, while its nominal GDP expanded by less than $175 billion.

That’s right. The Red Ponzi is generating barely $1 of GDP for every $6 of new debt. And much of the “GDP” purportedly generated during Q1 reflected new construction of empty apartments and redundant public infrastructure.

By now it ought to be evident that the Chinese economy is brobdingnagian freak of nature that is destined for a collapse, and that its economic statistics are a tissue of fabrications and delusions. Even its export figures, which are constrained toward minimum honesty because they can be checked against Chinese imports reported by the rest of the world, are padded to some considerable degree by phony export invoicing designed to hide illegal capital flight.

Still, the implication of its export trends are unmistakable. When you aside the statistical razzmatazz of the Chinese New Year’s timing noise in the data, exports were down by 10% in Q1 as a whole. That is the worst quarterly drop since 2009 amidst the global Great Recession, and was nearlytwice the rate of  decline during Q4 and Q3 2015.

Here’s the thing. China can’t be growing at 6.7% when its export machine has run out of gas, as is so starkly evident in the graph below. That’s because the whole Red Ponzi was built on subsidized exports via the massive currency pegging operations of the People’s Bank of China. But now that the DM world is at peak debt, the jig is up.

To wit, western consumers are out of borrowing capacity—–so China’s exporters are out of runway. It is maintaining the appearance of GDP growth, in essence, by building pyramids and playing a bad joke on the west.

After all, China’s GDP accounts may be doctored and reported in a crooked manner, but they were gifted to the comrades in Beijing by the same style of Keynesian economic reasoning that lead the Great Thinker to advocate digging holes and then refilling them again as an economic curative. His modern day followers on Wall Street apparently believe the same thing.

The latter are also peddling the myth of China’s smooth transition to domestic consumption and services. But when the central bank has exhausted the nation’s balance sheets, as is rapidly occurring in China, consumption growth perforce reverts to the growth rate of production and income. In China’s case, that vector will be heading south as its great construction binge and capital investment spree grinds to a halt.

In short, China is at nearly a 300% debt-to-GDP ratio already. What’s more, the denominator of that ratio is rotten to the core, representing as it does massive malinvestment and redundant public infrastructure that will one day be written off or abandoned as a dead weight loss to China’s economy.

More importantly, laid off construction and industrial workers and shrunken or closed business operations in the boom time sectors of its economy face drastic reductions in current cash flow and increasingly limited capacity to borrow—even in the Red Ponzi. So they will reduce spending, not recycle it, as Wall Street sell-side propagandists constantly proclaim.

That is, China is plunging into deflation and liquidation, not some grand transition to a US style shopping mall and services mecca.   The US got to that dubious condition by borrowing from the rest of the world so that American consumers could live well beyond their means. Alas, China has already used up its national credit card, and there is no one left on the planet to borrow from, anyway.

Indeed, there is plenty of evidence already for the coming round of economic compression as opposed to theoretically recycling. China is a great materials conversion machines that takes imports raw material and intermediate goods and converts them into final assemblies and consumer products for export. Accordingly, when import volumes are falling, it is a another telltale warning that China’s credit ponzi is failing.

Thus, Q1 imports as a whole fell 13.3% from prior year, and represented a worsening of Q4’s decline of 11.8% . As Jeff Snider demonstrated in the chart below, China’s import trend has transitioned from a slowdown mode to sustained decline.

If China were experiencing a smooth transition to domestic consumption and services, imports would not be falling at the rates depicted above. After all, the two largest sectors of its services economy are construction and retail—-both of which depend upon the flow-through of imports: raw materials in the former case, and luxury goods from the DM economies in the case of the latter sector.

Needless to say, the ongoing production slump in China is taking its toll far and wide among the export economies that prospered during the boom phase of the Red Ponzi.

Singapore, which is the hub of the system, has dropped even more. March exports were down 14% from prior year and nearly 21% from March 2014.

Likewise, Hong Kong’s exports are down nearly 9% in the last two years, while Taiwan’s exports have been reduced by 19% during that period. In both cases, the plunge in shipments to China has led the erosion. During the last year, for example,  Hong Kong’s exports to China have dropped by 11% or well more than its to total export drop.

Similarly, Indonesian export shipments have dropped 21%. In these case of Brazil, which was essentially an export satellite of China, the dollar value of its export shipments is down by 24% since 2013.

During the last two months, of course, the Red Ponzi has experienced another speculative mini-bubble. It seems that last year’s raging horde of gamblers, which at one point had opened 387 million stock trading accounts, had piled into the commodity pits. While this latest outbreak did fuel a completely phony 50-70% rebound in the price of iron ore, cotton and rebar futures, it was not evidence of a sustainable economic revival.

In fact, during Q1 China consumed 332 million tons of petroleum fuels (gasoline and distillates) compared to just under 339 million tons during Q1 of 2015. That 2% reduction not only negates the China recovery meme, but also represents a sharp inflection point in the underlying trend of petroleum consumption.

To wit, between 2011 and 2015 China’s Q1 domestic petroleum fuel use, as measured by shipments of its two giant state companies, rose from 271 million tons to 339 million tons or by 5.5% per annum.  By contrast, it is now shrinking, and that is a sign of an unfolding deflation, not a return to boom times in another venue.

There is a reason why CapEx is plunging all over the world, Japan is slipping into recession, Europe is sputtering and the US has hit the flat line. Namely, the central bank fueled crack-up boom is doing exactly what Mises foretold; its cracking up.

 

END

OIL ISSUES

Oil tumbles to the$43.00 handle:

(courtesy zero hedge)

WTI Crude Tumbles To $43 Handle As Demand Fears Grow

Remember when the low oil price was an “over-supply” issue and nothing at all to do with the other side of the same coin – dwindling demand? Well it appears that reality is dawning that a record glut combined with tumbling global growth (confirmed by weakness in China PMI, US PMI, and now EU growth expectations) is sending crude prices lower, back to a $43 handle for the June contract…

end Then crude jumps on smaller than expected Cushing OK build (courtesy zero hedge) WTI Crude Jumps Above $44 After Smaller Than Expected Cushing Build

Notable weakness in oil prices amid growth/demand concerns today, following Genscape’s (+821k) Cushing’s big build report yesterday, and expectations for continued builds in overall crude and Cushing levels set up trades ahead of API’s report with oil below $44 heading in. An overall crude inventory rise of 1.3mm barrels (almost double the 750k expectation)was not enough to trump a smaller than expected Cushing build of just 382k barrels (1.3m exp) which seemed to please the machines which ripped WTI back above $44 instantly.

As Bloomberg reports, Crude inventories +1.3m, gasoline -1.2m, distillates -2.6m, according to person familiar and reports on Twitter. Cushing crude inventories +382k

API:

  • Crude +1.265m (+750k exp)
  • Cushing +382k (+1.3m exp.. Genscape +821k)
  • Gasoline -1.17m
  • Distillates -2.6m

Cushing’s lower than expected build is the biggest driver for now…

“The reality is that gasoline inventories remain healthy and the runup had a lot to do with the seasonal trade and fear of ongoing production issues,” says Eric Rosenfeldt, vp of supply, trading at Papco

And the reaction in crude, after jumping higher after the NYMEX Close…

“The price of crude got ahead of itself,” Michael Corcelli, chief investment officer of hedge fund Alexander Alternative Capital in Miami, says. “The supply issue is definitely there. That’s not something that is going to change. Now people are starting to get worried about demand.”

 

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

 

euro  1.1577 UP .0054 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 105.88 DOWN 0.525 (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

GBP/USA 1.4669 UP .0007 (STILL THREAT OF BREXIT)

USA/CAN 1.2567 UP .0035

Early THIS TUESDAY morning in Europe, the Euro ROSE by 54 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 was CLOSED UP 54.32 PTS OR 1.85% / Hang Sang CLOSED DOWN 390.11  1.85%   / AUSTRALIA IS HIGHER BY 2.11% (RESOURCE STOCKS DOING WELL / ALL 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 FOR HOLIDAY 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 390.11 PTS OR 1.85% . ,Shanghai CLOSED  UP 54.32 OR 1.85%/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED FOR HOLIDAY/India’s Sensex IN THE RED

Gold very early morning trading: $1292.30. (AFTER PIERCING 1300 DOLLARS PER OZ AGAIN LAST NIGHT)

silver:$17.49

Early TUESDAY morning USA 10 year bond yield: 1.80% !!! DOWN 6 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 2.66 DOWN 6 in basis points from MONDAY night.

USA dollar index early TUESDAY morning: 92.25 DOWN 38 cents from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING

 

END

 

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.09% DOWN 1 in basis points from MONDAY

JAPANESE BOND YIELD: -0.124% DOWN 1/10 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.56% DOWN 2 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.46  DOWN 1 IN basis points from MONDAY

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

GERMAN 10 YR BOND YIELD: .200% (DOWN 17 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 1.1577 DOWN .0016 (Euro =DOWN 16  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 106.39 DOWN 0.013 (Yen UP 2 basis points As MARKETS TANK BADLY

Great Britain/USA 1.4539  DOWN .0123 Pound DOWN 123 basis points/

USA/CanadA 1.2717 UP 0.0187 (Canadian dollar DOWN 187 basis points with OIL FALLING(WTI AT $43.76)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 16 basis points to trade at 1.1507

The Yen ROSE to 106.39 for a GAIN of 2 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was DOWN 123 basis points, trading at 1.4539

The Canadian dollar FELL by 187 basis points to 1.2717, WITH WTI OIL AT:  $43.76

The USA/Yuan closed at 6.4832

the 10 yr Japanese bond yield closed at -.124% DOWN 1/10 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 7  basis points from MONDAY at 1.79% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.65 DOWN 7 in basis points on the day ( HUGE POLICY ERROR)

 

Your closing USA dollar index, 92.93 UP 35 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  DOWN 56.30 OR .90%
German Dax :CLOSED DOWN 196.50 OR 1.94%
Paris Cac  CLOSED DOWN 70.77  OR 1.59%
Spain IBEX CLOSED DOWN 257.20 OR 2.85%
Italian MIB: CLOSED DOWN 453.41 OR 2.46% (BANKING CRISIS)

The Dow was down 140.25  points or 0.78%

NASDAQ down 54.37 points or 1.13%
WTI Oil price; 43.76 at 4:30 pm;

Brent Oil: 45.07

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  66.54 (ROUBLE DOWN 1 AND 35 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT FELL AND WTI FELL

.

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:  $43.98

BRENT: 45.24

USA 10 YR BOND YIELD: 1.79%

USA DOLLAR INDEX:92.96 up 38 cents on the day

 

END

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

Trading Today in Graph form

Dollar’s Best Day In 6 Months Sparks Stock Slump, Bond Jump

 

For those anxiously Buying in May…

 

The machines giveth (in low volume meltup) and the data (Global PMI plunged to cycle lows following China’s update overnight, not helped by EU’s downgraded growth and inflation outlook) taketh away..

 

From Friday, Trannies and Small Caps are the biggest losers and Nasdaq danced at unchanged…

 

AAPL broke its longest losing streak since 1998… (thank you Jim Cramer and Buybacks)

 

VIX jockeyed with 16 all day…

 

As “Most Shorted” stocks plunged the most in 2 months…

 

HY bonds (HYG) had their worst day in 2 months as HY spreads spiked notably more than stocks…

 

Treasury yields collapsed today by the most in 3 months…

 

As The USD Index surged on EUR and AUD (RBA rate cut) weakness…

 

Today was the Bloomberg Dollar Index’s best day since Nov 2015…

 

Post-European open dollar strength took the shine off commodities, though PMs were the least impacted…

 

Crude slid back to a $43 handle befopre tonight’s inventory data…

 

Charts: Bloomberg

Bond yields plummet by 9 basis points on the 10 yr bond as the economy sinks:

(courtesy zero hedge)

Treasury Yields Tumble Most In 3 Months Despite Fed’s Williams Warning

Having pushed higher yesterday, it appears ‘investors’ have had a sudden change of heart and are panic-buying bonds today, despite Fed’s Williams warning that:

  • WILLIAMS SAYS U.S. TREASURIES ARE PRICED EXTRAORDINARILY HIGH.

Treasury yields are down 5bps (2Y) to 9bps (10Y) with non-stop buying since Europe opened.

30Y yield’s 7.5bps drop is the biggest since Feb 18th, pushing the yield back to its 20-day moving average.

 end

In the USA expect double digit increases in their premiums and this will occur precisely around one week before the election on November 1

( zero hedge)

Obamacare To Unveil “Price Shock” One Week Before The Elections

The writing was on the wall long before the largest US insurer, UnitedHealth, decided to pull the plug on Obamacare in mid April.  Then, just a week later, Aetna’s CEO said Thursday that his company expects to break even, but legislative fixes are needed to make the marketplace sustainable.

“I think a lot of insurance carriers expected red ink, but they didn’t expect this much red ink,” said Greg Scott, who oversees Deloitte’s health plans practice. “… A number of carriers need double-digit increases.”

It gets better.

One week ago Marilyn Tavenner, who until January 2015 ran the federal Centers for Medicare and Medicaid Services, aka the massive Federal agency that oversaw the rollout of Obamacare and the disastrous implementation of HealthCare.gov and who is now as an insurance lobbyist,said she sees big jumps in Obamacare insurance premiums.

Translation: insurers are not making money, and they need to make money or Obamacare is doomed. Which means even more dramatic rate hikes are about to be unveiled. However, it’s not the what but rather the when that is the shock. And, as Politico reports, the timing could not possibly come at a worse time for Democrats.

“Proposed rate hikes are just starting to dribble out, setting up a battle over health insurance costs in a tumultuous presidential election year that will decide the fate of Obamacare.”

The headlines are likely to keep coming right up to Election Day since many consumers won’t see actual rates until the insurance marketplaces open Nov. 1 — a week before they go to the polls.

That’s right: just one week before the election date, Americans will be served with what now appears will be double (if not more) digit increases in their insurance premiums. Politico is spot on in saying that “the last thing Democrats want to contend with just a week before the 2016 presidential election is an outcry over double-digit insurance hikes as millions of Americans begin signing up for Obamacare.

They will have no choice: following years of actual delays to avoid a major public backlash on the critical mandate, this time the hammer is set to fall and it will do so at the worst possible time for Hillary Clinton.

“Any reports of premium increases will immediately become talking points on the campaign trail,” said Larry Levitt, senior vice president for special initiatives at the nonprofit Kaiser Family Foundation. “We’re in an election where the very future of the law will be debated.” Democrats say they will mount a vigorous defense of a law that has provided 20 million people with coverage — and point to Republicans’ failure to propose any coherent alternative to Obamacare.

Which is another way to say Democrats are near panic.

“The Republicans will try to make Clinton own the higher prices, but the problem is that Republicans have no alternative or answer,” said Anna Greenberg, a Democratic pollster. “They are in the position of taking away insurance if they repeal Obamacare.”

Somehow we doubt that would be such terrible news for all those millions of Americans whose mandatory “tax” (thank you Supreme Court) subsidies keep the program alive. We also doubt that anyone among America’s middle class will shed a tear if Obamacare is gone.

Which brings us to the key question: just how much of a shocker will be unveiled days before the election? According to Politico, and here we disagree as we have seen price increases in the high double digit ragne, “average rate hikes have been modest in the past despite apocalyptic predictions: premiums increased by an average of 8 percent this year, according to an administration analysis. That report “debunks the myth” that Obamacare customers experienced double-digit rate hikes, said Department of Health and Human Services spokesman Ben Wakana.”

Where we do agree with Politico is that “there are reasons to think the next round may be different.” Blue Cross and Blue Shield plans, which dominate many state exchanges, saw profits plummet by 75 percent between 2013 and 2015, according to an analysis by A.M. Best Co. A chief reason for the financial woes: “the intensity of losses in the exchange segment.”

“I have to raise prices because I have to assume the worst,” said Martin Hickey, CEO of New Mexico Health Connections, one of the surviving co-ops, which expects to increase prices by roughly a third for 2017. “Whether it stabilizes or not, we can’t take the risk.”

Even New York-based Oscar, the much ballyhooed, tech-savvy startup bankrolled with billions in venture capital dollar, is sputtering. Medical costs for Oscar’s individual customers in New York, where it has the most customers, outstripped premiums by nearly 50 percent last year, according to financial filings.

“In some cases the hole is getting deeper rather than getting better,” said Deloitte’s Scott.

In short: expect majour double-digit percent increases in premium prices, and not just because Obamacare is fatally flawed, but for two key reasons we warned about years ago when Obamacare was being rolled out: i) not enough participants to make it economically scalable and ii) those who did sign up are so sick that they promptly soaked up all the externalities.

From Politico:

One big reason is lower-than-expected enrollment of younger, often healthier people who balance the costs of those who require more costly care. Roughly 12.7 million Americans signed up for Obamacare plans during the most recent open enrollment period. That’s far below the 22 million projected by the Congressional Budget Office, and it’s certain to decline as some drop out.

 

The pool is far less healthy than we forecast,” said Brad Wilson, CEO of Blue Cross Blue Shield of North Carolina, which says it lost $400 million on its exchange business during the first two years and is weighing whether to compete for Obamacare customers in 2017. “That’s an issue not just here in North Carolina, but all over. … We need more healthy people in the pool.”

Then again, the healthy people have no incentive to sign up and would rather pay the penalty charge instead of spending far more to subsidize those who are not healthy. Sure enough, as with all epically flawed government projects, the cracks in Obamacare became apparent with time.

There’s a growing realization the financial penalty for failing to obtain coverage is an insufficient cudgel to convince younger Americans to enroll. The fee for 2016 is $695, or 2.5 percent of income, whichever is higher. Just 28 percent of HealthCare.gov customers for 2016 were between the ages of 18 and 34, significantly below the 35 percent threshold typically considered necessary for a balanced marketplace.

 

“It wasn’t enough of a hammer,” said Kevin Fitzgerald, an insurance lawyer with Foley & Lardner. “You need a lot of healthy people to sign up to make the numbers work. Obviously that didn’t happen.”

Ah, we get it now: only Obamacare had “enough of a hammer” it would work like a charm.

And then there was the timing arbitrage. Health plans have complained that Obamacare’s enrollment rules are too loose, allowing people to wait until they need medical care to sign up for coverage, and then to halt payments once they’ve received treatment.

This may work for Netflix, but it is an absolute disaster when it affects a mandatory tax program that is supposed to benefit everyone.

The Obama administration is addressing some of these concerns: It has eliminated some reasons Obamacare customers can use to sign up outside the standard enrollment season. And it plans to require proof from exchange customers that they’re eligible to sign up outside the normal window because, say, they’ve moved or had a kid, which are among the most common reasons.

Alas, such “real time fixes” also never work and end up being gamed by the consumers every step of the way. Which is why health plan officials say more needs to be done to stabilize the markets, for instance, by giving them greater flexibility to sell different kinds of policies. “We have real concerns about the next year or two based on the experience so far,” said Ceci Connolly, CEO of the Alliance of Community Health Plans, which represents 22 plans. “Even for our members that are getting close to breaking even on this, they say that it’s a really challenging and unpredictable environment.”

Most health plans remain optimistic the markets will eventually stabilize. Security Health Plan, which does business in 41 Wisconsin counties, attracted three times as many exchange customers as anticipated during its first year of Obamacare business.

Was it a financial winner? No,” said John Kelly, the health plan’s chief marketing and operations officer. “We expected to take losses and we did.”

But no more, which is why literally in the days heading up to the general election, the US population will be served a very unpleasant reminder of what happens when big state goes out of control, and that there is no such thing as “free healthcare.”

Just how much of a hit to Hillary’s election chances the “Obamacare shock” will be, we will find out on November 8.

end

Well that about does it for tonight

I will see you tomorrow night

Harvey


May 2b/Open interest rises by another 24,106 or 48,000 contracts in two days/Silver OI declines by 2507 contracts/Italian banks in trouble as “Atlas” could only raise 4.5 billion euros and 1 billion of that needed to purchase all of Popolare di Vicenza...

Mon, 05/02/2016 - 18:52

Good evening Ladies and Gentlemen:

Gold:  $1,295.30 up $5.90    (comex closing time)

Silver 17.66  down 13 cents

In the access market 5:15 pm

Gold $1291.25

silver:  17.53

 

Let us have a look at the data for today

.

At the gold comex today we had a poor delivery day, registering 1 notice for 100 ounces for gold,and for silver we had 270 notices for 1,350,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period

.

In silver, the open interest fell by a rather large  2507 contracts down  to 201,170 despite the fact that the price was silver was way up to the tune of  26 cents with respect to Friday’s trading. In ounces, the OI is still represented by ust  over 1 BILLLION oz i.e. 1.005 BILLION TO BE EXACT or 143% of annual global silver production (exRussia &ex China) We are now within spitting distance of all time highs for OI with respect to silver

In silver we had 270 notices served upon for 1,350,000 oz.

In gold, the total comex gold OI ROSE by a gigantic 24,106 contracts, UP to 549,520 contracts AS  the price of gold was UP $23.60 with FRIDAY’S TRADING(at comex closing).

We had a gigantic deposit in tonnes of gold inventory at the GLD to the tune of 20.80 tonnes, thus the inventory rests tonight at 824.94 tonnes.  This is an absolute fraud as there is noway these guys can locate 20 tonnes of gold in 24 hrs.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 335.580 million oz.

.

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

1. Today, we had the open interest in silver fall by  2507 contracts down to 201,170 despite the fact that the price of silver was UP by a huge 24 cents with FRIDAY’S trading. The gold open interest ROSE by A GIGANTIC 24,106 contracts AS  gold ROSE by $23.60 on Friday. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver. Also the bankers are resolute in supplying non backed gold paper but they do not want to supply more silver paper. It sure looks like the bankers are getting scared with respect to silver as it looks like they are capitulating as the start to cover their shortfall.

(report Harvey).  

2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;  Gold pierces 1300 dollars and silver 18.00 before the bankers try their raid

2c) FRBNY gold movement report

(Harvey)

3. ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed FOR HOLIDAY  /  Hang Sang closed FOR HOLIDAY. The Nikkei closed DOWN 518.67 OR 3.11%  . Australia’s all ordinaires  CLOSED DOWN 0.18% BUT RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4705.  Oil FELL  to 45.59 dollars per barrel for WTI and 47.05 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4830 yuan to the dollar vs 6.4705 for onshore yuan.

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

Is Goldman signalling the all clear button to go long USA/Yen?

(courtesy zero hedge)

b) REPORT ON CHINA

see report on lousy PMI

4.EUROPEAN AFFAIRS

i) Atlante, or Atlas, the bailout fund for Italy’s 360 billion euro non performing loans, is off to a rocky start.  Instead of raising 6 billion euros, they raised only 4.25 billion euros.

The first troubled bank to be rescued is Popolare di Vicenza.  It sought from the public an offering of 1.5 billion euros in an attempt to shore up its troubled sector.  Instead of raising 1.5 billion, it raised only 150 million euros leaving the rest to be owned by non other Atlante/  Thus Atlante is the proud owner of 90% of this troubled bank and now they must try and swap out the bad debt and put it onto Atlante’s balance sheet.  Once the share offering is complete, then Atlante loses 1 billion euros and will be down to 3.25 billion euros trying to buy 360 billion euros of non performing loans.  What a complete nightmare!! The purchase of bad loans by Atlante will not be done at book value and should be done close to fair market value, meaning huge losses to the banks, something they are trying to avoid. This loss would erode their capital base big time. The fair market value of the non performing loans is around 6 to 10,75 cents on the dollar.  Thus they only have around 3.25 billion euros worth buying 20 to 30 billion on bad stuff.

( zero hedge)

ii) Our good friends over at Deutsche bank have now more troubles as the UK Regulator states these guys are money laundering, they are funding terrorists and they lack controls on sanctions.  In other words expect more fines out of these guys as they no doubt finance sovereigns with their fines. ( zero hedge)

iii)Here is the next shoe to fall:  Deutsche bank unveils that QE has run its course.  It is now time to initiate a wealth tax.

This is cause an avalanche into gold (courtesy zero hedge) iv)Now confirmed, massive inside trading as the ECB  finds widespread trading on leaked inside USA information;  ( Harvey: and I will bet that gold/silver is one of their classic manipulative tools) ( zero hedge) 5.RUSSIAN AND MIDDLE EASTERN AFFAIRS  

i)Saudi Arabia and perhaps the entire middle east’s largest construction company is the latest casualty to hit the globe as the Saudi Bin Ladin  Group just fired 50,000 out of its 200,000 work force.  All of the firings will be foreign workers who have not been paid for 4 months.

( zero hedge)

ii)Brilliant move:  let’s get the Russians annoyed with the USA et al

NATO will deploy 4,000 troops to the Russian border as the European Command urges a return to “war planning” ( zero hedge)

iii)Protesters storm Iraqi Parliament (broke through the Green zone).  Iraq is now in a state of emergency and their entire system is collapsing

( zero hedge) 6.EMERGING MARKETS

it is now getting really bad in Venezuela.  Over the weekend they ran out of beer as the largest manufacturer of beer cannot get the grains to make beer:

(Stratfor)

7.OIL ISSUES

i) take a look at this Wyoming Petroleum company. It lists assets of 1.3 billion and liabilities of 3.9 billion

No hope here…

(Bloomberg)

 

ii)Oil falls to 44 dollars after another huge Cushing OK build:

(courtesy zero hedge)

iii)With the two defaults this weekend, Ultra Petroleum and Midstate Petroleum. the junk bond default rate has just hit an all time high of 13%.  The previous high rate of default was 9.7% in 2009:

( zero hedge) 8.PHYSICAL MARKETS

i)Gold SURGES! early in the session, with gold breaking 1300 dollars and silver 18.00 dollars for the first time in quite some time:

(zero hedge)

ii)Venezuelan’s are large consumers of beer.  What more can happen to this hapless nations;

( Schipani/London’s Financial Times) iii)Brien Lundin, editor of the famous Blanchard, Gold Newdletter talks about gold manipulation and emphasizes what may happen in discoveries when Deutsche bank spills the beans on its other co conspirators:

( Brien Lundin/GATA)

iv)Bill Murphy is interviewed by Liberty’s Elijah Johnson:

Bill Murphy/Johnson/GATA)

v)Ronan Manly discusses the secrecy behind trading at the LBMA:

( Ronan Manly/Lars Schall)

vi)Egon Von Greyerz talks with Kingworld news on gold.  He highlights the lessening of the gold/silver ratio and negative interest rates signals a resumption of the bull market for gold/silver

( zero hedge)

 

vii)Chris Powell offers a terrific commentary:  what if central banks have not lost control of the gold market as they have decided it best to have gold higher to devalue all currencies and therefore huge mountains of debt:

( Chris Powell/GATA)

ix)Bill Holter’s interview in the latest SGT report:

( Sean and Bill Holter)

 

x)Lawrie Williams comments on the huge gains made by the major gold and silver miners:

( Lawrie on gold/Sharp’s Pixley)

 

9. your more important USA stories which will influence the price of gold/silver

 i)A terrific commentary from Lee Adler on why we are witnessing new homes sales collapse in the USA.  It is very simple: he tracks full times jobs vs new home sales and it is a very good correlation.  So when full time jobs falter so does new homes sales.  Makes perfect sense.

( Lee Adler/Wall Street Examiner)

ii)This is worth watching. The Central States Pension fund has a court date and if the court allows the plan to cut pension incomes in half to prevent it becoming insolvent in 2025 it will have consequences to UPS to the tune 3.8 billion.  The commentary explains why!

( zero hedge)

iii)Very sad!!  All of the Sports Authority stores will close for good.  Remember that they filed for bankruptcy protection in March and the theory was that they were going to emerge with a lower number of healthy stores.  That was not the case as the stores just could not compete with on line operations like Amazon:( zero hedge)

 

iv)Today is Day for Puerto Rico as it defaults on 422 million in bond redemption due today.

( zero hedge)

v)Markit’s final Manufacturing PMI prints at 50.8, the lowest since 2009:( zero hedge)

 

vi)Now Atlantic City is set to default:

( zero hedge)

vii) Greg Hunter interviews Alasdair Macleod

(Greg Hunter and Alasdair Macleod)

 

Let us head over to the comex:

The total gold comex open interest ROSE THROUGH THE ATMOSPHERE AGAIN,  to an OI level of 549,520 for a GAIN of 24,106 contracts AS the price of gold UP $23.60 with respect to FRIDAY’S TRADING. We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses . The month of May saw its OI fall by 29 contracts down to 1794. We had 25 notices filed on Friday so we lost 4 contracts or 400 oz will not stand for delivery.The next big active gold contract is June and here the OI rose by 5,215 contracts up to 405,312. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 32,267. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was excellent at 301,469 contracts. The comex is not in backwardation.

Today we had 1 notices filed for 100 oz in gold.

 

And now for the wild silver comex results. Silver OI FELL by a HUGE 2,507 contracts from 203,677 DOWN to 201,170 DESPITE THE FACT THAT the price of silver was UP quite nicely by 24 cents with FRIDAY’S TRADING. For the first time in over 2 years, we have not witnessed a liquidation of open interest as we ENTERED first day notice .  The next active contract month is May and here the OI FELL by only 2,683 contracts DOWN to 2920. We had 783 notices filed on Friday so we lost 1900 contracts or 9,500,000 oz of silver will not stand for delivery in this active month of May. The next non active month of June saw its OI RISE by 223 contracts UP to 708  OI.  The volume on the comex today (just comex) came in at 59,129 which is extremely high. The confirmed volume ON FRIDAY (comex + globex) was AGAIN HUGE AT 76,282. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had  270 notices filed for 1,350,000 oz.  

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY May 2. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  nil

  Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  NIL No of oz served (contracts) today 1 contract
(100 oz) No of oz to be served (notices) 1793 contracts

179,300 oz Total monthly oz gold served (contracts) so far this month 26 contracts (2600 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month  100.01 OZ

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 0 customer deposits:

total customer deposit:  NIL oz

Today we had 0 customer withdrawals:

Total customer withdrawals:  nil

Today we had 1 adjustments:

i) Out of HSBC:  108,609.655 oz of gold was removed from the dealer and this landed into the customer account of HSBC and will be deemed a settlement  (3.378 tonnes)

 

 

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 1 contract of which 0 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (26) x 100 oz  or 2600 oz , to which we  add the difference between the open interest for the front month of MAY (1794 CONTRACTS) minus the number of notices served upon today (1) x 100 oz   x 100 oz per contract equals 181,900 oz, the number of ounces standing in this non active month.  This number is huge for May. Let us see if this number remains constant throughout themonth   Thus the initial standings for gold for the MAY. contract month: No of notices served so far (26) x 100 oz  or ounces + {OI for the front month (1794) minus the number of  notices served upon today (1) x 100 oz which equals 181,900 oz standing in this non  active delivery month of MAY(5.6578 tonnes). 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 thus have 5.6578 tonnes of gold standing for MAY and 16.419 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 5.6578 TONNES FOR MAY + 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  = 24.552 tonnes still standing against 16.419 tonnes available.  .   Total dealer inventor 527,893.853 or 16.419 tonnes Total gold inventory (dealer and customer) =7,250,269.882 or 225.51 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

MAY INITIAL standings

 May 2.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 60,853.85 oz

scotia Deposits to the Dealer Inventory nil Deposits to the Customer Inventory nil oz

  No of oz served today (contracts) 270 contracts

1,350,000  oz No of oz to be served (notices) 4820 contracts

24,100,000 Total monthly oz silver served (contracts) 1053 contracts (5,265,000 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  708,882.75 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 0 customer deposits:

i

Total customer deposits: nil oz.

We had 1 customer withdrawals

i) Out of Scotia

:

total customer withdrawals:  60,853.85  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the MAY contract month is represented by 270 contracts for 3,915,000 oz. To calculate the number of silver ounces that will stand for delivery in May., we take the total number of notices filed for the month so far at (1053) x 5,000 oz  = 5,265,000 oz to which we add the difference between the open interest for the front month of MAY (2920) and the number of notices served upon today (270) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the MAY contract month:  1053 (notices served so far)x 5000 oz +(2920{ OI for front month of April ) -number of notices served upon today (270)x 5000 oz  equals 18,515,000 oz of silver standing for the MaY contract month. WE LOST AN ASTRONOMICAL 1900 CONTRACTS OR 9,500,000 OZ WILL NOT STAND AS THEY WERE CASH SETTLED.   Total dealer silver:  27.975 million Total number of dealer and customer silver:   151.718 million oz The open interest on silver is now close an all time high with the record of 206,748 being set in the last week of April. The registered silver (dealer silver) is now at multi year lows as silver is being drawn out and heading to China and other destinations.  The total dealer amount of silver is now at a multi year low of 27.975 million oz. end And now the Gold inventory at the GLD May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14 April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

May 2.2016:  inventory rests at 824.94 tonnes. The addition was nothing but paper vapour.

end

 

Now the SLV Inventory May 2/a huge in silver inventory at the SLV/a deposit of 1.49 million oz/Inventory rests at 337.007 million oz April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580 April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580 aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . May 2.2016: Inventory 337,007 million oz .end     1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!! Percentage of fund in gold 60.7% Percentage of fund in silver:37.9% cash .+1.4%( April 29.2016). 2. Sprott silver fund (PSLV): Premium to  FALLS to -.56%!!!! NAV (MAY 2.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.0.59% to NAV  ( MAY 2.2016) Note: Sprott silver trust back  into NEGATIVE territory at -.560%% /Sprott physical gold trust is back into positive territory at +0.59%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.56%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      end FEDERAL RESERVE BANK OF NEW YORK GOLD REPORT Federal Reserve bank of NY:  amount of earmarked gold shipped out: We just received the FRBNY figures for gold: March FRBNY earmarked gold:  7995 million dollars worth of gold at $42.22 dollars per oz April FRBNY earmarked gold:  7981 million dollars worth of gold at $42.22 dollars per oz Total amount of gold shipped out:  14 million dollars @ 42.22 per oz Thus $14 million divided by $42.22 =  331,596 oz of gold or 10.314 tonnes of gold shipped Obviously this is headed for Germany.  This is the first shipment of gold since Nov 2015:

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 (goldcore) off today/

 

Gold SURGES! Gold Surges To Jan 2015 Highs, Tops $1300 As Euro Hits 9-Month High

A lack of intervention in the Yen and strength in EUR have combined to weigh on the US dollar. Bloomberg’s USD Index is back at one-year lows as, while overnight chaos sent stocks higher, it has driven investors into the safety of bonds (Treasury yields down 2-3bps) and precious metals. Gold topped $1300 and Silver $18 as EURUSD pushes above 1.1500…

USD Index getting clubbed..

On the back of EUR strength…Topping 1.15 for the first time since August

Gold tops $1300…

And Silver hovers at $18…

It seems the Treasury’s “currency manipulation” report is having some effect.

END Venezuelan’s are large consumers of beer.  What more can happen to this hapless nations; (courtesy Schipani/London’s Financial Times) This is what happens when you don’t issue the world reserve currency

Submitted by cpowell on Fri, 2016-04-29 18:45. Section: 

Venezuelans Add Beer to List of Privations

By Andres Schipani
Financial Times, London
Friday, April 29, 2016

Venezuela’s largest privately owned company on Friday stopped producing beer, adding to a list of privations facing residents already frustrated by power cuts, water shortages, triple-digit inflation, and grinding recession.

“This could mean the end,” says Sergio Silva, shopkeeper at a neighbourhood store in Petare, one of Caracas’ biggest slums. “If Venezuelans do not have beer  … this country could blow.” …

… For the remainder of the report:

http://www.ft.com/intl/cms/s/0/a64bc010-0d61-11e6-9cd4-2be898308be3.html

end

Brien Lundin, editor of the famous Blanchard, Gold Newdletter talks about gold manipulation and emphasizes what may happen in discoveries when Deutsche bank spills the beans on its other co conspirators:

(courtesy Brien Lundin/GATA)

Gold Newsletter’s Brien Lundin: Manipulations and machinations

Submitted by cpowell on Sat, 2016-04-30 15:43. Section: 

11:55a ET Saturday, April 30, 2016

Dear Friend of GATA and Gold:

For many years Gold Newsletter has been essential to your secretary/treasurer’s interest in the gold market generally and in gold, silver, and resource companies particularly. Indeed, your secretary/treasurer’s interest was sparked entirely in 1998 by a trial subscription to the newsletter when it was under the editorship of its founder, James U. Blanchard III —

https://www.anthemvault.com/our-legacy

— whose extraordinary efforts restored in 1974, through federal legislation, the legal right of Americans to own monetary gold.

Since Blanchard’s death in March 1999 Gold Newsletter has been edited by Brien Lundin, proprietor of the New Orleans Investment Conference, and both the newsletter and the conference have generously given voice to GATA and recognition to the issue of gold market manipulation without fear of the resulting controversy.

Lundin’s letter this week included a detailed commentary on the issue, which he kindly has approved our sharing with you, so it is appended. Your secretary/treasurer finds it hard to imagine doing without Gold Newsletter, so if you’re inclined to check it out, subscription information is posted at the newsletter’s Internet site here:

http://goldnewsletter.com/subscribe-now/?affiliate=37

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

* * *

Manipulations and Machinations

By Brien Lundin
Gold Newsletter, Metairie, Louisiana
Thursday, April 28, 2016

There’s a lot to talk about this subject. In past issues, we’ve covered the massive bear attacks on gold, the greatest example being April 2013, when traders colluded in obvious illegal fashion to dump gold contracts nominally worth billions in only a few minutes.

In this first major attack, the bears were able to drive gold down a couple of hundred dollars in two trading sessions. Since then, we’ve noted more such attacks, more recently undertaken by high-frequency traders and as tracked by Eric Hunsader of Nanex.

We’ve also covered the longer-term manipulations caused by central banks leasing out their gold through the bullion banks, as first exposed in the late 1990s by Frank Veneroso in the pages of Gold Newsletter and our Gold Book Annual.

The efforts of the Gold Anti-Trust Action Committee (GATA), which were largely born out of the results of Veneroso’s research, have also been well chronicled in these pages.

From a philosophical viewpoint, I’ve differed from some of GATA’s beliefs in that I don’t think governments have either the ability or interest to manipulate the gold market on a daily if not minute-by-minute basis.

But I do firmly believe that the burden of proof is on those who claim that the gold market is not manipulated. What is so special about gold that it would be the only asset class wherein governments did not exert some level of control?

The Federal Reserve fine-tunes the price of money (interest rates) to boost the stock and bond markets, thereby generating a “wealth effect” for the public. Agricultural commodities? Ever hear of ethanol and price supports? And there’s an entire Department of Energy, for goodness sake, whose only job is to manipulate the price of various forms of energy to meet political goals.

So why would gold — the ultimate gauge of the government’s success or failure in managing the currency — be somehow excluded from official attentions?

The answer is that it isn’t. To some degree, the price of gold is manipulated today, and has been for decades.

And just as we saw with the London Gold Pool of the 1960s and the U.S. Treasury gold auctions of the 1970s, the current efforts will fail in spectacular fashion.

But getting back to the primary subject, today I am more concerned not with short-term or long-term manipulations in gold but with the intermediate-term attempts by the large commercials to move the gold market according to their whims,

Again, the most important factor not facing gold right now is the massive net short position in “paper gold” accumulated by the large commercials. We can argue over who is included in this category of traders, and we can dither about their motives. But it cannot be argued that this sector has not exhibited firm control over the direction of gold prices.

Now with that said, the cynics and conspiracy-minded among gold investors claim that the large commercials intentionally set up those who are traditionally on the opposite side of the seesaw: the large speculators. According to the theory, the large commercials build up short positions as the price rises, selling gold that the large speculators eagerly take up as they follow the trend higher. At some crucial point the commercials dump enough gold onto the market to send the price plummeting through the speculators’ sell-stops, exacerbating the downtrend.
Once the selling is inevitably exhausted, the commercials cash in their shorts, even adding long positions to profit from the next turn in the cycle.

It’s easy to assign malevolent motives to the exercise, since the commercials almost always end up being correct, and seem able to force the market to their bidding. But commercials, being in the trade and needing to hedge their transactions, are naturally shorting the market to lock in their costs and minimize their exposure. The question of manipulation turns on whether there are other actors within the commercial category who are taking advantage of the natural tendencies of the market.

I tend to believe that there are some hijinks involved, if for no other reason than the reliability and amplitude of the cycles. Somebody’s making a lot of money, on a regular basis … and this makes me think that none of it is accidental.

And in truth, it really doesn’t matter to what degree the paper gold market is manipulated or whatever the precipitating factors may be — because the results are obvious and irrefutable. As you can see from the accompanying chart via Nick Laird’s ShareLynx service, the peaks and troughs in the large commercial short position precisely correspond with the peaks and troughs in the gold price over the long term.

Importantly, the current level of net shorts for the commercials is historically extreme, and argues for a sharp and deep correction at any time.

Now as I’ve noted many times over the years, while the commercials are almost always correct, they aren’t always so. And when they are wrong, they are wrong in spectacular fashion. You see, on rare occasions the commercials are hoist by their own petard. In these instances gold refuses to halt its rise despite the ever-mounting short positioning of the commercials. Eventually, the commercials are forced to cover their shorts, buying gold in a desperate fashion that only throws gasoline onto the fire and accelerates the gains. They’re not able to catch up to the market, and their efforts to constrain the rise only serve to boost it higher.

This last occurred in the 2004-2006 time frame. Consider the results:

— 2004: From the spring low to the end of the year peak, gold gained 21 percent. The Gold Bugs Index of gold stocks soared 50%.

— 2005: From the spring low to the year-end peak, gold rose 29 percent. The Gold Bugs Index leaped 70 percent in response.

— 2006: Gold was topsy turvy this year, jumping 36 percent in price from March to May, then losing 10 percent from May to December. The metal ended up gaining 21 percent from the spring low to the year-end peak. The Gold Bugs Index gained 30 percent over that time frame.

I haven’t researched the statistics, but rest assured that a 30-50 percent gain in the staid Gold Bugs Index translated into a much greater gain in the junior gold stock indices. And for the biggest winners that we were able to pinpoint in Gold Newsletter, we’re talking about multi-bagger gains.

So that’s the scope of the potential we’re looking at … if the commercials are trounced and gold takes off from here.

Will the commercials finally break the market? Or will some other factor emerge to prompt even more buying by the speculators — enough to send the commercials running for the exits? If it’s the latter, there are some interesting candidates for the factor that lights the fuse for the next big run.

China is both the world’s largest consumer and producer of gold, so it’s only natural that they’ve felt like second-class citizens in a market where the price of the metal is set by Western “paper gold” traders. So it was no surprise when China announced months ago that they would launch a twice-daily gold fix based on the physically-settled Shanghai Gold Exchange, and denominated in yuan instead of dollars. That long-anticipated price fix was finally launched on April 19. And the gold price soared higher immediately.

Coincidence? Actually, yes, as nearly the entire commodity complex was higher that day thanks to a bout of dollar weakness.

But certainly the new yuan gold fix didn’t hurt gold’s case that day, and it will continue to help support the metal over the long term. That’s because the yuan price fix will be rooted in the supply/demand fundamentals at play in a market where investors and savers are buying gold hand over fist.

Thus it is likely that the Chinese price fix will have an upward bias compared with London and New York trading, and these Western markets will have to recognize this trend over time. The bottom line is that I expect the new yuan price fix to provide a mild but consistent upward pressure on gold from now on.

There’s another issue that could be provide much more dramatic impetus for the metal.

As you have probably heard, Deutsche Bank is attempting to settle a U.S.-based lawsuit that accused it and other defendant banks of manipulating the London gold and silver price fixes. Moreover, Deutsche Bank is offering to squeal on its co-conspirators, apparently in exchange for some leniency.

While the lawsuit was filed a bit over two years ago, I never gave it much credit. I figured everyone knew the London a.m. and p.m. price fixes were, eh, “fixed” to some extent. How could you lock up representatives of five banks in a room, twice daily over some 90 years, to set a somewhat arbitrary price upon which fortunes turned, and not expect them to figure out some way to profit from the exercise?

It never really bothered me because the fix couldn’t vary too much from the trading trend in place before and after the price setting, and any small differences that did exist would be quickly overwhelmed by the larger trends.

But here’s what I didn’t count on: Deutsche Bank snitching on its cronies. This development now has lawyers around the globe salivating.

Already a group of law firms in Canada is proposing a C$1 billion class-action suit that mirrors the U.S. litigation. And rest assured there’ll be more to come — there’s blood in the water and the sharks are gathering.

If the discovery process turns up more wide-ranging manipulation of the sort we and many other gold bugs have been talking about for years, then the potential damages are mind-blowing.

Consider that anyone who has ever invested in not only the metals but any gold or silver stock would have suffered injury. That’s the kind of potential payout that will have lawyers searching every nook and cranny. Even proof that the banks manipulated “just” the gold and silver price fixes could be sufficient to justify wider-scale damage claims, since the fixes are used in so many ways to determine the value of contracts and metals purchases.

This could get very interesting.

 

END

 

Bill Murphy is interviewed by Liberty’s Elijah Johnson:

(courtesy Bill Murphy/Johnson/GATA)

GATA Chairman Murphy discusses stark change in silver trading

Submitted by cpowell on Sat, 2016-04-30 16:31. Section: 

12:30p ET Saturday, April 30, 2016

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy, interviewed by Finance and Liberty’s Elijah Johnson, discusses the amazing change in trading in the silver market, which he believes foretells much higher prices. The interview also covers Deutsche Bank’s agreement to settle a class-action lawsuit accusing it of manipulating the gold and silver markets with other investment banks. The interview is 15 minutes long and can be heard at You Tube here:

https://www.youtube.com/watch?v=SA3dmvj-kBg&list=PLNwUWnJgSq_LsSyEjjIZEt…

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

END

Ronan Manly discusses the secrecy behind trading at the LBMA:

(courtesy Ronan Manly/Lars Schall)

London gold market is too secretive, gold researcher Ronan Manly says

Submitted by cpowell on Sun, 2016-05-01 20:22. Section: 

4:20p ET Sunday, May 1, 2016

Dear Friend of GATA and Gold:

Writing for Matterhorn Asset Management’s Gold Switzerland Internet site, financial journalist Lars Schall today interviews gold researcher Ronan Manly about his analysis of the world’s major gold markets. Manly says London’s gold market is among the least transparent, “because the London Bullion Market Association and the banks they represent do not want anyone poking around and finding out what’s really going on.” Manly also comments in detail on the German and Russian gold markets.

The interview is posted in both audio and transcript formats at Bullion Star’s Internet site here:

https://goldswitzerland.com/ronan-manly-will-economics-dictate-a-gold-pr…

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

 

END

 

Egon Von Greyerz talks with Kingworld news on gold.  He highlights the lessening of the gold/silver ratio and negative interest rates signals a resumption of the bull market for gold/silver

(courtesy zero hedge)

Tightening gold-silver ratio indicates monetary metals will keep rising: von Greyerz

Submitted by cpowell on Sun, 2016-05-01 23:58. Section: 

7:58p ET Sunday, May 1, 2016

Dear Friend of GATA and Gold:

Gold fund manager Egon von Greyerz tells King World News today that the tightening gold-silver ratio signals resumption of the bull market in the monetary metals, that negative interest rates are only weakening the world economy, and that the increasing manipulation of markets by central banks will lead to a spectacular bust. The interview with von Greyerz is excerpted at KWN here:

http://kingworldnews.com/egon-von-greyerz-warns-world-now-edge-total-cha…

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

 

END

 

Chris Powell offers a terrific commentary:  what if central banks have not lost control of the gold market as they have decided it best to have gold higher to devalue all currencies and therefore huge mountains of debt:

(courtesy Chris Powell/GATA)

What if central banks have NOT lost control of gold?

Submitted by cpowell on Mon, 2016-05-02 04:33. Section: 

12:51a ET Monday, May 2, 2016

Dear Friend of GATA and Gold:

Has the positioning of the big commercial traders in the monetary metals futures markets lost its value as an indicator of future monetary metals prices?

It seems like gold and silver bugs and maybe a few ordinary investors have been waiting for weeks for the usual smashing of the metals by those traders, the big investment banks, hoping to buy the next dip, only to have to watch the metals and the mining shares move steadily higher.

Among the market analysts whose prediction of a smash has gotten stale and who seems to be doubting himself is Clive Maund, whose latest commentary notes that it’s a “paradoxical situation.” His commentary is posted at GoldSeek here —

http://news.goldseek.com/CliveMaund/1462129992.php

— and at 24hGold here:

http://www.24hgold.com/english/news-gold-silver-gold-market-update–para…

Meanwhile in other commentary at GoldSeek, market analyst Dan Norcini, while not yet so alarmed about the commercial short position in gold, chides “gold cult members who seem to not understand that when they are cheering predictions of $5,000 or even $50,000 gold they are cheering the ruin of everything around them”:

http://news.goldseek.com/DanNorcini/1462129200.php

Count your secretary/treasurer among those who have been expecting the commitment of traders signal to be validated again for the thousandth time. But insofar as it is not validated and the monetary metals continue to rise, your secretary/treasurer can envision two possible explanations and offers them here with the justification of a slow-news Sunday night and the expertise of a high school graduate.

That is, either central banks, the biggest participants in the gold market, have lost control of it, the physical gold part of the market is overthrowing the paper gold part of the market, and the market is in the midst of the fabled “commercial signal failure.”

Or else central banks have not lost control of the gold market, and the gold price continues to go exactly where they want it to go.

That would mean that the consensus policy of central banks in regard to gold has changed recently — that they now want gold rising again, most likely to assist in the devaluation of their currencies, particularly now the U.S. dollar, as well as devaluation of the world’s debt, and that the huge short positions of the banks in the futures markets are actually central bank positions that must continue to increase even to unprecedented levels to keep this devaluation “orderly,” to use a favorite term of central banking. (Really, who else but institutions that are authorized to create infinite money and that hold large gold reserves could accept the risk of such shorting?)

This would mean that central banks disagree with Norcini. It would mean that far from considering a sharply higher gold price to be the end of the world, central banks consider a sharply higher gold price — at least if it can be accomplished in an “orderly” way — the prerequisite of worldwide debt relief, their own reliquefication, and the maintenance of their power, gold remaining, as the assistant undersecretary of state for economic and business affairs, Thomas O. Enders, explained to Secretary of State Henry Kissinger in April 1974, the supreme “reserve-creating instrument” of governments, the ultimate money, the form of money that underwrites all other forms of money, the form of money whose valuation is control of the world:

http://www.gata.org/node/13310

Your secretary/treasurer is far from the first to have such suspicions. They were expressed in detail four years ago by the American economists and fund managers Paul Brodsky and Lee Quaintance —

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

— and have been expressed increasingly by others lately, including, perhaps most notably, by fund manager and author James G. Rickards.

Since the world belongs to central banks and the rest of us occupy it only at their sufferance, they don’t volunteer what they are doing with our planet. Their policies and actions can be discerned only through careful observation, investigation, and research, like tedious searching of government archives that have not been fully redacted, leading to the compiling of documentation summarized by GATA here —

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

— and here —

http://www.gata.org/node/16377

— and even this research does not give much help as to the timing of policy.

So Maund, Norcini, and even your secretary/treasurer may be forgiven for not knowing certain things or not giving them their proper weight. The problem with Maund, Norcini, and others like them is only that, clinging desperately to their narrow craft, “technical analysis,” refusing to entertain the possibility that what they are analyzing are not really markets at all but the tools of higher powers, they seem not to want to know.

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

 

END

 

Lawrie Williams comments on the huge gains made by the major gold and silver miners:

(courtesy Lawrie on gold/Sharp’s Pixley)

 

 

  • Enormous gains YTD in major gold and silver stocks

    May 2, 2016lawrieongold

    On a day when the gold price, at the time of writing, had temporarily breached the $1300 level, before coming back a little – a rise of 23% since close on December 31 2015 – and with silver up 29% over the same period, after a bit of a slow start, it is interesting to see the massive gains experienced by many of the top gold and silver stocks over the same period. All prices quoted are in US dollars on US exchanges for comparative purposes, again at the time of writing.

    We have also included, top royalty/streaming companies, Franco Nevada in the gold stocks table, and Silver Wheaton in the silver stocks table to show the relative performances of what might be considered safer ways of investing in these two precious metals sectors.

    Selected Gold Mining Majors – US$ Quotes

    Company U.S. Ticker Price 12/31/2015 Price 5/2/16 gain Barrick ABX 7.4 19.4 +162% Newmont NEM 18.0 35.0 +94% AngloGold AU 7.1 16.9 +138% Goldcorp GG 11.6 20.14 +74% Kinross KGC 1.8 5.7 +217% Gold Fields GFI 2.8 4.7 +46% Agnico Eagle AEM 26.3 47.8 +82% Sibanye SBGL 6.1 14.9 +144% Yamana AUY 1.9 5.2 +174% Freeport* FCX 6.8 14.1 +107% Randgold GOLD 61.9 100.2 +62% Harmony HMY 0.9 3.7 +311% Franco Nevada FNV 45.75 70.4 +54% Gold price 1061 1300 23%

    Source: Metals Focus, Company Data

    *FCX is primarily a base metals stock (copper) but is one of the world’s largest gold producers so gold has a significant impact on its stock price.

    Top Primary silver mining stocks quoted on US Exchanges

    Company U.S. Ticker Price 12/31/2015 Price

    5/2/2016 Gain Pan American Silver PAAS 6.50 15.67 141% Tahoe Resources TAHO 8.67 14.13 63% Coeur Mining CDE 2.48 8.10 227% Hecla Mining HL 1.89 4.31 128% Silver Standard SSRI 5.18 9.39 81% First Majestic AG 3.27 10.64 225% Silver Wheaton SLW 12.42 20.95 69% Silver price 13.82 17.84 29% Source: Metals Focus, Company data

    The tables are a great demonstration of the gains that can be made in a rising gold and silver price environment, after a long downturn. But of course the rises are also vulnerable to any significant gold and silver price downturn to an equal extent. In investment timing is everything and, given the huge rises seen in some Tier 1 stocks, the tables suggest that they had been hugely oversold when sentiment moved against gold and silver. The big question is can both stocks and metal prices hold through the Summer doldrums period beginning around now?

    https://lawrieongold.com/2016/05/02/enormous-gains-ytd- in-major-gold-and-silver-stocks/

    -END-

 

Bill Holter’s interview in the latest SGT report:

(courtesy Sean and Bill Holter)

All;  my latest interview with Sean at SGT  Report http://sgtreport.com/2016/04/red-alert-warning-this-is-your-last-chance-bill-holter/ 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 6.4705 / Shanghai bourse  CLOSED  FOR HOLIDAY  / HANG SANG CLOSED FOR HOLIDAY

2 Nikkei closed DOWN 518.67 OR 3.11% /USA: YEN RISES TO 106.62

3. Europe stocks opened MIXED  /USA dollar index DOWN to 92.90/Euro UP to 1.1481

3b Japan 10 year bond yield: FALLS   TO -.110%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.04

3c Nikkei now WELLBELOW 17,000

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

3e WTI::  45.59  and Brent: 47.05

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 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 0.266%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 10.09%/: 

3j Greek 10 year bond yield FALL to  : 8.58%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1298.50/silver $17.88 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 12 /100 in  roubles/dollar) 64.89

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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9582 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1002 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .266%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.81% early this morning. Thirty year rate  at 2.66% /POLICY ERROR)

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

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

Slew Of Negative News, Defaults And Failed Mergers Push Futures In The Green

It has been a busy weekend for mostly negative newsflow.

It all started with China which on Saturday reported yet another disappointing PMI print of 50.1, which both missed expectations and declined from the previous month; then we got the latest Iraq oil output and exports number which rose yet again, pushing it further into near record territory despite a weekend of political chaos in Baghdad which saw protesters loyal to al Sadr penetrate the fortified Green Zone; at the same time Russian total output dipped just 0.5% from its post-USSR record, suggesting the global oil glut is only set to deteriorate.

In M&A news the long awaited termination of the Halliburton-Baker Hughes merger finally took place when the companies announced last night they would not extend the termination deadline; more important was Puerto Rico’s announcement that it would default on a $422 million bond payment for its Government Development Bank while Atlantic City is also expected to announce a default later today; the US shale sector just had its two latest casualties after Ultra Petroleum filed for bankruptcy citing $3.9 Billion Debt; at the same time Midstates Petroleum also filed Chapter 11.

In sum, a bevy of negative news in the past 48 hours which perhaps explains why futures are fractionally in the green as of this moment.

Central planning humor aside, US – and certainly Japanese – equities continue to be driven mostly by the Yen, which has failed to decline substantially after last week’s surge, and as a result the USDJPY remains within several dozen pips of its post October 2014 lows of 106.2.

The yen soared almost 5 percent on the final two trading days of last week as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a U.S. interest-rate increase this summer.  As a result, Japan led a selloff in Asian equities, with the Topix index sliding for a fifth day as trading resumed after a break on Friday. The yen held its steepest back-to-back gains since the global financial crisis and the Stoxx Europe 600 Index reached a two-week low.

To sum it up in a single phrase, there was a gap in the communication between the BOJ and the market,” Yoshinori Ogawa, a market strategist at Okasan Securities in Tokyo told Bloomberg. “There are concerns the yen may strengthen beyond 105 per dollar. As we are in the middle of long holidays, liquidity is thin, which makes it easier for speculators to whip markets around with their selling.”

This ongoing pressure on the dollar explains why gold has finally breached the $1,300 resistance level.

What is perhaps strange is that despite a weaker dollar, oil continues to fall for a second day due to the noted previously Iraqi exports which approached record high in April, adding barrels to worldwide supply glut.  Operations weren’t affected Sunday after protesters stormed parliament in Baghdad, threatening to paralyze govt of OPEC’s 2nd-largest producer; disruption broke up Sunday as protesters agreed to leave govt area. “The rally is running out of steam,” says Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “Negative sentiment and negative fundamentals are becoming more obvious. Most of the problem surrounds oversupply in the market, and that’s not going away.”

A notable move in Italy has seen local banks all slammed lower following the previously reported news that Italy’s bank bailout fund would use up a third of its firepower already just to buy most of the shares in Banca Popolare di Vicenza’s EU1.5b capital increase through an initial public offering after institutional investors showed little interest, in effect bailing out the first bank under its remit just weeks after being activated.  (Harvey: see below commentary on Italian banks)

S&P 500 futures rose 0.1 percent after U.S. equities ended last week with their worst two-day drop since February, amid lackluster earnings and few signs of a pickup in economic growth.

Liquidity in the market will be particularly low today as markets are shut for holidays in China, Hong Kong and the U.K.

Latest Market Snapshot

  • S&P 500 futures up 0.1% to 2061
  • Stoxx 600 up less than 0.1% to 342
  • DAX up 0.9% to 10131
  • German 10Yr yield down 2bps to 0.25%
  • Italian 10Yr yield down 2bps to 1.47%
  • Spanish 10Yr yield down 2bps to 1.58%
  • S&P GSCI Index down 0.5% to 358.4
  • MSCI Asia Pacific down 1.2% to 130
  • Nikkei 225 down 3.1% to 16147
  • S&P/ASX 200 down 0.2% to 5243
  • US 10-yr yield down 2bps to 1.82%
  • Dollar Index down 0.23% to 92.87
  • WTI Crude futures down 0.9% to $45.49
  • Brent Futures down 1.3% to $46.77
  • Gold spot up 0.5% to $1,299
  • Silver spot down 0.2% to $17.81

Global Top News

  • Halliburton, Baker Hughes Abandon $28 Billion Merger Agreement: Halliburton to pay Baker Hughes $3.5b termination fee
  • Buffett Hits Hedge Funds While They’re Down, Faulting High Fees: At the annual meeting of his Berkshire Hathaway, he warned about the enduring risk of derivatives, defended stocks in his portfolio and signaled that some of the co.’s biggest subsidiaries are hitting speed bumps; Buffett Says Valeant Business Model Was ‘Enormously Flawed’
  • Apollo-Led Consortium Increases Offer for Apollo Education: Consortium led by Apollo Global Management has increased its offer to buy Apollo Education to $10/share, or $1.14b
  • Puerto Rico Will Default on Government Development Bank Debt: Will default on a $422m bond payment for its Government Development Bank; GDB and creditors reach tentative framework on 53% haircut
  • Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt: Principal assets are gas-producing properties in Wyoming
  • Midstates Petroleum Co. files for bankruptcy protection
  • Euro-Area Manufacturing Growing at ‘Anemic’ Pace, Markit Says: Growth was little changed last month as stronger readings in Germany, Italy and Spain were offset by contraction in France
  • Energy Future Offers New Reorganization Plan Amid Deal Dispute: Proposal to sell Oncor unit to Hunt Consolidated in jeopardy
  • JPMorgan Says Justice Department, SEC Probing Hires in Asia
  • ‘Jungle Book’ Holds Off ‘Keanu’ to Stay No. 1 at Box Office: Collected $42.4m in its 3rd weekend in North American theaters
  • Oil Bulls Bet the Waning U.S. Shale Boom Will Curb Global Glut: Hedge funds boost bullish wagers to highest in 11 months: CFTC
  • AIG Raises $1.25 Billion Selling PICC Stock Near Bottom of Range: Sold 740 million PICC shares at HK$13.08 apiece
  • Short Sellers Target Perrigo After CEO Exit as Goldman Says Sell: Short interest at highest since 2013 after forecast cut

Looking at regional markets, Asia stocks opened the week in negative territory with Nikkei 225 resuming its BoJ-triggered declines as JPY strength slams exporters.Nikkei 225 (-3.1%) was dragged lower by a firmer JPY as well as poor earnings & forecasts from several Japanese firms. In addition, auto names were also pressured with Takata shares plunging 10% following reports that US authorities are to call for an expansion of car recalls affected by faulty airbags. Elsewhere, ASX 200 (-0.2%) conformed to the downbeat tone after discouraging Chinese PMI data whilst uncertainty over the upcoming RBA policy meeting adds to the caution. Finally, 10yr JGBs saw a mild uptick in trade amid a risk-averse sentiment in the region, while the 20yr yields declined to a fresh record low of 0.24%.

Top Asian News

  • China Factory Stabilization Shows Little Need for Added Stimulus: Official factory gauge, the manufacturing purchasing managers index, stood at 50.1 in April
  • Macau Gaming Revenue Stabilizes, Falls Less Than Estimated: April gaming rev. decreased 9.5% versus 13.5% estimated decline
  • JPMorgan Hires Ex-BOJ Officials for Research Business in Tokyo: Former BOJ deputy director Hiroshi Ugai recruited as senior economist, Rie Nishihara as senior analyst for banking
  • Election Jitters Send Philippine Stock Investors to Sidelines: Rodrigo Duterte, who maintains lead a week before presidential vote, has given few details on economic policies
  • Mitsubishi Motors’ Fraud Hits Nissan as Minicar Sales Plunge 51%: Nissan Japan sales of mini, standard vehicle fall 22% in April, Mitsubishi minicar deliveries drop 45%
  • Beaches of Dead Fish Test New Vietnam Government’s Response: Thousands rally on Sunday calling for closing of Formosa plant in a nation where public protests, criticism are unusual
  • Westpac Warns of Rise in Consumer Defaults on Mining Slowdown: Defaults inching up in mining states of Queensland, WA
  • Ricoh Drops Most on Record After Forecasting Decline in Profits: Closes down 16%, most since Nov. 2008, after a record 17% drop during the day
  • Takata Falls on Report Recalls May Rise to 100 Million Autos: Co. says no decision on additional recall in U.S. in response to Nikkei newspaper report

The European morning has seen equities kick-off the week in a tight range amid the holiday thinned trade, with UK markets closed and many across Asia also away.European equities trade marginally higher, led higher by exporters amid the EUR strength and with gains capped by the losses in financials, stemming from Italian banks as the NPL saga continues. Additionally, the tone has been somewhat dampened following soft Chinese Official PMI figures over the weekend, subsequently hinting at modest weakening in regards to the momentum of China’s economy.

From a fixed income perspective, Bunds are trading higher with the yield curve seeing some bull flattening, while notable outperformance has been observed in the long end with 30yr yields lower by 4.4bps. As such, some have noted that the price of German paper has been underpinned by residual month-end demand.

Top European News

  • Air France-KLM Board Picks Janaillac as New CEO, Chairman: Selected veteran transportation manager Jean-Marc Janaillac as CEO and chairman, to start July 31
  • Italian Bank Shares Tumble After Investors Snub Pop. Vicenza IPO: Bank stocks dropped after private investors snubbed an IPO by Banca Popolare di Vicenza and Atlante, Italy’s bank- rescue fund, had to buy almost all the shares; Italy Exchange to Rule on Pop. Vicenza Listing After Stock Sale
  • Philips Said Disappointed With Lighting Bids, Leaning To IPO: Could seek valuation of about EU5.5b in potential listing
  • Ferrari CEO Switch Said Imminent With Board Choosing Marchionne: Ferrari set to appoint Chairman Sergio Marchionne to replace Amedeo Felisa as CEO as early as Monday, according to people familiar with the matter
  • Italy’s Intesa Sanpaolo Sells Payment Units in $1.2b Deal: To sell Setefi and Intesa Sanpaolo Card payment units to a group that includes Bain, Advent in deal valued at EU1.04b
  • Deutsche Bank Said to Be Faulted by FCA Over Lax Client Vetting: Firm says it’s fixing lapses regulator cited in March letter
  • Merkel’s $1.4b German E-Car Push Boosts Infineon, STMicro: Value of chips in e-cars, hybdrids double that in regular cars
  • Spanish Politics Enters Uncharted Waters as Fresh Election Looms: Deadline for patching together a majority from the most fragmented parliament in Spanish history falls at midnight on May 2, triggering a repeat election for late June

In FX, there is not too much to report from early Europe, with the overnight session seeing a USD/JPY test lower but holding off 106.00 for now. A bid tone seen in the EUR with the lead spot rate taking out 1.1470-75 resistance — 1.1500 now targeted but digital out-strikes here said to be providing some supply ahead of the figure. EU manufacturing PMI’s saw the final read up slightly to 51.7, but notable weakness seen in the French component. Nevertheless, last week’s healthy EU wide GDP number adds to encouragement to a move beyond 1.1500. Elsewhere, Cable is shaking off some favour to the Brexit camp, but the EUR/GBP is pushing to new recent highs on the above EUR sentiment. An offered USD tone clearly continues, pushing AUD higher despite RBA risk ahead — outside calls for a rate cut. USD/CAD still eyeing 1.2500 lower down, but trade tight ahead of the North American open.

In commodities, in thin European trade WTI has managed to hang on to gains seen last week and continues to reside above the USD 45.00/bbl handle while Brent remains in close proximity to USD 47.00/bbl. Elsewhere, gold has continued its rally and has risen above the psychological USD 1300/oz as risk-averse sentiment and USD weakness underpinned the safe-haven, Silver printed just below USD 18/oz at USD 17.93/oz, while copper saw flat trade amid a lack of market participants as various nations including the world’s largest consumer China were away.

On today’s calendar we’ll get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European bourses trade modestly higher, led by exporters as EUR/USD approaches 1.1500 to the upside
  • Fixed income remains supported amid light volumes this morning, with the UK away for May Day Bank Holiday
  • Highlights today include US Manufacturing PMI and scheduled comments from Fed’s Lockhart, ECB’s Draghi and Lautenschlaeger
  • Treasuries rally in overnight trading as equity markets mixed in Europe, lower in Asia with many bourses closed due to holiday; economic data this week will be dominated by Friday’s nonfarm payrolls report.
  • U.S. Treasury says China, Japan, Germany, S. Korea, Taiwan meet two of three criteria for pursuing FX policies that could provide unfair competitive advantage, under Trade Facilitation and Trade Enforcement Act of 2015
  • In a world awash with debt, it’s hard to imagine that there may not be enough to go around. Yet, JPMorgan predicts record-low global yields ahead
  • Italian bank stocks dropped in Milan trading after private investors snubbed an initial public offering by Banca Popolare di Vicenza SpA and Atlante, the country’s bank- rescue fund, had to buy almost all the shares
    Markit Economics in London said its monthly Purchasing Managers Index points to “anemic” factory growth in the Euro-area as stronger
  • in Germany, Italy and Spain were offset by contraction in France
  • Gold advanced above $1,300 an ounce as investors flood back to precious metals as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to further interest-rate increases
  • Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that U.S. state and local entities use to access financing
  • Brazil’s President Rousseff promised increased spending on her party’s most popular social program and took other measures aimed at her electoral base, less than two weeks before the Senate is expected to vote in favor of the impeachment process she calls a coup d’etat
  • After ratcheting up lending at the behest of President Dilma Rousseff, Brazil’s state-controlled banks may be in store for more pain as Brazil’s longest recession in a century sparks a surge in delinquencies
  • Halliburton Co. and Baker Hughes Inc. called off their $28 billion merger that faced stiff resistance from regulators in the U.S. and Europe over antitrust concerns
  • The hundreds of protesters who pulled down blast walls and forced their way into Baghdad’s Green Zone on Saturday laid bare growing political chaos that increasingly poses a threat to the country’s security and the economy
  • Sovereign 10Y bond yields mixed; European equity markets mixed, Asian markets lower; U.S. equity-index futures rise. WTI crude oil drops, metals higher

DB’s Jim Reid concludes the overnight wrap

Earnings will again be a big focus for markets this week with 124 S&P 500 companies set to report, headlined by the likes of Merck, Pfizer and Kraft Heinz. We’ll also get the latest reports from 17% of the Stoxx 600 including some of the big banks. With the market firmly back to scrutinizing the data too, the big focus there this week comes on Friday when we’ll get the April employment report in the US. We’ll have a full preview of that closer to the date but as well as the labour market numbers it’s worth also keeping an eye on today’s ISM manufacturing print which, following on from softer regional readings, is expected to show a modest 0.4pt decline to 51.4. Our US economists are actually forecasting for a drop below 50 (to 49.0) and the data will give an early insight into what extent, if at all, growth is rebounding in Q2. We’ll also get the April PMI’s this week, so there’s plenty to keep us busy.

Over the weekend the main focus has been on the China data released on Sunday. The data showed a slight drop in the official manufacturing PMI for April, declining a modest 0.1pts to 50.1 (vs. 50.3 expected) while the non-manufacturing PMI was also lower, falling 0.3pts to 53.5. New orders subcomponents for both were softer, although especially in the latter where the component dropped back below 50. We’ll have to wait for the reaction from markets in China as bourses are closed for a public holiday (along with Hong Kong) today. The focus is more on Japan however where markets have reopened following a public holiday of their own on Friday. With the Yen unchanged this morning but hovering around 18 month highs, the Nikkei has plunged -3.62%, while the Topix is -3.55%. Elsewhere the ASX (-0.63%) and Kospi (-0.73%) are weaker too while moves for Oil aren’t helping with WTI down close to -1%.

Meanwhile the other headline grabber from the weekend is the news out of Puerto Rico with the confirmation that Governor Padilla has declared a debt moratorium on a $422m repayment due today by the island’s Government Development Bank, and so triggering a default. The bigger news now might mean what this means for the nation’s other general obligation bonds, of which according to Bloomberg $800m are due to be repaid by July. A story worth following.

Moving on. Earnings season is ticking along and in the US we’ve now had the latest quarterly earnings from 310 S&P 500 companies. There’s a familiar trend to what we’ve seen in the past with 77% beating at the EPS line and 57% at the revenue line – which largely matches previous quarters although the beat in sales is a bit better than what we’ve seen historically. As we’ve highlighted previously however, this masks what has been a significantly weaker period for earnings relative to last year. Our equity colleagues in the US highlight the important point that analysts have chopped their EPS forecast by over 9% for this quarter since the turn of the year, making it less of a surprise to see so many companies coming ahead of estimates. In fact our colleagues note that Q1 EPS should wrap up at about 5% lower YoY unless we see big beats from the remaining reporters. We’re currently down close to 6% on a YoY basis although ex-energy that’s only -0.5% yoy.

In a quick recap of markets on Friday, it was a pretty soft close to the week for markets on both sides of the pond, with volatility across currencies and some fairly mixed data plaguing sentiment. A late bounce into the close helped limit the loss for the S&P 500 to just -0.51%, however European bourses moved the other way in the late stages of trading there, culminating with the Stoxx 600 closing with a -2.13% decline which was the biggest daily fall since February. There was a similar underperformance in credit markets with the iTraxx Main and Crossover indices ending 2.5bps and 11bps wider respectively, while in the US CDX IG ended the day just 1bp wider. Currency markets were dominated by weakness for the US Dollar. In fact the Dollar index closed the day down -0.72% meaning it weakened over 2% during the week with the index now back to trading at the lowest level this year. It’s the mirror image for the Euro with the single currency up +0.87% on Friday and a shade over 2% on the week.

In terms of the US data, the core PCE was confirmed as rising +0.1% mom in March as expected which has resulted in the YoY rate dipping a tenth to +1.6%. The employment cost index print was reported as increasing +0.6% qoq in Q1. Meanwhile, there was some mixed signals coming from the personal income and spending reports last month. Income rose +0.4% mom and a little more than expected (vs. +0.3% expected), while spending (+0.1% mom vs. +0.2% expected) was below consensus. The Chicago PMI for April declined a steeper than expected 3.2pts to 50.4 (vs. 52.6 expected) while there was similar weakness in the ISM Milwaukee (-6.7pts to 51.1). Finally later in the session we got confirmation of a downward revision to the final April University of Michigan consumer sentiment print, by 0.7pts to 89.0. More concerning perhaps was the 3pt downward revision to the expectations reading to 77.6 which is the lowest since September 2014.

There was plenty of data released in Europe on Friday too. The highlight was a better than expected Q1 GDP print (+0.6% qoq vs. +0.5% expected) for the Euro area. This had the effect of keeping the YoY rate unchanged at +1.6% and while the headline reads positive, our Macro colleagues in Europe noted that some caution is warranted, however. They highlight in particular that there are transitory factors at play and numerous forces – including global uncertainty, rising oil and political risk – to prevent underlying growth from accelerating. Meanwhile, there was some disappointment in the CPI headline estimate for the Euro area after printing at -0.2% yoy (vs. -0.1% expected), a decline of two-tenths. The core print was recorded as declining three-tenths to +0.7% yoy (vs. +0.9% expected). Elsewhere, German retail sales were reported as declining unexpectedly in March (-1.1% mom vs. +0.4% expected) and so shrinking annual growth to +0.7% yoy.

Staying in Europe, there was some focus also on Portugal on Friday after the nation retained its IG credit rating status from DBRS. The news is significant as the agency is the only one to rate Portugal investment grade and so according to the FT, this allows the country to continue to benefit from QE bond buying by the ECB.

We’ll also get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released. Away from the data we’ll start to hear from a number of Fedspeakers again. Lockhart (today and Wednesday), Mester (Tuesday), Kashkari (Wednesday) and Bullard (Thurday) are all scheduled while Bullard, Kaplan, Lockhart and Williams are all due to take part in a panel interview on Friday. Meanwhile the ECB’s Draghi is scheduled to speak this afternoon, while Weidmann is also due to speak later in the week.

It’s another big week for earnings with 124 S&P 500 companies set to report, accounting for 16% of the index market cap. The highlights look set to be AIG (today), Pfizer (Tueday), Kraft Heinz (Wednesday) and Merck (Thursday). In Europe we’ll get reports from 17% of the Stoxx 600 including Shell, HSBC, BNP, UBS and BMW.

END

ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed FOR HOLIDAY  /  Hang Sang closed FOR HOLIDAY. The Nikkei closed DOWN 518.67 OR 3.11%  . Australia’s all ordinaires  CLOSED DOWN 0.18% BUT RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4705.  Oil FELL  to 45.59 dollars per barrel for WTI and 47.05 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4830 yuan to the dollar vs 6.4705 for onshore yuan.

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

Is Goldman signalling the all clear button to go long USA/Yen?

(courtesy zero hedge)

Goldman Throws In The Bearish Yen Towel: “There Is Little Doubt That The USDJPY Will Keep Falling”

Days before last week’s BOJ “stunner” in which the Japanese central bank ended up doing precisely nothing and smashing market expectations of further “bazooka” easing, we presented Goldman’s expectations why the Yen is set to “collapse” in the next 12 months, with Goldman’s FX strategist explaining why he believes the USDJPY will surge to 130 in the coming year. For those who missed it, the forecast was based on the assumption of much more aggressive easing including even more balance sheet expansion, something which clearly did not pan out (as we also warned) and the only “crushing” that took place was to the P&L of any Goldman clients who listened to the bank.

Then moments ago Robin Brooks came out with his much anticipated mea culpa in which he admits he misjudged the BOJ which has reverted to a “patient” narrative, saying “this is a fateful miscalculation in our view” but admitting that while “we hold to our structural view that $/JPY ultimately will go a lot higher… in the short term, it will fall.”

Seen in isolation, last week’s decision by the Bank of Japan (BoJ) to stay on hold is understandable. After all, the January move into negative rates produced a massive flattening in the JGB yield curve, exceeding anything seen in Apr. 2013 or Oct. 2014. We therefore have some sympathy for Governor Kuroda who said in the press conference that “we decided to watch the effect of QQE with negative rates this time.” But this meeting did not happen in isolation. The market interpreted the January shift to negative rates as validating fears that JGB scarcity limits QQE. $/JPY crashed from 120 – its equilibrium level following the QQE augmentation in 2014 – to below 110 in the run-up to last week, pushing inflation break-evens in Japan sharply lower. Our view going into last week was that the BoJ needed to grab the bull by the horns and dispel the notion that it is running “out of bullets.” We thought it could do this by shifting the emphasis back to balance sheet expansion by, for example, taking concrete steps to lift housing loans off banks’ balance sheets, something Governor Kuroda floated in a recent speech. Instead, the BoJ seemed intent on teaching the markets to be “patient,” downgrading the inflation forecast yet again while taking no action.This is a fateful miscalculation in our view. Unconventional easing is above all an expectations game, where it is necessary to shock markets again and again, until they have no reason to question a central bank’s commitment to its inflation target. Preaching “patience” is the opposite, telling markets they expect too much. There is little doubt in our minds that $/JPY will keep falling in the near term, until Governor Kuroda is forced to respond with overwhelming force. We therefore hold to our structural view that $/JPY ultimately will go a lot higher. But in the short term, it will fall.

Goldman then adds what Kuroda should be doing:

There remains the question what the BoJ can and should do. As we argued in the run-up to last week’s meeting, the BoJ needs to shift the emphasis of easing back to balance sheet expansion and QQE. While we do not believe that fears over JGB scarcity are well founded – there is plenty of scope for the BoJ to lift JGBs from non-banks (Exhibit 5) where the allocation to JGBs is high compared to government bond allocations elsewhere (Exhibit 6) – we think the BoJ needs to signal that it is not afraid to expand QQE beyond JGBs if needed by, for example, taking concrete steps to lift housing loans off banks’ balance sheets. We think such a step would cause $/JPY to rapidly move back above 120, as market fears over limits to QQE abate. Unfortunately, Governor Kuroda last week only floated additional rate cuts as the possible next easing step, something the market at this point disdains and, rightly, sees as incremental easing.

Until Governor Kuroda is willing to grab the bulls by the horns and confront market fears over the BoJ’s balance sheet, the path of least resistance for $/JPY is down. Our biggest anxiety is over intervention. In our opinion, this would throw out the rule book from recent years – that monetary policy is domestically focused – and the market could respond by pushing $/JPY down to an even greater degree. Of course, a lot rides on the price action in comings days. An emergency BoJ meeting may become necessary if Yen appreciation gets out of control.

It will be hardly encouraging for Goldman clients to hear that only an emergency central bank meeting will be the catalyst that delivers the long awaited move higher in the USDJPY, even as Goldman actively fails to note that according to the recent G-20 statements and last Friday’s Treasury warning an aggressive devaluation by the BOJ will henceforth be actively frowned upon.

But more importantly, Goldman’s admission that “the path of least resistance for $/JPY is down” may be just the “all clear” signal the market has been waiting for to go long the USDJPY, and judging by this morning’s reaction which has seen the currency pair spike higher, it is doing just that.

end b) CHINA ISSUES end 4.EUROPEAN AFFAIRS

Atlante, or Atlas, the bailout fund for Italy’s 360 billion euro non performing loans, is off to a rocky start.  Instead of raising 6 billion euros, they raised only 4.25 billion euros.

The first troubled bank to be rescued is Popolare di Vicenza.  It sought from the public an offering of 1.5 billion euros in an attempt to shore up its troubled sector.  Instead of raising 1.5 billion, it raised only 150 million euros leaving the rest to be owned by non other Atlante/  Thus Atlante is the proud owner of 90% of this troubled bank and now they must try and swap out the bad debt and put it onto Atlante’s balance sheet.  Once the share offering is complete, then Atlante loses 1 billion euros and will be down to 3.25 billion euros trying to buy 360 billion euros of non performing loans.  What a complete nightmare!! The purchase of bad loans by Atlante will not be done at book value and should be done close to fair market value, meaning huge losses to the banks, something they are trying to avoid. This loss would erode their capital base big time. The fair market value of the non performing loans is around 6 to 10,75 cents on the dollar.  Thus they only have around 3.25 billion euros worth buying 20 to 30 billion on bad stuff.

(courtesy zero hedge)

Italy’s Bank Bailout Fund Already One Third Empty After First Bank Rescue

When one month ago, Italy was scrambling to unveil a “last resort” bad bank bailout fund (which eventually received the name Atlante, or Atlas, for the Titan god who was condemned to hold up the sky for eternity, only in this case he is holding up Italy’s €360 billion in bad loans), many wondered why the rush? While the explicit purpose of the fund was to allow Italy to bailout insolvent banks without the involvement of the state which is expressly prohibited by the Eurozone, the scramble appeared erratic almost frentic, and was one of the reasons why Italian bank stocks tumbled in early February.

The question: “Does someone know something?”

It turns out the answer was yes, because as we learn today, “Atlas” is about to become the proud new owner of around 90% of Italy’s Popolare di Vicenza after investors only bought a fraction of the mid-tier bank’s €1.5 billion IPO, Reuters reports.

Popolare di Vicenza, which was due to announce the outcome of the public share offer later on Friday, said earlier in the day that ATLAS had raised €4.25 billion, at the lower end of a 4-6 billion euro range it had initially targeted, from 67 mostly domestic financial institutions.

And if the low take-up for the Popolare di Vicenza share sale is confirmed, Atlas is about to see nearly a third of its fire-power invested in a single bank.

Alessandro Penati, chairman of the Quaestio investment firm which manages the fund, said Atlante would aim to sell any stake it may get in Vicenza after 18 months. Good luck with finding buyers unless the ECB is openly monetizing bank stocks by then, which at the rate Mario Draghi is going (and especially if he listens to advice from JPM) is a distinct possilbity.

“Atlante has the financial resources to fully support Popolare Vicenza’s capital increase,” said Penati. The fund will probably buy most of the shares as institutional investors showed little interest.

According to Reuters, it was not immediately clear whether Popolare di Vicenza, which must raise the cash to comply with capital requirements set by the European Central Bank (ECB), would have enough free float to list on the market next week as planned. The minimum free float required to list is 25 percent of the share capital, but the Milan bourse can make exceptions.

Meanwhile, Atlas’ Penati said his fund was set up as a backstop investor to avoid banks like Popolare di Vicenza being wound down and triggering a crisis for the whole industry. What he didn’t say is that “backstop investor” also means owning over 90% of the bank.

The fund targets an annual return of around 6 percent and will spend 70 percent of its cash to invest in cash calls at ailing banks, he said. He added that the rest would be used to buy junior tranches of bad debt from banks at a higher price than that offered by funds specialised in distressed securities, but not at book value – meaning banks would have to book further writedowns.

Traders said that contributed to pushing bank share prices down on Friday, with UniCredit dropping 5 percent.

One big problem for Italian banks is that they are saddled with €360 billion of NPLs but are reluctant to sell them at a discount because that would erode their capital.

Another big problem is that the very same Atlante, announced earlier today that it has only manged to raise €4.25 billion from 67 Italian and international intuitions, a tiny fraction of what will ultimately be required.  While analysts say Atlante should have enough money to buy between 20 billion and 35 billion euros of gross non-performing loans, for now it has about one fifth to one ninth of that amount. And as of this moment it has €1.5 billion less.

END Our good friends over at Deutsche bank have now more troubles as the UK Regulator states these guys are money laundering, they are funding terrorists and they lack controls on sanctions.  In other words expect more fines out of these guys as they no doubt finance sovereigns with their fines. (courtesy zero hedge) Deutsche Bank Has Systemic Money Laundering, Terrorist Financing And Sanctions Problems: UK Regulator

Just two days after Deutsche Bank fired the head of its “integrity committee”, Georg Thoma who had been originally tasked with clearing up the bank’s past scandals, because according to DB’s vice chairman Alfred Herling, Thoma had been “overzealous” and “goes too far when he demands ever wider investigations and more and more lawyers come marching up”, today the UK financial watchdog agency FCA announced that Germany’s biggest bank has “serious” and “systemic” failings in its controls against money laundering, terrorist financing and sanctions, the Financial Times reported.

The Financial Conduct Authority (FCA), has now ordered a separate independent review, the FT reported the letter as saying. The FCA declined to comment.

In other words instad of firing it “Chief Ethics Officer” (sic), Deutsche should have ideally hired a few more because as a result of this latest probe it is most likely looking at billions more in settlement charges over the next 6 – 12 months.

“Our overall conclusion was that Deutsche Bank UK had serious AML (anti-money laundering), terrorist financing and sanctions failings which were systemic in nature,” the FCA letter, dated March 2, reportedly said.

“Effective senior management engagement and leadership on financial crime had been lacking for a considerable period of time.” And where there is effective senior management, the board makes sure to get rid of said management, because if it actually followed the law how could this megabank ever make money in Europe’s monetary twilight zone.

Meanwhile, Deutsche Bank said it is cooperating with regulators to fundamentally reform its anti-financial crime program.

“We understand the importance of this issue and are committed to and engaged in fixing it”, a company spokesman said in an emailed statement on Sunday.

This is only the latest brush-up between DB and the FCA: in late 2014, the UK regulator put Deutsche Bank’s London office under enhanced supervision owing to concern about the bank’s governance and controls. Enhanced supervision procedures are normally kept private and can follow fines. Following its review, Reuters reports, the FCA ordered a so-called skilled persons report – also called a Section 166 report – to assess remedial work Deutsche must now carry out.

Deutsche Bank’s new chief executive, John Cryan, who took over in July, has embarked on a deep restructuring of the bank, which includes an overhaul of governance procedures.

Cryan announced in November a review of its know-your-client mechanisms and its vetting procedures when taking on new clients. It has also suspended taking on new customers from 109 countries which it has defined as high risk, compared with 30 countries it had earlier classified as too risky.

The report on the FCA letter comes not only days after the abovementioned acrimonious public squabble among members of Deutsche Bank’s supervisory board and the ejection of the man heading the supervisory board’s Integrity Committee, but also just weeks after Deutsche became the first bank to settle and admit to charges that it had manipulated the gold market, and had also agreed to expose other gold manipulation cartel members.

: end Here is the next shoe to fall:  Deutsche bank unveils that QE has run its course.  It is now time to initiate a wealth tax. This is cause an avalanche into gold (courtesy zero hedge) Deutsche Bank Unveils The Next Step: “QE Has Run Its Course, It’s Time To Tax Wealth”

Helicopter money may be on the horizon, but if Deutsche Bank has its way, there is at least one intermediate step.

According to DB’s Dominic Konstam, now that the benefits QE “have run their course”, it is time for the next, and far more drastic step: “the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.”

Here is the big picture unveiling of what is coming next from Deutsche Bank’s Dominic Konstam, who is also buying the Treasury long end hand over fist:

  • The G3 central banks all stood pat, continuing the move away from the beggar-thy-neighbor paradigm. However, the adverse market reaction to the BoJ’s inaction suggests that the benefits of QE (or QQE) in its present form might have run their course.
  • It is becoming increasingly clear to us that the level of yields at which credit expansion in Europe and Japan will pick up in earnest is probably negative, and substantially so. Therefore, the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.
  • Until then, bank NIM compression will continue to drive elevated demand for dollar-denominated assets, which manifests itself in suppressed UST term premia and wide cross-currency bases.
  • What this means for the US is that policy rates and longer bond yields are unlikely to go up until global growth accelerates materially. Until such time, it is critical for the Fed to continue to relent, allowing real yields to keep falling while breakevens rise and nominal yields remain roughly static.
  • If the Fed were to turn hawkish, there is perhaps even less scope for long-end yields to rise as breakevens would likely collapse on policy error fears.

Some of the troubling detail:

QE as implemented in major economies since the crisis has operated through two shocks: a demand shock whereby real yields are forced lower through lower nominal yields and static – or even falling – breakevens, and a shock to inflation expectations, whereby real yields ultimately continue to fall but due to rising BEI and static to lower nominal yields. In the case of the Anglo-Saxon economies, the demand shock quickly gave way to the shock (higher) to inflation expectations and actually allowed nominal yields to rise, if fleetingly.

The second shock, to inflation expectations, has thus far remained stubbornly elusive in Europe and more so in Japan, and ephemeral in the Anglo-Saxon economies. That said, this dynamic appears to have re-emerged in the US post Fed relent and has been an important driver of the recovery in risk assets and, more generally, the easing of financial conditions.

This week’s BoJ announcement disappointed, and as a result the yen appreciated sharply. This outcome does not bode well for the future efficacy of QE, at least while that is the primary policy tool in use. Breakevens have been drifting lower and real yields have been drifting higher since last summer. In other words, financial conditions in Japan are tightening, suggesting the need for more stimulus. However, the BoJ already holds a significant proportion of the assets that would be available for purchase, and the gains from additional QE activity – higher breakevens, lower real yields, and a weaker yen – are likely on the margin to be fleeting. It appears that the markets doubt the BoJ’s willingness or ability to carry on with larger and broader asset purchases, or worse yet they do not believe that such asset purchases will have their desired stimulative effect

Further QE should be viewed as an experiment in real time, where the point of inquiry is the level of real or nominal yields at which credit will begin to expand more strongly with loan-to-deposit ratios increasing. What seems increasingly clear to us is that this level is likely at negative yields, and probably substantially so. If this is true, it would suggest to us that the equilibrium level of rates in the economy is probably negative. This in turn would strongly suggest a significant re-think to short-rate policy. In this case, central banks should move more strongly toward penalizing savings, rather than just the institutions that “house” those savings – the banks. This would mean allowing significantly negative retail deposit rates or perhaps even wealth taxes. With this stick would also come a carrot – one example being that while deposit rates penalize savings (the whole point), banks might also pay borrowers to buy houses via negative mortgage rates.

In short, the real central bank panic is about to be unleashed; who will suffer? Why everyone else. And should wealth taxes really be imminent, we foresee a lot of “boating incidents” in the immediate future.

end Now confirmed, massive inside trading as the ECB  finds widespread trading on leaked inside USA information;  ( Harvey: and I will bet that gold/silver is one of their classic manipulative tools) (courtesy zero hedge) Another “Conspiracy Theory” Confirmed: ECB Finds Widespread Trading On Leaked Inside Information

“information of many macroeconomic announcements is known by some market participants in advance

– European Central Bank

Remember when it was merely another conspiracy theory that “some” traders “trade” (with zero risk) with the benefit of leaked material non-public information? As of moments ago it is merely the latest conspiracy fact, confirmed by none other than the ECB, which earlier today published a research paper which finds substantial “informed” trading before the official release in seven of 21 market-moving U.S. macroeconomic announcements.

The paper has studied trading patterns from Jan. 2008 to March 2014 and finds that “prices begin to move in the ‘correct’ direction about 30 minutes before the release time. The pre-announcement price drift accounts on average for about half of the total price adjustment.”

Translation: chronic insider trading, which until recently was an allegation that the serious outlets would relentless mock as another conspiracy by tinfoil hat fringe websites.

The paper also finds “strong evidence of pre-announcement drift” in ahead of releases such as theConference Board’s consumer confidence index; NAR existing home and pending home sales; preliminary GDP; Federal Reserve’s industrial production (yes, even Fed data has been leaked repeatedly); ISM manufacturing and non- manufacturing indexes, and countless other examples.

While the ECB does not blame the entire “drift” on leaks of insider information, saying instead that “the evidence suggests that the pre-announcement drift likely comes from a combination of information leakage and superior forecasting” it is clear what the real culprit is for outperformance ahead of major data release, and – spoiler alert – it isn’t “superior forecasting.”

The paper also says that according to back-of-the-envelope calculations, since 2008 pre-release trading in S&P E-mini futures market profits amount to about $20 million per year.  Curiously, the ECB did not find evidence of “pre-announcement drift” in non-farm employment data. We doubt that especially since just this website has repeatedly caught BLS data being leaked in advance, an example of which we reported several years ago in “Bureau Of Labor Statistics Caught Red Handed Leaking Confidential Employment Data.”

From the paper’s non-technical summary:

Macroeconomic indicators play an important role in business cycle forecasting and are closely watched by financial markets. Some of these indicators appear to influence financial market prices even ahead of their so cial release time. This paper examines the prevalence of pre-announcement price drift in U.S. stock and bond markets and looks for possible explanations.

We study the impact of announcements on second-by-second E-mini S&P 500 stock index and 10-year Treasury note futures from January 2008 to March 2014. The study is based on 21 market-moving announcements among a sample of 30 U.S. macroeconomic announcements. Eleven out of these 21 announcements exhibit some pre-announcement price drift in the \correct” direction, i.e., in the direction of the price change consistent with the announcement surprise. For seven of these announcements the drift is substantial. Prices start to move about 30 minutes before the o cial release time, and this pre-announcement price move accounts on average for about a half of the total price adjustment.

These facts are uncovered by an outlier-robust procedure (MM weighted least squares), but are similarly striking in cumulative average return graphs and order  ow imbalances.

The paper shows that these results are robust to controlling for, among others, outliers, data snooping, nearby announcements and the choice of the event window length.

Extending the sample period back to 2003 with minute-by-minute data reveals both a higher announcement impact and a stronger pre-announcement drift since 2008, especially in the S&P E-mini futures market. Based on a back-of-the-envelope calculation, we estimate that since 2008 in the S&P E-mini futures market alone the prots associated with trading prior to the so cial announcement release time have amounted to about 20 million USD per year.

The late start of pre-release price drift, which becomes signicant only about 30 minutes before the so cial release time, reveals an interesting property of prevalent trading strategies. Assuming that informed traders possess their informational advantage already more than 30 minutes ahead of the release, the question arises why they wait with trading on their knowledge until shortly before the release time. A possible explanation is that trading close to the release time minimizes the exposure to other risks that are unrelated to macroeconomic announcements.

The diffi culty of identifying the causes of pre-announcement drift stems from the relatively small number of announcements that actually move financial markets. Nevertheless, we find that an implementation of strict release procedures makes pre-release drift less likely. This applies in particular to data released under the Principal Federal Economic Indicator (PFEI) guidelines, which impose strict security procedures. There is no evidence that modifying the calculation of market expectations, e.g., a focus on the most recent survey responses, helps in predicting the commonly used announcement surprise.

Public information, such as internet activity data, predicts the surprise in a few cases where the public information closely corresponds to the forecasting target. Analogously, improvements in data processing render privately collecting large amounts of comparable information feasible, which can be used for generating proprietary forecasts ahead of time. This early information -leaked or self-calculated- does not need to be precise in order to a have a large price impact. Under Bayesian learning, even if the information available before the o cial release is noisy, it can have a large price impact because of its timing. For a Bayesian learner, early availability makes up for less precision and a potentially smaller surprise. Thus, the incentives for privately collecting information and for leakage are high.

The main policy implications of this paper are twofold. First, the total impact of macroeconomic news is larger than measured in most event studies, which ignore the pre-release price drift. Therefore, the total impact of macroeconomic news on financial markets is larger, and financial markets are linked more tightly to the real economy than usually found. Second, information of many macroeconomic announcements is known by some market participants in advance. To ensure fairness in financial markets, strict release procedures need to be implemented for all market-moving announcements including announcements originating in the private sector.

Translation: the entire market is rigged.

For those who have been accused for years of being insane in claiming precisely what the ECB just “confirmed”, you can read the full paper here.

end RUSSIAN AND MIDDLE EASTERN AFFAIRS

Saudi Arabia and perhaps the entire middle east’s largest construction company is the latest casualty to hit the globe as the Saudi Bin Ladin  Group just fired 50,000 out of its 200,000 work force.  All of the firings will be foreign workers who have not been paid for 4 months.

(courtesy zero hedge)

Oil’s Latest Casualty: Saudi Binladin Group Fires 50,000 Workers, A Quarter Of Its Workforce

In the latest clear sign that low oil prices are taking their indirect toll not only the US shale sector, leading to billions in capex cuts and hundreds of thousands of lost oil and gas jobs, on Friday Saudi newspaper al-Watan reported that the multinational construction conglomerate Saudi Binladin Gropu (which was founded in 1931 by Sheikh Mohammed bin Laden Sayyid, father of Osama bin Laden who was removed as a shareholder in the business in 1993 and disowned by the family) has laid off 50,000 staff as pressure on the industry rises amid government spending cuts to survive an era of cheap oil.

This means that Binladin, one of Saudi Arabia’s biggest firms and among the Middle East’s largest builders, whose total workforce is around 200,000 just fired a quarter of its total staff.

Reuters adds, citing al-Watan’s unnamed sources, that the group has terminated the contracts of 50,000 workers – apparently all foreigners – and given them permanent exit visa to leave the kingdom. However, the workers have refused to leave the country without getting paid as some had not received wages for more than four months. Furthermore, they were protesting in front of the Binladin’s offices in the country almost daily, the paper added.

What is most disturbing is that one of the biggest companies in Saudi Arabia if the not the Middle East, has had a series of pay disputes with workers this year as it appears unable to fund payroll. In March, scores of workers gathered outside one of the company’s office in Saudi Arabia to demand unpaid wages.

Migrant workers, who work for Saudi Binladin Group, gather as they 
ask for a final settlement over salary issue

While Binladin prospered during Saudi Arabia’s high oil price-driven economic boom in the past decade, employing around 200,000 workers as it built many of the kingdom’s flagship infrastructure projects including airports, roads and skyscrapers, like many other Saudi construction firms, it has been hit hard in the past year as low oil prices have prompted the government to slash spending in an effort to curb a budget deficit that totaled nearly $100 billion last year.

As Reuters adds, labor market reforms, designed to push more Saudi citizens into private sector jobs, have since 2011 made it more difficult and expensive for construction firms to hire foreign workers, pressuring the industry.

The Binladin Group made tragic headlines last September (ironically, the 11th) when a crane toppled into Mecca’s Grand Mosque during a dust storm, killing 107 people. Following the incident, the Saudi royal court said Binladin had been suspended from taking new contracts. An initial government probe found Binladin had not properly secured the crane. Binladin did not issue a public statement in response to the suspension.

Worse, it is no longer just Binladin’s income statement that is impacted but the stress is now spreading to its balance sheet: the company has been discussing how to manage its debts with banks and a few have agreed to refinance some debt through steps such as extending maturities, with some providing short-term financing for the company’s working capital including staff wages, Reuters said. It is unclear if the conglomerate will still be able to avoid a comprehensive restructuring should oil remains in the $40-barrel range.

end Oh boy!! this is not good!! Protesters storm Iraqi Parliament (broke through the Green zone).  Iraq is now in a state of emergency and their entire system is collapsing (courtesy zero hedge) US-Created System In Iraq Is Collapsing: Protesters Storm Parliament, State of Emergency Declared – Live Webcast

Less than two years ago, the US set up another puppet government in the mid-east this time in the state of Iraq when following substantial US pressure, on August 14, 2014 then prime minister al-Maliki agreed to stepp down and be replaced with Haider al-Abadi. Today, the regime is in chaos and the system set up in Iraq by the US is collapsing when protesters loyal to popular Shiite cleric Muqtada al-Sadr breached the heavily fortified Green Zone, home to government buildings and foreign embassiesm and stormed the Iraqi parliament, forcing MPs to flee and resulting in a state of emergency being declared for all of Baghdad.

As can be seen in the photo (and live webcast below), hundreds of demonstrators occupied the country’s parliament. Video from inside the building showed jubilant crowds waving Iraqi flags and shouting “peaceful, peaceful.” Supporters of Sadr, whose fighters once controlled swaths of Baghdad and helped defend the capital from ISIS, have been demonstrating for weeks at the gates of the Green Zone, responding to their leader’s call to pressure the government to reform.

Cited by NBC, Brig. Gen. Saad Mann, a spokesman for the Iraqi military, said that Iraq security authorities have declared a state of emergency in Baghdad. “All gates that lead to Baghdad are closed. No one is allowed to enter into Baghdad, only those who want to leave Baghdad can do so.” “There is no evacuation for the American staff inside the American embassy,” he said. A U.S. official who spoke on condition of anonymity said the American Embassy in Baghdad was not being evacuated, contrary to local reports. We expect that should the pro-US government fall, this will promptly change.

Security forces responsible for guarding the entrance to the area were not able to stop the demonstrators without opening fire so they let them in, the security source told NBC News. As a result, the protest is mostly peaceful for now.

A live webcast from the scene of the Iraqi parliament can be seen after the jump.

end Brilliant move:  let’s get the Russians annoyed with the USA et al NATO will deploy 4,000 troops to the Russian border as the European Command urges a return to “war planning” (courtesy zero hedge) NATO Deploys 4000 Troops To Russian Border As EUCOM Chief Urges “Return To War-Planning”

With anti-establishmentarians on the rise in the US & Europe, it appears the neocons and their NATO proxy aren’t wasting any time and are stepping up not just the words, but their deeds, against a so-called “resurgent Russia.” NATO’s European Command (EUCOM) “needs to change,” blasts General Philip Breedlove, urging the military to get back to the business of war planning, a skill lost during the post-Cold War era saying his objective is to send a signal of deterrence to Russia. That signal was heard loud and clear as NATO is deploying an additional four battalions of 4,000 troops to the Russian border in Poland and the three Baltic States, according to a report citing US Deputy Secretary of Defense Robert Work.

“We have to be ready for a situation where we don’t have Russia as a partner,”warns EUCOM  Gen. Philip Breedlove, adding that the military here needs to get back to the business of war planning, a skill lost during the post-Cold War era and one needed again in the face of a resurgent Russia. As Military.com reports,

On Tuesday, Breedlove will walk a final time across the parade ground at EUCOM headquarters, handing off leadership of more than 60,000 troops to Gen. Curtis M. Scaparrotti.

Unlike when Breedlove assumed command in 2013, Scaparrotti arrives at a time of upheaval as the continent contends with Cold War-like tensions with Russia, a refugee crisis tearing at Europe’s social fabric, and increased fears about terrorism because of war along NATO’s southern flank.

Scaparrotti will lead a EUCOM headquarters that over the years has shrunk in size — it is the second-smallest of all combatant commands — even as the Pentagon attempts to boost its presence along NATO’s eastern edge.

Breedlove said more work needs to be done to lift EUCOM out of its post-Cold War mindset, which resulted in “building partner capacity,” military parlance for training missions. EUCOM is a “mere fraction” of what it was a generation ago, a downsizing that occurred when the U.S. was trying to make a partner out of Russia.

“I am very sure about how EUCOM needs to change,” Breedlove said during a recent exit interview with Stars and Stripes. “This headquarters shrank and changed from a war-fighting headquarters to a building-partnership-capacity, engagement kind of headquarters.”

“This headquarters needs to be a warfighting headquarters,” he said.

Reorienting EUCOM into a warfighting headquarters likely would demand more resources, more troops and new contingency plans to conduct combat operations within Europe.

In the past three years, EUCOM has responded to new security concerns by boosting its presence in eastern Europe, mainly through rotational troops and pre-positioned tanks and other armor.

A $3.4 billion Pentagon proposal, prompted by what the West sees as a more aggressive and unpredictable Russia, seeks to build upon recent efforts in the year ahead.

Dealing with Russia’s formidable capabilities around the Baltics, where NATO is outmanned and outgunned, is one obstacle allies will need to prepare for better, according to Breedlove.

Some critics, particularly in Berlin, have said Breedlove’s rhetoric sometimes has been too hawkish. The general rejects such criticism, saying his objective is to send a signal of deterrence to Russia; and as RT reports, NATO’s deployment of an additional 4,000 troops to the Russian border signals their intent loud and clear…

Work confirmed the number of troops to be sent to the border with Russia, The Wall Street Journal reports. He said the reason for the deployment is Russia’s multiple snap military exercises near the Baltics States.

“The Russians have been doing a lot of snap exercises right up against the borders, with a lot of troops,” Work said as cited by the Wall Street Journal. “From our perspective, we could argue this is extraordinarily provocative behavior.”

Moscow has been unhappy with the NATO military buildup at Russia’s borders for some time now; and with this latest move, The Russians, as expected, are displeased…

“NATO military infrastructure is inching closer and closer to Russia’s borders. But when Russia takes action to ensure its security, we are told that Russia is engaging in dangerous maneuvers near NATO borders. In fact, NATO borders are getting closer to Russia, not the opposite,” Russian Foreign Minister Sergey Lavrov told Sweden’s Dagens Nyheter daily.

Poland and the Baltic States of Lithuania, Latvia and Estonia have regularly pressed NATO headquarters to beef up the alliance’s presence on their territory.

According to the 1997 NATO-Russia Founding Act, the permanent presence of large NATO formations at the Russian border is prohibited. Yet some voices in Brussels are saying that since the NATO troops stationed next to Russia are going to rotate, this kind of military buildup cannot be regarded as a permanent presence.

Russia’s Defense Ministry says it’s ready for a tit-for-tat response to any NATO military activity near Russia’s borders. As Russia’s envoy to NATO Aleksandr Grushko put it, there are no “passive observes” in the Russian armed forces and Moscow would definitely compensate militarily for an “absolutely unjustified military presence.”

 end This is a huge mistake:  Visa free travel for 80 million Turks into Europe.  Possible migrants entering as well? (courtesy zero hedge) “Nightmare” Mistake: Visa Free Travel For 80 Million Turks Coming Up

Submitted by Mike “Mish” Shedlock of MishTalk

“Nightmare” Mistake: Visa Free Travel For 80 Million Turks Coming Up

Of all the inane, self-serving, deals German Chancellor Angela Merkel made with Turkey, visa-free travel for 80 million Islamic Turks tops the list.

“This is all a nightmare,” said one diplomat charged with making the deal work.

Nightmares aside, Brussels Prepares Legal Groundwork on Visa-Free Travel for Turks.

Brussels will this week propose visa-free travel to Europe for 80m Turks but says Ankara still needs to meet several politically explosive reform conditions within weeks, including overhauling its terrorism laws and party funding rules.

The enhanced travel rights were Turkey’s main windfall from a landmark EU deal in March, in which Ankara helped dramatically cut migrant flows to Europe by agreeing to take back all migrants arriving on the Greek islands.

On Wednesday the European Commission will legally recommend Turks should be granted short-term visa-free travel to the Schengen area. But it will point out that up to nine of the 72 eligibility conditions required of Turkey remain incomplete, according to people familiar with the proposal.

The stage is now set for a stand-off before the June visa deadline, with far-reaching consequences for the migration crisis, domestic politics across Europe and Turkey’s long-term relations with the bloc. Decisions on visa rights for Ukraine, Georgia and Kosovo are set to be taken at the same time.

“This is all a nightmare,” said one diplomat involved in talks. Another European diplomat described the Turkey-EU deal as carrying “the seeds of its own destruction”.

It is a gamble some senior EU officials fear “is a big mistake” and will backfire. “This will be the perfect get-out for the Dutch, French and Germans, who are facing major domestic problems and  suffering from buyer’s remorse since the Turkey deal,” the official said. “And the European Parliament will just not accept a political fudge, the Turks won’t be able to ram it through.”

Appropriate Terms (in Order of Occurrence)

  • Windfall to Turkey
  • Short-Term
  • Stage Set for Standoff
  • Nightmare
  • Seeds of its Own Destruction
  • Big Mistake
  • Backfire
  • Political Fudge

Political fudge, seeds of its own destruction, and nightmare are my three favorite descriptions.

A strong argument can be made for “short-term” given the massive long-term problems should this deal actually go through.

end EMERGING MARKETS

it is now getting really bad in Venezuela.  Over the weekend they ran out of beer as the largest manufacturer of beer cannot get the grains to make beer:

(courtesy Stratfor)

It’s a tough time to live in Venezuela.

The country’s long decline — on economic, social and political levels –reached a new inflection point this week, when the government cut public sector employees’ work week to a mere two days in efforts to cut down electricity use. Although rolling blackouts have been a part of life in Venezuela for some time, the situation has grown particularly challenging as a drought has begun to impact hydropower output from the Guri Dam.

And to top it all off, the country is literally running out of beer.

Empresas Polar, Venezuela’s largest private company, has now shuttered its breweries, saying it is unable to pay for imported grains under the government’s strict exchange controls, which govern access to dollars. So beer is now being added to a long list of items — including a variety of foodstuffs — that are in short supply for Venezuela.

All of these headlines have potential implications for embattled President Nicolas Maduro and his fractured government. Stratfor’s Latin America analyst team has studied the various factions arrayed against and with Maduro, their goals — and how the worsening social and economic crisis could affect the political landscape. You can read more about it with this piece, “Looking for a Way Out of Venezuela’s Crisis,” which is free on our website.

 

END

OIL ISSUES

Just take a look at this Wyoming Petroleum company. It lists assets of 1.3 billion and liabilities of 3.9 billion

No hope here…

(Bloomberg)

Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt Tiffany Kary and Steven Church May 1, 2016 — 3:37 PM EDT
  • Principal assets are gas-producing properties in Wyoming
  • Company had until end of April to reach deal with lenders

Ultra Petroleum Corp. filed for bankruptcy protection, the latest oil and gas explorer to fall victim to the prolonged slump in energy prices.

Ultra listed $1.3 billion in assets and $3.9 billion in debt in court papers filed in Houston on Friday. The Houston-based company has 159 employees and its main assets are gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah, according to court papers.

“The low commodity prices, and especially the low natural gas prices that prevailed throughout 2015 and have continued through the first four months of 2016 have had a devastating impact,” Chief Financial Officer Garland Shaw said in a filing explaining events that led to the bankruptcy.

Among its first requests to the court will be for permission to continue a surety bonding program that had $12.6 million outstanding as of the bankruptcy date, and that secures its obligations on environmental, road damage, and plugging of wells, according to court records.

Between March and early April, Ultra missed a series of principal and interest payments owed to lenders and bondholders. And on April 14, the company was sued by pipeline operator Sempra Rockies Marketing LLC for failing to pay transport fees.

Worst Slump

The oil market is suffering its worst slump in decades, brought on by a glut of production. Crude inventories are at their highest levels since 1930 in the U.S., according to data from the Energy Information Administration.

Much of the problem can be traced to a record-breaking surge in U.S. oil production that wouldn’t have been possible without a tremendous amount of debt. Many independent drillers, the small producers that drove the shale boom, outspent cash flow even when oil was $100 a barrel, and made up the difference with bank loans and high-yield bonds.

Officials from 18 oil exporters meeting in Doha failed on April 17 to come up with an agreement to freeze production. At the end of March, JPMorgan Chase & Co. strategists said that oil and gas companies are likely to experience a 20 percent default rate over the next two years.

The trouble has made banks unwilling to keep financing struggling producers. Since the start of the year, lenders have yanked $6.4 billion in credit from 36 oil and gas companies, the sharpest reductions since oil prices began toppling two years ago, according to data compiled by Bloomberg.

The case is Ultra Petroleum Corp., 16-32202; U.S. Bankruptcy Court, Southern District of Texas (Houston)

 

end

 

China is importing huge amounts of oil and stockpiling it as strategic reserves.  This is what is dictating the price and helping with the glut of oil:

(courtesy Upadhyay/Oil Price.com)

Why China Is Really Dictating The Oil Supply Glut

Submitted by Rakesh Upadhyay via OilPrice.com,

Ship tracking data from Bloomberg shows that 83 supertankers carrying around 166 million barrels of oil are headed to China, which has stockpiled an impressive 787,000 barrels a day in the first quarter of 2016 – the highest stockpiling rate since 2014.

While the world was speculating about oil prices plunging to $20 and $10 per barrel, China was busy stockpiling its reserves.

The chart below shows an increase in imports as crude prices collapsed. Since the beginning of this year, China has imported a record quantity of oil.

(Click to enlarge)

Back in January 2015, Reuters had reported that China planned to increase its strategic petroleum reserves (SPR) from 30 days to 90 days. In January 2016, it was revealed that China was buildingunderground storage to complement its above-ground storage tanks.

The Chinese urgency points to two things. China believes that crude oil prices will not remain at the current levels for long, and that a disruption is possible due to geopolitical reasons, which can propel oil prices higher.

As a net importer of crude, it is protecting itself against a black swan event and using the current low prices to fill its tanks. The filled up tanks will ensure a steady supply of crude for at least three months in case of a disruption.

Does the record buying spree by the Chinese indicate a bottom in crude oil prices?

That is difficult to conclude, but it does put a floor beneath the current lows, because in all likelihood, China will resume its record buying and top up its SPR if prices tank.

The total Chinese imports in March via the very large crude carriers was 7.7 million barrels a day. Other than the supertankers, China also imports oil through pipelines and small tankers.

The Chinese demand doesn’t show a huge uptick corresponding to the rise in imports.JP Morganestimates that in March, the total demand for oil in China was 10.3 million b/d, down 2.5 percent over the previous year and down 2.3 percent month on month, whereas the chart shows that imports are higher compared to the same period last year.

Crude oil prices have been on an upswing this month. The import data coming out of China for April will give a clue as to whether the Chinese demand remains intact at higher crude prices or the imports drop when prices rise.

If the demand drops following a rise in prices, we can assume that China doesn’t believe that the price rally will be sustained. At lower levels, Chinese buying might become a factor in deciding the bottom, as their increased imports will reduce the glut.

Similar to Saudi Arabia, which is a swing producer, China is acting like a swing consumer.However, as China doesn’t report its storage data, it is difficult to estimate how long this trend will continue.

Though other factors were involved in encouraging the bulls to buy at lower levels, the increased demand from China also helped in lapping up the excess production. If their imports drop, the world will return to the supply glut and oil prices will retrace back to the lower $30s per barrel.

end Oil falls to 44 dollars after another huge Cushing OK build: (courtesy zero hedge) WTI Crude Tumbles To $44 Handle After Big Cushing Build

Following last week’s shocking 1.75mm barrel build at Cushing, Genscape just reported an estimated 821k build which has stunned market participants apparently, sending WTI tumbling back to a $44 handle. Will this be the summer of 2015 oil re-run?

end With the two defaults this weekend, Ultra Petroleum and Midstate Petroleum. the junk bond default rate has just hit an all time high of 13%.  The previous high rate of default was 9.7% in 2009: (courtesy zero hedge) The Energy Junk Bond Default Rate Just Hit An All Time High

When we last looked at the soaring default rate among junk bonds issuers just two weeks ago, we noted that the $14 billion in defaults had already pushed the April total to the highest since 2014, while the first quarter was the fifth highest quarterly default total on record.

But it was the stark deterioration within the energy space that we said would promptly push high yield bond defaults within the troubled sector to hit all time highs in very short notice.

That prediction was validated less than a month later because following this weekend’s bankruptcies of Ultra Petroleum and Midstate Petroleum which added $3.1 billion to the mushrooming high-yield energy bond default volume tally, in addition to the $1.5 billion of credit facility defaults, the energy high-yield default has soared to a record 13% rate, surpassing the 9.7% mark set in 1999, according to Fitch Ratings.

To be sure, neither of these defaults were a surprise: prior to this weekend, Fitch had a 2016 energy sector default forecast of 20% and included both of these filings in the annual forecast. Furthermore, based on the current bond trading prices of approximately $0.15 for Ultra’s $850 million 6.125% bonds due 2024 and $450 million 5.75% bonds due 2018, the market alsoexpects well below-average bond recoveries, something else we have previously highlighted will be a distinct feature of this default cycle.

 

As Fitch goes on to note, Ultra Petroleum cited persistently low natural gas pricing that left it with an unsustainable capital structure as reason for filing. The company plans to use the bankruptcy process to renegotiate unprofitable contracts as well as reduce its $3.7 billion of total bank and bond debt obligations. The $999 million reserve-based credit facility (RBL) at subsidiary borrower Ultra Resources was essentially fully drawn at the time of filing, following a $216 million draw in February 2016.

Ultra’s bankruptcy was expected as it followed the expiration of grace periods for interest payments on notes, nonpayment of certain pipeline transportation fees, bank covenant violations and de-listing of the common shares.

Midstates Petroleum’s filing affects approximately $1.8 billion of total debt and is based on a pre-arranged plan support agreement with its lenders under the reserve-based revolving credit facility that represents approximately 80% of first lien facility borrowings, along with certain other creditors holding approximately 74% of second lien debt and 77% in principal amount of the third lien debt. The proposed plan incorporates some secured debt paydowns and equity conversion of debt that is junior to the first lien debt. Low commodity prices triggered a liquidity crunch at the company.

Low market trading prices on the bonds portend poor recoveries for unsecured creditors. Midstates’s unsecured $294 million, 10.75% senior unsecured bonds, due 2020, and $348 million, 9.25% senior unsecured bonds, due 2021, were bid at $1.875 and $1.75, respectively. The $625 million, 10% second lien notes, due 2020, were bid at $44.625 and the $524 million, 12% third lien notes, due 2020, were bid at eight cents on the dollar.

In more bad news for bank lenders, Midstates, like Ultra borrowed up to the remaining maximum RBL borrowing base in the months leading up to bankruptcy. Midstates drew $249 million under its $750 million RBL in February 2016 to build cash in advance of the bankruptcy filing and the April 2016 re-determination. Full draws of RBLs ahead of restructuring and re-determinations have occurred among some of the most distressed E&P companies as they plan to enter restructuring with this cash liquidity. Linn Energy and W&T Offshore are two other E&P companies that recently fully utilized RBLs.

But this biggest problem for banks is that as more energy companies default should oil prices fail to materially recover, leading to tumbling recoveries across the capital structure and far greater impairments than modeled, the question will once again become one of just who has the greatest committed exposure to the energy sector, especially if as we hinted earlier today, the oil price pattern from last summer reasserts itself and WTI proceeds to slide once more as shale producers resume pumping now that they have been properly hedged following the recent rebound in oil.

 

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

Euro/USA 1.1481 UP .0036 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 106.62 UP 0.394 (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

GBP/USA 1.4633 UP .0033 (STILL THREAT OF BREXIT)

USA/CAN 1.2534 DOWN .0017

Early THIS MONDAY morning in Europe, the Euro ROSE by 36 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 was CLOSED MAY 1 HOLIDAY / Hang Sang CLOSED   / AUSTRALIA IS LOWER BY 0.18% / ALL EUROPEAN BOURSES ARE MIXED  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 DOWN 518.67 OR 3.11% 

Trading from Europe and Asia:
1. Europe stocks MIXED AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED FOR HOLIDAY . ,Shanghai CLOSED  HOLIDAY/ Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED DEEPLY IN THE RED/India’s Sensex IN THE RED

Gold very early morning trading: $1298.75

silver:$17.88

Early MONDAY morning USA 10 year bond yield: 1.81% !!! PAR 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 2.66 PAR in basis points from FRIDAY night.

USA dollar index early MONDAY morning: 92.90 DOWN 17 cents from FRIDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers MONDAY MORNING

 

END

And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.10% DOWN 6 in basis points from FRIDAY

JAPANESE BOND YIELD: -0.125% DOWN 5 in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD:1.58% DOWN 1 IN basis points from FRIDAY

ITALIAN 10 YR BOND YIELD: 1.47  DOWN 2 IN basis points from FRIDAY

the Italian 10 yr bond yield is trading 11 points lower than Spain.

GERMAN 10 YR BOND YIELD: .267% (DOWN 1/2 IN BASIS POINTS ON THE DAY)

 

END

IMPORTANT CURRENCY CLOSES FOR MONDAY

 

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

 

Euro/USA 1.1517 UP .0073 (Euro =UP 73  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 106.48 UP 0.254 (Yen DOWN 25 basis points As MARKETS TANK BADLY/GOLD/SILVER SKYROCKET)

Great Britain/USA 1.4663  UP .0062 Pound UP 62 basis points/

USA/Canad 1.2546 DOWN 0.0005 (Canadian dollar UP 5 basis points with OIL RISING(WTI AT $46.08)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 73 basis points to trade at 1.1517

The Yen FELL to 106.48 for a LOSS of 25 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 62 basis points, trading at 1.4663

The Canadian dollar ROSE by 5 basis points to 1.2546, WITH WTI OIL AT:  $44.88

The USA/Yuan closed at 6.4738

the 10 yr Japanese bond yield closed at -.125% DOWN 5 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 5  basis points from FRIDAY at 1.86% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.72 UP 6 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 92.66 DOWN 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 MONDAY

London:  CLOSED HOLIDAY
German Dax :CLOSED UP 84.30 OR 0.84%
Paris Cac  CLOSED UP 13.79  OR 0.31%
Spain IBEX CLOSED DOWN 3.60 OR 0.04%
Italian MIB: CLOSED DOWN 180.36 OR 0.97% (BANKING CRISIS)

The Dow was down 57.12 points or 0.32%

NASDAQ down 29.83 points or 0.62%
WTI Oil price; 44.93 at 4:30 pm;

Brent Oil: 45.87

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.16 (ROUBLE DOWN 39 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT FELL AND WTI FELL

.

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:  $44.89

BRENT: 45.88

USA 10 YR BOND YIELD: 1.87%

USA DOLLAR INDEX:92.57 down 51 cents on the day

 

END

 

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

Trading Today in Graph form:

Dis-May-Day – Bonds Down, Dollar Down, Oil Down, Gold Down, Economy Down… Stocks Up

China data weakens, Puerto Rico defaults, Japan falls, crude drops, another E&P company defaults, failed M&A deal, US macro data dumps… and stocks surge…

 

US equities went up today… because why not…just a little too uniformly post-EU Close…

 

Thanks to a brief USDJPY momentum igntion as Construction Spending, and ISM and PMI all missed expectations…

 

And what appears like institutional-buying (every VWAP dip bid from fund inflows)

 

Another day, another short-squeeze…

 

VIX accelerated lower as the last 30 minutes began and panic-buying was unleashed…on the heel sof AAPL headlines…

 

AAPL was down for the 8th day in a row…

 

Until this headline hit (HINT: remember the lying email he supposedly sent Cramer about China when AAPL was last crashing to these lows?) BUT it didnt last and AAPL closed down 0.15%

 

Treasury yields lifted modestly today…seemingly from one big selling effort into the open (as usual)

 

Seems bonds had it right after all…

 

The USD Index is down for the sixth straight day – longest streak since April 2015… note USDJPY tried to bounce but failed…

 

Crude was monkey-hammrered after hopeful algos ran it higher in the early going. Silver slumped as did copper and gold kept its head despite the weaker USD…

 

Silver suffered it worst day since the first day of April. Gold fell for the first day in the last 6, having tagged $1300 early in the day…

 

But Gold remains the big winner post last week’s Fed/BOJ debacle…

 

Charts: Bloomberg

end

 

A terrific commentary from Lee Adler on why we are witnessing new homes sales collapse in the USA.  It is very simple: he tracks full times jobs vs new home sales and it is a very good correlation.  So when full time jobs falter so does new homes sales.  Makes perfect sense.

(courtesy Lee Adler/Wall Street Examiner)

The Real Story Behind The True Magnitude Of The New Home Sales Collapse

Submitted by Wall Street Examiner’s Lee Adler via Contra Corner blog,

Comparing the growth in the number of full time jobs versus the growth in new home sales starkly illustrates both the horrible quality of the new jobs, and how badly ZIRP has served the US economy.

Growth in new home sales has always been dependent on growth in full time jobs.For 38 years until the housing bubble peaked in 2006, home sales and full time jobs always trended together, subject to normal cyclical swings. With the exception of 1981-83 when Paul Volcker pushed rates into the stratosphere, new home sales always fluctuated between 550 and 1,100 sales per million full time workers in the month of March.

That correlation broke in the housing crash of 2008-09 when sales fell to a low

But in the housing crash in 2007-09 sales fell to a low of 276 per million full time workers.Since then the number of full time jobs has recovered to greater than the peak reached in 2007. In spite of that, new home sales per million workers remain at depression levels.

With 30 year mortgage rates now at 3.6% sales are lower today than they were when mortgage rates were above 17% in 1982. Sales have never reached 400 sales per million workers in spite of the recovery in the number of jobs, in spite of ZIRP, in spite of mortgage rates often under 4%.

ZIRP has actually made the problem worse. It has caused raging housing inflation which has caused median monthly mortgage payments for new homes to rise by 20% since 2009. ZIRP has enabled corporate CEOs to game the stock market to massively increase their own pay while encouraging them to cut worker salaries and shift higher paying jobs overseas. That leaves the US economy to create only low skill, low pay jobs that do not pay enough for workers to be able to purchase new homes.

The perverse incentives of ZIRP are why the housing industry languishes at depression levels.

end

 

This is worth watching. The Central States Pension fund has a court date and if the court allows the plan to cut pension incomes in half to prevent it becoming insolvent in 2025 it will have consequences to UPS to the tune 3.8 billion.  The commentary explains why! (courtesy zero hedge) UPS Braces For $3.8 Billion Charge As Treasury’s Pension Benefit Decision Looms

As we covered previously, in an effort to remain solvent the Central States Pension Fund has submitted an application to the Treasury for approval to cut member benefits While some plan participants could see pension incomes cut in half, the fund projects that it will become insolvent by 2025 if nothing is done.

Treasury is set to decide on the matter by May 7th, and as it turns out, the decision impacts more than just current plan participants…

During its Q1 earnings call, UPS told investors that if Treasury approves the CSPF plan to cut benefits, the company would have to take a charge of approximately $3.2 to $3.8 billion.

As part of a collective bargaining agreement with the International Brotherhood of Teamsters when UPS withdrew from the fund in 2007,  the company agreed to provide supplemental benefits to any remaining members in the event that certain benefits were lawfully reduced.

While any income statement impact will be adjusted out by analysts, it will be a significant drain on UPS’ cash flow (UPS generated $5 billion in free cash flow in fiscal 2015) as it funds the benefit gap over time.

UPS is just the latest example of what lies ahead and forces the government’s hand to provideyet another bailout (and encourage yet more moral hazard over-promising).

As we concluded previously, “This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It’s going to open the floodgates for other cuts.” said Karen Friedman, executive president of the Pension Rights Center.

We can’t help but wonder that as more pension funds become insolvent, and more and more participants are forced to take reductions in benefits, whether helicopter money won’t soon become a reality for the United Stateseven before it becomes one in Japan. Especially if it is spun by some opportunistic politicans as the “only hope” for America’s workers to preserve some of their retirement savings.

end

 

Very sad!!  All of the Sports Authority stores will close for good.  Remember that they filed for bankruptcy protection in March and the theory was that they were going to emerge with a lower number of healthy stores.  That was not the case as the stores just could not compete with on line operations like Amazon:

(courtesy zero hedge)

Why Sports Authority is throwing in the towel and closing all of its stores This Sports Authority in Torrance is among the more than 460 company stores that will soon be liquidated. The Englewood, Co.-based sporting goods chain filed for bankruptcy protection in March to rework $1.1 billion of debt. But the company has ultimately decided to sell off everything and cease operations. (Chuck Bennett/Staff Photographer)

By Kevin Smith, San Gabriel Valley Tribune

POSTED: 04/27/16, 4:56 PM PDT|UPDATED: 3 DAYS AGO

42 COMMENTS

When struggling retailer Sports Authority filed for Chapter 11 bankruptcy last month in the face of more than $1 billion in debt, the company indicated that it had two options going forward.

One of those was to shed underperforming stores and emerge from bankruptcy as an intact, but pared-down company. The other was to sell everything and cease operating.

On Tuesday, the company appeared to choose the latter.

In a hearing in U.S. Bankruptcy Court in Wilmington, Delaware, an attorney for the Englewood, Colorado-based sporting goods chain indicated that the only option for the company was to close all of its stores.

“It has become apparent that the debtors will not reorganize under a plan but instead will pursue a sale,” said the attorney, Robert Klyman.

The abrupt abandonment of a reorganization plan follows Sports Authority’s announcement in March that it would close 140 of its 464 stores in the U.S. and Puerto Rico to help pay off $1.1 billion in debt.

Phil Lempert, a Santa Monica-based analyst of consumer behavior and marketing trends, figures consumers haven’t seen the last of major retailers shuttering. Just last week, Sport Chalet announced the closure of all 47 of its stores in California, Nevada and Arizona. That chain is based in La Cañada Flintridge.

“With the minimum wage going up to $15 an hour and more people turning to online shopping, more stores are going to close,” Lempert said. “It’s fine to say that everyone should have a living wage. But the money has to come from somewhere.”

Lempert said a growing number of retail outlets have fallen victim to “showrooming,” where customers will walk into a store, try on the shirt or jacket they like and then order it online at a significant discount.

“These stores have to look at not at how they will compete with other brick-and-mortar stores, but how they will compete with Amazon,” he said. “It’s become a holistic environment where people can buy things on their mobile phones and then have the products delivered by the time they get home.”

Matt Carlson, president and CEO of the National Sporting Goods Association, said Internet sales have fueled increased competition for brick-and-mortar retailers. And online retailers have a big advantage. Their overhead costs are far less and their customers often don’t have to pay sales tax on their purchases.

Figures from the National Sporting Goods Association reveal that in 2009, 10 percent of all sporting goods purchases were made online. The following year that jumped to 12 percent and in 2014 it hit 15 percent.

One equity analyst who could not provide his name as it would violate his company’s policy, said Sports Authority’s store closures will be a “huge” hit for the industry.

“There are a lot of suppliers that will left hanging,” he said. “When you have 464 doors closing, there’s no where else to go to make up for that loss of sales volume.”

Industry experts say Pittburgh-based Dick’s Sporting Goods, which operates 645 locations, including 42 in California, will likely snag some of that business.

But REIBig 5 Sporting Goods and Bass Pro Shops will also be angling for Sports Authority’s customers.

Oscar Barrios, a sales associate with the Finish Line athletic wear store in the Ontario Mills mall, figures his store will pick up some business when the Sports Authority there closes.

“I think more people will be coming in to buy shoes from us,” he said. “It will probably increase our foot traffic.”

U.S. Bankruptcy Judge Mary Walrath, concerned that money from liquidation sales of Sports Authority’s assets was going to pay off certain creditors and not others, threatened to push the case into Chapter 7, under which a trustee would oversee the liquidation.

She postponed that decision until a May 3 hearing to give creditors more time to decide whom they want to direct the liquidation: company management or an outside trustee, according to Reorg Research, a firm that tracks bankruptcy cases.

Victor Camerena, who owns a Submarina sandwich shop adjacent to a Sports Authority store in Oceanside, was surprised to hear that all of the locations will be closing.

“Some of their employees come in here about four times a week and they were under the impression that the company wasn’t going to close that store,” he said. “But the way the economy is, and with the minimum wage increases, profit margins are getting tighter and tighter. It’s getting difficult for companies to stay in business.”

Staff writer Aldo Svaldi contributed to this report.

 

end

 

Today is Day for Puerto Rico as it defaults on 422 million in bond redemption due today.

(courtesy zero hedge)

Puerto Rico Says Will Default Tomorrow, Begs Congress For Help “Or Else Crisis Will Get Worse”

Update: PR Governor Padilla has spoken…

  • *PUERTO RICO GOVERNOR SAYS WON’T PAY DEBT TOMORROW
  • *PUERTO RICO GOVERNOR SAYS ISLAND WON’T PAY DEBT MONDAY
  • *PUERTO RICO GOVERNOR: GOVERNMENT SIGNED MORATORIUM BILL YESTERDAY
  • *PUERTO RICO NEEDS DEAL W/ CREDITORS AND/OR CONGRESS: GARCIA

And of course, demands a bailout…

  • *PUERTO RICO GOVERNOR CALLS ON U.S. CONGRESS, PAUL RYAN FOR HELP

And then threatens…

  • *CRISIS WILL GET WORSE IF U.S. CONGRESS DOESN’T HELP: GARCIA
  • *PUERTO RICO GOVERNOR CONCLUDES REMARKS TO COMMONWEALTH

As we detailed earlier, It’s D-Day in Puerto Rico.As Bloomberg reports, investors are finding little comfort in the Puerto Rico Government Development Bank’s efforts to strike a last-ditch agreement with creditors to soften the blow of a default this weekend. The bonds that mature today (May 1st) have crashed to just 20c (disastrously below the 36-cent recovery rate the commonwealth proposed in March).
It appears investors are not buying what Puerto Rico is selling and prefer to dump the bonds than hold out in hope of a ‘deal’…

A default on the $422 million due today is “virtually certain,” S&P Global Ratings said April 11.

No matter which route Puerto Rico takes, credit-rating companies see a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes. S&P Global Ratings said a distressed-debt exchange or temporarily withholding interest is synonymous to default.

But as Bloomberg reports, Puerto Rico said its Government Development Bank, which is operating in a state of emergency to preserve its dwindling cash, reached an agreement with some credit unions to delay $33 million of bond payments as the commonwealth rushes toward a potential historic default.

The pact only affects a portion of the $422 million that the bank owes on May 1. The GDB will exchange the $33 million in bonds for new debt that will mature May 1, 2017, Governor Alejandro Garcia Padilla’s administration said in a statement Friday. The terms of the agreement are available to other credit unions, called cooperativas, and investors, according to the statement.

“Apart from this private exchange, GDB continues to negotiate a potential transaction related to an exchange of all of GDB’s bond indebtedness, which would require the participation of all creditors of GDB (including the cooperativas),” the administration said in the statement. “The private exchange does not affect, or take the place of, those ongoing negotiations.”

The bank is still negotiating a possible debt exchange on all of its bonds, which would require the participation of all its creditors, according a the statement. The GDB, which structured the island’s debt sales, has $5.1 billion of debt. The governor’s office said Garcia Padilla will speak to the commonwealth in a televised address Sunday at 5 p.m. New York time.

end

 

Is Atlantic City set to default?:

Actually they came up with the 1.8 billion in payment and that gives them a little breathing room until the next payment is due!

(courtesy zero hedge)

First Puerto Rico, Now Atlantic City? Mayor Holds Press Conference Ahead Of Looming Default – Live Feed

Update: it is only Puerto Rico who will be on the default docket today because in the last possible minute, Atlantic City’s mayor Don Guardian announced that his city had made the required $1.8 million in interest payments due May 1, averting what would have been New Jersey’s first municipal default since the Great Depression as state lawmakers bicker over how to assist the troubled gaming hub.

As he noted during his press conference, Mayor Don Guardian had said last week that he hadn’t decided whether to meet the city’s obligations on tax-exempt bonds sold in 2012. Some of the securities are insured by Assured Guaranty Ltd., which would have been obligated to pay holders interest on the bonds. Because May 1 fell on a Sunday, the city has until Monday to come through.

The city made the payments Monday morning, Guardian said in a City Hall news conference.

The decision averted a worsening of the city’s long-building fiscal crisis. The community has already lengthened pay periods for its workers to avert a shutdown of services as it tries to stave off insolvency. Governor Chris Christie’s rejection of measures that would have diverted gambling funds to the city created a $33.5 million hole in its budget. Christie and state lawmakers have yet to agree on a plan to rescue the 39,000-resident seaside town.

For now the chip can has been kicked, and markets seem to love it – the S&P just hit intraday highs on this news.

Just a day after Puerto Rico’s governor pulled the default rip-cordthe clock is ticking for Atlantic City Mayor Don Guardian.

The city must decide today whether to pay a $1.8 million debt obligation, or be the first New Jersey municipality to default since the Great Depression.

According to the Press of Atlantic City, the city is expected to run out of money in a matter of weeks, and the short-term picture looks grim. Not only is a $1.8 million bond payment due today, but a $7 million payroll payment is set for Friday as well.

With the city sitting on $500 million in debt, and with budget deficits topping $100 million, default and perhaps bankruptcy looks imminent without a major bailout from the state.

New Jersey Governor Chris Christie had reportedly reached an agreement to take over Atlantic City’s finances back in January in order to try and stem the fallout on New Jersey’s tourism, and also the credit rating concerns that other municipalities would have to deal with in New Jersey, but the deal has fallen apart.

“I can’t trust him. Steve and I thought we had a deal with an honorable guy. Now he wants me to call him? And say what exactly? You want a new deal? I try only to deal with honorable people.” Christie was quoted as saying regarding the deal falling through.

If the city defaults and subsequently enters into bankruptcy, the plea for helicopter money may be too much for the Fed to ignore, as other cities will surely follow suit.

A press conference is set for 11am EST today which you can watch live here
Live streaming video by Ustream

 end

Markit’s final Manufacturing PMI prints at 50.8, the lowest since 2009:

( zero hedge)

 

 

“No End In Sight To Current Downturn” – US Manufacturing Plunges To Sept 2009 Lows

Following April’s flash PMI print plunge to cycle lows – blamed on the presidential election uncertainty – Markit’s Final Manufacturing PMI printed 50.8 (as expected) its lowest since September 2009. New orders weakened further as the rate of job creation tumbles to thre-year lows. ISM Manufacturing fell back from its oddly decoupled bounce to July 2015 highs to a coincidental 50.8 (missing expectations of 51.4). As Markit concludes, apparently peddling fiction, “the April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity…raising question marks over whether GDP growth will improve on the near-stalling seen in the first three months of the year.”

Manufacturing PMI Headline output and employment data are ugly…

And following ISM’s recent bounce, notably opposing Markit’s survey, ISM reported Manufacturing fell back perfectly in line with Markit’s PMI…

Breakdown shows 4 componenst in contraction…

Notably, despite the drop, all respondents ‘cherry picked’ by ISM were positive.

Howver, commenting on the final PMI data, Chris Williamson, chief economist at Markit said:

“The April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity. The survey indicates that factory output is dropping at an annualized rate of approximately 3%, and factory headcounts are being culled at a rate of around 10,000 per month.

“Destocking is also very much in evidence as companies often reported weaker than expected demand and exports are slumping at the fastest rate for one and a half years.

“Rather than reviving after a disappointingly weak first quarter, the data flow therefore appears to be worsening in the second quarter, raising question marks over whether GDP growth will improve on the near-stalling seen in the first three months of the year.”

Charts: Bloomberg

end Let us close with this interview of of Alasdair Macleod with Greg hunter (courtesy Greg Hunter/USAWatchdog)

Very Big Correction for All Markets Coming- Alasdair MacleodBy Greg Hunter On May 1, 2016 In Market Analysis

http://usawatchdog.com/wp- content/uploads/2016/04/1c.jpg http://usawatchdog.com/wp- content/uploads/2016/04/1c.jpgBy Greg Hunter’s USAWatchdog.com

 

(Early Sunday Release)

 

Financial expert Alasdair Macleod says the most important economic news concerns the U.S. dollar. Macleod explains, “I think the most important point is actually the dollar has turned. The panic move into the dollar by miners and producers of raw material . . . was driving the dollar up. That has now ceased. China has now started buying those raw materials, base metals, oil and so on and so forth. So, the result is the commodity crisis is over. That, actually, is the biggest driver of the dollar, which is pushing it down.”

On the U.S. economy having a huge recession, Macleod contends, “Actually, the underlying business conditions are not good. What we have seen for considerable time is U.S. corporations have increased their borrowing, to invest in production—no, to buy back shares to artificially inflate their earnings. There comes a point that if you don’t have the underlying cash flow, you can’t do that anymore. I think there is a concern in the markets we are getting near to that point.”

Macleod predicts when the market turns, it will crash big-time. Macleod contends, “Whenever markets get mispriced, the correction is always very sudden, unexpected and hurts a lot of people. Now, we don’t have it in just one market, we have it in all markets. So, I would expect on that basis alone, that when the thing starts sliding, it’s going to be very, very big and actually could be systemically big.”

Macleod, who is also an expert in precious metals, says, “The fundamental reason gold (prices) is getting better is the dollar is getting weaker. The strength of the dollar in 2015 was all about falling commodity prices. . . . Commodity producers all owe dollars. The result was when their incomes dropped, they had to cover the dollars that weren’t going to get rolled over. The bank was not going to roll over dollars for Brazil or Glencore. That period is over, and the reason it is over is China now has its 13th five year plan, which is aimed at developing the rest of Asia. . . . It wants to give it an industrial revolution. You have a turn that has actually occurred in commodities, and if commodity prices are rising, then by definition, the purchasing power of the dollar is falling. The price of commodities over a long period of time tends to drop. The price of commodities measured in dollars tends to rise over a long period of time and quite spectacularly. . . . You can see this relationship between the dollar and gold priced in commodities is the thing to watch. . . . The natural drift for the dollar is down. There is a reason for foreigners to sell the U.S. dollar, and this is the key thing. . . . I see gold going better . . . because the dollar is going down.”

Join Greg Hunter as he goes One-on-One with Alasdair Macleod of GoldMoney.com.

(There is much more in the video interview.)

Video Link

http://usawatchdog.com/very-big-correction-for-all- markets-coming-alasdair-macleod/

-END-

Well that is all for today

I will see you tomorrow night

harvey


April 29b/Gold and Silver offer a full court press against the bankersas gold rises almost $24.00 and silver up $.24/USA/Yen continues to falter with yen up another 1.74 yen per dollar: this breaks the backs of the yen carry traders/The National...

Fri, 04/29/2016 - 18:39

Good evening Ladies and Gentlemen:

Gold:  $1,289.40 up $23.60    (comex closing time)

Silver 17.79  up 24 cents

 

In the access market 5:15 pm

Gold $1293.20

silver:  17.86

 

 Today is the first time in maybe 4 years that the bankers were unsuccessful in manipulating the gold/silver market during options expiry week.  They lost big time. The price of gold rose by almost 24 dollars and the bankers supplied the necessary paper to keep gold from going off the charts.  Silver was really on fire rising close to 18 dollars before the bankers dosed the flames, such that they can regroup and decide what to do on Monday.  The OI for gold and silver are at multi year years despite the low price for both metals.On first day notice a rather large 28 million oz of silver is standing and for the first time in over 2 years, the whole silver OI complex did not contract.  In gold, the total amount of tonnes of gold standing, in a non active month total 5.67 tonnes which is huge.We must wait to see if the holders will only accept gold and not fiat as the month progresses. In currencies, the USA/Yen collapsed again with the yen rising to 106.40 on closing, a yen gain of 1.7 yen per dollar.  Those yen carry traders who have so far not been wiped out will surely feel the mighty stick of margin calls as they must settle by Monday morning.

Let us have a look at the data for today

.

At the gold comex today,on first day notice we had a good delivery day, registering 25 notices for 2500 ounces for gold,and for silver we had 783 notices for 3,915,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period

.

In silver, the open interest rose by a tiny  207 contracts up  to 203,677 despite the fact that the price was silver was way up to the tune of  26 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.01 BILLION TO BE EXACT or 145% of annual global silver production (exRussia &ex China) We are now within spitting distance of all time highs for OI with respect to silver

In silver we had 783 notices served upon for 3,915,000 oz.

In gold, the total comex gold OI ROSE by a gigantic 23,385 contracts, UP to 525,414 contracts AS  the price of gold was UP $15.90 with THURSDAY’S TRADING(at comex closing). You can just imagine what the OI for gold and silver will be like on Monday. Remember we are always 24 hours back in OI ( i.e. real OI for Friday will be received on Monday)

We had no change in tonnes of gold inventory at the GLD, thus the inventory rests tonight at 804.14 tonnes.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 335.580 million oz.

.

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

1. Today, we had the open interest in silver rise by only 207 contracts up to 203,677 despite the fact that the price of silver was UP by a huge 26 cents with THURSDAY’S trading. The gold open interest ROSE by A GIGANTIC 23,385 contracts AS  gold ROSE by $15.90 YESTERDAY. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver. Also the bankers are resolute in supplying non backed gold paper but they do not want to supply more silver paper.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN BY 7.26 POINTS OR 0.25%  /  Hang Sang closed DOWN 320.98 OR 1.50%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 0.51% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed DOWN at 6.4855.  Oil ROSE  to 46.45 dollars per barrel for WTI and 48.00 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4885 yuan to the dollar vs 6.4855 for onshore yuan.

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

see  trading overnight

b) REPORT ON CHINA

This is scary!! China in this latest USA-China escalation, Beijing denies a USA aircraft carrier access to a Hong Kong harbour:

( zero hedge)

4.EUROPEAN AFFAIRS

i)The head of Deutsche Bank’s integrity committee, a lawyer, has been fired due to him being overzealous!

( zero hedge)

5.GLOBAL ISSUES

The real issue surrounding the globe:  huge debt, not only at the sovereign level but also the corporate level.  Debt to GDP rises to astronomical heights with respect to sovereigns like Japan,  China,  Greece Italy and the USA.  If we take  China, the total debt to GDP is 350%.  Japan it is 450%.  This is a runaway train ready to crash:

( Guy Hasselman/Scotia Bank)

 ii)This is something to watch.  When the Yen/South SAfrican Rand reaches high levels, it generally means crisis time:  previous shocks where the cross was at all time highs;

9.11, Enron, and Lehman default: ( zero hedge) 6.OIL MARKETS

i)Due to the higher prices for oil, USA shale companies are back in business and pumping out more oil.  Now OPEC in response will also boost exports to near record levels trying to get them out of business

( zero hedge)

ii)And that sends the message to dump oil:

( zero hedge)

iii Rig counts decline and yet crude cannot climb:

(courtesy zero hedge) 7.PHYSICAL MARKETS

i)Gold and silver skyrocket during the night/trading overnight

(zero hedge)

ii)Today’s commentary from Alasdair Macleod: a very important read as Alasdair believes it is in the interest of Saudi Arabia to sell its 5% stake in Aramco to China and in return, China removes a big block of its unwanted dollars.

( Alasdair Macleod)

iii)This will be another dagger into the heart of the USA dollar:  Russia is to price its oil in Roubles:( Bloomberg/GATA)

iv)For your interest…explorers hunting for gold in the Egyptian desert: i.e. ancient sites where gold may be buried:

( NYTimes/GATA)

8.USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)In the USA the consumer is 70% of GDP.  With the latest results, savings rate rose while spending disappointed again.  The consumer has reached peak debt!! and cannot spend anymore

( zero hedge)

 

ii)the all important Chicago National manufacturing PMI tumbles again due to lack of orders.  This is a very significant index as it measures manufacturing at the national level and mfg is collapsing!

( zero hedge) iii)At first blush, the Atlanta Fed reveals Q2 GDP at 1.8% which is 1/2% below Wall Street consensus.  This number will be lowered in the next few months as the financial scene inside the USA deteriorates: ( zero hedge)

iv)The Fed just found its next excuse not to raise rates:  BREXIT.

For the first time, BREXIT takes a lead over staying in the EMU: ( zero hedge)

v)I have highlighted this to you on countless occasions but it is worth repeating;

all of the net corporate debt has gone to buy up stock not to foster growth: ( zero hedge) vi)The following is interesting:  The USA treasury, the biggest manipulator of them all, gives explicit warnings to China, Japan,South Korea, Taiwan and Germany not to devalue their currencies: I understand the first 4 countries but Germany?  It does not have a currency, it is part of the EME  (Euro).  The key country named , of course is China.  Actually it was China that warned the USA that if the Americans raised their interest rate, then China would devalue!

( zero hedge) Let us head over to the comex:

The total gold comex open interest ROSE THROUGH THE ATMOSPHERE,  to an OI level of 525,414 for a GAIN of 23,395 contracts AS the price of gold UP $15.90 with respect to THURSDAY’S TRADING. We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses . The month of May saw its OI fall by 200 contracts down to 1823. The next big active gold contract is June and here the OI rose by 19,431 contracts up to 390,097. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 254,687. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 242,254 contracts. The comex is not in backwardation.

Today we had 25 notices filed for 2500 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a tiny 207 contracts from 203,470 up to 203,677 DESPITE THE FACT THAT the price of silver was UP quite nicely by 26 cents with THURSDAY’S TRADING. For the first time in over 2 years, we have not witnessed a liquidation of open interest as we enter first day notice .  The next active contract month is May and here the OI FELL by only 5887 contracts DOWN to 5603. This level is exceedingly high and thus we have 2 million oz standing for the May active contract month  . The volume on the comex today (just comex) came in at73,488 which is extremely high with minimal rollovers. The confirmed volume yesterday (comex + globex) was AGAIN HUGE AT 100,941. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had  783 notices filed for 3,915,000 oz.  

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY April 29. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  100.01 OZ

SCOTIA Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  NIL

  No of oz served (contracts) today 25 contracts
(2500 oz) No of oz to be served (notices) 1798 contracts

179800 oz Total monthly oz gold served (contracts) so far this month 25 contracts (2500 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month  100.01 OZ

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 0 customer deposits:

 

total customer deposit:  NIL oz

Today we had 0 customer withdrawals:

Total customer withdrawals:  nil

 

Today we had 2 adjustments:

i) Out of JPMorgan:  542.37 oz of gold was removed from the dealer and this landed into the customer account of JPM and will be deemed a settlement

ii) Out of Scotia: 1183.317 oz of gold was removed from the dealer Scotia and this landed into the customer account of Scotia: and this is deemed a settlment

in tonnage: .205 tonnes settled.

 

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 25 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 8 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (25) x 100 oz  or 2500 oz , to which we  add the difference between the open interest for the front month of MAY (1823 CONTRACTS) minus the number of notices served upon today (25) x 100 oz   x 100 oz per contract equals 182,300 oz, the number of ounces standing in this non active month.  This number is huge for May. Let us see if this number remains constant throughout themonth   Thus the initial standings for gold for the MAY. contract month: No of notices served so far (25) x 100 oz  or ounces + {OI for the front month (1823) minus the number of  notices served upon today (25) x 100 oz which equals 182,300 oz standing in this non  active delivery month of MAY(5.6702 tonnes). 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 thus have 5.6702 tonnes of gold standing for MAY and 20.000 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 5.6702 TONNES FOR MAY + 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  = 24.5652 tonnes still standing against 20.000 tonnes available.  .   Total dealer inventor 636,503.508 oz or 19.7979 tonnes Total gold inventory (dealer and customer) =7,250,269.882 or 225.51 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

MAY INITIAL standings

 april 29.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 647,973.598 oz

Delaware,JPM Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 743,657.855 oz

CNT,Brinks

Scotia No of oz served today (contracts) 783 contracts

3,915,000  oz No of oz to be served (notices) 4820 contracts

24,100,000 Total monthly oz silver served (contracts) 783 contracts (3,915,000 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  647,973.598 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

 

we had 3 customer deposits:

i) Into CNT: 300,980.275 oz

ii) Into Brinks: 300,139.750 oz

Into Scotia; 142,537.830 oz

Total customer deposits: 743,657.855 oz.

We had 2 customer withdrawals

i) Out of Delaware; 47,974.298 oz

ii) Out of JPMorgan: 599,99.300 oz

:

total customer withdrawals:  647,973.598  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the MAY contract month is represented by 783 contracts for 3,915,000 oz. To calculate the number of silver ounces that will stand for delivery in May., we take the total number of notices filed for the month so far at (783) x 5,000 oz  = 3,915,000 oz to which we add the difference between the open interest for the front month of MAY (5603) and the number of notices served upon today (783) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the MAY contract month:  783 (notices served so far)x 5000 oz +(5603{ OI for front month of April ) -number of notices served upon today (783)x 5000 oz  equals 28,015,000 oz of silver standing for the MaY contract month.   Total dealer silver:  31.957 million Total number of dealer and customer silver:   151.779 million oz The open interest on silver is now close an all time high with the record of 206,748 being set in the last week of April.  The total dealer amount of silver remains at multi year low of 31.957 million oz. end At 3:30 pm we get the COT report which gives position levels of our major players. This week will no doubt be a dandy.  Let us see what it brings: Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 288,173 67,316 46,236 116,445 356,553 450,854 470,105 Change from Prior Reporting Period -2,970 -6,990 1,996 -1,298 -1,311 -2,272 -6,305 Traders 172 96 86 42 57 256 201   Small Speculators   Long Short Open Interest   47,030 27,779 497,884   -3,175 858 -5,447   non reportable positions Change from the previous reporting period COT Gold Report – Positions as of Tuesday, April 26, 2016 Our large specs: Those large specs which have been long in gold strangely pitched a large 2970 contract from their long side. Those small specs that have been short in gold correctly covered 6990 contracts from their short side. Our Commercials Those commercials that have been long in gold pitched 1,298 contracts from their long side. Those commercials that have been short in gold covered 1,311 contracts from their short side ?? Our Small Specs: Those small specs that have been long in gold pitched 3175 contracts from their long side Those small specs that have been short in gold added 858 contracts to their short side. The commercials go net short by a tiny:13 contracts I believe the figures are a little far fetched. And now for our silver COT: Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 99,774 21,001 20,826 56,700 148,002 4,786 -2,559 5,054 2,748 9,966 Traders 109 59 45 33 43 Small Speculators Open Interest Total Long Short 206,748 Long Short 29,448 16,919 177,300 189,829 -350 -223 12,238 12,588 12,461 non reportable positions Positions as of: 167 130 Tuesday, April 26, 2016   © SilverSeek.com These figures are a little more believable Our large specs: Those large specs that have been long in silver added 4786 contracts to their long side Those large specs that have been short in silver covered 2559 contracts from their short side. Our commercials Those commercials that have been long in silver added 2748 contracts to their long side Those commercials that have been short in silver added a whopping 9966 contracts to their short side. Our small specs: Those small specs that have been long in silver added 1263 contracts to their long side Those small specs that have been short in silver covered 929 contracts from their short side. Commercials go net short by 7,218 contracts and that means the bankers are ready to raid. Remember that these figures are up to Tuesday, April 26.2016.  The OI went nuts these past 3 days so I would wager that the commercials went on a continued rampage of supplying non backed paper short. And now the Gold inventory at the GLD April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14 April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 29.2016:  inventory rests at 804.14 tonnes

end

 

Now the SLV Inventory April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580 April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580 aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . April 29.2016: Inventory 335.580 million oz .end     1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!! Percentage of fund in gold 60.7% Percentage of fund in silver:37.9% cash .+1.4%( April 29.2016). 2. Sprott silver fund (PSLV): Premium to  RISES to +60%!!!! NAV (April29.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.0.85% to NAV  ( April29.2016) Note: Sprott silver trust back  into positive territory at +.60%% /Sprott physical gold trust is back into positive territory at +0.85%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to +.60%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      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

 

Gold “Chart of The Decade” – Maths Suggest $10,000 Per Ounce Says Rickards By Mark O’ByrneApril 29, 20160 Comments

James Rickards, economic and monetary expert, joined Bloomberg’s Francine Lacqua on Tuesday to discuss the gold “chart of the decade”, his new book “The New Case for Gold,” why gold is money and why gold is going to $10,000/oz in the coming years.

Gold in USD – 10 Years (GoldCore)

Francine generously acknowledged how Rickards was “bullish on gold for quiet some time and actually you have been proven right … it is the chart of the decade”. She said that this “has to do with inflation expectations, it has to do with currency but it is really at the end of the day just a haven so people pile into it – as much as they do yen …”

GOLD IS MONEY
Jim responded that

“Gold is a form of money and not an investment. As money it competes with other kinds of money — the dollar, euro, yen etc.. They’re like horses going around a racetrack – place your bets but you have a subjective preference for money. 

As investors are losing confidence in central banks … that’s what’s been going on and been clearly revealed. Central bankers have told me that they don’t know what they’re doing and they sort of make it up as they go along. They experiment.

President Evans of the Chicago Fed has said this and others have said it privately.

I spoke to Ben Bernanke and he described that everything he’s done was an experiment — meaning you don’t know what the outcome is.

So in that world where investors are losing confidence in central banks, gold does well.

Right now there are tens of trillions of dollars of sovereign debt with negative yields to maturity – bunds and JGBs..

Gold has zero yield.

Zero is higher than a negative 50 bps so gold is now the high yield asset in this environment.”

STOCKS HIGHER ON “FULL DOVE”
Regarding stocks, Rickards had this to say:

“Both gold and stocks are going up, and the reason stocks are going up is because Janet Yellen is going “full dove”. There’s nothing the stock market doesn’t like about free money. Plus negative interest rates might be on the table for next year.

That’s sort of bullish for stocks but it’s also bullish for gold.

Sometimes gold and stocks go up together and sometimes they don’t. There’s no long term correlation, but right now in a world of easy money and negative yields it’s good for both stocks and gold.”

GOLD AT $10K/oz
When asked for his price target for gold, Rickards says

“I have a technical level for gold, it is $10,000 U.S. per ounce. That amount gets bigger over time because it’s a ratio of physical gold to printed money. The amount of physical gold doesn’t go up very much, but printed money goes up a lot, so the dollar target goes up more over time because of all the money printing.

$10,000 U.S. per ounce is the implied non-deflationary price for gold. If you have to go back to a gold standard, or anything like it to restore confidence, that is the number you must have to avoid deflation.

So $10,000 per ounce is mathematically derived and is not a guess.”

INTEREST RATES and US ECONOMY
Rickards is asked what happens if Yellen tries to normalise rates and says

“If Janet Yellen begins to normalize then it would probably throw the U.S. into a recession. A 25 basis points hike in December threw the U.S. stock market into a 10% correction in the next two months.

The U.S. is hanging by a thread. It looks like first quarter GDP is going to come in at well below 1% according to the Atlanta Fed Tracker.

What’s the difference between -1% and 1%? Technically not much. One may be a technical recession and one is not, but growth is extremely weak. You don’t raise interest rates in a recession. You’re supposed to ease in a recession.

International spill over as well as the U.S. economy being fundamentally weak is the reason to not raise rates.

The time to raise rates was 2011 and that’s long gone. But two wrongs don’t make a right.”

SHANGHAI ACCORD and ‘SUPER MARIO’
“The Phillips Curve seems to have broken down — if it ever existed. The bigger play is the “Shanghai Accord” which came out of the G20 meeting in Shanghai, China in February 2016.

It’s like a secret Plaza Accord between the U.S. Fed, the Bank of England, the Peoples Bank of China, the European Central Bank and the Bank of Japan.

The evidence for a new secretive plaza accord is overwhelming. See here is the deal – China needs to ease. But the last two times China eased, August 2015 and December/January 2016, the U.S. stock market fell out of bed.

So how do you ease China without destroying the U.S. stock market?

So the answer is keep the dollar/yuan cross rate unchanged. Then ease in the U.S. dollar so that China goes along for the ride. At the same time tighten Japan and Europe, so you get a stronger yen and a stronger euro.

China is a larger trading partner for Japan and Europe than the U.S. is, so it’s a backdoor easing for China. Cross rates unchanged but China gets to ease.”

Lacqua wonders if Mario Draghi in the ECB would agree to that and Rickards concludes by saying that ‘Super Mario’ “is his favourite central banker”.

Watch the full interview here


Week’s Market Updates
Property Bubble In Ireland Developing Again

Silver Bullion “Momentum Building” As “Supply Trouble Brewing”

Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

Gold In London Vaults Beneath Bank of England Worth $248 Billion – BBC

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold News and Commentary
Silver “will likely continue to be the surprise outperformer in 2016” said GoldCore (Reuters)
“Tempter tantrum in global markets today is quite worrisome” said GoldCore (Marketwatch)
Gold climbs after Fed, BOJ stand pat on policy (Reuters)
Gold powers higher as BOJ’s surprise inaction hurts the dollar (Mineweb)
Russia’s VTB aims to supply up to 100 tonnes of gold to China per year (Reuters)

Gross Warns Financial System Likely To Implode – (Bloomberg Video)
JP Morgan Sees Draghi as Buyer of Last Resort for Equities (Bloomberg)
Venezuela Doesn’t Have Enough Money to Pay for Its Money (Bloomberg)
America’s earnings recession just got worse (CNN)
Germany’s Merkel warns of risks to banks from low interest rates (Reuters)
Read More Here

Gold Prices (LBMA)
29 April: USD 1,256.60, EUR 1,106.45 and GBP 861.43 per ounce (To be updated)
28 April: USD 1,256.60, EUR 1,106.45 and GBP 861.43 per ounce
27 April: USD 1,244.75, EUR 1,100.79 and GBP 853.58 per ounce
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce

Silver Prices (LBMA)
29 April: USD 17.35, EUR 15.29 and GBP 11.92 per ounce (To be updated)
28 April: USD 17.35, EUR 15.29 and GBP 11.92 per ounce
27 April: USD 17.34, EUR 15.34 and GBP 11.87 per ounce
26 April: USD 16.95, EUR 15.02 and GBP 11.64 per ounce
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce

Mark O’Byrne Executive Director Published in Market Update end GOLD TRADING LAST NIGHT/LAST NIGHT’S YUAN FIXING HIGHER FORCES USA DOLLAR DOLLAR AND THUS LIFTS COMMODITY PRICES HIGHER After the fix, the yuan faltered but the uSA dollar was still under pressure.  This allowed gold and silver to rise throughout the night. (COURTESY ZERO HEDGE) Gold & Silver Surge To New Cycle Highs After China Strengthens Yuan By Most In 11 Years

With Japan closed, and unable for now to do more damage (or damage control), China stepped in with some modest turmoil of its own by strengthening the Yuan fix by the most since 2005, pressuring the USD weaker for the 5th day in a row. Commodities have tended to push higher on the back of this with Crude above $46.50 but Gold and Silver have surged to fresh 15 month highs (over $1275 and near $18 respectively).

The biggest strengthening in Yuan fix (implicitly pressuring the USD weaker) since 2005…

Sent PMs higher overnight…

And lifted crude (June) to the highest since Thanksgiving…up 4 days in a row

As it appears crude is playing catch up with gold post-BoJ…

A lack of BoJ “help” has left S&P futures trading in a very narrow range overnight – oscillating around VWAP…

END Today’s commentary from Alasdair Macleod: a very important read as Alasdair believes it is in the interest of Saudi Arabia to sell its 5% stake in Aramco to China and in return, China removes a big block of its unwanted dollars. (courtesy Alasdair Macleod) Alasdair Macleod: Taking the petro out of the dollar

Submitted by cpowell on Thu, 2016-04-28 18:29. Section: 

2:30p ET Thursday, April 28, 2016

Dear Friend of GATA and Gold:

With China moving to internationalize its currency and Saudi Arabia looking for another sugar daddy, GoldMoney’s Alasdair Macleod writes, the oil trade’s decades-long support of the U.S. dollar may be coming to an end. Macleod’s commentary is headlined “Taking the Petro Out of the Dollar” and it’s posted at GoldMoney’s Internet site here:

https://www.goldmoney.com/research/goldmoney-insights/taking-the-petro-o…

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

end

This will be another dagger into the heart of the USA dollar:  Russia is to price its oil in Roubles:

(courtesy Bloomberg/GATA)

Putin’s decade-old dream realized as Russia to price its own oil

Submitted by cpowell on Fri, 2016-04-29 03:10. Section: 

By Eduard Gismatullin
Bloomberg News
Wednesday, April 27, 2016

Russian President Vladimir Putin is on the verge of realizing a decade-old dream: Russian oil priced in Russia.

The nation’s largest commodity exchange, whose chairman is Putin ally Igor Sechin, is courting international oil traders to join its emerging futures market. The goal is to increase revenue from Urals crude by disconnecting the price-setting mechanism from the world’s most-used Brent oil benchmark. Another aim is to move away from quoting petroleum in U.S. dollars.

If Russia is going to attract international participation in Russian-based pricing, the Kremlin will need to persuade traders it’s not simply trying to push prices up, some energy analysts said. The government is dependent on oil revenue to fund its budgets.

“The goal is to create a system where Russian oil is priced and traded in a fair and straightforward way,” said Alexei Rybnikov, president of the St. Petersburg International Mercantile Exchange, or Spimex, in a phone interview. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-04-28/putin-s-decade-old-dre…

end

For your interest…explorers hunting for gold in the Egyptian desert: i.e. ancient sites where gold may be buried:

(courtesy NYTimes/GATA)

Following ancients, explorers hunt gold in the Egyptian desert

Submitted by cpowell on Fri, 2016-04-29 03:52. Section: 

Still another rich country insisting on being poor.

* * *

By The Associated Press
via The New York Times
Thursday, April 28, 2016

EASTERN DESERT, Egypt — Off the off-road tracks deep in Egypt’s eastern desert, prospectors are ramping up the hunt for the treasure once revered by the pharaohs as the “skin of the gods” — gold.

Essential for ancient artifacts like the famed burial mask of Tutankhamun and still highly desired in Middle Eastern culture today, gold has been mined in Egypt for millennia. But experts say the country is heavily underexplored and that modern technology now allows much deeper excavation of the ancient sites shown on pharaonic treasure maps.

If developed, gold and mineral mining could prove a boon to the country at a time it is desperate for foreign currency, and provide jobs for its burgeoning population of 90 million. But miners and experts say current legislation is out of step with global practices and doesn’t give enough incentives to bring in foreign investment.

“Mining has been going on here for over 5,000 years, but in the 21st century it’s essentially virgin ground,” said Mark Campbell, president of the Canadian exploration company Alexander Nubia, which is increasing its drilling this year in a 1,070-square mile area in the desert. “Exploring for gold and minerals in Egypt today with modern technology is like having a map where X marks the spot.” …

… For the remainder of the report:

http://www.nytimes.com/aponline/2016/04/28/world/middleeast/ap-ml-egypt-…

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 DOWN to 6.4855 / Shanghai bourse  CLOSED DOWN 7.26  OR 0.25%  / HANG SANG CLOSED DOWN 320.98 OR 1.50% 

2 Nikkei closed FOR HOLIDAY /USA: YEN FALLS TO 107.04

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 93.40/Euro UP to 1.1398

3b Japan 10 year bond yield: FALLS   TO -.075%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.04

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  46.45  and Brent: 48.00

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.

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 0.247%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.60%/: 

3j Greek 10 year bond yield RISE to  : 8.99%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1277.75/silver $17.76 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 61 /100 in  roubles/dollar) 64.14

3m oil into the 46 dollar handle for WTI and 48 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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9624 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0967 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .247%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.85% early this morning. Thirty year rate  at 2.70% /POLICY ERROR)

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

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

USDJPY Plunges As Dollar Drops To 11 Month Lows, Commodities Rise

Following yesterday’s Yen surge in the aftermath of the disappointing BOJ announcement, the pain for USDJPY long continued, with the key carry pair tumbling as low as 106, the lowest level since October 2014 before stabilizing around 107, and is now headed for its biggest weekly gain since 2008, which in turn has pushed the US dollar to to its lowest close in almost a year as signs of slowing growth in the U.S. dimmed prospects for a Federal Reserve interest-rate increase. As a result, global stocks fell and commodities extended gains in their best month since 2010.

The yen strengthened against all 16 major peers for the second day in a row, climbing as much as 1.1 percent to 106.91 a dollar, the strongest level since October 2014. It surged 4.3 percent this week as the Bank of Japan defied economists’ expectations that stimulus would be stepped up.

The sliding dollar is proving beneficial for raw materials, helping lift gold and silver to 15-month highs. Crude oil has jumped 21 percent this month to more than $46 a barrel in New York. European equities trimmed their biggest monthly advance since November.

As Bloomberg writes, the dollar’s third straight monthly drop and the prospects for the Fed moving gradually on interest rates are spurring the outlook for inflation, with the 10-year U.S. break-even rate at the highest since July. Reports today on consumer confidence and personal spending will provide clues on the trajectory of the world’s largest economy after data on Thursday showed the slowest pace of expansion in two years.

Looking at regional markets, Asia traded mixed amid holiday thinned trade and a cautious tone following Wall St. losses, where an Apple sell-off and weak US GDP dampened sentiment. However, ASX 200 (+0.4%) edged higher underpinned by commodity strength in which WTI broke above USD 46/bbl. Elsewhere, the Shanghai Comp (-0.3%) was subdued after further discouraging earnings in which PetroChina posted its first ever quarterly loss and ICBC reported lacklustre growth as well as an increase in NPL’s, while the PBoC also conducted a net CNY 290b1n drain. Finally, Japanese markets were shut for Showa Day public holiday.

In Europe, despite the upside in the energy complex today, sentiment is firmly dampened after the soft close in the US yesterday and the risk off trading seen overnight. Although Asia saw thin trade due to the Japanese holiday, the upside seen in both JPY and precious metals illustrated the uncertainty felt across asset classes, with this filtering through to Europe. Equities have traded in the red throughout the morning, with Euro Stoxx lower by 1.2%, although with the downside in equities failing to filter through to any significant price action in fixed income. Bunds are flat on the day and continue to trade in the tight range between 162.50 and 162.25.

In Fx, it has been a mixed session in FX, but one which again is to the detriment of the USD as the index is pressed down to fresh 6 month+ lows on the back of another down-leg in USD/JPY. Losses in London saw 107.00 taken out, but ahead of 106.50, exotic protective bids are helping contain the sell-off, albeit temporarily so as yet. EUR/USD has been propelled higher accordingly, having adopted a strong bid tone in recent sessions. Earlier gains extended through the pre 1.1400 top seen over the ECB press conference last week, and despite running into strong offers above here, the pullback is contained ahead of 1.1350, with better than expected Q1 GDP in the Euro zone now aiding the bid. This has also helped EUR/GBP recover a little, with Cable now only managing to match the early Feb high at 1.4667 before retracing back through 1.4600. Bids in the mid 1.4550’s supporting for now. Commodities still recovering amid the backdrop of recent jitters in equity markets. Oil continues to power north to help maintain USD/CAD pressure on 1.2500. Strong bids coming in ahead of this but sellers keen ahead of 1.2550.

Heading into the North American crossover, energy prices have seen upside for much of the morning with Brent crude futures above USD 48/bbl, while WTI is trading at levels last seen since October. Newsflow for the energy has been somewhat light, with only reports out of Saudi Arabia that they may potentially boost oil production in the summer to around 10.5mln bpd. Elsewhere, Gold rose nearly 1% as a cautious tone spurred a flight-to-safety reaching USD 1280.00/oz eyeing the highs of USD 1284.8/oz seen on the 11th Mar’16, Elsewhere Silver broke the recent highs of USD 17.66/oz reaching USD 17.84/oz with the next level up at USD 18.44/oz. Copper and iron ore prices also benefited from the USD’s demise to 8-month lows, with Dalian iron ore futures hitting limit up in early trade.

Bulletin headline summary from Bloomberg and RanSquawk

  • An uninspiring lead from US and Asian bourses filters into Europe despite the upside in the energy complex
  • USD-index continues its persistent softness with USD/JPY briefly breaking below 107.00.
  • Looking ahead, highlights include US Core PCE and Personal Spending, as
    well as comments from Fed’s Kaplan, and BoE’s Cunliffe
  • Treasuries slip during overnight trading, lower with global equities as Japan closed today and May 3-5 for Golden Week; volumes light with 10Y Treasury futures trading around 147k contracts.
  • Federal Reserve Bank of Dallas President Robert Kaplan says estimates of first-quarter growth have been disappointing, but that output should improve over the remainder of the year
  • Mario Draghi’s policy challenge was highlighted once again on Friday, with the fastest economic growth in a year overshadowed by a renewed drop in consumer prices as euro- area inflation rate fell to minus 0.2 percent in April
  • Commerzbank AG downgraded bonds from Poland, Hungary and Croatia this week, saying the countries are most vulnerable to Brexit risks
  • Spanish banks are gobbling up a growing slice of Portugal’s financial industry, taking advantage of the country’s halting recovery from Europe’s debt crisis
  • China’s central bank responded to an overnight tumble in the dollar by strengthening its currency fixing the most since a peg was dismantled in July 2005.
  • Chinese authorities are considering convening a top-level finance work conference this summer, a year ahead of schedule, to map out a sweeping consolidation of the country’s financial regulatory system in a move to reduce risks
  • Vice President Michel Temer is playing down expectations that he can achieve a quick fix for Brazil’s economic troubles should his boss, Dilma Rousseff, be impeached
  • Sovereign 10Y bond yields mixed; European, Asian markets lower; U.S. equity-index futures rise. WTI crude oil, metals higher

DB’s Jim reid concludes the overnight wrap

So a busy period of Central Bank policy meetings comes to an end giving investors a chance to take stock and assess where we go from here. In the last week and a bit we’ve heard from the ECB, Fed and now the BoJ. Much of the focus on the former was on the details around the corporate bond purchasing program with the general feeling that it largely exceeded expectations. The Fed made some subtle changes to its language, but ultimately markets remain unconvinced that we’re any closer to the next tightening move. Finally it was the turn of the BoJ yesterday and while investors had been fairly 50/50 going into the meeting for some sort of action, the immediate reaction from markets was one of obvious disappointment. Kuroda’s press conference yesterday seems to have left the market in a bit of a haze of confusion and the BoJ will have be careful not to mismanage expectations and so damage their credibility in the future. All of a sudden it might be worth checking your summer holiday dates versus the next two BoJ dates on June 16th and July 29th.

It’s interesting to take a look at how markets have performed through this busy period of monetary policy meetings, and corporate earnings results for that matter. Ultimately the conclusion is that there’s actually not been that much change for asset prices in the period since the close of play prior to the ECB. Looking at equity markets the S&P 500 is -1.2% with much of that decline a result of yesterdays late selloff, while the Nikkei is -1.4% (again plagued by yesterdays performance), the Stoxx 600 -0.3% and the DAX -1.0%, while European Banks (+2.5%) have actually bounced. Sovereign bond markets are more mixed. 10y Treasury yields are 2bps lower, while similar maturity Bunds and JGB’s are 10bps and 6bps higher respectively. The iTraxx Main index is actually unchanged which may come as a surprise while in FX land the Yen is 1.6% stronger and the Euro is up about half a percent.

Post the BoJ yesterday the main focus was on the US data and specifically the Q1 GDP print. Growth disappointed at +0.5% qoq (vs. +0.7% expected) as net exports contributed negatively while business fixed investment was also down sharply. Inventories also dragged as expected and the data confirmed that Q1 was the weakest quarterly performance for growth since Q1 2014. Interestingly though the US Dollar bounced off its lows and Treasury yields moved higher as the inflation data released alongside actually surprised to the upside. The Q1 Core PCE print came in at +2.1% qoq (vs. +1.9% expected) which is the highest level in four years. We’ll get some idea of the intra-quarter pattern with this afternoon’s March PCE data.

Before we get there though, flicking over to Asia where markets are closing out the week on a bit of a mixed note. After the steep leg lower yesterday, equity markets in Japan are closed for a public holiday, however the Yen has continued to strengthen and is another 1% firmer this morning around 107.20 which is an 18-month high. That means it has rallied over 4% since pre-BoJ yesterday. Meanwhile the Hang Seng has dropped -1.35% this morning, bourses in China are little changed, the Kospi is -0.55% however the ASX is +0.41%. The Chinese Yuan is generating headlines this morning too after the PBoC raised the fix by the most since 2005. The reference rate was set +0.56% stronger however that appears to be more of a reflection of the big weakness in the USD yesterday rather than any policy intention.

Elsewhere US equity index futures are little moved despite Amazon reporting a big beat for Q1 earnings after the closing bell yesterday which sent shares up over 10% in extended trading. The company reported an EPS of $1.07 a share for the quarter after expectations were for 57c. Even if we use the peak in consensus for Q1 EPS this year back in January of 87c, the beat is still impressive.

Back to yesterday. After European equity markets had wiped out the early BoJ-led selloff from the Nikkei into the close (Stoxx 600 closing +0.17%), US equities did look like they were on course for a broadly flattish day before a sharp leg lower for Apple took the rest of the tech sector with it meaning the S&P 500 (-0.92%) and Dow (-1.17%) both ended the session heavily in the red. Apple ended just over 3% lower and it appears that the cause of that was the CNBC interview with Carl Icahn confirming that the investor has sold his stake in the company with concerns about issues in China. US credit indices ended up being hard hit too with CDX IG nearly 3bps wider by the end of play.

Meanwhile the Yen rally yesterday saw the US Dollar index end -0.66% lower and so continuing the theme of dropping every day this week. 10y Treasury yields ended nearly 3bps lower at 1.825% after at one stage touching 1.87% post the inflation data. Oil markets took more of a backseat but the weakness in the Dollar did help to extend the YTD high for WTI after rallying +1.54% to close a smidgen above $46/bbl. Precious metals were the bigger winner on the day however in true risk off fashion. Gold ended up +1.64% at $1266/oz while Silver rallied to the tune of nearly 2% meaning it is an impressive 18% up from the lows of earlier this month.

In terms of the rest of the data yesterday, there were few surprises from the flash CPI numbers out of Germany where the April headline number printed at -0.2% mom as expected. German unemployment was also noted as falling 16k last month. The rest of the data in Europe was reserved for Euro area confidence indicators. Consumer confidence was confirmed this month at -9.3, while economic confidence rose 0.9pts to 103.9 (vs. 103.4 expected). Both services and business climate indicator readings were reported as rising this month too. Meanwhile in the US the only other data of note was a slight increase in initial jobless claims last month by 9k to 257k although albeit still at historically low levels, while the Kansas City Fed’s manufacturing survey was reported as rising 2pts this month to -4.

Looking at today’s calendar, we’ve got a busy end to a busy week for data today. This morning in Europe and shortly after this hits your emails the French Q1 GDP print will be released. Following that will be German retail sales for March before we’re back to France again with the first snapshot of the April inflation numbers. We then turn to the UK for money and credit aggregates data before its all eyes on the Euro area CPI report for April (headline expected at -0.1% mom) and Q1 GDP report (expected to be +0.4% qoq). Across the pond this afternoon we’ll get the Q1 employment cost index, March personal income and spending data and that PCE deflator and core data for last month. There’s more regional manufacturing data in the form of the ISM Milwaukee and the Chicago PMI before we get the final revision to the April reading for the University of Michigan consumer sentiment survey. Meanwhile 22 S&P 500 corporates will be out with their latest quarterly earnings today including Exxon Mobil and Chevron so it’s well worth keeping an eye on those results.

END

ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN BY 7.26 POINTS OR 0.25%  /  Hang Sang closed DOWN 320.98 OR 1.50%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 0.51% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed DOWN at 6.4855.  Oil ROSE  to 46.45 dollars per barrel for WTI and 48.00 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4885 yuan to the dollar vs 6.4855 for onshore yuan.

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

see above

b) CHINA ISSUES

This is scary!! China in this latest USA-China escalation, Beijing denies a USA aircraft carrier access to a Hong Kong harbour:

 

(courtesy zero hedge)

 

In Latest US-China Escalation, Beijing Denies US Aircraft Carrier Access To Hong Kong Port

What until now was mostly effete jawboning over US complaints surrounding China’s territorial expansion ambitions in the South China Sea, including the occasional sailing of a US ship deep inside the disputed territorial waters (with zero impact especially now that China may soon start building maritime nuclear power plants in the area), changed dramatically earlier today when China officially denied a U.S. carrier strike group’s request for a port visit to Hong Kong next week.

The Stennis strike group

As Stripes writesthe Chinese Ministry of Foreign Affairs notified the United States Thursday of its decision to deny the USS John C. Stennis and its escort ships access to the former British colony, Darragh Paradiso, a spokeswoman for the U.S. Consulate General in Hong Kong, said by phone. The ministry provided no explanation for the move.

While U.S. warships frequently visit Hong Kong, port calls have been canceled at times of diplomatic strain between the two Asia-Pacific powers. In 2007, China denied access to the city’s port by the aircraft carrier USS Kitty Hawk.

The decision follows weeks of increasing diplomatic sparring between China and the U.S. over Beijing’s claims to more than 80 percent of the South China Sea. The nuclear-powered Stennis has played a central role in U.S. efforts to demonstrate its continued security presence in the disputed waters, with Defense Secretary Ashton Carter visiting the warship on patrol there in April.

A plane carrying U.S. Secretary of Defense Ash Carter lands on the deck of the USS 
John C. Stennis on April 15, 2016, as the ship sailed through the South China Sea.

According to Shi Yinhong, director of the Center on American Studies at Renmin University in Beijing, and a foreign policy adviser to the State Council, the Stennis has become a “symbol of efforts to spark strategic tensions between China and the United States. The cancellation is a snapshot of the current intensity in China-U.S. security relations. Without significant security need, routine port calls would not have been canceled.

While the US has been complaining about China’s territorial expansions over the past year, culminating with the current recent incident, China’s claims to the South China Sea have resulted in numerous other disputes with other neighboring Southeast Asian nations that assert rights to the area, including Vietnam and the Philippines. Tensions are running high as the region braces for a ruling by an international arbitration panel on a Philippine challenge to China’s claims.

“We have a long track record of successful port visits to Hong Kong, including with the current visit of the USS Blue Ridge, and we expect that will continue,” Paradiso said, referencing the U.S. Navy command ship already moored in the city.

Finally, earlier today the US State Department confirmed that indeed China has refused to allow Stennis to dock in Hong Kong.

 denied Hong Kong port call by USS Stennis aircraft carrier, @StateDept confirms. 

10:03 AM – 29 Apr 2016 end EUROPEAN AFFAIRS

The head of Deutsche Bank’s integrity committee, a lawyer, has been fired due to him being overzealous!

(courtesy zero hedge)

Head Of Deutsche Bank “Integrity Committee” Fired Due To “Overzealousness”

Perhaps it is merely a coincidence but just weeks after Deutsche Bank became the first bank to admit to rigging the gold market (and agreeing to rat out fellow manipulators) yesterday afternoon the head of Deutsche Bank’s “integrity committee” announced he would resign two years before his time, which is a polite way of saying he was fired.

As the FT reports, Georg Thoma has been fired from Deutsche Bank’s supervisory board two years before his contract ends “after coming under fire from other board members in a battle over how to deal with the German bank’s past scandals.”

Thoma, a veteran Shearman and Sterling lawyer, was brought on to the board by chairman Paul Achleitner in 2013 and headed the integrity committee, whose remit includes overseeing the bank’s efforts to comply with legal and regulatory requirements. Alas, he failed as the bank’s record surge in litigation charges in recent years has amply demonstrated.

According to the FT, “Thoma’s approach left him at odds with some colleagues, and on Sunday, Alfred Herling, Deutsche’s vice-chairman, took the unusual step of publicly criticising his actions in Germany’s Frankfurter Allgemeine Sonntagszeitung. Mr Herling accused Mr Thoma of “overzealousness”, saying that he “goes too far when he demands ever wider investigations and more and more lawyers come marching up”, and adding that the costs were “no longer proportionate”.

As Bloomberg adds, the remarks divided observers, with Dieter Hein, an analyst at Fairesearch-Alphavalue, saying Thoma was probably just doing his job, while Michael Seufert, an analyst at Norddeutsche Landesbank, said the question of going too far in probing wrongdoing is legitimate.

In other words, the vice-chairman goes after an internal scapegoat, the person who is tasked with fixing what is clearly a broken organization (just check its stock price) because the bank is unable to stop rigging every market it participates in.

As a reminder, Deutsche Bank’s costs and provisions for fines and lawsuits have amounted to $14.3 billion since 2012 and have substantially cut into the company’s reserves at a time when regulators order banks to hold more capital, resulting in the company’s stock price recently hitting lows not seen since the financial crisis. On Thursday, DB said that it expects further “material” legal costs this year when reporting quarterly earnings

DB at least had some kind parting words: Achleitner said Thoma had given Deutsche “outstanding service” during his time on the board. “He has implemented processes of great importance and benefit to the bank. The supervisory board is determined to continue its work of investigating possible misconduct and to draw lessons for the future,” he said.

And yet the main lesson, namely that not to fire the person who is meant to fix a broken organization, was somehow missed.

Meanwhile, Henning Kagermann, the former head of German software group SAP who is also a board member at Deutsche, told the newspaper that “for all the diligence that we have exercised, it is important for us that Deutsche Bank finally . . . devotes all its energy to looking to the future”.

Yes please, look at the future, and ignore DB’s past which, among other unexplained incidents, includes the suicide of former senior executive William Broeksmit, who was found dead after hanging himself at his London home, as well as the suicide of the bank’s associate general counsel, 41 year old Calogero “Charlie” Gambino, who was found on the morning of Oct. 20, having also hung himself by the neck from a stairway banister.

One wonders if any of those deaths had something to do with what has emerged to be a culture of unprecedented corruption and, recently, outright crime.

Deutsche said in a statement that Mr Thoma would resign immediately from his role as chairman of the integrity committee and leave the supervisory board after a one-month notice period. The bank has begun the search for a permanent successor. We are confident a former Goldman Sachs employee will be delighted to fill Thoma’s shoes.

The shocking termination comes comes just three weeks before Deutsche’s annual shareholder meeting on May 19, at which the bank’s supervisory board is likely to come under scrutiny, and even more dirty laundery may be set to emerge, especially since as the FT adds, “one small shareholder has requested a special audit of whether members of Deutsche’s supervisory board or management board breached their obligations in how they dealt with some of the bank’s legal entanglements.

The motion requests that the audit ascertain whether there were management failings in relation to a number of investigations, including the Libor scandal. Among other things, it requests an investigation into whether Deutsche had to pay heavier fines because members of its management or supervisory board obstructed, misled, or failed to co-operate sufficiently with authorities.

Considering the tsunami of legal settlements unveiled by Deutsche Bank in recent months – not to mention its shocking eagerness to put its gold manipulation history quickly in the past – we are confident the motion will be promptly denied.

END GLOBAL ISSUES

The real issue surrounding the globe:  huge debt, not only at the sovereign level but also the corporate level.  Debt to GDP rises to astronomical heights with respect to sovereigns like Japan,  China,  Greece Italy and the USA.  If we take  China, the total debt to GDP is 350%.  Japan it is 450%.  This is a runaway train ready to crash:

(courtesy Guy Hasselman/Scotia Bank)

It’s The Debt Stupid: Scotiabank Warns “At Some Point ‘The Future’ Becomes ‘Today'”

Debt undermines growth and, as Scotiabank’s Guy Haselmann exclaims, the world has never been more indebted.

Reinhart and Rogoff’s 2010 research on the topic concluded that growth is about 1 percentage point lower in the long run when sovereign debt is 90% or more of GDP. They found that these episodes of ‘high debt’ were long and costly and that the average period (of ‘high debt’) lasted 23 years.  [Such long duration advocates that ‘high debt’ is not merely a function of a downturn in the business cycle.]

Debt levels of many countries have reached levels far higher than 90%. 

Those levels do not include the trillions of dollars in corporate debt (which has grown rapidly in the last 5 years). In many countries, debt has been growing at a rate far faster than economic growth. Such a trend is clearly unsustainable. Historically, rapid increases in debt levels typically result in a financial crisis or a prolonged slowdown in GDP growth.

The government debt-to GDP level of 104% in the US does not even include gargantuan unfunded entitlement liabilities which many argue will reach levels greater than $100 trillion in the next 10 years. It could be argued that a US growth rate of 2% might be the best case scenario for many years.

Loose monetary policy is supposed to provide cheap(er) funding for investment into capital projects that ultimately create jobs and spurs economic growth throughout the broader economy.  However, when there is limited visibility, projects will not be undertaken. Highly indebted corporations will be reluctant to take out more debt for capital projects without some sense of the value of those future cash flows as well as the cost of operating that future business.

Currently, it is too difficult to handicap future costs, and changes to the tax code, employee health care costs, regulations, or the fiscal policies (of whomever our elected leaders will be). Low and negative interest rates have not led to borrowing for capital projects because of this uncertainty.  Without these fiscal reforms, the effectiveness of monetary policy is muffled.

Yet, a massive amount of borrowing has taken place.Unfortunately, the proceeds of the huge corporate debt issuance have been used for share buybacks and dividend increases.  To make things look ‘less bad’, corporate executives have made efforts to increase earnings per share (EPS) ratios by making sure that the “S” falls faster than the “E”. The net result is higher asset prices that increasingly diverge from underlying economic fundamentals.

Low interest rates attempt to buy time. The idea is to bring consumption forward until the economy heals on its own as capital projects are completed. But those projects never began for the reasons I mentioned. The end result is ever-higher debt that borrows more and more from the future. Unfortunately, it borrows from the future without making the future any brighter through solutions to root causes of economic ailments.

At some point, the “future” becomes “today”.

A former central banker used a good analogy to describe the current condition in which central banks have placed themselves.  He said it is like cycling up a hill that is getting increasingly steeper and steeper and you need to pedal faster and faster to maintain the same position.

The hill is steepening as low and negative interest rates are no longer bringing spending forward. The BoJ cut in January to negative rates caused consumers to retrench.  This was likely due to worries about what such extraordinary measure must mean for the future.  Expectations matter. This market reaction has rightly acted as a warning sign to central banks about the limits of their policies.

There are trillions of dollars of debt maturing in the next 24 months.In this light, some random facts follow.  China has around $86 billion of debt maturing in May alone. The largest in their history. US CMBS has over $125 billion in loans maturing both this year and next.  Italy has around €360 Billion of impaired assets and non-performing loans (NPLs), which equals almost 25% of GDP. Since Greece had missed budget targets due to weaker than expected tax receipts, creditors may have to give them more money in order for Greece to be able to pay the €3.5 billion interest payment due in July.  The Malaysian state fund 1MDB defaulted this month on the interest on a $1.75 billion bond which in turn led to a few cross defaults.

The bottom line is that high debt typically inflicts future financial stress.  The burden magnifies if interest rates rise, or if the debt burden either cannot be rolled over or can only be refinanced at wider spreads.

High yield bonds spread have come roaring back from wide levels, but credit will face headwinds and challenges going forward.  Emerging markets (EM) corporations and countries that have borrowed in US dollars face similar challenges, particularly due to the relative strength of the USD in recent years (which is likely to persist). According to the BIS EM borrowing in USD has soared above $9 trillion.

My view of US Treasuries has not changed.  The compelling technical story, which I have outlined in several notes, remains firmly intact. The global shortage of (and increasing demand for) high-quality, risk-free, and positive-yielding collateral can be added to the list of factors. I still expect long-maturity Treasury yields to fall to all-time low levels in 2016. Other financial assets will not perform so well.

“Know what you own, and know why you own it” – Peter Lynch

 END This is something to watch.  When the Yen/South SAfrican Rand reaches high levels, it generally means crisis time:  previous shocks where the cross was at all time highs; 9.11, Enron, and Lehman default: (courtesy zero hedge) ZARpocalypse Now? BofAML Warns “Summer Of Shocks” Looms

The mysterious ZARJPY indicator of global turmoil is flashing red once again as BofAML’s Michael Hartnett warns of soaring sentiment into a potential “summer of shocks.”

With BofAML Bull & Bear index (from 0.1 in Feb to 5.0) sentiment at 11-month highs, Hartnett sees the world split into the next few months…

“Summer of Stocks” (boring macro/trading range/grind higher) plausible… cash still high, US/EU credit underpinned, breadth improving

“Summer of Shocks” (buy vol) more plausible… H1 policy “panic” ended this week, BofAML say Fed hikes June, bears getting “stopped in”, Japan yen surge, China bond vigilantes, ISM<50, BREXIT all risk-off shocks

Wall Street/Fed continues to play “cat and mouse” (risk rallies end when Fed hike expectations imminent, and start when Fed hike expectations postponed).

And (hedge fund) redemption, (central bank) repression, (market) regulation risks remain very high as the flash crash/pain trade era to continue.

end OIL MARKETS

Due to the higher prices for oil, USA shale companies are back in business and pumping out more oil.  Now OPEC in response will also boost exports to near record levels trying to get them out of business

(courtesy zero hedge)

OPEC Set To Pump Even More Oil In April As Saudi Arabia Boosts Exports To Near-Record High Levels

In one of the least surprising highlights from the ongoing earnings season, yesterday we reported that as oil continues to rise, US shale companies are starting to resume mothballed production.

First, it was Pioneer who said it was “expecting to deliver production growth of 12%+ in 2016 compared to the Company’s previous production growth target of 10%” adding that it also expected to “add five to ten horizontal drilling rigs when the price of oil recovers to approximately $50 per barrel and the outlook for oil supply/demand fundamentals is positive.” Then yesterday it was another US shale giant, Whiting Petroleum, who admitted that $45 oil is good enough, and that it is “increasing its production forecast to a range of 131,400 BOE/d to 136,900 BOE/d” adding that “with the majority of completions scheduled for the second half of the year, the Company expects to realize the full production benefit in late 2016 and 2017.”

And now, according to the latest Reuters production survey, in the aftermath of the failed Doha oil freeze agreement, OPEC will be the next to boost production in the coming month, expanding supplies from an already oversupplied 32.46MMb/d to 32.64MMb/d.

As Reuters notes, its survey indicates output from the Organization of the Petroleum Exporting Countries rose by 170,000 bpd in April. OPEC has no supply target. At a Dec. 4 meeting the producer group scrapped its output ceiling of 30 million bpd, which it had been exceeding for months.

The Reuters survey aims to assess crude supply to market, defined to exclude movements to, but not sales from, storage. Saudi and Kuwaiti data includes the Neutral Zone.

Venezuelan data includes upgraded synthetic oil. Nigerian output includes the Agbami stream and excludes Oso and Akpo condensates. Totals are rounded. There are no individual quotas for the OPEC member countries.

The full Reuters table:

And then moments ago:

  • SAUDI ARABIA BOOSTS OIL EXPORTS TO NEAR-RECORD HIGH LEVELS.

We wonder just how much longer algos can keep ignoring fundamentals.

end

And that sends the message to dump oil: (courtesy zero hedge) Oil Suddenly Tumbles

Having risen all day on the back of the weaker dollar now sliding to nearly one year lows, moments ago oil just wiped out all its intraday gains and tumbled to unchanged, losing almost a dollar in seconds.

It is unclear what caused this sudden drop, although the headline that Saudi Arabia is set to export another record amount of oil in the coming month surely did not help, and may indicate that the ongoing quant driven buying and relentless short squeeze may be ending as eyes finally turn to fundamentals.

end Rig counts decline and yet crude cannot climb: (courtesy zero hedge) Crude Unable To Bounce Despite Biggest Rig Count Decline In 6 Weeks

After its earlier pump and rapid dump, WTI crude is unable to bounce for now despite the biggest rig count decline in 6 weeks. The oil rig count declined by 11 to 332 – the lowest since October 2009 – tracking lagged crude prices. If the co-dependence continues we would expect to see rig counts begin to rise (or stop declining) very soon. Total US rig count dropped to 420 – a new all-time record low.

  • *U.S. TOTAL RIG COUNT DOWN 11 TO 420 , BAKER HUGHES SAYS

  • *U.S. OIL RIG COUNT DOWN 11 TO 332, BAKER HUGHES SAYS

Will we see rig counts stabilize here – tracking the legged price of crude?

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 1.1398 UP .0041 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 107.04 DOWN 1.053 (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

GBP/USA 1.4614 UP .0006 (STILL THREAT OF BREXIT)

USA/CAN 1.2505 UP .0044

Early THIS FRIDAY morning in Europe, the Euro ROSE by 41 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 was DOWN 7.26 POINTS OR 0.25% LAST 2 HR RESCUE / Hang Sang DOWN 320.98. OR  1.50%   / AUSTRALIA IS HIGHER BY 0.51% (RESOURCE STOCKS DOING WELL)/ ALL EUROPEAN BOURSES ARE DEEPLY 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 FRIDAY morning: closed HOLIDAY 

Trading from Europe and Asia:
1. Europe stocks DEEPLY IN THE RED  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED IN THE RED . ,Shanghai CLOSED IN THE RED/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED FOR HOLIDAY/India’s Sensex IN THE RED /

Gold very early morning trading: $1277.50

silver:$17.79

Early FRIDAY morning USA 10 year bond yield: 1.85% !!! UP 2 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 2.70 UP 2 in basis points from THURSDAY night.

USA dollar index early FRIDAY morning: 93.40 DOWN 36 cents from THURSDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers FRIDAY MORNING

END

And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.16% DOWN 1 in basis points from THURSDAY

JAPANESE BOND YIELD: -0.075% PAR in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.59% DOWN 1 IN basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.49  UP 1 IN basis points from THURSDAY

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

GERMAN 10 YR BOND YIELD: .271% (UP 2 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 1.1449 UP .0092 (Euro =UP 92  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 106.69 DOWN 1.406 (Yen UP 107 basis points As MARKETS TANK BADLY/GOLD/SILVER SKYROCKET)

Great Britain/USA 1.4610  UP .0002 Pound UP 2 basis points/

USA/Canad 1.2538 DOWN 0.0010 (Canadian dollar UP 10 basis points with OIL RISING(WTI AT $46.08)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 92 basis points to trade at 1.449

The Yen ROSE to 106.69 for a GAIN of 141 basis points as NIRP is STILL a big failure for the Japanese central bank/AND TODAY IF THERE ARE ANY REMAINING YEN CARRY TRADERS THEY WERE TOTALLY WIPED OUT

The pound was UP 2 basis points, trading at 1.4610

The Canadian dollar ROSE by 10 basis points to 1.2538, WITH WTI OIL AT:  $46.07

The USA/Yuan closed at 6.4738

the 10 yr Japanese bond yield closed at -.075% PAR IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 2  basis points from THURSDAY at 1.81% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.66 DOWN 1 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 93.10 DOWN 67 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 DOWN 80.51 POINTS OR 1.27%
German Dax :CLOSED DOWN 282.18 OR 2.73%
Paris Cac  CLOSED DOWN 128.40  OR 2.82%
Spain IBEX CLOSED DOWN 243.30 OR 2.62%
Italian MIB: CLOSED DOWN 376.15 OR 1.98%

The Dow was down 57.12 points or 0.32%

NASDAQ down 29.83 points or 0.62%
WTI Oil price; 45.98 at 4:30 pm;

Brent Oil: 47.28

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.65 (ROUBLE UP 9 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

.

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:  $45.98

BRENT: 47.37

USA 10 YR BOND YIELD: 1.83%

USA DOLLAR INDEX:93.05 down 72 cents on the day

END

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

Trading Today in Graph form:

Stock-Drop-alypse Wow – Gold Soars As Kamikaze Kuroda Strikes Again

Remember Wednesday night… after Facebook crushed it…

 

Overheard behind the scenes at CNBC today…

 

US Macro suffered its 4th weekly drop in a row and earnings expectations continue to weaken…

 

Stocks globally were a mess after The BoJ “shock”… NKY down 1700 points

 

Europe’s worst week in 3 months

 

And US equity market’s worst week in almost 3 months…

 

Futures from the Wednesday cash close show the chaos best… from The Fed to Facebook to Kuroda and from dismal macro to Icahn…

 

The panic-buying at the end managed to get S&P green for April…

 

Year-to-Date, Small Caps joined Nasdaq back in the red and The S&P gave up most of its gains… (and then a very late-day buying panic managed to get Russell 2000 to unchanged)

 

Financials were weak but Tech was a big loser on the week…

 

XLF – the US Financials ETF – broke back below its 200-day moving-average…

 

And after rushing into the safety of Biotechs in the last few weeks, they were monkey-hammered this week (down 7.5% – worst week since the first week of the year) testing its 50-day moving-average..

 

AAPL’s worst week since Jan 2013 (and before that since Lehman in 2008) as the “no brainer” has fallen for 10 of the last 11 days…

 

VIX surged this week above 17… before The PPT stepped in stomped on its throat at the 330RAMP…

 

And while we prefer not to use percentage change, this week was VIX’s biggest jump since the first week of the year, closing back above its 50-day-average for the first time since early Feb…

 

For the month of April Crude and Silver were the best performers, Dow flat…

 

The long-bond yield ended modestly lower on the week but underperformed relative to the belly which dropped 7-8bps…notably the gains for Treasuries accelerated into the close (the trend of selling bonds into and through the US open continues)

 

USD Index has fallen for 5 days in a row… big movers were yuuge Yen strength (after The BoJ) and AUD weakness (record lowflation)

 

This was the worst week for Bloomberg’s USD Index since March 2015…

 

As Yen just had its biggest 2-day rally since Lehman…

 

As USDJPY accelerated lower into the close…

 

The USD weakness spurred comnmodities higher generically with even Copper managing toi get green after major selling pressure from China’s unwind…interesting how uniform the gains in crude and PMs were on the week…

 

Despite today’s rollercoaster, oil closed at its highest weekly close since Thanksgiving, up 4 weeks in a row (over 20% off the Doha Dip lows)…

 

Gold’s 2nd best week since Oct 2011 (to $1299), Silver up 4 weeks in a row (topping $18)…

 

Charts: Bloomberg

end

 

Or simply:

 

Keep ‘peddling’…

 

 

Source: Investors.com

 

end

In the USA the consumer is 70% of GDP.  With the latest results, savings rate rose while spending disappointed again.  The consumer has reached peak debt!! and cannot spend anymore

(courtesy zero hedge)

Savings Rate Highest Since December 2012 After Personal Spending Disappoints Again

Following the drastically revised-away surge in spending in January, and the savings rate surge to 2012 highs in Feb, March’s income and spending data released today showed more problems for The Fed. While income grew 0.4% MoM (more than the 0.3% expectations), spending disappointed with a mere 0.1% rise (against +0.2% MoM expectations). Year-over-year spending growth slowed to 3.5% – the weakest since December and income growth slowed to 4.0% YoY leaving the savings rate at its highest since January 2013.

Income up, Spending down:

As Durables Goods spending (autos?) growth tumbles…

Which in longer historical context….

… Pushed the savings rate to match its highest since December 2013:

As all that hope-strewn spending has been revised away, and as a result following several revisions, the biggest concern to the Fed, the savings rate, has just hit its highest since December 2012, which means one thing: instead of spending money US consumer are quietly packing it away under the mattress despite ZIRP.

Charts: Bloomberg

end the all important Chicago National manufacturing PMI tumbles again due to lack of orders This is a very significant index as it measures manufacturing at the national level and mfg is collapsing! (courtesy zero hedge) Chicago PMI Tumbles From March Dead-Cat-Bounce “Plagued By A Lack Of Orders”

March’s dead-cat-bounce in Chicago PMI (like January’s) has died again as the business barometer drops to just 50.4 (from 53.6) missing expectations of 52.6. This barely-above-contractionary level was driven by an 11-point collapse in Order backlogs to the lowest since Dec 2015, and as MNI reports, “order patterns continued to be plagued by a lack of large orders and absence of international demand, purchasers said.”

Barely above contraction, Chicago PMI’s bounce is over…

Breakdown:

  • Prices Paid rose compared to last month
  • New Orders fell compared to last month
  • Employment fell compared to last month
  • Inventory rose compared to last month
  • Supplier Deliveries rose compared to last month
  • Production rose compared to last month
  • Order Backlogs fell compared to last month
  • Number of Components Rising: 4

As MNI reports,

Order patterns continued to be plagued by a lack of large orders and absence of international demand, purchasers said. Softer ordering led to a decrease in the Employment component, which fell back into contraction, where it has been in 10 of the last 12 months.

Despite lower ordering and employment levels, Production posted a small increase as special projects, and a plethora of low volume high margin orders kept companies busy.

The most surprising element of the report was an unusually large 20.2% surge in Supplier Deliveries to the longest since October 2014. Purchasers feared extensions in lead times could be telegraphing the beginning signs of major supply chain disruptions on the horizon.

Insufficient inventories of components at the supplier level were cited for lengthening in lead times, purchasers said. To a lesser extent some minor global strikes and transportation issues added to longer lead times aswell.

What was uniform was a lengthening in Supplier Lead times with many citing capacity issues at offshore facilities. This led to some inventory builds, purchasers said.

Outside of the barometer components, Prices Paid was up over 25% to the highest in 17-monthsand its first expansionary read in 9 months as commodities moved higher in April.  Inventories added 5.6 points to 49.6, the highest since October as some companies noted difficulty in restocking from offshore suppliers.

Comments from the survey panel remained mixed with strong players continuing on a solid footing while others barely broke even. Others remained very weak and needed “way more orders”.

Those on a solid footing reported higher backlogs and higher revenues.

Others were slow and continued to note a lack of larger orders, and an ongoing focus on grabbing market share on low volume, high margin orders. The latter may have boosted production levels along with seasonal factors.

end At first blush, the Atlanta Fed reveals Q2 GDP at 1.8% which is 1/2% below Wall Street consensus.  This number will be lowered in the next few months as the financial scene inside the USA deteriorates: (courtesy zero hedge) Atlanta Fed Unveils First Q2 GDP Forecast, Sees 1.8% Growth, 0.5% Below Wall Street Consensus

After being just fractionally above the official Q1 GDP print which yesterday came in at 0.5%, moments ago the Atlanta Fed unveiled its first Q2 GDP estimate which it sees at 1.8%, roughly 0.5% below the sellside average estimate of 2.3%, and just in line with the lowest forecast.

From the Fed:

Latest forecast: 1.8 percent — April 29, 2016

The first GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the second quarter of 2016 is 1.8 percent on April 29. The final model nowcast for first-quarter real GDP growth was 0.6 percent, 0.1 percentage points above the advance estimate of 0.5 percent released on Thursday by the U.S. Bureau of Economic Analysis.

The next GDPNow update is Monday, May 2. Please see the “Release Dates” tab below for a full list of upcoming releases.

Considering the ongoing retrenchment among US consumer spending, which once again missed expectations and pushed the savings rate to match 3 year highs, we expect this number to be once again revised lower in the coming weeks.

end The Fed just found its next excuse not to raise rates:  BREXIT. For the first time, BREXIT takes a lead over staying in the EMU: (courtesy zero hedge) The Fed Just Found Its Next Excuse Not To Hike Rates

As June looms, The Fed – having dropped ‘some’ of its global event risk language in the latest statement – is now desperate for an excuse to not hike rates (or face a total loss of credibility). Judging by Fed’s Kaplan, they just found it…

  • *KAPLAN SAYS FED WILL WATCH U.K. POLLS ON BREXIT CLOSELY IN JUNE

Which is a problem as ‘Brexit’ just moved into the lead among YouGov polls.

Either Brexit or market turmoil or a terrible jobs number…

  • *KAPLAN SAYS IF ECONOMY IMPROVES IN NEXT MONTHS, WILL BACK HIKE
end I have highlighted this to you on countless occasions but it is worth repeating; all of the Net corporate debt has gone to buy up stock not to foster growth: (courtesy zero hedge) Bubble Finance At Work: All The Net Corporate Debt Growth In 21st Century Has Gone To Stock Buybacks by  • April 28, 2016

By Tyler Durden at ZeroHedge

By now it is a well-known fact that corporations have no real way of generating organic growth in this economy, so they are relying on two things to boost share prices: multiple expansion (courtesy of central banks) and debt-funded buybacks (courtesy of central banks), the latter of which requires the firm to generate excess incremental cash. Incidentally, as SocGen showed last yearall the newly created debt in the 20th century has gone for just one thing: to fund stock buybacks.

The problem with this is that if a firm is going to continue to add debt to its balance sheet in order to fund buybacks (and dividends), then it needs to be able to generate enough operational cash flow in order to service the debt. Even if one makes the argument that debt is cheap right now, which may be true, or that central banks are backstopping it, which is certainly true in Europe as of a month ago, the fact remains that principal balances come due eventually also, and while debt can be rolled over, at some point the inability to generate cash from the operations catches up with them; furthermore even a small increase in rates means the rolling debt strategy is dies a painful death, as early 2016 showed.

In the following chart we can see net debt growth skyrocketing nearly 30% y/y, while EBITDA (cash flow) has been contracting for the past year. In fact, as SocGen shows below, the difference in the growth rate between these two most critical data series is now over 35% – the biggest negative differential in recent history.

Of course, every finance 101 student knows that a firm which has to borrow more cash than it is able to produce from its core operations is not a sustainable business model, and yet today’s CFOs, pundits and central bankers do not.

And the next question is: what happens if the Fed does raise rates, what happens to the feasibility of these companies servicing the debt while also spending on R&D and CapEx (assuming there is any), and who can only afford the rising interest expense as a result of ever smaller interest rates? The answer is, first, massive cost cutting, i.e. layoffs, which would be a poetic way for the Fed’s disastrous policies to be reintroduced to the real economy… and then, more to the point, mass defaults.

Source: Debt is Growing Faster Than Cash Flow by the Most On Record – ZeroHedge

Post navigation end The following is interesting:  The USA treasury, the biggest manipulator of them all, gives explicit warnings to China, Japan,South Korea, Taiwan and Germany not to devalue their currencies: I understand the first 4 countries but Germany?  It does not have a currency, it is part of the EME  (Euro).  The key country named , of course is China.  Actually it was China that warned the USA that if the Americans raised their interest rate, then China would devalue! (courtesy zero hedge) US Treasury Gives Explicit Warning To China, Germany And Japan Not To Devalue Their Currencies

While the US Treasury’s semi-annual report on the foreign-exchange policies of major U.S. trading partners has traditionally been, pardon the pun, a paper tiger, as the US has not named a single country as a currency manipulator since it did so to China in 1994, and it didn’t go so far as to blame any country as an outright manipulator in the just released April edition, there was a new addition to the latest report.

In an inaugural “monitoring list”, the US put five economies including China, Japan and Germany (as well as South Korea and Taiwan) on a new currency watch list, saying that their foreign-exchange practices bear close monitoring to gauge if they provide an unfair trade advantage over America.

This is what it said:

In determining the appropriate factors to assess these criteria, Treasury took a thorough approach, analyzing data spanning 15 years across dozens of economies, including all economies that have had a trade surplus with the United States during that period, and which in the aggregate represent about 80 percent of global GDP. The thresholds are relatively robust in that reasonable changes to the thresholds do not materially change the Report’s conclusions. Treasury will also continue to review the factors it uses to assess these criteria to ensure that the new reporting and monitoring tools provided under the Act meet the objective of indicating where unfair currency practices may be emerging.

 

Pursuant to the Act, Treasury finds that no economy currently satisfies all three criteria, however, five major trading partners of the United States met two of the three criteria for enhanced analysis. Treasury is creating a new “Monitoring List” that includes these economies: China, Japan, Korea, Taiwan, and Germany. China, Japan, Germany, and Korea are identified as a result of a material current account surplus combined with a significant bilateral trade surplus with the United States. Taiwan is identified as a result of its material current account surplus and its persistent, one-sided intervention in foreign exchange markets. Treasury will closely monitor and assess the economic trends and foreign exchange policies of these economies.

 

As noted above, Treasury is creating a new “Monitoring List” that cites major trading partners that have met two of the three criteria specified in the Act. In this first Report, the Monitoring List includes China, Japan, Korea, Taiwan, and Germany.

This is about as direct a threat to the 3+2 nations not to engage in major currency devaluation whether through QE, NIRP or major interest rate changes as Jack Lew could come up with, and in some ways was to be expected in the aftermath of the G-20 meeting which as we found out this week, precluded any additional QE by the BOJ.

Recall that as part of the most recent G-20 accords, which many believe is what unleashed the steep slide in the dollar, the member nations agreed to refrain from FX intervention absent “disordely markets.” It also made clear what could push a country from merely the watch list to full blown manipulator status:

While no economy met all three of the criteria, this result is a reflection, in part, of the dynamics of the global economy during the past year, in which capital outflows from emerging markets have led a number of economies to engage in foreign exchange intervention to resist further depreciation of their currency (rather than appreciation). The extent of these flows was unusually high by historical standards, which underscores the possibility that more economies may trigger these thresholds going forward.

It added that “the Administration shares strongly the objective of taking aggressive and effective actions to ensure a level playing field for our workers and companies. The President has been clear that no economy should grow its exports based on a persistently undervalued exchange rate, and Treasury has been working aggressively to address exchange rate issues bilaterally, including through the U.S.-China Strategic and Economic Dialogue, and multilaterally through the G-7, G-20, and the International Monetary Fund.”

And specifically referring to the G-20 meeting, the Treasury notes the following:

The United States has secured commitments from the G-20 member countries to move more rapidly to more marketdetermined exchange rates, avoid persistent exchange rate misalignments, refrain from competitive exchange rate devaluations, and not target exchange rates for competitive purposes. Through Treasury’s leadership, the G-7 member countries, including Japan, have publicly affirmed that their fiscal and monetary policies will be oriented toward domestic objectives using domestic instruments. Treasury has also pushed for stronger IMF surveillance of the exchange rate policy obligations of its members. The IMF now publishes an exchange rate assessment for 29 economies, and is improving its exchange rate analysis in its Article IV reports on member countries. And through U.S. leadership, the Trans-Pacific Partnership countries have adopted—for the first time in the context of a trade agreement—provisions that address unfair currency practices by explicitly adopting G-20 exchange rate commitments and by promoting transparency and accountability.

In other words, the next country that dares to engage in wholesale currency devaluation with the US’ express prior permission gets it, although it is not quite clear what “it” is (we will have more thoughts on that tomorrow).

Finally, there was no comment by the US Treasury on the biggest FX manipulator of all, the US Treasury itself which courtesy of the Fed can move the value of the Dollar higher or lower by orders of magnitude in seconds. Why? Because for now the US “reserve currency” privilege allows it to do whatever it wants, plus as a reminder, the world remains synthetically short trillions of dollars. If the US wants to punish everyone else, all it needs to do is to increase the value of the dollar by 10-15% in a short period of time, and we will again witness the same events that led to the market swoon in late 2015 and early 2016.

Average:

5 You Let us wrap up the week, with this review by Greg Hunter of USAWatchdog (courtesy Greg hunter/USAWatchdog)

Economy Rotten-Like Apple Sales, Russia US Moving Towards Conflict, MSM Unfair to TrumpBy Greg Hunter On April 29, 2016 In Weekly News Wrap-Ups

The economy is rotten just like Apple iPhone sales numbers. For the first time in 10 years, Apple reported its first quarterly sales drop for their popular iPhone. No, it’s not the end of the world, but it’s a sign there is trouble in the economy. Sure, Facebook beat its earnings projections, but they don’t make anything. Other bad news includes new home sales are down. Manufacturing numbers from the Dallas Fed are down. Consumer sentiment numbers from the University of Michigan are down. Spending is down. Retail sales are down. GDP in the first quarter came in at a paltry .5%. Economist John Williams says that number will be revised down and will probably turn negative. Williams says we are already in a recession or soon will be. Both Bo Polny and Greg Mannarino say the same thing: we are getting to a point where they can no longer hide the bad economy, and there really is no recovery after all.

What does this mean for the run up in the stock market we have seen in the last few months? Mannarino and Polny also come to the same conclusion, and that is the markets are rolling over and we are headed down. Maybe that’s why insiders have sold stocks for the last 13 weeks in a row—a record. Add this to the news of Saudi Arabia cutting oil deals with China, and Russia, as of this week, is no longer pricing its oil in dollars. Looks like we have a perfect storm of deep trouble for the U.S. and the world for that matter.

President Obama asked Europe for support for a possible war with Russia. While the President was in Germany recently, he asked that all members of NATO back the U.S. in Eastern Europe if war breaks out. There are all sorts of signs that things between the U.S. and Russia are not good. Russian fighters have recently buzzed U.S. Navy ships and surveillance aircraft. The U.S. has sent two F-22 Raptors to Romania to deter what the U.S. says is “Russian aggression.” Threats continue to be made on both sides. Meanwhile, in the Middle East, the U.S. sent another 250 troops to fight against ISIS while Iran’s Supreme Leader is complaining about how the U.S. is slow to remove sanctions and has done so only “on paper.” I say, that’s the deal you get when nobody signs a deal. The Iran/U.S. deal to curtail its nuclear program is a no deal-deal because you don’t have a deal if nobody signs it.

The mainstream media (MSM) continues to trash Trump. To me, it is painfully obvious that the MSM are afraid of a Trump presidency and, deep down, know Democrats are going to vote for Trump. According to a legit poll out at the first of the year, 20% of Democrats say they will vote for Trump.

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

Video Link

http://usawatchdog.com/weekly-news-wrap-up-4-29-16-greg- hunter/

 

end

 

well that about does it for tonight

I will see you Monday night

Harvey


APRIL 28/Agnico eagle produces strong results in a tough environment (banker manipulation)/ The big news of the day: Japan cannot and willnot do anymore QE/sends Japanese yen skyrocketing and bourses crumbling throughout the globe/Yen carry traders...

Thu, 04/28/2016 - 18:48

Good evening Ladies and Gentlemen:

Gold:  $1,265.50 up $15.90    (comex closing time)

Silver 17.55  up 26 cents

In the access market 5:15 pm

Gold $1266.60

silver:  17.56

 

From last night’s access market through to the opening of Japan, the bankers were doing everything possible to knock gold off its perch.  Then suddenly, Kuroda of the Central Bank of Japan shocked all of the traders by doing absolutely nothing.  Everyone was expecting some sort of new QE.  That sent the Japan skyrocketing by over 340 basis points, the Nikkei plummeted by over 1000 points and then bourses around the world were hit pretty hard.  The big winner was gold and silver as they immediately rebounded and that put a huge dent in the plans of the bankers with respect to the London’s options which expire tomorrow morning.  If they fail tomorrow that would be the first time in many years that the bankers have failed during the entirety of options expiry week.

 

Please remember that even though comex options have expired we still have London’s LBMA and OTC to contend with.  They expire on tomorrow morning.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 30 notices for 3000 ounces for gold,and for silver we had 2 notices for 10,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period.

 

In silver, the open interest fell  by  3,278  contracts down  to 203,470 despite the fact that the price was silver was up  by 18 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.01 BILLION TO BE EXACT or 145% of annual global silver production (exRussia &ex China) We are now at all time highs for  OI with respect to silver

In silver we had 0 notices served upon for nil oz.

In gold, the total comex gold OI ROSE by 4142 contracts, UP to 502,029 contracts AS  the price of gold was UP $7.00 with WEDNESDAY’S TRADING(at comex closing).

We had a huge addition of 1.49 tonnes of  gold inventory at the GLD, thus the inventory rests tonight at 804.14 tonnes.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 335.580 million oz.

.

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

1. Today, we had the open interest in silver fall by 4,278 contracts down to 203,470 despite the fact that the price of silver was UP by only 18 cents with WEDNESDAY’S trading. The gold open interest ROSE by A LARGE 4,145 contracts AS  gold ROSE by $7.00 YESTERDAY.  Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 7.47 POINTS OR 0.25%  /  Hang Sang closed UP 26.43 OR 0.12%. The Nikkei closed DOWN 623.33 POINTS OR 3.61% . Australia’s all ordinaires  CLOSED UP 0.73%. Chinese yuan (ONSHORE) closed EVEN at 6.4760.  Oil FELL  to 45.17 dollars per barrel for WTI and 47.14 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4831 yuan to the dollar vs 6.4760 for onshore yuan.

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

ii) The big news:  The central bank of Japan did absolutely nothing.  That disappointed the markets and the Nikkei initially dropped 1000 points and finishing down 624 points.  The USA/Yen crashed 3 huge handles to 108.07.  Markets around the globe tumbled:

(courtesy zero hedge)

b) REPORT ON CHINA

iii) As we pointed out to you yesterday, Chinese commodity trading volume has crashed

The bubble has burst!!

( zero hedge)

iv)Smart man!!  The following Chinese wealth manager decided to disappear before the authorities disappeared him.  He is off with 154 million dollars: ( zero hedge)

v)China injected 1 trillion usa into its economy and did get industrial profits rising by 11% year over year.  However China is still stuck with huge excess capacity.  Another problems is payments due to suppliers is running at 83 days and that is not good. Remember also that this month commodity prices burst which should burst everything inside China

( zero hedge) 4.EUROPEAN AFFAIRS

Oh boy!! this is trouble.  The EU rejects the Greek emergency summit. As you will recall, Greece has big repayments in July and it does not seem that they will be made

(courtesy Mish Shedlock/)

5.GLOBAL ISSUES

Ports around the globe very quite as goods are just not moving

( C. Paris/Wall Street Journal/David Stockman/ContraCorner)

6.OIL MARKETS Crude rips higher up to $46.00 crushing the oil shorts ( zero hedge) 7.PHYSICAL MARKETS

i) this is huge!!  We now have the largest Russian bank, VTB that will supply up to 100 tonnes of gold per year to China.  Since Russia generally keeps all of its gold and purchases gold on the foreign markets for its own account, they will now supply China.

(courtesy GATA/Reuters)

iiA very important commentary tonight from Bill Holter

a must read…

My response to Bob Moriarty (public article)

iii)Dave Kranzler of IRD on gold, the market story of the year:

( Dave Kranzler/IRD)

8.USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)The actual first quarter GDP grew at only .5% instead of the .7% expectations:

( zero hedge)

ii)

David Stockman lays out the political mess inside the USA

a must read… ( David Stockman/ContraCorner)

iii)David Stockman has the detailing on a continuous basis the S and P earning last year.  The official earnings for the year:  slightly over 86 dollars with a P/E at 24 x.  Now we are entering first quarter  2016 and the S and P earnings are coming in at a growth rate of -8%.

And the earnings are mirroring the likes in Europe and Japan: ( JPMorgan/zero hedge)

iv)Carl Icahn dumps his entire stake in Apple:

( zero hedge)

v)Strange!! our Quant specialist, Marko Kolanovic is suddenly worried about the end game and believe it or not discusses how gold will be useful in this environment:

( zero hedge)

vi) What took them so long!  The SEC will now begin to crack down on non GAAP accounting earnings:

( zero hedge) Let us head over to the comex:

The total gold comex open interest ROSE CONSIDERABLY, as expected to an OI level of 502,029 for a GAIN of 4,145 contracts AS the price of gold UP  $7.00 with respect to WEDNESDAY’S TRADING. We are now entering the active delivery month of April. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month.The front April contract month is now off the board and we will have to wait to see how many contracts are served upon.  The next non active contract month of May saw its OI fall by 111 contracts down to 2023. The next big active gold contract is June and here the OI rose by 3089 contracts up to 70,666. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 230,036. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 181,884 contracts. The comex is not in backwardation.

Today we had 30 notices filed for 3,000 oz in gold.

 

And now for the wild silver comex results. Silver OI FELL by a considerable 3,278 contracts from 206,748 down to 203,470 DESPITE THE FACT THAT the price of silver was UP by only 18 cents with WEDNESDAY’S TRADING.  We are noff off the April contract month.  The next active contract month is May and here the OI FELL by only 15,540 contracts DOWN to 11,490. This level is exceedingly high AS WE ONLY HAVE 1 day before first day notice tomorrow, Friday, April 29. The volume on the comex today (just comex) came in at 97,587 which is extremely high. The confirmed volume yesterday (comex + globex) was AGAIN OUT OF THIS WORLD AT 141,158. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had  2 notices filed for 10,000 oz.  

April contract month:

INITIAL standings for APRIL

Initial Standings for April April 28. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  26,373.07 oz  (Scotia,BRINKS)

500 kilobars + Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  48,079.648 OZ

HSBC No of oz served (contracts) today 30 contracts
(3000 oz) No of oz to be served (notices) off the board Total monthly oz gold served (contracts) so far this month 3984 contracts (398,400 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month 155,354.2 oz

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 1 customer deposit:

i) Into SCOTIA: 10,297.975 oz

total customer deposit:  10,297.975 oz

Today we had 2 customer withdrawals:

i) Out of SCOTIA;  1,607.500  50 kilobars

ii) Out of Manfra:  64.30  2 kilobars

total customer withdrawal:1,607.500 oz   52 kilobars

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 107 contracts of which 42 notices was stopped (received) by JPMorgan dealer and 24 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (3984) x 100 oz  or 398,400 oz , to which we  add the difference between the open interest for the front month of April (30 CONTRACTS) minus the number of notices served upon today (30) x 100 oz   x 100 oz per contract equals the number of ounces standing.   Thus the initial standings for gold for the April. contract month: No of notices served so far (3984) x 100 oz  or ounces + {OI for the front month (30) minus the number of  notices served upon today (30) x 100 oz which equals 398,400 oz standing in this non  active delivery month of April (12.3917 tonnes). we gained 2,400 oz of additional gold standing. 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 thus have 12.3917 tonnes of gold standing for April and 20.000 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 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)  = 19.107 tonnes still standing against 20.000 tonnes available.  .   Total dealer inventor 643,108.03 oz or 20.000 tonnes Total gold inventory (dealer and customer) =7,250,269.872 or 225.51 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

APRIL INITIAL standings

 april 28.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 375,800.85 oz

CNT Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 600,381.000

CNT, No of oz served today (contracts) 2 contracts

10,000  oz No of oz to be served (notices) off the board Total monthly oz silver served (contracts) 193 contracts (965,000 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 10,122,681.0 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into CNT: 600,381.000??? oz

Total customer deposits: 600,381.000 oz.

We had 1 customer withdrawals

 

i) Out of CNT; 375,800.85 oz

 

:

total customer withdrawals:  375,800.85  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 2 contracts for 10,000 oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (193) x 5,000 oz  = 965,000 oz to which we add the difference between the open interest for the front month of April (2) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the April. contract month:  193 (notices served so far)x 5000 oz +(2{ OI for front month of April ) -number of notices served upon today (2)x 5000 oz  equals 965,000 oz of silver standing for the March contract month. we neither lost nor gained any silver ounces standing.   Total dealer silver:  31.957 million Total number of dealer and customer silver:   151.683 million oz The open interest on silver is now close an all time high with the record of 206,748 being set yesterday.  The total dealer amount of silver remains at multi year low of 31.957 million oz.   end And now the Gold inventory at the GLD April 28/a huge addition of 1.49 tonnes of gold at the GLD/Inventory rests at 804.14 tonnes April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 28.2016:  inventory rests at 804.14 tonnes

end

 

Now the SLV Inventory April 28/no change in silver inventory/rests tonight at 335.580 million ox April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580 aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . April 28.2016: Inventory 335.580 million oz .end     1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!! Percentage of fund in gold 60.7% Percentage of fund in silver:37.9% cash .+1.4%( April 28.2016). 2. Sprott silver fund (PSLV): Premium to  RISES to +58%!!!! NAV (April28.2016)  3. Sprott gold fund (PHYS): premium to NAV  rises.1.06% to NAV  ( April28.2016) Note: Sprott silver trust back  into positive territory at +.58%% /Sprott physical gold trust is back into positive territory at +1.06%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to +.58%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      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   Property Bubble In Ireland Developing Again By Mark O’ByrneApril 28, 20160 Comments

A property bubble is developing in Ireland again. The Dublin housing market has seen residential property prices surge by 50% on average and as much as 100% in more affluent areas since the Dublin property market began to bounce in 2012.

“Crisis: The dysfunctional property market has already re-emerged just
a few years after the biggest housing bust in the country’s history”

Respected Irish economist and economic commentator Colm McCarthy warned last week that “there is another house price bubble under way in the Dublin area.”

While all the focus is on the housing crisis and the rising threat of homelessness for many including families, and rightly so, less attention is being paid to the surge in prices in Dublin. Prices have risen  by so much that modest 3 bed and 4 bed houses in middle class suburbs in Dublin are now unaffordable to typical middle class families.

Many families need financial support from grandparents in order to be able to buy. This means that the majority of buyers are buy to let investors looking to profit from rising yields as rents spiral higher. Many of these buyers are cash buyers.

Writing in the Independent, McCarthy warned of increased speculation and “extraordinary prices”:

“Notwithstanding the efforts by the Central Bank to keep mortgage credit under control, some extraordinary prices have been quoted recently for the small parcels of land that become available.”

McCarthy cites spiralling Dublin land prices and makes the point that high prices being paid for land in Dublin means that the subsequent houses built on this land come on the market and much higher prices.

He focuses on the lack of supply, potential solutions and the risk that the government response may make matters worse including the risk of a wage price spiral as trade unions use spiralling house prices to secure higher wages leading to inflation and potentially stagflation as the global economy slows down.

The OECD voices concerns about an emerging property bubble in November. From the Examiner:

The OECD yesterday predicted the Irish economy will continue to grow strongly, but the Paris-based think- tank warned that the country faces “significant risks”, including another property bubble, as the crisis years are put behind.

“Pent-up demand after a long crisis may result in stronger private spending than projected,” the OECD said.

“Strong property prices may boost construction activity further in the short run, but also risk sparking another spiral of higher property prices and credit.”

Despite the eurozone getting a grip on its debt crisis by improving its bank safety net, “Ireland’s still high debt leaves it particularly vulnerable to any re-emergence of the banking and sovereign debt crisis”, it said.

UTV Ireland’s documentary series Insight investigated the state of the Irish property market, the housing crisis and whether there was a bubble developing, in a special report aired two weeks ago.

‘Insight: Is the Property Bubble Back?’ examined how the surging house prices in Dublin is forcing people to purchase properties in commuter towns such as Wicklow and Naas – where developments are currently being constructed to facilitate a rising demand, reminiscent of boom-time levels. As are average rents in Dublin which are now higher than at the peak of the boom.

UTV Ireland interviewed independent TD Mick Wallace who warned that there was new property bubble forming in Dublin.

Another Independent TD Richard Boyd Barrett voiced similar concerns to RTE as reported in the Irish Times:

The Government is “recreating the conditions for a housing bubble which has the potential to crash the Irish economy again in the near future”, according to People Before Profit TD Richard Boyd Barrett.

As was the case in 2007, there are valid reasons to be concerned about an emerging Dublin property bubble, especially given the extremely uncertain global financial and economic outlook.

Many of the risks seen in 2007 and in recent years remain and are now coming to the fore in 2016:

• Global economy remains vulnerable to recessions and new debt crises. There are fragile recoveries in the UK and U.S. while the Eurozone and Japan remain in recession
• Financial and banking system remains vulnerable as seen in the very sharp falls in German, European and U.S. bank shares in recent days
• Geopolitical risk in the Middle East (Syria, Saudi, Iran etc.), increasing tensions amongst Russia, China and western powers and the increasing spectre of terrorism and war
• The Eurozone crisis is far from resolved and there is the risk of debt crises in China, the U.S., the Eurozone, Ireland and other nations

We believe that gold and silver have had healthy periods of correction and consolidation.  Both are more than 20% higher so far in 2016. We believe they should continue rising again in 2016 and in the coming years due to the considerable macroeconomic, systemic, geopolitical and monetary risks of today.

We are confident that gold will continue to protect those who own it as part of an overall diversification strategy and as crucial financial insurance in a portfolio. Dr Constantin Gurdgiev, Dr Brian Lucey, Eddie Hobbs, Jim Power and Jill Kerby are all advocating diversification into gold today.


Recent Market Updates
Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

Gold In London Vaults Beneath Bank of England Worth $248 Billion – BBC

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold Price Set To Push Higher As Inflation Picks Up – RBC

Silver Bullion “Has So Much More to Give” – 5 Must See Charts Show

China Gold Bullion Yuan Trading To Boost Power In Gold and FX Markets

Gold News and Commentary
“We believe the recovery in the U.S. is more fragile than is acknowledged” (GoldCore in Marketwatch)
Silver Supply Trouble Shows Why Rally Momentum Is Building (Bloomberg)
China’s gold imports from Hong Kong rise to 3-month high – (Reuters via Biz Recorder)
China’s Gold Imports Jump on Investment Demand as Price Falters (Bloomberg)
Silver may touch as high as $20 an ounce in near term – Deutsche Bank (Metal.com)

Gold Has “Chart of Decade” – Going to $10,000/oz – Rickards (Boomberg)
Depression, Debasement, & 100 Years Of Monetary Mismanagement (Zero Hedge)
Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold (Zero Hedge)
Why a Collapse Is “Practically Unavoidable” (Casey Research)
Do Old Indicators Matter Or Is Physical About To Overrun Paper? (Dollar Collapse)
Read More Here

Gold Prices (LBMA)
27 April: USD 1,244.75, EUR 1,100.79 and GBP 853.58 per ounce
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce
22 April: USD 1,245.40, EUR 1,104.34 and GBP 868.73 per ounce
21 April: USD 1,257.65, EUR 1,113.21 and GBP 877.01 per ounce

Silver Prices (LBMA)
27 April: USD 17.34, EUR 15.34 and GBP 11.87 per ounce
26 April: USD 16.95, EUR 15.02 and GBP 11.64 per ounce
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce
22 April: USD 17.19, EUR 15.26 and GBP 11.96 per ounce
21 April: USD 17.32, EUR 15.31 and GBP 12.05 per ounce

Mark O’Byrne Executive Director Published in Market Update

 

 

end

 

Agnico eagle produces extremely strong results

(courtesy Agnico Eagle Home page)

 

Agnico Eagle Reports First Quarter 2016 Operating and Financial Results – Continued Strong Operational Performance – Amaruq, El Barqueno and Barsele Drill Programs Yield Positive Results April 28, 2016

Stock Symbol: AEM (NYSE and TSX)

(All amounts expressed in U.S. dollars unless otherwise noted)

TORONTO, April 28, 2016 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $27.8 million, or $0.13 per share, for the first quarter of 2016.  This result includes unrealized gains on financial instruments of $9.6 million ($0.04 per share), non-cash foreign currency translation gains on deferred tax liabilities of $8.0 million ($0.04 per share), non-cash foreign currency translation losses of $6.8 million ($0.03 per share), non-cash stock option expense of $5.9 million ($0.03 per share), non-recurring losses of $1.9 million ($0.01 per share) and various mark-to-market and other adjustment losses of $0.9 million (nil per share).  Excluding these items would result in adjusted net income of $25.7 million or $0.12 per share for the first quarter of 2016.  In the first quarter of 2015, the Company reported net income of $28.7 million or $0.13 per share.

First quarter 2016 cash provided by operating activities was $145.7 million ($167.5 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $143.5 million in the first quarter of 2015 ($176.8 million before changes in non-cash components of working capital).  The decrease in cash provided by operating activities before changes in working capital during the current period was largely due to higher exploration and corporate development expenditures (up 70%, period over period) which were partially offset by higher sales volumes.

“The year is off to a good start with a more constructive gold price environment and continued strong operating performance from all of our mines.  As a result of the strong operating results, we now expect to meet the top end of our production guidance for 2016,” said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “At current margins, Agnico Eagle is generating sufficient cash flow to support its expanded exploration and development activities and potentially pay down additional debt,” added Mr. Boyd.

First Quarter 2016 highlights include:

  • Quarterly gold production – Payable gold production1 in the first quarter of 2016 was 411,336 ounces of gold at total cash costs2 per ounce on a by-product basis of $573 and all-in sustaining costs per ounce3 (“AISC”) on a by-product basis of $797
  • Strong operational performance at Mexican operations – In the first quarter of 2016, payable gold production was 87,899 ounces at the Company’s Mexican mines.  Silver production was a new quarterly record of 752,000 ounces.  Total cash costs per ounce of gold on a by-product basis averaged $364
  • 2016 production now expected to reach high end of the guidance range – Production for 2016 is now expected to meet the high end of the guidance range of approximately 1.525 to 1.565 million ounces of gold with total cash costs per ounce on a by-product basis of between $590 to $630 and AISC of approximately $850 to $890 per ounce
  • Continued strong operating performance enhances financial flexibility – In the first quarter of 2016, $55 million was repaid under the Company’s credit facility and net debt was reduced by approximately $89 million to $923 million at March 31, 2016.  For the sixth consecutive quarter, the Company has reduced net debt
  • Amaruq Project, Nunavut – Further drilling refines the geometry of the Whale Tail Ore Shoot and IVR deposit – Drilling resumed in January and results show that the Whale Tail Ore shoot is larger in the central area than previously interpreted and confirms that the IVR deposit extends to the East and to a depth of 230 metres
  • Drilling at Barsele, in Sweden, extends the mineralization at depth and suggests the potential for a Goldex type deposit – Highlights include: 2.01 grams per tonne (“g/t”) gold (capped) over an estimated true width of 84.0 metres at a depth of approximately 310 metres in the Skirasen zone
  • A quarterly dividend of $0.08 per share was declared 

end

 

this is huge!!  We now have the largest Russian bank, VTB that will supply up to 100 tonnes of gold per year to China.  Since Russia generally keeps all of its gold and purchases gold on the foreign markets for its own account, they will now supply China.

(courtesy GATA/Reuters)

Russia’s VTB aims to supply up to 100 tonnes of gold to China per year

Submitted by cpowell on Wed, 2016-04-27 15:20. Section: 

By Oksana Kobzeva and Polina Devitt
Reuters
Tuesday, April 26, 2016

MOSCOW — VTB Bank, Russia’s second-largest lender, aims to supply between 80 and 100 tonnes (2.57-3.22 million troy ounces) of gold to China per year, the bank said on Tuesday after it started the shipments.

VTB said earlier Tuesday it had dispatched its first batch of gold to China, becoming the first Russian bank to start direct supplies of physical gold to the world’s largest buyer and consumer of the precious metal. …

… For the remainder of the report:

http://www.reuters.com/article/russia-bank-vtb-china-gold-idUSL5N17T5IB

 

END

Very strange: The CFTC continues to have no comment on the gold/silver rigging of Deutsche bank:

(courtesy Chris Powell/GATA)

 

CFTC has no comment on Deutsche Bank’s admission of gold, silver
market rigging

Submitted by cpowell on 11:01AM ET Thursday, April 28, 2016.
Section: Daily Dispatches
2p ET Thursday, April 28, 2016

Dear Friend of GATA and Gold:

The U.S. Commodity Futures Trading Commission will not answer
questions arising from Deutsche Bank’s reported agreement to pay
damages for and implicate other banks in the manipulation of the
gold and silver markets, a commission spokesman said today.

Last week your secretary/treasurer put to the commission three
questions about the development with Deutsche Bank:

— Does the commission have any reaction to Deutsche Bank’s
admission to manipulating the gold and silver markets?

— Is the commission responding to Deutsche Bank’s admission in
any way?

— In September 2013 the commission reported that it had been
investigating the silver market for five years and had found
nothing improper. In light of the development with Deutsche Bank,
is the commission reconsidering that conclusion?

 

Today’s “no comment” from the commission spokesman also covered
an additional question put to the commission today. Today’s
question noted that after your secretary/treasurer reported to
you, in a dispatch on April 23, his inquiries to the commission –

http://www.gata.org/node/16404

— a GATA supporter asserted to your secretary/treasurer that
soon after the announcement of Deutsche Bank’s plan to settle the
market-rigging lawsuit, he reached a market surveillance official
for the commission and this official said the commission was very
much aware of the development with Deutsche Bank. Such an
admission by a CFTC market surveillance official would contradict
the impression the CFTC spokesman gave to your
secretary/treasurer a week ago, conveyed in the April 23 dispatch
— that the commission had not been aware of the development with
Deutsche Bank until GATA inquired.

So today’s rejected question was: Prior to GATA’s inquiry to the
CFTC, was a market surveillance official for the commission
contacted about the Deutsche Bank development and did he confirm
that the commission was aware of it?

Since the CFTC’s annual budget is around $250 million, these
refusals to comment about or even acknowledge awareness of
reports of commodity market rigging could seem a bit overpriced.

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

 

end

Dave Kranzler of IRD on gold, the market story of the year:

(courtesy Dave Kranzler/IRD)

 

The Precious Metals Are The Market Story Of The Year So Far April 28, 2016Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

“Short gold on market overreaction”Jeffrey Currie on CNBC on Feb 16, 2016;   CNBC host:“Is there any commodity that you can recommend to help our viewers make money?” Jeffrey Currie: “Short gold”CNBC on April 5, 2016;

Goldman Sachs’ Jeffrey Currie has become the “Jim Cramer” of the gold market (click on graph to enlarge).  When he issues a table-pounding call, do the opposite.  When gold was approaching its bottom around the $1050 level, Currie’s price target was $800.   Much the same way Wall Street banks like Goldman, with AAPL at $96 and down 27% since July have been forced to lower their price target from $200 to $150, Currie was forced to raise his price target for gold to $1080.  And he’s still pounding table with a “short gold” advisory.   I guess when he receives a taxpayer-subsidized seven-figure bonus every year, he doesn’t mind looking like a total idiot with regard to the market.

To be sure, there’s several developments that warrant designation as the market story of the year so far.  The shocking performance of the stock market would likely get the nod except for the now-obvious fact that the Federal Reserves continuous intervention is the force behind the stock market’s buoyancy.  In relation to the true underlying fundamentals, perhaps the only two markets in history that have been more irrational are the Dutch tulip bulb mania of the 1630’s and the Weimar Republic stock market from 1914 – 1923.

Without a doubt in my mind, the move up in the precious metals sector since January 20th is the market story of the year so far.  What makes this even more remarkable is the relentlessness of the move despite the obvious repetitious attempts by the Federal Reserve/bullion banks to push the price of gold/silver lower with fraudulent Comex paper derivatives, as evidenced by the rapidly escalating amount of paper gold/silver contracts printed and sold into the “market.”  The open interest of paper in relation to the amount of underlying deliverable physical gold/silver on the Comex has been multiplying recently at a geometric rate.

This rise in the price of gold/silver has ensued despite a plethora of skepticism from even the traditionally bullish precious metals-investing analysts.  Most market prognosticators – and I’m more less guilty of this myself – have been forecasting a sharp pullback/correction in response to market technicals which heretofore have signaled the imminence of a massive bullion bank price attack.

Further contributing to the surprising price-behavior of gold is the absence of Indian imports which push the market higher with elephantine seasonal demand at this time of year.  India’s import machine has been effectively shut down from a jeweler’s strike since March 1.  This source of physical demand has begun to stir, which could make the present build-up in the paper short interest in gold and silver particularly interesting to watch.

There’s a flood of capital on the sidelines that stands ready to move into the sector but that is waiting for a big price pullback before initiating or adding to position.  The “smart” institutional money has been unloading historically overvalued stocks and is loathe to buy near-zero yielding Treasuries.   Perhaps this dynamic in and of itself will pre-empt any meaningful price corrections for the time-being.  While it may feel like the metals and mining stocks have made an unsustainably large move since mid-January, these two graphs below provide some perspective on the “scale” of the current move (click to enlarge):

As you can see, the two graphs of gold and the HUI index, while making a large percentage move since mid-January, have barely moved the needle in relation to their mid-bull market tops in 2011.

For as brutal and relentless as the manipulated price correction has been for the last five years, we can expect the next move higher to be a least as equally forceful in its power and durability.  Make no mistake, the underlying fundamentals which triggered the de facto financial system collapse in 2008 and drove the precious metals sector its peak in 2011 have become even stronger since the advent of QE – the money printing which further fertilized and enabled these systemically catastrophic inducing trigger-points.

The junior mining stocks are set up to provide life-style changing wealth creation.  But finding the ones that are bona fide companies is a challenge.  The Mining Stock Journal presents bi-monthly commentary and insight to the precious metals market plus a well-researched junior mining stock idea with each issue.   You can access the current report plus the back-issues (distributed via email) here:  Mining Stock Journal.   The issue that will be published today presents a relatively undiscovered and incredibly undervalued compa

 

A very important commentary tonight from Bill Holter

a must read…

My response to Bob Moriarty (public article) In response to my article yesterday The Chances Of A COMEX Default… (Public Article) , Bob Moriarty decided to respond and attack me personally in this article http://www.321gold.com/editorials/moriarty/moriarty042716.html .  He claims me to be a “GURU” (an insult according to him), a fool, a bad writer with poor grammatical skills (I agree), with poor logic …and a liar.  To start, calling someone a “liar” is a very big leap because it means there is an “intent to deceive” as opposed to just being wrong or even stupid.  Moriarty says I “feed people’s fantasies” to entice them to subscribe to our newsletter which is now one month old.  I wonder had I written the article over a month ago when all of my work was public what he would have claimed my motives to be?  Many have read my work since 2007 at http://www.lemetropolecafe.com/ and dozens of other sites, does anyone see a shift in my logic since those days in order “fool subscribers”?   As for my grammatical skills, I agree, they suck!  People do not read my work to make sure whether proper tense or punctuation is correct, they read it for the logic.  I try to take complicated subjects and break them down so the average person can understand what is happening.  The logic in this case is there are several hundred ounces of gold/silver represented by paper contracts but backed by only one ounce.  Put simply, COMEX is a fraud.  A call on this contractual metal cannot be met because the metal simply does not exist.  I believe when the “call” for delivery comes, COMEX will be forced to declare force majeure and settle with cash.  As I asked in the article, is this a default or is it not?  In the real world it will make no difference at all whether it is “legally” a default or not, “practically” IT IS!  In the real world the prices of gold and silver will have exploded and the “cash” so generously provided by COMEX to “settle” will not purchase the ounces you thought it would.  In essence, while gold and silver supplies go into hiding, you will be left holding a pile of devaluing and worthless dollars that will not “buy” what you were promised.   If you want to be “technical”, here are several passages from COMEX rules: Section 702 of the rules states in part: “In the event a clearing member fails to perform its delivery obligations to the Clearing House, such failure may be deemed a default pursuant to Rule 802.” Section 714 of the rules states in part: “A failure by a clearing member carrying a short futures position to tender a Delivery Notice on or before the time specified by the Clearing House on the last day on which such notice is permitted shall be deemed a violation of this Rule, except that the President of the Clearing House may, for good cause, extend the time to present such notice. Unexcused failure to make delivery shall be deemed an act detrimental to the interest or welfare of the Exchange. In addition to any penalties imposed as provided in Chapter 4, the Clearing House Risk Committee shall determine and assess the damages incurred by the buyer.” Section 802 of the rules states in part: “1. Default by Clearing Member If a clearing member of CME, CBOT, NYMEX , COMEX, or an OTC Clearing Member, (i) fails promptly to discharge any obligation to the Clearing House or (ii) becomes subject to any bankruptcy, reorganization, arrangement, insolvency, moratorium, or liquidation proceedings, or other similar proceedings under U.S. federal or state bankruptcy laws or other applicable law, the Clearing House may declare such clearing member to be in default. For purposes of this Rule 802, each default by a clearing member will be considered a separate default event, provided that if a clearing member has been declared in default, subsequent failures to pay by such defaulting clearing member shall not be considered separate default events unless and until the original default has been fully resolved and such clearing member has been restored to good standing.”   The obvious question is this, if COMEX uses the word “default” in their own legal language then how is it impossible to ever occur?  Would they really address an impossibility?  While these rules pertain to individual members, what happens collectively were the longs to demand delivery of non existent metal?  What will it be called when collectively the members cannot perform and deliver?  “Default(s)” as in “plural” or just one grand default? Further, Mr. Moriarty wrote “If Mr. Holter and Ted Butler want instead to make an argument that since the short position is so large you will never be able to take delivery because there won’t be any silver, they can say that. Butler did in 2001 and managed to pick the absolute bottom of silver in real terms in 5000 years. Not only was there a lot of silver, it was at a low. There was no shortage then, there is no shortage now.”  I would ask this, if far more “paper” silver has been sold than actually exists, isn’t this a “shortage” of real metal in and of itself?  Buyers have “paid” for silver that doesn’t even exist.  This aids in suppressing price because the paper was used as a “relief valve” to divert real demand into fake supply.  Is this not a scam?  This by the way is “manipulation” pure and simple, something Moriarty denies.  Deutsche Bank has graciously now moved what was “conspiracy theory” into the category of FACT!   After discussions with the CFTC, Harvey Organ has told me “the CFTC insists cash settlement is a no no, gold or ‘equivalent’ must be delivered for settlement”.  As a side note, I find it quite odd COMEX which trades in 100 ounce gold bars continually reports “.000” (triple zero) movements which is a statistical impossibility.  They have also been reporting many movements and adjustments that are divisible by 32.15 indicating these are kilo bars.  It is also odd because the 100 ounce bars are only 99.5 fine while kilo bars are 99.99 fine, how is this accounted for if kilo bars are used to settle?  Something fishy here? Mention of “naked shorting” definitely needs mentioning because there certainly IS such a thing.  One needs look no further than COMEX itself.  What exactly are the contracts sold over and above available metal?  Or look at shorts in various stocks, there have been times where more stock was sold short than authorized and issued.  What would you call this?  “Naked shorts” are the reason for the old saying “he who sells what isn’t his’n, buys it back or goes to prison”.   As for fake bars of gold, they have already intermittently shown up at this point.  https://www.sprottmoney.com/blog/fake-gold-is-back-hk270-million-discovered-in-hong-kong-nathan-mcdonald-sprott-money-news.html Rob Kirby is cited in this article saying 6,000  400 ounce bars were discovered in China  http://www.silverbearcafe.com/private/03.10/phonygold.html  The New York Post reported on fake gold in New York  http://nypost.com/2012/09/23/fake-gold-hits-nyc/  followed by more fake gold found in New York https://www.youtube.com/watch?v=trMTQBKbZlk .  As I see it, when the call for delivery comes, either fake bars, no bars or cash will be the only options available.

 When it comes to derivatives, Mr. Moriarty wrote “I only know of three people who seem to understand derivatives. That would be Adam Hamilton, me, and a guy named Jim Sinclair”.  He followed later with “Maybe Mr. Holter could get someone to introduce him to Jim Sinclair. Sinclair knows who does and doesn’t understand derivatives. He also knows about commodities and how they cannot default. I don’t think he would dream of charging people $119 a year just to feed people’s fantasies.”  Isn’t this interesting?  I am not sure I understand, at the beginning of his piece he acknowledges Jim Sinclair as my partner but now someone “should introduce us”?  And …there are only three people in the world that he knows of who understand derivatives …and one of them is my partner Jim Sinclair?  I’m pretty sure the feeling is not mutual on Jim’s part, he wrote me prior to my first article written

  “Bill,  I dismissed Moriarty for poor knowledge many years back.  His insistence derivatives net out to zero was evidence of real world ignorance.  Denial of notional value as total true value is warped logic.  Notional value will bcome full value at that very moment in time they are called on to perform.  As long as derivatives have no need to perform they remain unimportant.  As you have written, what is a contract worth that cannot perform?  COMEX comes immediately to mind.  Ry, Jim”      I must confess, I wrote poorly and incorrectly when writing “I do want to point out, this is the same man who said a derivatives blowup can never happen.  I should have included “because of ‘notional’ value”.  For this I apologize publicly.  Failing to include “because of notional value” is the main point to where we disagree.  This is where he and Jim Sinclair vehemently disagree.  We believe notional value when markets become stressed will become real and TOTAL VALUE.  Jim and I believe too much “notional value” is exactly what will cause a de facto default on the COMEX with gold and silver.  You see, the notional value of all the futures contracts, the puts and calls, and OTC derivatives simply dwarf COMEX inventories.  The derivatives on gold and silver dwarf ALL THE METALS EVER MINED IN ALL OF HISTORY FOR THAT MATTER!  THIS is where we disagree.  Notional values will ultimately be the root cause of cross party defaults in EVERYTHING …INCLUDING COMEX GOLD AND SILVER!    I am not sure I get it, while talking about markets AND DERIVATIVES blowing up, Moriarty believes none of this can or will happen because of notional value?  These derivatives that will blow up are all paper contracts based on stocks, bonds and currencies but not commodities nor silver or gold because those members and exchanges cannot default?  I would suggest this, if an exchange settled with bananas instead of copper, that would be a default.  Just as if COMEX settled gold or silver with dollars?  Are not fiat dollars and physical precious metals the exact opposites of each other?  Who wants dollars if they were expecting gold?  Technically, under a situation of force majeure, settling in dollars may not be a legal default (though COMEX itself says it is in their own rules)… it is however a real world and de facto default settling in the exact opposite currency to what you were “betting” on as a speculator.  Man up and call a spade a spade Bob!   To finish, I would like to address the most egregious personal attack Mr. Moriarty levelled against me.  He called me a liar.  As he obviously did not know Jim Sinclair and I are partners, he may not have known I was a stockbroker for 23  years and a branch manager for 12 of those.  In a highly litigious business world, I worked 23 years without ever an arbitration, lawsuit or any type of settlement.  Of more pride, none of my brokers were ever involved in any type of arbitration, lawsuit or settlement.  After the Dot Com bust, of the 711 branch offices at AG Edwards, less than one dozen offices were not litigated against.  Mine was one of those!  A “liar” cannot go 23 years while supervising others and doing business on a handshake and verbal order without being sued multiple times in multiple venues.  I tell it as I see it, if you disagree then that is your option.  Call me what you want, liar is cannot be one of them. Mr. Moriarty may not like my spelling or grammar (my schoolteachers did not either!), he may not like or agree with my logic though I believe it is sound.  He may believe whatever he would like to, it does not make him correct nor logical.  I tried to take the high road with this and simply argue the logic, or lack of.  I would hope Mr. Moriarty would extend the same courtesy in the future.  Lastly, so sorry for the spelling and grammatical errors but in reality I don’t give a damn! As an addendum, Jim Sinclair felt it necessary to chime in after reading the above: “Mr. Moriarty and I had a serious disagreement extremely early in the recognition of the severe problems that derivatives and their financial interdependence threatened the financial community based on lack of full grasp of the impact of bankruptcy a complexity of contract law thereupon many years back.  His insistence that derivatives net out to zero was correct in a theoretical and prefect world in which all parties to all derivatives performed as to what and when the contract called for. He even had a professor write an article to sustain his view. What they both missed was the critical financial factor and entirety of the problem OTC derivatives have landed us with in the trillions.  His denial of notional value transmuting to total true value in default is under contract law simply untrue.  Notional value will become full value at that moment in time they are called on to perform. If either party can’t come up with the huge funds then called for or physical gold, then bankruptcy of one party leads to the initial default.  The danger lies should this default be of size to become systemic in nature.  If either party to the Comex contract buyer or seller fails to perform according the varied contract stipulation the agreement under contract law, default occurs and the agreements in nominal value becoming real cash value which is an enormous financial swing. It is in the present discussion to recognize that default occurs at the point of non performance of the contract. All that Force Majeure does in the Comex contract is to outline a possible form of a solution to which there is no guarantee of

  Under the logical outline by Bill of events you can anticipate the Comex contract will default by not being able to perform in the contract manner called for. As far as the called for    

remedy by the halt that Force Majeure it is also theoretical in a perfect world. This is exactly what Bear Sterns and Lehman Brothers faced for the same reason which broke them both. Bill’s argument is totally correct in the real world of finance” Standing watch, Bill Holter Holter-Sinclair collaboration Comments welcome  bholter@hotmail.com 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 UP to 6.4760 / Shanghai bourse  CLOSED DOWN 7.47  OR 0.25%  / HANG SANG CLOSED UP 26.43 OR 0.12% 

2 Nikkei closed DOWN 624.44 or 3.61%%/USA: YEN FALLS TO 108.07

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 93.88/Euro UP to 1.1345

3b Japan 10 year bond yield: FALLS   TO -.082%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.07

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  45.14  and Brent: 47.14

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.

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 0.244%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.95%/: 

3j Greek 10 year bond yield RISE to  : 8.91%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1255.25/silver $17.32 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 30 /100 in  roubles/dollar) 64.83

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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9668 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0971 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .245%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.83% early this morning. Thirty year rate  at 2.68% /POLICY ERROR)

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

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

Global Stocks Plunge After Bank Of Japan “Shock”

It is very fitting that on today’s April 28th anniversary of the bull market, the day that officially makes this the second-longest “bull market” in history, the market got a stark reminder of just how it got there: through constant and relentless central bank intervention, which has been “beneficial” to stocks for the most part, however last night was anything but.

Less than one week after the BOJ floated a trial balloon using Bloomberg, that it would reduce the rate it charged some banks which set off the biggest USDJPY rally since October 2014, we are back where we started following last night’s “completely unexpected” (for everyone else: we wrote “What If The BOJ Disappoints Tonight: How To Trade It” hours before said “shock”) shocking announcement out of the BOJ which did absolutely… nothing.

It’s a total shock,” Nader Naeimi, Sydney- based head of dynamic markets at AMP Capital Investors told Bloomberg. “From currencies to equities to everything — you can see the reaction in the markets. I can’t believe this. It’s very disappointing.”

As we reported last night, the yen surged the most in 8 months, or since August’s market meltdown and Japanese equities plunged after the Bank of Japan refrained from adding to its monetary stimulus. Bonds jumped around the world and gold rallied as the Federal Reserve signaled no hurry to raise interest rates. The staggering move as seemingly everyone was caught wrong-footed is shown in the chart below.

As we warned readers in advance of the BOJ announcement, it all started with Goldman which one week before the BOJ announcement changed its “base case” for BOJ easing from June to April, expecting a doubling in ETF purchases, and immediately all the other sellside lemmings followed, assuing everyone would be flatfooted when the BOJ “disappointed.” As Bloomberg puts it, “the BOJ’s decision was a surprise because a majority of economists surveyed by Bloomberg had predicted some action to counter a strengthening yen that had cast a shadow over the outlook for wage gains and investment spending. That the market’s reaction was so violent shows the weight financial markets are attaching to shifts in monetary policy.”

The move confounded economists, a slight majority of whom had expected extra easing, and investors, who’d pushed the Topix index higher and the yen toward a one-month low in the hours before the decision.

The resulting screams of anger as the BOJ refuse to coddle spoiled “traders”, pardon central bank frontrunners, was absolutely hilarious: “I’m very disappointed. I wanted the BOJ to do something and the BOJ should have done something,” said Masaru Hamasaki, head of the investment information department at Amundi Japan Ltd. “Kuroda has created mostly positive surprises so far, but this time it’s negative. The BOJ hasn’t been on the same wavelength as markets this year.”

There was more: “Todays market reaction is all about the BOJ,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “‘Investor expectations that had been built ahead of the meeting have now been scaled back. Earnings in a nutshell look OK, but as earnings estimates further down the road are still too high, there will be a negative trend in earnings revisions.”

But wait, it gets even better: “Quite a few people have been wrong-footed by this,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “Guessing what governments do next at this moment in time is not a good way to play these markets. Hoping that there will be more stimulus will lead to disappointment, because hope isn’t a very good strategy.”

Yes, hope is not a very good strategy, especially when you are betting it all on what an irrational central planner may or may not do.

Of course, Kuroda’s inaction doesn’t just matter to investors. Japan’s economy is struggling to break out of a funk, with consumer prices dropping in March by the most since 2013 and company profits getting hurt by the stronger yen. In refraining from adding to stimulus, officials are betting that their success in bringing down borrowing costs since unveiling a negative-rate policy in January will generate an acceleration in lending. Perhaps this is just Kuroda’s way of saying Abenomics (and the BOJ’s policies) have failed and it’s time to pack it up?

And while Japan’s troubling future just got even more nebulous, stocks around the world tumbled, with European and Asian stocks, and U.S. index futures all falling after the BOJ “shock.” The drop is so big that not even last night’s blowout earnings by Facebook appear to be able to make much of a dent.

The MSCI All-Country World Index dropped 0.2 percent. The Stoxx Europe 600 Index lost 1.3 percent, heading for its biggest decline since April 5 as almost all of its industry groups declined.  Among the notable movers, we say Banco Bilbao Vizcaya Argentaria SA plunge 7.9 percent and Lloyds Banking Group Plc falling 2.4 percent after they reported earnings declines. Deutsche Bank AG was the exception, rising 3.8 percent, as it posted a surprise profit. Electrolux AB jumped 9.5 percent after Europe’s biggest maker of home appliances announced earnings that beat analysts’ estimates and raised its forecast for U.S. growth.

Futures on the Standard & Poor’s 500 Index slid 0.8 percent after the gauge rose for a second day, closing near its highest level of the year. In the premarket, Facebook Inc. climbed 8.4 percent after reporting sales and profit that topped projections. Medivation Inc. added 2.3 percent after Sanofi offered to buy it. The U.S. will release details of its first-quarter economic growth on Thursday.

Market Wrap

  • S&P 500 futures down 0.8% to 2074
  • Stoxx 600 down 1.2% to 344
  • FTSE 100 down 1.1% to 6248
  • DAX down 1.3% to 10165
  • German 10Yr yield down 6bps to 0.23%
  • Italian 10Yr yield down 5bps to 1.47%
  • Spanish 10Yr yield down 3bps to 1.6%
  • S&P GSCI Index up 0.2% to 356.7
  • MSCI Asia Pacific down 0.3% to 131
  • Nikkei 225 down 3.6% to 16666
  • Hang Seng up 0.1% to 21388
  • Shanghai Composite down 0.3% to 2946
  • S&P/ASX 200 up 0.7% to 5225
  • US 10-yr yield down 3bps to 1.82%
  • Dollar Index down 0.67% to 93.75
  • WTI Crude futures down less than 0.1% to $45.32
  • Brent Futures up less than 0.1% to $47.22
  • Gold spot up 1% to $1,258
  • Silver spot up 0.8% to $17.38

Top Global News

  • Facebook’s Zuckerberg Wants Right to Be Bold After Revenue Beat: Proposed new share class to give CEO more freedom for big bets; 1Q adj. EPS 77c vs est. 63c; 1Q rev. $5.38b vs est. $5.27b; Zuckerberg Borrows Google Tactic in Splitting Stock for Control
  • Sanofi Pursues Medivation for $9.3 Billion After Being Spurned: Offers $52.50 per share in cash, a premium of >50% to the 2-month volume-weighted avg. price prior to takeover rumors
  • BOJ Holds Off More Stimulus to Gauge Impact of Negative Rate: Keeps three key tools unchanged; majority forecast some action
  • Deutsche Bank Profit Beats Estimates as Legal Costs Drop: 1Q net attributable EU214m vs EU544m y/y; est. loss EU484.3m; debt trading revenue falls less than analysts had expected; Cryan, Fitschen call financial markets outlook “uncertain”
  • Texas Instruments Forecast Shows Rising Auto-Industry Demand: Sees 2Q rev. $3.07b-$3.33b, est. $3.17b; sees 2Q EPS 67c-77c, GAAP est. 71c; 1Q GAAP EPS 65c, est. 62c
  • First Cash Said to Be in Advanced Merger Talks With Cash America: Discussing an all-stock merger of equals and an agreement could be announced as soon as this week
  • Valeant’s ‘Mistakes’ Raised Profit, Destroyed Value, Ackman Says: Drugmaker’s price strategy reassessed at Washington hearing
  • PayPal Goes Mobile to Lure Customers, Fend Off Competitors: 1Q net rev. $2.54b vs est. $2.50b, adj. pro forma EPS 37c, est. 35c
  • Hanesbrands Offers $835 Million for Aussie Underwear Firm: Agreed to buy Australia’s Pacific Brands Ltd. for A$1.15 per share in cash, 22% more than the target’s closing price on Wed., gaining iconic underwear labels including Bonds and Jockey
  • Marriott 1Q Adj. EPS, Rev. Beat; Starwood Deal ‘On Track’: 1Q adj. EPS 87c, est. 84c, 1Q rev. $3.77b, est. $3.71b
  • VW’s Biggest Brand Stumbles to Loss on Emissions Crisis: VW brand posted a loss of EU127m in the final three months of 2015, compared with a profit of EU780m a yr earlier
  • House Panel Approves $610.5B Defense Policy Bill For FY 2017: House Armed Services Committee approves the $610.5b defense authorization bill by a vote of 60-2
  • Qlik Tech Said to Draw Bids From Thoma Bravo, Bain, Permira: First-round offers said submitted by Tuesday deadline
  • Puerto Rico Risks Historic Default as Congress Chooses Inaction: Island may impose moratorium if GDB payment isn’t delayed
  • Suncor Takes Majority Syncrude Stake After Murphy Oil Deal: Additionanal Syncrude stake will provide 17,500 barrels
  • Monsanto Says New Technology to Help GMOs Fight Pest Resistance: Technique may allow GMO plants to beat weed, insect resistance
  • DreamWorks Said to Explore Sale Advised by Centerview: Reuters

Looking at regional markets, Asian stocks trade mixed following a mild positive lead from Wall St. where an unsurprising FOMC and strength in oil provided early support, while Nikkei 225 slumped after the BoJ disappointed markets and kept monetary policy on hold. This saw a firm break below 17000 in the Nikkei 225 (-3.6%) with the index wiping out Industrial Production inspired gains. ASX 200 (+0.6%) benefited from the uptick in energy after WTI broke above USD 45/bbl to post another YTD high, while the Shanghai Comp (-0.3%) weakened amid ongoing poor earnings with state-owned CNPC the latest addition after its profits dropped over 50%. 10yr JGBs are relatively flat despite the slump in Japanese stocks as the BoJ’s inaction kept fixed-income demand subdued.

Top Asian News

  • China’s $1 Trillion Bond Leverage Unwinds as Pimco Senses Panic: Investors get squeezed as bond prices fall, repo rates rise
  • Daiwa Securities Quarterly Profit Falls 45% on Trading Slump: Brokerage commissions and underwriting fees also drop
  • Docomo Forecasts Jump in Profit as Phone Subsidy Ban Cuts Costs: To buy back up to 193b yen of shares from May 2 to Dec. 31
  • Sony Reports Quarterly Loss, Holds Forecast to Assess Earthquake: 4Q net loss 88.3b yen vs 106.8b yen loss y/y
  • ICBC Joins Bank of China in Breaching Bad-Loan Coverage Rule: Industrial & Commercial Bank of China breached a regulatory requirement for bad-loan coverage as it reported a 0.6% gain in 1Q profit
  • Samsung Gets S7 Boost, Still Leaves Question of What’s Next: Latest smartphone model fuels gains in net income, sales; shares decline as analysts see few new hits on horizon; co. to uy back 2.03 trillion won worth of common and preferred shares
  • Cnooc 1st Quarter Revenue Drops 31% After Crude Hits 12-Year Low: 1Q oil, gas revenue falls 30.7% y/y to 24.6b yuan
  • India’s Tata Starts Tech Transformation With Yoga Wearables: Tata hopes to place technology at the heart of group strategy
  • China Said to Mull Starting Trading of Credit-Default Swaps: NAFMII sought views on CDS and credit-linked notes, people say

European equities are broadly lower this morning as hopes of further stimulus had been shattered by the BoJ, after the central bank kept rates unchanged while also refraining from increasing the size of its asset purchase program. Alongside this, another bout of earnings have guided price action in Europe with IBEX the notable underperformer following a poor figures from BBVA. While the DAX saw a technical break below yesterday’s low amid VW’s annual conference, while weak regional German CPI’s point towards a poor national reading, subsequently adding to the dampened tone. Bunds have been bolstered by the negative tone across the region, with yields across the curve falling after the BoJ’s lack of action, coupled with signals from the FOMC that they are in no rush to tighten monetary policy. As such, CME FFR futures are now pricing in as much as 17% of a hike in June.

Top European News

  • Lloyds Falls After Posting Decline in First-Quarter Revenue: Rev. fell 1% to GBP4.4b, lender cut operating costs 2% to offset revenue drop
  • Anglo to Sell Niobium, Phosphate Business for $1.5 Billion: China Molybdenum agreed to buy the division and the transaction is expected to be completed in the second half of this year
  • Euro-Area Economic Confidence Rebounded in April From 1-Year Low: Indicator rises to 103.9 in April from 103.0 in March, economists had forecast a gain to 103.4
  • German Unemployment Extends Drop in Sign Economy Still Robust: Number of jobless fell for seventh straight month in April, unemployment rate remains at record low level of 6.2%
  • Airbus Profit Falls on Delivery Delays as A400M Issues Brew: Earnings slump 23% after setbacks to A320Neo, A350 programs, said fresh problems with the troubled A400M transport plane could hurt future earnings.
  • BBVA, CaixaBank Drop as First-Quarter Profit Miss Estimates: BBVA said net income fell 54% to EU709m, earnings were hit by lower trading revenue and currency fluctuations
  • Telecom Italia Said to Target $1.1 Billion Cost Cuts by 2018: New CEO Cattaneo wants to double company’s prior savings goal
  • WPP Sales Rise as U.S. Clients Spend More on Advertising: Forecast further increase this year, helped by the Summer Olympics in Rio and the U.S. presidential election
  • Hermes Sales Buoyed by Bags After Boosting Leather Output: Sales of leather goods, saddles surges 15%, beating estimates
  • TUI Agrees to $1.3 Billion Hotelbeds Sale to PE, Pension Funds: Price about 1.2 times 2015 rev. for online booking unit

In FX, In the wake of the FOMC statement last night, we see the market continue to pressure the USD, and focus is firmly on USD/JPY this morning after the heavy overnight losses based on the BoJ’s on-hold call. Heavy spec positioning on hints of a move saw the lead spot rate hit by 3 JPY, but early London has only managed a modest dip under 108.00 since. EUR/USD has been pressed higher as a result, with EUR/JPY showing the familiar resilience at the lows, but only after suffering a near 4 JPY drop. Similar losses seen in the rest of the major cross rates, but AUD, CAD and NZD all still higher against the USD, as is GBP which is back testing recent highs through 1.4600. German regional inflation all generally softer, but widely expected, with the unemployment rate unchanged at 6.2%. EU sentiment indices on the soft side also, but industrial above expectations — all to minimal effect on the EUR. Oil still pushing higher as Jun WTI eyeing $45.50+. CAD well bid but pre 1.2500 orders contain for now. US Q1 GDP the main event this afternoon, with USD sales fading in the last hour or so as a result.

In commodities, WTI and Brent have benefited from the decline in the USD index as the Fed look to be in no rush to hike rates, WTI currently trading near the USD 45.00/bbl level with the next major resistance at the psychological level of USD 46.00/bbl level. Gold has also been rising off the back of safe haven flows into the asset following the central banks decisions and comments. Silver has also been rallying reaching the USD 17.35/oz level eyeing the recent highs of USD 17.67/oz. In base metals copper prices were subdued amid the dampened tone in China and on the hourly chart price is currently at the 38.2 fib support level and could look to move higher after rejecting it for a second time.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Global equities slump amid the surprising lack of action by the BoJ, alongside a slew of rather soft earnings updates from large European names.
  • JPY benefits from the BoJ’s action, coupled with the broad risk off tone in the region.
  • Looking ahead, highlights include US Advance GDP, Unemployment Claims, German national Inflation figures alongside ECB’s Linde and Costa.
  • Treasuries rise during overnight trading with European and Asia sovereign bonds after the BOJ held off on more stimulus to take more time to assess the impact of negative rates, and the Fed showed no sign of June rate increase.
  • Haruhiko Kuroda hasn’t lost his power to jolt markets: but now he’s moving them by doing nothing as the yen soared the most in eight months and stocks sank in Tokyo
  • New Zealand’s central bank said it may need to cut interest rates further after holding them steady Thursday, as slowing global economic growth and a strong currency prolong a period of low inflation
  • Sweden’s krona is moving in the wrong direction with the threat of a major appreciation putting economic growth forecasts at risk, according to Riksbank Deputy Governor Per Jansson
  • Currency trading via CME Group Inc., ICAP Plc and Thomson Reuters Corp. fell to $538 billion per day last month, from more than $669 billion in September 2014, according to data compiled by Bloomberg, which shows the extent of the slump in a market that this month saw some banks report less client activity
  • PetroChina Co. posted its first-ever quarterly loss as falling prices for global crude and domestic gas wiped out earnings; China’s biggest oil and gas producer reported a 13.8 billion yuan ($2.1 billion) loss in the three months ended March 31 from a 6.15 billion yuan profit a year ago; Cnooc Ltd., China’s biggest offshore oil and gas explorer, reported a 31 percent decline in revenue and an increase in output amid a crash in crude prices
  • China is considering starting trading of credit-default swaps as the number of corporate nonpayments surges, according to people familiar with the matter
  • Brexit campaigners sought to seize back the initiative in the referendum battle as eight high-profile economists declared Britain would do better outside the European Union.
  • Daiwa Securities Group Inc. said it has almost completed a round of job cuts overseas as a trading slump contributed to a 45 percent decline in fourth-quarter profit
  • Sovereign 10Y bond yields lower; European, Asian markets lower; U.S. equity-index futures fall. WTI crude oil lower, metals higher

DB’s Jim Reid concludes the overnight wrap

It’s straight to Japan for us this morning where all eyes have been on the BoJ. Expectations had been growing in recent weeks that we might see some sort of further easing, a view also shared by a narrow majority of economists, however the big news is that BoJ has stayed put on all measures. That means annual asset purchases are unchanged at ¥80tn, the policy rate is to stay at -0.1% and the rate of ETF purchases is also unchanged. At the same time the BoJ has also pushed backed on its 2% inflation target, the fourth time in a year they have done so.

Pressure had only mounted leading into the meeting this morning after the BoJ reported lower than expected inflation data. Headline CPI was reported as dipping into negative territory at -0.1% yoy last month (vs. 0.0% expected), a fall of four-tenths. That’s the first deflation reading since 2013. Core inflation also slipped into negative territory at -0.3% yoy (vs. -0.2% expected), a drop of three tenths. The core core print (ex food and energy) was one-tenth lower at +0.7% yoy.

The most immediate impact to the BoJ decision was a huge rally in the Yen. Having hovered around 111.5 prior to the release, the currency surged over two big figures and broke through 109.0 (touching 108.77). It’s currently hovering around 109.3 which is a 2% rally on the day. Meanwhile Japanese equity markets have sharply reversed course. The Nikkei was up +1.41% prior to the decision, but sharply reversed to the tune of nearly 4.5% to trade at -2.96% as we go to print. It’s a similar story for the Topix which is currently -2.62%. Bourses elsewhere in Asia have given up earlier gains. The Shanghai Comp (-0.68%) and Kospi (-0.67%) are in the red post the news, while the Hang Seng (+0.50%) is up but has given up bigger gains from earlier in the session. 10y JGB yields are down 3bps.

The big focus now will be on Governor Kuroda who is scheduled to speak to the press shortly after this hits your emails at 7.30am BST. Given the massive adverse reaction from markets, this has arguably suddenly become the main event of the week where there will be huge attention placed on his every word.
Needless to say yesterday was all about the other big central bank meeting of this week with the conclusion of the FOMC meeting. All-in-all the tone of the statement didn’t offer a whole lot of new information, with the Fed still very much in a wait and see mode. Those banging the tightening drum for June will probably be a little disappointed and while that door is still being left open, the lack of any real reaction in futures markets – with the probability hovering around 21% this morning – indicates that investors were little swayed by the outcome yesterday.

The main focus of the statement was on the reference to global risks. After previously saying that global economic and financial developments pose risks to their outlook, they replaced that with the line that the Fed ‘continues to monitor inflation indicators and global economic and financial developments’.

With regards to economic developments, Fed officials appeared more downbeat saying specifically that growth of economic activity ‘appears to have slowed’ which has coincided with a moderation in household spending. On the flip side the committee also made mention to households’ real income rising at a ‘solid rate’ and consumer sentiment also remaining high. Business fixed investment and net exports were acknowledged as being soft, while the usual positive rhetoric around the labour market was referenced with ‘a range of recent indicators, including strong job gains, points to additional strengthening of the labour market’. On the inflation front market-based measures of inflation compensation were reported as remaining low, while survey measures are little changed. For the third time in a row, the balance of risks statement was omitted.

So it feels like its back to the data-watch train to determine the path ahead for the Fed. On that note, today’s advance Q1 GDP figures released this afternoon will be of huge interest. The current consensus forecast is for +0.6% qoq, which is also the latest forecast of the Atlanta Fed. That consensus forecast has actually been trimmed from as high as +2.5% back in January. Our US economists are a little lower than the market at +0.5%. We’ll know the exact outcome at 1.30pm BST.

In terms of what happened in markets yesterday, prior to the FOMC the bulk of risk assets in the US had been trading in the red, led by weakness in the tech sector from the weak Apple led results hangover. As the session dragged on however and post-FOMC, markets bounced back into the close albeit finishing with still fairly modest gains. The S&P 500 ended up with a +0.16% gain despite Apple closing some 6% lower, while the Dow (+0.28%) closed up slightly more. The Nasdaq (-0.51%) did however fail to recover from the early leg lower. Some better than expected results out of Facebook late last night however (shares traded up as much as 7% in extended trading) did see US equity index futures and particularly the tech-heavy Nasdaq trade higher this morning, but those moves have been wiped out post the BoJ decision.

Supporting the rebound also was another impressive performance for the Oil complex. WTI closed above $45/bbl after rallying close to 3% to mark a fresh 2016 high. That was actually after what was a fairly volatile session which saw Oil drop some 3% off its early highs in the afternoon following a surprise jump in US crude stockpiles levels, before then climbing back into the close late in the session post FOMC. The US Dollar continued its theme of declining each day this week with the Dollar index ending -0.20%, while some of the bigger moves were reserved for the Treasury market. Having risen for seven consecutive sessions, 2y yields ended 4.4bps lower yesterday at 0.819%, while 10y yields finished close to 8bps lower at 1.852%, albeit still back to where they were mid-way through last week.

Yesterday’s main economic data of note was the March advance goods trade balance reading for the US. The data showed an unexpected shrinking of the deficit to $57bn from $63bn reflecting a sharp slowdown in imports, after expectations had been for little change. Meanwhile the latest housing market data was reserved for the March pending home sales numbers which were reported as rising +1.4% mom last month (vs. +0.5% expected).

Meanwhile closer to home yesterday there was a similar bounce off the early lows for risk assets in Europe yesterday with the Stoxx 600 and DAX ending with a +0.29% and +0.39% gain respectively. The main focus data wise was on the ECB’s money and credit aggregates numbers for March. The data was fairly unspectacular with M3 money supply growth up one-tenth to +5.0% yoy as expected, while the credit impulse shrank. Meanwhile we also got wind of a number of regional consumer confidence surveys, with Germany reporting a rise in confidence, while France was little changed and Italy reported a decrease. Finally the advance Q1 GDP reading for the UK printed as expected at +0.4% qoq.

Looking at the day ahead, the early focus this morning is on the UK where the April house price data is due. Shortly after that we’ll get the latest unemployment reading out of Germany, while later this afternoon the April CPI print in Germany will be closely watched. We’ll also get confidence indicators for the Euro area today. Over in the US this afternoon the big focus is on the aforementioned Q1 GDP report, while the core PCE reading will be released alongside (expected at +1.9% qoq). Initial jobless claims data and the Kansas City Fed’s manufacturing survey rounds off the data. It’s another busy day for earnings too with 63 S&P 500 companies set to report including Amazon, UPS and Ford Motor. In Europe the corporate reporting calendar is highlighted by the banks today.

END

ASIAN AFFAIRS

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 7.47 POINTS OR 0.25%  /  Hang Sang closed UP 26.43 OR 0.12%. The Nikkei closed DOWN 623.33 POINTS OR 3.61% . Australia’s all ordinaires  CLOSED UP 0.73%. Chinese yuan (ONSHORE) closed EVEN at 6.4760.  Oil FELL  to 45.17 dollars per barrel for WTI and 47.14 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4831 yuan to the dollar vs 6.4760 for onshore yuan.

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

The big news:  The central bank of Japan did absolutely nothing.  That disappointed the markets and the Nikkei initially dropped 1000 points and finishing down 624 points.  The USA/Yen crashed 3 huge handles to 108.07.  Markets around the globe tumbled:

(courtesy zero hedge)

Japanese Bloodbath After BoJ Disappoints – Nikkei Drops 1000 Points, USDJPY Crashes

If there was a sign that nothing else matters but central bank largess, this was it.The moment The Bank of Japan statement hit and proclaims “unchanged” a vacuum hit USDJPY and Japanese stocks. Reflecting that Japan’s economy has “continued a moderate recovery trend” which is utter crap given the quintuple-dip recession, Kuroda and his cronies said they will “add easing if necessary” and apparently that is not now. Not so much as a higher ETF purchase or moar NIRP.. and the aftermath is carnage – NKY -1000 points and USDJPY crashed to a 108 handle!!

  • *BOJ WILL ADD EASING IF NECESSARY
  • *BOJ: SEES LARGE DOWNSIDE RISKS FOR ECONOMIC OUTLOOK
  • *BOJ: JAPAN’S CPI TO BE AROUND ZERO PERCENT FOR TIME BEING

Incidentally, this is what consensus looked like ahead of today’s BOJ decision:

Of 41 respondents, 19 predict an increase in purchases of
exchange-traded funds, eight expect a boost in bond buying, and eight
project the BOJ will cut its negative rate.

And the result…

Some context…

The BoJ website crashed also.

The fallout is going global… Dow Futures tumbled 150 points to LoD…

And Yuan surged…

Just as we noted earlierthe biggest argument for a BOJ disappointment was that with the G7 meeting in Japan in on month on 26–27 May 2016, it’s unlikely that
Japanese policymakers will want to draw attention yet again to the idea
that they are in the business of manipulating the JPY lower. After all
the most recent G20 meeting once again confirmed that absent “disorderly moves” in the Yen, the US would frown on any attempt to dramatically manipulate its currency lower.

Unless, of course, Abe wants to send Lew and Obama a message, that if China can enjoy a weaker dollar (courtesy of its USD peg), then so should the Bank of Japan.

END b) CHINA ISSUES

As we pointed out to you yesterday, Chinese commodity trading volume has crashed

The bubble has burst!!

(courtesy zero hedge)

Chinese Commodity Trading Volume Crashes: “Most Don’t Even Know What They Are Trading”

The speculative Chinese commodity bubble has begun to reach the mainstream as Citi’s warning to “hold on to your hats” today at the surge in trading volumes across Rebar, Iron Ore, Coke, and Copper literally exploded with the former now the most actively trade commodity in the world. The frenzy has become so insane that the head of the largest metals exchange in the world exclaimed at a conference in Singapore today that “I don’t think most people who trade it know what it is.” We suspect he is 100% correct and judging by the following chart, we know exactly how it will end.

As Bloomberg reports, the head of the world’s largest metals exchange said while volumes in China’s commodity futures markets have become phenomenal, it’s possible some traders don’t even know what it is they are buying or selling.

“Why should steel rebar be one of the world’s most actively-traded futures contracts?” Garry Jones, chief executive officer of the London Metal Exchange, said at a conference in Singapore on Wednesday. “I don’t think most people who trade it know what it is.”

Trading of commodity futures in China from steel reinforcement bars — a benchmark product used in construction — to iron ore, coking coal and cotton has ballooned this month on an unprecedented surge in retail investor interest. The jump in volumes has stunned global markets, according to Morgan Stanley, while eliciting concern from Goldman Sachs Group Inc.

Exchanges in Asia’s top economy including in Shanghai have announced a series of measures this month to cool the frenzy, and said more steps may follow.

“If you look at the client base of most Chinese exchanges, it’s heavily retail-focused,” Jones said on a panel discussion addressing commodities and risk management in China. The exchanges there “have very high retail participation. They have a very high velocity of trading,” he said.

Now where have we seen this pattern of massive speculative volume rushing in from retail investors chasing a trend?

The speculative activities will be vulnerable to a sharp reversal, once the upward price momentum wanes, according to BMI Research, a unit of Fitch Group, drawing parallels with a rally, followed by a slump, in Chinese equities last year.

And that did not end well for price action before in 2015…

or 2009…

And just as expected above…once the volume reaches a crescendo it crashes and The Party’s Over

As reports from China suggest both major margin increases at the main exchanges and crackdowns on real production: Tangshan city is banning all coke, steel & cement productions for 24 hours starting this noon.

END And then this: the spewing of false signals on the Chinese economy is over: (courtesy zero hedge) Volume Collapses As China Commodity Exchanges Ordered To “Curb Speculation”

We have been warning about China’s speculative commodity trading bubble – spewing false signals around the world about the strength of the real economy – and now, as we suggested previously, Chinese authorities have decided to burst yet another bubble they created.Reuters reports that China’s Securities regulator has ordered three major commodity exchanges to “control intraday speculation in commodity markets,” ordering them to “curb trading for investors with no commodity industry background.” Volume has crashed… and just as it did in the equity markets, price will follow.

As Reuters reports, China’s securities regulator ordered the country’s major commodity futures exchanges this week to control speculative trading activity, sources told Reuters, after a surge in prices sparked fears of a boom-and-bust cycle.

In response, commodity futures exchanges in Dalian, Shanghai and Zhengzhou ordered major institutional investors that lack a commodities background to rein in their trading, three people with direct knowledge of the situation said. The sources didn’t define what was meant by a lack of background in commodities.

Analysts said speculators have been betting that government plans for more infrastructure spending and signs of a pick up in the economy would fuel more demand for commodities.

Others suggested commodities futures markets were the only place left for speculators to make quick profits given weakness in stocks, bonds and housing.

The result…Party’s Over!

As Reuters concludesthe measures this week appear to be having an impact. Steel and iron ore futures steadied on Thursday, while other commodities fell further.

The aim is to restrict the oversized space for profiting from short-term trades, reduce elevated holdings of related products and curb speculation,” the Dalian Commodity Exchange said on Wednesday, referring to the moves to increase trading costs.

The volatility in prices has already deterred some major industry players from using the futures market, causing some to take losses and others to reduce their positions. It also marks a setback for attempts to give China’s domestic markets more influence over global pricing, analysts say.

And that means prices are set to tumble…

A run up in steel prices has been blamed for encouraging some idled steel mills to restart production, adding to a production glut in the country and exports of the metal, which is upsetting other countries.

Average:

0 Smart man!!  The following Chinese wealth manager decided to disappear before the authorities disappeared him.  He is off with 154 million dollars: (courtesy zero hedge) China “Wealth Manager” Disappears With $154 Million

As China’s credit fueled craziness rages on, individual “investors” have been tripping over themselves trying to get in on a piece of the action, opening up enough brokerage accounts for every man, woman, and child in LA and pouring hard earned money into “investment” opportunities such as P2P funds.

This has of course lead people to game the system, recall Ezubao’s $7.6 billion P2P ponzi scheme that led to the arrest of 21 people earlier this year, and more recently the shuttering of Zhongjin Capital Management, which also led to 21 arrests on charges of suspicion of illegal fundraising.

It now appears that we’ve reached the point in the game where instead of waiting around to be arrested, those running shady ponzi schemes are now pulling the ripcord, clearing out as many bank accounts as possible, and just disappearing.

In the latest development in the crumbling shadow banking sector, police in the Chinese city of Hangzhou are searching for the chairman of the Wangzhou Group who allegedly disappeared with $154 million according to Reuters.

The Wangzhou Group is the parent of asset management firm Wangzhou Fortune,has more than 20,000 investors.

Investors had reported “problems with the company’s cash flow” since last Monday, Xinhua said.

To repay investors, Wangzhou Group plans to retrieve about 1 billion yuan in principal and interest payments on loans it has made and cover the additional 1.2 billion yuan shortfall by selling property, Xinhua quoted a company statement as saying.

We expect this won’t be the last time we hear of such a thing taking place, because after all as the credit bubble starts to burst, China authorities will try to root out more fraudulent firms in order to try and get ahead of the situation.

An effort that will inevitably be too little, too late.

end China injected 1 trillion usa into its economy and did get industrial profits rising by 11% year over year.  However China is still stuck with huge excess capacity.  Another problems is payments due to suppliers is running at 83 days and that is not good. Remember also that this month commodity prices burst which should burst everything inside China (courtesy zero hedge) China Industrial Profits Soar Most In 18 Months But Overcapacity Looms

Profit growth of Chinese industrial companies rebounded dramatically in March. Of course this should not be totally surprising given the trillion-dollar credit injection in Q1 and artificially-elevated commodity prices juicing the zombified industrial base but it does leave The Fed today with a problem – they’re running out of excuses. So in being patriotic, we will help – first, as Goldman warns, this profit spike is unsustainable given the surge in overcapacity; and second, nobody is paying – payment delays have surged to the highest in 17 years as the ponzi accelerates.

So a trillion dollars goes in and profits spike 11.1% YoY..

But on Sunday we also learned that median days sales outstanding for mainland domiciled companies now sits at 83 days – the highest in nearly 17 years and double the average for EM as a whole.

As you can see from the above, it now takes 50% longer for Chinese firms to get paid than it did just five years ago. As you might imagine, the problem is particularly acute for industrial firms who are waiting 131 days to convert sales into cash. “A reading of more than 100 days is typically a red flag,” Amy Sunderland, a money manager at Grandeur Peak Global Advisors in Salt Lake City told Bloomberg.

Yes, Amy it certainly is. Especially considering the median for companies in the MSCI Emerging Markets Index is just 44 days.

But, as Goldman notes, while it is all sunshine and rainbows now, this profits jump is not sustainable…

March industrial profits improved both in month-over-month and year-over-year terms. This is consistent with the rebound in industrial production in March. Better underlying activity growth, pickup in producer prices and lower financial costs all contributed to the rebound in profits in March.

Moreover, according to data quoted by NBS in the explanatory note, higher investment returns and non-business income also helped with the rebound in headline industrial profit growth: investment return went up 20.4% yoy in March (-3% in Jan-Feb), and non-business income (this includes gains from most asset sales , but not investment property) jumped 68.3% yoy in March (39.5% yoy in Jan-Feb). Compared with March last year, 30.5% of increase in profits (3.4 pp of the 11.1%yoy headline profit growth ) came from investment return/non-business income. Profit growth improved in most sub-sectors: in year-over-year terms, profit growth improved or turned less negative in ferrous/non-ferrous metal smelting and pressing, general equipment manufacturing, automobile manufacturing, computer manufacturing among other sectors.

We continue to expect sequential growth to rebound in Q2, which should support profit growth in the near term; however, structural issues such as overcapacity will still weigh on industrial profits in the long run.

Especially if the commodity bubble bursts…

END EUROPEAN AFFAIRS

Oh boy!! this is trouble.  The EU rejects the Greek emergency summit. As you will recall, Greece has big repayments in July and it does not seem that they will be made

(courtesy Mish Shedlock/)

Greek Default Looms In July After EU Rejects Greek Emergency Summit

Submitted by Mike “Mish” Shedlock

More Greece “Uncertainty”: Default Looms in July, EU Rejects Greek Emergency Summit

Those who thought the situation in Greece was solved after prime minister Alexis Tsipras suddenly caved in to creditors’ demands need think again.

Greek tax revenues are running well under expectations. A default looms in July unless the creditors give more money to Greece so that Greece can pay back the creditors. As convoluted as that sounds, that’s precisely the way this madness works.

The creditors demand still more austerity but Tsipras said “no”. Instead, Tsipras seeks an emergency meeting, but European Commission president Donald Tusk said “no” to that proposal.

Supposedly this standoff represents “renewed uncertainty”.

Emergency Meeting Request Denied

The BBC reports EU Rejects Greek Request for Emergency Summit.

The head of the European Union has rejected Greece’s request for an emergency meeting aimed at ending an impasse over the country’s bailout.

Greece agreed to a third rescue package worth €86bn (£60bn; $94bn) last year and faces a looming debt payment. However, it has been unable to unlock the next loan instalment after clashing with its creditors over more reforms.

The International Monetary Fund and other European partners are demanding that Greece implement further austerity measures. They are looking to generate nearly €4bn in additional savings or contingency money in case Greece misses future budget targets.

But the left-wing government led by Alexis Tsipras has said it will not agree to any “additional actions” to what it had already signed up to last summer.

A special ministerial meeting was supposed to be held on Thursday, but Dutch Finance Minister Jeroen Dijsselbloem, who is in charge of the Greece negotiations, called it off.


Summit Request Denied

The Financial Times reports Donald Tusk Rejects Alexis Tsipras Summit Request.

Donald Tusk, the European Council president, has turned down a Greek request for an emergency summit on Athens’ bailout and told eurozone finance ministers to do more to narrow their differences.

Without a deal on new austerity measures, Greece faces a default on €3.5bn in debt payments that come due in July.

Greece is fast running out of cash to pay salaries and pensions in May because of lagging tax receipts. To cover the gap Mr Tsipras’s government has been strong-arming state entities, from the cash-strapped health service to the profitable water utility, to empty their bank accounts and place the funds with the central bank in a short-term loan arrangement.

Bailout negotiations have stalled over a request by the EU and the International Monetary Fund, Greece’s main lenders, that Athens legislate €3bn in “contingency” budget cuts that could be triggered if the programme veers off-course and fails to produce projected surpluses.

Euclid Tsakalotos, the Greek finance minister, has told negotiators getting additional cuts through the Greek parliament is politically impossible, and has asked instead for lenders to accept across-the-board budget cuts in case targets are missed. EU and IMF negotiators have rejected that proposal, however, insisting the additional reforms be targeted carefully to ensure they do not damage economic growth.

“Renewed Uncertainty”

“I am convinced that there is still work to be done by the ministers of finance who have to avoid a situation of renewed uncertainty for Greece,” Mr Tusk said after a phone call on Wednesday morning with Alexis Tsipras, Greece’s prime minister.

Talk of renewed uncertainty is ridiculous. It’s a certainty that what cannot be paid back, won’t be paid back.

The only thing “uncertain” is the same that that’s been uncertain since the beginning of the crisis: the timing of the credit event.

END GLOBAL ISSUES

Ports around the globe very quite as goods are just not moving

(courtesy C. Paris/Wall Street Journal/David Stockman/ContraCorner)

http://davidstockmanscontracorner.com/what-global-growth-rebound-ports-quiet-containerships-losing-steam/

What Global Growth Rebound? Ports Quiet, Containerships Losing Steam

By Costas Paris at the Wall Street Journal 

At a logistics park bordering Shanghai’s port last month, the only goods stored in a three-story warehouse were high-end jeans, T-shirts and jackets imported from the U.K. and Hong Kong, most of which had sat there for nearly two years.

Business at the 108,000-square-foot floor warehouse dwindled at the end of 2015 after several Chinese wine importers pulled out, said Yang Ying, the warehouse keeper, leaving lots of empty space. The final blow came after a merchant turned away a shipment in December at the dock.

“The client told the ship hands, just take the wine back to France,” Ms. Yang said. “Nobody wants it.”

Pain is increasing among the world’s biggest ports—from Shanghai to Hamburg—amid weaker growth in global trade and a calamitous end to a global commodities boom. Overall trade rose just 2.8% in 2015, according to the World Trade Organization, the fourth consecutive year below 3% growth and historically weak compared with global economic expansion.

The ancient business of ship-borne trade has been whipsawed, first by a boom that demanded more and bigger vessels, and more recently by an abrupt slowing. That turnabout has roiled the container-shipping industry, which transports more than 95% of the world’s goods, from clothes and shoes to car parts, electronic and handbags. It has set off a frenzy of consolidation and costs cutting across the world’s fleets.

Ashore, it is also slamming ports and port operators, the linchpin to global commerce. Nowhere is the carnage more painful than along the Europe-Asia trade route, measuring roughly 28,000 miles round trip. A cooling Chinese economy and a high-profile crackdown by Beijing on corruption has damped demand for everything from commodities like iron ore to designer scarves and shoes. Meanwhile, Europe’s still sputtering recovery from the global economic crisis is hitting the flow of goods in the other direction.

On Friday, the Hong Kong Marine Department reported throughput for its port in the first quarter was off 11% from the first three months of last year. Throughput for all of 2015 also dropped 11%.

“It is the first time you see people in shipping being really scared,” said Basil Karatzas, of New York-based Karatzas Marine Advisors and Co.

Chinese imports from the European Union fell nearly 14% in 2015. Chinese exports to Europe were down 3%. This year isn’t starting any better. In the first quarter, Chinese imports from the EU fell 7% from a year earlier, a decline matched by exports to Europe.

Jonathan Roach, a container-shipping analyst at London-based Braemar-ACM Shipbroking, said some 100 Asia-to-Europe sailings were canceled last year, or 10% of regularly scheduled voyages on the route.

“Drastic fleet management strategies have been implemented by liner operators to reduce their exposure on oversupplied Asia-Europe trades,” Mr. Roach said.

 Last November, Maersk Line, the world’s biggest container operator, said it would lay off 4,000 employees and pushed back new ship orders to weather collapsing freight rates. In Asia, South Korean shippers Hyundai Merchant Marine and Hanjin Shipping Co.are in talks with creditor Korea Development Bank to restructure debts.

There are many reasons for the global slowdown, including a yearslong commodities-price rout, generally slower growth in Asia and an anemic recovery in much of Europe. Economic and political crises have roiled big markets, including Russia, Ukraine and Brazil. And policy makers blame a dearth of big trade deals, like Nafta, which have spurred big global trade gains in the past.

Not everyone is suffering. U.S. ports from Los Angeles to New York are pursuing expansions in anticipation of higher volumes, thanks to a relatively robust American economy. But even in those ports, retailers are sitting on large amounts of unsold goods, and could cut back on ordering more from overseas if inventories don’t come down.

At the biggest ports in Asia and Europe, there are few signs of a near-term rebound. Last year, Shanghai International Port (Group) Co., China’s top port, handled more containers, but total cargo fell to 513 million tons, down 5% from 2014. Through March this year, volumes were down 4% from the year-earlier period.

Willy Lin, chairman of the Hong Kong Shippers’ Council, said car parts imported from Europe and assembled in China fell by at least 13% by volume in 2015. Shipments of luxury goods, including high-end clothes, shoes and apparel, from Europe were down around 15% last year.

“It is 30% fewer boxes coming in and around 10% [fewer] going out” of Chinese ports, Mr. Lin said.

The pain is just as bad in Europe. A recent study by the European Shippers’ Council, which represents around 25,000 exporters and importers, found a 12% decrease in Northern European port calls by all shipping lines between the second half of 2014 and the second half of last year. The study showed a doubling of skipped port calls between Europe and Asia over the same period.

At the Belgian port of Zeebrugge, a major European transshipment hub for container ships and dry-bulk vessels, cargo volumes have dropped to less than half over the past 15 months.

“You can see it at the docks, which at times are empty,” said Fernanda Van Opstal, a sales manager in Zeebrugge for port operator APM Terminals, owned by Danish shipping giant A.P. Moeller-Maersk A/S.

Ms. Van Opstal said exports to China, including timber, fertilizers, metal and plastic scrap, and heavy machinery, continue, but volumes over the past year are down by up to 30% in most categories. So-called “Triple E” vessels, the world’s largest container-carrying ships, are coming and going less frequently, and often less than full.

In Hamburg, Europe’s third-busiest port behind Rotterdam and Antwerp, container traffic with China fell last year to its lowest since 2009. Klaus-Dieter Peters, chief executive of Hamburger Hafen und Logistik AG, which runs three out of the four container terminals in Hamburg, blames China’s slowing economy and the crises in Russia and Ukraine.

Cranes at the Yangshan Port Container Terminal in Shanghai late last year. PHOTO: DING TING/XINHUA/ZUMA PRESS

“The challenging environment…was felt particularly in seaborne container handling,” he said. HHLA’s container throughput fell 13% in 2015.

At the Zhanghuabang Terminal in Shanghai, near the mouth of the Yangtze River, roads are lined with idle trucks, with chain-smoking drivers waiting for loads. Inside the terminal on a recent afternoon, 45-year-old driver Sun Shihong was helping other workers unload half-ton, U-shaped coil units made by Shanghai Electric Group for use at power plants

In 2010, Mr. Sun said the company was using more than 40 trucks, each of which made the run between the factory and the port three times a day.

“I earned 12,000 yuan (about $1,850) a month three years ago,” he said. “And now, 6,000 yuan to 7,000 yuan.”

Source: Once Bustling Trade Ports in Asia and Europe Lose Steam – the Wall Street Journal

END OIL MARKETS Crude rips higher up to $46.00 crushing the oil shorts (courtesy zero hedge) WTI Crude Soars To $46 – Highest In 5 Months

The panic-buying continues in the crude complex. Oil prices are up for the 3rd day in a row, trading up to $46 for the first time since December 4th 2015. Despite continued growth in inventories and worse than expected economic growth, it appears speculative traders in black gold just can’t get enough… Of course, as we just detailed, this merely accelerates the self-defeating re-birth of shale production as cash-flow desperation trumps rationality.

June crude is back at its highest sicne Dec 4th 2015… and above its 200dma…

 

The last time June crude was here, the rest of the curve was over $4 higher… think about what that says about the real confidence in this bounce…

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 1.1345 UP .0019 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 108.77 DOWN 3.449 (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

GBP/USA 1.4554 UP .0016 (STILL THREAT OF BREXIT)

USA/CAN 1.2590 UP .0008

Early THIS THURSDAY morning in Europe, the Euro ROSE by 19 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was DOWN 7.47 POINTS OR 0.25% / Hang Sang UP 26.43. OR  0.12%   / AUSTRALIA IS HIGHER BY 0.73% / ALL EUROPEAN BOURSES ARE DEEPLY 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 (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 DOWN 624.44. OR 3.41%

Trading from Europe and Asia:
1. Europe stocks DEEPLY IN THE RED  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED IN THE GREEN . ,Shanghai CLOSED IN THE RED/ Australia BOURSE IN THE GREEN: /Nikkei (Japan)RED IN THE RED/India’s Sensex IN THE RED /

Gold very early morning trading: $1255.00

silver:$17.30

Early THURSDAY morning USA 10 year bond yield: 1.83% !!! DOWN 3 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 2.68 DOWN 3 in basis points from WEDNESDAY night.

USA dollar index early THURSDAY morning: 93.88 DOWN 51 cents from WEDNESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING

 

END

 

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.17% DOWN 2 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -..075% DOWN 3 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.60% DOWN 3 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.48  DOWN 4 IN basis points from WEDNESDAY

the Italian 10 yr bond yield is trading 12 points lower than Spain.

GERMAN 10 YR BOND YIELD: .251% (DOWN 3 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 1.1350 UP .0024 (Euro =UP 24  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 108.07 DOWN 3.449 (Yen UP 344.9 basis points As MARKETS FALL BADLY)

Great Britain/USA 1.4605  UP .0067 Pound UP 67 basis points/

USA/Canad 1.2527 DOWN 0.0054 (Canadian dollar PU 54 basis points with OIL RISING(WTI AT $45.75)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 24 basis points to trade at 1.1350

The Yen ROSE to 108.13 for a GAIN of 340 basis points as NIRP is STILL a big failure for the Japanese central bank/AND TODAY IF ANY REMAINING YEN CARRY TRADERS WERE TOTALLY WIPED OUT

The pound was UP 67 basis points, trading at 1.4605

The Canadian dollar ROSE by 54 basis points to 1.2527, WITH WTI OIL AT:  $45.81

The USA/Yuan closed at 6.4735

the 10 yr Japanese bond yield closed at -.075% DOWN 3 BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 3  basis points from WEDNESDAY at 1.83% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.67 DOWN 4 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 93.76 DOWN 63 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 2.49 POINTS OR 0.04%
German Dax :CLOSED UP 21.32 OR 0.21%
Paris Cac  CLOSED DOWN 2.04  OR 0.04%
Spain IBEX CLOSED DOWN 63.60 OR 0.68%
Italian MIB: CLOSED UP 226.09 OR 1.21%

The Dow was down 210.79 points or 1.17%

NASDAQ down 57.85 points or 1.19%
WTI Oil price; 45.75 at 3:30 pm;

Brent Oil: 47.80

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.68 (ROUBLE UP 45 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

.

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:  $45.88

BRENT: 47.55

USA 10 YR BOND YIELD: 1.82%

USA DOLLAR INDEX:93.72 down 67 cents on the day

 

END

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

Trading Today in Graph form:

Kamikaze-Kuroda & Carl Icahn Crush Facebook-Driven Stock-Feeding Frenzy

There is only one clip for this…

 

It started in Japan…when Kuroda let the world down… 1500 NKY points down!!

 

And then China stomped on its latest bubble…

 

But then US GDP printed its worst level in 2 years… and stocks took off!! soaring all the way to the edge of Kuorda’s Kamikaze moment before Carl Icahn upset everyone...

 

Stops run to Kuroda’s cliff and then icah npushed the market over the edge…

 

Of course, Nasdaq was outperforming thanks to Facebook out of the gate but once the selling started everything collapsed…

 

Dow futures swung around 1000 points in the last 24 hours…

 

“Most Shorted” stocks plunged…

 

AAPL tanked again after carl Icahn said he was out…

 

VIX was smashed early on in another desperate bid for 2100 in the S&P 50).. but failed… (VIX >15.5 at the close…)

 

Financials began to rollover…

 

Stocks decoupled higher from bonds once again before catching back down…

 

Treasury yields roller-coastered lower…(but notably 2Y and 30Y held as the belly slumped)…

 

Yen’s surge weighed on The USD Index – biggest drop in a month – down 4 days in a row…

 

 

USD weakness helped most commdoties (but industrials fell as China collapsed)

 

WTI Crude is now up 18% off the post-Doha lows – from $39 to $46…

 

Crude’s rip leads the way post-Fed, with stocks red…

 

But Gold (and Silver) are the best performers since Kuroda’s Kamikaze-move…

 

Charts: Bloomberg

Bonus Chart: Do you feel lucky?

end

 

The actual first quarter GDP grew at only .5% instead of the .7% expectations:

(courtesy zero hedge)

US Economy Grew At Just 0.5% In Q1, Missing Expectations, Lowest Growth Rate In Two Years

“Did the Fed have an advance glimpse at Q1 GDP?”

That was a question everyone was asking yesterday when the Fed came out with another not too hawkish statement. The answer may have been yes because moments ago the BEA reported that the US economy grew at just a 0.5% annualized rate in the first quarter, missing expectations of a 0.7% growth rate, growing at half the rate recorded in the 4th quarter, and the lowest quarterly growth rate since Q1 2014 (when the winter was blamed for a negative print). It was also the third consecutive quarter of GDP declines.

The breakdown of components was mixed: while personal consumption rose 1.9% q/q, it contributed only 1.27% to the bottom GDP line, the weakest spending contribution since Q1 of 2015. What was more troubling was the impact from all the other components:

  • Fixed Investment subtracted 0.27% from the annualized GDP print, the first negative CapEx print since Q1 2011
  • Inventories, as expected, subtracted another 0.33% from the annualized number, following last quarter’s -0.22% decline
  • Trade (net exports and imports) was another negative contribution, cutting the final number by another 0.33%
  • Government was perhaps the only bright side, adding 0.2% to the GDP print up from 0.2% in the prior quarter.

Visually:

Needless to say, this is hardly the backdrop for the Fed to unleash even more tightening, and we expect the market to trade appropriately, because after all bad news is bad news.

Incidentally, this is how today’s latest economic disappointment will be spun by the career economists and sundry permacheerful pundits:

end David Stockman has the detailing on a continuous basis the S and P earning last year.  The official earnings for the year:  slightly over 86 dollars with a P/E at 24 x.  Now we are entering first quarter  2016 and the S and P earnings are coming in at a growth rate of -8%. And the earnings are mirroring the likes in Europe and Japan: (courtesy JPMorgan/zero hedge) JPM Summarizes Earnings Season So Far: “At -8%, The S&P500 Q1 EPS Growth Is The Worst Since ’09”

As we approach the mid point of earnings season (this is the busiest week of the Q1 earnings season with 39% of companies having already reported in the US, 33% in Europe and 17% in Japan), here is a quick summary of where we stand.

Here is a quick rundown courtesy of JPM:

In the US, 80% of S&P500 companies beat EPS estimates, surprising positively by 3%. The actual EPS is running at -8% yoy for the overall market and at -7% ex-Energy. The S&P500 blended Q1 EPS is tracking at $26.5, down from $29.1 at the start of the year. The proportion of US companies beating sales estimates, at 58%, is up from previous quarters but top-line growth remains soft, at -1% yoy.

In Europe, 57% of Stoxx600 companies beat EPS estimates, surprising positively by 4%. The actual Q1 EPS growth is coming out at -18% yoy, but it is flat ex-Energy and Financials. Only 43% of the companies beat sales expectations, down from previous quarters. Top-line growth is weak, too, at -7%. Ex-Energy and Financials, sales are running at -4% yoy.

In Eurozone, 59% of the companies that have reported beat estimates. Overall EPS growth is coming out at -6% yoy, and at +2% ex-Energy. So far, the Euro area is the only region delivering positive earnings growth ex-Energy. Revenue delivery is weaker with only 44% of companies beating sales estimate. Sales are down 5% yoy and 2% ex-Energy.

In Japan, the earnings season is at an earlier stage. So far, only 40% of companies beat EPS estimates, recording yoy growth of -11%. 40% of the companies beat revenue estimates with negative top-line growth of -2% yoy.

80% of US companies beating EPS estimates is above the historical average. However, we note that in the last 10 years, the proportion of EPS beats was always well above the 50% threshold, suggesting that companies typically do a good job at managing analysts’ expectations. The actual delivered EPS growth is a better indicator of the underlying earnings backdrop, in our view. At -8%, the S&P500 Q1 EPS growth is the worst since ’09.

Finally, this is what global earnings “growth” looks like.

end Carl Icahn dumps his entire stake in Apple: (courtesy zero hedge) “No Brainer” – Carl Icahn Dumps Entire Stake Of AAPL

And just like that the “no brainer” party’s over. Remember when in January 2014 Carl Icahnlaid out his extensive thesis on why being long AAPL is the best investment out there?  Or when a little over a year later, hoping for even more stock buybacks (even as he was decrying short term activism) he boosted his price target on AAPL to $240?

All that is now over.

Speaking during a CNBC interview, Carl Icahn admitted the ultimate “no brainer” is no longer a holding of his:

  • ICAHN TELLS CNBC HE’S EXITED APPLE POSITION

And so, two years after his “buy buy buy” pitch, and with AAPL stock less than half of his so-called price target but with , the billionaire has pulled the plug, after pushing up the company’s debt from $35 billion to just shy of $80 billion.

The market is not happy.

 

But don’t cry for Icahn. With a cost basis of $68, he still made hundreds of millions.

What we would like to know is which hedge fund will sell next. As a reminder, there are many candidates…

 end David Stockman lays out the political mess inside the USA a must read… (courtesy David Stockman/ContraCorner) Stockman: Anything Trumps Hillary

Submitted by David Stockman via Contra Corner blog,

It’s all over except the shouting. That is, the primary election season effectively ended last night and now the actual shouting match between Hillary and The Donald begins.

This will surely be the most entertaining election in US history, and probably the most pointless, too. After all, Hillary wants to use government to make Government Great Again. And Trump promises to use government to make America Great Again.

But government doesn’t make anything great, including itself. It is a necessary evil that always and everywhere is driven toward self-aggrandizement and mission creep by the politicians and special interest lobbies which control its operations.

What government actually does is thwart the capacity of the people to pursue their own vision of greatness by encumbering their economic lives with burdensome taxation, regulation, roadblocks to opportunity and monetary fraud while saddling their public lives with endless Nanny State impositions and encroachments upon their personal liberty.

And, most especially, what the central state does in its current incarnation as Imperial Washington is to sabotage national greatness, not foster it, and saddle the economically listing American nation with a debilitating $800 billion national security apparatus that is wholly unnecessary.

The latter has long since morphed into a Warfare State leviathan. It pursues senseless and destructive foreign interventions that erode, not enhance, the safety and security of American communities. It impairs constitional liberties at home under cover of exaggerated and often contrived threats of terrorism. And it breeds blowback and terrorism aboad wherever its drones, bombs, occupations and covert machinations intrude in matters that are none of our business.

But of course that is exactly what Hillary’s candidacy is all about. Namely, insinuating the American state even more deeply and destructively into matters which are none of its business, and doing so at home and abroad with equal similitude.

Hillary Clinton allegedly protested the Vietnam War before becoming a Republican summer intern in 1967, but to my knowledge that was the last war she didn’t embrace. She was an enthusiastic backer of Bill Clinton’s feckless military interventions in the Balkans during the 1990s and a signed-up hawk for George Bush’s catastrophic wars in Afghanistan and Iraq.

As Donald Trump rightly says, her time as Secretary of State was an unmitigated disaster.The “peace candidate” actually won the 2008 election, but Secretary Clinton along with lifetime CIA operative and unabashed war-monger, Robert Gates, saw to it that peace never got a chance.

From the pointless, bloody “surge” in Afghanistan to the destructive intervention in Libya to the arming and aiding of jihadist radicals in Syria, Hillary has proved herself to be a shrill harpy of military mayhem. Indeed, she brought a fillip to the neocon playbook that has made Imperial Washington even more trigger happy.

To wit, Clinton has been a tireless proponent of the insidious doctrine of R2P or “responsibility to protect”. No one in their right mind could have concluded that the aging, pacified, tent-bound Moammar Khadafy was a threat to the safety and security of the American people. Even the community organizer from South Chicago wanted to keep the American bombers parked on their runways.

But Hillary’s infamous emails leave no doubt that it was she who induced Obama to embrace the folly that quickly created yet another failed state, hotbed of jihadism and barbaric hellhole in the middle east. Indeed, her hands are doubly bloody.

When Hillary bragged that “We came, we saw, he died”, it turns out that not just Khadafy but thousands of innocents have died, and not just from the chaos unleashed in Libya itself. The former dictator’s arsenals and mercenaries have now been dispersed all over North Africa and the middle east, spreading desolation in their wake.

Indeed, the CIA annex in Benghazi was actually in the business of recycling Libyan weapons to the jihadists in Syria through the ratline to Turkey. Is there any possibility at all that this would have happened, and that Ambassador Stevens would have been murdered, had Hillary not put the shive to Khadafy’s backside?

And then there is the ultimate proof that Hillary is an unreconstructed warfare statist who would bury America deeper in foreign quagmires and fiscal chains. To wit, she has become so blinded by the parochial delusions of Imperial Washington that she actually likened Vladimir Putin to Adolf Hitler.

C’mon. The man’s a monumental crook and no model citizen of the world, but he is no threat to American security whatsoever.

He presides over a third rate economy no larger than the GDP of the New York SMSA that essentially consists of a complex of petroleum fields, grain farms and metal mines and a lethargic work force with a fondness for Vodka.

Until the constitutionally elected government of Ukraine was overthrown by a Washington funded mob of  economically deprived citizens, disgruntled nationalists and crypto-Nazi agitators in February 2014, Putin was basking in the glory of the Sochi Olympics and having petty quarrels with the crook who took-over the tiny state of Georgia after the Soviet Union disappeared. The world disdained his oafish character, but no one claimed that he was fixing to invade Europe.

At the same time, any one who knew the slightest thing about Ukraine’s history and its long co-existence in the shadow of Mother Russia understood that bringing it into NATO was a decidedly stupid idea, and that threatening Russia’s rented naval homeport in Sevastopol, Crimea was sheer folly.

Not Hillary. She was soon at the barricades justifying the folly of the NATO confrontation with Russia and the self-defeating economic sanctions against Putin.

Even though she was out of office and in a position to recognize that the very same “partition” solution that had led to the severance of Kosovo from Serbia during the 1990s could have solved the Donbas and Crimea issues, she was having none of it.

Instead, by her lights NATO, which should have been disbanded after 1991, needs to go to the brink with Putin over essentially a Ukrainian civil war. And that’s just for starters.

Hillary keeps advocating a “no-fly” zone in Syria, but the Islamic State butchers don’t even have an air force.  So her so-called “humanitarian” no fly zone is just another way to confront Putin.

Indeed, it’s designed to stop him from aiding the constitutionally sanctioned and secular government of Syria that has invited Russian help. Yet Hillary is so besotted by the beltway fatwa against Bashar al-Assad that she is oblivious to the fact that the Russian/Iranian/Syrian alliance has done more in a few months to weaken ISIS and its jihadist confederates than has Washington’s feckless bombing campaigns and futile attempts to arm “moderates” and organize a coalition of the region’s unwillings during the last two years.

Meanwhile, on the other side of the Potomac, Hillary wants to make Big Government even greater. Indeed, her victory speech last night was more or less an ode to free stuff.

Students who borrow hand-over-fist are going to be let off the hook, while social security beneficiaries who already receive far more than they paid in are going to get a raise.

So are workers who are desperately hanging on to entry level part-time jobs. Hillary is going to raise their wages to $15/hour, and presumably then supply them with unemployment benefits, food stamps and Medicaid when their jobs are off-shored or robotized.

And when it comes to the most destructive “free stuff” of all, Hillary will surely be all-in. That is, she will not lift a finger to stop the Fed’s 88 month running gift of free money to the Wall Street casino.

Yes, she apparently did “Feel The Bern” and has a deck full of empty talking points about how a Clinton Administration will be there for main street, not Wall Street.

No it won’t. Hillary Clinton has spent a lifetime milking and promoting the state.

She has no clue that it is the state itself in the form of the rogue central bankers now ensconced in the Eccles Building that is creating the wealth and income mal-distribution and rampant unfairness which she denounces; and which is strangling American capitalism and the opportunities to advance for the traditionally left behind and the recently fallen behind that she so stridently voices from the podium.

If Hillary really wanted to stop Wall Street’s unspeakable windfalls and bring a modicum of economic hope back to main street, of course, she would demand Janet Yellen’s resignation and promise to clean house among the enablers of casino capitalism at the Fed.

But as the Donald might say, “it’s not going to happen”.

So is there any chance at all that Trump will make America Great Again by erecting trade barriers, a Trump Wall on the Rio Grande and an end to America’s imperial beneficence and meddling abroad?

Stayed tuned. There may be more to The Donald than meets the eye.

And whatever it is, it certainly trumps Hillary’s deplorable purpose to make Imperial Washington an even greater menace both abroad and at home.

end Strange!! our Quant specialist, Marko Kolanovic is suddenly worried about the end game and believe it or not discusses how gold will be useful in this environment: (courtesy zero hedge) Why Is JPM’s “Quant Guru” Suddenly Worried About The “Endgame”

When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher. Instead, we were surprised to read an extended analysis looking at how trapped the “out of options” central banks are, what the next steps are for the global economy, how the market is now as overvalued as it was before the 2000 crash, how rising rates “would make the current S&P 500 level look like a bubble”, and the exhaustion of all available policy options, which he dubbed the “endgame.” To wit:

If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying.This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

We were most surprised by Kolanovic’s strong case to buy gold, although considering it comes just one week after a Pimco economist dared to propose that central banks should monetize gold next in an attempt to massively boost inflation expectations (while send the price of gold to $5,000), perhaps we are not that surprised.

* * * .

We are confident readers will find it just as an engaging read.

From JPM’s Marko Kolanovic

Central banks, Inflation, and Debt Endgame

With the Fed and BoJ meetings behind us, markets are increasingly accepting that central banks are nearly out of options. Central banks can hardly raise interest rates, and there is a growing realization that negative interest rates simply make no sense (see analysis below). Unconventional approaches of buying corporate bonds (ECB) and stocks (Japan) so far have not produced significant results, and run the risk of tainting these assets for private investors. The next attempt to boost the economy or prevent a potential market crisis will likely need to be accomplished by fiscal measures. Fiscal measures may be employed even if there is no crisis (e.g., post US election), and over the next months investors will look closely at potential measures and their impact on equity markets, commodities (potential positive impact on certain sectors – e.g., from infrastructure spending), and the value of debt and currencies (likely negative impact).

Before we discuss the implications and risks that could result from such developments, we present an analysis that suggests that central banks face the risk of entrenched low inflation (rather than the risk of high inflation) and likely will not be able to raise rates meaningfully. Figure 1 shows the cumulative PCE (relative to the Fed’s 2% target) that shows significant and persistent undershooting over the past 8 years. Since 2000, the cumulative undershoot is 6% on the core PCE measure. Over the past 4 years, core PCE undershot by more than 1.5 % (and headline by 3.5%, the difference being largely due to the 2014 decline in energy). This undershooting is fairly significant: over the past 2 years headline PCE undershot by 3% (2 standard deviations) and Core by 1% (1 standard deviation). What should be more worrying is that PCE readings historically show strong persistence (serial correlations). This means that a low core PCE reading today implies that PCE is more likely to stay low in the future as well (e.g., core PCE reading today has 80% correlation with the reading of 12 months ago). Our quantitative model of core PCE indicates the most likely level is still below the Fed’s 2% target and continuing to undershoot over the next 3 years.

In that context, the Fed should welcome any overshooting of the target as that is the only way it can end up closer to the stated 2% target over any meaningful time period (e.g., 2, 5, or 10 years). For instance, overshooting the target over the next 2-3 years by ~0.5% each year (or over the next 1-2 years by ~1%) would put the inflation averages within the margin of the stated 2% target. The problem is that it simply may not happen, and inflation breakeven rates in the US, Europe and Japan point to the same direction.

Over the past 20 years, PCE overshoots (undershoots) tended to coincide with S&P 500 rallies (declines). However, over the past 8 years, PCE kept trending lower, while the market rallied strongly. While the Fed’s QE programs did not prevent inflation to persistently undershoot the 2% target, a potential byproduct was inflated S&P 500 valuations. Indeed, many clients ask us how much of the S&P 500 rally can be attributed to near zero rates and can be at risk should rates continue to rise? Assuming the S&P 500 returning to median P/E levels for comparable rate and inflation environments in the past, it would suggest a 5%-15% de-rating of the equity multiple should rates continue to rise at a moderate pace and assuming no increase of recession probability. If rates increase the probability of recession, it would likely result in a larger market pullback, as both earnings and multiples would suffer.

Should the problem of low inflation go away (e.g., if there is an oil price shock, or upside growth surprise) and there is need to raise rates more significantly, the Fed will face another problem. That is how to hike but not push the equity market significantly lower. The reason is that with current levels of leverage, rates behave like a ratchet (easy to turn lower, but hard to turn higher without breaking the gears). Over the years of ZIRP, asset prices and business models adjusted to low rates. For example, home buyers make decisions based on monthly mortgage payment levels, and S&P 500 companies (ex-financials) have the highest leverage since 2007 (when leverage was at record levels), with some of the debt used to buy back shares.

Indeed, the current S&P 500 P/EBITDA ratio is at the same level as shortly before the market crash of 2000. The distinction between current market valuations being reasonable vs. bubble-like is due to low interest rates (as well as lower effective tax rates).Significant increase of rates (e.g., to levels implied by 2018 Fed dots) would make the current S&P 500 level look like a bubble.

As we argued above, it is hard to see short-term rates moving meaningfully higher any time soon. We also think that rates cannot go much lower either as negative rates fundamentally don’t make sense (issues such as physical storage of cash can make negative yields viable only over short periods of time). So the attempt to boost growth or fight a potential crisis will likely need to be accomplished by fiscal measures.

However, fiscal measures also bring an increased level of government debt and increased market and credit risk of owning government bonds. These risks are in addition to current low yields and a less favorable correlation of bonds to risky assets. The unfavorable risk-reward of government bonds near the point of zero yields will likely prevent asset managers from increasing holdings of government bonds. If there are no private buyers, governments can still place their bonds with central banks. This trend is of course already in place – for instance, the Fed’s holdings of US Treasuries increased from ~18% in 2008 to ~34% today.

Increased government spending, financed by central banks could indeed create inflation, but will further elevate the problem of debt viability. If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

Once fiscal measures replace monetary measures, we think investors will increasingly focus on the dynamics of government debt and currency valuations, particularly in Japan and the US.

How can an investor hedge against the risk of these potential developments? One can reduce allocation to bonds and increase allocation to real assets and equity sectors related to real assets. Investors can also move away from bonds that are not backed by reserve assets such as currency reserves or gold. The ability of a government to pay back debt and at the same time as maintaining the value of the currency should be measured by hard assets for which transfer to bondholders is politically viable. For example, during the Greek crisis, the option of selling islands owned by the government was off limits. On the other hand, governments can easily part with assets with no national or cultural attachments such as FX reserves or gold, as was recently the case with Ukraine and Venezuela.

end What took them so long!  The SEC will now begin to crack down on non GAAP accounting earnings: (courtesy zero hedge) SEC Begins Crack Down On Non-GAAP Accounting Gimmicks

Having railed for years against the accounting gimmickry known as non-GAAP, with both the WSJ, AP and even Warren Buffett joining the vocal outcry in recent years, things may finally be changing. According to Dow Jones, the SEC is finally stepping up its scrutiny of companies’ “homegrown earnings measures, signaling it plans to target firms that inflate their sales results and employ customized metrics that stray too far from accounting rules.

According go DJ, the move to intensify oversight “signals that regulators have grown weary of the widespread use of some adjusted measures, which often result in a rosier view of profits than what is reported under generally accepted accounting principles, or GAAP.

 And in the most actionably news yet, we read that the SEC is launching a campaign to crack down on made-to-order metrics that regulators think are particularly confusing or opportunistic.”

This is long overdue because as we showed in February, the spread between GAAP and non-GAAP earnings has grown to gargantuan levels in recent years and the current reporting season may in fact conclude with the widest nominal gap between GAAP and non-GAAP in history.

 

If the SEC actually plans on follow through with its threats – as opposed to its failed attempt to regulate HFT frontrunning – the gaap may very soon be closing and would reveal the true GAAP P/E of the S&P which according to our calculations is currently north of 24x.

Regulators plan to push back on companies that accelerate the recognition of revenue that hasn’t yet been earned, said Mark Kronforst, chief accountant of the SEC’s corporation finance division. Firms that sell their product on a subscription model, for instance, are required to book the revenue as they deliver the goods or services. But some firms are using non-GAAP measures that assume all sales are recorded as soon as customers are billed, which adds revenue to their books earlier than allowed under GAAP, Mr. Kronforst said.

“The point is, now the company has created a measure that no longer reflects its business model,” he said. “We’re going to take exception to that practice.”
The SEC’s rules allow companies to report profit figures that don’t comply with GAAP, provided they don’t obscure the official numbers and reconcile the non-GAAP numbers to the equivalent GAAP figure.

To be sure companies for whom non-GAAP means the difference between a miss and a beat (as we documented on numerous occasions recently) are pushing back and saying “investors value the adjusted measures because they exclude unusual or noncash costs, resulting in measures that better reflect future operating results. Technology firms such as Facebook Inc. and other Silicon Valley brand names are particularly devoted users of non-GAAP formulas, reporting numbers that strip out hundreds of millions of dollars of stock compensation.”

What companies really mean is that both companies and investors would prefer to lie and be lied to in order to perpetuate the illusion that all is well until this is no longer possible. The most egregious example of all is most likely Alcoa, which we showcased several weeks ago,and which has generated a $500 million loss in the LTM period which however courtesy of $1 billion in non-one time, recurring “one-time, non-recurring” addbacks has been transformed into a $500 million profit.

 

The SEC appears to have noticed, and according to Dow Jones it has recently seen companies report adjusted earnings that go further: A company, for instance, applies different accounting assumptions, such as changing the lifespan of equipment that must be expensed over time. Stretching out the useful life of machinery typically results in lower annual costs and boosts profits. Naturally, there are also far more egregious examples.

So what will the SEC do?

The agency plans to issue comment letters in the coming months that critique firms that booked revenue on an accelerated basis. Mr. Kronforst, who plans to speak Thursday at a Northwestern University legal conference about the issue, declined to name them.

 

Mr. Kronforst said regulators also plan to challenge companies that report their adjusted earnings on a per-share basis. The results are often higher than per-share GAAP earnings and look too much like measures of cash flow, which decades-old rules prevent from being presented on a per-share basis, Mr. Kronforst said. That is because investors could confuse cash flow with actual earnings, which truly represent the amounts that could be distributed to investors.

 

“We are going to look harder at the substance of what companies are presenting, rather than what the measures are called,” he said.

In other words, the SEC threatens to finally do its job and determine if companies are abusing every accounting loophole known in order to apply countless layers of lipstick on their piggy lips. The SEC often pushes back on non-GAAP figures that it fears could be misleading, typically by issuing public-comment letters on a company’s investor filings. SEC Chairman Mary Jo White said in March that regulators could write new rules to restrict the use of non-GAAP financial metrics.

Amusingly, the SEC has previously “objected” to companies’ non-GAAP metrics. That clearly led nowhere. In 2011, regulators raised questions with Groupon Inc. before the firm went public, criticizing its use of a non-GAAP profit measure that excluded its marketing costs. Groupon scaled back its use of the metric in response to the SEC’s concerns.

That said, we doubt the SEC will push too hard: if it does the companies that make up the S&P may just be force to admit that instead of generating 120 in EPS in 2015, their true earnings were just shy of 90. And that would lead to a massive selloff, something the SEC would never be allowed to unleash.

end Well that about does it for tonight I will report to you tomorrow night h

April 27/FOMC results: nothing of importance/Big news is sthat the OI on silver continues to set new records: today 206,748 contracts or 1.03 billion oz/

Wed, 04/27/2016 - 18:50

Good evening Ladies and Gentlemen:

Gold:  $1,249.20 up $7.00    (comex closing time)

Silver 17.29  up 18 cents

In the access market 5:15 pm

Gold $1246.00

silver:  17.24

 

 Today we got a little surprise in that gold rebounded from its lows to close at $1249.20 at comex closing time and silver was up 18 cents at $17.29  The comex options expiry had little effect on both metals.  In silver, we now have an all time high in silver OI at 206,748 which represents 1.03 billion oz.  Generally when you get a record high OI, you also have high prices for your commodity. Please remember that even though comex options have expired we still have London’s LBMA and OTC to contend with.  They expire on Friday morning.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 107 notices for 10700 ounces for gold,and for silver we had 0 notices for nil oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 224.62 tonnes for a loss of 78 tonnes over that period.

In silver, the open interest rose by another 711  contracts up  to 206,748 despite the fact that the price was silver was up only by 11 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.03 BILLION TO BE EXACT or 147% of annual global silver production (exRussia &ex China)We are now at multi year highs in OI with respect to silver

In silver we had 0 notices served upon for nil oz.

In gold, the total comex gold OI ROSE by 2448 contracts, UP to 497,884 contracts AS  the price of gold was UP $3.00 with TUESDAY’S TRADING(at comex closing).

We had no change in gold inventory at the GLD, thus the inventory rests tonight at 802.65 tonnes.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had a small deposit of 856,000 ooz in silver inventory.  Thus the inventory rests at 335.58 million oz.

.

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

1. Today, we had the open interest in silver rise by 711 contracts up to 206,748 despite the fact that the price of silver was UP by only 11 cents with TUESDAY’S trading. The gold open interest ROSE by A LARGE 2,448 contracts AS  gold ROSE by $3.00 YESTERDAY.   Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed DOWN BY 11.03 POINTS OR 0.37%  /  Hang Sang closed DOWN 45.67 OR 0.21%. The Nikkei closed DOWN 62.79 POINTS OR 0.36% . Australia’s all ordinaires  CLOSED DOWN 0.63%. Chinese yuan (ONSHORE) closed EVEN at 6.4928.  Oil ROSE  to 44.94 dollars per barrel for WTI and 46.74 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5071 yuan to the dollar vs 6.4928 for onshore yuan.

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

none today

b) REPORT ON CHINA

i(The following is an essential read. Japan and China are not growing at all.

Japan will probably experiment by going increasingly into NIRP and also by paying banks to loan money in an early attempt at helicopter money

However the real problem is in China where the POBC unleashed 1 trillion uSA of debt into their economy.  They bought boatloads of crude and purchased mega tonnes of base metals in the hope of stimulating their economy. Basically the large injection of funds created a bubble in tier one housing sector in Beijing, Shanghai and Shenzen making housing totally out of reach for many.  However Peer to Peer financing for these homes in the Tier one sector will be the atom bomb that blows up the paper game inside China:

 

( David Stockman/ContraCorner)

ii) Trading in iron ore and steel rebar is now the most traded commodity in the world and surpassing oil.  This is an accident waiting to happen:

( zero hedge) 4.EUROPEAN AFFAIRS

none today

 

5.GLOBAL ISSUES

i) CPI in Australia plummets as the Q1 injection just did not make it well into Asian Pac countries. It sure looks like the speculative frenzy in commodities merely looked like a recovery. This caused the Aussie dollar to plunge and a bet that their central bank will cut rates!

( zero hedge)

ii)Sweden is now on high alert as ISIS militants have penetrated the country and reports are that these Muslims will strike with a terror attack

( zero hedge) 6.EMERGING MARKETS i) Very strange!!  You would not believe the next thing that Venezuela ran out of: PAPER MONEY TO PAY FOR MONEY: ( Andrew Rosati/Bloomberg)

ii)Then our buffoon, Maduro has just ordered a 5 day weekend for public servants to conserve on energy as the Guri dam is just 1 meter from complete shutdown( zero hedge)

7.OIL MARKETS

i)For those of you who are long in oil you have just been forewarned:

Dennis Gartman just went long in oil after stating oil will not hit 44 dollars during his lifetime:

( zero hedge)

ii)So much for WTI above 45 dollars and right on schedule, as soon as Gartman goes long, crude plunges after the DOE reports a big build:

( DOE/zero hedge)

 

iii)The losses to oil companies for the year are a whopping 67 billion dollars

 ( money.cnn.com) 8.PHYSICAL MARKETS

i)Are the bankers losing control over the silver paper market

( John Rubino/DollarCollapse)

ii)Craig Hemke…

( Craig Hemke/TFMetals Report)

iii)Stephen Quayle credits GATA for exposing the precious metals manipulation:

( Kingworldnews/GATA/Stephen Quayle

 

iv)Rory Hall and CEO of First Majestic Silver Mines Keith Neumeyer discuss the Deutsche bank rigging case:

( Rory Hall/Keith Neumeyer)

USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)Goldman, having shorted Apple for quite a while is “disappointed” in their results as they cut their price target from 155 dollars down to $136.  They are no doubt covering their short position:

(courtesy zero hedge)

ii)First it was energy stocks tanking, then banking and now tech. We should add that the huge Japanese pension fund is a large buyer of Apple as well as the USA plunge protection team.

 John Rubino asks is there anything which can save the system: ( John Rubino/DollarCollapse.com)

iii)The following is very important.  The stock market has been riding high with corporate buy backs of stock.  Last yr close to 400 billion dollars worth of stock has been bought back with debt.  This yr. less than half.

Those buying stocks BEWARE!!  London’s Financial Times) iv) FOMC results (zero hedge) v)Greg Hunter interviews John Williams (John  Williams/Greg Hunter) Let us head over to the comex:

The total gold comex open interest ROSE CONSIDERABLY, as expected to an OI level 497,884 for a GAIN of 2448 contracts AS the price of gold UP  $3.00 with respect to TUESDAY’S TRADING. We are now entering the active delivery month of April. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month. Only the former was in force today . In the front month of April we lost 192 contracts from 305 contracts down to 113.  We had 202 notices filed yesterday so we GAINED 10 CONTRACTS or an additional 1000 gold ounces will  stand for delivery. The next non active contract month of May saw its OI fall by 127 contracts down to 2134. The next big active gold contract is June and here the OI rose by 672 contracts up to 367,577. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 133,553. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 157,739 contracts. The comex is not in backwardation.

Today we had 107 notices filed for 10,700 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 711 contracts from 206,037 UP 206,748 DESPITE THE FACT THAT the price of silver was UP by only 11 cents with TUESDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 2 contracts falling to 2. We had 0 notices filed YESTERDAY so we 2 SILVER OUNCES or 10,000 oz THAT wil notl stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by only 14,581 contracts DOWN to 27,030. This level is exceedingly high AS WE ONLY HAVE 3 days before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 142,743 which is HUMONGOUS  AND NORMAL ROLLOVERS. The confirmed volume yesterday (comex + globex) was AGAIN OUT OF THIS WORLD AT 136,877. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had 0 notices filed for 10,000 oz.  

April contract month:

INITIAL standings for APRIL

Initial Standings for April April 27.

 

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  26,373.07 oz  (Scotia,BRINKS)

500 kilobars + Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  48,079.648 OZ

HSBC

  No of oz served (contracts) today 107 contracts
(10,700 oz) No of oz to be served (notices) 6 contracts 600 oz/ Total monthly oz gold served (contracts) so far this month 3954 contracts (395,400 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month 155,354.2 oz

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 1 customer deposit:

i) Into hsbc: 48,079.648 oz

total customer deposit:  48,079.648 oz

Today we had 2 customer withdrawals:

i) Out of SCOTIA;  16,075.000  500 kilobars

total customer withdrawal:16,075.00 oz   500 kilobars

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 107 contracts of which 42 notices was stopped (received) by JPMorgan dealer and 24 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (3954) x 100 oz  or 395,400 oz , to which we  add the difference between the open interest for the front month of April (113 CONTRACTS) minus the number of notices served upon today (107) x 100 oz   x 100 oz per contract equals the number of ounces standing.   Thus the initial standings for gold for the April. contract month: No of notices served so far (3954) x 100 oz  or ounces + {OI for the front month (113) minus the number of  notices served upon today (107) x 100 oz which equals 396,000 oz standing in this non  active delivery month of April (12.317 tonnes). We gained 10  contracts or an additional 1000 oz will  stand in this active delivery month of April 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 thus have 12.317 tonnes of gold standing for April and 20.000 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 12.609 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)  = 19.182 tonnes still standing against 20.000 tonnes available.  .   Total dealer inventor 643,108.03 oz or 20.000 tonnes Total gold inventory (dealer and customer) =7,241,643 or 225.24 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.57 tonnes for a loss of 78 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

APRIL INITIAL standings

 april 27.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 188,673.64 oz

CNT, Delaware

BRINKS, Scotia Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 1,165,933.800

HSBC, No of oz served today (contracts) 0 contracts

nil  oz No of oz to be served (notices) 2 contracts)(10,000 oz) Total monthly oz silver served (contracts) 191 contracts (955,000 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 9,746,880.2 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into BRINKS: 596,467.200 oz

Total customer deposits: 596,467.200 oz.

We had 4 customer withdrawals

ii) Out of Delaware: 984.100 oz

iii) Out of BRINKS: 137,268.620 oz

iv) Out of CNT; 9886.900 oz

v)Out of Scotia:  40,534.02 oz

:

total customer withdrawals:  188,673.64  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 0 contracts for NIL oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (191) x 5,000 oz  = 955,000 oz to which we add the difference between the open interest for the front month of April (2) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the April. contract month:  191 (notices served so far)x 5000 oz +(2{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 965,000 oz of silver standing for the March contract month. we lost 2 contracts or an additional 10,000 oz will not stand for delivery   Total dealer silver:  31.957 million Total number of dealer and customer silver:   151.459 million oz The open interest on silver is now at an all time high having surpassed yesterday’s OI ;  The total dealer amount of silver remains at multi year low of 31.957 million oz.   end And now the Gold inventory at the GLD April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 27.2016:  inventory rests at 802.65 tonnes

end

Now the SLV Inventory April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580 aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . April 27.2016: Inventory 335.580 million oz .end     1. Central Fund of Canada: traded at Negative 6.1 percent to NAV usa funds and Negative 6.3% to NAV for Cdn funds!!!! Percentage of fund in gold 60.5% Percentage of fund in silver:38.1% cash .+1.4%( April 25.2016). 2. Sprott silver fund (PSLV): Premium to  RISES to -77%!!!! NAV (April27.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.+48% to NAV  ( April27.2016) Note: Sprott silver trust back  into negative territory at -77%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.48%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.77%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      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   Silver Bullion “Momentum Building” As “Supply Trouble Brewing” By Mark O’Byrne April 27, 2016 0 Comments

Silver bullion prices are likely to rise further as there is “supply trouble brewing” as strong industrial and investment demand are confronted by declining supply.

“There are signs that this year could be a pivotal year for the silver market,” New York-based CPM Group said in its “Silver Yearbook 2016.”

“Silver mine supply is forecast to decline for the first time in 2016, since 2011,” CPM said, noting scheduled closures and planned production cutbacks.

More good news for silver bulls: there’s supply trouble brewing.

Output from mines will fall for the first time since 2011, while demand for the metal in uses including industrial products and jewelry is heading for a fourth straight gain, supporting prices, according to CPM Group. The market is entering what is “likely to be a pivotal year,” the New York-based researcher said in its “Silver Yearbook 2016” reported Bloomberg.

Bloomberg said that “momentum is building” as silver mine output is “seen falling for first time since 2011” at the same time that “investor holdings in silver ETFs rise at triple gold’s pace”.

CPM forecast global silver mine production will fall 2.4 percent to 784.8 million ounces in 2016, with output declining in Mexico and Australia but rising in Peru and China. Fabrication demand was seen rising 1.6 percent from 2015 to 889.7 million ounces, with increases in jewelry, silverware, electronic, battery and solar panel manufacturing.

CPM forecast a global deficit of 44.7 million ounces in 2016, much larger than the 11.9-million-ounce deficit in 2015 and the biggest deficit since 2005.

CPM expect demand for silver coins to fall to 142.8 million ounces this year, down from record levels of 145.7 million ounces in 2015. Silver coin demand in China, however, was forecast to rise to 24.5 million ounces from 22.3 million ounces in 2015.

Silver had its biggest quarterly rise in nearly 30 years in the first three months of 2016 as ETF investors, buying of silver coins and bars and speculators in the futures market pushed prices higher.

Silver prices fell to $13.60 an ounce in December, the lowest in more than six years. Silver has since rallied nearly 20 percent in the first three weeks of April to an 11-month high at $17.70 an ounce and has entered a new bull market.


Recent Market Updates
Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

Gold In London Vaults Beneath Bank of England Worth $248 Billion – BBC

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold Price Set To Push Higher As Inflation Picks Up – RBC

Silver Bullion “Has So Much More to Give” – 5 Must See Charts Show

China Gold Bullion Yuan Trading To Boost Power In Gold and FX Markets

Gold News and Commentary
“We believe the recovery in the U.S. is more fragile than is acknowledged” (GoldCore in Marketwatch)
Silver Supply Trouble Shows Why Rally Momentum Is Building (Bloomberg)
China’s gold imports from Hong Kong rise to 3-month high – (Reuters via Biz Recorder)
China’s Gold Imports Jump on Investment Demand as Price Falters (Bloomberg)
Silver may touch as high as $20 an ounce in near term – Deutsche Bank (Metal.com)

Gold Has “Chart of Decade” – Going to $10,000/oz – Rickards (Boomberg)
Depression, Debasement, & 100 Years Of Monetary Mismanagement (Zero Hedge)
Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold (Zero Hedge)
Why a Collapse Is “Practically Unavoidable” (Casey Research)
Do Old Indicators Matter Or Is Physical About To Overrun Paper? (Dollar Collapse)
Read More Here

Gold Prices (LBMA)
27 April: USD 1,244.75, EUR 1,100.79 and GBP 853.58 per ounce
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce
22 April: USD 1,245.40, EUR 1,104.34 and GBP 868.73 per ounce
21 April: USD 1,257.65, EUR 1,113.21 and GBP 877.01 per ounce

Silver Prices (LBMA)
27 April: USD 17.34, EUR 15.34 and GBP 11.87 per ounce
26 April: USD 16.95, EUR 15.02 and GBP 11.64 per ounce
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce
22 April: USD 17.19, EUR 15.26 and GBP 11.96 per ounce
21 April: USD 17.32, EUR 15.31 and GBP 12.05 per ounce

 

 

Read Our Most Popular Guides in Recent Months

 

Mark O’Byrne Executive Director Published in Market Update

end

 

Are the bankers losing control over the silver paper market

(courtesy John Rubino/DollarCollapse)

 

Silver: Do Old Indicators Matter Or Is Physical About To Overrun Paper?

Submitted by John Rubino via DollarCollapse.com,

For as long as most gold and silver investors can remember, the paper markets – that is, banks and speculators placing bets with futures contracts – have set the price of those metals. And within the paper markets, “the commercials” – fabricators and big banks – have consistently fooled speculators like hedge funds into going long or short at exactly the wrong time.

The data series that tracks this relationship is known as the commitment of traders report (COT), and it’s been a pretty reliable indicator of precious metals’ short-term trajectory.

Right now that’s bad news for gold and especially for silver, because the speculators – who, remember, are usually wrong at the extremes – are exuberantly long the latter, implying that the silver recovery is due for a correction. Here’s a recent piece from well-known metals trader Dan Norcini:

Silver Commitments of Traders – Halloween is Arriving Early This Year

 

By that I mean, it just keeps getting scarier and scarier.

 

My guess is that every speculator on the planet is long silver/short gold or outright long silver.

 

That of course is an exaggeration but I am not exaggerating when I categorically state that the silver market is a train wreck just waiting to happen. As I have said before, and will say so again – I would rather miss any more upside in this market than get long now, not with a trade so lopsidedly jammed with speculators on the long side. I will leave that for the daredevils and others who like driving the stagecoach as close to the edge of the mountain pass road as they possibly can.

 

Here is a look at the hedge fund outrights:

 

 

Yet another all time record high! Tell me we do not have a buying frenzy taking place in the silver market! I suppose it can keep going higher and the specs can keep piling on more and more longs but when it breaks, it is going to be ugly – unless you are short and then it will be a thing of beauty to behold a mass exodus of hapless specs who ended up buying the top in this thing.

 

Commercial interests and Swap Dealers have been more than happy to offload silver into the hands of speculators at these prices. If I were long this market, and I am not, I would get some downside protection through the use of options at the very least.

On the other side of this argument is London metals trader Andrew Maguire, who in his latest interview on King World News asserts that gold and silver are entering new, post-paper age in which physical demand sets prices:

Western central planners have finally lost control of the gold market.

 

There is an unprecedented liquidity drain out of London markets into physical markets in the East. It’s flowing out of the paper market into the physical exchanges. These events are unprecedented, forcing changes in the behavior of paper markets that are not comprehended by paper-centric analysts who are puzzling over outdated chart patterns and synthetically extracted data.

 

Just this week things came to a head. An overwhelming number of bearish observations appeared in the blogosphere. I see a lot of hand wringing about open interest structure which historically at these levels has resulted in a major rinse lower. But the gold market is increasingly driven by global physical benchmarks. The physical market dog is starting to wag the paper market tail. Anyone trading paper-centric historical patters is driving forward while looking in the rear view mirror.

Maguire goes on to say that if this is indeed the long-awaited physical take-over of the precious metals markets silver will not only fail to correct, it will go up faster than gold, bringing the gold/silver ratio down to more historically normal levels.

For those getting back into precious metals after the brutal bear market of the past few years, the prospect of the Eastern physical markets taking over from the Western paper markets is welcome. But it adds another layer of complexity to an already opaque market.

So here again, the only rational response is to embrace the short-term uncertainty and dollar-cost average. Since both camps in the above debate see precious metals much higher a few years hence, just buy a little at a time and don’t try to play the squiggles. Leave that to the pros.

 

END

 

 

Stephen Quayle credits GATA for exposing the precious metals manipulation:

(courtesy Kingworldnews/GATA/Stephen Quayle)

 

Precious metals dealer credits GATA for exposing market manipulation

Submitted by cpowell on Tue, 2016-04-26 23:48. Section:

7:50p ET Tuesday, April 26, 2016

Dear Friend of GATA and Gold:

Interviewed by King World News, Stephen Quayle of Renaissance Precious Metals in Bozeman, Montana, gives GATA credit for exposing the manipulation of the monetary metals markets.

Citing Deutsche Bank’s agreement to settle a class-action lawsuit charging such manipulation, Quayle says, “We all know that these banks are doing this at the behest of Western central banks such as the Federal Reserve. They are acting as agents for the central banks when doing this type of manipulation. The bottom line is that gold and silver prices are kept artificially low so that people don’t pay as much attention to the fact that purchasing power of their fiat paper money is being destroyed.”

Quayle’s interview is excerpted at KWN here:

http://kingworldnews.com/forget-the-lies-and-propaganda-this-is-what-is-…

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

 

END

 

Craig Hemke…

 

(courtesy Craig Hemke/TFMetals Report)

Spinning The Yarn By Turd Ferguson | Tuesday, April 26, 2016 at 10:32 am

Another one of Mother Fellen’s Tea & Doily Parties begins today amidst a haze of economic collapse and negative interest rates. Just last week, Mother held three unscheduled meetings with her Goons and she even visited the brain trust at The White House. So the question becomes, might Mother have some surprises up her sleeve when the Fedlines are released tomorrow?

I mean, for crying in a bucket. At some point there has to be some sort of mainstream acknowledgement of just how lousy things are…right? Seriously, how can this stuff be continually downplayed and overlooked? How many goons and shills can CNBS and BBG roll onto their airwaves to disingenuously assure everyone that “Q2 will surely see a rebound”? The Economic Disaster du Jour comes to us this morning listed as Durable Goods for the month of March:

But check this…Even the ZH headline fails to tell the entire story. ZH states: “Core Durable Goods Tumble For 14th Month, Longest Non-Recessionary Stretch In 60 Years”. Well, why would that be? How could we have this current “non-recessionary stretch”? Remember the traditional measure of a recession is two, consecutive quarters of negative GDP growth. Well, back in the day…say over the first 55 years or so…you could actually put some amount of trust in the GDP measurements. But now, the GDP numbers are all double and even triple seasonally-adjusted to make them look better! THAT’S how you get “The Longest Non-Recessionary Stretch In 60 Years”! You never get data that shows a recession because you keep fudging and inflating the data! See how that works?!?

(Keep in mind that the first guesstimate of Q1 GDP will be released on Thursday at 8:30 EDT. Recall that the most recent Atlanta Fed GDPnow is just +0.3%…even with the double adjustments!)

And into this ongoing disaster Mother convenes another Tea & Doily party today. No one is expecting much and the odds of a “rate hike” are essentially zero. However, LIESman will still breathlessly analyze each Fedline word-for-word when they’re announced and who knows what slight punctuation changes might wiggle the algos. But I do want you to at least ponder the possibility of some sort of surprise.

Keep in mind that ole Mother held those three, previously-unscheduled meetings with her Goons last week. Additionally, last Monday, she rushed off to The White House to meet Woody and Plugs. Now, of course, we have no freaking idea what all of this might have been about…this being, as you know, the most transparent administration in history. BUT…what if these meetings were about a pending reversal of course? Maybe, instead of “two more rate hikes in 2016”, Mother was informing The Buffoon Brothers of her plans to ease rates and restart QE, if necessary? What if this is alluded to in the Fedlines tomorrow? I don’t know…I’m just sayin. I’ll guess we’ll just have to wait and see. In the meantime, I saw in the press release that Mother had already stitched this little beauty earlier today. She really has a gift…

Given that today is option expiration for the May silver contract, it should continue to come as no surprise that silver is pinned near $17, given that the small “sweet spot”  for expiry is right near there, too. I still haven’t made any moves…no options or miner buybacks…but that’s about to change. Having a decent cash balance in an option account is not something that an addicted gambler can handle and I definitely want to get back into a few deals before the fedlines tomorrow. For those playing along at home, I’ll be sure to let you know what I decide.

In the meantime, be sure to note that…as of today…the moving averages in silver are all bullishly crossed and this configuration is as bullish as it gets for these particular technical inputs. Does this mean that silver can no longer be raided and smashed lower? F NO!!!However, it does mean that the HFTs should now be dip buyers rather than rally sellers for the first time since 2012.

And here’s a shocker…After reaching a low of $1232 and a high of $1246, gold is currently $1243. What so shocking about that? If you don’t know, then you clearly haven’t been spending enough time in Turdville over the past week.

On the bright side, total OI in gold fell another 6,400 contracts yesterday, back to 495,436. This means we’ve now shed over 16,000 contracts from last Thursday’s massive cap and raid and it gives us a little wiggle room should the Specs come charging back in late tomorrow and Thursday.

But this will blow you away…In silver, where the May contract is going off teh board on Thursday and OI should be falling, total open interest surged again yesterday by another 4,250 contracts! This brings the total Comex silver OI to a new alltime record high of 206,037…a level which is simply incredible!!! Again, doing the math:

  • 206,037 contracts X 5000 oz/contract = 1,030,185,000 ounces of paper “silver” on the Comex

Please allow me to remind you that the entire planet will only produce 880,000,000 ounces of silver this year.

So, THE CRIMINAL AND EVIL COMEX BANKS now have written derivative contracts for 117% of total mine supply.

And this is legal? And this process “discovers” a free and fair price? Okeydokey, then.

As I go to close, I see that ZH has just posted summaries of three more, terrible economic datapoints from this morning:

Perhaps we should embed LIESman directly into that Fed meeting room. He might even be inspired learn how to sew. With the yarns that will be spun at 2:00 pm tomorrow, that skill might come in awful handy.

TF

end

Rory Hall and CEO of First Majestic Silver Mines Keith Neumeyer discuss the Deutsche bank rigging case:

(courtesy Rory Hall/Keith Neumeyer)

By Rory Hall – The Daily Coin 2 days ago

April 25, 2016

For the past three plus years I have been asking how silver and gold have always been available when we can see stress in the markets all through the supply chain. According to several prominent analyst, and producers, global silver and gold production declined in 2015. In Mexico alone silver production is down approximately 6%. According to some of the information that we reviewed, here at The Daily Coin, silver production increased due to the low price of silver.

Silver has become a just-in-time product. With Eric Sprott, Sprott Assets, recently announcing a $5 billion addition of physical silver to the PSLV ETF we shall see what is happening with the silver market at the institutional level.

Keith Neumeyer also explains how a large electronics manufacturer recently contacted his company, First Majestic, regarding the acquisition of silver for their manufacturing processes. This screams of a very, very tight supply of silver in large quantities. Where is metal coming from?

I sat down with Keith Neumeyer, CEO, First Majestic and Chairman, First Mining Finance, to get his take on Duestche Bank admitting to rigging the silver and gold markets and naming both HSBC and Scotia-Mocatta as being involved with the scheme. The important part is Duestche Bank naming other bullion banks as being part of the scheme.

Keith also shares with us how the gold/silver ratio is so far out balance that when it begins to correct that it will be breathtaking in the way it unfolds. Can you imagine a 8:1 gold/silver ratio price? Currently, the ratio is 75:1. Meaning the price of gold is 75 times higher than silver even thought silver is mined at a 10:1 ratio to gold.

Let’s listen to Mr. Neumeyer and allow him to explain the current condition of the market and how the mining production will continue to decline, thereby, putting quality mining operations in the drivers seat for the unfolding next leg of the precious metals bull market.

Video Link

https://www.sprottmoney.com/blog/keith- neumeyer-silver-more-rare-than-the-market-understands-the- daily-coin.html

 

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 6.4928 / Shanghai bourse  CLOSED DOWN 11.03  OR 0.37%  / HANG SANG CLOSED DOWN 45.67 OR 0.21% 

2 Nikkei closed DOWN 62.79 or 0.36%%/USA: YEN RISES TO 111.27

3. Europe stocks opened ALL MIXED  /USA dollar index DOWN to 94.38/Euro UP to 1.1313

3b Japan 10 year bond yield: RISES   TO -.065%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.09

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  44.94  and Brent: 46.74

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 andDOWN 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 0.295%   German bunds in negative yields from 7 years out

 Greece  sees its 2 year rate RISE to 10.53%/: 

3j Greek 10 year bond yield RISE to  : 8.63%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1246.10/silver $17.33 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 16 /100 in  roubles/dollar) 65.27

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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9721 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0997 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 7 Year German bund now  in negative territory with the 10 year RISES to  + .295%

/German 7 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.90% early this morning. Thirty year rate  at 2.73% /POLICY ERROR)

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

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

Futures Ignore Apple Plunge; Oil Rises Above $45 As Yellen Looms

For those who thought that the world’s biggest company losing over $40 billion in market cap in an instant on disappointing Apple earnings, would have been sufficient to put a dent in US equity futures, we have some disappointing news: with just over 7 hours until the FOMC reveals its April statement, futures are practically unchanged, even though the Nasdaq appears set for an early bruising in the aftermath of what is becoming a disturbing quarter for tech companies. “It’s pretty disappointing,” Angus Nicholson, an analyst at IG Ltd., told Bloomberg. “These aren’t good numbers out of the China segment which people are most concerned about, and if that continues to play out it will be a concern going forward.”

Instead of tech leading, however, the upside has once again come from the energy complex where moments ago WTI rose above $45 a barrel for the first time since November after yesterday’s unexpected 1.07 million barrel API inventory drawdown.

Adding to the oil move, the World Bank boosted its forecast for oil prices this year, projecting that refinery demand will pick up and U.S. output cuts will steepen in the second half of 2016.  “The recent leg higher in oil prices is due to the tightening of the supply side of the market,” Jens Naervig Pedersen, an analyst at Danske Bank A/S in Oslo, said by e-mail. “U.S. production is edging lower, the rig count suggests there’s more to come, and the API figures from yesterday pointing to stock draws further confirm this development.”

So with oil back over the critical $45 level at which point US shale producers resume fracking, it is increasingly looking like the Morgan Stanley deja vu forecast, which sees 2016 being a repeat of 2015 is coming true.

Elsewhere, treasuries rose perhaps following Gundlach’s recommendation from yesterday afternoon to start buying, sending 10-year yields lower for the first time in eight days, and the dollar weakened, as markets signaled caution before the Federal Reserve’s latest interest rate decision. As Bloomberg reports, benchmark 10-year note yields retreated from the highest level in a month before the Fed’s policy announcement.

Looking ahead to today’s Fed meeting, virtually nobody expects Yellen to surprise and Fed Funds futures reflect zero chance of an interest-rate hike on Wednesday, though the central bank’s comments will be scrutinized for any hints of a move in coming meetings. “Whether they will still remain a little bit dovish, that is the key thing for us,” said Jens Peter Soerensen, chief analyst at Danske Bank A/S in Copenhagen. “Given that data has been not too strong but not too bad either, the risk is still very balanced. People are a bit reluctant to go in and buy the dollar until they see what the Fed does tonight.”

Here is what DB’s Jim Reid thinks will happen:

Markets have been feeling the chill so far this week but the conclusion of the FOMC meeting this evening should heat things up. With no press conference, all the focus will be on the tone of the associated statement. The Fed will want to leave the door open for a June hike but it’s hard to imagine that they’ll dramatically change market pricing for it. The futures contracts have nudged up to pricing a 22% probability of a June hike from as low as 14% mid-way through this month. How much this changes will likely hinge on what extent the Fed continues to acknowledge concerns about global growth and risks abroad. US data has been mixed of late. After getting back close to neutral at the start of April, economic surprise indices have trended steadily lower into negative territory as the month has passed. On the positive side the weaker US Dollar should give the Fed some confidence. Since the March Fed meeting, the Dollar index has weakened just over 2%. That’s partly helped to support a near $8/bbl gain for WTI and 4% rally for the S&P 500 to YTD highs. We think much of the rebound in markets since early February has been due to the Fed’s about turn and re-found dovishness. This leaves them trapped in our opinion.

Meanwhile, confusion reigns: “People are questioning valuations because earnings growth just isn’t there,” said Francois Savary, chief investment officer at Prime Partners in Geneva. “It will be very difficult for stocks to gain more ground, especially with the higher euro. There’s also the issue of Fed credibility, and the fact that Yellen is looking at international events as a reason to not raise rates.”

More important than the FOMC will be tonight’s BOJ announcement, where there is a substantial probability of surprise by Kuroda. The Bank of Japan will review monetary policy on Thursday and Prime Minister Shinzo Abe’s economic adviser said Tuesday it’s possible that purchases of government bonds and exchange-traded funds will be stepped up.

In Asia, shares fell with U.S. equity index futures as Apple’s earnings added to the gloom around the current reporting season for technology companies. Barclays Plc and Total SA advanced on better-than-expected reports. Australia’s dollar weakened versus all 31 major peers. Crude oil in New York rose to the highest since November.

Greek government bonds slid, pushing the yield on shorter-dated notes up by the most in more than three weeks, as Prime Minister Alexis Tsipras sought a meeting of euro-area leaders to resolve disagreements between the government and creditors, a move echoing last year’s drama when a quarrel over bailout terms almost pushed the country out of the currency bloc.

The Stoxx Europe 600 Index declined 0.1 percent amid mixed earnings results. Barclays climbed 2.7 percent as revenue at the investment bank fell less than expected. Adidas AG jumped 7.2 percent to a record after raising its annual profit forecast as consumers spend more before this year’s 2016 UEFA European Championship.  Total SA added 1.4 percent after posting a smaller-than-projected drop in quarterly earnings, and Statoil ASA, Norway’s largest oil company, climbed 2.8 percent after reporting a surprise profit. Rio Tinto Group and BHP Billiton Ltd. dragged a gauge of miners lower as iron ore retreated. Societe BIC SA sank 5.5 percent after reporting a decline in margins.

Standard & Poor’s 500 Index futures slipped 0.2%, while contracts on the Nasdaq 100 slumped 1.1 percent. Apple fell 7.1 percent in premarket trading as waning demand for the iPhone weighed on its results. Twitter Inc. tumbled 13 percent after forecasting current-quarter revenue that will fall short of analysts’ estimates. Facebook Inc. and PayPal Holdings Inc. are among companies reporting earnings after the close of markets Wednesday.

Market Snapshot

  • S&P 500 futures down 0.2% to 2084
  • Stoxx 600 up 0.1% to 348
  • FTSE 100 down less than 0.1% to 6280
  • DAX up 0.3% to 10290
  • German 10Yr yield down less than 1bp to 0.29%
  • Italian 10Yr yield down 4bps to 1.49%
  • Spanish 10Yr yield down 7bps to 1.57%
  • S&P GSCI Index up 1.2% to 356.1
  • MSCI Asia Pacific down 0.8% to 131
  • Nikkei 225 down 0.4% to 17290
  • Hang Seng down 0.2% to 21362
  • Shanghai Composite down 0.4% to 2954
  • S&P/ASX 200 down 0.6% to 5188
  • US 10-yr yield down 2bps to 1.91%
  • Dollar Index down 0.12% to 94.46
  • WTI Crude futures up 2.2% to $45.01
  • Brent Futures up 2.6% to $46.92
  • Gold spot up 0.2% to $1,246
  • Silver spot up 0.9% to $17.32

Top Global News

  • Apple’s Waning Smartphone Sales End 51-Quarter Growth Streak: Fewer iPhone upgrades lead to 16% decline in shipments; sees FY3Q rev. $41b-$43b vs est. $47.35b, 2Q EPS $1.90 vs est. $2.00; Apple Suppliers Fall After Forecast for Slowing IPhone Sales; Earnings No Help for Apple Stock Set to Become Dow’s Biggest Dog; Samsung Planning $9 Billion Down Payment on IPhone Displays
  • Twitter Gains in Users Aren’t Enough to Spur Advertising Growth: sees 2Q rev. $590m-$610m vs est. $677.1m, sees 2Q adj. Ebitda $145m-$155m vs est. $172.9m; 1Q rev. $595m vs est. $607.5m; says rev. came in at low end of forecast range because brand marketers didn’t raise spending as fast as expected in 1Q
  • EBay Forecast Beats Estimates as Traffic Efforts Pay Off: Sees 2Q rev. $2.14b-$2.19b, est. $2.14b, sees 2Q adj. EPS cont. ops 40c-42c, est. 44c; 1Q adj. EPS 47c, est. 45c
  • Comcast in Discussions to Buy DreamWorks Animation, WSJ Says:
  • U.S. Oil Rises Above $45 a Barrel for First Time Since November: Nationwide stockpiles drop 1.07m barrels last week: API
  • AT&T Profit Tops Estimates; Company Sees Net TV Customer Loss: 1Q adj. EPS 72c, est. 69c; added 129k monthly subscribers, below projections
  • Trump Declares He’s ‘Presumptive Nominee’ as Clinton Wins Four: Trump won all five states holding votes Tuesday — Pennsylvania, Connecticut, Maryland, Delaware and Rhode Island; Clinton beat Bernie Sanders in Connecticut, Pennsylvania, Delaware and Maryland, Sanders won in Rhode Island
  • NYSE Joins Nasdaq Assailing Plan to Overhaul Trading Fees: Proposed test will hurt investors, NYSE president says
  • Bond Inflation Outlook Sets Nine-Month High Ahead of Fed Meeting: Inflation seen at 1.57% pace next 5 yrs, yields show
  • Near-Zero Growth Happens Often in Slow-Motion U.S. Economy: Sluggish first quarter would be third in as many years, economists forecast GDP to rise 0.6%
  • Exxon Mobil Loses Top Credit Rating It Held Since Depression: Standard & Poor’s on Tuesday stripped Exxon of its highest AAA measure of credit-worthiness, cutting it to AA+
  • Adidas Lifts Profit Forecast Ahead of Euro Soccer Tournament: Now sees 2016 net income from cont. ops up 15%-18%, had seen up 10%-12%; raised outlook for 2nd time in less than 3 months
  • Chipotle Sales Tumble 23% as Food-Safety Fallout Persists: Restaurant chain reports first loss since going public
  • FBI Officials Said to Urge Against Review of IPhone Hacking Tool: Have recommended against conducting a review to determine whether the vulnerability that was used to hack into a dead terrorist’s iPhone should be disclosed to Apple

Looking at regional markets, Asian stocks traded mixed following the tentative lead from Wall St. as participants remained weary ahead of the upcoming FOMC & BoJ meetings, while disappointing earnings from Apple also weighed on Asian suppliers. ASX 200 (-0.3%) initially outperformed after WTI climbed to YTD highs following an unexpected API drawdown, while weak domestic CPI data also boosted RBA rate cut hopes. However, the index was then dragged into negative territory alongside the risk-averse tone in the region. Nikkei 225 (-0.3%) fell as participants remain cautious as the BoJ kicked off its 2-day policy meeting, while Apple suppliers in the region also suffering following poor Q2 results from the tech giant which missed on earnings, revenue and forecasts, while iPhone sales declined for the 1st time Y/Y. Shanghai Comp (-0.4%) had been initially supported by strong Industrial Profits which rose 11.1 % Y/Y, although declines in Chinese commodity prices and default concerns saw the index reserve its earlier gains. 10yr JGBs weakened with participants side-lined ahead of the upcoming policy decision, while the absence of the BoJ in the market also contributed to the lack of demand.

Top Asian News

  • Nomura Posts Surprise Quarterly Loss on Trading, Brokerage Slump: 4Q net loss 19.2b yen vs est. 23.4b yen profit
  • Galaxy Ent.’s Profit Trails Estimates on Dearth of High- Rollers: 1Q adj. Ebitda HK$2.4b vs est. HK$2.47b
  • Nintendo Forecasts Miss Analyst Estimates; NX Release March 2017: Sees op. profit +37% to 45b yen vs est. 65.6b yen
  • Mitsubishi Motors Withholds Earnings Forecast on Test Fraud: Co.may have to compensate customers, Nissan, govt
  • Australia Core Inflation Slows to Record, Puts Rate Cut in Play: CPI falls 0.2% q/q, first decline since 2008 crisis
  • China Debt Headache Swells as Bank Breaches Bad-Loan Buffer: Bank of China’s coverage ratio falls below 150% for first time
  • Asia Hedge Fund Outflows Highest in Seven Years, eVestment Says: March redemptions from Asia-based funds neared $2b
  • Rupee Bulls See Volatility Damped as Oil Enters Goldilocks Phase: Currency’s implied volatility fell to 4-mo. low last week
  • Samsung Planning $9 Billion Down Payment on IPhone Displays: Co. said to be in talks to supply for next iPhone model

In Europe, stocks have traded in modest negative territory through much of the morning before seeing a pickup in recent trade to pare earlier losses. Sentiment in equity markets has been somewhat uncertain after the downbeat CPI data overnight from Australia and ahead of the key risk events of the week in the form of the Fed and BoJ rate decisions. Equities however reversed course amid the positive impact from the upside seen in the energy complex. This comes as WTI and Brent both continue to trade at YTD highs in the wake of the surprise API drawdown last night (-1100k vs. Exp. 2400k) and the continued upside seen in oil seen over the past few weeks. In terms of equity specific news, earnings season is in full flow with the likes of Adidas (+6.6%) and Barclays (+2.6%) among the best performers after premarket releases.

Fixed income markets remain modestly higher on the day, in fitting with the general risk off sentiment. As such, Bunds remain at elevated levels, subsequently tracking USTs higher with the curve notably flatter amid outperformance in the long end.

Top European News

  • Barclays Shares Rise as Investment Bank Weathers Market Turmoil: Pretax profit fell 25% to GBP793m, rev. dropped 13% to GBP4.6b, topping GBP4.48b avg. estimate; investment bank posted smaller revenue declines than U.S. rivals
  • U.K. Economy Loses Pace as Services Slow, Manufacturing Shrinks: Growth slowed to 0.4% from 0.6% in the final three months of 2015, as forecast in a Bloomberg survey of economists
  • Total Quarterly Profit Beats Estimates, Helped by Refining: 1Q adj. net $1.64b beats average est. $1.25b; co. plans to limit capex to
  • Hutchison-VimpelCom Italian Deal Said to Face EU Objections: EU antitrust complaint listing concerns could come in June
  • Steinhoff Folds in Darty Auction, Handing Victory to Fnac: aid Steinhoff says it won’t raise its offer for Darty, Fnac’s 170p/shr bid supported by shareholders owning majority stake
  • Munich Re Shares Decline After First-Quarter Profit Warning: says 1Q result “well below” expectations, also well below year-earlier figure
  • Santander Jumps as Bank Beats Profit Estimates, Builds Buffer: 1Q Net EU1.63b, est. EU1.5b; provisions for bad loans fall, as capital ratio rises
  • Nordea Girds for Sanctions It Says May Follow Panama Probe: Posted 28% decline in profit last quarter
  • Iberdrola Profit Drops as Currencies, Electricity Prices Slide: 1Q Ebitda EU2b; est. EU2.06b
  • Deutsche Bank Struggles to Shake Winter Blues in Credit Markets: Cost of insuring against losses on Deutsche Bank’s debt is 67% higher than average for 12 of its biggest peers
  • ECB May Reshape Euro Corporate Debt by Driving Long-Term Issues: Central bank to purchase bonds with maturities up to 30 years

In FX, it has been a busy morning ahead of the key FOMC meeting tonight, with yet more USD sales to note against selected majors, but enough to pull the USD index lower again. Stand out has been GBP earlier in the week, but EUR/USD gains have seen us back into the low-mid 1.1300’s again, while a WTI surge to $45.0 has sent USD/CAD through 1.2600 and below the lows from Friday. The move has also stemmed the sell-off in AUD/USD, which slumped from the mid .7700’s in the wake of the surprise Australian CPI read which was much lower than expected — Q1 yoy 1.3% vs 1.8% previously. We tested .7600, but unsuccessfully as yet. Big data release in the UK in Q1 GDP, but coming in largely as expected, pre data positioning saw early selling above 1.4600 reversed, but 1.4545-50 levels have held up so far. Tuesday’s 1.4638 high is intact as yet. USD/JPY has every reason to stand pat with the BoJ decision hot on the heels from that of the Fed. Support holding up, but stock market weakness creeping in (Apple miss) to cap the topside for now.

In commotieis, heading into the North American crossover, WTI and Brent crude futures have extended on gains following yesterday’s surprising drawdown in the latest API crude oil inventory report. Subsequently, crude prices now trade at YTD highs with WTI breaking above USD 45.00/bbl which is the first time since Nov’15. Gold (+0.1 %) prices remained near yesterday’s highs as a cautious tone and USD weakness underpinned. Elsewhere, copper and Dalian iron ore futures extended on losses in Asian trade with the latter declining 6% to hit limit down on Chinese concerns and a continuation of the selling since China increased transaction costs.

Datawise in the US this afternoon it’s worth keeping a close eye on the advance goods trade balance reading for March with respect to its influence on GDP, before March pending home sales data is released. This all of course comes before the main event this afternoon with the conclusion of the two-day FOMC meeting. Meanwhile it’s another bumper day for earnings today with 41 S&P 500 companies set to report, the highlights of which include Boeing, Facebook and General Dynamics.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Uncertainty looms across equities as participants weigh risk events in the form of the Fed and BoJ rate decisions with the surge higher in crude prices.
  • GBP finds support to remain near 1.4600 following UK GDP figures, while commodity linked currencies strengthens against the USD amid the surge in crude prices.
  • Looking ahead, highlights include Fed, RBNZ and Brazilian rate decisions and US Pending Home Sales.
  • Treasuries rose during overnight trading after falling seven straight days amid equity weakness in Asia and Apple posted its first quarterly-revenue drop in more than a decade; FOMC statement expected at 2pm, no press conference.
  • Fed will keep rates on hold at April 26-27 mtg, won’t signal a rate increase is likely at following mtg, should continue to watch risks posed by global developments, based on published research from economists/strategists
  • The U.K. economy lost momentum in the first quarter as services posted their weakest performance for almost a year and industrial production continued to decline
  • Oil climbed above $45 a barrel in New York for the first time since November after U.S. industry data showed a decline in crude stockpiles
  • The “black hole” of Japanese and European interest rates will be the thing that drags down Australian bond yields, according to HSBC
  • Greek government bonds tumbled, pushing the yield on shorter-dated notes up by the most in more than three weeks, after the nation failed to resolve disagreements with creditors, prompting Prime Minister Alexis Tsipras to seek a euro-area leaders’ summit
  • Nomura Holdings Inc. unexpectedly posted a quarterly loss for the first time in more than four years, as trading income and brokerage commissions slumped and it set aside cash for payouts tied to job cuts
  • Here’s one trademark of the slow-motion U.S. economic expansion: Near-zero growth in any given quarter is nothing to panic about. Yet if 2014 and 2015 are any indication, GDP will rebound in the subsequent quarter as consumer demand picks up and keeps the expansion moving ahead
  • Republican Donald Trump declared himself the “presumptive nominee” and Hillary Clinton all but sealed the Democratic race as both scored dominating wins in northeastern state presidential primaries
  • Sovereign 10Y bond yields mostly lower; European equity markets higher, Asian markets drop; U.S. equity-index futures fall. WTI crude oil, metals both higher

 

DB’s Jim Reid concludes the overnight wrap

Well the weather in Europe yesterday certainly saw four seasons in one day. Actually thinking about it there was nothing resembling summer as London had snow, I got caught in a freezing hail downpour in Holland and then arrived late last night in Munich to sleet with no signs of any imminent rise in temperature. Goodness knows how cold it would have been without man made global warming. Pity our poor Dutch friends who are off for King’s Day today with the forecast being that it will be colder than Xmas 4 months ago.

Markets have been feeling the chill so far this week but the conclusion of the FOMC meeting this evening should heat things up. With no press conference, all the focus will be on the tone of the associated statement. The Fed will want to leave the door open for a June hike but it’s hard to imagine that they’ll dramatically change market pricing for it. The futures contracts have nudged up to pricing a 22% probability of a June hike from as low as 14% mid-way through this month. How much this changes will likely hinge on what extent the Fed continues to acknowledge concerns about global growth and risks abroad. US data has been mixed of late. After getting back close to neutral at the start of April, economic surprise indices have trended steadily lower into negative territory as the month has passed. On the positive side the weaker US Dollar should give the Fed some confidence. Since the March Fed meeting, the Dollar index has weakened just over 2%. That’s partly helped to support a near $8/bbl gain for WTI and 4% rally for the S&P 500 to YTD highs. We think much of the rebound in markets since early February has been due to the Fed’s about turn and re-found dovishness. This leaves them trapped in our opinion.

All that at 7pm BST tonight then. Meanwhile, while yesterday was another fairly directionless and unconvincing day of price action for markets ahead of the bigger events this week, the first of these big events came after the closing bell in the US last night with the release of the Apple Q2 results. The headline news saw the first quarterly drop in revenues in over a decade. This was expected but the magnitude of the decline wasn’t, with revenues declining nearly $1.5bn more than the consensus estimate. Earnings also missed with the tech giant posting EPS of $1.90 (vs. $2.00 expected). Also disappointing was the guidance for Q3 with revenues expected to fall materially more than the market had previously been expecting. Unit sales of iPhones and iPads actually exceeded expectations during the quarter, although sales in other products disappointed while the steep decline in revenues in Greater China for Apple was also highlighted as a concern.

All this culminated in a nearly 8% fall for Apple shares in extended trading, while some soft results from Twitter which saw shares plummet 9% in after hours compounded the pain for the sector. This morning we’ve seen Nasdaq futures weaken over 1% in early trading, with other US equity index futures also in the red. Bourses in Asia are a little more mixed. The Nikkei is -0.58% while Mainland and Greater China bourses are flattish. The Kospi is -0.22% although the ASX has jumped +0.66% after Australia posted a markedly softer than expected CPI print which has seen the Aussie Dollar plummet 1.4% in the aftermath. There has been better news out of China with the latest industrial profits data reporting a +11.1% yoy gain in March, a remarkable rebound from the -4.7% reported at the end of 2015.
The other news this morning is coming out of the US Presidential campaign where the WSJ is reporting that Trump has won all five Republican primaries overnight. The exact number of delegates is yet to be released but the victories will further extend Trump’s lead. Meanwhile the same wire is reporting that Clinton was the big winner in the Democratic Party race, winning four of the five primaries over closest rival Sanders.

Moving on. The big mover again yesterday was Oil with WTI closing up over 3% and a shade above $44/bbl to mark a fresh YTD high. Much of this reflected a weaker day for the US Dollar with the Dollar index (-0.28%) closing lower for the second consecutive day post some disappointing durable and capital goods orders data (more shortly). Interestingly, the benign return across both equity markets (S&P 500 +0.19%, Stoxx 600 +0.18%) and credit markets (CDX IG -0.1bps, Main unchanged) suggested that we may be seeing some decoupling between commodity markets and wider risk assets. In fact iron ore sold off nearly 5%, while Copper was down close to 1%. Sovereign bond yields continue to edge higher meanwhile with 10y Bunds now close to testing 0.30% (up 4bps yesterday) and 10y Treasury yields also extending their move up above 1.9% to close yesterday at 1.928% (up 1.4bps), the seventh consecutive session yields have edged higher.

With regards to that data, it was the softer than expected reads for durable and capital goods orders in March which got the main attention. Headline durable goods orders were reported as increasing +0.8% mom (vs. +1.9% expected) with the ex-transportation reading (-0.2% mom vs. +0.5% expected) also missing. Core capex orders were unchanged in March meanwhile (vs. +0.6% expected), while shipments rose a less than expected +0.3% mom (vs. +0.9% expected). Our US economists noted yesterday that the -9.6% annualized decline in Q1 2016 core shipments marks the weakest quarter since Q2 2009 (-21.2%), when the economy was just about to emerge from recession. They note also that spending outside the energy sector also plunged last quarter. In fact if you remove the impact of the machinery component from the shipments data, which is where energy related spending is captured, then shipments were down -13.8% last quarter.

Meanwhile there was also some disappointment to be had in the April consumer confidence index reading which fell 1.9pts to 94.2 (vs. 95.8 expected) although there was a silver lining in a reported increase in the present conditions index. Further evidence of disappointment in the manufacturing sector was revealed this month with a decline in the Richmond Fed manufacturing survey by 8pts to 14 (vs. 12 expected). On the positive side the flash April services PMI rose 0.8pts to 52.1 (vs. 52.0 expected). Finally the S&P/Case-Shiller home price index rose +0.7% mom in February in the 20 main cities so as to be up +5.4% yoy.

Switching to the micro where there were a couple of interesting snippets of news to make mention of, all of which came in the energy/commodity sector. First there was some positive news to take away from the Q1 BP earnings which revealed an unexpected profit during the quarter supported by gains in trading and refining, after analysts had been forecasting a loss for the period. Meanwhile, Glencore returned to the new issue market yesterday for the first time in about a year which in that time has seen the company weather a huge commodity rout and subsequent asset sale process. The company issued 250m of Swiss Franc denominated bonds yesterday which according to the FT was an upsized deal from the early indication. Lastly and on a slightly damper note for the sector, Exxon Mobil was stripped of its AAA credit rating from S&P yesterday after being downgraded by one notch to AA+. According to Bloomberg Exxon had held that rating since 1930 and it means the S&P AAA corporate club in the US public space now has just two members in Microsoft and Johnson & Johnson.

Before we look at today’s calendar, a quick mention of the latest in Spain where new elections this summer is looking likely after talks between potential coalition party leaders ended without agreement yesterday. Much of the commentary is suggesting that a new ballot would be likely to take place on June 26th, interestingly just 3 days after the Brexit referendum vote.

Looking ahead to today, this morning in Europe we’re kicking off in Germany where we’ll get the import price index for March, along with the latest consumer confidence data. Shortly following that we’ll get money supply data for the Euro area as well as the advanced reading for Q1 GDP in the UK (expected to print at +0.4% qoq). Datawise in the US this afternoon it’s worth keeping a close eye on the advance goods trade balance reading for March with respect to its influence on GDP, before March pending home sales data is released. This all of course comes before the main event this afternoon with the conclusion of the two-day FOMC meeting. Meanwhile it’s another bumper day for earnings today with 41 S&P 500 companies set to report, the highlights of which include Boeing, Facebook and General Dynamics. Total and Statoil will report during European hours in the energy sector.

END

ASIAN AFFAIRS

 

i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed DOWN BY 11.03 POINTS OR 0.37%  /  Hang Sang closed DOWN 45.67 OR 0.21%. The Nikkei closed DOWN 62.79 POINTS OR 0.36% . Australia’s all ordinaires  CLOSED DOWN 0.63%. Chinese yuan (ONSHORE) closed EVEN at 6.4928.  Oil ROSE  to 44.94 dollars per barrel for WTI and 46.74 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5071 yuan to the dollar vs 6.4928 for onshore yuan.

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

none today

b) CHINA ISSUES

The following is an essential read. Japan and China are not growing at all.

Japan will probably experiment by going increasingly into NIRP and also by paying banks to loan money in an early attempt at helicopter money

However the real problem is in China where the POBC unleashed 1 trillion uSA of debt into their economy.  They bought boatloads of crude and purchased mega tonnes of base metals in the hope of stimulating their economy. Basically the large injection of funds created a bubble in tier one housing sector in Beijing, Shanghai and Shenzen making housing totally out of reach for many.  However Peer to Peer financing for these homes in the Tier one sector will be the atom bomb that blows up the paper game inside China:

(courtesy David Stockman/ContraCorner)

 

Another Gary Cooper Rebound—–It Isn’t On The Level by  • April 25, 2016

Gary Cooper famously told a Congressional committee investigating communist infiltration of Hollywood in the 1950s that “from what I have heard about it, it isn’t on the level.”

I was put in mind of that observation this morning. First, I heard Jim Cramer saying that the bottom is in for Caterpillar and then I read that Goldman Sachs had upgraded its rating on CAT and Joy Global on the grounds that,

“…… the signs of a China recovery now appear to be broadening.”

By the lights of Wall Street and its media megaphones, therefore, global demand for commodities and oil is purportedly rebounding and a reflationary cycle of growth is again underway. Apparently, its time to buy the dip again because the world economy has gotten back into its growth groove.

No it hasn’t. What we have here is a Gary Cooper rebound. That is, another unsustainable upward blip of the fundamentally false global credit bubble. But the latter is no more on the level than was Joseph Stalin’s new Soviet paradise.

This time, of course, capitalism is being supplanted by printing-press happy central bankers rather than tonnage toting commissars reinforced by firing squads. But the end game is much the same. To wit, when the state tries to over-ride the laws of the market and sound money, the experiment will eventually end in tears.

We can’t be too far away. The BOJ has gotten so desperate, for example, that it is apparently fixing to double down on its leap into negative interest rates on central bank deposits by extending NIRP to its commercial bank funding facility. That is, its going to pay commercial banks to make loans to private sector firms and households which are already buried in debt. At more than 450% of GDP,  in fact, Japan’s total credit outstanding towers well above the rest of the world.

No matter. The madcap money printers at the BOJ have already bought up every Japanese government bond that can be pried loose and own nearly 50% of Japanese issued ETFs. And now comes word that the BOJ has bought so much stock through ETFs and directly that it has become a top holder of most of the stocks in the Nikkei 225.

Needless to say, the Japanese bond and stock markets are not even slightly on the level. They are incendiary artifacts of a central bank that has gone berserk and getting more desperate by the day.

Yet the BOJ is hardly an aberration. The affliction is nearly universal as Draghi demonstrated last week and as the Fed will reaffirm this week when it effectively perpetuates ZIRP into its 89th month.

So rather than discounting the unmistakable signs of economic weakness and swooning profits everywhere, the casino gamblers keep repairing to any sign that one or another of these rogue central banks will goose the financial markets with one more round of stimulus—-or delay in the inexorable path toward normalization.

The flavor of the moment this week is that the BOJ will soon embark on the form of helicopter money referenced above. But that has been mightily reinforced by this morning’s Cramer/Goldman proposition that the global economy is in a renewed upswing because the red suzerains of Beijing have now injected a massive new round of stimulus into China’s faltering growth machine.

Well, that they did. It now appears that total social financing in Q1 hit 7.5 trillion yuan with a “T”. In plain USD’s that implies a $4.5 trillion annualized rate of credit expansion.

It also settles the case. Beijing has completely lost control of the Red Ponzi and in contradiction of every one of its public pronouncements about pro-market reforms and a smooth transition to a consumption and services based economy, it has unleashed the printing presses like never before.

But with $30 trillion of debt already smothering the Chinese economy, generating new credit at a rate of nearly 40% of GDP is tantamount to a death wish. It is simply inflating financial bubbles faster than can be tracked, and eliciting yet another borrowing and construction surge in an economy swamped in excess capacity and white elephants. Accordingly, during March Chinese steel production set an all-time record, cement production soared and the “iron rooster” was temporarily back in business.

To be sure, the short-term reflationary impulse has been explosive. As the venerable Ambrose Pritchard-Evans observed yesterday regarding China’s first quarter boomlet:

New home sales jumped 64pc in March from a year earlier. House prices have risen 28pc in Beijing, 30pc in Shanghai, and 63pc in the commercial hub of Shenzhen. The rush to buy has spread to the Tier 2 cities such as Hefei – up 9pc in a single month.

“The housing market is on fire,” said Wei Yao, from Societe Generale. “In the first quarter, increases in total credit exploded to 7.5 trilion yuan, up 58pc year-on-year. There is no bigger policy lever than this kind of credit injection.”

“This looks like an old-styled credit-backed investment-driven recovery, which bears an uncanny resemblance to the beginning of the“four trillion stimulus” package in 2009. The consequence of that stimulus was inflation, asset bubbles and excess capacity. We still think that this recovery will not last very long,” she said…..

The signs of excess are visible everywhere as the Communist Party once again throws caution to the wind . Cement production jumped 24pc in March and infrastructure investment rose 19pc.

Yang Zhao from Nomura said the edifice is becoming more dangerously unstable with each of these stop-go mini-booms. “Structural problems and financial imbalances are worsening. We believe this debt-fueled growth is not sustainable,” he said.

Nomura said the law of diminishing returns is setting in as the economy nears credit exhaustion. The ‘incremental credit-output ratio” has deteriorated to 5.0 from 2.3 in 2008. Loans are losing traction and the quality of investment is falling.

 

That’s right. China’s precisely calibrated GDP grew by $180 billion during Q1, even as its outstanding debt soared by upwards of $1.055 trillion. So it took $6 of new borrowing to coax another dollar of dubious GDP—-that is, more empty roads, train stations and apartments—–out of the Red Ponzi.

But what it actually did was trigger another round of Chinese speculation in commodity stockpiles, industrial inventories, real estate and other assets. That impulse, in turn, cascaded through global commodity markets, causing a modest rebound in beaten down prices and thereby reinforcing the Wall Street meme that global reflation is underway.

The chart below says otherwise. At the heart of the Wall Street rebound from the February 11th lows was the 55% gain in crude oil prices. The whole proposition was that the Doha disaster didn’t matter because global crude oil supply, at length, was beginning to bend downward and that by early next year the market would be back in balance. This, in turn, was to pave the way for prices above $50 and a rebound in the entire commodity and materials complex.

Yet even as Cramer was attempting to lure homegamers into CAT, Bloomberg came forward with a cat of a decidedly different strip. Based on an exhaustive empirical investigation that involved tracking oil tankers on the water, it unloaded the following:

China is hoarding crude at the fastest pace in at least a decade, filling inventories at a time when oil futures remain about 60 percent below where they were just two years ago. The nation added 787,000 barrels a day to stockpiles in the first quarter, the most for the period since at least 2004 when Bloomberg started calculations based on customs data. Its imports climbed in March from countries including Iran, Venezuela and Brazil.

“We’ve seen crude buying in recent months coming from a very broad range of sources, more coming from Latin America and more from Europe,” said Richard Mallinson, an analyst at Energy Aspects Ltd. in London. Shipments are being boosted by so-called teapot refineries and may also be advancing in preparation for the end of refinery maintenance programs in China, he said.

Operating rates at teapot refineries in eastern Shandong province rose to about 52 percent in the week to April 22 as two plants completed maintenance and restarted production, according to industry website Oil.chem.net, which surveys 32 of the refineries.

Here’s the thing. Global liquids demand in Q1 according to the international energy agency averaged 94.82 million b/d compared to 93.58 million b/d during Q1 2015. So demand was apparently up by 1.24 million b/d (1.3%), but self-evidently much of that was due to backdoor inventory accumulation through China’s teapot refinery complex deep in the maw of the Red Ponzi, not growing final demand.

In fact, China’s inventory accumulation accounted for two-thirds of apparent global demand growth in Q1. So on the margin, oil got a bid because the punters are watching the supply curve, but assuming that “demand growth” is a given.

To the contrary, global oil demand is on the precarious edge of rolling over. Most of the apparent demand growth of 800k b/d in Q4 and 1.2 million b/d in Q1 reflected the final burst of credit-fueled inventory accumulation in the Red Ponzi. But as has been demonstrated repeatedly in the copper, iron ore, cotton and other commodity markets, when the Chinese speculators commence a destocking cycle——–then, look out below!

What actually happened in Q1, in fact, was that world trade volumes collapsed by double-digit rates in China and throughout the East Asian export complex. What comes next, therefore, is global oil “demand destruction” as economic activity continues to ebb. The modest production drop in the US shale patch expected in the months ahead will be no match for the latter.

There is no reflationary cycle just ahead. The commodity complex will soon reverse. CAT’s sales have declined for 32 straight quarters for a reason. To wit, the massive CapEx spending boom elicited by the central bank driven credit bubble of the last two decades is over and done. There is enough used big yellow machines floating around the global used machinery markets to last for a decade.

Stated differently, the global commodity and CapEx bottom’s not in. It’s not even in sight.

More importantly, this Gary Copper rebound has already reached its sell-by date.

Jim Cramer to the contrary notwithstanding, the more prudent thing to do would be not to back-up-the-truck, but to sell it. Today brought still more evidence that the entire global casino is definitely not on the level.

 

end Trading in iron ore and steel rebar is now the most traded commodity in the world and surpassing oil.  This is an accident waiting to happen: (courtesy zero hedge) “Hold Onto Your Hats”: A Chinese Commodity Is Now The Most Traded In The World, Surpassing Oil

Having abandoned its equity and credit bubbles, China recently opened the spigots on an unprecedented commodity bubble, as we explained in “Beware The Bubble In China’s Domestic Commodity Market” and “The Stunning Chart Showing Where All The Commodity Gains Have Come From.”

None of that however does justice to what is really taking place. So for an extended view we skimmed a piece by Citi released overnight, titled “Hold onto Your Hats – Explosion in Chinese Commodities Futures Brings Unprecedented Liquidity, Untested Volatility” in which we read the following stunning finding: “trading volumes in Chinese exchanges further spiked, with SHFE rebar and DCE iron ore futures becoming the No.1 and No.3 most-traded contracts around the world, and 11 of the top 20 traded futures contracts are on Chinese exchanges. On 21 April, a major contract of SHFE rebar “RB1610″ reached daily trading volume of US$93 billion, exceeding the total volumes of the Shanghai and Shenzhen stock exchanges combined.”

Putting this in context:

The fact that iron ore, responsible for a small fraction of daily trade in oil and far less important for the global economy than oil, has attracted massive fund inflows in China is an indication of the excesses of Chinese futures exchanges and the dangers that wanton trading on Chinese exchanges may destabilize global markets. Trading in Chinese futures on some irrelevant commodities including bitumen, polypropylene, and PVC have also soared during the past weeks.

The chart below shows this unprecedented explosion in volume in context:

Citi adds that “exploding trading volumes have created large price volatility on Chinese commodity exchanges, a sign of market overheating as perceived by regulators. All three exchanges have therefore attempted to cool down the market by shifting up daily upper and lower limits, raising margins and transaction fees, sending out risk alerts, and banning activities by high-frequency trading accounts.”

So aside from the generic explanation that this is merely the latest Chinese bubble, what has prompted this epic inflow in commodity trading. According to Citi, Chinese commodity futures volumes spiked since 2015 thanks to three factors: 1) domestic liquidity easing; 2) fund inflow from other asset classes, in particular from trading activities in stock index futures; 3) rise of producer hedging in the face of falling commodity prices and volatile RMB.

In other words all the things that prompted the credit bubble in late 2015 and the equity bubble last summer.

One other key factor was a massive short squeeze. “Short positions on iron ore, steel and base metals began to accumulate at the end of last year, accelerating in January as equity investors were prevented from shorting equities during the big China sell-off, partly due to a government crackdown on short-selling equities, and moved to short commodities as a way to profit from a slowing Chinese economy. Roughly after Chinese New Year, they went suddenly long, apparently showing more confidence in the Chinese economy but it was designed as well to lock in lower prices under the assumption that the RMB was weakening over the course of 2016, with higher-priced dollars implying significantly higher RMB prices for commodities in China.”

Citi adds that while the big picture of financialization in Chinese futures market still holds, the most recent rapid movements in Chinese futures market have been triggered by a few more specific factors. For industrial commodities, particularly steel, iron ore, coke and coking coal, an improvement of sentiments on real estate and infrastructure activities since early 2016 has boosted physical purchases of these commodities, leading to a tight physical market with low inventories and rapid surge of prices. More recently, positive sentiment was proved by better-than-expected real estate starts in March, prompting further speculative long positions, a decent proportion of which likely to be short-covering.

The euphoria has been broad based but mostly driven by institutions this time, not retail:

Agricultural products, most notably corn and cotton, also saw a surge of prices thanks primarily to higher-than-expected corn reserve purchase and a delayed schedule of cotton reserve sales.

A simultaneous surge of industrial and agricultural product prices has encouraged massive speculative longs in the futures market. Retail investors have also reported increased participation in futures markets, although we believe institutions are the major driver of the recent rally. However, it is worth noting that open interests in domestic futures market have surged to a much lesser extent than trading volumes for the past few months, indicating that most speculative trades have been conducted through high-frequency transactions, with average tenure of each contract reportedly lower than four hours.

However, while everyone enjoys the leg higher, the question is what happens when the inevitable rush for the exits begins: “When prices start to fall, investors may find it hard to speculate on the futures market by taking short positions, partly as Chinese exchanges require physical settlement for all commodity contracts.

Others are already looking forward to the inevitable leg lower: quoted by the FT, analysts at London’s Liberium said that “We’ve seen this kind of speculative frenzy before in China in both the real estate and equity markets and the heard mentality has now driven fast money to commodity speculation. Once the upward momentum inevitably runs out, and potentially already has done, the same speculative market forces will drive prices down.” they added. “The situation feels very similar to what played out last year after the Shanghai composite gained 61 per cent in the first half.

Citi’s conclusion – there are some pros in the recent unprecedented commodity action out of China…

“We believe potential opportunities should rise from the introduction of new contracts, growth of ETFs, and increasing producer hedging activities. We also identified risks to sustainable growth of Chinese futures markets, including physical settlement requirements in domestic futures markets, dangers in an expansion of commodity ETFs, uncertainties in futures market regulations, and limited opportunities for foreign participation.”

But one very large con – once the selling begging, not only are all bets off, but the collapse in commodity prices will reverberate across the entire world:

“all of this growth poses multiple dangers to global commodity pricing stability given how less regulated and therefore less protective the Chinese regimes are for investors, who are perhaps the most speculative in the world.

Which is why Cit’s warning is simple enough: “hold on to your hats.” In fact hold on tight because now that even Beijing is getting nervous and as reported before, has moved to not only increase trading costs –the Dalian exchange just doubled trading fees and hiked margins – but also reduced night time trading to try and deter some of the more speculative investors, prices have started to tumble.

Then again, a collapse in the commodity complex may be all the excuse that central banks need to try the direct “monetization” of commodities as a last ditch measure before that unleashing the final monetary assault also known as helicopter money.

GLOBAL ISSUES

CPI in Australia plummets as the Q1 injection just did not make it well into Asian Pac countries. It sure looks like the speculative frenzy in commodities merely looked like a recovery. This caused the Aussie dollar to plunge and a bet that their central bank will cut rates!

Aussie Dollar Plunges As Inflation Slumps To Record Low

Despite surging commodity prices in China – which must be real and represent demand growth and price increases, right?Aussie core inflation slowed to the weakest on record as headline prices unexpectedly fell last quarter (CPI -0.2%). RBA Rate-cut odds tripled instantly sending AUD down over 1.2% (its biggest drop in 2 months). Perhaps, just perhaps, that collossal credit injection in Q1 via China did not make it into the AsiaPac economy after all and merely fueled a speculative frenzy in commodities that merely “looks” like a recovery?

The Reserve Bank of Australia looks at two core inflation measures — trimmed mean and weighted median — and Wednesday’s report showed:

  • Trimmed mean CPI rose 0.2% QoQ vs. median forecast of 0.5%
  • Weighted median CPI gained 0.1% QoQ vs. median forecast of 0.5%
  • CPI fell 0.2%, first decline since final quarter of 2008 vs. median forecast 0.2% rise

This does not look like a recovering Chinese economy is helping…

 

Which drove traders to bet on a rate-cut…

  • *RBA MAY RATE CUT ODDS RISE TO 40% FROM 14% YDAY, FUTURES SHOW

“A pre-emptive May cut is surely now a real possibility,” said Gareth Berry, a foreign-exchange and rates strategist in Singapore at Macquarie Bank Ltd. “At the latest, an August cut is now inevitable. That spells the end of this three-month old Australian dollar rebound, and the downtrend can now resume in earnest.”

 

“Whereas the RBA was previously thinking that low inflation would allow it to cut interest rates if demand faltered, it is now clear that low inflation itself is the problem,” said Paul Dales, chief economist for Australia and New Zealand at Capital Economics. “An inflation-targeting bank like the RBA can’t ignore such a big undershoot of underlying inflation.”

As Goldman notes,

We believe the RBA will now be forced to lower their inflation forecasts in the May Statement of Monetary Policy, not just due to the low CPI data for 1Q16 but also in response to the rise in the A$ through 2016 which will further challenge the RBA’s assessment that inflation will accelerate to well within the target band due to rising tradeable inflation. From our perspective the inflation data is key evidence that excess capacity exists in both product and labour markets and this is supported by private sector wages expanding at record lows and the recent erosion of surveyed measures of inflation expectations (see here). In concert with our analysis that the reported strength in GDP growth in 4Q15 overstates the underlying pulse of the domestic economy (see here) and evidence that economic activity is slowing in 2016 across a broad range of indicators (including investment intentions, retail sales, finance approvals, tourist arrivals, housing turnover, consumer confidence).

 

Moreover, the RBA clearly established the criteria required for them to act upon their easing bias; weak inflation, slowing employment growth and a currency at a level that challenges the RBA assumptions of future economic growth. On all three criteria the evidence supports the case to ease policy in May. Should the RBA choose to remain on hold in May the RBA will be more than aware that the calendar quickly becomes crowded by a likely election campaign through May to early July (the RBA’s July meeting is just 3 days post the likely date of the federal election) and the leadership transition at the RBA scheduled for September. History has shown that since 1990 the RBA has not been overly influenced by political and leadership events. The RBA has eased on 3 occasions and hiked once in the month of or the month prior to a federal election and Governor Stevens continued a tightening cycle soon after his appointment to Governor. Nevertheless, it would seem lmore likely that the next widow for the RBA would be late in 2016.

 

While it is still possible that the RBA holds out hope that the rally in commodity prices might continue and that the US Federal Reserve turns significantly more hawkish, we continue to believe that the course of least regret is for the RBA to follow its inflation targeting framework and ease in May, where we continue to forecast a 25bp reduction. Nevertheless, following the firming of the possibility of an early federal election in July we have decided to move our final forecast rate cut to November 2016 (previously July). Our A$ forecast is under review.

*  *  *

Makes one wonder if any of this bounce in Chinese industrial metals is real at all…

 

Charts: Bloomberg

 END Sweden is now on high alert as ISIS militants have penetrated the country and reports are that these Muslims will strike with a terror attack (courtesy zero hedge) Sweden On High Alert After Reports ISIS Militants Enter Country To “Target Civilians”

In the last week of March, immediately in the aftermath of the tragic Brussels bombing which ISIS took responsibility for and which was subsequently revealed as organized by a semi-autonomous Brussels cell operating closely with the French cell responsible for the November 2015 terrorist attack, we reported that the Islamic State group has trained at least 400 attackers and sent them into Europe for terror attacks. As AP said, citing security officials, “the network of interlocking, agile and semi-autonomous cells shows the reach of the extremist group in Europe even as it loses ground in Syria.”

The last sentence was most troubling: “The officials say the fighters have been given orders to find the right time, place and method to carry out their mission.”

Fast forward one month later when one such place targeted for a new ISIS attack may have been revealed.

ISIS is reportedly planning to strike civilians in the Swedish capital of Stockholm

Earlier today Swedish media reported that officials from the local security services are in a “heightened state of readiness” in connection with a potential terror threat because according to these same reports, several Islamic State fighters have arrived in Sweden to carry out attacks on civilian targets in the capital Stockholm.

“Right now we’re gathering information and intelligence and coordinating with our national and international partners,” security police (Säpo) press spokesman Simon Bynert told the TT news agency.

He added that Säpo is also cooperating with the national police service. “That means we’re sharing this information with them to see if they can implement measures that fall under their remit.”

The Swedish Expressen newspaper reported that the country’s security service received information from their Iraqi colleagues about an imminent terror threat in the country. About seven to eight Islamic State terrorists arrived in Sweden to carry out attacks in Stockholm, Expressen sources claimed and added that “according to the information, the terrorists are planning to attack civilian targets in the capital.’ 

While the Swedish Security Service (Säkerhetspolisen) would not confirm the reports in both Expressen and Aftonbladet – Scandinavia’s biggest tabloid newspapers – but said they are working on analyzing the intelligence received.

Sweden’s flag waves near the Stockholm Cathedral in the Old Town district of Stockholm

According to AP, there has been speculation in local media that Swedish King Carl XVI Gustaf’s 70th birthday, a traditional gathering for the royal family, government officials and EU royal visitors, on April 30 could be a possible target for extremists.

It is thus certainly possible that 7-8 ISIS fighters are located in Sweden now, which could become the locus of the next terrorist attack. At least 300 Swedish nationals have traveled to Iraq and Syria to join Islamic State (IS, formerly ISIS/ISIL) according to research conducted by the International Centre for Counter-Terrorism (ICCT), published on April 1. Around half of these are from the city of Gothenburg, Sweden’s second largest city with a population of around 500,000 people.

This makes Gothenburg the European city which, in proportion to population, ‘contributes the highest number of people to violent extremism,’ Swedish integration police chief Ulf Boström said last year, branding it ‘ISIS’s recruiting ground in the EU’.

In March, Europol also added that between 3,000 and 5,000 so-called ‘foreign fighters’ – EU citizens trained in IS terror camps – have returned to Europe and pose a “completely new challenge.”

An April report in the Swedish media said Islamists have successfully infiltrated Sweden’s Green Party. According Lars Nicander from the Swedish National Defense University, there is “a very similar effect today in which people close to the Muslim Brotherhood, an Islamist party, are apparently gaining large footholds in the Green Party.”

Finally, considering the already tense environment in Sweden, profiled most recently in “Swedes Revolt Over Refugees Near Schools: Demand “F##king Answers” From Stockholm City Council“, a terrorist attack here could be just the powder key needed to unleash the next, far more violent phase of Europe’s refugee crisis.

end EMERGING MARKETS Very strange!!  You would not believe the next thing that Venezuela ran out of: PAPER MONEY TO PAY FOR MONEY: (courtesy Andrew Rosati/Bloomberg) Venezuela Doesn’t Have Enough Money to Pay for Its Money April 27, 2016 — 5:00 AM EDT  by Andrew Rosati
  • Billions of new bills in circulation and still more are needed
  • Rampant inflation means gym bags full of cash for dinner

Venezuela’s epic shortages are nothing new at this point. No diapers or car parts or aspirin — it’s all been well documented. But now the country is at risk of running out of money itself.

In a tale that highlights the chaos of unbridled inflation, Venezuela is scrambling to print new bills fast enough to keep up with the torrid pace of price increases. Most of the cash, like nearly everything else in the oil-exporting country, is imported. And with hard currency reserves sinking to critically low levels, the central bank is doling out payments so slowly to foreign providers that they are foregoing further business.

Venezuela, in other words, is now so broke that it may not have enough money to pay for its money.

This article is based on interviews with a dozen industry executives, diplomats and former officials as well as internal company and central bank documents. All of the companies declined official comment; the central bank did not respond to numerous requests for interviews and comment.

Thronging Banks

The story began last year when the government of President Nicolas Maduro tried to tamp down a growing currency shortfall. Multi-million-dollar orders were placed with a slew of currency makers ahead of December elections and holidays, when Venezuelans throng banks to cash their bonuses.

At one point, instead of a public bidding process, the central bank called an emergency meeting and asked companies to produce as many bills as possible. The companies complied, only to find payments not fully forthcoming.

Last month, De La Rue, the world’s largest currency maker, sent a letter to the central bank complaining that it was owed $71 million and would inform its shareholders if the money were not forthcoming. The letter was leaked to a Venezuelan news website and confirmed by Bloomberg News.

“It’s an unprecedented case in history that a country with such high inflation cannot get new bills,” said Jose Guerra, an opposition law maker and former director of economic research at the central bank. Late last year, the central bank ordered more than 10 billion bank notes, surpassing the 7.6 billion the U.S. Federal Reserve requested this year for an economy many times the size of Venezuela’s.

World’s Highest Inflation

The currency crisis sheds light on the magnitude of the country’s financial woes and its limited ability to remedy them as oil — the mainstay of its economy — continues to flatline. Venezuela’s inflation, the world’s highest, is expected to rise this year to close to 500 percent, according to the International Monetary Fund.

The first signs of the currency shortage date back to 2014 when the government began increasing shipments of bank notes as wallet-busting wads of cash were already needed for simple transactions. Venezuelans spend hours waiting in line for consumer staples, lining up first at banks and cash machines, often carrying the loot in backpacks and gym bags to pay for dinner out.

Ahead of the 2015 congressional elections, the central bank tapped the U.K.’s De La Rue, France’s Oberthur Fiduciaire and Germany’s Giesecke & Devrient to bring in some 2.6 billion notes, according to bank documents and people familiar with the deals. Before the delivery was completed, the bank approached the companies directly for more.

De La Rue took the lion’s share of the 3-billion-note order and enlisted the Ottawa-based Canadian Bank Note Company to ensure it could meet a tight end-of-year deadline.

Sniper Cover

The cash arrived in dozens of 747 jets and chartered planes. Under cover of security forces and snipers, it was transferred to armored caravans where it was spirited to the central bank in dead of night.

While the cash was still arriving — at times, multiple planeloads a day — authorities set their sights on the year ahead. In late 2015, the central bank more than tripled its original order, offering tenders for some 10.2 billion bank notes, according to industry sources.

But currency companies were worried. According to company documents, De La Rue began experiencing delays in payment as early as June. Similarly, the bank was slow to pay Giesecke & Devrient and Oberthur Fiduciaire. So when the tender was offered, the government only received about 3.3 billion in bids, bank documents show.

“Initially, your eyes grow as big as dish plates,” said one person familiar with matter. “An order big enough to fill your factory for a year, but do you want to completely expose yourself to a country as risky as Venezuela?”

Further complicating matters is the sheer amount of bills needed for basic transactions. Venezuela’s largest bill, the 100-bolivar note, today barely pays for a loose cigarette at a street kiosk.

Uncharted Territory

As early as 2013, the central bank commissioned studies for 200 and 500 bolivar notes, former monetary officials say. Despite repeated assurances, no new denominations have been ordered, pushing Venezuela into uncharted territory by its refusal to produce larger bills while not fully paying providers.

Companies are backing away. With its traditional partners now unenthusiastic about taking on new business, the central bank is in negotiations with others, including Russia’s Goznack, and has a contract with Boston-based Crane Currency, according to documents and industry sources.

Steve Hanke, a professor of applied economics at Johns Hopkins University, who has studied hyperinflation for decades, says that to maintain faith in the currency when prices spiral, governments often add zeros to bank notes rather than flood the market.

“It’s a very bad sign to see people running around with wheelbarrows full of money to buy a hot dog,” he said. “Even the cash economy starts breaking down.”

 

end

 

Then our buffoon, Maduro has just ordered a 5 day weekend for public servants to conserve on energy as the Guri dam is just 1 meter from complete shutdown

(courtesy zero hedge)

 

Venezuela Economy Literally Grinds To A Halt As Maduro Orders “Five Day Weekend” For Public Workers

Just three weeks ago, the Venezuela socialist paradise gifted local workers with one extra day of rest each week when, as a result of the crippling economic crisis and collapsing power grid, president Maduro designated every Friday in the months of April and May as a non-working holiday in his desperate bid to save electricity as a prolonged drought pushes water levels to a critical threshold at hydro-generation plants. Never without a scapegoat, Maduro immediately blamed El-Nino for implementing the three-day weekend.

“This plan for 60 days, for two months, will allow the country to get through the most difficult period with the most risk,” Maduro said on state television in early April. “I call on families, on the youth, to join this plan with discipline, with conscience and extreme collaboration to confront this extreme situation” of the drought blamed on the El Nino weather system.

As a reminder, the reason for the electrical rationing was the water content of Venezuela’s Guri Dam, which supplies more than two-thirds of the country’s electricity. As The Latin American Herald Tribune wrote a month ago, the dam “is less than four meters from reaching the level where power generation will be impossible. Water levels at the hydroelectric dam are 3.56 meters from the start of a ‘collapse’ of the national electric system. Guri water levels are at their lowest levels since 2003, when the a nationwide strike against Hugo Chavez reduced the need for power, masking the problem.”

Yesterday the water levels at Guri dam reached a record low of 241.67 meters, according to state power utility Corpoelec. If levels drop below 240 meters, the dam’s operator may be forced to shut down units at the plant that produces about 75 percent of the electricity that Caracas, the country’s capital and largest city, consumes.

(arrow shows where the water shoud be if the dam were operating at capacity)

Alas, since this plan was doomed to fail as the Venezuela economy would produce even less output as a result of the extended weekend, things went from comical to farcical overnight when the Venezuelan gift kept on giving, and the nation expanded the three-day weekend to five days, declaring a two-day work week for government workers, adding it was seeking international help to save its power grid amid a drought that threatens the capital’s main source of electricity.

The two-day work week, after the government added Wednesdays and Thursdays as non-working days to save more power, will last at least two weeks, President Nicolas Maduro said on his weekly program broadcast on state television. Schools will be closed on Fridays starting this week, he said.

“The public sector will work Monday and Tuesday, while we go through these critical and extreme weeks where we are doing everything to save the Guri,” Maduro said, referring to the giant hydroelectric dam that has become like a “desert.” The collection of electricity-saving measures have reduced Guri’s daily drop from 22 centimeters a day to 10 centimeters, he added.

As Bloomberg adds, Venezuela is requesting emergency international help from the United Nations for public works construction to help the country recover from an “extreme situation,” Maduro said. He called for “social peace” during the power crisis.

Meanwhile, Venezuelans, except those in the capital and some states, began to experience programmed four-hour rolling blackouts on Monday as a drought cripples generation at the Guri dam. According to the IMF, Venezuela’s economy will contract 8% this year, after shrinking 5.7% in 2015. Considering hyperinflation in Venezuela is already running at over 700%,and now that the economy is effectively shut down, we will take the under.

Today’s announcement follows another curious idea by Maduro when earlier this month he ordered the country’s time zone changed to save energy, reversing the decision by his predecessor, Hugo Chavez, to set back clocks 30 minutes in 2007 to ease daily predawn commutes for school children and the poor. Clocks will be moved forward a half hour May 1.

Looking forward, we doubt that the decision to expand the weekend from 3 to 5 days will be reversed any time soon (after all the initial 3-day weekend expansion was supposed to be temporary as well), and the most likely outcome is that in his next decree, Maduro will announce that public workers can just take a 7 day weekend, and no longer show to work. They will also receive a commesurate wage.

At that point, we assume, is when the Venezuela experiment in creating a socialist paradise finally concludes.

end OIL MARKETS

For those of you who are long in oil you have just been forewarned:

Dennis Gartman just went long in oil after stating oil will not hit 44 dollars during his lifetime:

(courtesy zero hedge)

After Saying Oil Would “Not Hit $44 During My Lifetime”, Gartman Flip-Flops, Turns Bullish

In late January, when oil was trading in the low $30 range, Dennis Gartman made a bold forecast: “we won’t see crude above $44 again in my lifetime”

Three months later, oil just hit $45 – its highest price since November – and yet Gartman is still alive…

A paradox? Gartman has an explanation, and it has to do with Keynes, “erring” and “wrongness.” From this latest note:

Finally… and perhaps most importantly… we invoke Lord John Maynard Keynes this morning who said long ago when he had changed his mind on an investment he had previous touted that “When the facts change, I change; What then do you do, Sir?” The facts are changing in the world of crude oil; demand is still rather strong and supplies seem to be rising but only modestly. Further, the term structures are shifting. We had been, on balance and really quite openly, bearish of crude for the past several years, erring always to sell crude’s rallies rather than to buy crude’s weakness. That has been wrong for the past two monthsand it is time to acknowledge that “wrongness.” If the facts are indeed changing… and certainly they seem to be… then we too must change. Lord Keynes did; we must also.

Well, “change” is certainly prefereably to “die.”

Oil can now crash.

 

end

 

So much for WTI above 45 dollars and right on schedule, as soon as Gartman goes long, crude plunges after the DOE reports a big build:

(courtesy DOE/zero hedge)

 

Crude Plunges After DOE Reports Big Build

Following last night’s surprise inventory draw (1.1m via API), WTI soared above the week’s high holding $45 into this morning’s DOE data which was dramatically different. Instead of a draw, DOE reported a bigger-than-expected 2.00m build along with a major build at Cushing and Gasoline stocks also rose. Despite a small drop in production, WTI prices are plunging, erasing the hope-driven API ramp.

API

  • Crude -1.1m (+1.75m exp)
  • Cushing +1.9m
  • Gasoline -400k
  • Distillates -1.02m

DOE

  • Crude  +2.00m (+1.75m exp)
  • Cushing +1.746m
  • Gasoline +1.61m
  • Distillates -1.70m

A major build at Cushing (after the pipeline delay ends) and saurprsing build overall…

Production fell modestly o nthe week…

And the reaction in crude…erasingthe API exuberance…

Charts: Bloomberg

end

The losses to oil companies for the year are a whopping 67 billion dollars (courtesy money.cnn.com) and special thanks to Robert H for sending this to us:

http://money.cnn.com/

Ouch. Oil companies lose whopping $67 billion

April 26

NEW YORK

American oil companies are drowning in a sea of red ink.

The crash in crude oil prices caused a stunning $67 billion in combined losses by 40 publicly-traded U.S. oil producers last year, according Energy Information Administration research. And the bleeding is expected to continue at least early this year for many.

The losses surpassed $1 billion each from struggling oil companies like EOG Resources (EOG), Devon Energy (DVN) and Linn Energy (LINE) as well as SandRidge Energy (SD), the shale oil driller that recently admitted it’s exploring a bankruptcy filing.

The EIA research excluded some of the largest oil companies such as ExxonMobil (XOM) and Chevron (CVX), both of which posted profits last year, albeit vastly smaller in size. These companies were excluded because they also have large offshore operations and the EIA report focused on on-shore oil companies.

The analysis also revealed that the companies most vulnerable to losses were oil producers with too much debt taken on during the boom years. The 18 U.S. oil companies that reported the biggest losses were saddled with $57 billion in long-term debt. These big losers also had an alarming average long-term debt-to-equity ratio of 99%, the EIA said.

By comparison, the remaining 22 companies that posted milder losses had total debt of $40 billion, or 58% of equity.

Related: Toxic oil loans create trouble for big banks

Companies with lots of debt have a much smaller margin for error. When cash flows dry up, as they have since oil prices started to crash in mid-2014, it makes it more difficult to make interest payments on their debt.

Secondly, these companies are more likely to have borrowed the money to make risky explorations or expanded into oilfields that are unprofitable. That can backfire when prices drop, forcing them to write down the value of those suddenly unprofitable assets.

“It seems those companies that were most highly leveraged were also the ones taking the riskiest bets. That’s what has come back to hurt them the most,” said Matt Smith, director of commodity research at ClipperData.

Some oil companies that piled on too much debt won’t make it in today’s world of $40-$50 oil.In fact, the high debt group of companies wrote down reserves by 21% last year, compared with a more modest 6% reduction by the other group, EIA said.

Even though oil prices have rebounded from $26 a barrel in February to above $42 today, oil companies are still under significant financial pressure. Wall Street is bracing for more losses this earnings season from oil drillers like Continental Resource (CLR)s, Diamondback Energy (FANG) and Denbury Resources (DNR).

And get ready for more red ink from SandRidge Energy, the Oklahoma City shale oil driller saddled with $3.6 billion of debt. SandRidge warned last month it could be forced into bankruptcy, potentially making it the biggest North American oil-focused company to go bust during the current downturn.

Related: BP profits crash by 80%

Against this challenging backdrop, the oil industry is wrapping up a difficult process with bankers known as “redetermination.” Under this process, bankers can reduce or even yank their credit lines to oil producers.

The EIA warned that oil companies with “high leverage or lower quality assets could face significant curtailment” of their access to short-term credit. That in turn could constrain their ability to drill for oil or even lead to bankruptcy.

But so far bankers haven’t been too tough on their oil clients — and they’re likely to be encouraged by the recent oil price rebound. For example, Chesapeake Energy (CHK) recently eased fears of a catastrophic cash crunch by reaching a deal with its banks to keep a $4 billion credit line.

“Even though there have been huge losses, it seems the period of panic is over,” said Smith.

By Matt Egan April 26, 2016 10:29AM EDT

 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 1.1313 UP .0017 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 111.27 up 0.058 (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

GBP/USA 1.4607 UP .0035 (STILL THREAT OF BREXIT)

USA/CAN 1.2589 DOWN .0021

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 17 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was DOWN 11.03 POINTS OR 0.37% / Hang Sang DOWN 45.67. OR  0.21%   / AUSTRALIA IS LOWER BY 0.63% / ALL EUROPEAN BOURSES ARE MIXED  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 (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 62.79. OR 0.36%

Trading from Europe and Asia:
1. Europe stocks MIXED  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED IN THE RED . ,Shanghai CLOSED IN THE RED/ Australia BOURSE IN THE RED: /Nikkei (Japan)RED IN THE RED/India’s Sensex IN THE GREEN /

Gold very early morning trading: $1246.10

silver:$17.33

Early WEDNESDAY morning USA 10 year bond yield: 1.90% !!! DOWN 3 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 2.73 DOWN 2 in basis points from TUESDAY night.

USA dollar index early WEDNESDAY morning: 94.38 DOWN 13 cents from TUESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers WEDNESDAY MORNING

END

And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  3.19% DOWN 3 in basis points from TUESDAY

JAPANESE BOND YIELD: –..045% DOWN 4 in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:1.63% DOWN 1 IN basis points from TUESDAY

ITALIAN 10 YR BOND YIELD: 1.52  DOWN 3 IN basis points from TUESDAY

the Italian 10 yr bond yield is trading 11 points lower than Spain.

GERMAN 10 YR BOND YIELD: .286% (DOWN 1 IN BASIS POINTS ON THE DAY)

 

END

IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

 

Euro/USA 1.1311 UP .0017 (Euro =UP 14  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 111.45 UP 0.241 (Yen DOWN 6 basis points As MARKETS FALL)

Great Britain/USA 1.4526  DOWN .0026 Pound DOWN 26 basis points/

USA/Canad 1.2623 UP 0.0014 (Canadian dollar DOWN 14 basis points with OIL RISING(WTI AT $45.37)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 14 basis points to trade at 1.1311

The Yen FELL to 111.45 for a LOSS of 24 basis points as NIRP is STILL a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.

The pound was DOWN 46 basis points, trading at 1.4526

The Canadian dollar FELL by 14 basis points to 1.2623, WITH WTI OIL AT:  $45.38

The USA/Yuan closed at 6.4940

the 10 yr Japanese bond yield closed at -.047% UP 2 BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 7  basis points from TUESDAY at 1.86% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.71 DOWN 4 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.49 DOWN 2 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 35.39 POINTS OR 0.56%
German Dax :CLOSED UP 40.24 OR 0.39%
Paris Cac  CLOSED UP 26.22  OR 0.58%
Spain IBEX CLOSED UP 49.60 OR 0.58%
Italian MIB: CLOSED UP 80.21 OR 0.43%

The Dow was up 51.23 points or 0.28%

NASDAQ down 25.14 points or 0.51%
WTI Oil price; 45.39 at 3:30 pm;

Brent Oil: 47.16

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.16 (ROUBLE UP 27 ROUBLES PER DOLLAR FROM FRIDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

.

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:  $45.33

BRENT: 47.17

USA 10 YR BOND YIELD: 1.85%

USA DOLLAR INDEX:94.38 down 12 cents on the day

END

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

Trading Today in Graph form:

Fed-nado Trumps AAPLocalypse: Panic-Buying Spree Pushes S&P Back Over 2,100 (And Fails)

Are you not entertained??

 

Commodity Carnage continues in China…

 

Nothing happened before The Fed (apart from a chaotic dip and rip in crude oil and bid for bonds all morning)…and then it hit…

 

Getting the S&P 500 to 2,100 was all that mattered after The Fed – becase that tells the world that everything is awesome!!

 

Tough day for Nasdaq (as AAPL and TWTR were twatted) but the crushing of VIX lifting all boats saved the day… AAPL knocked 48 points of The Dow today

 

On the week, Small Caps were squeezed once again to the highs as Nasdaq remains the laggard

 

FANG stocks had a tough day even with the post-Fed pump and panic buying effort to lift Nasdaq into the close…

 

The USD Index continued to drift lower while AUD’s collapse overnight (after record low inflation) stands out among the majors…

 

 

Treasuries broke the longest losing streak since Sept 2014 today with 10Y Yields dropping 6bps after rising for 7 days straight.

 

This was the biggest drop in 3 weeks… as bonds rallied back from where they were at the March FOMC…

 

As 2s10s flattened dramatically…

 

Commodities were generally higher today as the dollar los more ground. Copper continued to slide as chinese commodity bubble bursts, PMs were flat tp sligfhtly higher but crude was total chaos…

 

F##k The Fundamentals…at least the ramp stopped at NYMEX close…for now

 

 

Charts: Bloomberg

end

 

 

Goldman, having shorted Apple for quite a while is “disappointed” in their results as they cut their price target from 155 dollars down to $136.  They are no doubt covering their short position:

(courtesy zero hedge)

“We Are Disappointed” – Goldman Removes Apple From “Conviction Buy” List, Cuts Price Target From $155 To $136

The tide has finally turned on what until recently was every sellside analyst’s favorite stock.

With AAPL back in bear market territory and the stock back at levels last seen when the S&P was at 1820, it only makes sense for Goldman to take profit on its AAPL short position, which in this case manifested itself with a “Conviction Buy” call on the stock (for Goldman to short the stock, clients have to buy), and moments ago it closed out its “conviction buy” saying “we are disappointed by Apple’s quarter and guidance, as it reflects a much weaker iPhone 6s product cycle than we had anticipated, with most of the negative surprise vs. our expectations coming from China”, and cutting its 12 month price target on the stock from $155 to $136.

This is what else Goldman said.

Tough quarter; removing from Conviction List, maintain Buy rating

Current view

We are disappointed by Apple’s quarter and guidance, as it reflects a much weaker iPhone 6s product cycle than we had anticipated, with most of the negative surprise vs. our expectations coming from China. As such, we expect the shares to be weak in the near term, until the market gets comfortable around improving trends with the iPhone 7 product cycle. That said, we do not view the quarter as thesis-changing longer term, and maintain our Buy rating. In particular, we are encouraged by (1) Apple’s new disclosure that its iPhone installed base is up 80% vs. 2 years ago, coupled with evidence in our US survey of significant pent-up demand for the iPhone 7, and (2) the acceleration in reported services growth to 20% yoy, with gross services up 27% – evidence of increasing monetization of Apple’s platform. We now estimate 41mn iPhone units in F3Q, compared to prior GS/consensus at 47mn/44mn, with about a 2mn impact from the channel inventory reduction. We lower our FY16-18 sales estimates by 8%-9% on lower units/ASPs, and our EPS estimates by 11%- 14% to $8.40/$10.53/$11.42 on the additional impact of lower margins. We lower our 12-month price target to $136 from $155, based on 12.5X CY17 EPS (previously 15X on CY16E EPS), reflecting lower growth. Risks include product cycle execution, end demand, competition, and a slower pace of innovation.

iPhone: Disappointing iPhone 6s demand weighs on results

Apple’s iPhone segment fell short of expectations in the quarter, as revenue of $32.9bn (-18% yoy, -36% qoq) compared to GS at $35.3bn and consensus at $33.2bn. Similarly, 51.2mn units were below our forecasted 53.6mn although modestly above Street at 50.3mn. ASPs of $642 compared to GS and Street at $659 driven by FX headwinds as well as a mix towards both mid-tier and entry-level iPhones (i.e., the 6 and 5s, respectively) in the quarter. Looking ahead to June, while management does not provide explicit segment-level guidance, it expects “seasonal” sequential declines in iPhone sales. Looking at the trailing three-year average as a proxy for underlying seasonality, that -19% qoq decline would imply 41.2mn iPhone units. Management also expects iPhone ASPs to decline from March driven by the maturing 6s cycle coupled with the introduction of the lower-priced iPhone SE. The ASP mix in F3Q will also be negatively impacted by the $2bn planned channel inventory reduction, as that primarily impacts the higher-priced iPhone 6s models. We now expect iPhone unit volume of 213.9mn/246.3mn in CY16/CY17, representing yoy growth of -7.6%/+15.1%, respectively.

$2bn channel inventory reduction creates up to 2mn unit drag yoy

Exiting the March quarter, iPhone inventory was within the company’s targeted five-to-seven week range; however, citing the “macroeconomic environment” management intends to reduce company-wide channel inventories by $2bn in the June quarter compared to a ~$800mn reduction in C2Q15. The company expects the vast majority of that reduction to occur within the iPhone segment, which we believe is driven by disappointing sales of the iPhone 6s and some cannibalization by the unexpectedly popular iPhone SE, which is in short supply. Taking our C2Q16 iPhone ASP assumption of $620 and assuming that 95% of the $2bn reduction is iPhone, we calculate a 3mn hit to iPhone shipments in the June quarter vs. an estimated 1mn drag in the year ago period. Net-net, we expect a 2mn unit headwind which equates to a 4pt revenue growth headwind on a yoy basis from the planned channel inventory reduction in F3Q.

Installed base up 80% over the past 2 years, supports “7” refresh cycle in 2H

On this quarter’s earnings call, Apple disclosed additional information about the growth of its iPhone installed base as well as the upgrade rate relative to prior cycles. CEO Tim Cook said that the active iPhone installed base is up 80% vs. two years ago; note that Apple includes secondary market devices within its definition. In addition, the upgrade rate for the iPhone 6s is slightly higher than the iPhone 5s but lower than the particularly robust iPhone 6 cycle; this suggests that the yoy decline in the replacement rate we are seeing currently may be more due to difficult comps and a pull forward by the iPhone 6. We view these as positive indicators heading into the iPhone 7 cycle this fall, as we continue to expect a return to yoy unit growth driven largely by upgrades of the rapidly growing installed base. Recall that our survey of over 1,000 US consumers indicated that 44% of respondents intend to buy the iPhone 7 this fall which we view as a strong indicator of pent-up demand within the installed base. Please refer to our report, Reiterate CL-Buy as Apple enters upward estimate revision cycle dated April 12, 2016 for detailed discussion about our survey.

Translation:

end First it was energy stocks tanking, then banking and now tech. We should add that the huge Japanese pension fund is a large buyer of Apple as well as the USA plunge protection team.  John Rubino asks is there anything which can save the system: (courtesy John Rubino/DollarCollapse.com) With Tech Tanking, Can Anything Save The System?

Submitted by John Rubino via DollarCollapse.com,

First it was the banks reporting horrendous numbers — largely, we were told, because of their exposure to recently-cratered energy companies. Now it’s Big Tech, which is a much harder thing to explain. The FAANGs (Facebook, Apple, Amazon, Netflix and Google) own their niches and not so long ago were expected to generate strong growth pretty much forever. That’s why every large-cap mutual fund and most hedge funds (not to mention a few central banks) owned so much of them.

This year’s first quarter was emphatically not what their fans had in mind. Apple, for instance, reported not just a slowdown but a double-digit year-over-year sales decline:

Rotten Apple: Stock plunges 8% on earnings, revenue miss

(CNBC) – Apple reported quarterly earnings and revenue that missed analysts’ estimates on Tuesday, and its guidance for the current quarter also fell shy of expectations.

The tech giant said it saw fiscal second-quarter earnings of $1.90 per diluted share on $50.56 billion in revenue. Wall Street expected Apple to report earnings of about $2 a share on $51.97 billion in revenue, according to a consensus estimate from Thomson Reuters.

That revenue figure was a roughly 13 percent decline against $58.01 billion in the comparable year-ago period — representing the first year-over-year quarterly sales drop since 2003.

Shares in the company fell more than 8 percent in after-hours trading, erasing more than $46 billion in market cap. That after-hours loss is greater than the market cap of 391 of the S&P 500 companies.

Looking ahead to the fiscal third quarter, Apple said it expects revenue between $41 billion and $43 billion — Wall Street had expected $47.42 billion on average, according to StreetAccount.

One area of weakness for Apple in its second-quarter was the Greater China segment — comprising mainland China, Taiwan and Hong Kong. Revenue for that region fell 26 percent year-over-year to $12.49 billion. Previously, that area had posted consistent growth for China.

Twitter managed to grow in the first quarter, but its next-quarter revenue projection came in 10% below Wall Street’s consensus:

Twitter sinks 12% on revenue miss, guidance

(CNBC) – Twitter on Tuesday posted mixed quarterly results and gave sales guidance that disappointed Wall Street, even as its user base grew more than expected.

The social media company reported adjusted first-quarter earnings of 15 cents per share on $594.5 million in revenue. Earnings rose from 7 cents per share in the previous year, while sales climbed 36 percent from $435.9 million in the prior-year period.

Analysts expected Twitter to report earnings of 10 cents per share on $608 million in revenue, according to a consensus estimate from Thomson Reuters.

Shares dropped about 12 percent in after-hours trading Tuesday.

Twitter said it expects second-quarter revenue of $590 million to $610 million, well below analysts’ estimates of $678 million, according to Thomson Reuters. In the company’s conference call, executives downplayed the low estimate, saying it did not reflect sagging interest from advertisers.

The repercussions from tech’s tank are myriad, in part because so many sophisticated investors own so much of this paper. As Zero Hedge just noted:

Wall Street In Pain: 163 Hedge Funds Are Long AAPL Stock

First it was the blow up of hedge fund darling Valeant that crushed countless funds who were long the name.

Then, one month ago after the collapse of the Allergan-Pfizer deal, we showed (one of the reasons) why the hedge fund world continued to underperform the broader market: Allergan was one of the most widely held hedge fund stocks.

And now, following the biggest Apple debacle in years, here is the reason why the hedge fund community is about to see even more redemption requests and underperform the market even more: according to the latest GS hedge fund tracker, at least 163 hedge fund are long the name which has just lost over $40 billion in market cap in the after hours. The good news: it used to be over 200 as recently as a year ago.

Tears won’t be confined to Wall Street however: let’s not forget that none other than the Swiss National Bank is also long some 10.4 million shares of AAPL.

It also won’t be a surprise to find out that the Japanese central bank — a massive buyer of equities which recently began diversifying into other countries’ shares — and the US Plunge Protection Team are on the hook for a few tens of billions here. But stock market squiggles and hedge fund redemptions are a side-show. The big questions are:

1) Can an economy grow when its banks, energy companies and tech giants are all losing ground?

2) Can a hyper-leveraged global financial system survive if its main economies can’t grow?

The answer to both questions is almost certainly “no.” So either something extraordinary (and extraordinarily unlikely) happens to ignite sustainable growth, or the dissolution of the fiat currency/fractional reserve banking/central planning model will begin. Expect developed world governments to do almost literally anything to stop that from happening.

end The following is very important.  The stock market has been riding high with corporate buy backs of stock.  Last yr close to 400 billion dollars worth of stock has been bought back with debt.  This yr. less than half. Those buying stocks BEWARE!! (courtesy London’s Financial Times) and special thanks to Robert H for sending this for us and Jeff. An important article.

http://www.ft.com/intl/cms/s/0/92efa126-0ba4-11e6-b0f1-61f222853ff3.html

SMART MONEY

Last updated: April 27, 2016 11:53 am

Alarm over corporate debt and stalled earnings John Authers

Corporate America is swimming in cash. There is no great news about this, and no great mystery about where it came from. Seven years of historically low interest rates will prompt companies to borrow.

A new development, however, is that investors are starting to ask in more detail what companies are doing with their cash. And they are starting to revolt against signs of over-leverage.

That over-leverage has grown most blatant in the last year, as earnings growth has petered out and, in many cases, turned negative. This has made the sharp increases in corporate debt in the post-crisis era look far harder to sustain. Perhaps the most alarming illustration of the problem compares annual changes in net debt with the annual change in earnings before interest, tax, depreciation and amortisation, which is a decent approximation for the operating cash flow from which they can expect to repay that debt. As the chart shows, debt has grown at almost 30 per cent over the past year; the cash flow to pay it has fallen slightly.

According to Andrew Lapthorne of Société Générale, the reality is that “US corporates appear to be spending way too much (over 35 per cent more than their gross operating cash flow, the biggest deficit in over 20 years of data) and are using debt issuance to make up the difference”. The decline in earnings and cash flows in the past year has accentuated the problem, and brought it to the top of investors’ consciousness.

A further issue is the uses to which the debt has been put. As pointed out many times in the post-crisis years, it has generally not gone into capital expenditures, which might arguably be expected to boost the economy. It has instead been deployed to pay dividends, or to buy back stock — or to buy other companies. Shifts in these uses of cash are nowaffecting markets.

Cash-funded mergers and acquisitions are at a record. In the four quarters to the end of last September, according to Ned Davis Research, S&P 500 companies spent $376bn on acquisitions, 43 per cent above the prior high in 2007, ahead of the credit crisis.

Buyback activity remains intense. According to S&P Dow Jones, for each of the seven quarters up to the third quarter of last year, between 20 and 23 per cent of S&P 500 companies bought back enough shares to reduce their total shares outstanding at a rate of 4 per cent per year. In the last quarter of 2015, 25.8 per cent of companies did so.

However, this year, repurchases have fallen sharply. According to David Santschi of TrimTabs, which tracks uses of corporate cash, US companies have bought back $182bn of their own stock so far this year, barely half the $354bn they bought in the same period last year. He ascribed this to caution about the economy — companies tend to cut down on buybacks and instead conserve cash when they are worried about growth.

Meanwhile, dividend growth has continued, with an increase of 4.6 per cent in the first quarter of this year compared with the first quarter of last year across all US stocks, according to S&P Dow Jones. However, this also showed some caution, as total dividend payments failed to set a new record, while the rate of increase has reduced.

How is the use of cash affecting markets? The clearest symptom that leverage is now a source of concern comes from the market’s attitude to share buybacks. It is not just that companies are buying back less of their own stock. It is also that investors are far less enthused to buy the companies that do so.

Over the past year, the PowerShares Buyback Achievers exchange-traded fund, one of the most popular to follow the strategy, has fallen 7.5 per cent, while the S&P 500 has dropped only 1 per cent. The experience of other strategies emphasising buyback stocks has been similar. This follows years of outperformance.

Meanwhile the ProShares S&P 500 Dividend Aristocrats ETF, which tracks companies that pay a high dividend yield, has gained 4.9 per cent.

Such popularity for companies that pay out dividends is generally sign of bearishness and lack of trust. If investors want to be shown the money in this way, it suggests very low confidence in companies’ ability to use the cash wisely. At this point, according to Mr Santschi, investors are eschewing buyback stocks because they fear that the buybacks will only be funded with further debt.

Companies can of course afford to stay highly levered without too much difficulty, while they enjoy fixed low rates. The problem, and the reason that investors have now started to focus on the problem, is producing the earnings and cash flows needed to pay their debt. That is why earnings are being watched with such anxiety.

If companies demonstrate that they can generate the earnings needed to deal with their leverage, there should be a rebound for the market, and a period of underperformance for dividend-yielding stocks. Until that happens, the anxiety will continue.

john.authers@ft.com

end

The sad case for America’s Millennials:  (age 18 through 34) (courtesy Wall Street Journal/zero hedge) America’s Millennial Dream: Making 20% Less & Drowning In Debt

Millennials have now overtaken baby boomers as America’s largest living generation according to Pew Research. Millennials as defined by Pew as ages 18-34 now number 75.4 million, slightly edging out Baby Boomers (ages 51-69) numbering 74.9 million.

Millennials also have a few other things going for them, however not in a good way.

As the WSJ reportsMillennials in New York City are earning about 20% less than the previous generation of workers, and they are absolutely drowning in $14 billion in debt.

The average working 23-year old in New York City earned $23,543 compared to $27,731 in 2000 (adj. for inflation). Moving up the age scale a bit, the average 29-year old made $50,331 in 2014 versus $56,026 in 2000.

Another point worth mentioning in the article is that nationwide, the percentage of millennials living independently (read: not in their parents house) has fallen from 51% in 2007, to just 45% in 2014.

In summary, people from 18-34 are going to college, getting into debt, entering into the workforce at minimum wage, and living with their parents. The very definition of the American dream isn’t it? Imagine if Obama hadn’t saved the world’s economy, as he so humbly said he did.

Of course all of this speaks to what we discuss repeatedly on Zero Hedge. The economy is weak, the only jobs being created are primarily waiter and bartender jobs, and the fed is fueling a enormous student loan credit bubble. Now, courtesy of years of mismanaged policies and incompetence, millennials have do face the consequences directly.

end Dan Loeb explains why this year has been quite catastrophic for our hedge funds: (courtesy Dan Loeb/zero hedge) “Carnage” – Dan Loeb Explains Why This Has Been A “Catastrophic” Time or Hedge Funds

Yesterday’s plunge in AAPL, which as we noted is one of the most widely held names by the hedge fund community with some 163 names long the stock, cemented what has already been a terrible start to 2016 for most hedge funds following a comparable blow up in Allergan one month ago, arguably the most popular at the time stock within the hedge fund community.

Overnight, none other than Third Point’s Dan Loeb confirmed as much when he said that hedge funds are in the first stage of a “washout” after “catastrophic” performance this year, to wit:

The result of all of this was one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund…There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies.

Loeb adds that the “increasing complexity” – or perhaps simplicity, recall that all one has to do to make money is to successfully frontrun central bankers – in markets over the past few months is here to stay, Bloomberg adds. Most investors were “caught offsides at some or multiple points” since August, Third Point said, when China’s surprise currency devaluation roiled global markets.

The firm said market participants were hurt by bets against the yuan in February and investments in Facebook Inc., Amazon.com Inc., Valeant Pharmaceuticals International Inc. and Pfizer Inc.

“Further exacerbating the carnage was a huge asset rotation into market neutral strategies in late the fourth quarter,” Third Point said. “Unfortunately, many managers lost sight of the fact that low net does not mean low risk and so, when positioning reversed, market neutral became a hedge fund killing field.”

But perhaps the latest, and most amusing fact about Dan Loeb, is what he has changed his BBG MSG header to.

Some more excerpts from his Q1 investor letter:

Review and Outlook

Volatility across asset classes and a reversal of certain trends that started last summer caught many investors flat-footed in Q1 2016. The market’s sell-off began with the Chinese government’s decision to devalue the Renminbi on August 11, 2015 and ended with the RMB’s bottom on February 15, 2016, as shown in the chart below:

By early this year, the consensus view that China was on the brink and investors should “brace for impact” was set in stone. In February, many market participants believed China faced a “Trilemma” which left the government with no choice but to devalue the currency if it wished to maintain economic growth and take necessary writedowns on some $25 trillion of SOE (State Owned Enterprise) debt. Based largely on this view, investors (including Third Point) crowded into short trades in the RMB, materials, and companies that were economically sensitive or exposed to Chinese growth.

Making matters worse, many hedge funds remained long “FANG” stocks (Facebook, Amazon, Netflix, and Google), which had been some of 2015’s best performing securities. Further exacerbating the carnage was a huge asset rotation into market neutral strategies in late Q4. Unfortunately, many managers lost sight of the fact that low net does not mean low risk and so, when positioning reversed, market neutral became a hedge fund killing field. Finally, the Valeant debacle in mid-March decimated some hedge fund portfolios and the termination of the Pfizer-Allergan deal in early April dealt a further blow to many other investors. The result of all of this was one of the most catastrophic periods of hedge fund performance that we can remember since the inception of this fund.

When markets bottom, they don’t ring a bell but they sometimes blow a dog whistle. In mid-February, we started to believe that the Chinese government was unwilling to devalue the RMB and was instead signaling that additional fiscal stimulus was on deck (an option that the bears had ruled out). Nearly simultaneously, the dollar peaked and our analysis also led us to believe that oil had reached a bottom. We preserved capital by quickly moving to cover our trades that were linked to Chinese weakness/USD dominance in areas like commodities, cyclicals, and industrials. We flipped our corporate credit book from net short to net long by covering shorts and aggressively adding to our energy credit positions. However, we failed to get long fast enough in cyclical equities and, while we avoided losses from shorts, we largely missed the rally on the upside. Unfortunately, our concentration in long health care equities and weakness in the structured credit portfolio caused our modest losses in Q1.

So where do we go from here? As most investors have been caught offsides at some or multiple points over the past eight months, the impulse to do little is understandable. We are of a contrary view that volatility is bringing excellent opportunities, some of which we discuss below. We believe that the past few months of increasing complexity are here to stay and now is a more important time than ever to employ active portfolio management to take advantage of this volatility. There is no doubt that we are in the first innings of a washout in hedge funds and certain strategies. We believe we are well-positioned to seize the opportunities borne out of this chaos and are pleased to have preserved capital through a period of vicious swings in treacherous markets.

Full letter below:

see zero hedge if you want to see the entire letter;

 

end

 

The Fed uttered total garbage this afternoon.

China will never allow the USA to raise rates:

(courtesy zero hedge)

 

FOMC Statement Key Take Aways: “Fed Leaves Door Open For June Rate Hike”

The best, and so far most concise assessment of the FOMC statement comes from Stone McCarthy which points out the following:

Key Take-Aways:

  1. The April 27 statement downgraded economic activity, said it “slowed”, but labor market conditions “improved further” and inflation still expected to rise toward 2% over the medium term.
  2. Removed language that “global economic and financial developments continue to pose risks”.
  3. Kansas City Fed’s Esther George dissented in favor of a rate hike.

The FOMC meeting statement of April 27 was downgraded its assessment of current economic activity as it “appears to have slowed”, but overall the tone was for moderate expansion, further improvements in the labor market, and low inflation that is still expected to gradually return toward the 2% objective as “transitory effects of declines in energy and import prices dissipate”. Inflation expectations “remain low”, while survey-based measures of inflation compensation were “little changed, on balance”.

Our read is that the key change in the statement is the removal of the language that said, “However, global economic and financial development continue to pose risks.” While the FOMC will continue to “closely monitor inflation indicators and global economic and financial developments”, the deletion suggested that FOMC participants are in consensus that impacts from global market turbulence will have a limited impact on the US, and that the US economy will remain resilient in the face of headwinds.

We think that this leaves the door open for a rate hike at the June 14-15 meeting provided the economic data remains about the same as at present, or improves. The forward guidance was unaltered. The statement said, “In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. In light of the current shortfall of inflation from 2 percent, the Committee will carefully monitor actual and expected progress toward its inflation goal. The Committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.”

Kansas City Fed President Esther George dissented for a second meeting in a row. The statement said she “preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent”.

 

end

 

Let us close with John Williams being interviewed by Greg Hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog)

Dollar Selling Panic Coming-John Williams

By Greg Hunter On April 27, 2016 In Market Analysis

Economist John Williams has long predicted the $16 trillion in U.S. dollar assets held outside of America will be sold in a panic. The time draws near for that scenario to unfold, and Williams explains, “When people start selling the dollar, or dollar denominated assets, you will see the value of the plunge. We have had a remarkable rally in the dollar since mid-2014, and it is up over 30%. It is going to be going down by more than that, and we are going to be headed to new lows. We have the waffling of the Fed and the beginnings of the perception that the economy is in serious trouble, which generally would be negative for the dollar. We have started to see selling pressure on the dollar. It has been inching lower. It’s down year to year now. . . . The selling is going to intensify, not only with large central banks, but with corporations that will be beginning to dump their Treasury holdings. . . . Nobody wants to be the last one out the door when you have a panic like this. It’s not a panic yet, but the potential certainly is there.”

Williams also says, “The dollar will blow up, and when I say blow up, it will collapse. There will be panic selling of the dollar, and that will intensify the inflation. The problem is they don’t have a way of avoiding it. If they could somehow get the economy back on track, they would have some room to work, I think, but the economy has never recovered. That’s being seen now in these revisions. At the end of this week, we are going to see bench mark revisions to retail sales. . . . So, you are going to see some downside revisions to the retail sales. You already have it with industrial production, and now you are going to have it with retail sales. We are very close to turning negative with the first quarter GDP . . . We are in a recession now, and they would be inclined to call it that once they get a contracting GDP, and everything else is beginning to show that. . . . You are going to see a formal recession declaration not too far down the road. It hasn’t happened yet, but it will.”

So, the Fed sold a grand lie since 2009 that there was a so-called recovery, and there was no real recovery? Williams says, “Effectively, yes. There was a little bit of a bounce up, but the other numbers show we never really had a recovery . . . They don’t want to come out with a negative forecast, but everybody knows it’s not recovering. . . . The economy is turning down rapidly. We have a new recession.”

Williams says it is not a matter of if, but when, there is panic dollar selling. Williams says the Fed would try to slow it down. Williams explains, “The Federal Reserve would step in and slow the pace to make it not appear like a panic. If you start to see a panic selloff (in the dollar), that’s a real bad sign. It means they are losing control of the system, and I think that is coming. The initial effect on the system for people living in the United States, as the dollar crashes, you will see inflation beginning to surge, particularly from oil and gasoline prices. Those effects will begin to spread in the system. It will change the way people look at things and will start the process that will eventually be a hyperinflation. The Fed does not have a way out of this circumstance. They have backed themselves into a corner. They have been keeping things reasonably stable, but they can’t get things going in the economy. . . . The economy is in terrible shape.”

Join Greg Hunter as he goes One-on-One with economist John Williams, the founder ofShadowStats.com.

(There is much more in the video interview.)

http://usawatchdog.com/dollar- selling-panic-coming-john-williams/

end See you tomorrow night Harvey

April 26/Comex silver hits its all time open interest high at 206,000 contracts despite a low price/China continues to have USA dollar outflows: IIF expects this yr almost 600 billion USA dollarrs will leave Chinese shores/Chinese steel and Iron ore...

Tue, 04/26/2016 - 18:36

Good evening Ladies and Gentlemen:

Gold:  $1,243.20 up $3.00    (comex closing time)

Silver 17.11  up 11 cents

In the access market 5:15 pm

Gold $1243.90

silver:  17.17

 

 Today we got a little surprise in that gold rebounded from its lows to close at $1243.20 at comex closing time and silver was up 11 cents at $17.11  The comex options expiry had little effect on both metals.  In silver, we now have an all time high in silver OI at 206,037 which represents 1.03 billion oz.  Generally when you get a record high OI, you also have high prices for your commodity. In silver in blows my mind that we have a record OI and a low price of silver.  It shows you the damage that the bankers inflicted upon us. Please remember that even though comex options have expired we still have London’s LBMA and OTC to contend with.  They expire on Friday morning.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 202 notices for 20200 ounces for gold,and for silver we had 0 notices for nil oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 224.62 tonnes for a loss of 78 tonnes over that period.

In silver, the open interest rose by a SURPRISING 4,250  contracts up  to 206,037 despite the fact that the price was silver was up only by 10 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.03 BILLION TO BE EXACT or 147% of annual global silver production (exRussia &ex China)We are now at multi year highs in OI with respect to silver

In silver we had 0 notices served upon for nil oz.

In gold, the total comex gold OI FELL 6,408 contracts, DOWN to 495,436 contracts AS  the price of gold was DOWN $10.20 with MONDAY’S TRADING(at comex closing).

We had another withdrawal  in gold inventory of 2.38 tonnes at the GLD, thus the inventory rests tonight at 802.65 tonnes.Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 334.724 million oz.

.

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

1. Today, we had the open interest in silver rise by a HUGE 4,250 contracts up to 206,037 despite the fact that the price of silver was UP by only 10 cents with MONDAY’S trading. The gold open interest FELL by A LARGE 6,408 contracts AS  gold fell by $10.20 YESTERDAY.   Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 18.03 POINTS OR 0.61%  /  Hang Sang closed UP 102.83 OR 0.48%. The Nikkei closed DOWN 86.02 POINTS OR 0.49% . Australia’s all ordinaires  CLOSED DOWN 0.30%. Chinese yuan (ONSHORE) closed DOWN at 6.4928.  Oil FELL  to 43.05 dollars per barrel for WTI and 45.01 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5048 yuan to the dollar vs 6.4928 for onshore yuan.

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

i)The big story of the day.  The very influential and private IIF (Institute of International Finance) has just concluded that China had another outpouring of USA capital of just under 200 billion for the quarter and they expect around $568 to the lost for the year.

Most pundits had thought that China had stabilized its economy and outflow but they were mistaken

a must read…

( zero hedge)

ii)We have been warning about the following:  steel prices have risen domestically due to huge speculation.  The price of iron ore has has also risen.  Well it seems that this bubble has just burst as both steel and iron ore prices have come back to earth in these past two days:

( zero hedge)

 

4.EUROPEAN AFFAIRS

i)A major UK Pension fund slashes benefits as they become 86% funded with a liability of 8 billion pounds. They have now initiated increased fees from both employee and employer which will weaken profitability

( zero hedge)

 

ii)as you will recall we had an election in Spain of which nobody won.  In order to form a government a coalition of the various parties had to be formed.  In the past 4 months it seems that they could not agree to any coalition and a new election must be called.The problem, of course, is that the election will produce the same results.

( zero hedge)

 

5.GLOBAL ISSUES

Alberta, Canada

Many are saying the decline in business activity inside Alberta amounts to a depression;

( zerohedge)

6.OIL ISSUES

Commodity king, Freeport McMoRan  does not see any daylight with respect to its oil and gas sector as it just fired 25% of its staff:

( zero hedge)

 

7.PHYSICAL MARKETS

i)Dave Kranzler believes that the China/Russia move to crate a link between Beijing and Moscow is very positive along with the physical fix

( Dave Kranzler/IRD)

 

ii)  Craig Hemke

 

An excellent commentary tonight from Craig Hemke.  In his calculations of total silver produced, he includes China and Russia.  I exclude them as both countries never let a oz of gold or silver leave their respective countries

( Craig Hemke/GATA)

8.USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)Core durable goods tumble for the 14th consecutive month: generally means a deep recession

( zero hedge)

ii)Home prices are showing the slowest growth and for 5 months in a row have missed expectations.  February saw prices rise by 5.38%. ( zero hedge/Case Shiller) iii)Markit sees its preliminary PMI for April services rising a bit to 52.  However its manufacturing PMI continues to falter.  They suggest that Q2 is humming along at only a .8% GDP ( zero hedge)

iv)Devastation continues to run rampant in the USA.  One out of 5 American families has nobody having a job.  We are also witnessing a complete devastation in the retail sector as the consumer is basically has no funds for incremental purchases.  The retail chain of Aeropostale (800 stores) will file for bankruptcy and will not continue

( zero hedge) v)Eight hundred department stores or 1/5 of the USA capacity is now uneconomic ( zero hedge) vi)We now have the 3rd Fed mfg index fall, after the Philly and Dallas Fed.  This time it was the Richmond Mfg Fed index faltering.  You will recall that last month it gave a surprise spike to 7 yr highs.  It did not last long: ( zero hedge)

vii)Consumer confidence dropped in April and is hovering at 2 yr lows. Income growth potential is falling.  Not a very good sign:

( zero hedge)

ix)Seems that the Atlanta Fed keeps getting tapped on the shoulder to revise its GDP higher Today is really farcical:

( Atlanta Fed/zero hedge)

x)This seems to be the trend:  even though their report is not that bad, hedge fund Brevan Howard met with a massive 1.4 billion USA redemption:

( zero hedge) xi After the market closed we had two biggy on the downside: First Twitter Second: Apple Let us head over to the comex:

The total gold comex open interest FELL CONSIDERABLY, as expected to an OI level of 495,436 for a LOSS of 6,408 contracts AS the price of gold DOWN  $10.20 with respect to MONDAY’S TRADING. We are now entering the active delivery month of April. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month. We certainly witnessed both parts today . In the front month of April we lost 1079 contracts from 1384 contracts down to 305.  We had 973 notices filed yesterday so we LOST 106 CONTRACTS or an additional 10,600 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI fall by 24 contracts down to 2261. The next big active gold contract is June and here the OI fell by 6,481 contracts down to 366,905. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 143,383. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 128,809 contracts. The comex is not in backwardation.

Today we had 202 notices filed for 20,200 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 4250 contracts from 201,787 UP 206,037 DESPITE THE FACT THAT the price of silver was UP by only 10 cents with MONDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 2 contracts reducing to 6. We had 2 notices filed YESTERDAY so we NEITHER  gained NOR LOST ANY SILVER OUNCES THAT will stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by only 7,156 contracts DOWN to 41,611. This level is exceedingly high AS WE ONLY HAVE 3 days before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 129,349, which is HUMONGOUS  AND NORMAL ROLLOVERS. The confirmed volume yesterday (comex + globex) was AGAIN OUT OF THIS WORLD AT 101,880. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had 0 notices filed for 10,000 oz.  

April contract month:

INITIAL standings for APRIL

Initial Standings for April April 26. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  1,607.500 oz  (Scotia)

50 kilobars Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  32,073.910 OZ

SCOTIA

  No of oz served (contracts) today 973 contracts
(97,300 oz) No of oz to be served (notices) 103 contracts 10,300 oz/ Total monthly oz gold served (contracts) so far this month 3643 contracts (364,300 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month 128,981.2 oz

 

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 1 customer deposit:

i) Into Scotia: 32,073.910 oz

total customer deposit:  32,073.910 oz

Today we had 1 customer withdrawals:

i) Out of SCOTIA;  1607.500  50 kilobars

total customer withdrawal:1,607.50 oz   50 kilobars

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 202 contracts of which 91 notices was stopped (received) by JPMorgan dealer and 30 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (3847) x 100 oz  or 384,700 oz , to which we  add the difference between the open interest for the front month of April (305 CONTRACTS) minus the number of notices served upon today (202) x 100 oz   x 100 oz per contract equals the number of ounces standing.   Thus the initial standings for gold for the April. contract month: No of notices served so far (3847) x 100 oz  or ounces + {OI for the front month (305) minus the number of  notices served upon today (202) x 100 oz which equals 395,000 oz standing in this non  active delivery month of April (12.286 tonnes). We lost 106 contracts or 10,600 oz will not stand. 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 thus have 12.286 tonnes of gold standing for April and 20.000 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 12.609 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)  = 19.218 tonnes still standing against 20.000 tonnes available.  .   Total dealer inventor 643,011.737 oz or 20.000 tonnes Total gold inventory (dealer and customer) =7,219,937.119 or 224.57 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.57 tonnes for a loss of 78 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

APRIL INITIAL standings

 april 26.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 1,027,743.500 oz

JPM, Delaware

BRINKS, Scotia Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 596,467.200

BRINKS, No of oz served today (contracts) 0 contracts

nil  oz No of oz to be served (notices) 4 contracts)(20,000 oz) Total monthly oz silver served (contracts) 191 contracts (955,000 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 9,746,880.2 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into BRINKS: 596,467.200 oz

 

Total customer deposits: 596,467.200 oz.

We had 4 customer withdrawals

ii) Out of Delaware: 1986.000 oz  ?????

iii) Out of BRINKS: 275,463.310 oz

iv) Out of JPMorgan; 150,255.600 oz

v)Out of Scotia:  600,038.65 oz

:

total customer withdrawals:  1,027,743.500  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 0 contracts for NIL oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (191) x 5,000 oz  = 955,000 oz to which we add the difference between the open interest for the front month of April (4) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the April. contract month:  191 (notices served so far)x 5000 oz +(4{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 975,000 oz of silver standing for the March contract month. we neither gained nor lost any silver ounces standing in this non active delivery month of April.   Total dealer silver:  31.957 million Total number of dealer and customer silver:   150.482 million oz The open interest on silver is now at an all time high having surpassed yesterday’s OI which came within 200 OI of the record; silver is slowly disappearing from the comex vaults. The total dealer amount of silver remains at multi year low of 31.957 million oz.   end And now the Gold inventory at the GLD aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.03 tonnes April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 26.2016:  inventory rests at 802.65 tonnes

end

 

Now the SLV Inventory aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz. April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . April 26.2016: Inventory 334.724 million oz .end      end 1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!! Percentage of fund in gold 61.0% Percentage of fund in silver:37.6% cash .+1.4%( April 26.2016). 2. Sprott silver fund (PSLV): Premium to rises FALLLS to -96%!!!! NAV (April26.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.+67% to NAV  ( April26.2016) Note: Sprott silver trust back  into negative territory at -96%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.67%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.96%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      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   Swift Warns of Cyber Fraud – $81 Million Stolen From Central Bank By Mark O’ByrneApril 26, 20160 Comments

Swift, the vital global financial network that western financial services companies, institutions and banks use for all payments and transfer billions of dollars every day, warned its customers yesterday evening that it was aware of cyber fraud and a number of recent “cyber incidents” where attackers had sent fraudulent messages over its system and $81 million was apparently stolen from a central bank.

SWIFT (Wikipedia)

As reported by Reuters, the disclosure came as law enforcement agencies investigate the February cyber theft of $81 million from the Bangladesh central bank account at the New York Federal Reserve Bank. Swift has acknowledged that the scheme involved altering Swift software on Bangladesh Bank’s computers to hide evidence of fraudulent transfers.

Yesterday’s statement from Swift marked the first acknowledgement that the cyber attack on  the New York Federal Reserve Bank was not an isolated incident but one of several recent criminal schemes that aimed to take advantage of the global messaging platform used by some 11,000 financial institutions.

“Swift is aware of a number of recent cyber incidents in which malicious insiders or external attackers have managed to submit Swift messages from financial institutions’ back-offices, PCs or workstations connected to their local interface to the Swift network,” the group warned customers.

The warning, which Swift issued in a confidential alert sent over its network, did not name any victims or disclose the value of any losses from the previously undisclosed attacks.

Swift, or the Society for Worldwide Interbank Financial Telecommunication, is a co-operative owned by 3,000 financial institutions. Also, Swift released a security update to the software that banks use to access its network to thwart malware that security researchers with British defense contractor BAE Systems said was probably used by hackers in the Bangladesh Bank heist.

Cyber security experts said more attacks could surface as SWIFT’s banking clients look to see if their SWIFT access has been compromised.

Shane Shook, a banking security consultant who investigates large financial crime, said hackers were turning to SWIFT and other private financial messaging platforms because such attacks can generate more revenue than going after consumers or small businesses.

“These hacks specifically target financial institutions because smaller efforts result in much larger thefts,” he said. “It’s much more efficient than stealing from consumers.”

Full Reuters article is here

We have for some time warned of the risks posed by cyber fraud and war to banks, savings and indeed investments. The apparent theft of $81 million from a central bank from an account at the New York Federal Reserve shows this.

Cyber theft is a real risk for all digital or virtual wealth today – whether that be digital bank accounts and deposits or electronic stock and other exchanges.

Fintech solutions involving the vitally important blockchain cometh and not before time. However, many of these solutions are also vulnerable in the short term as the nascent industry grows and the best solutions survive and thrive and less safe ones are slowly found out by the market and disappear.

The risks posed to bank deposits, markets and indeed all online investments and savings by hacking, cyberterrorism and cyberwar remains not understood.

Given these real risks, tangible gold becomes not important but a vital means of preserving wealth. Physical gold coins and bars, due to their tangible nature, are not vulnerable to crises that may afflict electronic digital currency and other digital wealth.

Those who hold physical gold and silver coins and bars outside the banking system as an insurance policy would certainly weather the storm better than those who do not.

The hope is that these risks will not materialise. Hope is not a strategy. We believe it is prudent to be aware of and take appropriate measures to protect your wealth.

Our modern western financial system with its massive dependency on single interface websites, servers and the internet faces serious risks that few analysts have yet to appreciate and evaluate. These also pose risks to digital gold providers who do not allow clients to interact and trade on the phone and are solely reliant on online trading platforms.

Jim Rickards, the leading expert on currency wars and risks posed by cyber fraud to people’s, company’s and indeed nation’s wealth commented to GoldCore about the cyber theft:

“Bangladesh is one of the poorest countries in the world. $100 million of their money disappeared. The money was on deposit with the Federal Reserve Bank of New York, the safest bank in the world. The culprits hacked SWIFT, one of the most secure message traffic systems in the world. If the Fed and SWIFT aren’t safe, nothing is safe. If Bangladesh had held physical gold, they would still have their money. The case for owning gold in an age of cyber-financial threats is compelling.”


Recent Market Updates

Gold In London Vaults Beneath Bank of England Worth $248 Billion – BBC

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold Price Set To Push Higher As Inflation Picks Up – RBC

Silver Bullion “Has So Much More to Give” – 5 Must See Charts Show

China Gold Bullion Yuan Trading To Boost Power In Gold and FX Markets

Marc Faber: “Messiah” Central Banks Helicopter Money Printing “Will Not End Well”

Gold News and Commentary
Gold ends higher ahead of central bank meetings (Marketwatch)
Gold climbs as dollar lends support ahead of Fed meeting (Reuters)
Gold Rises, Copper Falls as U.S. Home Sales Sag a Third Month (Bloomberg)
Sales of New U.S. Homes Fall for a Third Month on Slump in West (Bloomberg)
China debt load reaches record high as risk to economy mounts (FT via CNBC)

Macro picture sees precious metal shine (FT Adviser)
Gold, already on its way up, may head even higher: Technician (CNBC)
World Witnessed Socialism’s Death … Central Banking Is Next (Gold Seek)
Depression, Debasement, & 100 Years Of Monetary Mismanagement (Zero Hedge)
When will the Fed stop propping up the US stockmarket? (Money Week)
Read More Here

Gold Prices (LBMA)
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce
22 April: USD 1,245.40, EUR 1,104.34 and GBP 868.73 per ounce
21 April: USD 1,257.65, EUR 1,113.21 and GBP 877.01 per ounce
20 April: USD 1,247.75, EUR 1,098.09 and GBP 867.45 per ounce

Silver Prices (LBMA)
26 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce (Not updated yet)
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce
22 April: USD 17.19, EUR 15.26 and GBP 11.96 per ounce
21 April: USD 17.32, EUR 15.31 and GBP 12.05 per ounce
20 April: USD 16.97, EUR 14.93 and GBP 11.81 per ounce

Read Our Most Popular Guides in Recent Months

 

Mark O’Byrne Executive Director Published in Market Update

investors better make sure they have already own physical gold and silver.

-END-

 

Dave Kranzler believes that the China/Russia move to crate a link between Beijing and Moscow is very positive along with the physical fix

(courtesy Dave Kranzler/IRD)

 

China And Russian Look To Take Over Global Gold Trading

BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told TASS  – RT.com, April 19

The article in RT.com from which the above quote is sourced surprisingly did not receive a lot of attention from the alternative media.  Perhaps it was overshadowed by the highly anticipated move by China to commence fixing the price of gold on the Shanghai Gold Exchange in yuan.  I suggested that we would not see an immediate impact on the price of gold, which we have not, but that the move was part of a larger plan by China to “de-dollarize” the world.

Also largely ignored by the alternative media was the fact that Russia added another 500,000 ounces of gold to its Central Bank reserves (Harvey: 15.55 tonnes)– data provided by Smaulgld.com. To put this into some context, currently the Comex, which is sporting over 50 million ounces of paper gold open interest, is reporting 643k ounces of gold designated as available for delivery (“registered”).   In 2015, Russia added a record amount of gold tonnage to its Central Bank stash.

I would argue, as would many, that China and Russia are strategically and methodically weaning the world off paper gold and fiat currencies and are looking to officially remove the dollar from its reserve status and to re-introduce gold into the global monetary system – without triggering WW3.   Of course, this would explain the Obama Government’s recent military belligerence toward both countries…

Dennis Gartman, among many others, has expressed anxiety over the net short position in gold futures by the “commercial trader segment” bullion banks per the Commitment of Traders report.  The fear is that the banks are getting ready to attack the price of gold with another hedge fund “long liquidation” operation.  This, of course, is a trading pattern in the precious metals that we have become accustomed to enduring since the bull market began in 2000/2001.   Obvious manipulation that for some reason seems to be undetectable by the Government regulators (CFTC) who are paid by the Taxpayers to enforce laws.

I looked at some statistics from the COT data that goes back  to 2005 (compiled assiduously by one of the partners in the investment fund I co-manage).   While the net short position in gold futures held by the bullion banks, 240,121 per the latest COT report,  is quite a bit higher than the average net short over the period (-161,781), it’s not even close to the highest net short of -308,231 in December 2009 or -302,740 in September 2010.  In 2009, gold sold off for a bit after that -308k reading  but in 2010 gold continued higher toward $1900 after the -302k reading.

The point here is that the relative net short position held by the criminal bullion banks is not necessarily the best predictive metric with which to forecast the next move in the price of gold. Furthermore, it’s quite possible that the physical gold market activities being conducted by China and Russia will act as a counter-force to the manipulation efforts exerted by the western Central/bullion banks.

I have argued for years that traditional chart and t/a analysis applied to the precious metals is thoroughly useless because of the high degree of intervention by the Central and bullion banks.

With that reservation about using charts, I wanted to present a couple charts of gold and one of the dollar because, in my view, gold is potentially set up for a monster move higher and the dollar appears to be potentially headed off the proverbial cliff (click on images to enlarge):

 

 

The graph in the middle is a 10-yr weekly of gold. You can see that over this time period, the price of gold is still exceedingly “oversold” per the TRIX indicator.  The other graphs  is a 1-yr daily which shows that gold has been “oscillating” laterally in a consolidation formation.  It’s brushing up against its 50 dma (yellow line).  Of course, at this point, the price of gold could “break” either way, higher or lower.   Perhaps even a quick trip down to its 200 dma (red line).  Having said that, the longer term graph of gold, combined with the massive demand for physical gold from Russia and China, suggests that every manipulated price hit should be aggressively bought.  You can see the dollar (lower left graph) is positioned treacherously, as it has traded well below its 50 dma and could be headed lower.  Certainly the ongoing economic and political deterioration of the United States is not giving anyone a reason to buy dollars.

There’s been a lot of “chatter” about whether or not the mining shares, which have had a tremendous run since mid-January, are “overbought.”  The general consensus is that the mining shares are due for a pullback and I know a lot of my subscribers are hesitant to buy right now.  My view is that, in the context of the brutal beating inflicted on the miners since March 2011 by overt manipulative forces – from both official entities and predatory hedge funds – it’s impossible to determine a true measure of “overbought” because the mining shares have been oversold for nearly five years.

I’m in an email group with a very impressive roster of precious metals investment and analytic professionals. One of them who is rather well-known made this comment today, which I thought summed up the situation perfectly:    Now everybody is desperately waiting on the sideline to build up a first positon in gold, silver and miners, but nobody wants to buy into the rally, but rather buy into a correction… that’s why I am convinced, that every bigger dip will be bought and gold might head to 1,400-1,500 by year end! 

The next bi-monthly issue of my Mining Stock Journal will be released Thursday. I have a sub-50 cent junior exploration stock to present with a market cap that is likely 1/10 the intrinsic value of the Company given the amount of proved gold and silver it has already discovered.  This company is self-funding for now as well.  You can access the next issue plus I’m offering the four previous back-issues (for now) by clicking here:  Mining Stock Journal.

end

 

An excellent commentary tonight from Craig Hemke.  In his calculations of total silver produced, he includes China and Russia.  I exclude them as both countries never let a oz of gold or silver leave their respective countries

(courtesy Craig Hemke/GATA)

TF Metals Report: Spinning the yarn

Submitted by cpowell on Tue, 2016-04-26 15:12. Section:

11:12a ET Tuesday, April 26, 2016

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today notes what seems like astounding strength in the silver futures market, where open interest has risen dramatically. He speculates that high-frequency traders may be turning bullish and buying dips. His analysis is headlined “Spinning the Yarn” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/7588/spinning-yarn

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

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 DOWN to 6.4929 / Shanghai bourse  CLOSED UP 18.03  OR 0.61% (LAST HR RESCUE) / HANG SANG CLOSED UP 102.83 OR 0.48% 

2 Nikkei closed DOWN 86.02 or 0.49%%/USA: YEN RISES TO 110.91

3. Europe stocks opened ALL MIXED  /USA dollar index DOWN to 94.58/Euro UP to 1.1281

3b Japan 10 year bond yield: FALLS   TO -.115%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.09

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  43.05  and Brent: 45.01

3f Gold DOWN  /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.

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 andDOWN 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 0.257%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.12%/: 

3j Greek 10 year bond yield FALL to  : 8.55%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1233.75/silver $16.99 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 25 /100 in  roubles/dollar) 66.31

3m oil into the 43 dollar handle for WTI and 45 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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9750 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1000 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .257%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

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 1.91% early this morning. Thirty year rate  at 2.73% /POLICY ERROR)

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

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

As Fed Meeting Begins Futures Are Flat In Sleepy Session; Apple Earnings On Deck

With the Fed decision just one day away, followed the very next day by the increasingly more irrational BOJ, stocks had no desire to make significant moves and overnight’s boring session was the result, as European stocks and U.S. index futures rose modestly but mostly hugged the flatline while Asian declined 0.2% for a third day as raw-material shares declined and Tokyo equities slumped before central bank meetings in the U.S. and Japan this week. China’s stocks rose the most in almost two weeks, up 0.6% but failed to rise above 3000 on the Shanghai Composite, in thin trading.

The reason why no breakout is possible in any direction is because confusion reigns about the most basic issue: earnings. Take these two quotes for example:

“While policies are supportive of equities, valuations look expensive,” Hans Goetti, the Dubai- based chief strategist for the Middle East and Asia for Banque Internationale à Luxembourg told Bloomberg. “First-half earnings don’t really look great. Unless you have very good earnings coming through in the second half, I think valuations could be on the high side.”

And then this: “Earnings are doing pretty well,” Michael Woischneck, a fund manager who oversees the equivalent of $190 million at Lampe Asset Management in Dusseldorf, Germany told Bloomberg. “But that’s something that could change with just one word from a Fed governor. Although no changes are expected, wording at this week’s meeting is key.”

Peraps one was looking at GAAP while the other one was focused on non-GAAP?

In any case, European stocks climbed for the first time in four days as BP Plc and Standard Chartered Plc rose after the companies reported earnings. The Stoxx Europe 600 Index rose 0.5 percent as of 10:37 a.m. London time. BP rallied 4.2 percent and Standard Chartered jumped 10 percent in London. The pound strengthened against all of its major counterparts on speculation that the U.K. is less likely to leave the European Union.  Banks led gains in Europe and Asian equities pared their decline. The yen and Treasuries advanced before central bank meetings this week. Malaysia’s ringgit dropped to a one-week low after a state-owned investment fund withheld an interest payment on its bond. Copper fell for a second day and crude oil traded below $43 a barrel. Day ahead natural gas in the U.K. rose to the highest since mid January as colder-than-usual weather boosted demand.

BP, the first oil major to report quarterly earnings, posted a surprise profit as a stronger-than-expected refining and trading performance helped mitigate the lowest crude prices in more than a decade. In the U.S., Apple Inc. releases results Tuesday that may shed more light on the state of the technology sector. The Federal Reserve concludes its meeting Wednesday, with investors pricing in no chance of an interest-rate increase. The Bank of Japan’s outcome is a day later and most analysts predict Governor Haruhiko Kuroda will unveil a stimulus boost.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. Apple, the world’s most valuable company, forecast in January that quarterly revenue would drop for the first time in more than a decade as iPhone sales slowed. The company’s projection of $50 billion to $53 billion for the three months through March compares with an average estimate of $52 billion in a Bloomberg survey of analysts.

The MSCI Emerging Markets Index rebounded 0.1 percent, after losing 0.4 percent, as stocks in China, India and South Korea advanced. The Hang Seng China Enterprises Index of mainland shares in Hong Kong rose 0.3 percent after sliding 1.4 percent. The Shanghai Composite Index added 0.6 percent, rebounding from the lowest since March.

Global Market Snapshot

  • S&P 500 futures up 0.2% to 2087
  • Stoxx 600 up 0.2% to 347
  • FTSE 100 up 0.3% to 6279
  • DAX up less than 0.1% to 10295
  • German 10Yr yield up 1bp to 0.28%
  • Italian 10Yr yield up 1bp to 1.54%
  • Spanish 10Yr yield up 1bp to 1.65%
  • S&P GSCI Index up 0.2% to 346
  • MSCI Asia Pacific down 0.2% to 133
  • Nikkei 225 down 0.5% to 17353
  • Hang Seng up 0.5% to 21407
  • Shanghai Composite up 0.6% to 2965
  • S&P/ASX 200 down 0.3% to 5221
  • US 10-yr yield down 1bp to 1.9%
  • Dollar Index down 0.3% to 94.56
  • WTI Crude futures up 0.7% to $42.94
  • Brent Futures up 0.7% to $44.80
  • Gold spot down 0.3% to $1,235
  • Silver spot up less than 0.1% to $17.01

Global Top News

  • DuPont Boosts Outlook as First-Quarter Sales Top Estimates: Boosts yr oper. EPS forecast to $3.05-$3.20, had seen $2.95- $3.10; 1Q oper. EPS $1.26 vs est. $1.04; says on track for $730m cost reductions
  • BP Reports Surprise Profit on Strength in Refining, Trading: Profit adjusted for one-time items and inventory changes was $532m vs analyst ests. for loss of $244.9m; co. says it can balance books w/ oil at ~$50-$55/bbl
  • Sarepta Fails to Win FDA Panel Backing for Muscle Disease Drug: Panel votes 7-3 that drug wasn’t shown to be effective
  • U.S. to Require Large Banks to Have Year Worth of Liquidity: WSJ; Details of rule crafted by Federal Reserve, FDIC, Office of the Comptroller of the Currency to be released Tuesday at FDIC board meeting
  • Toyota Cedes Global Sales Lead to VW as Shutdowns Trump Scandal: Toyota sales fell 2.3% in 1Q to 2.46m in Jan.- March, Volkswagen deliveries rose 0.8 percent to 2.5m
  • Fed to Keep Options Open for June Rate Hike: Decision-Day Guide: Officials to debate whether to reinstate risk assessment
  • Toshiba Books $6.2 Billion Loss After Westinghouse Writedown: Yr prelim Oper. loss 690b yen; had forecast 430b yen loss; nuclear business results in 260b yen impairment
  • Oil’s Recovery Inches Higher as Fracklog Awaits Price Trigger: Drilled, uncompleted wells could return 500,000 b/d to market
  • New Valeant CEO Papa Trades Challenge at Perrigo for Fresh One
  • Verisk to Sell Health-Care Services Ops to Veritas for $820m: Sale prices includes $720m cash, $100m L-T promissory note with interest paid in kind, other contingent consideration
  • Perella Weinberg Said In Merger Talks With Tudor Pickering: Considering a tie-up with Tudor Pickering in a push into the energy sector
  • Alere Said to Get Default Notice From Creditors on Filing Delay: Received notice of default from group of bondholders after company delayed filing 2015 financial statement
  • McDonald’s Said to Market Euro Bonds After ECB Expands Stimulus: Offering the securities in 3 parts, with notes maturing in January 2021, November 2023 and May 2028, according to person familiar with matter
  • Earnings Blowups Send Tech Traders to Options Market for Hedges: Ratio of Nasdaq VIX to S&P 500 gauge near highest since August
  • Landry’s, Jefferies CEOs Plan IPO for New SPAC: Reuters: Landry’s CEO Tilman Fertitta, Jefferies/Leucadia CEO Richard Handler to start special purpose acquisition co. through their cos. called Landcadia, plans to raise as much as $300m in IPO

Looking at regional markets, Asian stocks traded lower following the subdued lead from Wall St. as participants remained cautious ahead of the week’s key policy decisions. ASX 200 (-0.3%) opened from its long weekend to trade in minor-positive territory, underpinned by a rebound in the commodities-complex in which WTI briefly reclaimed USD 43/bbl, but failed to hold onto gains as commodities pulled back and the downbeat tone persevered. Nikkei 225 (-0.5%) extended on losses with participants tentative as they contemplate on whether the BoJ will ease further this week, while Chinese markets (Shanghai Comp +0.6%) initially outperformed following another substantial liquidity injection and expectations outflows are to improve this year, before sentiment later soured on commodity weakness with Dalian iron ore prices falling over 4%. 10yr JGBs traded mildly higher as the risk-averse tone in Japan supported safe-haven assets, while the BoJ were also in the market to acquire around JPY 1trl in government debt.

Top Asian News

  • Mitsubishi Motors’ Improper Mileage Tests Date Back to 1991: Formed a panel of three former prosecutors to investigate improper testing that goes back as far back as 1991, including the falsification of fuel efficiency data
  • 1MDB Defaults on Bond After Missing $50 Million Payment: 1MDB in disagreement with IPIC over debt obligations
  • Hyundai Posts 9th Successive Profit Drop as China Sales Fell: Deliveries in South Korea rose 3.7%, while in China fell 9.6%; 1Q oper. profit 1.34t won; est. 1.42t won; 1Q net income, excluding minority interests, 1.69t won; est. 1.5t won
  • Obscure Chinese Hedge Fund Is Making Big Enemies in Stock Market: Activist investor in the making takes on Internet firms
  • UBS Says Hong Kong Traders Should Be Worried Amid China Defaults: End of implicit state support to drive up funding cos
  • Alipay Owner Raises Record $4.5 Billion to Fund Global Expansion: China’s sovereign wealth fund joins as new investor
  • Mallya Faces Expulsion From India Parliament by Ethics Panel: Businessman said to be overseas as creditors seek debt dues
  • India’s Energy Minister Wants to Cut Coal Imports to Nothing: Goyal says India increasing domestic output to cut imports

Sentiment today has kicked off in a more upbeat fashion in Europe, with equity indices higher across the board (Euro Stoxx: +0.4%). In terms of the notable outperformers, the likes of BP (+3.8%) and Standard Chartered (+10.0%) have both seen strength in the wake of their earnings updates, while Italian banks are once again among the best performers in Europe. In tandem with the uptick in sentiment, WTI futures remain near their highest levels of the day, although still slightly lower than the USD 43.00/bbl level.

In fixed income, Bunds have ebbed lower throughout the morning to break below 162.00 to the downside and approach the April 25th low at 161.90 in what appears to be more of a technically driven move and also in tandem with the move higher in stocks. Separately, orders for the UK 2065 Gilt syndication exceed GBP 19bIn with price guidance unchanged according to bookrunners with price guideline at 0.25-0.5bps above 3.5% 2068 Gilt. Looking ahead, highlights still to come include US durable goods orders, flash services PMI, comments from ECB’s Constancio and Fed’s Mester and Lockhart.

Top European News

  • Standard Chartered Jumps on Surprise Drop in Loan Impairments: 1Q pretax adj. profit fell 64% to $539m, capital ratio climbs, costs fall 12% y/y, losses on bad loans fell 1% to $471m
  • Diamond’s Atlas Mara Interested in Barclays Africa Takeover: Said it’s held talks with investors on a potential bid for or the U.K. lender’s operations in Africa to boost its presence across the continent
  • Bayer Profit Beats Estimates as Newest Drugs Buoy Demand: 1Q Ebitda before special items EU3.4b, est. EU3.1b, top-selling drugs Xarelto and Eylea continued to soar
  • Orange Quarterly Sales Rise 0.6% as Growth Resumes in Spain: 1Q rev. EU10b vs est. EU10b; keeps guidance, targets 2016 restated Ebitda higher than in 2015 on comparable basis
  • BAT Revenue Beats Estimates on Gains Across Western Europe: Reported a surge in cigarette sales in western Europe that helped 1Q revenue beat analysts’ estimates
  • EON Sees Profit of Up to 1 Billion Euros After Uniper Split: Utility plans to pay dividend of 40%-60% of underlying income
  • Merkel Said to Weigh $1.4 Billion in Electric-Car Incentives: Will meet with German automotive CEOs on Tuesday evening to discuss a plan to spend as much as EU5,000 per vehicle,
  • Pound Shows How Brexit Concerns Are Starting to Look Overdone: Implied pound volatility falls most since 2015 U.K. election

In FX, nothing other than GBP buying behind the USD moves this morning, as ($) index has turned lower aggressively and is now testing support in the 94.50 area. Brexit repositioning said to be largely behind the sharp turn in the tide of UK sentiment, but we sense specs are now pushing for further stops with pre 1.4600 offers set to be tested. Nevertheless, mid Feb highs now achieved. EUR/GBP losses have slowed though as EUR/USD has turned higher in tandem, touching on 1.1300. AUD and CAD gain on follow on moves, but .7750 and 1.2630 levels contain respectively for now.

Ahead of the FOMC, some restraint is likely to kick in soon, but levels are getting stretched despite the focus on whether Yellen and Co will hint/signal at a potential move in June.

The ringgit slid 0.5 percent. 1Malaysia Development Bhd. said it didn’t pay $50 million of interest on a $1.75 billion bond amid a dispute with Abu Dhabi’s sovereign wealth fund on who should be making the payment. The latter is the co-guarantor of the defaulted securities and said this month 1MDB owed it more than $1 billion. 1MDB’s dollar bonds slumped, sending $3 billion of March 2023 securities down 1.76 cents to 88.37 cents on the dollar to yield 6.53 percent .

The yen strengthened 0.3 percent to 110.87 per dollar, having touched a three-week low of 111.91 on Monday. Nikkei newspaper reported that Japan’s $1.3 trillion Government Pension Investment Fund will start hedging to protect its foreign assets against an appreciating yen, a move Bank of America Merrill Lynch strategist Shusuke Yamada said could boost the local currency.

In commoditues, WTI has been trickling lower after reaching highs of USD 45.45/bbl last Thursday. Prices have continuously made lower highs and lower lows (1hr chart) and currently resides at USD 42.94/bbl. Gold has been largely range bound between USD 1240.77/oz to USD 1232.35/oz. Silver was also bearish overnight and on a technical note used the 23.6 fib on the 4 hour chart as resistance for a move up which was at the USD 17.00 level. In industrials we also saw copper and Dalian iron ore futures pressured with the latter retreating further away from 20-month highs amid a widespread cautious tone.

 

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Sentiment today has kicked off in a more upbeat fashion in Europe, with equity indices higher across the board (Euro Stoxx: +0.4%)
  • Nothing other than GBP buying behind the USD moves this morning, as ($) index has turned lower aggressively and is now testing support in the 94.50 area
  • Looking ahead, highlights include US Durable Goods Orders, Flash Services PMI, API Crude Oil Inventories and Fed’s Mester
  • Treasuries little changed during overnight trading amid European equity strength after better-than-expected earnings from BP and Standard Chartered; Treasury auctions continue with sale of $34b 5Y notes, WI 1.385%; last sold at 1.335% in March, 1.169% in February.
  • Federal Chair Janet Yellen and her colleagues will have a chance this week to signal whether they want to raise rates as soon as June. The message is likely to be it’s still an option, but far from a certainty
  • Bond traders aren’t fully pricing in another rate increase until February, while driving a gauge of expected volatility in Treasuries to the lowest since 2014 this month. That’s the sort of hubris that can get them burned, according to Jerome Schneider, a money manager at Pimco
  • The ECB’s announcement in March to include corporate bonds in its QE program has sent borrowing costs toward record lows for issuers in the region. That has investors looking beyond senior debt to find bonds that may have been overlooked
  • A measure of risks to sterling following the June 23 vote on Britain’s membership in the European Union has tumbled by the most since the country narrowly avoided an inconclusive general election result last year
  • If Britain leaves the European Union, it’s going to need negotiators, and lots of them. Parliament’s Foreign Affairs Committee thinks it knows where it can find them: London’s financial sector
  • Fitful financial markets and signs of a southwest Florida real estate slowdown so unnerved Canadians Fab and Christa Michetti that they sold one of their two vacation homes there last month. The U.S. presidential election’s isolationist talk provided one more push
  • Sovereign 10Y bond yields mostly higher; European, Asian equity markets mostly higher; U.S. equity-index futures rise. WTI crude oil higher while metals drop

 

DB’s Jim Reid concludes the overnight wrap

Markets were snoozing a little yesterday ahead of things hotting up in what is a very busy rest of the week. There was some cautiousness around though with the Fed and the BoJ continuing to create lots of debate, especially the latter. The meeting is seemingly on a knife-edge in terms of whether they’ll act now or not and as we highlighted yesterday the consensus split is fairly even as to whether they pull the trigger this time. Our FX colleagues touched upon the topic of the BoJ approving NIP loans yesterday in their daily FX piece. While they ultimately expect no change in policy, they believe that it’s unlikely in their view that NIP loans would provide a major jolt that leads to an increase of banks’ corporate loans.

This morning in Asia, bourses are generally following the lead from the US last night and drifting lower. Leading the way are markets in Japan where the Nikkei is currently -1.08% and the Topix is -1.31%. The Hang Seng (-0.81%), Kospi (-0.09%) and ASX (-0.34%) are also in the red, with China flattish as we go to print. The risk-off tone is being reflected by the strengthening in the Yen this morning too, currently up +0.28%. Despite the near 3% weakening for the currency last week, which is going part of the way to lending support to the BoJ on hold camp, the Yen is still a not too insignificant 6.7% stronger from the day before the January negative rate move, rallying from nearly 119 to the current level of just below 111.

As we noted earlier there wasn’t much to write home up about with regards to newsflow and price action in markets yesterday, compounded also by a lack of earnings releases for investors to get stuck into. Some slightly softer macro data and an easing across the energy complex (WTI ended down nearly 2.5% and back below $43/bbl) contributed to a softish day for markets on the whole with the S&P 500 (-0.18%), Dow (-0.15%), Stoxx 600 (-0.51%) and DAX (-0.76%) all ending the session in the red. Its worth noting though that volumes were generally 10-20% lower than the average depending on the index. Credit markets were probably the bigger underperformer yesterday. In Europe, after rallying to the tune of 5bps or so last week, the iTraxx Main gave back about half of that move in yesterday’s session, while across the pond CDX IG ended just over 1.5bps wider following a 7bp rally last week.

Speaking of credit markets, some of the more interesting news yesterday was in the new issue market where Unilever became the latest corporate to price a post ECB-CSPP announcement zero-coupon bond in Euros (4y bonds). The bonds were priced at a discount so as to yield a miniscule 12bps. This comes after Sanofi priced 3y bonds last month also with a zero coupon and it feels like it won’t be the last.

That news came despite it being a broadly weaker day across rates markets. 10y Bund yields edged another 3bps higher yesterday and at 0.263% is now some 19bps off the early April lows. It was a similar story in the US Treasury market where the benchmark 10y ended up 2.5bps higher in yield at 1.914% – the first time it’s closed above 1.9% since March 25th.

Just on that economic data, in the US we learned that new home sales declined unexpectedly last month (-1.5% mom vs. +1.6% expected) to an annualised rate of 511k. In fairness this actually masked what was actually 26k of upward revisions to the prior two months so the headline probably looked softer than the overall details revealed. Meanwhile, the other data released in the US was another regional manufacturing survey, this time from the Dallas Fed. Data for this month was weaker than expected however at -13.9 (vs. -10.0 expected), a slight weakening from the -13.6 in the prior month. Closer to home, the only data of note came out of Germany where the IFO business climate survey was little changed from March at 106.6 (and below hopes for a rise to 107.1). The current assessment component declined 0.6pts to 113.2 which was offset by a modest 0.4pts gain in the expectations component to 100.4

Turning to the micro and a quick update of where we’re standing on the earnings front (ahead of a busy rest of the week calendar). As it stands with 138 S&P 500 companies having reported, 104 have beat EPS consensus (75%) at a weighted average beat of 2.6%. Meanwhile 82 companies have beaten revenue estimates (59%) at a more modest 0.2% average beat. The bottom-up EPS for the index is now over 8% lower on a YoY basis, while DB’s David Bianco made mention in his piece on Friday that analysts have cut their Q1 EPS estimates by a whopping 9.4% since January 1st – with this number likely to increase as we run further through reporting season. This was most evidenced by the Banks last week and looking ahead to Apple’s Q2 results today, the current EPS consensus estimate is $1.98 which has been marked down nearly 17% since the start of the year. So while earnings are tracking at their usual beat/miss ratio, this is being propped up by materially lower consensus earnings expectations while earnings are also down high single digits (in percentage terms) relative to last year.

Taking a look at the day ahead now, this morning in Europe it’s a fairly sparse calendar with only BBA loans data out of the UK of any interest. That all changes this afternoon however where we’ve got a packed afternoon for data in the US. The early release will be the first reads for durable and capital goods orders in March. The market is expecting a +1.9% mom headline durable orders print, and +0.9% mom core capex print, while our US economists are a little less optimistic at +1.0% mom and +0.7% mom respectively. Also due out today will be more housing market data in the form of the S&P/Case-Shiller house price index, along with the Conference’s Board’s leading index (expected to decline 0.4pts to 95.8), the flash services and composite PMI, and finally further regional manufacturing data in the form of the Richmond Fed manufacturing activity index. Away from the data there will be more Central Bank speak from the ECB with Constancio scheduled to speak, while BoE Deputy Governor Cunliffe is also due to speak today.

Earnings season kicks up another gear meanwhile with 50 S&P 500 companies set to report. The highlights look set to be Proctor & Gamble (before-market), AT&T (after-market), eBay (after-market) and of course Apple (after-market). Meanwhile, the highlight of the European calendar today will likely be results out of BP.

END

ASIAN AFFAIRS

i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 18.03 POINTS OR 0.61%  /  Hang Sang closed UP 102.83 OR 0.48%. The Nikkei closed DOWN 86.02 POINTS OR 0.49% . Australia’s all ordinaires  CLOSED DOWN 0.30%. Chinese yuan (ONSHORE) closed DOWN at 6.4928.  Oil FELL  to 43.05 dollars per barrel for WTI and 45.01 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5048 yuan to the dollar vs 6.4928 for onshore yuan.

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

none today

b) CHINA ISSUES IIF Ruins The Party, Predicts Another $420 Billion In Chinese Capital Outflows This Year

In early 2016, the biggest global macroeconomic risk factor was the accelerating capital outflows out of China over fears of currency devaluation (or simply because the local population knows better than anyone just how dire to domestic situation is and is rushing to park its assets offshore) and with good reason: after the PBOC burned through $1 trillion in reserves to offset capital flight starting in the summer of 2014, even the IMF chimed in with a concerned report suggesting China may have at most another half a trillion “buffer” left before it runs into illiquid assets which would prove virtually impossible to liquidate easily in the open market.

It got so bad that in January and early February, US equity futures would surge or slump based on a Yuan fixing that was a few basis point lower or higher than expected.

But then, almost as if on cue, following three consecutive months of nearly $100 billion in outflows, in February the capital flight slowed sharply and then proceeded to reverse (not if one includes FX adjustments but these days who actually does math) in March, leading to the first Chinese reserve increase since October. (assuming of course one believes Chinese data; one reason why one should not is everything that is currently going on in Vancouver real estate which proves the capital outflow has never been stronger).

So perhaps as a result of the rapid reversal in reserve liquidation or the stabilization in the offshore Yuan rate (where the PBOC has been particularly active in punishing shorts), fears about Chinese capital flights have been relegated to the back pages. Which is paradoxical, because not only have none of China’s underlying problems been addressed, the only way China managed to sweep its all too glaring problems under the rug was with the aid of $1 trillion in new Q1 loans.

Of course, it was concerns about soaring bad debt (as well as a hard landing economy and plunging exports, but those are all derivatives of China’s 350% in debt/GDP) that got China where it was in the summer and winter of 2015 in the first place, when it first started devaluing its currency. So to suggest that by adding even more debt on top of what was a debt problem somehow fixed it, well, debt problem is something only a full Krugman could suggest.

Which is why we were not surprised to read that according to the latest Institute of International Finance forecast, and in validation of Kyle Bass’ strong conviction that China is about to suffer a major 15%+ devaluation, China’s capital outflow headaches may be only just starting. According to the IIF’s latest report released today, global investors are expected to pull $538 billion out of China’s slowing economy in 2016, which means another $420 billion after the $118 billion that has already been withdrawn in Q1.

That number would be down a fifth from the $674 billion pulled out last year, the industry association said, but could be a stark acceleration from $118 in reserves sold in the first three months of the year as fears re-emerge of a “disorderly” drop in the yuan, or the renminbi, as the currency is also known.

“A sharp drop in the renminbi would likely spark a renewed sell-off of global risk assets and trigger a flight of portfolio capital from emerging markets,” the IIF said in a new report.

“Moreover, a sharp depreciation of the renminbi could lead to a round of competitive devaluation in other emerging markets, particularly in those with close trade linkages to China.”

As noted above, for now, however, outflows are slowing. Roughly $35 billion was pulled out in March, bringing the total since the start of the year to around $175 billion, well below the pace seen in the second half 2016.

The IIF cited progress Chinese authorities had made in easing worries about the yuan’s direction. Once again, we fail to see what those are aside from one more trillion in loans and another unprecedented round of fiscal stimulus.

Ironically, the IIF forecast that:

  • We project net capital outflows to slow to $538 billion in 2016 from $674 billion last year, supported by a gradual recovery in non-resident capital inflows. However, there remain risks that outflows could accelerate again if concerns about RMB depreciation intensify again

Which is certainly not improvement but actually a sharp deterioration to the latest runrate inflow, considering it took the Shanghai Accord and countless central bank interventions to stabilize the Yuan, and the halt the Chinese outflows. The IIF’s forecast is implicitly suggesting that what has been achieved is nothing but a pyrrhic victory and over the next three quarters,China is about to see another $420 billion in outflows, a dramatic deterioration to the status quo, one which would return the market into a full blown sell-off mode as that encountered at the end of 2015 and first two months of 2016 when panic over China’s soaring outflows was all the rage.

So did the IIF just tacitly open the next Pandora’s box in China’s capital flight tale? In its own conclusion, the IIF hopes for the best:

In our baseline projections, capital outflows and pressure on the RMB persist through 2016, but diminish in intensity as policymakers persuade investors that they will be successful in stabilizing the RMB’s value.

With brute central bank intervention to punish anyone found shorting the CNH. Anyway, continuing:

Greater confidence that the economy is on track to meet the growth target of 6.5-7 percent would also help. Most of the improvement is projected to
be in a turnaround in non-resident capital flows, while resident outflows and errors and omissions are forecast to moderate more gradually

That confidence won’t come to anyone who does an even cursory look behind the scenes because as we have reported over the past week, none of the Chinese numbers – be they imports, annualized GDP or province level GDP – actually make any sense.

The IIF conludes as follows:

Nonetheless, China remains vulnerable to a renewed intensification of capital outflows, particularly if doubts about the stability of the RMB were to come to the fore again. In particular, stress could rise through a combination of a stronger USD—particularly if the market comes to believe that the Fed will tighten more quickly than currently priced in—and further disappointment about China’s growth momentum.

So yes, any Fed rate hikes and we are right back out of the eye of the hurrican, but even more amusing would be if we end up in the same spot if after reading this report the market realizes that after managing to restore inflows, China is now expected to see another $400 billion in outflows for the rest of 2016 as per the IIF’s “benign” forecast, and proceeds to panic all over again.

Source

end We have been warning about the following:  steel prices have risen domestically due to huge speculation.  The price of iron ore has has also risen.  Well it seems that this bubble has just burst as both steel and iron ore prices have come back to earth in these past two days: (courtesy zero hedge) China Commodity Bubble Bursts As Exchanges Curb Goldman’s “Biggest Concern”

During the last week we have highlighted the frightening similarity between the speculative spike in China commodity trading (which has sent industrial metals prices soaring in yet another ‘error’ signal for real supply and demand) and the pump-n-dump in Chinese stocks. Specifically, as Goldman warns the factor that “concerns us the most is the increased speculation in the Chinese iron ore futures market,” and now, as Bloomberg reports, it appears that bubble is bursting as Steel and Iron Ore prices tumble most in 21 months after Chinese exchanges raise margins in an attempt to curb speculation.

This is what the commodity insanity looked like!!

Bloomberg notes that:

Goldman Sachs has expressed its concern about the surge in speculative trading in iron ore futures in China, saying that daily volumes are now so large that they sometimes exceed annual imports.

The increase in futures trading in the world’s largest importer was among factors that have lifted prices, according to a report from analysts Matthew Ross and Jie Ma received on Tuesday. Iron ore volumes traded on the Dalian Commodity Exchange are up more than 400 percent from a year ago, they said.

“While increased fixed-asset investment in China, a bring-forward of steel production (ahead of a government curtailment) and mining disruptions help to explain the strong rally in the iron ore price, the one driver that concerns us the most is the increased speculation in the Chinese iron ore futures market,” they wrote.

As we said ast week, eventually, the excesses will need to be curbed and maybe that starts a new phase of risk-off within China: As one local trader put it:

“The market is moving so quickly, yesterday felt just like the stock market in June last year before the crash… I think how it goes up, that’s how it will come down.”

“There have been two days in the past month where futures volumes have been greater than the total amount of iron ore that China actually imported for the whole of 2015 (950 million tons),” the Goldman analysts wrote.

And so, as Bloomberg adds,

To slow trading activity, the Dalian exchange has announced it would be increasing margin requirements and transaction costs on iron ore futures, they said.

nd that has sent commodity prices tumbling…

The most-active Iron ore futures contract dropped as much as 4.4 percent on Tuesday after the exchange doubled trading fees.

The benchmark spot price for ore with 62 percent content delivered to Qingdao fell 5 percent to $62.78 a dry ton on Tuesday, up 44 percent this year, according to Metal Bulletin Ltd.

Other raw materials in China were also in retreat on Tuesday. Coking coal futures, which trade in Dalian, reversed early gains to lose as much as 5 percent to 777.5 yuan ($120) a ton.

As Goldman concluded:”the commodity rally is not sustainable” and along with it the Baltic Dry’s misplaced confidence signals.

end EUROPEAN AFFAIRS

A major UK Pension fund slashes benefits as they become 86% funded with a liability of 8 billion pounds. They have now initiated increased fees from both employee and employer which will weaken profitability

 

(courtesy zero hedge)

Major UK Pension Fund Slashes Benefits As Funding Crisis Spreads

As we continue to cover the pension crisis that is unfolding in the United States (recently hereand here), it is important to remember that these problems are not unique to just the U.S.

One of the largest educator pension funds in the U.K., the Universities Superannuation Scheme (USS) is implementing significant changes to the plan benefits as it becomes increasingly under-funded, just like its peers in the United States. The changes are drastic, and are meant to keep the fund solvent in order to at least pay some benefits rather than none over time. The plan represents 330,000 members across 400 institutions, according to its website.

The changes were foreshadowed in 2014, when in discussing the funding issues, the USS said“this means it is likely that, given the increased cost of providing future pensions and the need to deal with an increased deficit, higher contributions and/or other responses will be required.”

Upon the completion of the 2014 actuarial valuation, the first of those “other responses” was for the fund update its deficit recovery plan to include employer’s contributing 2.1% of salaries toward the deficit over a period of 17 years.

Following completion of the 2014 actuarial valuation, and further consultation with Universities UK (as the representative body for the scheme’s sponsoring employers), the trustee has updated its recovery plan for addressing the scheme’s deficit. The updated recovery plan requires employers to contribute 2.1% of salaries towards the deficit over a period of 17 years. The trustee has extended the period of the recovery plan following an extensive piece of work, undertaken independently, on the financial strength of the scheme’s sponsoring employers (which is generally referred to as the employers’ covenant). The conclusions from that work confirmed the trustee has reasonable visibility of the ongoing strength of the covenant over a period of 20 years.

Then, as the funding gap widened, further measures were taken.

According to the 2015 annual report (month ended March 31, 2015) the fund had £49.1 billion in assets, and £57.3 billion in valued liabilities, adding up to a deficit position in the amount of £8.2 billion. Said another way, only 86% funded, down from 89% the prior year.

 

Based on the 2015 results, additional steps were taken in the effort to lower the plan’s deficit.

The USS introduced changes that significantly change the structure of the plan, and begins to shift the focus from definied benefit to defined contribution. Beginning April 1, 2016, the following changes have been made (per the annual report):

  • The use of final salary to calculate retirement benefits comes to an end, and will be replaced by a career revalued benefit (CRB) basis (i.e. an average salary calculation, adjusted for a capped CPI amount will be used to calculate defined benefit payments instead of using the most recent – and presumably highest – salary at retirement).
  • Employer contribution rates will increase to 18%, up from 16%
  • Employee contribution rates will increase to 8%, up from 6.5% for current CRB members, and up from 7.5% for final salary members)

Additionally, beginning October 1, 2016, contributions after the first £55,000 of one’s salary will be paid into a new defined contribution plan (of which the employer will contribute 12% of the excess salary over the threshold). This point is critical, as it starts to move the plan from defined benefit to defined contribution, which takes pressure off employers to fund guaranteed payout amounts, and puts members at the mercy of the performance of the money managers handling their investments.

In summary, one of the UK’s largest pension funds couldn’t sustain the current trajectory of cash flows, so they decided to cut defined benefits and put the burden on money managers to live up to member expectations in retirement. This is a plan that we already know will end poorly once the markets reset and wealth is once again transferred from the savers to the asset owners, as is the recurring cycle under the central banking regime. Of course, there is always helicopter money tied to bailouts of such pension funds, which is forever a possibility with the PhD’s behind the central banking curtain.

h/t Henry Lahr

END

as you will recall we had an election in Spain of which nobody won.  In order to form a government a coalition of the various parties had to be formed.  In the past 4 months it seems that they could not agree to any coalition and a new election must be called. The problem, of course, is that the election will produce the same results. (courtesy zero hedge) Spain “Doomed” To New Elections After King Felipe Unable To Bring Parties Together

Back In December, Spain held what turned out to be inconclusive elections as voters clearly rejected the status quo with the country’s lowest turnout in three decades. While incumbent Rajoy gained the most seats he was unable to get a majority and now four months later, King Felipe appears to have thrown in the towel on trying to bring the sides together in a working coalition. A new election for Spain is now inevitable in the summer after the king said no candidate counts with enough support to form a government – after a third round of talks between party leaders, the king won’t nominate a candidate, the Royal Palace said in a statement.

To be sure, voters were clearly sick of the status quo. The country’s three decade old political duopoly was broken when PP and PSOE garnered their lowest combined share of the vote since the eighties.

 

And now as AP reports,

A new election in June for Spain seemed all but inevitable Tuesday after the leader of the country’s Socialist party said he was open to a last-minute deal for a coalition government proposed by a small leftist group but predicted he wouldn’t get enough support to pull it off.

 

Pedro Sanchez said Spain is “doomed to a call for new elections” after meeting with King Felipe VI, who has spent the last two days with political leaders to determine whether he should pick one to try to form a government or set a fresh national election for June 26 in a bid to break four months of political paralysis.

 

The poll would happen six months after the last election on Dec. 20 that saw the downfall of the country’s traditional two-party system as voters enraged by high unemployment, corruption and austerity cuts strongly supported two new upstart parties.

 

Felipe was expected to decide Tuesday night whether or not Spain will hold another election after meeting with acting Prime Minister Mariano Rajoy, who told the king on Tuesday for the second time since January that he doesn’t have enough support among other parties to cobble together a government led by his conservative Popular Party.

 

Sanchez’ declaration came after the small Compromis party floated a list of 30 proposals Tuesday to form a new government to rule in the 350-seat lower house of Parliament, and the Socialists said they could accept most of them.

 

The challenge in Spain for forming a government has come down to mathematical calculations on which party could win enough support in an election that saw the Popular Party come in first with 123 seats, the Socialists second with 90, the far-left Podemos party with 60, the business friendly Ciudadanos with 40 and a handful of smaller parties with the remaining 37 seats.

 

Sanchez had already struck a deal with Ciudadanos but in two votes last month was unable to convince Podemos and Compromis, which together have sway over 69 seats, to join them.

 

Podemos leader Pablo Iglesias said his group backed the last minute Compromis plan but that the Socialists’ refusal to enter into a coalition of leftist forces excluding Ciudadanos meant the deal had little chance of success.

 

Ciudadanos leader Albert Rivera rejected the proposal outright and also predicted the country was headed for another election.

 

Polls suggest a repeat election — which would be a first for Spain since democracy was restored in 1978 — is unlikely to break the stalemate and could mean a political impasse stretching into the summer, possibly ending with another impasse and yet another election.

 

Spain has never had a coalition government at the national level. The Socialists rejected Rajoy’s proposal for a grand coalition as has happened in many other European countries.

Additionally, The King asked parties on Monday to keep the costs of a new political campaign down, a sign he had little hope a viable pact could be found, and some leaders have already acknowledged they lack the support of rivals to secure a parliamentary majority.

In December’s election, which produced the most fragmented result in decades, the center-right People’s Party (PP) of caretaker Prime Minister Mariano Rajoy won 123 seats in the 350-seat lower house of parliament, while the Socialists took 90, Podemos 69 and Ciudadanos 40.

 

Although opinion polls suggest a new election would do little to resolve the deadlock, leaders have entered pre-campaign mode, blaming each other for the impasse which may start taking its toll on the economy more noticeably if Spain remains without a government for many more months.

So more political turmoil ahead in the periphery, turmoil which has the potential to rattle markets. But perhaps the most important thing to note about everything said above is this: a leftist-led government is now considerably more certain. It’s only a matter of what form it will take. That means the religious adherence to Berlin-style fiscal rectitude is going to come to a rather unceremonious end sooner or later. That, in turn, means the relative calm shown in the following chart may well give way to carnage by the end of the year…

end GLOBAL ISSUES

Alberta, Canada

 

Many are saying the decline in business activity inside Alberta amounts to a depression;

(courtesy zerohedge)

 

“We Haven’t Seen This Is In Our Lifetimes” – CEO Says “Alberta Is In A Depression”

Regular readers know that we’ve covered Alberta’s decline at length (refresher here), so there is no need to give much of a backstory other than to say that the situation seems to get worse for the Canadian province as each day passes even as oil has rebounded in the past two months.

Toronto’s “Condo King” Brad Lamb tried to put things into context when he said the situation is “worse than 2008.” However, on Friday we received an even more gloomy (albeit realistic) description of the economic situation in Canada’s energy hub, Alberta. In a very blunt interview with BNN, Murray Mullen the CEO of trucking company Mullen Group, said that the situation has moved well past recession, and should be described as a depression.

“Well, if you’re involved in the oil patch directly, drilling activity or anything like that I think we’ve gone beyond recession and it’s more a depression. The facts are that this latest round of commodity price collapse that happened the first part of this year I think really put the nail in the coffin for the industry.”

 

“The damage has already been done basically for this year. Even though it seems like the oil price and even natural gas is starting to recover, there was no room for error because commodity prices had fallen so low in 2015, and then when it happened in 2016, and it’s not just crude oil, it’s natural gas also. We’re just kind of trapped in a difficult market dynamic that we haven’t seen in probably most of our lifetimes.

 

“There’s no investment activity going on below $40, it just goes to zero.”

The fact that Mr. Mullen categorized the situation as a depression isn’t surprising to us: after all that’s how we characterized the economic reality in Alberta for the first time last December in “This Is Canada’s Depression

And while we wait for yet another local shoe to drop (and after soaring crime, surging suicides, and overwhelmed food banks, one wonders just what could be next), we continue to be on the lookout for the number of future bankruptcies that emerge from this space (as he alluded to numerous times throughout his interview). Recall that as as we first reported, Canada’s bankshave virtually zero reserves for a worst case scenario.

Because when the already shaking Calgary domino finally falls, that’s when the Bank of Canada will have no choice but to make good on its threat from last year and unleash negativeinterest rates.

 

* * *

And just as we hinted, constantly from bad to worse. Moments ago, Bloomberg reported that Moody’s has downgraded Alberta’s credit rating. 

  • Moody’s says province will need to increase direct borrowing in order to finance operating deficits for first time in over 20 years
  • Moody’s expects Alberta’s net direct and indirect debt to increase to nearly 17% of GDP in 2018-19 from 7% in 2015-16
  • Outlook negative
 END OIL ISSUES

Commodity king, Freeport McMoRan  does not see any daylight with respect to its oil and gas sector as it just fired 25% of its staff:

(courtesy zero hedge)

No Energy Recovery In Sight: Freeport Fires 25% Of Its Oil And Gas Workers

One of the more important companies reporting today was commodity king Freeport McMoRan which in 2016 has seen its stock plunge then surge on hopes the Chinese bubble reflation will push commodities higher. So far it has worked, but far more important was what FCX’ own assessment of the future was: was it preparing for a strong rebound, or instead, was it slashing costs and firing employees in another confirmation that the recent rally has been, as Bank of America’s “smart money” clients admit for 13 consecutive weeks, nothing but fumes. It was the latter, because in addition to reporting poor earnings numbers that were largely in line with expectations, the company also announced that it would fire 25% of its oil and gas employees, hardly a ringing endorsement for the future prospects of the energy space.

From the report:

During first-quarter 2016, FCX conducted a formal process involving multiple third-party oil and gas industry and financial participants to evaluate alternatives for the oil and gas business. Further weakening in oil and gas prices and negative credit and financing market conditions during first-quarter 2016 had a significant unfavorable impact on the process. While the process did not identify a buyer for the entire oil and gas business, a number of parties have interest in select assets, and FCX continues to engage in discussions with parties interested in potential asset or joint venture transactions.

In the interim, FCX is taking immediate steps to reduce oil and gas costs further. In April 2016,FCX announced a new management structure and is instituting an approximate 25 percent oil and gas workforce reduction. The newly structured oil and gas management team is actively engaged in managing costs and developing plans to preserve and enhance asset values. FCX expects to record a charge of approximately $40 million in second-quarter 2016 associated with workforce reductions and other restructuring costs.

We fully expect these newly designated “waiters and bartenders” to be touted by the US Labor Secretary as yet another confirmation of Obama’s great economic recovery.

end Then crude extends its gains as API reports a huge 1.1 million inventory draw: However Cushing continues at add inventory: (courtesy zero hedge/API) Crude Extends Gains After Surprise Inventory Draw

With expectations for a 1.75m barrel build, API shocked by reporting a 1.1m inventory draw sending WTI crude above $44.50 – running stops from last week’s highs. Gasoline (-400k) and Distillates (-1.02m) also saw draws. Cushing, however, after recent declines from pipeline closures, saw a 1.9m barrel build.

 

 

Spiking crude above last week’s highs…

 

 

 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 1.1281 UP .0015 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 110.91 DOWN 0.214 (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

GBP/USA 1.4558 UP .0074 (STILL THREAT OF BREXIT)

USA/CAN 1.2646 DOWN .0031

Early THIS TUESDAY morning in Europe, the Euro ROSE by 15 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to 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 NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was UP 18.03 POINTS OR 0.61% / Hang Sang UP 102.83. OR  0.48%   / AUSTRALIA IS LOWER BY 0.30% / ALL EUROPEAN BOURSES ARE MIXED  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 (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 DOWN 86.02. OR 0.49%

Trading from Europe and Asia:
1. Europe stocks MIXED  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED IN THE GREEN . ,Shanghai CLOSED IN THE GREEN/ Australia BOURSE IN THE RED: /Nikkei (Japan)RED IN THE GREEN/India’s Sensex IN THE GREEN /

Gold very early morning trading: $1232.20

silver:$16.95

Early TUESDAY morning USA 10 year bond yield: 1.91% !!! PAR 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 2.73 UP 1 in basis points from MONDAY night.

USA dollar index early TUESDAY morning: 94.58 DOWN 21 cents from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING

END

 

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.22% DOWN 7 in basis points from MONDAY

JAPANESE BOND YIELD: –.100% DOWN 4 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.64% PAR IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.55  UP 1 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 9 points lower than Spain.

GERMAN 10 YR BOND YIELD: .299% (UP 3 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 1.1287 UP .0021 (Euro =UP 21  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 111.43 UP 0.296 (Yen DOWN 30 basis points As MARKETS FALL)

Great Britain/USA 1.4575  UP .0091 Pound UP 91 basis points/

USA/Canad 1.2618 DOWN 0.0056 (Canadian dollar UP 56 basis points with OIL FALLING (WTI AT $42.70)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 21 basis points to trade at 1.1267

The Yen FELL to 111.43 for a LOSS of 30 basis points as NIRP is STILL a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.

The pound was UP 91 basis points, trading at 1.4575

The Canadian dollar ROSE by 56 basis points to 1.2618, WITH WTI OIL AT:  $43.96

The USA/Yuan closed at 6.4905

the 10 yr Japanese bond yield closed at -.100% DOWN 4 BASIS  points in yield/

Your closing 10 yr USA bond yield: UP  3  basis points from MONDAY at 1.93% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.75 UP 3 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.61 DOWN 19 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 23.60 POINTS OR 0.38%
German Dax :CLOSED DOWN 34.76 OR 0.34%
Paris Cac  CLOSED DOWN 12.94  OR 0.28%
Spain IBEX CLOSED UP 143.00 OR 1.56`%
Italian MIB: CLOSED UP 267.18 OR 1.45%

The Dow was up 13.08 points or 0.07%

NASDAQ down 7.48 points or 0.15%
WTI Oil price; 43.98 at 3:30 pm;

Brent Oil: 45.76

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  65.65 (ROUBLE UP 95 ROUBLES PER DOLLAR FROM FRIDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

.

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:  $44.83

BRENT: 46.31

USA 10 YR BOND YIELD: 1.93%

USA DOLLAR INDEX:94.51 down 28 cents on the day

 

END

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

Trading Today in Graph form:

FANGs Slump Despite Crude Pump As China Commodity Carnage Continues

Nothing to see here, move along…China commodity carnage, US data dismal, and a Fed meeting that has to err on the side of hawkishness…

 

The commodity carnage in China continued overnight…

 

But for the 4th day in a row, authorities intervened to support Chinese stocks…

 

And that provided some hope oveernight into the US open…

 

On the day – very mixed – Nasdaq underperformed but Trannies & Small Caps squeezed higher…Dow/S&P Unch…

 

Once again, VIX was smashed into the close in an effort to maintain Dow 18,000…BUT FAILED

 

Another day, another short squeeze…lifts Trannies & Small Caps

 

AAPL was chaotic today into earnings…

 

FANGs had their worst 3-day run in almost 3 months, back to 6-week lows…

 

Treasury yields rose for the 2nd day heading into The Fed meeting, with a wider range today…

 

The USD Index drifted lower once again… (though notably JPY weakened also)…

 

Copper drifted lower – dragged by the industrial metal collapse in Chinas but crude and PMs all rallied on the weaker dollar…

 

Crude algos panic-big oil prices above $44, running yesterday’s high stops ahead of tonight’s API report…

 

Charts: Bloomberg

Bonus Chart: Macro madness…

END

Core durable goods tumble for the 14th consecutive month: generally means a deep recession

 

(courtesy zero hedge)

 

Core Durable Goods Tumble For 14th Month, Longest Non-Recessionary Stretch In 60 Years

Following February’s dismal drops across the board in Durable Goods, expectations were high for a March rebound. However, the mean-reverters were greatly disappointed as Orders rose just 0.8% MoM (missing expectations of a 1.9% surge) off a revised lower print, pushing the YoY change back into the red. Core Durables Goods Orders fell YoY for the 14th consecutive month – a streak never seen in 60 years outside of a broad US recession. Capital Goods Orders (0.0% vs +0.6% exp) and Shipments (+0.3% vs +0.9% exp) both missed and were both revised lower. Not a pretty picture…

The headline Durable Goods Orders printed back in the red YoY…

But a 14th consecutive monthly drop in YoY Core Durable Goods Orders has never happened outside of a recession…

It really is different this time.

Most notably, New Orders for defense aircraft and parts surged 65.7% to $6.1 billion – So not even war can keep the US economy afloat any more!!

Finally, the all important core capex series, or nondefense capital goods ex aircraft was unchanged for the month, and printed a 2.4% decline from a year ago. This too represents 14 consecutive months of core capex declines, something else that has never happened outside of a recession.

Charts: Bloomberg

end Home prices are showing the slowest growth and for 5 months in a row have missed expectations.  February saw prices rise by 5.38%. (courtesy zero hedge/Case Shiller) Case-Shiller Home Price Growth Slowest Since September

For the 5th month in a row (and 10th of last 11), S&P Case-Shiller Home Price growth YoY missed expectations. February saw prices rise 5.38% (below 5.5% exp) which is the weakest annual growth since September 2015. Seattle and San Francisco rose the most MoM as Cleveland and New York saw the biggest drops MoM.

Weakest home prices appreciation since September 2015 and the misses continue…

The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 5.3% annual gain in February, unchanged from the previous month. The 10-City Composite increased 4.6% in the year to February, compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.4%, down from 5.7% the prior month.

”Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

“The year-over-year figures for the 10-City and 20-City Composites both slowed and 13 of the 20 cities saw slower year-over-year numbers compared to last month. The slower growth rate is evident in the monthly seasonally adjusted numbers: six cities experienced smaller monthly gains in February compared to January, when no city saw growth. Among the six were Seattle, Portland OR, and San Diego, all of which were very strong last time.

Mortgage defaults are an important measure of the health of the housing market.Memories of the financial crisis are dominated by rising defaults as much as by falling home prices. Today as well, the mortgage default rate continues to mirror the path of home prices. Currently, the default rate on first mortgages is about three-quarters of one percent, a touch lower than in 2004. Moreover, the figure has drifted down in the last two years. While financing is not an issue for home buyers, rising prices are a concern in many parts of the country. The visible supply of homes on the market is low at 4.8 months in the last report. Homeowners looking to sell their house and trade up to a larger house or a more desirable location are concerned with finding that new house. Additionally, the pace of new single family home construction and sales has not completely recovered from the recession.”

Combined with weakness in new home sales, starts, and permits, things are starting to creak in the “real estate recovery” narrative.

END Markit sees its preliminary PMI for April services rising a bit to 52.  However its manufacturing PMI continues to falter.  They suggest that Q2 is humming along at only a .8% GDP (courtesy zero hedge) Services PMI Suggests “0.8% GDP At Start Of Q2” As “Job Creation Slows”

With Manufacturing PMI at multi-year lows and trending lower, why would anyone be surprised that, amid plunging profits in retailers and weakness in restaurant performance indices, Markit’s preliminary Services PMI for April would bounce for the 2nd month in a row to  52.1. However, as Markit notes, despite th emodest pickup, growth is clearly far more fragile than this time last year.”

Dead cat bounce?

As Markit details,

“The upturn in the rate of growth of business activity and increased inflows of new orders suggest the economy should see GDP rise at an increased rate in the second quarter, butgrowth is clearly far more fragile than this time last year.

Viewed alongside the recent poor performance of the manufacturing sector, which reported its worst month since October 2009, the survey suggests the economy grew at an annualized rate of just 0.8% at the start of the second quarter, only marginally above the pace signalled for the first quarter.

 Survey responses indicate that persistent weak demand from domestic and overseas customers, the struggling energy sector, the strong dollar and election worries are all eating into business optimism.

“The current pace of growth is also only being supported by price reductions, as an increasing number of firms offer discounts to win sales.

Job creation has also slowed as a result of costcutting pressures and uncertainty over the outlook, but remains solid. The surveys point to another 150,000 non-farm payroll increase in April, as robust service sector hiring continues to offset factory job losses.”

Additionally, growth momentum remained much weaker than that seen on average since the survey began in late-2009.

Survey respondents suggested that subdued client demand and less favourable underlying economic conditions had weighed on business activity at their units in April. Reflecting this, latest data signalled only a marginal rebound in new business growth from the survey-record low recorded in March.

A relatively weak upturn in new work contributed to slower job creation across the service economy in April. Payroll numbers have expanded continuously for just over six years, but the latest increase was the softest since October 2015 and weaker than the post-crisis trend. At the same time, service providers indicated another modest drop in backlogs of work in April, suggesting a lack of pressure on operating capacity.

end

We now have the 3rd Fed mfg index fall, after the Philly and Dallas Fed.  This time it was the Richmond Mfg Fed index faltering.  You will recall that last month it gave a surprise spike to 7 yr highs.  It did not last long: (courtesy zero hedge) Richmond Fed Plunges By Most Since August After March’s WTF Spike

Following the weakness in Philly and Dallas Fed regional – fading off Feb/Mar dead cat bounces –Richmond Fed’s epic 9-standard-deviation biggest spike ever to 7 year highs in March appears to have been a one of as it fell back from 22 (3rd highest ever) to 14 (still above expectations) – the biggest drop since August. Of course how one can take this seriously is anyone’s guess as shipments , new orders, wages, and workweek all crashed from March’s embarrassing spike as did inventory levels for finished and raw materials (not good for Q2 GDP). Worse still outlook for six months ahead saw wages, workweek and new orders collapse further.

As a reminder, here is March…

And so April tumbles most since August…

Charts: Bloomberg

end Consumer confidence dropped in April and is hovering at 2 yr lows. Income growth potential is falling.  Not a very good sign: (courtesy zero hedge) Consumer Confidence Stagnant Since The End Of QE3 As Wage Growth Hopes Fade

We’re gonna need more money-printing. Consumer Confidence dropped in April to 94.2, missing expectations of 95.8 and hovering at its lowest in 2 years. In fact, the current level is relatively unchanged since the end of QE3, despite all the recent surges in stocks as the post-2009 94% correlation between the S&P 500 and confidence is breaking down rapidly and ruining The Fed’s animal spirits’ party. Most crucially, income growth expectations are tumbling as The Conference Board suggests American consumers “do not foresee any pickup in momentum.”

h/t @GreekFire

“Consumer confidence continued on its sideways path, posting a slight decline in April, following a modest gain in March,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved, suggesting no slowing in economic growth. However, their expectations regarding the short-term have moderated, suggesting they do not foresee any pickup in momentum.”

Consumers’ appraisal of current conditions improved somewhat in April. Those saying business conditions are “good” decreased from 24.9 percent to 23.2 percent.However, those saying business conditions are “bad” also declined, from 19.2 percent to 18.1 percent. Consumers’ appraisal of the labor market was also mixed. Those claiming jobs are “plentiful” decreased from 25.4 percent to 24.1 percent, however those claiming jobs are “hard to get” also declined from 25.2 percent to 22.7 percent.

Consumers were less optimistic about the short-term outlook in April than last month. The percentage of consumers expecting business conditions to improve over the next six months decreased from 14.7 percent to 13.4 percent, while those expecting business conditions to worsen rose to 11.0 percent from 9.5 percent.

Consumers’ outlook for the labor market was also less favorable. Those anticipating more jobs in the months ahead decreased slightly from 13.0 percent to 12.2 percent, while those anticipating fewer jobs edged up from 16.3 percent to 17.2 percent. The proportion of consumers expecting their incomes to increase declined from 16.9 percent to 15.9 percent; however, the proportion expecting a reduction in income also declined, from 12.3 percent to 11.2 percent.

end Seems that the Atlanta Fed keeps getting tapped on the shoulder to revise its GDP higher Today is really farcical: (courtesy Atlanta Fed/zero hedge) Atlanta Fed Boosts GDP Forecast Following Today’s Durable Goods Miss And Downward Revision

If there was some confusion why the Atlanta Fed recently revised its GDP Nowcast higher following the recent retail sales miss, that confusion will be even more acute today when moments ago the Atlanta Fed plugged today’s weaker than expected durable goods print (and downward revision to past month’s data), and ended up with… a GDP forecast that was higher than previously, or an increase from 0.3% to 0.4%.

From the Atlanta Fed’s Nowcast:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.4 percent on April 26, up from 0.3 percent on April 19. After last Wednesday’s existing-home sales release from the National Association of Realtors, the forecast for first-quarter real residential investment growth increased from 8.5 percent to 10.8 percent. After this morning’s advance report on durable manufacturing from the U.S. Census Bureau, the forecast for real equipment investment growth declined slightly while the forecast for real inventory investment increased slightly.

 end Devastation continues to run rampant in the USA.  One out of 5 American families has nobody having a job.  We are also witnessing a complete devastation in the retail sector as the consumer is basically has no funds for incremental purchases.  The retail chain of Aeropostale (800 stores) will file for bankruptcy and will not continue (courtesy zero hedge) In 1 Out Of Every 5 American Families, Nobody Has A Job

Submitted by Michael Snyder via The Economic Collapse blog,

If nobody is working in one out of every five U.S. families, then how in the world can the unemployment rate be close to 5 percent as the Obama administration keeps insisting? The truth, of course, is that the U.S. economy is in far worse condition than we are being told. Last week, I discussed the fact that the Federal Reserve has found that 47 percent of all Americans would not be able to come up with $400 for an unexpected visit to the emergency room without borrowing it or selling something. But Barack Obama and his minions never bring up that number. Nor do they ever bring up the fact that 20 percent of all families in America are completely unemployed. The following comes directly from the Bureau of Labor Statistics

In 2015, the share of families with an employed member was 80.3 percent, up by 0.2 percentage point from 2014. The likelihood of having an employed family member rose in 2015 for Black families (from 76.4 percent to 77.7 percent) and for Hispanic families (from 85.9 percent to 86.4 percent). The likelihood for White and Asian families showed little or no change (80.1 percent and 88.6 percent, respectively).

For purposes of this study, families “are classified either as married-couple families or as families maintained by women or men without spouses present” and they include households without children as well as children under the age of 18.

Digging into the numbers, we find that there were a total of 81,410,000 families in America during the 2015 calendar year.

Of that total, 16,060,000 families did not have a single member employed.

So that means that in 19.7 percent of all families in the United States, nobody has a job.

And of course there are lots more families that are “partially employed”. In other words, maybe the wife has a job but the husband does not.

So based on these numbers, it would appear to me that the true rate of unemployment in this country is vastly higher than 5 percent, and John Williams of shadowstats.com agrees with me. According to his calculations, the broadest measure of unemployment in the U.S. would actually be sitting at 22.9 percent if honest numbers were being used.

But let’s not just focus on where we are.

Let’s take a look at where we are going.

According to Challenger, Gray & Christmas, job cut announcements by big companies in the United States were up 32 percent during the first quarter of 2016 compared to the first quarter of 2015, and it appears that the job losses are going to continue to mount as we roll into the second quarter. For instance, late last week Intel announced that it is going to be laying off 12,000 workers

As it navigates its path into the future, Intel, the 47-year-old corporation best known for making microprocessor chips that power personal computers, has announced significant changes to its business.

On Tuesday, Intel’s CEO Brian Krzanich said in a letter to employees that the company over the next year will cut its 107,300-person global workforce by 12,000 people, or 11 percent.

Those are good middle class jobs, and they are exactly the kind of jobs that we cannot afford to be losing.

Meanwhile, the “retail apocalypse” appears to be accelerating once again.

Bloomberg is reporting that teen clothing chain Aeropostale is preparing to file for bankruptcy.  Aeropostale currently operates more than 800 stores across the nation, and it is unclear if any of them will be able to stay open as this process plays out. But of course it isn’t just Aeropostale that has gone bankrupt lately. Here are a few more examples of major retailersthat have recently filed for bankruptcy

April 16, 2016: Vestis Retail Group, the operator of sporting goods retailersEastern Mountain Sports (camping, hiking, skiing, adventure sports), Bob’s Stores (family clothing and shoes), and Sport Chalet (general sporting goods), filed for Chapter 11 bankruptcy. It will close all 56 stores and stop online sales.

In the filing, it blamed the going-out-of-business sales at “certain Sports Authority locations,” plus the weather, which had been too warm, and trouble with switching to a new software platform. It’s owned by private equity firm Versa Capital Management LLC.

April 7, 2016: Pacific Sunwear of California, clothing retailer with nearly 600 stores and derailed ambitions of skate-and-surf cool, filed for Chapter 11 bankruptcy. PE firm Golden Gate Capital, a lender to the company, agreed to convert over 65% of its loan into equity of the reorganized company and add another $20 million in financing. Wells Fargo agreed to provide $100 million of debtor-in-possession financing.

March 2, 2016: Sports Authority filed for Chapter 11 bankruptcy. It said it would close 140 of its 450 stores, including all stores in Texas.

Just because the stock market has been doing well in recent weeks does not mean that the crisis has passed.

In fact, many experts believe that the crisis of 2016 is just getting started.  Albert Edwards of Societe Generale is one of them

But what I do know is when in the last few weeks I have heard that Janet Yellen sees no bubble in the US, when Ben Bernanke hones and restates his helicopter money speech, and when Mario Draghi says that the ECB’s policy of printing money and negative interest rates was working, I feel utterly depressed (I could also quote similar nonsense from Japan, the UK and China). I have not one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result.

The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!

All over the world, the underlying economic fundamentals continue to deteriorate.Here in the U.S., retail sales have been extremely disappointing, total business sales have been steadily falling, corporate revenues and corporate profits continue to plunge, and corporate debt defaults have soared to their highest level since the last financial crisis.

All of these numbers are screaming that a major economic downturn is here, and with each passing week things look even more ominous for the second half of 2016.

end This seems to be the trend:  even though their report is not that bad, hedge fund Brevan Howard met with a massive 1.4 billion USA redemption: (courtesy zero hedge) Iconic Hedge Fund Brevan Howard Slammed With $1.4 Billion In Redemption Requests

It has already been a very bad several years for hedge funds with 2016 starting off especially brutally, as Goldman’s own Hedge Fund VIP basket demonstrates…

… when moments ago we learned that it is about to get even worse for one of the most iconic names in the macro hedge fund space, Brevan Howard, which according to Bloomberg has been served with $1.4 billion in cash redemption requests.

Brevan Howard co-founder Alan Howard

As Bloomberg writes, investors in Brevan Howard Asset Management have asked to pull about $1.4 billion from the firm’s main hedge fund after successive annual declines followed by losses during the first quarter, according to two people with knowledge of the matter.

The Brevan Howard Master Fund, which bets on macroeconomic trends to invest across asset classes, will have to meet the redemption requests by the end of June, said the people who asked not to be identified because the information is private. The fund managed $17.6 billion at the end of March, down from about $27 billion two years ago, according to a company website.

While the firm’s billionaire co-founder Alan Howard has previously said that there will be “exceptional opportunities” to make money this year, those have so far failed to materialize. What is odd is that Brevan’s losses are once again not even that material: the Master Fund closed the first quarter down 0.97 percent after losing 2 percent in March. It dropped almost 2 percent in 2015 and 0.8 percent in 2014, people familiar with the matter said earlier this month.

This, however, appears sufficient for many LPs to send in their redemption papers.

Investors disappointed by hedge funds’ performance during recent market turmoil pulled the most money last quarter since the tail-end of the financial crisis, according to Hedge Fund Research Inc. Money managers betting on macro economic trends suffered $7.3 billion in outflows.

The recent trend of pulling funds away from hedge funds is not new: recently New York City’s pension for civil employees, whose money managers included Brevan Howard, voted this month to pull $1.5 billion from hedge funds. Clients of Tudor Investment Corp. have asked to withdraw more than $1 billion from the firm founded by billionaire Paul Tudor Jones after three years of lackluster returns, while Och-Ziff Capital Management Group LLC saw its assets fall by about $1 billion in March to $42 billion on April 1, according to a company filing.

As central banks continue to take over capital markets and make fundamental-based investing impossible, we expect even more hedge fund casualties who collect 2 and 20 in a worldin which activist central bankers have become the Chief Risk Officers of broader markets, and better yet, they do it for “free.”

end Eight hundred department stores or 1/5 of the USA capacity is now uneconomic (courtesy zero hedge) Malinvestment In US Malls—-800 Department Stores Or One Fifth Of Capacity Now Uneconomic

By Suzanne Kapner at The Wall Street Journal

Department stores need to close hundreds of locations if they want to regain the productivity they had a decade ago, according to new research from Green Street Advisors.

The real-estate research firm estimates that the closures could include roughly 800 department stores, or about a fifth of all anchor space in U.S. malls.

Sears Holdings Corp. alone would need to close 300, or 43%, of its Sears stores to regain the sales per square foot it had in 2006, adjusted for inflation, according to Green Street.

“Department stores used to be a great catchall for different brands, but today many of the brands have stores of their own, and shoppers can also find them online,” said DJ Busch, a senior Green Street analyst.

Sears and other retailers including Macy’s Inc. and J.C. Penney Co. have closed hundreds of stores in recent years as business has shifted to discounters or online merchants likeAmazon.com Inc. But the closures haven’t been enough to offset a drop in sales, Green Street said.

Sales at the nation’s department stores averaged $165 a square foot last year, a 24% drop since 2006, according to company disclosures and Green Street estimates. Over the same period, the stores reduced their physical footprint by 7% in aggregate.

Some chains have moved faster to cull their fleets than others. On Thursday, Sears said it would close 78 stores, including 68 Kmarts, this summer, part of a plan announced in February to “accelerate the closing of unprofitable stores.” But Penney has only closed seven stores this year out of a base of more than 1,000.

Green Street estimates that Penney would need to close a total of 320 locations, or 31% of its stores to return to its 2006 productivity levels, while Nordstrom Inc. would need to shutter 30 stores, or a quarter of its footprint. By comparison, Macy’s, which closed 40 stores last year, would only need to eliminate a further 70 locations, or 9% of its base, Green Street estimates.

While declining to comment on the specifics of Green Street’s report, the chains have indicated that mass store closings aren’t the right strategy.

“There’s a misperception out there that when we close a store, that business transfers online,” Ed Record, Penney’s chief financial officer, told analysts in November. “When we close a store, particularly in a small market, we see our dot-com business go down.

A spokesman for Nordstrom said that all of its stores are profitable, and closing stores “is not our normal practice.”

In addition to closing unproductive locations, Macy’s has been trying to get more shoppers in the door by adding Bluemercury beauty shops and Backstage discount stores to its department stores.

It may be unrealistic to expect that department stores could ever return to historical levels of sales or profits given the changing dynamics of retailing. Many retailers say they make less money selling goods online than they do in their physical stores. And with the Internet making it easier for consumers to comparison shop, discounts have become the norm.

Department stores occupy about two-thirds of mall anchor space, and even though they are being replaced by restaurants, grocery stores, and big box retailers such as Dick’s Sporting Goods Inc. and Target Corp., there aren’t always enough new tenants to go around, said Green Street’s Mr. Busch.

The store glut has important implications for the country’s weaker malls, which rely on their anchors to drive foot traffic. “If department stores were to move forward and aggressively streamline their physical presence it could result in several hundred malls no longer being relevant retail destinations,” he said.

Source: Department Stores N

END

After the market closed we had two biggys on the downside:

First Twitter:

Second:Apple

 

(courtesy zero hedge)

 

Twitter Crashes After Slashing Revenue Forecast

Despite all eyes on the slightly better than expected MAUs (310m vs 308m exp.), Twitter is being clubbed like a baby seal after-hours as it has slashed Q2 revenue:

  • *TWITTER SEES 2Q REV. $590M TO $610M, EST. $677.1M

Most crucially, Twitter explains, “Revenue came in at the low end of our guidance range because brand marketers did not increase spend as quickly as expected in the first quarter.” Which also does not exactly bode well for the overall ad spend market.

Some other key points from the CEO:

We see a clear opportunity to increase our share of brand budgets over time. We have a strong product roadmap designed to tap into incremental brand-oriented online video budgets, and will deliver additional features for advertisers later this year — including more detailed demographic targeting and verification, and reach and frequency planning and purchasing.

This is what Twitter would like the market to focus on: the sequential growth in users:

The market sadly is not seeing it, and instead is looking at the following: the company’s poor guidance which sees Revenue next quarter to be about 10% below consensus estimate of $677.

OUTLOOK For Q2, we expect:

  • Revenue to be in the range of $590 to $610 million;
  • Adjusted EBITDA to be in the range of $145 to $155 million;
  • Stock-based compensation expense to be in the range of $165 to $175 million;
  • GAAP share count to be in the range of 700 to 705 million shares;
  • Non-GAAP share count to be in the range of 710 to 720 million shares.

For FY 2016, we expect:

  • Capital expenditures to be $300 to $425 million;
  • Adjusted EBITDA margin in the range of 25-27%.

Note that our outlook for Q2 and full year of 2016 reflects foreign exchange rates as of April 15, 2016.

Meanwhile, Twitter continues its favorite pastime of converting massive GAAP losses into non-GAAP profits by adding back $151 million in stock-based compensation

Some other key highlights:

Advertising Metrics

 

Total ad engagements grew 208% year-over-year, an acceleration in growth compared to Q4 2015,
driven once again by the adoption of auto-play video, increases in ad load versus the prior year period,
and improvements in click through rate in select ad formats. The average cost per ad engagement fell
56% year-over-year, again primarily due to the move to auto-play video. Cost per ad engagement for
direct response and app install ad formats was up nicely year-over-year, as we have made noticeable
improvements in targeting, measurement, and creative capabilities for those formats.

 

Costs & Adjusted EBITDA

 

Non-GAAP total expenses in Q1 grew 26% year-over-year to $490 million. The increase was driven by higher traffic acquisition costs from non-O&O advertising revenue, infrastructure costs, sales and marketing, and employee-related and overhead expenses. Traffic acquisition costs were 57% of non-advertising revenue in the quarter, vs. 64% in Q1 2015 and 61% in Q4 2015. Stock based compensation expense was $151 million in the quarter, $9 million below the low end of our  forecasted range of $160 to $170 million. This also marks the fourth consecutive quarter of absolute decline in stock based compensation expense. Adjusted EBITDA was $180 million in Q1, $20 million ahead of the high end of our guidance range of $150 to $160 million. Adjusted EBITDA margin on GAAP revenue was 30%, approximately 600 basis points better than that of Q1 2015 and 300 basis points better on a
sequential basis. Total employees were approximately 3,800 at the end of the period, reflecting slower
than expected hiring.

 

Balance Sheet

 

We ended the quarter with $3.6 billion in cash, cash equivalents and marketable securities. Free cash
flow in the period was $99 million.
Audience
Total MAU was 310 million for the quarter, which compares favorably to the 305 million reported for Q4
2015. Growth was driven by both seasonality and marketing initiatives.

Investors are not happy:

end And now Apple misses: Apple Tumbles After Missing Sales And Earnings, Guides Below Lowest Estimate

First it was Twitter, now it is consumer tech titan AAPL’s turn to tumble.

For those pressed for time, here is the breakdown:

  • APPLE Q2 REVENUE $51.56BN, EST 251.97BN
  • APPLE Q2 EPS $1.90, EST $2.00
  • APPLE SEES 3Q REV. $41B-$43B, EST. $47.4B
  • APPLE SOLD 51.2M IPHONES IN 2Q, EST. 50.7M
  • APPLE SOLD 4.03M MACS IN 2Q, EST. 4.6M
  • APPLE SOLD 10.3M IPADS IN 2Q, EST. 9.4M
  • APPLE 2Q IPHONE ASP $641.83, EST. $651
  • APPLE BOOSTS QTR DIV TO 57C-SHR FROM 52C, EST. 57C
  • APPLE INCREASED SHARE REPURCHASE AUTHORIZATION TO $175B

And now the details:

Moments ago AAPL reported Q2 EPS of $1.90, missing expectations of $2.00 on revenue of $50.56BN which also significantly missed expectations of $52 Billion. Perhaps the biggest drive for this was both the sequential and annual plunge in Chinese sales, which dropped to $12.5 billion from $16.8 billion a year ago.

 

And while Apple beat expectations on iPhone sales, selling 51.2 million units in the quarter, above the 50.7 million expected, it did so on both a lower than expected margin of 39.4%, and lower iPhone ASPs, which dropped to $641.8 below the $651 estimate.

 

The company’s guidance for Q3 revenues was abysmal, and sees only $41-$43BN in sales, well below not only the median estimate of $47.35bn but below the lowest sellside estimate of $43.95bn.

But the scariest chart is probably the one showing the sharp slow down in sales across virtually all geographies.

Tim Cook’s commentary:

“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

But more troubling was the CFO commentary according to whom what was slowing iPhone sales was the slowness to upgrade.

Is the AAPL magic gone?

As of this moment investors says yes, as AAPL tumbles 6% after hours, and that despite AAPL announcing that the Board has increased its share repurchase authorization to $175 billion from the $140 billion level announced last year.

 end

Well that about does is for tonight

I will see you tomorrow night

Harvey


April 25.2016/Open interest in silver climbs above 200,000 at 201,787 within 200 contracts of its all time high and yet silver price is very low in comparison/Chicago Pensions system is in disarray/Deutsche bank echoes David Stockman in that Q one...

Mon, 04/25/2016 - 18:38

Good evening Ladies and Gentlemen:

Gold:  $1,238.90 down $10.20    (comex closing time)

Silver 17.00  up 10 cents

In the access market 5:15 pm

Gold $1238.00

silver:  17.00

 

 

 Tomorrow is options expiry on the comex.  However we have to wait until Friday afternoon as the London’s LBMA options expire along with the bankers OTC options. So expect the prices of our precious metals to remain subdued to the rest of the week.  The open interest in silver continues to rise despite Friday’s weakness in price.  Somebody is accumulating massive amounts of silver and the longs are waiting patiently ready to pounce.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 973 notices for 97,300 ounces for gold,and for silver we had 2 notices for 10,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 224.62 tonnes for a loss of 78 tonnes over that period.

 

In silver, the open interest rose by a SURPRISING 2,556  contracts up  to 201,787 despite the fact that the price was silver was down  by 19 cents with respect to FRIDAY’s trading. In ounces, the OI is still represented by 1 BILLLION oz (1.009 BILLION TO BE EXACT or 143% of annual global silver production (exRussia &ex China)We are now at multi year highs in OI with respect to silver

In silver we had 2 notices served upon for 20,000 oz.

In gold, the total comex gold OI FELL 9,490 contracts, DOWN to 501,844 contracts AS  the price of gold was DOWN $20.30 with FRIDAY’S TRADING(at comex closing).

We had no changes in gold inventory at the GLD, thus the inventory rests tonight at 805.03 tonnes.The boys loading  gold into and/or removing gold at the GLD must be getting dizzy at the sheer pace of transactions!!   The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold, after they deplete the GLD will be the FRBNY and the comex.   In silver’s SLV,we had no change in silver inventory.  Thus the inventory rests at 334.724 million oz.

.

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

1. Today, we had the open interest in silver rise by a HUGE 2556 contracts up to 201,787 despite the fact that the price of silver was DOWN 19 cents with FRIDAY’S trading. The gold open interest FELL by A LARGE 9,490 contracts AS  gold fell by $19.30 ON FRIDAY.   Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed DOWN BY 12.28 POINTS OR 0.41%  /  Hang Sang closed DOWN 162.60 OR 0.76%. The Nikkei closed DOWN 133.19 POINTS OR 0.76% . Australia’s all ordinaires  CLOSED DOWN 0.69%. Chinese yuan (ONSHORE) closed DOWN at 6.4927.  Oil FELL  to 43.72 dollars per barrel for WTI and 44.78 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.5071 yuan to the dollar vs 6.4927 for onshore yuan.

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

ii)Through purchases of their ETF’s, the Bank of Japan is now a top 10 owner of an unbelievable 90% of Japanese stocks:

(courtesy zero hedge)

iii)The following is something that Goldman Sachs is not very happy about, the huge rise in the yen and it continued today. We have witnessed the hedge funds do net long on dollar claims  (short the yen) as they loaded the boat on one side.  Now hedge funds are going net short the dollar.  Is Goldman Sachs going to wrong again? (courtesy zero hedge) b) REPORT ON CHINA

Not only is China hoarding gold but they are also hoarding crude at the fastest pace on record!

( zero hedge)

4.EUROPEAN AFFAIRS

i)Austrian right wing party sweeps the first round of Presidential elections:

( zero hedge)

ii)From the sublime to the ridiculous:  Unilever issue a bond at 0% coupon: i.e. it costs them nothing:

( zero hedge) 5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)The White house is set to release some of the secret 28 pages.  Now we await the Saudi response and it may liquidate its bond holdings:

( zero hedge)

ii)Something is terribly wrong here!  The Saudi interbank rate climbs above 2%.  Either the Saudis are having trouble locating dollars or Saudi banks are afraid to loan to one another:

(courtesy zero hedge)

iii) SWEDEN AND THEIR HUGE MIGRANT PROBLEM

Sweden revolts as Stockholm City council moves Muslim migrants right next to a school:

( zero hedge)

6.GLOBAL ISSUES:  

TORONTO CANADA

 

i)The huge real estate company URBANCORP has just filed for bankruptcy protection.

This will surely hurt Canada’s booming real estate sector. It looks like the Chinese money have stopped coming.

( zero hedge)

ii)The following is a big story.  As we have pointed out there are now 7.8 trillion dollars worth of bonds in negative story.   We are also pointing out that many on the planet are scrapping the surface trying to get anything with a positive yield and that means bonds that are out 100 years.  If interest rates were just to move up 1/2%, the loss will be 1.3 trillion USA or if rates climb 1% then losses would be 2.6 trillion.  This is an accident waiting to happen

( zero hedge)

OIL ISSUES

i)Oil slides after a report shows a huge 1.5 million barrel inventory build at Cushing which is largely expected

( zero hedge)

 

ii)This is not going over well with the rest of the producers:  Saudi Arabia is set to boost production in competition with other producers to satisfy Chinese demand (stockpiling)

( zero hedge) PHYSICAL MARKETS:

i) Bill Holter’s commentary tonight is entitled:

“”The chances of a COMEX default … (public article)”

ii)Strange:  Supposedly the CFTC did not know of the Deutsche market rigging settlement until GATA asked them what they were going to do about it, one week later.  I notified the CFTC on the Thursday morning release by Reuters

( zero hedge)

iii)A very important commentary from Andrew Maguire.  Basically he is stating correctly that the Chinese SGE  is taking liquidity away from the LBMA  and comex paper game. We have witnessed that the gold price is higher as it enters the Chinese fix.  It is now logical that a Chinese holder of gold can sell say 1 tonne of his hoard of 100 tonnes of gold and then buy a contract in London and NY at lower prices and then wait and take delivery to retrieve his lost 1 tonne.  This arbitrage will break the backs of the west:

a must listen to audio.. ( Kingworldnews/Andrew Maguire)

iv)The Hong Kong gold exchange is now working with the large Chinese bank, ICBC to launch gold services such as storage, and physical settlement in the free trade zone of Qianhai.( GATA/South China Morning Post)

 

b)Zero hedge comments on the above story:

(courtesy zero hedge)

USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)Take a look at the Chicago Pension system: There are 7500 retired teachers in theChicago area that earn over 100,000 dollars.

( zero hedge)

ii)Desperation time for the Republicans as Cruz and Kasich form a last minute alliance trying to stop him:

( zero hedge)

iii)The Dallas Fed mfg index disappoints again for the 16th straight month:

( zerohedge) iv)Deutsche bank admits that the true story of Q 1 earnings are very disappointing and they echo what David Stockman states.  And strangely they also admit that D.B’s first quarter est is at risk: ( zero hedge)

v)Perhaps of all the home stats, new homes if the most vital:  today, new homes sales suffer their 3rd month drop and the worst streak since July 2011:

( zero hedge)

 vi)Gold Eagles from the USA mint triple from last yr due to the continued financial market deterioration( Steve St Angelo/SRSRocco Report)

 

Let us head over to the comex:

The total gold comex open interest FELL CONSIDERABLY, as expected to an OI level of 501,844 for a LOSS of 9,490 contracts AS the price of gold DOWN  $20.30 with respect to FRIDAY’S TRADING. We are now entering the active delivery month of April. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month. We certainly witnessed both parts today . In the front month of April we lost 209 contracts from 1703 contracts down to 1494.  We had 61 notices filed yesterday so we LOST 49 CONTRACTS or an additional 4900 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI fall by 100 contracts down to 2285. The next big active gold contract is June and here the OI fell by 10,075 contracts down to 373,396. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 29,072. The confirmed volume ON FRIDAY (which includes the volume during regular business hours + access market sales the previous day was very good at 220,868 contracts. The comex is not in backwardation.

Today we had 973 notices filed for 97,300 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 2556 contracts from 199,231 UP 201,787 DESPITE THE FACT THAT the price of silver was DOWN 19 cents with FRIDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 0 contracts remaining at 6. We had 0 notices filed on FriDAY so we NEITHER  gained NOR LOST ANY SILVER OUNCES THAT will stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by only 8,096 contracts DOWN to 48,767. This level is exceedingly high AS WE ONLY HAVE  4 days before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 101,960, which is HUMONGOUS  AND NOT MANY ROLLOVERS. The confirmed volume on Friday (comex + globex) was AGAIN OUT OF THIS WORLD AT 130,872. Silver is not in backwardation. London is in backwardation for several months. THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.   We had 2 notices filed for 10,000 oz.  

April contract month:

INITIAL standings for APRIL

Initial Standings for April April 25. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz  nil  16,075.000 oz  (Scotia)

500 kilobars Deposits to the Dealer Inventory in oz NIL Deposits to the Customer Inventory, in oz  643.00 OZ

HSBC

20 kilobars No of oz served (contracts) today 973 contracts
(97,300 oz) No of oz to be served (notices) 411 contracts 41100 oz/ Total monthly oz gold served (contracts) so far this month 3643 contracts (364,300 oz) Total accumulative withdrawals  of gold from the Dealers inventory this month   nil Total accumulative withdrawal of gold from the Customer inventory this month 127,373.7 oz

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 0 customer deposit:

i

total customer deposit:  NIL oz

Today we had 1 customer withdrawals:

i) Out of SCOTIA;  16075.000  500 kilobars

 

total customer withdrawal:16,075.000 oz   500 kilobars

Today we had 1 adjustment:

Out of hsbc:

91,148.085 oz was adjusted out of the CUSTOMER and into the DEALER

 

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 973 contracts of which 328 notices was stopped (received) by JPMorgan dealer and 285 notices were stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (3643) x 100 oz  or 364,300 oz , to which we  add the difference between the open interest for the front month of April (1384 CONTRACTS) minus the number of notices served upon today (973) x 100 oz   x 100 oz per contract equals the number of ounces standing.   Thus the initial standings for gold for the April. contract month: No of notices served so far (364,300) x 100 oz  or ounces + {OI for the front month (1384) minus the number of  notices served upon today (973) x 100 oz which equals 405,400 oz standing in this non  active delivery month of April (12.609 tonnes). We lost 49 contracts or 4900 oz will not stand. 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 thus have 12.609 tonnes of gold standing for April and 20.000 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing. We now have partial evidence of gold settling for last months deliveries We now have 12.609 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)  = 19.6221 tonnes still standing against 20.000 tonnes available.  .   Total dealer inventor 643,011.737 oz or 20.000 tonnes Total gold inventory (dealer and customer) =7,205,549.709 or 223.62 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.62 tonnes for a loss of 78 tonnes over that period.    JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)  end And now for silver  

APRIL INITIAL standings

 april 25.2016

Silver Ounces Withdrawals from Dealers Inventory nil Withdrawals from Customer Inventory 924,866.004 oz

JPM, Delaware

BRINKS, Scotia Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 702,729.000

BRINKS,SCOTIA No of oz served today (contracts) 2 contracts

10,000  oz No of oz to be served (notices) 4 contracts)(20,000 oz) Total monthly oz silver served (contracts) 191 contracts (955,000 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 8,719,136.7 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

 

we had 2 customer depositS:

i) Into BRINKS: 219,806.200 oz

II) INTO SCOTIA:  482,922.800 OZ

Total customer deposits: 702,729.000 oz.

We had 4 customer withdrawals

 

ii) Out of Delaware: 21,879.944 oz

iii) Out of BRINKS: 2,969.220 oz

iv) Out of JPMorgan; 300,003.800 oz

v)Out of Scotia:  600,013.04 oz

:

total customer withdrawals:  924,866.004  oz

   

 

 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 0 contracts for NIL oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (191) x 5,000 oz  = 955,000 oz to which we add the difference between the open interest for the front month of April (6) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the April. contract month:  191 (notices served so far)x 5000 oz +(XX{ OI for front month of April ) -number of notices served upon today (2)x 5000 oz  equals 975,000 oz of silver standing for the March contract month. we neither gained nor lost any silver ounces standing in this non active delivery month of April.   Total dealer silver:  31.957 million Total number of dealer and customer silver:   150.913 million oz The open interest on silver is now at multi year highs and silver is slowly disappearing from the comex vaults. The total dealer amount of silver remains at multi year low of 31.957 million oz.   end And now the Gold inventory at the GLD April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes April 21/no change in gold inventory/rests tonight at 805.03 tonnes April 20/no change in gold inventory/rests tonight at 805.03 tonnes April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46 April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical. Inventory rests at 815.14 tonnes.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 25.2016:  inventory rests at 805.03 tonnes

end

 

Now the SLV Inventory April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz. April 22/ no changes in silver inventory/rests tonight at 334.724 million oz April 21/no change in silver inventory/rests at 334.724 million oz/ April 20/no change in inventory/rests at 334.724 million oz April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724 April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297 April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz April 12.no change in silver inventory/rests tonight at 336.151 million oz . April 25.2016: Inventory 334.724 million oz .end 1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.5% to NAV for Cdn funds!!!! Percentage of fund in gold 61.5% Percentage of fund in silver:38.6% cash .-.1%( April 22.2016). 2. Sprott silver fund (PSLV): Premium to rises rises to -79%!!!! NAV (April25.2016)  3. Sprott gold fund (PHYS): premium to NAV  falls.+62% to NAV  ( April25.2016) Note: Sprott silver trust back  into negative territory at -79%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.62%/Central fund of Canada’s is still in jail. It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.79%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.      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   Gold Bullion In London Vaults Beneath Bank of England Worth $248 Billion – BBC By Mark O’ByrneApril 25, 20160 Comments

The gold bullion or “hidden gold mine” of various nation’s gold reserves stored in the vaults beneath the Bank of England have been covered by the BBC:

Under London’s streets lies a hidden gold mine.

It stretches across more than 300,000 square feet under the City, the finance quarter in the heart of Britain’s capital. There, beneath the pavement and commuters of Threadneedle Street, lies a maze of eight Bank of England gold vaults – each stacked with gold bars worth a total sum of around £141 billion ($200 billion).


Stacks of gold bars are arranged on shelves in the Bank of England’s vaults (Credit: David Levenson/Alamy)

The bars sit on rows of blue numbered shelves. Every bar weighs precisely 400 troy ounces (about 12kg), making each currently worth some £350,000 ($500,000), comfortably more than the average price of a house in the UK. Each bar looks subtly different depending on where it was refined. Some bars have sloping edges to make them easier to pick up; others look more like a loaf of bread.

There is no smell here: metal has none. There is no noise, either, on account of the vaults’ thick concrete walls.

What there is, however, is one of the world’s most important traded assets. Deals are still done in gold in almost every country in the world. Its price is a crucial barometer for consumer confidence. Prices rise when markets are uncertain, and before US elections – like now.

Read full article here


Recent Market Updates

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

Gold Price Set To Push Higher As Inflation Picks Up – RBC

Silver Bullion “Has So Much More to Give” – 5 Must See Charts Show

China Gold Bullion Yuan Trading To Boost Power In Gold and FX Markets

Marc Faber: “Messiah” Central Banks Helicopter Money Printing “Will Not End Well”

 

Gold News and Commentary
Gold marginally higher ahead of central banks this week (Bloomberg)
Metals hold up in high ground but may need to consolidate (Bullion Desk)
Gold hidden in secret vaults beneath the Bank of England worth $248bn (Independent)
One fifth of the world’s gold is buried in London (The Sun)
Building’s rent can be based on gold prices (Dispatch)

Silver’s New Bull Market (Zeal LLC)
Why Silver May Rally to $25: CPM Group -Video – (Fortune)
Britain should pay more attention to Eurozone crisis (Telegraph)
Gold has everything in its favor – Rally has legs (Marketwatch)
Resurgence Of Gold & Looming “Run On Cash” – Bass (Zerohedge)
Read More Here

Gold Prices (LBMA)
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce
22 April: USD 1,245.40, EUR 1,104.34 and GBP 868.73 per ounce
21 April: USD 1,257.65, EUR 1,113.21 and GBP 877.01 per ounce
20 April: USD 1,247.75, EUR 1,098.09 and GBP 867.45 per ounce
19 April: USD 1,241.70, EUR 1,095.18 and GBP 867.01 per ounce

Silver Prices (LBMA)
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce
22 April: USD 17.19, EUR 15.26 and GBP 11.96 per ounce
21 April: USD 17.32, EUR 15.31 and GBP 12.05 per ounce
20 April: USD 16.97, EUR 14.93 and GBP 11.81 per ounce
19 April: USD 16.62, EUR 14.67 and GBP 11.57 per ounce

 

Read Our Most Popular Guides in Recent Months

Mark O’Byrne Executive Director  end Strange:  Supposedly the CFTC did not know of the Deutsche market rigging settlement until GATA asked them.  I notified the CFTC on the Thursday morning release by Reuters (courtesy zero hedge) CFTC didn’t know of Deutsche’s market-rigging settlement until asked by GATA

Submitted by cpowell on Sat, 2016-04-23 16:14. Section:

12:23p ET Saturday, April 23, 2016

Dear Friend of GATA and Gold:

While it may be hard to believe, it seems that the U.S. Commodity Futures Trading Commission was unaware of Deutsche Bank’s agreement to settle a class-action lawsuit accusing it of manipulating the gold and silver markets until GATA repeatedly sought to bring the matter to the commission’s attention over the last week.

The news of the settlement agreement broke with Reuters and Bloomberg News reports on Wednesday and Thursday, April 13 and 14:

http://www.gata.org/node/16375

http://www.gata.org/node/16380

The reports said that Deutsche Bank had agreed in principle not only to pay financial damages to the plaintiffs but also to provide evidence against the other defendants in the suit.

 

Since the CFTC has jurisdiction over the U.S. commodity futures markets and since the commission purported to have undertaken a five-year investigation of the silver market, closing it in September 2013 upon concluding that there was no cause for action –http://www.cftc.gov/PressRoom/PressReleases/pr6709-13

— it was natural to seek comment from the commission about the Deutsche Bank news.

So on Saturday, April 16, your secretary/treasurer e-mailed the commission’s news media office as follows, providing the Internet link to the Bloomberg News report:

“Does the commission have any reaction to Deutsche Bank’s admission to manipulating the gold and silver markets, as reported by Bloomberg News this week? Is the commission responding to Deutsche Bank’s admission in any way? As you may recall, some years ago the commission reported that it had investigated the silver market and had found nothing improper. Is the commission reconsidering that conclusion?”

Receiving no response, on Tuesday, April 19, your secretary/treasurer sent by facsimile machine a letter to the office of the chairman of the CFTC, Tim Massad, reading: “As I am unable to get any acknowledgement from your commission’s press office, could you answer my questions here? Does the commission have any reaction to Deutsche Bank’s admission to manipulating the gold and silver markets, as reported by various news organizations last week? Is the commission responding to Deutsche Bank’s admission in any way? As you may recall, some years ago the commission reported that it had investigated the silver market and had found nothing improper. Is the commission reconsidering that conclusion? Thanks for your help.”

Having received no acknowledgment of that letter as well, yesterday – Friday, April 22 – your secretary/treasurer telephoned the CFTC’s press office and within a half hour of leaving a message received a cordial call back from an assistant to the director. He said he was unaware of the Deutsche Bank story and could find no reference to it in the commission’s compendium of news reports of interest to the commission’s work.

Your secretary/treasurer conceded that the story is being largely suppressed by Western financial news organizations and sent him the links to the Reuters and Bloomberg stories as well as a link to the original complaint in the class-action lawsuit. He said he would consult his superiors and hoped to reply to me next week.

Of course all this gives the impression that the CFTC not only doesn’t know what’s going on in its jurisdiction but also that it doesn’t want to know. It is additional evidence that certain commodity market rigging is outside the commission’s concern because the U.S. government and other governments are the actual perpetrators, surreptitious market rigging by the government being specifically authorized by the Gold Exchange Act of 1934 as amended in the 1970s –

https://www.treasury.gov/resource-center/international/ESF/Pages/esf-ind…

— and because of the admission in recent official filings by CME Group, operator of the major U.S. futures exchanges, that it provides volume trading discounts to governments and central banks for surreptitiously trading all futures contracts on its exchanges:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

All this also seems to confirm that the prerequisites of this market rigging are the cowardice of the monetary metals mining industry, which refuses to protest it, and the cowardice of mainstream financial news organizations, which refuse to report it.

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

 

 

 

END

 

Bill Holter’s interview with X22 report! my latest interview with X-22 Report This Is The End Days Of The Current Economic System And We Might Not Reach October: Bill Holter end Bill Holter’s commentary tonight is entitled: “The chances of a COMEX default … (public article)”

IS GUARANTEED in my opinion!

I would not normally write something like this but it seems I had to.  Last week, Bob Moriarty of 321 Gold wrote a story with the exact same title http://www.321gold.com/editorials/moriarty/moriarty041916.html and came to the conclusion “…is zero”.  He began his article by saying “So anyone telling you Comex is about to default either doesn’t have a clue as to how commodity markets work or they are deliberately lying to you.”

  He then goes on to say “But the chance of a ‘Gold Derivatives Time Bomb,’ is also zero. There is no such thing. And there is no such thing as a ‘Commercial Signal Failure’ or a 400 ounce gold bar made of tungsten.”  Is he serious?  When well over 100 pieces of paper “call” on the one underlying real ounce …there is no chance of failure?  Is he trying to say the commercials can NEVER ever be wrong and forced to cover because they cannot deliver “promised” but non existent gold?  Is he trying to say 400 ounce tungsten bars have not already turned up?  I do want to point out, this is the same man who said a derivatives blowup can never happen.  I think those at Bear Stearns and Lehman Brothers would beg to differ with him!  We already know for a fact, we were only hours away from a total financial meltdown in 2008 were it not for the Fed magically creating $16 trillion.  It is clear to me, since the amount of global derivatives far exceed the underlying assets they represent, true “settlement” or “performance” is a foregone impossibility as the “pie” only gets bigger.  The only question now is “how big is TOO big”?   Let’s look at the numbers and use a little common sense to see “who doesn’t have a clue or is deliberately lying to you”! Currently in the COMEX gold and silver vaults we see there are roughly 17 tons of gold and 32 million ounces of silver “registered” (available for delivery).  This amounts to about $680 million worth of gold and $540 million of silver.  A whopping total of $1.2 billion or less than 1/2 day’s interest on the U.S.  federal debt.  In today’s world of “trillions and quadrillions”, this amounts to pocket change!
I put these registered inventories forth so we can have something to use as a base for comparison.  Looking at silver, there are now 1 billion ounces represented by 200,000 COMEX contracts of various months.  For May alone (which goes first notice day in five days) there are 280 million ounces represented by these paper contracts.  By comparison, the world (excluding Chinese and Russian production) produces 700 million per year.  So, we have a market with a claimed 32 million ounces that “prices” (for now) a market which produces 700 million ounces per year.  This 32 million ounce inventory is the “guarantee” being used or promised to “deliver” on contracts (280 million ounces worth for May and 1 billion ounces in total) whose owners can decide they want delivery.  If you look at other “commodity” markets, there are none as egregious as silver.  Currently open interest represents 140+% of global production.   In other words, the paper market is far larger than the real physical market.  Not so in other commodities where the paper markets are typically 10-15% the size of global production.
Going one step further with this 32 million ounce inventory, we saw a 10 minute span on Thursday morning where 37.5 million ounces of silver were dumped all at once.  The effect of course was nearly a $1 drop in price.  This was done as silver looked to be breaking out pricewise to the upside, the massive dump was used to contain price.  We saw this again on Friday when over 100 million ounces were dumped in just one hour.  In perspective, Thursday’s dump equated to 19 days of total global production…sold in 10 minutes. TakingThursday and Friday’s “70 minutes” together saw the equivalent of 2 1/2 months of global silver production sold.  Again, who actually has this amount of silver and who in their right mind would ever sell it in this fashion to get the absolute worst price possible?  …unless they WANTED the worst price possible?  Taking a brief look at how inept the registered gold inventory is, Shanghai has been importing 30-40 tons per WEEK for several years now.  How many “days” worth of Shanghai imports will COMEX’ 17 tons cover?
The above speaks to the woefully small registered inventories claimed by COMEX.  From a mathematical standpoint, both silver and gold stocks could be wiped out in just one trade.  Bob Moriarty says this does not matter and no default can ever happen because COMEX can settle in paper.  I agree with his statement “COMEX can settle in paper” because it appears they have been doing this for years rather than delivering real metal to all of those standing.  I do no have smoking gun proof of this but just ask yourself the question, WHO would fully fund their account in order to take delivery, wait until the very last days of the delivery period and then just “go away”?  This happens time and time again, I believe it can only be explained by “cash premiums” being offered and paid.  If you have another plausible explanation, I would love to hear it but by “plausible” I mean to say it must include real logic a true economic man would follow.
Now, is “cash settlement” because there is no gold or silver available to deliver … considered a default?  According to Bob Moriarty the answer is “no”.  I would simply ask you this, if COMEX can only settle in cash, then what is it exactly that you are trading?  Of what value is a contract which cannot perform and deliver the product you are “supposedly” trading?  It is for this reason I have said for many years we will end up seeing a two tiered market where there is one price for the paper derivatives of gold and silver …and another (higher) price for the real thing.  In fact, we are already seeing the early stages of this with backwardation particularly in London.
To finish, until recently we were told that ALL markets were rigged EXCEPT for gold and silver.  We were just nutjob conspiracy theorists to think gold and silver markets were rigged.  But now we find out we weren’t nuts after Deutsche Bank admitted guilt and paid a fine for rigging the London fixes.  The fine by the way was not small potatoes, it was $5 BILLION …(or roughly five times the dollar value of what COMEX claims to be able to deliver)!
I assure you Deutsche Bank did not hand over $5 billion out of the goodness of their hearts, nor did they take lightly “pleading guilty” as they will now be sued by the mining industry to the moon and back.  Even more curious was their decision to turn state’s evidence?  I certainly do not have the particulars but I can observe and connect the dots.  The metals markets are acting very differently and the commercials (if COT numbers are to be believed) are extremely short while registered inventories are extremely low.  Financial stresses in Western credit markets are again showing quite similar to 2008. Central banks have already fired interest rate/money supply bazookas …while sovereign treasuries far and wide have destroyed their balance sheets.
Would it be crazy to believe fear capital will flood into the ONLY MONIES ON THE PLANET that have neither counterparty risk nor are anyone else’s liability?  Actually, from a mathematical standpoint, all of this global debt can ONLY be paid back if currencies are debased …which guarantees a flood into gold and silver.  Would it be considered a “default” if the U.S. had to print so many dollars that it took 1 million of them to purchase a cup of coffee?  In the situation where COMEX inventories get cleaned out, isn’t this the same thing as a bank in the old days “running out of gold”?  That was considered default then but Moriarty wants you to believe it is “business as usual” today?  Sorry, I don’t think so!   This has been a “public” article , should you desire to read all of our work, please follow this link to our subscription page

http://www.jsmineset.com/member

Standing watch,

Bill Holter
Holter-Sinclair collaboration

end Bill discusses the above with Greg Hunter

COMEX Default Is Coming Soon-Bill HolterBy Greg Hunter On April 23, 2016 In Market Analysis

By Greg Hunter’s USAWatchdog.com (Special Release)

According to financial writer Bill Holter, we are getting to the end of the gold and silver price suppression game. Holter contends, “Because the inventories are so small, silver and gold registered categories (at COMEX) total about $1.2 billion. That’s nothing in today’s world. That’s less than one day’s interest the U.S. pays on its debt. I don’t see this going for a long time because inventories are so small. . . . This whole suppression game on gold and silver was brought about to protect the reserve currency, the dollar, because gold is a direct competitor with the dollar. If the silver market blows up, and I shouldn’t say if, it’s when the silver market blows up, that’s going to blow the gold market up, and that is basically going to expose the fact the West is a fraud, that the gold and silver markets were a fractional reserve Ponzi scheme. That’s going to blow confidence, and you are going to see derivatives blow up all over the world, and markets will be closed in a couple of days.”

Holter, who is also an expert on gold, goes on to warn, “The world runs on credit, and you going to Walmart or a grocery store each week, the stuff doesn’t appear on shelves, it gets there by several layers of credit. . . . Silver is a teeny tiny domino compared to the whole system, but it will lead to all the dominos coming down. China and Russia know this. It could be two days, two weeks or two months. It could blow before the market opens on Monday morning. You tell me when someone steps up to buy twice as much silver than COMEX can deliver, and that’s it. It is done. This is a seminal moment for the entire Western financial system. . . . It could be any day. The default is coming.”

If criminal bankers would not have conspired to suppress gold for the last several years, what would the price be today? Holter says, “You couldn’t have $5,000 or $10,000 gold and 0% interest rates. I think there would have been a panic into metals (gold and silver) by now because the price suppression has been used to hit people’s emotions. It’s been used to hurt their psyche. I think if they had not dumped all this paper to suppress the price, the pot would have already boiled, and there would have been a run on the banks and a run into the metals.”

So, if the banks would not have criminally suppressed the price of gold, we would already have a gold price that would be thousands of dollars higher than today. Holter says, “Yes, absolutely. Gold is real money that cannot default. That is what this is all about. When the whole system defaults, what’s going to be left standing–gold and silver, real money. They are no one else’s liability.”

Join Greg Hunter as he goes One-on-One with Bill Holter of JSMineset.com.

(There is much, much more in the video interview.)

Video Link

http://usawatchdog.com/comex-default-is-coming-soon-bill- holter/

-END-

A very important commentary from Andrew Maguire.  Basically he is stating correctly that the Chinese SGE  is taking liquidity away from the LBMA  and comex paper game. We have witnessed that the gold price is higher as it enters the Chinese fix.  It is now logical that a Chinese holder of gold can sell say 1 tonne of his hoard of 100 tonnes of gold and then buy a contract in London and NY at lower prices and then wait and take delivery to retrieve his lost 1 tonne.  This arbitrage will break the backs of the west: a must listen to audio.. (courtesy Kingworldnews/Andrew Maguire) Massive’ pressure for gold price reset, Maguire tells KWN

Submitted by cpowell on Fri, 2016-04-22 17:57. Section:

1:56p ET Friday, April 22, 2016

Dear Friend of GATA and Gold:

London metals trader Andrew Maguire says the physical gold market, spurred by China, is steadily taking control of the market from the Western derivatives mongers and “the pressures for a price reset are massive.” An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/whistleblower-andrew-maguire-and-deutsche-banks…

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

 

END

 

The Hong Kong gold exchange is now working with the large Chinese bank, ICBC to launch gold services such as storage, and physical settlement in the free trade zone of Qianhai.

 

(courtesy South China Morning Post.GATA)

Hong Kong’s gold exchange to work with ICBC in launch of Shenzhen services

Submitted by cpowell on Sun, 2016-04-24 14:17. Section:

By Enoch Yiu
South China Morning Post, Hong Kong
Sunday, April 24, 2016

The Hong Kong gold exchange has teamed up with Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.

Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said the exchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold. The service is considered useful for companies using gold to fashion decorative items, as the yellow metal can be stored before being fashioned into jewellery and other gold products at factories in Shenzhen.

The local gold bourse plans to build a HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor, and related offices areas in Qianhai, however the project will take two years before completion, according to Cheung.

“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services,” Cheung said.

“ICBC’s Macau branch also handles gold import and export services. Teaming up with ICBC would connect Hong Kong, Macau, Qianhai and Shenzhen as a gold trading hub,” he added.

The Chinese Gold and Silver Exchange Society partnered with the Shanghai international gold board last year to provide gold trading and custodial services. Twenty-one Hong Kong financial companies are authorised to trade gold in Shanghai.

The proposed Qianhai services is viewed as beneficial to Hongkongers, as it will enable trade in Shanghai and physical settlement in Qianhai. The service is believed to be particularly useful to jewellery manufacturers with operations in Shenzhen. It will also be possible for large dealers to ship their bullion from Shanghai to Qianhai,

“The development of the gold industry will speed up the physical delivery process of gold trading in Hong Kong, Shanghai and Qianhai. Of China’s 3,000 gold-jewellery manufacturers, 70 per cent have factories in Shenzhen, The bonded warehouse in Qianhai, which is next to Shenzhen, would make it much easier for them to access gold when needed,” he said.

Currently, jewellery manufacturers must transport gold from Hong Kong and Shanghai to their factories in Shenzhen, in what can be a lengthy process.

Meanwhile, Hong Kong Exchanges and Clearing is planning to relaunch gold futures trading, according to Chief Executive Charles Li Xiaojia, although a launch date has not been announced.

This comes only a year after the HKEx scrapped its gold contract last year owing to low trading volume.

Cheung said he was not worried about competition from HKEx.

“The Chinese Gold and Silver Exchange has knowledge and experience in trading and settlement of physical gold for 105 years. We have an electronic trading platform and we have the system to deliver physical gold for end users. If you look at the historical record, it shows we can compete with rivals,” he said.

* * *

end

 

Zero hedge comments on the above story:

(courtesy zero hedge)

 

 

 

Hong Kong Is Building The Biggest Gold Vault And Trading Hub In The World

Less than a week after the official launch of the Chinese Yuan-denominated gold fix on the Shanghai Gold Exchange, a historic move which represents an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market” and which will gradually transform the market of paper gold trading, in the process shifting the global trading hub from west to east, overnight Hong Kong’s Chinese Gold and Silver Exchange (CGSE) Society revealed plans to do something comparable for physical gold when it announced plans for what may end up being the biggest gold vault in the world.

As reported initially by SCMP, the Hong Kong gold exchange has teamed up with the world’s biggest bank by both assets and market cap, China’s Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.

Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said theexchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold.

A 2011 file photo of honorary permanent president Haywood Cheung Tak-hay
of the Chinese Gold & Silver Exchange Society (centre) while conducting duties
as then president. Photo: Edward Wong

The plan is to replace this temporary facility with a massive, HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor and related offices areas in Qianhai: that would make it among the largest if not the biggest gold vault and trading hub in the world. The project will take two years before completion, according to Cheung.

“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services.” It also appears to have an acute interest in the yellow metal.

Cited by SCMP, Cheung said that “ICBC’s Macau branch also handles gold import and export services. Teaming up with ICBC would connect Hong Kong, Macau, Qianhai and Shenzhen as a gold trading hub,” he added.

The new “hub” would capture not only the paper but physical trading as well – as gold storage across – in the wealthiest Pacific Rim countries where the world’s biggest demand for gold is currently to be found.

The Chinese Gold and Silver Exchange Society partnered with the Shanghai international gold board last year to provide gold trading and custodial services. Twenty-one Hong Kong financial companies are authorised to trade gold in Shanghai.

The official reason behind the proposed Qianhai facility is to benefit Hongkongers, as it will enable trade in Shanghai and physical settlement in Qianhai. The service is believed to be particularly useful to jewellery manufacturers with operations in Shenzhen. It will also be possible for large dealers to ship their bullion from Shanghai to Qianhai.

“The development of the gold industry will speed up the physical delivery process of gold trading in Hong Kong, Shanghai and Qianhai. Of China’s 3,000 gold-jewellery manufacturers, 70 per cent have factories in Shenzhen, The bonded warehouse in Qianhai, which is next to Shenzhen, would make it much easier for them to access gold when needed,” he said.

Currently, jewellery manufacturers must transport gold from Hong Kong and Shanghai to their factories in Shenzhen, in what can be a lengthy process.

The new facility will also allow China’s uber wealthy, should they decide they no longer feel “comfortable” storing their millions of gold in Shanghai, to gradually shift it to Hong Kong.

At the same, SCMP reports that the Hong Kong Exchanges and Clearing, which scrapped its gold contract last year owing to low trading volume, is planning to relaunch gold futures trading, according to Chief Executive Charles Li Xiaojia, although a launch date has not been announced.

Cheung said he was not worried about competition from HKEx.

It remans to be seen how successful the new hub will be or whether it will even be completed as scheduled, however one thing is increasingly clear: as the rest of the (developed) world is increasingly exiting the gold trading, bonding, custody and vaulting business, the interest in China, already the world’s largest importer of gold, has never been higher. One still wonders how long before China’s serial bubble obsession, which moved from housing, to stocks, to bonds, to commodities and back to housing all in under two years, resets its attention on gold – the same gold which with the help of soaring Chinese demand in mid-2011 saw the price of the yellow metal soar to all time highs just shy of $2000.

Gold Eagles from the USA mint triple from last yr due to the continued financial market deterioration

(courtesy Steve St Angelo/SRSRocco Report)

Continued Financial Market Deterioration Impacts Gold Eagle Sales In A Big Way

By: SRSrocco Report

The financial system is sitting on the edge of a cliff and an increasing number of investors are beginning to realize it.  I hear more and more evidence from contacts in the financial and precious metal industry that the U.S. banking industry and Dollar are in serious trouble.

While some of individuals believe that the Fed and U.S. Government will continue rigging the markets for the next decade or more, I believe we will witness a financial dislocation or black swan event within the next year.

As I have stated in several interviews, I sold my business and left the big city and moved to the country back in the beginning of 2007.   I knew the mortgage industry and economy were going to collapse.  What I didn’t know was the degree to which the Fed and Central banks could prop up the market.

It has been eight years now and the silver bullets have run out.  While the Fed and Central Banks will continue to rig the markets as best they can, the amount of debt overhanging the market has become unsustainable.  As Central banks push interest rates negative, it just motivates more investors to get into gold and silver.

Last week there were several emergency Fed meetings followed by China’s launching of its new gold yuan benchmark this Tuesday.   Also, according to Global Research News:

China has reportedly decided ”there can be no conversion of gold-backed Yuan to or from US dollars.”  What China fears is that many countries around the world will want to trade their reserve US dollars  for the new Yuan, leaving China with mountains of worthless US dollars.  China already has several trillion in US dollar reserves and does not want or need more.

If the news reports that China will not allow a conversion of its new gold-backed Yuan to or from U.S. Dollars, this is indeed serious trouble for the United States Empire.  Which is the very reason I believe there were emergency Fed meetings last week.  Even though there hasn’t been any major impact via the mainstream media, the ramifications are likely to become public in due time.

Gold Eagle Sales Surge 3 Times Higher In April

The telltale sign that something isn’t right in the financial industry is a surge in Gold Eagle sales.  Last year, total Gold Eagle sales for April equaled 29,500 oz.  However, in just the first three weeks of April this year, Gold Eagle sales have reached 87,500.  This is three times last years figures and we still have another week remaining in the month:

We can see in the chart above, the weekly sales in the second (33,000 oz) and third week (34,000 oz) of April surpassed the total for the month last year.  Furthermore, April’s sales so far of 87,500 oz are nearly two-and-a-half times the 38,000 oz sold last month.

Now, if we compare total Gold Eagle sales for 2016 versus the same period last year, we have the following result:

The U.S. Mint’s Gold Eagle (JAN-APR) sales are 90% higher at 333,000 oz compared to the same period last year of 175,500 oz.  If demand for Gold Eagles continues to remain strong for the remainder of the year, we could see total sales exceed 1 million oz.   This figure hasn’t been seen since 2011 when total Gold Eagle sales reached 1 million oz.

Here are the following annual Gold Eagle Sales totals (troy oz):

2007 = 198,500

2008 = 865,500

2009 = 1,435,000

2010 = 1,220,500

2011 = 1,000,000

2012 = 753,000

2013 = 856,500

2014 =524,500

2015 = 801,500

2016 Ytd = 333,000

With the Chinese recent launch of their new gold-backed Yuan, the days of U.S. Dollar hegemony are numbered.  When the world starts dumping U.S. Treasuries and Dollars, investors better make sure they have already own physical gold and silver.

-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 6.4927 / Shanghai bourse  CLOSED DOWN 12.28  OR 0.41% / HANG SANG CLOSED DOWN 162.60 OR 0.76% 

2 Nikkei closed DOWN 133.19 or 0.76%%/USA: YEN RISES TO 111.09

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 94.88/Euro UP to 1.1254

3b Japan 10 year bond yield: RISES   TO -.065%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.09

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  43.32  and Brent: 44.78

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.

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 andDOWN 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 0.219%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 10.11%/: 

3j Greek 10 year bond yield FALL to  : 8.60%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1233.90/silver $16.88 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 47 /100 in  roubles/dollar) 66.06

3m oil into the 43 dollar handle for WTI and 44 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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 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 .9745 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0968 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .219%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

The bank withdrawals were causing massive hardship to the Gre