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Updated: 5 hours 5 min ago

Feb 23/Gold rises on Mnuchin indecision/Silver breaks out of the 18.00 dollar stranglehold/Open interest in silver climbs close to 215,000 contracts (1.07 billion oz) despite yesterday’s drop/the volume at the comex exceeds 150,000 contracts which is...

Thu, 02/23/2017 - 13:34

Gold at (1:30 am est) $1247.00 UP $15.00

silver was : $18.14:  UP 20 CENTS

Access market prices:

Gold: $1249.50

Silver: $18.18

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 23/17 (10:15 pm est last night): $  1245.85

NY ACCESS PRICE: $1236.70 (AT THE EXACT SAME TIME)/premium $9.15

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Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1246.85

NY ACCESS PRICE: $1236.70 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  10.15

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 23/2017: 5:30 am est:  $1237.35   (NY: same time:  $1238.05   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 23.2017: 10 am est:  $1247.90(NY same time: $1248.30 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  5 NOTICE(S) FOR 500 OZ.  TOTAL NOTICES SO FAR: 5320 FOR 532,000 OZ    (16.547 TONNES)

For silver:

 

For silver: FEBRUARY

120 NOTICES FILED FOR 600,000 OZ/

TOTAL NO OF NOTICES FILED: 585 FOR 2,925,000 OZ

This is options expiry week for both the silver and gold contracts.  First day notice is this Tuesday, Feb 28.2017.  Options will expire on the comex tonight and on the OTC market in London, early Tuesday morning.  For the first time comex has silver in backwardation February/March by 2 cents.  The open interest on the silver comex is now over 1 billion oz and no doubt that the London OTC is multiples of that. We will be watching this week with open eyes.

The gold/silver equity shares performed terribly today against the huge runnup in the physical price.  Expect a big raid tomorrow.

 

 

Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 6182 contracts UP to 214,329 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.072 BILLION TO BE EXACT or 153% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 24 NOTICE(S) FOR 2400 OZ

In gold, the total comex gold ROSE BY 2441 contracts DESPITE THE FALL IN  THE PRICE GOLD ($5.50 with YESTERDAY’S trading ).The total gold OI stands at 429,609 contracts

we had 5 notice(s) filed upon for 500 oz of gold.

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

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV:

THE SLV Inventory rests at: 335.281 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by A WHOPPING 6182 contracts UP to 214,329 DESPITE THE FACT THAT SILVER WAS DOWN 5 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 2,441 contracts UP to 429,609 WITH THE FALL IN THE PRICE OF GOLD OF $5.50  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 9.84 POINTS OR .30%/ /Hang Sang CLOSED DOWN 87.10 POINTS OR 0.36% . The Nikkei closed DOWN 8.41 POINTS OR 0.04% /Australia’s all ordinaires  CLOSED DOWN 0.30%/Chinese yuan (ONSHORE) closed UP at 6.8753/Oil ROSE to 54.48 dollars per barrel for WTI and 56.81 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8566 yuan to the dollar vs 6.8780  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

North Korea lashes out at both China and Malaysia as they now anticipate that China will orchestrate a regime change in the failed state

(courtesy zero hedge)

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

Taiwan joins the global war on cash as they plan to ban purchases of houses cars and jewelry with cash

( zero hedge)

4. EUROPEAN AFFAIRS

A centrist alliance caused French yields to tumble as a risk of a LePen victory falls:

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

Sweden

This is what happens when you have negative interest rates.  In order  not to be dinged with a .75% tax on deposits at the bank, citizens decide to overpay their taxes.  Sweden must repay over 3.2 billion dollars equivalent back to its citizens for overpayment

(courtesy Mish Shedlock/Mishtalk)

7. OIL ISSUES

i)Exxon cuts its reserves by a record 3.3 billion barrels of oil as the low price finally forced the company to act..and guess what the stock goes up

( zero hedge)

ii)The DOE reports today a huge inventory gain with production topping 9 million barrels. This caused oil to slide agai

( zero hedge)

iii)Gasoline demand is faltering equal to 460 kb/day or 5%.  This decline has not occurred since the turn of the century. It sure tells us that we are in a recession

( zero hedge)

 

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)China now prepares its citizens that it will not bail them out when things go south

( GATA/Bloomberg)

ii)I highlighted this to you yesterday but it is worth repeating

( Craig Hemke/TFMetals/GATA

iii)The LME cuts a deal with banks to help propel gold future contracts

(Hobson/Reuters/GATA)

iv)Bitcoin joins gold as it is up 10 days in a row and now a record highs: $1153.00 and closing in on gold.

( zero hedge)

v)So much for the economy improving…Copper is getting clobbered

(courtesy zero hedge)

10.USA STORIES

i)More contradictions as Mnuchin in an interview expresses his praise for a strong dollar:

( zero hedge)

ii)Mnuchin is interviewed by CNBC and again fails to disclose the Trump tax plan:and more confusion as to what they are going to do!

( zero hedge)

iii)Gold is the big winner as the dollar retreats on the Mnuchin confusion

( zero hedge)

iv)As David Stockman warned us;  Infrastructure stocks are belted today on a report that Trump may (will) delay the infrastructure bill until 2018)

( zero hedge)

v)The all important Fed’s National activity index drops in January.  It draws on 85 economic indicators:

( zero hedge)

vi)It now looks like Dallas taxpayers are going to bailout the deficient Dallas Police and Firefighter Pension fund

( zerohedge)

vii)It looks like Bannon is out of the National Security Council and McMaster is in.It sure looks like the Trump administration is in turmoil;’

(courtesy zero hedge)

viii)O’Keefe delivers the undercover footage of CNN trying to manipulate data

( zero hedge)

ix)The border tax is back on and that caused retailers to tumble. Intersetingly the dollar did not rally when this was announced:

( zero hedge)

xii)Trump reverses another Obama gem:  private prisons are back in!

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY 2441 CONTRACTS UP to an OI level of 429,609 DESPITE THE FALL IN THE  PRICE OF GOLD ( $5.50 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 32 contracts DOWN to 730.   We had 24 notice(s) served upon yesterday and therefore we LOST 8 contracts or an additional 800 oz will NOT stand for delivery and  IT LOOKS LIKE THE CASH SETTLEMENTS HAVE RESUMED FOR A FIAT PROFIT . The next non active contract month of March saw it’s OI FALL by 157 contracts DOWN TO 1459. The next big active month is April and here the OI ROSE by 1335 contracts UP to 278,295.

We had 5 notice(s) filed upon today for 500 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx  And now for the wild silver comex results.  Total silver OI ROSE by 6182 contracts FROM 208,147 UP to 214,329  AS THE PRICE OF SILVER FELL TO THE TUNE OF 5 CENTS with respect to YESTERDAY’S trading.  We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540). The closing price of silver that day: $20.44

The  active month of February saw the OI FALL BY 52  contract(s) DOWN TO 121.  We had 52 notice(s) served YESTERDAY so we NEITHER LOST NOR GAINED ANY SILVER OUNCES STANDING IN THIS DELIVERY MONTH OF FEBRUARY.

The next big active delivery month is March and here the OI decrease by 5116 contracts down to 45,361 contracts WITH 4 TRADING DAYS LEFT BEFORE FIRST DAY NOTICE. For comparison purposes last year on the same date only 33,887 contracts were standing.(WITH 4 TRADING DAYS TO GO BEFORE FIRST DAY NOTICE)

We had 120 notice(s) filed for 600,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 258,825  contracts which is VERY GOOD.

Yesterday’s confirmed volume was 209,293 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 23/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   257.20 OZ Manfra Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz  32,150.000 oz Scotia No of oz served (contracts) today   5 notice(s) 500 oz No of oz to be served (notices) 725 contracts 72,500 oz Total monthly oz gold served (contracts) so far this month 5320 notices 532,000 oz 16.547 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  319,2088.4   oz Today we HAD 2 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1  customer deposit(s): i) Into Scotia: 32,150.00 (1,000 kilobars) DUBIOUS!! total customer deposits; 32,150.00 oz We had 1 customer withdrawal(s)  i) Out of MANFRA: 257.20 OZ (8 KILOBARS) total customer withdrawal: 257.20 oz We had 0  adjustment(s) For FEBRUARY:

Today, 0 notice(s) were 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 5 contract(s)  of which 2 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5320) x 100 oz or 532,000 oz, to which we add the difference between the open interest for the front month of FEBRUARY (730 contracts) minus the number of notices served upon today (5) x 100 oz per contract equals 604,500 oz, the number of ounces standing in this  active month of FEBRUARY.   Thus the INITIAL standings for gold for the FEBRUARY contract month: No of notices served so far (5320) x 100 oz  or ounces + {(730)OI for the front month  minus the number of  notices served upon today (5) x 100 oz which equals 604,500 oz standing in this non active delivery month of FEBRUARY  (18.802 tonnes)    we LOST 8 contracts or an additional 800 oz will stand in this active delivery month.        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 16.547 tonnes vs 7.9876 at the end of Feb). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.9004 tonnes FEB/ 18.802 tonnes total for the 14 months;  244.797 tonnes average 17.485 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,910.287.228 or 277.147 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 277.147 tonnes for a  loss of 26  tonnes over that period.  Since August 8/2016 we have lost 77 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 6 MONTHS  77 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE JANUARY DELIVERY MONTH FEBRUARY INITIAL standings  feb 23. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 20,389.740 0z  HSBC Deposits to the Dealer Inventory 598,391.740 oz Brinks Deposits to the Customer Inventory   977.20 oz Delaware No of oz served today (contracts) 120 CONTRACT(S) (600,000 OZ) No of oz to be served (notices) 121 contracts (605,000  oz) Total monthly oz silver served (contracts) 585 contracts (2,925,000 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   6,703,736.7 oz today, we had  1 deposit(s) into the dealer account:  i) Into Brinks:  598,391.700 oz total dealer deposit: 598,391.700 oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 1 customer withdrawal(s): i) Out of HSBC:  20,389.740 oz TOTAL CUSTOMER WITHDRAWALS: 20,389.740 oz  we had 1 customer deposit(s): i) Into Delaware: 977.20 oz ***deposits into JPMorgan have now stopped. total customer deposits;  977.20  oz    we had 0  adjustment(s) The total number of notices filed today for the FEBRUARY. contract month is represented by 120 contract(s) for 600,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at 585 x 5,000 oz  = 2,925,000 oz to which we add the difference between the open interest for the front month of feb (121) and the number of notices served upon today (120) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the FEBRUARY contract month:  585(notices served so far)x 5000 oz  + OI for front month of FEB.( 173 ) -number of notices served upon today (120)x 5000 oz  equals  2,930,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver.  We neither gained nor lost any silver ounces (contracts) standing in this delivery month of February.  At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory. END Volumes: for silver comex Today the estimated volume was 150,348 which is gigantic!!! FRIDAY’S  confirmed volume was 110,444 contracts  which is totally unbelievable. To give you an idea of volume today’s confirmed volume::  150,348 contracts equates to 751 million oz or 107% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA   Total dealer silver:  31.238 million (close to record low inventory   Total number of dealer and customer silver:   184.045 million oz The total open interest on silver is NOW CLOSER TO   its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

FEB 23/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 22/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Feb 23/2017/ Inventory rests tonight at 841.17 tonnes *IN LAST 96 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 43 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory FEB 23/no changes in inventory at the SLV/Inventory rests at 335.281 million oz FEB 22/no changes in inventory at SLV/inventory rests at 335.281 million oz FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 9/no changes in silver Inventory rests at 334.713 million oz feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/ Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/ . Feb 23.2017: Inventory 335.281  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.1 percent to NAV usa funds and Negative 8.4% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.2% Percentage of fund in silver:39.6% cash .+0.2%( feb 23/2017)  . 2. Sprott silver fund (PSLV): Premium rises  to -.20%!!!! NAV (Feb 23/2017)  3. Sprott gold fund (PHYS): premium to NAV rises TO – 0.26% to NAV  ( feb 23/2017) Note: Sprott silver trust back  into NEGATIVE territory at -0.20% /Sprott physical gold trust is back into NEGATIVE territory at -0.26%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

The Oscars – Worth Their Weight in Gold? By davidrussell February 23, 2017 0 Comments

The Oscars – Worth Their Weight in Gold?

  • 89th Oscars to air this weekend
  • Oscars have been dipped in 24 karat gold since 1929
  • If the Oscars were made of solid gold they would weigh 330 ounces
  • 330 ounces of gold is worth $408,210 at today’s prices (nearly €400k & £330k)
  • Oscars cannot be sold, making them a tricky investment piece
  • Steven Spielberg keeps his gold Oscar with the Academy for ‘safe-keeping’
  • Shows importance of owning gold in safest ways
  • Price of gold has climbed from $20.67 since the first Oscars ceremony to over $1,237 today

‘We All Dream In Gold’ read the strap line for last year’s Academy Awards. This is no doubt still the case for the nominees of the 24 awards set to be given out at this Sunday’s 89th Oscars.

Since the first awards in 1929 nearly 3,000 oscar statues have been awarded to the lucky darlings of the film industry. After the teary speeches, after-parties and press junkets following their win, what is left for those who have achieved the highest-level of recognition in the film industry?

Winning an Oscar is an expensive business, studios spend millions trying to get their hands on at least one, each year. But film and celebrity is a fickle trade and few people can remember who received Oscars last year, let alone when they were first launched in 1929.

How much value do they really bring?

As we all dream in gold, we’ve spent some time thinking about the golden Oscars, asking just how golden they are and how they hold up when compared to gold itself.

What is an Oscar?

Designed by George Stanley, the Oscar (rumours abound why it is has that nickname) shows a knight standing with a reel of film, clutching his sword. There are five spokes on the base, one representing the branches of the Academy: Actors, directors, producers, writers and technicians.

Fun fact, whilst the Oscars have been going on since 1929 and seemingly little has changed in regard to the appearance of the statue, the mould currently used was only created last year.

The Academy wanted a version of the statue that was closer to the original 1929 design. A 3D printer created the version that is used today and provides the trophies with their more authentic look.

The awards weigh around 8 and a half pounds, and are made from Britannia metal or Britannium and plated in copper, nickel silver, and on the top layer is 24-karat gold. Excluding three years during the Second World War, the statue has always been dipped in gold. So when the Academy says that we all dream in gold, they’re not wrong when it comes to the Oscars.

Worth its weight in gold?

As mentioned above, the gold on the Oscar is the icing on the cake, a cake which is made up of a few layers and alloys. However there is very little gold when it comes to the actual Oscar, in fact just 0.38 microns (one-two hundredth of the thickness of a human hair).

This year’s statues are rumoured to have a monetary worth of $629 each, demonstrating just how little gold Oscar is wearing.


This isn’t to say the Academy Award trophies aren’t worth anything.

Since the first ceremony in 1929, the price of gold has climbed from $20.67 to $1,237 today. Just the gold alone, in those 13.5 inch statues have climbed by nearly 60 times in price.

It is a classic example of how the dollar has devalued over the years – the dollar has devalued and has lost 98% of its value against gold in those 88 years.

But what if Hollywood had really wanted to show its stars how much they valued them? What if the dreams of gold really came true and the Oscar was made of solid gold?

At 8.7 lb, the statue in its current form is equivalent to 126.9 troy ounces but this weight has been taken on from the fact that the statue is made up of Britannia metal. Britannia metal is an alloy consisting of approximately 92% tin, 6% antimony and 2% copper.

Assuming that we are working with 24 karat gold with a density of 19.282 g/cm3, then research tells us that the cubic centimetres of this much tin is around 531.25, and it would take nearly 22.6 pounds of gold to fill it. This means a solid gold Oscar would weigh around 330 troy ounces and at today’s price would be worth around $408,210. A significant uptick from last year’s which were worth around $382,000.

Had actors and actresses received solid gold Oscars nearly 30 years ago, in 1991, then they would have seen a climb in value of over 3 times over. Not bad for a few months’ work on a film and not a bad return on any investment.

Regardless of whether or not someone remembers who won and what for, the solid gold Oscar wouldn’t care. The gold would act as a timeless store of value and insurance, no matter what the public and critics think of you and your film in the years ahead.

You can sell your gold but not your Oscar

Some of you might be arguing that the Oscars bring so much more than just a piece of gold, and the kudos that comes with them is priceless. If you were to sell an Oscar, you might argue, then you would get far more thanks to the kudos that comes with it being ‘an Oscar.’

Some trophies from the pre-1950s era have been sold and have done very well. David Copperfield bought Michael Curtiz’s 1942 Oscar for Casablanca, in 2003 for $299,000 later selling it for over $2 million. The 1939 Oscar for Gone With the Wind was estimated to sell for $300,000 in 1999 but was bought at a far higher price of $1.54 million.

You could take a leaf out of Steven Spielberg’s book. The ET director and one of the most successful directors of all time has previously bought two 1950s Oscars and rather than kept them in his cloakroom (as many seem to do) he has handed them both over to the Academy ‘for safekeeping’.

This is a similar approach taken by many who invest in the most precious of metal – gold. Gold investors often use storage facilities provided by the likes of GoldCore in Zurich, Singapore, Hong Kong and elsewhere, in order to maintain the safekeeping of their assets.

But before you start thinking you could go out and invest in an Oscar, it is no longer possible. Unlike investing in gold bars, which are borderless and cannot be controlled by one authority, the Oscars market is restricted. Those who receive Oscars are prevented from selling their awards at market price as since 1950 the trophies have been considered the perpetual property of the Academy.

The ‘Regulations’ section of the oscars.org website reads, ‘Award winners shall not sell or otherwise dispose of the Oscar statuette, nor permit it to be sold or disposed of by operation of law, without first offering to sell it to the Academy for the sum of $1.00. This provision shall apply also to the heirs and assigns of Academy Award winners who may acquire a statuette by gift or bequest.’

The idea is that the honour of winning an Oscar is maintained, were it to be sold then some believe it would be cheapened. This is where a solid gold Oscar would be very different.

The market for gold is affected by economics and the desire to hold gold as a form of insurance, rather than the prestige that comes with owning a piece of something that is gold-plated and was once owned or won by somebody who happened to be famous and or was a great actor.

 Gold does not discriminate, the Oscars do

Few will have missed the furore that surrounds the Academy Awards when it comes to recognition that it shows to ethnic minority groups. The issue has its own hashtag #OscarsSoWhite.

But what few people discuss is the discrimination when it comes to the benefit of winning an Oscar. A 2008 paper by Kevin Sweeney, finds that “an Oscar increases a male winner’s salary by 81% holding all other variables constant.”

But this is not the case for women, Sweeney finds that, “Female winners do not experience this same clear boost in their salaries…women, experience significantly lower salary increases from winning an Academy Award than men. In such cases, winning an Academy Award did not have a statistically significant effect on women’s salaries in the sample.”

As mentioned above, gold does not discriminate when it comes to who you are or when you won, and it certainly doesn’t care what nationality you are.

Gold is a stateless form of money, something that has been bought for generations as a store of value across the globe. The Chinese Aunties don’t care who won an Oscar when it comes to Chinese New Year, parents don’t mind which film won when it comes to buying their daughter’s wedding jewellery in India and central bankers can’t give two hoots about the best costume winner when they are accumulating gold reserves and diversifying their foreign exchange reserves.

These people and everyone who chooses to own gold, know that it will hold its value and act as a form of insurance and money in the months and years to come.

Give the gift of gold

February is the month of love and this year’s Oscars attendees will certainly be feeling it when they get hold of the 2017 Academy Awards’ infamous ‘Everyone Wins’ goody bags. Last year each of the gift bags were worth £232,000 and included (according to Forbes):

‘ a year’s worth of Audi rentals ($45,000), 15-day private tour of Japan ($54,000), VIP all-inclusive trip to Israel ($55,000) and a lifetime’s supply of Lizora skincare products ($31,200).’

This year the bags have even more bizarre, luxury products:
“including a female sex toy, the Nuelle Fiera Arouser for Her, deluxe Swiss toilet paper …” according to the Telegraph.

The swag bags are provided by Distinctive Assets, whose Managing Director said “We are gifting them for the same reason that they are paid upwards of $20 million for a single film…because their personal brand has value as a commodity.”

The commodity that is celebrity is (as we said early on) is very fickle and comes and goes with the tides. Gold, the ultimate commodity and money, is not.

Its shine has not been tarnished over the years and it still sees constant and universal demand.

This year, celebrities are not the only commodities that will be on show. A 14 carat gold and diamond OM bracelet is part of the swag bag. As we wrote earlier this month, gold jewellery is a bad investment when compared to a pure gold bar or sovereign coin. Demand for gold jewellery is falling and the resale price is appalling compared to the initial purchase price. Celebrities would be better served, if they were gifted with a few gold bars or coins which will hold their value, in contrast to a flimsy gold bracelet or bangle.

Who will win Best Picture this year?

Personally, I’m not going gaga over ‘La La Land’ like most people seem to be, so I’m rooting for ‘Arrival’. But sometimes these things come down to personal preference.

Look out for our-post Oscars coverage next week. I’m afraid that doesn’t mean we’ll be giving you an actress-by-actress account of who wore what designer, instead we’ll be looking at the winning pictures and how much gold it takes to win an Oscar.

Interestingly the films nominated for this year’s Best Picture Award are diverse in their costs in terms of gold ounces. We will show you in previous years how much the price of movies has and hasn’t changed when it comes to spend in dollars and gold.

Conclusion

Celebrity, fame and awards all have their worth and they’re good fun for lots of people. In the same way, imagining what holding a solid gold Oscar in our hands would be like is also fun.

Winning an Oscar and being acknowledged for being a great actor would be wonderful. Winning a solid gold Oscar would be even better – a conversation starter and contrary to the Oscar ‘regulations’ in the event of financial crisis and collapse, it could be sold for close to its gold melt or spot value.

When it comes to protecting your life savings, or having essential financial insurance for a rainy day, we just think it’s better to own the good, timeless commodity and currency that are gold coins and bars.

But let’s be honest, most of us are unlikely to win any sort of Oscar – be it one made from base metal or investment grade gold bullion, and so a few gold coins or gold bars are better guarantees of wealth and financial security in the long-run

 

http://www.goldcore.com/us/gold-blog/oscars-worth-weight-gold/

end

China now prepares its citizens that it will not bail them out when things go south

(courtesy GATA/Bloomberg)

China’s $9 trillion moral hazard is now too big to ignore

Submitted by cpowell on Wed, 2017-02-22 15:15. Section:

From Bloomberg News
Wednesday, February 22, 2017

China may be about to embark on its most ambitious — and perilous — campaign to convince investors that they shouldn’t depend on a bailout when markets go south.

In a rare show of cooperation, the nation’s main financial regulators are drafting new rules for asset-management products that aim to make clear the investments don’t have government guarantees, people familiar with the matter told Bloomberg News on Tuesday.

The products, which promise higher returns than bank deposits but are viewed by many investors as a form of risk-free savings, have become an integral part of the Chinese financial system after swelling in recent years to almost $9 trillion as of June 30.

Policy makers face a difficult balancing act. If they fail to dispel the notion of an implicit government guarantee, riskier investments could proliferate and pose an even greater threat to the financial system when China faces its next bout of market turmoil. But if authorities act too forcefully now, they risk triggering a stampede away from products that have become a key funding source for banks. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-02-22/china-s-9-trillion-mo…

 

END

 

I highlighted this to you yesterday but it is worth repeating

(courtesy Craig Hemke/TFMetals/GATA)

Metals Capped Into FOMC Minutes By Turd Ferguson | Wednesday, February 22, 2017 at 11:06 am

An incredible amount of fraudulent, virtual silver is being created in order to cap price and paint the chart. Will JPM and the rest of The Evil Empire be successful once again in capping price and routing the Specs. The reaction to today’s FOMC minutes may help to determine the outcome.

Again, I can’t stress enough the devious and fraudulent nature of this latest attempt to contain and cap price. The past four days have seen the price of Comex Digital Silver pressing up against the key resistance of $18 and the 200-day moving average near $17.93. See below:

Over this same time period, the Comex Silver Banks led by JPM have increased the total supply of Comex silver contracts by 12,809 contracts. So, while price has been flat, total supply of Comex silver contracts has been increased by 6.5%. THIS is how you cap price and paint the chart!

Imagine for a moment where price would be this morning if total open interest was held flat for the past week. How much higher would price be if sellers of existing contracts needed to be found for the 12,809 contracts of buying pressure? On a larger scale, yes the price of Comex Digital Silver is up $2 year-to-date or about 13%, but how much higher would price be if The Banks hadn’t fraudulently added 44,000 new contracts since December 30?

Why do we always describe this as “fraud”? Two primary reasons:

  1. The Banks are selling something that they don’t have. Can you enter into a contract to sell a house or a car if you don’t actually own the house or car you are attempting to sell?
  2. The Banks create this new “silver” from whole cloth without depositing as collateral any additional silver into their Vaults.

Regarding point #2, see below. Note that at the beginning of 2017, total silver within the Comex vaulting structure was 181,903,037 ounces. Total Comex open interest that day was 163,812 contracts. With each contract representing 5,000 ounces of silver, this equates to a virtual exposure of 819,060,000 ounces.

As of last Friday, total open interest had grown to 205,602 contracts or 1,028,010,000 ounces or virtual silver yet the total amount of silver in the Comex vaults was stagnant at 184,088,021 ounces.

So, The Comex Silver Banks have increased the supply of virtual silver by 25% while only increasing the supply of physical silver in the vaults by 2%. This is fraud, this is a scam and this has absolutely ZERO connection to the supply/demand fundamentals of actual physical silver.

And what are The Banks attempting to accomplish in their aggressive efforts to cap price? Two things. First, maintaining price below the 200-day moving average is important in managing future Spec demand for additional Comex paper.

Second and perhaps more important is the chart-painting aspect of keeping price below $18. As you can see on this weekly chart, by capping price here, JPM et al are effectively attempting to paint a massive head-and-shoulder top onto the weekly chart.

So, once again, you must be alert and cautious here. The forces aligned against you in the Comex silver “market” are powerful and these criminals are doing everything in their collective power to rig price in their favor. Will they be successful (again)? That will depend upon a number of factors going forward. For today, at least, you’d be wise to not underestimate the collusive power of The Banks and the fraudulent nature of their paper derivative pricing scheme.

TF

END

The LME cuts a deal with banks to help propel gold future contracts

(Hobson/Reuters/GATA)

London Metal Exchange cuts deal with banks to propel gold futures

Submitted by cpowell on Thu, 2017-02-23 12:45. Section:

By Peter Hobson
Reuters
Thursday, February 23, 2017

LONDON — The London Metal Exchange has reached a 50:50 revenue-sharing deal with a company founded by a group of banks to promote trade in its new gold futures contracts, sources said, aiming to overcome market scepticism surrounding their launch in June.

Usually, exchanges merely consult potential users about their needs when planning new financial and commodity contracts. But in this case the LME has opted for a radical departure from normal practice as it tries to grab a piece of London’s $5 trillion-a-year gold market.

Sources close to the matter told Reuters that the five banks and a proprietary trader that are shareholders in the new company have undertaken to bring guaranteed minimum levels of trade in the gold futures.

Should they meet these levels, the project partners will receive a half share of the revenue under an incentive scheme designed to ensure the contracts have turnover, viability, and credibility from the outset.

“We’re all committed to market-making and will at least bring our own trading book,” said a source at one of the banks involved in the project. “It’ll come with some built-in volume.” …

… For the remainder of the report:

http://www.reuters.com/article/us-lme-precious-idUSKBN1620KW

 

END

 

John Embry notes that the boys are having great difficulty keeping silver below 18 dollars.

(courtesy Kingworldnews/John Embry)

Embry notes desperation to keep silver below $18 Submitted by cpowell on Thu, 2017-02-23 18:57. Section:

1:59p ET Thursday, February 23, 2017

Dear Friend of GATA and Gold:

Interviewed by King World News today, Sprott Asset Management’s John Embry notes the ever-more obvious and desperate efforts by bullion banks and central banks to keep silver below $18. Embry thinks silver is the most undervalued asset. He also reflects on his recent visit to Argentina. The interview is excerpted at KWN here:

http://kingworldnews.com/we-are-headed-for-something-disastrous-on-this-…

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

 

end

 

Bitcoin joins gold as it is up 10 days in a row and now a record highs: $1153.00 and closing in on gold.

(courtesy zero hedge)

 

Bitcoin Up 10 Days In A Row – Surges To Record High

As the dollar drops, and fears over US trade action may exaggerate capital outflows in China, Bitcoin has renewed its rally post-Golden Week to new record highs. The virtual currency is up 10 days in a row as we noted previously that the Chinese have discovered a workaround for the PBOC’s crackdown on Bitcoin exchanges.

Record highs in USD terms… (not yet record highs in Yuan terms)

As we noted previously, China’s central bank has stepped up oversight of bitcoin exchanges this year, leading major trading platforms to impose halts on withdrawals and other checks to appease the regulator. But, as Quartz reports, Chinese traders aren’t playing along—they are apparently flocking to peer-to-peer marketplaces to continue buying and selling bitcoin.

As Yuan trading on bitcoin exchanges has plummeted…

Quartz notes that one of the longest established peer-to-peer marketplaces is LocalBitcoins, which acts as a kind of directory for buyers and sellers to find each other. Users can arrange to meet in person, on chat platforms, or talk on the phone to arrange exchanges involving bitcoin.

Yuan volumes on the marketplace have exploded in the past week. Trading on LocalBitcoins currently accounts for about 6% of the total trading volume in yuan, according to data source Crypto Compare.

And Bitcoin prices have practically erased all of the Chinese crackdown losses…

It seems the Chinese will not be stopped in their effort to get capital out of the country – even as the PBOC spends billions propping up the currency in the short-term to create the illusion of stability.

 

end

 

So much for the economy improving…Copper is getting clobbered

(courtesy zero hedge)

Doctor Copper’s Getting Clubbed

When Copper was soaring (2 weeks ago) it ‘proved’ that China’s debt binge had worked and that Trumpian reflation was going to secure global economic growth going forward. Now that Dr.Copper is collapsing – we are not hearing so much about the industrial metal’s economic forecasting prowess…

Supply concerns, strikes, and demand hope…?

 

end

 

The Royal Mint in England off to a huge start in 2017:

(courtesy Joe O’Donnell/Coinworld)

Why the Royal Mint’s bullion sales were up big in January 2017

A combination of increased demand and increased emphasis has led to the rise

By Joe O’Donnell , Coin World
Published : 02/22/17

The Royal Mint’s 2017 Year of the Rooster lunar bullion coin is one of its several precious metals investment options.
Image courtesy of Royal Mint

Britain’s Royal Mint was striking 50 percent more gold bullion coins and bars as of Feb. 1, 2017, than it was one year earlier, following January 2017 bullion sales that were up 30 percent, according to a Feb. 1 Reuters report.

The increase in production and sales for the Royal Mint should probably be no surprise, considering the 2016 political turmoil in the nation, which peaked in July when voters supported a referendum to leave the European Union.

The so-called Brexit vote, in fact, caused a worldwide spike in gold and silver prices.

The unexpected election of U.S. President Donald Trump was followed by rising gold and silver prices, as well, as the world waits to see what economic effects his policies will have.

http://www.coinworld.com/news/precious- metals/2017/02/price-of-gold-donald-trump-economy-precious- metals-investing.all.htmlThe price of gold usually falls when the stock market is strong, but not in 2017: A popular meme since the political rise of Trump is that “the old rules don’t apply anymore.” That apparently is true of precious metals investing, too.

And while nobody is supposed to enjoy “turmoil,” there’s no denying that it benefits, at least in the short term, the companies selling gold and silver bullion.

The Royal Mint has been pushing its bullion business for years

The political turmoil causing investors to look toward precious metals occurs at the same time as the Royal Mint promotes its bullion business, seeking a larger share of the market.

In 2014, the mint introduced its own online precious metal trading website, which enables customers to buy, store and sell bullion coins at constantly updated live prices directly from the Royal Mint 24 hours a day, 365 days a year.

The Royal Mint began issuing a series of lunar bullion coins in 2014 with the Year of the Horse bullion coins, followed by Sheep and Monkey bullion coins in 2015 and 2016, respectively, and Year of the Rooster bullion coins for 2017.

Last year, the Royal Mint introduced a new bullion coin program, The Queen’s Beasts, a 10- design series that began in March 2016 with an issue honoring the lion of England, followed by a griffin coin in November 2016 .

The new coins join the ranks of the gold sovereign and Britannia gold and silver pieces in the Royal Mint’s bullion coin repertoire. Also available are the Royal Mint Refinery range of gold and silver bars, a program that began in 2015.

To boot, the Royal Mint announced in December 2016 that it is partnering with CME Group to “build and launch a digitized gold offering called Royal Mint Gold” utilizing blockchain technology, and that it is working with the World Platinum Investment Council to issue platinum bullion products in 2017.

The Reuters report reads, “While in global terms the Mint is still small — its total gold sales of 237,000 ounces last year were dwarfed by the U.S. Mint’s 1.2 million ounces of gold Eagle and Buffalo coin sales, the Austrian Mint’s 534,000 ounces of gold Philharmonic coin sales, and the Perth Mint’s 520,000 ounces of gold sales — its bullion unit expanded both revenue and profit by two-thirds last year.

“It is forecasting similar growth this year, through expansion in its already core U.S. and German markets, and elsewhere.”

Why people invest in gold and silver

Investing in gold and silver has historically been viewed as a hedge against the unpredictability of the overall economy, and in turn, a safe haven when other markets experience a downturn, like the one that followed the Brexit vote.

Gold is valuable. That is based on the fact that we know there’s not a lot of it, and we know it is appealing to people. So while the health of someone’s investments in the stock market is subject to the performance of the companies invested in, gold is a known commodity with a value that, while it does fluctuate over time as we’ll explain later, generally does not fluctuate with the suddenness that a company’s stock can.

While still a hard asset that can serve as a hedge, silver is much less valuable than gold (as of 9:32 a.m. Feb. 22, one ounce of silver was valued at $17.96, while one ounce of gold was valued at $1,237.20) and its price is more prone to relatively large swings in the percentage of its value, up and down.

http://www.coinworld.com/news/precious- metals/2017/02/royal-mint-gold-silver-bullion-coin-sales- increase-brexit-donald-trump.all.html#

-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 STRONGER AT  6.8753(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8566 / Shanghai bourse DOWN 9.84 POINTS OR .30%   / HANG SANG CLOSED DOWN 87.10 POINTS OR 0.36% 

2. Nikkei closed DOWN 8.41 POINTS OR 0.04%   /USA: YEN FALLS TO 112.83

3. Europe stocks opened ALL MIXED     ( /USA dollar index FALLS TO  101.14/Euro UP to 1.0569

3b Japan 10 year bond yield: RISES TO    +.084%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.83/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.48  and Brent: 56.81

3f Gold UP/Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 10yr bund RISES TO  +.261%/Italian 10 yr bond yield UP  to 2.218%    

3j Greek 10 year bond yield RISES to  : 7.32%   

3k Gold at $1246.50/silver $18.12(8:15 am est)   SILVER CLOSE TO RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 23/100 in  roubles/dollar) 57.75-

3m oil into the 54 dollar handle for WTI and 56 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.83 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0088 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0662 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.261%

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

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

4. USA 10 year treasury bond at 2.395% early this morning. Thirty year rate  at 3.026% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Futures Flat, Global Stocks Near Record High After Minutes Fail To Spark Dollar Rally

One day after the FOMC Minutes guided to a rate hike “fairly soon”, but not soon enough in the eyes of the market (March hike odds dropped after the release), the dollar has posted minimal gains, while global stocks held near record highs on Thursday; S&P futures were fractionally in the green to start the session; crude climbed back above $54 after API showed U.S. stockpiles fell. US and euro zone government bond yields fell or held steady as concerns of an imminent rate hike faded.

The rally that has taken the value of global equities to over $70 trillion and the MSCI All-Country World Index to a record, appears to again be losing momentum as investors grapple with political uncertainty and the Fed’s schedule for lifting borrowing costs. The minutes showed many Fed policymakers said it may be appropriate to raise rates “fairly soon” if jobs and inflation data met expectations. But they also highlighted deep uncertainty over President Donald Trump’s economic program and wrestled with uncertainty on issues ranging from the Trump administration’s fiscal stimulus plans to the headwinds a rising dollar may pose.

Stocks in Europe were mixed in early trading before rising led by telecommunications companies, following solid earnings from Telefonica SA. Bank stocks were stronger on the back of solid earnings from Barclalsy whose profit before tax of £3.2bn for 2016, rose threefold from the £1.1bn the year before. Its reorganisation has included the sale of its Africa business and selling off “non-core” assets.  The STOXX 600 stocks index was marginally higher and close to 14-month highs touched on Tuesday. A 4 percent fall in miner Rio Tinto and a fall of nearly 5 percent in EasyJet, which were among companies whose shares went ex-dividend, weighed on the index.

The MSCI Asia index ex-Japan edged up 0.1 percent, trading near the highest level since July 2015 it hit on Wednesday. Earlier, the index lost as much as 0.15%. Japan’s Nikkei closed fractionally lower, as banks fell, and Australian shares ended down 0.4 percent. MSCI’s world index also nudged higher and was within half a point of Wednesday’s record high.

The dollar edged up less than 0.1 percent against a basket of major currencies but held below highs hit on Wednesday, having fallen immediately after the minutes were released. The euro, which has been buffeted by investor nerves over France’s presidential election, to be held in April and May, was flat at $1.0556. The yen was also barely changed at 113.28. Sterling strengthened 0.2 percent to $1.2468.

As discussed yesterday, in addition to Trump’s policies on taxes, spending and trade, markets are now trying to gauge his attitude to the dollar. Trump said before his inauguration that the dollar’s strength against the Chinese yuan was “killing us”, raising concern in the “strong dollar” policy espoused by recent U.S. administrations could change. However, in an interview with the WSJ, Treasury Secretary Steven Mnuchin praised the strong dollar on Wednesday, saying it reflected confidence in the economy.

French bonds advanced after a pact between independent presidential candidate Emmanuel Macron and centrist Francois Bayrou, which for now has helped ease fears the country could elect a leader who favors leaving the European Union. “Yesterday’s developments in France were positive for French bonds and broader risk appetite,” said Orlando Green, European fixed income strategist at Credit Agricole in London.

Earlier this morning, French OATs extended gains, led by the 10y-30y sector, as 30y bonds fall as much as 4bps following latest OpinionWay poll showing gains for Macron in second round. Poll shows Macron would beat Le Pen 60%-40% in the second round; that compares with 59%-41% spread in Wednesday’s poll.  Italian bonds underperform with 10y yields rising 6bps, leading losses, as concession is built ahead of next week’s supply, which include two issues in the 10y bucket for €2-3BN. German 10Year bonds edged up 1 basis point to 0.28%, having closed on Wednesday at 0.27 percent.

Stronger-than-expected demand at sale of 20-year debt causes Japan’s sovereign curve to flatten; bonds rise in Singapore ahead of this year’s first 10-year sale.

Oil prices rose after data showed a decline in U.S. crude stockpiles as imports fell. Brent crude last traded at $56.56, up 72 cents a barrel. Prices have been rising since the Organisation of Petroleum Exporting Countries and other oil producers agreed output cuts last year. “It’s a battle between how quick OPEC can cut without shale catching up,” said Tony Nunan, oil risk manager at Mitsubishi Corp in Tokyo.

Copper fell almost 1 percent to $5,982 a tonne on concern about fresh regulation that could affect China’s property boom. Gold rose less than 0.1 percent to $1,238 an ounce, supported by uncertainty over the Fed rate outlook. Zinc and nickel also fell more than 1 percent.

Market Snapshot

  • S&P 500 futures up 0.1% to 2,362.75
  • STOXX Europe 600 little changed at 373.55
  • German 10Y yield fell 0.5 bps to 0.274%
  • Euro down 0.2% to 1.0542 per US$
  • Brent Futures up 1.5% to $56.67/bbl
  • Italian 10Y yield fell 5.3 bps to 2.194%
  • Spanish 10Y yield fell 0.3 bps to 1.69%
  • MXAP little changed at 146.12
  • MXAPJ little changed at 470.84
  • Nikkei down 0.04% to 19,371.46
  • Topix down 0.05% to 1,556.25
  • Hang Seng Index down 0.4% to 24,114.86
  • Shanghai Composite down 0.3% to 3,251.38
  • Sensex little changed at 28,862.89
  • Australia S&P/ASX 200 down 0.4% to 5,784.66
  • Kospi up 0.05% to 2,107.63
  • Brent Futures up 1.5% to $56.67/bbl
  • Gold spot little changed at $1,237.58
  • U.S. Dollar Index up 0.2% to 101.39

Top Overnight News via BBG

  • Barclays shares rose to the highest in more than a year as its capital ratio exceeded expectations and the bank signaled progress in efforts to divest its Africa unit and sell off unwanted assets
  • Carlyle Group is closing the money raising process this week for its fourth fund that will focus on distressed debt and special-situations after reaching its target of $2.5 billion
  • Mohamed El-Erian is warning traders not to get complacent about the prospect of a Fed interest-rate hike next month
  • Germany’s central bank increased risk provisions to manage losses it anticipates to make once ECB starts to raise interest rates
  • Smaller Chinese banks have sold record amounts of short-term debt this month before possible new rules that would constrain their ability to issue the securities
  • The U.K. won’t be able to retake complete control of its destiny though Brexit, European Central Bank chief economist Peter Praet said
  • Allergan has “no interest” in Valeant Pharmaceuticals, most likely not even “in pieces,” Allergan CEO Brent Saunders said during an interview at Bloomberg headquarters in New York.
  • PSA Ready for ‘Opportunities’ as Profit Gain Helps Opel Stance
  • Tesla Keeping Model 3 Steady Overshadows CFO Exit, Cash Needs
  • HP Sales Soar Past Estimates on Personal-Computer Strength
  • Exxon Caves to Oil Crash With Historic Global Reserves Cut

Asia equity markets traded mixed following a weak lead from Wall Street where the Dow Jones outperformed amid rising du Pont and Dow Chemical merger bets. ASX 200 (-0.4%) underperformed amid losses seen in the metals and mining sector as Rio Tinto (-5.2%) shares sunk, while Nikkei 225 (-0.1%) traded in the red amid a firmer JPY and a mild pullback of yesterday’s gains in Toshiba (-4.7%) shares. Shanghai Comp. (-0.3%) traded in the red following a weak CNY 50bIn liquidity injection by the PBoC, while Hang Seng (-0.3%) was led lower following reports that Chinese banks could pass on higher funding costs to customers amid increasing short-term borrowing rates. 10yr JGBs traded higher amid the risk-off tone in the region with the yield curve beginning to flatten in the super long end, while participants look ahead to the auction for 20yr government paper.

Top Asian News

  • SoftBank Denies It’s Looking for Stake in Merged Vodafone- Idea
  • Chinese State Fund’s Broker Says It’s Buying Hong Kong Stocks
  • Emerging-Markets Hedge-Fund Assets Reach Record in ’16, HFR Says
  • Hong Kong Property Stock Rally Gathers Pace on Earnings Outlook
  • Japan Stocks to Watch: NTT Docomo, Takata, Tepco, Mitsui & Co
  • China Said to Appoint Guo Shuqing as Banking Regulator Head: WSJ
  • Adelson’s Sands Missing Stock Rally as Rivals Pull in VIPs
  • China Expands Drug Insurance Coverage in Boost to Pharma Stocks
  • BAT Forecasts Earnings Growth Amid Race for Smoking Alternatives

European bourses opened mixed but now trade mostly higher as earnings dictate play, Barclay’s (+3.5%) profits almost treble to GBP 3.2bIn and the Co. reported strong progress in restructuring and Glencore (+2.4%) also impressed investors with annual profits rising 48% off the back of higher commodities prices and strong trading results. Telecoms outperform after Orange reported better than expected earnings. Fixed income, underperformance has been noted in the periphery as Italian yields trade wider by 1.7% with Italian press reporting that former PM Renzi is looking to call new elections in early June. Analysts at Citi noting a June election would be challenging but not impossible. The GE/FR spread had tightened post yesterday’s news that Centrist Bayrou has pulled out of the French election race lending support to Macron, however there has been a bit of an unwind in recent trade.

Top European News

  • Glencore Completes Turnaround as Profit Soars on Trading
  • Copper Strike Poses Supply Threat Even After Miners Return
  • Leviathan Partners Approve $3.75 Billion Gas-Development Plan
  • Downbeat Outlook Eclipses Magyar Telekom Profit as Shares Fall
  • U.K. Claim That Burning Biomass Is Clean Seen as ‘Flawed’
  • Centrica Sees No Reason for Further Rough Impairments Now:

In currencies, the Bloomberg Dollar Spot Index gained 0.1 percent, after falling 0.2 percent on Wednesday. The yen added 0.2 percent to 113.14 per dollar, following a 0.3 percent gain the previous day. The euro weakened 0.2 percent to $1.0538 after gaining 0.2 percent on Wednesday. It’s been a very quiet morning in FX, with the FOMC minutes offering little fresh insight into Fed thinking. UST yields hold their ground however, but this may waiver as the count down to the March FOMC looms. This explains the range bound markets seen today, which looks set to continue over coming weeks. EUR/USD has been in focus, but looks reluctant to retest 1.0500 after yesterday’s brief dip below here, but all now depends on whether Le Pen’s performance in the polls changes to any notable degree. USD/JPY is also largely sidelined, but if stocks hold up, we expect little deviation from 112.50-114.50, and testing these limits looks unlikely any time soon. The crosses have also stabilised, most significantly EUR/JPY, having recovered 1 JPY from yesterday’s lows circa 118.50.

In commodities, West Texas Intermediate crude climbed 1.4 percent to $54.33 a barrel, rebounding from a 0.9 percent drop in the previous session. Movement across the spectrum of commodities remains confined to near term ranges, highlighted by the WTI test of USD55.00 earlier in the week – which was swiftly rejected. This may change later today ahead of the DoE report, with prices better supported despite the raft of inventory data to its detriment. Production cuts (and more to come?) are perhaps yet to feed through, and this looks to be driving the support seen on dips. Gold (and Silver) continue to dance to the tune of the USD, but we are ever watchful on equities which relentlessly push higher. Copper is back testing USD2.70 again, but all base metals have slipped a little on the back of the overnight CAPEX data. Less so Nickel as the Philippines environment minister underlined her backing from the president.

Looking at today’s calendar, in the US we’ve got initial jobless claims and the Kansas City Fed’s manufacturing survey. Away from the data the Fedspeak continues with Lockhart (1.35pm GMT) and Kaplan (6.00pm GMT) both scheduled. The ECB’s Praet is also due to speak at various stages through the day.

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, Jan., est. 0.00, prior 0.14
  • 8:30am: Initial Jobless Claims, Feb. 18, est. 240k, prior 239k; Continuing Claims, Feb. 11, est. 2068k, prior 2076k
  • 9am: House Price Purchase Index QoQ, 4Q, prior 1.5%; FHFA House Price Index MoM, Dec., est. 0.5%, prior 0.5%
  • 9:45am: Bloomberg Consumer Comfort, Feb. 19, prior 48.1
  • 11am: Kansas City Fed. Manf. Activity, Feb., est. 9, prior 9
  • 1pm: Fed’s Kaplan Speaks in Fort Worth

DB’s Jim Reid concludes the overnight wrap

If you’re someone who is disillusioned with global politics at the moment then yesterday you were perhaps offered an escape route assuming you have 39 years of travelling time left in you and you can source a spaceship that can move at the speed of light. If you tick both boxes then hop along to the Trappist-1 star system and its newly discovered seven earth sized planets, three of which scientists have deemed to be in the ‘habitable zone’. I read about this last night while watching the ‘Brit Awards’ (UK version of the Grammys) where tributes were paid to the likes of David Bowie. I couldn’t help be thankful that our planets have better names than the ones scientists discovered yesterday. I’m not sure “Is there life on ‘E’ ‘F’ or ‘G’?” would quite have worked played with a haunting piano line.

In markets yesterday planet F referred to the Fed and France as they were the two big macro stories. Starting with the former, the main passage to note from the FOMC minutes last night was that “many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the committee’s maximum-employment and inflation objectives increased”. While there was that mention of “many participants” the “fairly soon” aspect of timing makes it hard to argue that March is any closer for the next move. That said it was highlighted that “a few participants noted that continuing to remove policy accommodation in a timely manner, potentially at an upcoming meeting, would allow the Committee greater flexibility in responding to subsequent changes in economic conditions” suggesting that there are a few members who would clearly be happy going next month.

In terms of the mention of future balance sheet strategy the only real takeaway was the reference that “participants also generally agreed that the committee should begin discussions at upcoming meetings about the economic conditions that could warrant changes in the existing policy of reinvesting proceeds from maturing Treasury securities and principal payments from agency debt and mortgage-backed securities, as well as how those changes would be implemented and communicated”. So no real new insight on that front. With regards to Trump and the question marks there, the minutes showed that “most participants continued to see heightened uncertainty regarding the size, composition and timing of possible changes to fiscal and other government policies, and about their net effects on the economy and inflation over the medium term, and they thought some time would likely be required for the outlook to become clearer”.

All in all then a fairly balanced set of minutes. Bloomberg’s calculator shows the probability of a Fed hike in March at 34% this morning which is actually down slightly from 36% the day before. May is at 62% from 59% – so not particularly big moves. Markets elsewhere didn’t really do much in the aftermath either. 10y Treasury yields closed out at 2.414% which was down 1.6bps on the day, having traded as high as 2.452% earlier on. The Greenback finished slightly lower (-0.15%) while risk assets were subdued. The S&P 500 (-0.11%) suffered only its third negative day in the last 3 weeks although the Dow (+0.16%) did finish higher and in doing so marked a three-decade record of nine consecutive new record closing highs. While we’re on the Fed it’s worth noting that Fed Governor Powell also spoke yesterday and said that a hike is warranted “fairly soon” should the economy continue on its current path. When asked if March is on the table, his reply was “Yes”.

Meanwhile in France the latest update is the news that centrist candidate Francois Bayrou will now team up with independent candidate Macron in forming an alliance in the presidential election. The news should be a small positive for Macron. Bayrou had been running at around 5-6% in the recent polls and a portion of that should now transfer to Macron in the first round. An Elabe poll released on Tuesday found that Macron would get 17% of votes in the first round if Bayrou decided to run, and 18.5% without Bayrou running. So that suggests a 1.5% swing in Macron’s favour. The same poll showed Fillon as  benefiting from an extra 1% from Bayrou not running with the rest split around the far left and right. So as we noted a very marginal positive for Macron. The suggestion is that Bayrou has a strong influence on the centrist electorate so it could still be a bigger boost to Macron further down the line.

European bond markets were notably stronger yesterday including a bounce back for 10y OATs (-7.4bps) to 1.006%. They outperformed Bunds (-2.1bps to 0.275%) while peripherals were a bit more mixed (yields flat to 6bps lower). It’s worth highlighting that 2y Bund yields finished down another 2bps yesterday at -0.902% and so extending their record low. They are in fact now down 24bps from the highs in January which has coincided with political uncertainly steadily climbing higher. European equities were alot more mixed yesterday. The Stoxx 600 finished -0.01%, the DAX +0.26% but the peripherals were much weaker with the IBEX and FTSE MIB -0.88% and -0.83% respectively.

This morning bourses in Asia are generally trading in the red with commodity related names in particular underperforming. The Nikkei (-0.27%), Hang Seng (-0.48%), Shanghai Comp (-0.39%) and ASX (-0.26%) are all lower as we goto print. Yesterday’s declines across base metals don’t appear to be helping although Oil (+0.88%) has bounced back over $54/bbl following a -1.36% loss yesterday. Sovereign bond yields in Asia have also generally tracked lower.

Staying in Asia it’s worth noting that the National People’s Congress (NPC) in China is now just around the corner with the event kicking off on March 5th. As a reminder this is where the government sets out its working plan for the year. Our China Chief Economist Zhiwei Zhang published a report yesterday previewing the event with what he expects to hear. He thinks that the government will set a growth target broadly unchanged from last year, keeping 6.5% as the floor. He is curious if the government will send signals on how they are going to handle the pressure from the US on trade issues. Further opening up some service sectors may be one option. Zhiwei highlights that investors should also pay close attention to press conferences during the NPC. Experience in the past suggests that messages from those press conferences may have a significant impact on the market.

Also worth highlighting yesterday are our published takeaways from DB’s Bank Capital Forum 2017. Every year, the event brings together major investors, issuers and senior regulators to discuss the latest market and regulatory developments in banking. This year’s main topic was bank resolution and the keynote address was delivered by Dr. Elke König, Chair of the EU Single Resolution Board. It was followed  by a regulatory outlook panel, issuer panel and investor panel. The report should be in your inbox, contact Michal.Jezek@db.com if not.

Wrapping up, yesterday’s economic data in the US was reserved to the January existing home sales report which revealed that sales rose a better than expected +3.3% mom in January (vs. +1.1% expected). In Europe the notable data was the Germany IFO survey. The headline business climate reading jumped 1.1pts to 111.0 (vs. 109.6 expected) and so matching the December level again which is the highest since March 2014. Firms were most upbeat about the current assessment of the economy with that component rising 1.5pts to 118.4 while the expectations component rose 0.8pts to 104.0. Meanwhile in the UK  Q4 GDP was confirmed at a slightly above market +0.7% qoq (vs. +0.6% expected) but earlier downward revisions meant annual growth was revised down two-tenths to +2.0% yoy. Finally there were no surprises in the final January CPI print for the Euro area at -0.8% mom. That puts the headline annual rate at +1.8% while the core is at +0.9%.

Looking at today’s calendar, this morning we’re kicking off in Germany again where we’ll get the final revisions to Q4 GDP (no change from the +0.4% qoq flash expected) along with the various growth components. Also due out will be various confidence indicators in France for February along with the UK’s CBI distributive trades survey for February. This afternoon in the US we’ve got initial jobless claims and the Kansas City Fed’s manufacturing survey. Away from the data the Fedspeak continues with Lockhart (1.35pm GMT) and Kaplan (6.00pm GMT) both scheduled. The ECB’s Praet is also due to speak at  various stages through the day.

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 9.84 POINTS OR .30%/ /Hang Sang CLOSED DOWN 87.10 POINTS OR 0.36% . The Nikkei closed DOWN 8.41 POINTS OR 0.04% /Australia’s all ordinaires  CLOSED DOWN 0.30%/Chinese yuan (ONSHORE) closed UP at 6.8753/Oil ROSE to 54.48 dollars per barrel for WTI and 56.81 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8566 yuan to the dollar vs 6.8780  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

North Korea lashes out at both China and Malaysia as they now anticipate that China will orchestrate a regime change in the failed state

(courtesy zero hedge)

China Prepares For “Regime Collapse” In North Korea

Over the weekend, following reports that China has banned all North Korean coal imports – in the aftermath of last week’s North Korean ballistic missile launch- which marked a troubling escalation in relations between the two formerly “amicable” nations, we discussed how China was tipping its hand that not only was Kim Jong-Un potentially losing a “very big ally”, but that it could also lead to “jeopady” for his regime, and a potential political coup in the generally unstable dictatorship.

Now, it appears that the likelihood of a regime collapse in North Korea is being taken seriously by none other than the country’s formerly largest trading partner, China, which as SCMP reports, “will take the necessary measures to safeguard national security in the event of the collapse of the neighbouring North Korean regime”, a defence official said on Thursday.

The recent assassination of North Korean leader Kim Jong-un’s half-brother Kim Jong-nam has sparked renewed concerns over the stability of Pyongyang and the possibility of a collapse of the reclusive regime, SCMP adds.

Beijing, long seen as the guarantor of Pyongyang’s security, had mostly largely silent on the incident. However in the aftermath of the abrupt coal import suspension, Chinese officials no longer had the luxury of avoiding the topic.

Asked whether China had a contingency plan for a North Korean collapse, defence ministry spokesman Ren Guoqiang said Beijing has maintained its usual policy towards Pyongyang, and urged the “relevant parties to refrain from any actions that will escalate tensions”.

“We are resolute in safeguarding the peace and security of the Korean Peninsula, sticking to the objective of denuclearization and to resolving disputes through dialogue and consultation,”Ren said on Thursday. “The Chinese military will take the necessary measures, according to the need that arises in the security environment, to safeguard national security and sovereignty,” he said.

Ren denied recent reports that China had sent troops to the border between China and North Korea after Kim Jong-nam’s death to prevent potential large-scale refugee crossings. Beijing has often been criticised by US President Donald Trump for not doing enough to rein in Pyongyang’s nuclear development. The latest missile test has reaffirmed South Korea’s resolve to deploy the Terminal High Altitude Area Defence (THAAD), a US-developed anti-ballistic missile system, following North Korea’s fourth nuclear test in January last year.

South Korea’s acting president, Hwang Kyo-ahn, said on Monday the deployment could not be delayed in the face of the growing nuclear missile threat from the North, despite Beijing’s hostility to the move, Reuters reported. Beijing has strongly protested deployment of THAAD, arguing that the system is not targeted to prevent an attack from North Korea, but could be used to spy on Chinese missile flight tests. Ren at the defence ministry yesterday reiterated China’s opposition to THAAD, saying China would “take all necessary measures to safeguard its national security and sovereignty”.

* * *

Meanwhile, in an inexplicable move, the WSJ reports that in an escalation that is certain to only antagonise China, North Korea lashed out at Beijing in a state-media commentary published on Thursday, in unusually pointed rhetoric from Pyongyang toward a powerful neighbor that it has long relied on for economic support. In Thursday’s piece, North Korea even adopted a mocking tone, saying that the country is “styling itself a big power, is dancing to the tune of the U.S.

The KCNA statement also vowed that cutting its exports wouldn’t deter North Korea from developing its nuclear arsenal. “It is utterly childish to think that the DPRK would not manufacture nuclear weapons and intercontinental ballistic rockets if a few penny of money is cut off,” the statement said.

The commentary, published by the state-controlled Korean Central News Agency, didn’t name China, but left little doubt about its target: “a neighboring country, which often claims itself to be a ‘friendly neighbor’.” In particular, the article lambasted China for playing down North Korea’s nuclear capabilities, and for curbing foreign trade—an apparent reference to China’s statement over the weekend that it would suspend coal imports from North Korea for the rest of the year.

 

North Korea remains heavily reliant on its larger neighbor for trade, while China sees North Korea as a buffer against South Korea and Japan, both U.S. allies. But Beijing’s patience wore thin after Pyongyang conducted a series of nuclear and ballistic-missile tests last year, prompting China to back fresh United Nations sanctions in November that target North Korea’s coal exports. According to the KCNA report, the unnamed country “has unhesitatingly taken inhumane steps such as totally blocking foreign trade related to the improvement of people’s living standard under the plea of the U.N. ‘resolutions on sanctions’ devoid of legal ground.”

While an early round of U.N. sanctions restricted coal imports from North Korea, China is widely believed to have used a so-called humanitarian exception to exceed that cap. That loophole was removed in last November’s U.N. resolution, and North Korea’s protest against China suggests that Beijing has made clear it intends to adhere to the new rule, said Adam Cathcart, a scholar who focuses on China-North Korea relations at the University of Leeds in the U.K.

“I would take this editorial as hard evidence that China has told North Korea it is narrowing the definition of coal exports for ‘humanitarian purposes,’” Mr. Cathcart said, adding that it was exceedingly rare for North Korea to criticize China so directly. Mr. Cathcart called the KCNA editorial “a frontal assault on China’s position on the U.N. sanctions issue,” a shift from the oblique critiques of China that North Korea usually turns to when it expresses its displeasure.

* * *

North Korea’s apparent anger at the Chinese comes as Pyongyang has escalated a diplomatic row with another friendly nation in Asia, Malaysia, after authorities in Kuala Lumpur identified a North Korean embassy official and a state-owned airline employee among seven suspects still at large in the killing of dictator Kim Jong Un’s half brother. North Korea has denied its involvement in last week’s public slaying of Kim Jong Nam. Malaysian authorities have refused to turn over the corpse to North Korea, as the embassy there has demanded, instead conducting its own autopsies—a move decried by North Korea as part of a broader conspiracy engineered by South Korea and the U.S.

Just hours before its broadside against China, KCNA published a report blaming Malaysia for an “undisguised encroachment upon the sovereignty of the DPRK,” referring to North Korea by the acronym for its formal name, the Democratic People’s Republic of Korea.  “The biggest responsibility for his death rests with the government of Malaysia as the citizen of the DPRK died in its land,” KCNA reported, quoting a group called the Korean Jurists Committee.

* * *

While it remains unclear if there are political pressures mounting on Kim Jong-Un from within (or externally), some have suggested that his reaction to a potential military coup could be terminal, and irrational, resulting in ballistic missile launches at close neighbors, with potentially dire consequences.

end

b) REPORT ON JAPAN c) REPORT ON CHINA

Taiwan joins the global war on cash as they plan to ban purchases of houses cars and jewelry with cash

(courtesy zero hedge)

Taiwan Joins Global War On Cash: Plans To Ban Purchases Of Houses, Cars, & Jewelry

The cancerous virus of freedom-destroying worldwide cash-bans – in the name of fighting terrorism – has reached Taiwan this week. With the aim of ‘preventing money-laundering’, Taiwan may ban cash purchases of properties and luxury goods, Taipei-based Economic Daily News reports, citing unidentified official at Ministry of Justice.

As we previously noted, the War on Cash is not merely continuing, it is intensifying.

It began in the West, with relatively minor infringements on our right to use the currency of our own nation. The War has now shifted to India, been radically ratcheted up, and inflicted upon a population of 1.2 billion people, where 68% of transactions were conducted with cash. And now, as The Economic Daily News reports (via Google Translate), to Taiwan…

With the goal of strengthening the prevention and control of money laundering, Taiwan’s Ministry of Justice plans to promote large-scale transactions without cash. The first wave may lock real estate, luxury cars and jewelry transactions.

According to the provisions of the money-laundering control law, which currently controls the use cash payment tools, The Ministry of Justice to discuss the plan with other regulators in the second half of the year.

Once finalized, the sale of real estate, cars, and jewelry will not be possible using cash; only non-cash payment tools, such as credit cards, financial cards, checks, electronic payments or remittances.

Current regulations require the keeping of records and reporting of any transcations over 500,000 Yuan (around $72,000), with no limit on the amount of cash that can be used.

As to whether a lower threshold will be set, it is unclear; but from indications, for the sale of real estate, luxury cars or jewelry the threshold will be zero – and only non-cash allowed.

Officials said that in addition to changes in the concept of the majority of normal business people should not be affected, but for some with bad credit, who can not apply for a credit card or bank account, it admitted the new law may cause inconvenience.

Of course, the excuse for all this cah ban is simple –

The Ministry of Justice internal data show that the criminal group’s asset allocation is especially heavy in gold, diamonds, and real estate. Real estate transactions are considered to high-risk money laundering transactions.

As we noted previously, on the face of it, this ‘war on cash’ smacks of conspiracy theory, yet certainly, all governments would benefit from this control and would be likely to get on board. In fact, it might prove to be the only way out of their present economic problems.

So, how would it play out? Here’s roughly how I saw Phase I:

  • Link the free movement of cash to terrorism (Create a consciousness that any movement of large sums suggests criminal activity.);
  • Establish upper limits on the amount of money that can be moved without reporting to some government investigatory agency;
  • Periodically lower those limits;
  • Accustom people to making all purchases, however small or large, through a bank card;
  • Create a consciousness that the mere possession of cash is suspect, since it’s no longer “necessary”.

When I first wrote on the subject, there was considerable criticism as to the possibility that such a programme would ever be attempted, let alone succeed. And, granted, it was so Orwellian that it was understandably seen as a crackpot idea. But since that time, the programme has been developing extremely rapidly. In the last six months alone, it has become so visible that it has even garnered a name – “the War on Cash”.

References in the media have been made that terrorist groups fund their attacks with cash. Dozens of countries have placed limits on the maximum amount of money that can be moved without reporting. Some, notably France, have already begun lowering their limits. Banks in some countries, notably Sweden, are already treating all cash transactions as suspicious. The previously theoretical Phase I is now well under way.

It would appear Taiwan is joining the rest of the world in this war on cash. There are three major players involved in the war on cash:

1. The Initiators

Who? Governments, central banks.

Why? The elimination of cash will make it easier to track all types of transactions – including those made by criminals.

2. The Enemy

Who? Criminals, terrorists

Why? Large denominations of bank notes make illegal transactions easier to perform, and increase anonymity.

3. The Crossfire

Who? Citizens

Why? The coercive elimination of physical cash will have potential repercussions on the economy and social liberties.

The shots fired by governments to fight its war on cash may have several unintended casualties:

1. Privacy

  • Cashless transactions would always include some intermediary or third-party.
  • Increased government access to personal transactions and records.
  • Certain types of transactions (gambling, etc.) could be barred or frozen by governments.
  • Decentralized cryptocurrency could be an alternative for such transactions

2. Savings

  • Savers could no longer have the individual freedom to store wealth “outside” of the system.
  • Eliminating cash makes negative interest rates (NIRP) a feasible option for policymakers.
  • A cashless society also means all savers would be “on the hook” for bank bail-in scenarios.
  • Savers would have limited abilities to react to extreme monetary events like deflation or inflation.

3. Human Rights

  • Rapid demonetization has violated people’s rights to life and food.
  • In India, removing the 500 and 1,000 rupee notes has caused multiple human tragedies, including patients being denied treatment and people not being able to afford food.
  • Demonetization also hurts people and small businesses that make their livelihoods in the informal sectors of the economy.

4. Cybersecurity

  • With all wealth stored digitally, the potential risk and impact of cybercrime increases.
  • Hacking or identity theft could destroy people’s entire life savings.
  • The cost of online data breaches is already expected to reach $2.1 trillion by 2019, according to Juniper Research.

This issue has expanded more quickly than we’d anticipated. Clearly, the governments that are forcing it into being are running out of time. There can only be one reason why they’d rush a programme that normally would be given more time for people to accept, and that’s that they see a crash coming before they can get Phase II of the programme underway.

 

end

4. EUROPEAN AFFAIRS

A centrist alliance caused French yields to tumble as a risk of a LePen victory falls:

(courtesy zero hedge)

French Yields Tumble To 1-Month Lows After Macron Alliance

While bookmakers’ odds are unchanged for a Le Pen victory, French bond yields have tumbled to one-month lows as the prospect of a centrist alliance in the country’s presidential election eased market anxiety that far-right candidate Marine Le Pen will win.

French yields are down to one-month lows.As The FT notes, the decision on Wednesday by independent candidate François Bayrou not to stand in the country’s elections, and instead throw his support behind fellow centrist Emmanuel Macron, has helped French bonds snap a three-day losing streak.

“Though the polls continue to suggest that a Le Pen victory is unlikely in the second, decisive round, the tone throughout yesterday’s session was clear in that the market does not wish to be proven incorrect, yet again,” said Lyn Graham-Taylor at Rabobank.

And despite the collapse in German yields, the French spread has also reduced notably… though only to 4 days lows…

“It is increasingly debatable, above all in bond/credit market terms, whether there is another story in financial markets other than the French elections and related market fears,” noted Marc Ostwald, a strategist at Admisi.

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

This is what happens when you have negative interest rates.  In order  not to be dinged with a .75% tax on deposits at the bank, citizens decide to overpay their taxes.  Sweden must repay over 3.2 billion dollars equivalent back to its citizens for overpayment

(courtesy Mish Shedlock/Mishtalk)

Sweden Has Another Problem – It’s Collecting Too Much Tax

 

 

Submitted by Mike Shedlock via MishTalk.com,

As a direct result of Sweden’s tax laws in conjunction with negative interest rates by the central bank, Sweden’s citizens now purposely overpay their tax bills in record amounts as a savings vehicle.

Here’s the peculiar result: The Swedish Government Complains it Collects Too Much Tax.
 

Data released on Wednesday showed Sweden’s government generated a budget surplus of SKr85bn ($9.5bn) in 2016, with approximately SKr40bn coming from tax overpayments. The government will have to repay more than £3.5bn to businesses and individuals who purposely paid too much tax in 2016.

The government wants to discourage further overpayments but the national debt office has admitted its efforts will probably not be enough.

 

While bank interest rates plummeted, Swedish tax rules meant that excess deposits in taxpayers’ payment accounts continued to earn a minimum of 0.56 percent annual interest, leading many people to use them like makeshift bank accounts.

 

Most governments would be pleased with an annual budget surplus more than twice the forecast size. But Stockholm has complained that this “involuntary borrowing” from residents will cost it around SKr800m more over 2016 and 2017 than if they had borrowed the money at market rates.

 

Unfortunately for the debt office, there is little chance that the problem will go away anytime soon. At its latest policy meeting last week the central bank said it was more likely to cut rates further into negative territory than increase them in the short term.

Given negative interest rates, even if Sweden paid zero percent on overpayments, the Swedish government would lose money vs. borrowing from the central bank.

I suppose the government could charge money for excess payments, but officials might be worried about voter backlash

7. OIL ISSUES

Exxon cuts its reserves by a record 3.3 billion barrels of oil as the low price finally forced the company to act..and guess what the stock goes up

(courtesy zero hedge)

Exxon Cuts Reserves By A Record 3.3 Bilion Barrels As Oil Crash Finally Takes Toll

Last September, when the price of oil was well below where it had been trading for the bulk of the past several years,  we reported that NY Attorney General Eric Schneiderman was probing why Exxon Mobil hasn’t written down the value of its assets, two years into a pronounced crash in oil prices. The complaint was simple: out of the 40 biggest publicly traded oil companies in the world, Exxon – then still led by now Secretary of State Rex Tillerson – was the only one that hasn’t booked any impairments in the prior 10 years.

As the WSJ wrote at the time, “since 2014, oil producers world-wide have been forced to recognize that wells they plan to drill in the future are worth $200 billion less than they once thought, according to consultancy Rystad Energy. Because the fall in prices means billions of barrels cannot be economically tapped, such revisions have become a staple of oil-patch earnings, helping to push losses to record levels in recent years.” And yet, Exxon had – until the later half of 2016 – declined to take any write-downs, the only major oil producer not to do so, which has led some analysts to question its accounting practices.

Maybe the NYAG was on to something?

To be sure, the company had played down the criticism, saying it is extremely conservative in booking the value of new potential fields and wells. That reduced its exposure to write-downs if the assets later prove to be worth less than expected. Then again, not even the most “conservative” company could have factored in oil crashing from $100 to $42 without that impacting the balance sheet.

Needless to say, avoiding reality and Exxon’s “ability” to avoid write-downs, and the massive losses that come with them, had been the main factors helping the company outperform rivals since prices began falling in mid-2014. Exxon shares had fallen by about half of the average of top peers Chevron,  Royal Dutch Shell, Total and BP. Since 2014, those companies have booked more than $50 billion overall in write-downs and impairments.  But not Exxon.

Then-CEO Rex Tillerson has an unusual explanation why Exxon has refused to write down assets so far: Rex told trade publication Energy Intelligence in 2015 that the company has been able to avoid write-downs because it places a high burden on executives to ensure that projects can work at lower prices, and holds them accountable.

“We don’t do write-downs,” Mr. Tillerson told the publication. “We are not going to bail you out by writing it down. That is the message to our organization.”

All of that changed this afternoon, when Exxon, now ex-Tillerson, disclosed the deepest reserves cut in its history as the ongoing rout in oil prices erased the value of a $16 billion oil-sands investment and other North American assets.  In a press release filed after the close, Exxon announced that “proved reserves were 20 billion oil-equivalent barrels at year-end 2016, inclusive of a net reduction of 3.3 billion oil-equivalent barrels from 2015. Reserves changes in 2016 reflect new developments as well as revisions and extensions to existing fields resulting from drilling, studies, analysis of reservoir performance and application of the methodology prescribed by the U.S. Securities and Exchange Commission.

As a result of very low prices during 2016, certain quantities of liquids and natural gas no longer qualified as proved reserves under SEC guidelines.

In other words, after years of denials, and claims that “we don’t do write-down”, Exxon just concluded the biggest reserve cut on record, as 3.3 billion barrels of crude was removed from the company’s “proved reserves” category. The revisions were triggered when low energy prices made it mathematically impossible to profitably harvest those fields within five years. The massive 3.5-billion barrel Kearl oil-sands development in western Canada accounted for most of the hit, with another 800 million oil-equivalent barrels in North America did not qualify as proved reserves, “mainly due to the acceleration of the projected economic end-of-field life.”

Following the reserve cut, the company’s total reserves dropped to 20 billion, the lowest in two decades.

As Bloomberg adds, the oil-sand mines in northern Alberta are among the costliest types of petroleum projects to develop because the raw bitumen extracted from the region must be processed and converted to a thick, synthetic crude oil. As such, they have been particularly hard hit by the worst oil slump in a generation.

The reductions were partially offset by reserves additions of oil and natural gas totaling approximately 1 billion barrels of oil equivalent in the U.S., Kazakhstan, Papua New Guinea, Indonesia and Norway, which replaced 65% of production and were the result of acquisitions, improved asset performance and a decision to fund an expansion of the Tengiz project in Kazakhstan.

According to Bloomberg calculations, the 19 percent drop amounts to the largest annual cut since at least the 1999 merger that created the company in its modern form. That includes 1.5 billion barrels of reserves that were pumped from wells. The previous record cut was a 3 percent reduction taken during the height of the global financial crisis in 2008.

Proved Reserves are among the most important metrics watched by investors because they are an indicator, along with commodity prices, of future cash flow. When the 2008 reserves cut was announced in February 2009, Exxon shares lost more than 4 percent in a single day, wiping out almost $17 billion in market value.

Today, after the biggest reserve write down in history, the shares gained 0.2% to $81.08 in after-hours trading as of 5:46 p.m. in New York on Wednesday, after closing at $80.93, suggesting that either the market does not care about fundamentals, or had largely priced in the announcement. As noted above, Exxon was facing an SEC probe into how it valued its portfolion, and signaled in October and again last month that the revision was probably coming, which may explain the lack of reaction.

On Tuesday, ConocoPhillips engaged in a similar reserve reduction when it removed the equivalent of 1.15 billion barrels of oil-sands crude from its books as part of a 21 percent cut that pushed the Houston-based company’s reserves to a 15-year low.

Under SEC rules, proved reserves can only include oil fields that can be produced economically within the next half decade. Price trends from the previous 12 months are compared against the estimated cost to harvest crude and gas in determining which reserves are counted.

 

END

 

The DOE reports today a huge inventory gain with production topping 9 million barrels. This caused oil to slide again

(courtesy zero hedge)

WTI/RBOB Slide After Crude Inventory Hits Record High, Production Tops 9 Million Barrels

After API’s surprise draw across all major categories, DOE reported the 7th weekly crude build in a row (even as crude imports plunged). Gasoline, Distillates, and Cushing all saw draws even as crude production rose to new cycle highs – back above 9mm bbl/d.

So here is a question for the crude bulls from Bloomberg’s Javier Blas: the U.S. imported way less crude last week (down 1.2 million b/d week-over-week, to 7.3 million b/d) and exported again lots (1.2 million b/d, or nearly 100,000 b/d week-over-week). And yet, crude stocks build-up again. So where’s is the rebalancing?

API

  • Crude -884k (+3.3m exp)
  • Cushing -1.7mm
  • Gasoline -893k (-1.5mm exp)
  • Distillates -4.229mm

DOE

  • Crude +564k (+3.25m exp)
  • Cushing -1.528mm (-50k exp)
  • Gasoline -2.628mm (-1.5mm exp)
  • Distillates -4.924mm (-1.0mm exp)

7th weekly crude build in a row but major draws across the other categories…

Notably, Bloomberg’s Javier Blas points out that U.S. refinery intake traditionally reaches a seasonal bottom between the second half of February and the first half of March. Last week intake, at just 15.5 million, was already low already and any further reduction would make a big increase in crude stocks more likely. Refinery Utilization tumbled to its lowest since April 2013…

Furthermore, some crude that was on floating storage in so-called contango deals is coming now in-land, increasing imports; but U.S. Crude oil exports rose above one million barrels a day for the first time on record the week ended Feb. 10. WTI averaged $2.26 a barrel below global benchmark Brent this year, making U.S. crude more attractive to overseas buyers.

As a reminder, US crude inventories are already at a new record high…

 

As are gasoline inventories…

Gasoline demand rose in the last week but remains down over 5% YoY…the biggest drop in 16 years.

 

Production remains on a rising trend – back above 9mm barrels/day, tracking the lagged rig count and suggesting – noise apart – considerably more production to come…

 

Bloomberg’s Javier Blas concludes:

I don’t see yet any sings of the U.S. domestic oil market rebalancing, despite the best efforts by OPEC. What’s becoming more and more clear is that the domestic industry is ramping up activity faster than most have predicted. OPEC cuts have lifted prices and created space for U.S. production overseas. OPEC failed to kill shale, and now it’s throwing it a big economic incentive to prosper.

WTI and RBOB rallied overnight following the API data and while both initially spiked on the print, they are falling now.. what will happen 15 minutes after?

 

Finally we remind readers of what happens next…for the last four weeks, bang on at the 3:45 pm London time (15 minutes after the DOE release), the algo emerged when bearish EIA figures also triggered buying.

Just like it did last week…

 

And the week before…

 

And the week before that…

*  *  *

No buying panic today yet…

 

 

end

 

Gasoline demand is faltering equal to 460 kb/day or 5%.  This decline has not occurred since the turn of the century. It sure tells us that we are in a recession

(courtesy zero hedge)

Recession Concerns Grow After Gasoline Demand Slides Most In 16 Years

Two weeks ago, we reported that when Goldman observed the latest gasoline demand data, it said that either something must be wrong with the data, or the US is in a recession: as the firm’s commodity analyst Damien Courvalin put it, such a steep drop in in US gasoline demand “would require a US recession.” He added that “implied demand data points to US gasoline demand in January declining 460 kb/d or 5.2% year-on-year. In the absence of a base effect, such a decline has only occurred in four periods since 1960 during which time PCE contracted.”

Bloomberg’s Liam Denning confirms that “big dips in U.S. gasoline demand, especially of 5 percent or more, are almost unheard of outside of a recession or oil crisis.” Goldman then adds that “to achieve the 5.9% decline suggested by the weekly data, our model requires PCE to contract 6%, in other words, a recession.”

 

At this point Goldman – which naturally was aghast at the possibility that there is an under the radar consumer recession taking place at a time when the bank was predicting three rate hikes – quickly pivoted and explained that a far more likely explanation is that the latest weekly report was an aberration, and that there was simply something wrong with the data.

Our analysis identifies weekly yield and exports as systematically deviating from their final values and such biases suggest that demand could be revised higher by 190 kb/d. The EIA’s real-time export data still includes estimates and we see potential for the recent shifts in the Mexican gasoline market to exacerbate the overstatement of US exports by an additional 185 kb/d given (1) lower PEMEX refinery turnarounds, and seasonally lower demand exacerbated by the January 16% hike in prices. Adjusting for these lower exports points to US gasoline demand declining only 85 kb/d yoy in January, in line with our macro model.

After chosing to ignore the data, Goldman then reiterated its fudged, rosy outlook based on its own fudged data:

Looking forward, we reiterate our outlook for strong global demand growth in 2017 and view the recent US gasoline builds as reflective of transient regional shifts in gasoline supply instead. Given our outlook for strong consumer spending in 2017, we believe that US gasoline demand growth will remain resilient this year at 60 kb/d, albeit below last year’s 150 kb/d growth because of higher prices.  From a global perspective, these declines remain modest, especially compared to the 510 kb/d 2016 demand growth from the 40 countries we track.

The problem with this narrative is that with every passing week that the DOE fails to correct the “error” in its residual calculation, assuming there is one, the less credibility the “non-recession” thesis has.

Which is why among the numbers released in today’s weekly update by the DOE, the one most anticipated was the one showing gasoline demand: what it revealed was troubling, with gasoline demand in the past 4 weeks sliding some 5.2% compared to last week, the much anticipated rebound, or data revision, remains elusive.

 

It also suggests that the worst-case scenario may be the right one: something is wrong with US consumer spending.

While one can debate if the gasoline demand data is accurate, there are other troubling indicators: as Bloomberg points out, the recent pace of recovery in US miles driven is slowing sharply.

Vehicle-miles traveled increased by just 0.5%, year over year, in December. For much of the prior two years, roughly coinciding with the crash in oil prices, growth had averaged more than 3 percent, sometimes spiking above 5 percent. In addition, the slowdown is fairly broad in geographic terms. Of the five regions into which the Federal Highway Administration divides the U.S., three showed outright year-over-year declines in December, the first time that’s happened since March 2014.

Those three regions represent almost 60 percent of the entire country’s vehicle-miles traveled; again, it’s the first time that much of country has experienced a decline in about three years:”

Among the other notable observations on American driving habits, namely that “the number of miles driven by the average American peaked more than a decade ago (see this blog post by Harry Benham of Carbury Consulting).

In addition to the recent economic improvement on the back of trillions in central bank liquidity, one can also point to the gasoline price base effect: today’s average of about $2.22 per gallon is far below the levels of $3.60 or more paid back in the summer of 2014. But the rebound over the past year, highly visible on gas-station placards along every highway, must have registered with at least some drivers:”

Whatever the reasons, Bloomberg concludes that “the size of the change is acute, and does suggest that a shorter-term action may be the cause. However, there may be a combination of near-term price sensitivity intertwined with longer-range shifts in vehicle technology and driving patterns. The next few weeks will reveal more.”

Alternatively, it may also indicate that the entire narrative about the “recovery” is quietly unraveling on America’s roads.

Finally, as we have been pounding the table since last year, no matter what is the driver, so to say, behind the decline in gasoline demand, it will have broad implications on both the equilibrium price of crude oil, and supply: and as Bloomberg similarly concludes, any impact on US gasoline demand this year, perhaps causing trend growth of 100-200,000 b/d to transform into a reduction of say 250,000 b/d, would force the oil market into having to find that net 350-450,000 b/d demand from elsewhere.

“And that seems unlikely given the trends in Europe and China toward more conservative fuel policies, and non-gasoline technologies.”

Which means that all those hedge funds who currently have record long WTI positions and who have been ignoring the troubling fundamental data from America’s roads, will sooner or later be forced to close out, resulting in one of the biggest oil price drops in history, in the process perhaps unleashing the next deflationary shock.

 

end

8. EMERGING MARKETS

none today

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

Euro/USA   1.0569 UP .0017/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL MIXED  

USA/JAPAN YEN 112.83 DOWN 0.558(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2494 UP .0045 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3118 DOWN .0045 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 17 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0569; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 9.84 POINTS OR 0.30%     / Hang Sang  CLOSED DOWN 87.10 POINTS OR 0.36%    /AUSTRALIA  CLOSED DOWN 0.30%  / EUROPEAN BOURSES ALL MIXED 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 8.41 POINTS OR 0.04% 

Trading from Europe and Asia:
1. Europe stocks ALL MIXED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 87.10 POINTS OR 0.36%       / SHANGHAI CLOSED DOWN 9.84   OR 0 .30%/Australia BOURSE CLOSED DOWN 0.30% /Nikkei (Japan)CLOSED DOWN 8.41 POINTS OR 0.01%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1243.00

silver:$18.07

Early THURSDAY morning USA 10 year bond yield: 2.395% !!! DOWN 2 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.026, DOWN 1 IN BASIS POINTS  from TUESDAY night.

USA dollar index early THURSDAY morning: 101.14 DOWN 19 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.97% UP 1  in basis point yield from WEDNESDAY 

JAPANESE BOND YIELD: +.084%  UP  1/10  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.686%  DOWN 1 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.225 UP 3 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 54 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.233% DOWN 4 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0581 UP .0015 (Euro UP 81 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.71 DOWN: 0.690(Yen UP 69 basis points/ 

Great Britain/USA 1.2556 up 0.0105( POUND up 105 basis points)

USA/Canada 1.3104 down 0.0059(Canadian dollar up 59 basis points AS OIL ROSE TO $54.43

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This afternoon, the Euro was up by 31 basis points to trade at 1.0581

The Yen ROSE to 112.71 for a GAIN of 69 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 105  basis points, trading at 1.25560/

The Canadian dollar ROSE  by 50 basis points to 1.3104,  WITH WTI OIL RISING TO :  $54.43

The USA/Yuan closed at 6.8621/ the 10 yr Japanese bond yield closed at +.084% UP 1/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 4 IN basis points from WEDNESDAY at 2.390% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.024 DOWN 1 in basis points on the day /

Your closing USA dollar index, 100.94 DOWN 36 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for THURSDAY: 1:00 PM EST

London:  CLOSED DOWN 30.88 OR 0.42% 
German Dax :CLOSED DOWN 50.76 POINTS OR 0.42%
Paris Cac  CLOSED DOWN 4.59 OR 0.09%
Spain IBEX CLOSED UP 16.20 POINTS OR 0.17%
Italian MIB: CLOSED DOWN 65.41 POINTS OR 0.35%

The Dow closed UP 34.72 OR 0.17%

NASDAQ WAS closed down 25.12 POINTS OR 0.43%  4.00 PM EST
WTI Oil price;  54.43 at 1:00 pm; 

Brent Oil: 56.55  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.78 UP 27/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.233%  FOR THE 10 YR BOND  1:30 EST

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:$54.38

BRENT: $56.46

USA 10 YR BOND YIELD: 2.376%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.014%

EURO/USA DOLLAR CROSS:  1.0579 up .0030

USA/JAPANESE YEN:112.66   down 0.743

USA DOLLAR INDEX: 100.97  down 36  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.25552 : up 101   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.233%

END

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

TRADING IN GRAPH FORM

Gold Jumps Most In 2017 As ‘Mnuchin Moment’ Sparks Dollar Dump; Dow Tops 20,800

Mnuchin hit the reset button and then asset gatherers spent the day like this…

 

The Dow topped 20,800 shrugging off any fears from Mnuchin…thanks to a VIX slam…

 

Total panic bid right athe close to ensure 20,800 and to get the S&P green…

 

Making the 10th record close in a row – something that has only happened once before in the 100-year-plus history of The Dow…1987

 

The Value Line Geometric Composite Index has officially broken out…

Dana Lyons explains The Value Line Geometric Composite (VLG), as we have explained many times in these pages, is an unweighted average that tracks the median stock performance among a universe of approximately 1800 stocks. Thus, in our view, it serves as perhaps the best representation of the true state of the U.S. equity market. Additionally, it has historically been very true to technical analysis and charting techniques, which is quite remarkable considering there are no tradeable vehicles based on it. And, as noted, the VLG is testing a monumental level at the moment, going back several decades.

The S&P Tech sector finally had a losing day in Feb…

Ending the record winning streak…

 

Construction stocks tumble most since June on Trump infrastructure plan timing doubts

 

Tesla tumbled…

 

WalMart took a spill late on after Trump raise the border tax again…

 

As did the rest of the Retail sector…

 

VIX and VXV have entirely decoupled from stocks…

 

Mnuchin’s comments sparked reflexive buying in bonds and stocks but that soon broke with stocks tumbling to recouple with bond yields drop…

 

Rates dropped notably on Mnuchin’s comments (with the long-end underperforming) – now all lower in yield on the week…

 

ED/FF Futures indicate that March rate hike odds are tumbling as hawks shift out to May…

 

The USD Index tumbled on Mnuchin comments – the biggest drop since January. NOTE – no bounce in the USD after Trump brought up the BAT again (and tanked retail stocks)

 

With Cable and yen strength the biggest driver…

 

Gold topped $1250 (best day for Gold since December) – erasing most of the Trump losses – and Silver broke above its 200DMA…

 

Bitcoin reached a new record high in USD terms…

 

Copper dumped on end of strike chatter and US infrastructure doubts

 

 

END

 

 

More contradictions as Mnuchin in an interview expresses his praise for a strong dollar:

(courtesy zero hedge)

Mnuchin Praises Strong Dollar, Adds To Currency Confusion

Following today’s more dovish than most expected minutes, the dollar tumbled and its main carry counterpart, the yen spiked. However, shortly after 4pm, the USDJPY resumed its levitation, a time when the traditional trust bank intervention on behalf of the BOJ was not yet in play. The reason for the updraft in the dollar was the publication of an interview in the WSJ with Treasury Secretary Steven Mnuchin, his first since being sworn in as Treasury Secretary last week, in which he appeared to advocate a “strong dollar”, and said the strong U.S. currency “is a reflection of confidence in the U.S. economy”, adding that its performance compared with the rest of the world and was a “good thing” in the long run.

“I think the strength of the dollar has a lot to do with kind of where our economy is relative to the rest of the world, and that the dollar continues to be the leading currency in the world, the leading reserve currency, and a reflection of the confidence that kind of people have in the U.S. economy,” Mr. Mnuchin said.

Mnuchin’s remarks are notable because like in his confirmation hearing in January, he contradicts many other White House officials, including not only Trump’s key trade advisor Peter Navarro, but President Donald Trump himself, both of whom have suggested in the past that they favored a weaker currency to support the U.S. trade position.

The dollar has appreciated by 23% over the past three years and added to those gains since Mr. Trump’s November election; recent US export weakness and numerous disappointing corporate earnings results have been blamed on the stronger dollar. A stronger dollar goes against the very basis of Trump’s desire to make the US into an export powerhouse.

“For longer-term purposes, an appreciation of the dollar is a good thing, and I would expect longer-term, as you’ve seen over periods of time, the dollar does appreciate,” Mr. Mnuchin added.

It was the short term, however, that was far more interesting to FX traders whose P&L is updated on a daily, not decade basis

“In the short term, there are certain aspects [of a strong currency] that are positive about the dollar for our economy and there are certain aspects that are not as positive,” Mr. Mnuchin said. “A lot of the appreciation of the dollar since the election in particular is a sign of confidence in the Trump administration and the economic outlook for the next four years.”

It is unclear if that statement was a veiled pitch to begin selling the dollar.

As reported yesterday, perhaps it was the “short term” that Mnuchin was discussing when he held his first phone call with Christine Lagarde, and told the IMF’s managing director that he expects the IMF to provide “frank and candid” analysis of exchange rate policies.

As the WSj adds, the Treasury Department traditionally has been the leading voice from the U.S. on foreign exchange policy and notes that “the past several administrations have for the most part signaled support for a strong currency, even though at times an appreciation of the currency has hurt exports.” Of course that ignores the fact that it was the historic debasement of the dollar with the Fed’s various QE programs that provided the US with an extensive trade advantage for years against its main trading peers, who only joined the currency devaluation race far later.

Mnuchin deferred when asked about China’s currency and said he looked forward to “healthy bilateral relations” with the world’s second largest economy.

“There’s trade issues that will make sense to look at, and I think there’s investment issues that will make sense to look at,” he said. “There are many things that we will need to collaborate on.” Previously Trump said he would label China a currency manipulator on his first day as president, although he may have since changed his mind upon learning that for the past two years China was intervening to strengthen, not weaken, its currency in order to mitigate and prevent China’s historical capital outflows, which have so far resulted in over $1 trillion in capital flight.

 

END

 

Mnuchin is interviewed by CNBC and again fails to disclose the Trump tax plan:and more confusion as to what they are going to do!

(courtesy zero hedge)

Steven Mnuchin Speaks To CNBC, Fails To Give Trump Tax Plan Details: Key Highlights

Following his first interview since being confirmed yesterday with the WSJ, US Treasury Secretary Steven Mnuchin spoke to CNBC’s Becky Quick and repeated some of the key points he made yesterday, among which his hope to get tax reform done by the August Congress recess, however he again confirmed that there are too many moving pieces at this point saying it is “too early to give details” of the Trump tax plan.

CNBC @CNBC

Treasury Secretary Mnuchin: We’re committed to ‘very significant’ tax reform by August recess http://cnb.cx/2lO8VYh 

7:07 AM – 23 Feb 2017

He also reiterated that “we’re primarily focused on a middle-income tax cut and simplification for business”

CNBC @CNBC

Treasury Secretary Mnuchin to CNBC: “We’re primarily focused on a middle-income tax cut and simplification for business”

7:16 AM – 23 Feb 2017

As a reminder, on February 9th stocks surged after President Trump promised a “phenomenal” tax plan to be unveiled in “two or three weeks.” It appears that this will not happen, and instead in his State of the Union address, where the market expects more clarity on Trump’s economic policies to be unveiled, Trump will be forced to speak in broad generalities as he juggles not only passage of his tax plan in Congress, but also the process of “repeal and replace” (and rename and repair) of Obamacare which similarly has gotten bogged down in negotiations in Congress. Overnight we laid out an extensive primer of how Trump’s tax policies will likely be impacted by the stalled negotiations over Obamacare.

As a reminder, yesterday in his WSJ interview, Mnuchin said the administration was working with House and Senate Republicans to smooth over differences among them on tax policy, with the aim of passing major legislation before Congress leaves for its August recess. He added, “that’s an ambitious timeline. It could slip to later in the year.” He also said the administration is “looking seriously” at the House plan that includes border adjustment and was well aware of concerns raised by specific industries. The Treasury Department had its own concerns, he added, “about what the impact may be on the dollar” from a border-adjusted tax.

On another hot button topic, despite Trump previous vows to name China a currency manipulator, Mnuchin said “we’re not making any judgments” at this time.

CNBC @CNBC

Despite Trump’s campaign vow to name China a currency manipulator, Treasury Sec. Mnuchin says “we’re not making any judgments” at this time.

7:23 AM – 23 Feb 2017

Overall, Mnuchin avoided most “hot button” topics, and reiterated the same vague WSJ talking points to CNBC. In addition to the punchline, namely that it is “too early to give details of tax plans” here are some other notable mentions by Mnuchin in the interview:

  • “Most important thing for growth is the tax plan; tax reform is mostly focused on the middle class”
  • “Tax reform will be significant”
  • “High income tax cuts should be offset; the dollar and stocks are reflecting confidence in the US economy”
  • “Isn’t focused on day to day market moves”
  • “Looking closely at border adjustment tax” although he added that there are some issues with it.
  • “3% growth is very achievable, could be late 2018 before we see 3% growth”
  • “Not making judgments on China currency policy; Treasury has a process for reviewing foreign-exchange policies”
  • “Trump admin’s growth forecast is likely to be higher that Congress”
  • “Regulatory relief is also important to boost growth”
  • “We’re looking at significant economic changes, we’re reaching out to businesses”

Finally, while he denied to provide details on plans for a 50 year bonds, he conceded that the “idea of issuing 50-year or 100-year U.S. Treasuries worth a serious look.”

 

END

 

Gold is the big winner as the dollar retreats on the Mnuchin confusion

(courtesy zero hedge)

Gold Spikes As Dollar Dumps After Mnuchin Comments

Confirming President Trump’s concerns about US national debt levels, and that new policies will likely have limited impact in 2017, Treasury Secretary Mnuchin’s comments this morning have sparked buying in bonds, bullion, and marginally in stocks as the dollar gets monkey-hammered.

After the WSJ article overnight provided some USD strength, his comments this morning seemed to dull any strong dollar hype…

Which is helping spark gold gains…

And Bitcoin back to record highs…

But investors are buying both stocks and bonds this morning… (10Y back below 2.40% and 30Y at 3.00%)

 

end

 

As David Stockman warned us;  Infrastructure stocks are belted today on a report that Trump may (will) delay the infrastructure bill until 2018)

(courtesy zero hedge)

Infrastructure Stocks Tumble On Report Trump May Delay Infrastructure Bill Until 2018

Construction, engineering and materials stocks are underperforming the market on sudden concerns that in addition to tax reform and Obamacare repeal, another core aspect of Trump’s fiscal stimulus, Infrastructure spending, may be delayed by at least two years.

As Kalex Advisors wrote in a note “Time for Plan B?” this morning, while no decisions have been made, Axios reports that the Trump is considering pushing off its call for Congress to pass an infrastructure bill until 2018, given the full slate of other top-tier items on Congress’s plate this year including healthcare and tax reform, Supreme Court fight, and potential debt ceiling / government shutdown battles.

The idea would be to take up infrastructure in an election year and make it very difficult to oppose money for home-state roads, bridges and other projects that lawmakers can take credit for. It also would make sense procedurally given we expect the money to pay for infrastructure will largely come through tax reform and deemed repatriation of overseas earnings with a one-time tax.

Again the legislative strategy is still evolving and such a timeline would run counter to what GOP leaders laid out last month in their Philadelphia retreat, but the calendar is beginning to look crowded and infrastructure has always been less of a priority for Republican leaders on Capitol Hill than it has been for Trump.

Next Tuesday’s speech to Congress by Trump will hopefully address the issue and provide further clarity as to where infrastructure is in the food chain.

As a result of the report, the S15CSTE index of construction and engineering companies, which has rallied 21% since President Trump’s election Nov. 8, fell as much as 3.2% Companies down more than 3% include GVA, AEGN, ACM, DY, MYRG.

CAT is the biggest decliner in Dow Jones Industrial, down as much as 2.6%

 

end

 

The border tax is back on and that caused retailers to tumble. Intersetingly the dollar did not rally when this was announced:

(courtesy zero hedge)

Retailers Tumble After Trump Says He Is “In Favor Of Border Tax”, Hints At Nuclear Arms Race

Moments ago retailers stumbled on one single Reuters headline: Trump says he supports “some form” of border tax.

As Reuters adds, President Donald Trump on Thursday spoke favorably about an export-boosting border adjustment tax proposal being pushed by Republicans in the U.S. Congress, but did not specifically  endorse it. Trump had previously sent mixed signals on the proposal at the heart of a Republican plan to overhaul the U.S. tax code for the first time in more than 30 years.

It could lead to a lot more jobs in the United States,” Trump told Reuters in an interview, using his most positive language to date on the proposal.

Trump had sent conflicting signals about his position on the border adjustability tax in separate media interviews in January, saying in one interview that it was “too complicated” and in another that it was still on the table.

“I certainly support a form of tax on the border,” he told Reuters on Thursday.

“What is going to happen is companies are going to come back here, they’re going to build their factories and they’re going to create a lot of jobs and there’s no tax.” Trump also said his administration will tackle tax reform legislation after dealing with Obamacare, the health insurance system put in place by his predecessor, President Barack Obama.

Trump’s latest U-turn means that the BAT debate, having been largely assumed to be over, following vocal opposition from both senators and the retail lobby, is again back front and center. And since “some form” of border adjustment would force retailers to pass on rising import costs to consumers, it promptly sent the retail sector tumbling to day lows:

In separate comments to Reuters, Trump also appeared to revive the second coming of the nuclear arms race – something he hinted at several months ago – when he said that he wants to build up the U.S. nuclear arsenal to ensure it is at the “top of the pack,” saying the United States has fallen behind in its atomic weapons capacity. Trump also complained about Russian deployment of a cruise missile in violation of an arms control treaty and said he would raise the issue with Russian President Vladimir Putin when and if they meet.

In his first comments about the U.S. nuclear arsenal since taking office on Jan. 20, Trump said the United States has “fallen behind on nuclear weapon capacity.” “I am the first one that would like to see everybody – nobody have nukes, but we’re never going to fall behind any country even if it’s a friendly country, we’re never going to fall behind on nuclear power.

 

“It would be wonderful, a dream would be that no country would have nukes, but if countries are going to have nukes, we’re going to be at the top of the pack,” Trump said. The new strategic arms limitation treaty, known as New START, between the U.S. and Russia requires that by February 5, 2018, both countries must limit their arsenals of strategic nuclear weapons to equal levels for 10 years.

 

The treaty permits both countries to have no more than 800 deployed and non-deployed land-based intercontinental and submarine-launched ballistic missile launchers and heavy bombers equipped to carry nuclear weapons, and contains equal limits on other nuclear weapons.

Analysts have questioned whether Trump wants to abrogate New START or would begin deploying other warheads. In the interview, Trump called New START “a one-sided deal.  “Just another bad deal that the country made, whether it’s START, whether it’s the Iran deal … We’re going to start making good deals,” he said.

The United States is in the midst of a $1 trillion, 30-year modernization of its aging ballistic missile submarines, bombers and land-based missiles, a price tag that most experts say the country cannot afford.

Trump also complained that the Russian deployment of a ground-based cruise missile is in violation of a 1987 treaty that bans land-based American and Russian intermediate-range missiles.

 

“To me it’s a big deal,” Trump said.  Asked if he would raise the issue with Putin, Trump said he would do so “if and when we meet.” He said he had no meetings scheduled as of yet with Putin.

 

Speaking from behind his desk in the Oval Office, Trump  declared that “we’re very angry” at North Korea’s ballistic missile tests and said accelerating a missile defense system for U.S. allies Japan and South Korea was among many options available.

“There’s talks of a lot more than that,” Trump said, when asked about the missile defense system. “We’ll see what happens. But it’s a very dangerous situation, and China can end it very quickly in my opinion.

 

 

end

Trump reverses another Obama gem:  private prisons are back in!

(courtesy zero hedge)

 

DOJ Reverses Obama-Era Decision To Phase Out Private Prisons

Another day, another reversal of a legacy Obama policy.

Moments ago, US Attorney General Jeff Sessions reversed an Obama-era memo to phase out the use of private prisons, signalling his support for federal use of such facilities and advising that the Bureau of Prisons will “return to its previous approach to the use of private prisons.”

Sessions issued a new memo Thursday replacing one issued last August by Sally Yates, the deputy attorney general at the time, in which he said the Obama decision “impaired” the ability to meet the needs of the correctional system.

That Yates memo told the Bureau of Prisons to begin reducing and ultimately end its use of privately run prisons. She said the facilities were less well run than those managed by the Bureau of Prisons, and were less necessary given declines in the overall prison population.

But Sessions says in his memo Thursday that Yates’ directive contradicted longstanding Justice Department policy and “impaired the Bureau’s ability to meet the future needs of the federal correctional system.”

In light of Trump’s aggressive push to round up as many as 11 million illegal aliens currently residing in the US, we can venture the reason behind this expansion of US incarceration facilities.

Meanwhile, the market reaction was quick, with the private prison REITs jumping following the DOJ announcement. Among individual stocks, CoreCivic rose 2.9% post-market while GEO Group was up 0.7%.

 

The all important Fed’s National activity index drops in January.  It draws on 85 economic indicators:

(courtesy zero hedge)

 

Fed’s National Activity Index Drops In January

Despite all the exuberant ‘soft’ survey data, The Fed’s National Activity Index dropped in January and missed expectations as 49 of the 85 subcomponents deteriorated.

The Chicago Fed national index, which draws on 85 economic indicators, was minus 0.05 in January versus 0.18 in December.

A reading below zero indicates below-trend-growth in the national economy and a sign of easing pressures on future inflation.

36 of the 85 monthly individual indicators made positive contributions, and 49 of the 85 monthly individual indicators made negative contributions.

This real activity index confirms the decline in the ‘hard’ data post election…

 

end

 

It now looks like Dallas taxpayers are going to bailout the deficient Dallas Police and Firefighter Pension fund

(courtesy zerohedge)

Dallas Police Pension Board Approves Benefit Cuts; Asks For More Taxpayer Money To Avoid Collapse

For the past several months we’ve warned that the taxpayers of the City of Dallas, despite all of the tough talk coming out of their elected city council members, would ultimately be forced to bail out the failing Dallas Police and Fire Pension (DPFP) system.  And just last night the DPFP board voted 9-0 to approve a plan that would do just that.

The plan to save the DPFP was proposed by Dan Flynn, chair of the pensions committee in the Texas House of Representatives, and calls for Dallas taxpayers to contribute 34.5% of police and firefighter salaries each year into the failing pension system, up from 27% in 2015, plus an incremental $11 million per year.  In total, the adopted plan will cost Dallas taxpayers an extra $22 million per year.

That said, the plan also calls for pensioners to grant concessions, including the following:

  • Increase in retirement age to 58 from 55
  • Increase in employee contributions to 13.5% of payroll from 8.5%
  • Elimination of COLAs in the near term
  • Elimination of exorbitant interest payments made on employees DROP accounts

Of course, the $7 billion shortfall in the DPFP triggered downgrades to Dallas’s credit rating from Moody’s and S&P in recent months which has wreaked havoc on the city’s bond yields. (chart per Bloomberg).

Meanwhile, no amount of incremental taxpayer funding will ever be sufficient to stop angry pensioners from playing the victim card when the realities of their pension ponzi schemes are exposed for all to see.  Per NBC 5:

There was a whirlwind of emotions at the meeting, from clapping, to tears and obvious tension, both from board members and from those whose futures hang in the balance.

“I think we’re being treated like animals to a certain degree, and I was hesitant to even come down here today,” said Frank Varner, a retired Dallas firefighter.

“How do you fix broken promises? These people deserve better. The firefighters and officers working today deserve better,” said Mike Mata, a Dallas police officer and president of the Dallas Police Association.

Don’t worry dear pensioners, there is no problem too large for taxpayers to bail out.

A summary of the plan adopted by the DPFP board can be viewed below:

 

end

 

It looks like Bannon is out of the National Security Council and McMaster is in.It sure looks like the Trump administration is in turmoil;’

(courtesy zero hedge)

Bannon Out Of NSC? McMaster Prepares To Reorganize Foreign Policy Team

The arrival of Mike Flynn’s replacement, Gen. H.R. McMaster as Trump’s new national security advisor could mean sweeping changes of the White House foreign policy team, giving him control of Homeland Security and guarantee full access to the military and intelligence agencies. In a report by the NYT, Mr. McMaster is said to be weighing changes to an organization chart that generated consternation when it was issued last month.

According to one proposal, McMaster would restore the director of national intelligence and the chairman of the Joint Chiefs of Staff to full membership in a cabinet-level committee.

Another likely change would involve the Homeland Security Council which would reform under the National Security Council, the way it was during the administration of President Barack Obama. The NYT notes that they were only left out because the Trump team copied a Bush-era organizational chart without realizing that President Obama had made both positions full members of the committee: “Mr. Trump’s team did not intend to reduce the role of the intelligence director or Joint Chiefs chairman, officials said. In crafting their organization order, the officials said, Mr. Trump’s aides essentially cut and pasted language from Mr. Bush’s organization chart, substituting the national intelligence director for the C.I.A. director, who back then was the head of the nation’s spy agencies.”

The decision to separate the Homeland Security staff, they said, was primarily a way to diminish the power of McMaster’s predecessor, Michael T. Flynn, who resigned last week. Now that Flynn is out and Mr. McMaster is in, both councils may report to him.

But the most notable proposed change has to do with the fate of Steve Bannon on the NSC, who may be removed from the principals committee: “Under the original organization plan last month, Mr. Bannon was invited to attend any National Security Council meeting led by the president and was made a regular member of the so-called principals committee of cabinet secretaries. One senior official supportive of Mr. Bannon’s position said it would not change under any reorganization. Sean Spicer, the White House press secretary, said this week that Mr. McMaster would have full authority to organize his staff, but that any change in Mr. Bannon’s status would have to be approved by the president.”

However, the NYT notes, that veterans of past administrations and members of Congress from both parties criticized the decision to put Mr. Bannon on the principals committee, saying that it risked injecting politics into national security. President George W. Bush’s senior adviser, Karl Rove, was generally kept out of sensitive national security meetings. Mr. Obama’s senior adviser, David Axelrod, attended some national security meetings but was not given formal status.

But Mr. Trump was surprised by the intensity of the blowback to the initial order, and complained that Mr. Flynn had not made him understand the significance of the changes or how they would be perceived, according to senior officials.

The NYT explains that White House officials were talking about revising the organization chart even before Mr. McMaster’s appointment, but the issue came to a head after Mr. Trump asked for Mr. Flynn’s resignation last week because Mr. Flynn had misled Vice President Mike Pence and other White House officials about what he discussed with Russia’s ambassador in a December phone call.

Since arriving this week, Mr. McMaster has made a point of going door to door through the Eisenhower Executive Office Building, where most national security aides work, to introduce himself and build relations, current and former officials said. He is planning an all-hands staff meeting on Thursday.

As for Bannon, who may be cut from the NSC, Trump’s decision will be carefully watched as such a move would be potentially perceived as a relaxation of Bannon’s influence over Trump, a topic which has been of material focus for the press in recent weeks.

 

end

 

O’Keefe delivers the undercover footage of CNN trying to manipulate data

(courtesy zero hedge)

O’Keefe Drops “Bombshell” Undercover Footage From Within CNN

As promised two days ago on the Sean Hannity radio show, James O’Keefe and his team at Project Veritas just released covertly captured, previously unheard audio footage from within the CNN newsroom.  But unlike his usual undercover sting operations, this footage was allegedly sourced from a CNN insider who apparently grew frustrated with the perpetually biased reporting of the “fake news” media outlet.

Per O’Keefe’s website, today’s release includes 119 hours of secretly recorded raw footage from an inside source at CNN with another 100 hours of footage still to be released.  Given the volume of footage to be released, O’Keefe is asking for help to transcribe and investigate the recordings and encourages users to provide tips on interesting discoveries here.

The audio was secretly recorded in 2009 by an anonymous source inside CNN’s Atlanta headquarters who we are identifying as Miss X. The tapes contain soundbites from current and previous CNN employees Joe Sterling, Arthur Brice, and Nicky Robertson, as well as numerous others. 

 

In order to expose media malfeasance within CNN, we need your help transcribing, investigating and connecting the dots on these 200+ hours of audio. Leave comments, upload transcriptions or contact us with your tips below.

View image on Twitter

James O’Keefe @JamesOKeefeIII

BREAKING: @Project_Veritas releases Part I of @CNN tapes at press conference.

10:06 AM – 23 Feb 2017

 

Among other things, the audio recordings reveal CNN attempting to misrepresent polling data…

Miss X: “I read a CNN poll that was taken on June 26 and 28th, and I know that the hearing for the case, the fire fighters case was on the 29th, so the poll was done right before it, and those are still the poll results we’re reporting, so I asked someone in DC who does the poll results about why we hadn’t updated it, and said there were a few newer polls from last week and the week before and there’s CBS news polls and a Rasmussen poll, and he said we don’t use Rasmussen, and I said does CNN plan to do another poll if we’re only using that. He said we’re not going to be doing another poll, those are the results we’ll be using. So I don’t see how that’s reporting all sides because that poll said hold for release until Friday the 10th.”

 

Arthur Brice: “Who did you talk with?”

 

Miss X: “Paul [CNN’s Deputy Political Director Paul Steinhauser].”

 

Arthur Brice: “Yeah, he’s your director. Yeah, he’s pretty high up in the food chain. I agree. I think it’s dishonest to use outdated information if new information shows something that is in variance with what you’re reporting. It’s just, it’s dishonest.”

…and again with polling data related to Supreme Court Justice Sotomayor:

Miss X: “This wasn’t released until two weeks after. So can we say a newly released poll?”

 

Joe Sterling: “No, you can’t say that. You can’t say that at all. This isn’t a newly released.”

 

Miss X: “But it says newly released on Friday.”

 

Joe Sterling: “I know, how did we write about this? Did we write a wire about this? “I don’t think we stand to change how people think of her [Sotomayor]. Geez, I mean if someone picked this up it’s not going to change – it’s not going to change anybody’s opinion.”

And, admitting what we all knew already, here is CNN’s former News Desk Editor, Joe Sterling, revealing his clear bias for Obama.

James O’Keefe @JamesOKeefeIII

Joe Sterling, once News Desk Editor @CNN admits he has a clear bias in favor of @POTUS44. Doesn’t claim to be “most trusted?”

11:03 AM – 23 Feb 2017

 

With that brief intro, here is O’Keefe’s latest work.


The full 119 hours of audio footage will eventually be available here, but for now PV’s servers seem to be having a difficult time keeping up with the overwhelming demand from supporters eager to hear first-hand accounts of CNN’s bias.

Meanwhile, noting that this is just the “beginning of the end for the MSM”, O’Keefe also announced that he will pay a $10,000 award to anyone who comes forward with legally obtained audio or video footage exposing media malfeasance.

James O’Keefe @JamesOKeefeIII

If you are an employee in a newsroom and hear or see something unethical, record it. If it’s good enough I’ll pay you $10k.

10:08 AM – 23 Feb 2017 James O’Keefe @JamesOKeefeIII

I want to start exposing the media and their flaws. This is the beginning of the end for the MSM. And it starts today. @CNN

10:13 AM – 23 Feb 2017 James O’Keefe @JamesOKeefeIII

Have video inside a newsroom? I will go to jail to protect your name. We will defend you. Come to me. Come to us. I will protect you.

10:17 AM – 23 Feb 2017

 

end

 

I will close with this terrific commentary from Pam Martens and Russ Martens on the criminal actions of JPMorgan and Citigroup and how their CEO’s have kept their jobs quite distinct from Wells Fargo’s upper management who were fired for their transgressions.

 

special thanks to Mark W. for sending this down for us

(courtesy WallStreetOnParade/Russ and Pam Martens)

 

What JPMorgan and Citigroup Have in Common When It Comes to Crime

By Pam Martens and Russ Martens: February 23, 2017

On September 8, 2016, the Consumer Financial Protection Bureau (CFPB) fined Wells Fargo $185 million following an investigation that found that its employees had engaged in a widespread practice of “secretly opening unauthorized deposit and credit card accounts” in order to meet sales quotas or qualify for bonuses. An estimated 2 million accounts were involved. One month later, the Chairman and CEO of Wells Fargo, John Stumpf, was gone.

Consider that swift action to acknowledge and punish egregious abuse of clients with how the Boards of Directors of JPMorgan Chase and Citigroup have responded to criminal felony charges and seemingly endless regulatory fines for abusing clients’ trust. The Boards have kept their CEOs in place, paid the monster fines and moved on to the next settlement.

Jamie Dimon became the CEO of JPMorgan Chase on January 1, 2006. At that point, the bank was more than a century old and had never been charged with a criminal felony. In 2014, the Justice Department charged JPMorgan Chase with two felony counts in connection with their role in facilitating the Madoff Ponzi scheme. The bank was given a two-year deferred prosecution agreement.

The very next year, in May 2015, JPMorgan Chase was hit with a new felony count for its role in rigging foreign currency markets as part of a banking cartel. That’s three felony counts in two years and yet Jamie Dimon kept his job. Before the felony counts there was a $13 billion settlement with the Justice Department and Federal and State regulators in 2013 for JPMorgan Chase’s role in selling toxic mortgage investments to investors as worthwhile products when the bank had good reason to believe they would blow up.

In 2012, Dimon himself was hauled before Congress to explain why his bank was making speculative bets with depositors’ money in high risk derivatives in London. The bank eventually owned up to losing $6.2 billion in the wild trades. The scandal  became infamously known as the London Whale. In 2013, the Senate Permanent Subcommittee on Investigations released a damning 307-page report on the London Whale matter. The same year, the regulator of national banks, the Office of the Comptroller of the Currency (OCC), released the following statement regarding the London Whale trades:

“The credit derivatives trading activity constituted recklessly unsafe and unsound practices, was part of a pattern of misconduct and resulted in more than minimal loss, all within the meaning of 12 U.S.C. § 1818(i)(2)(B)”;  and “The Bank failed to ensure that significant information related to the credit derivatives trading strategy and deficiencies identified in risk management systems and controls was provided in a timely and appropriate manner to OCC examiners.”

Senator Carl Levin, Chair of the Senate Permanent Subcommittee on Investigations at the time, said that the bank “piled on risk, hid losses, disregarded risk limits, manipulated risk models, dodged oversight, and misinformed the public.”  And, unbelievably, Jamie Dimon continued his tenure as Chairman and CEO of JPMorgan Chase.

The crime spree at JPMorgan Chase became so surreal that two trial lawyers, Helen Davis Chaitman and Lance Gotthoffer, published a breathtaking book on the subject, comparing the bank to the Gambino crime family. In addition to the settlements noted above, the authors add more details as to what has occurred on Dimon’s watch, such as:

“In April 2011, JPMC agreed to pay $35 million to settle claims that it overcharged members of the military service on their mortgages in violation of the Service Members Civil Relief Act and the Housing and Economic Recovery Act of 2008.

“In March 2012, JPMC paid the government $659 million to settle charges that it charged veterans hidden fees in mortgage refinancing transactions.

“In October 2012, JPMC paid $1.2 billion to settle claims that it, along with other banks, conspired to set the price of credit and debit card interchange fees.

“On January 7, 2013, JPMC announced that it had agreed to a settlement with the Office of the Controller of the Currency (‘OCC’) and the Federal Reserve Bank of charges that it had engaged in improper foreclosure practices.

“In September 2013, JPMC agreed to pay $80 million in fines and $309 million in refunds to customers whom the bank billed for credit monitoring services that the bank never provided.

“On December 13, 2013, JPMC agreed to pay 79.9 million Euros to settle claims of the European Commission relating to illegal rigging of benchmark interest rates.

“In February 2012, JPMC agreed to pay $110 million to settle claims that it overcharged customers for overdraft fees.

“In November 2012, JPMC paid $296,900,000 to the SEC to settle claims that it misstated information about the delinquency status of its mortgage portfolio.

“In July 2013, JPMC paid $410 million to the Federal Energy Regulatory Commission to settle claims of bidding manipulation of California and Midwest electricity markets.

“In December 2013, JPMC paid $22.1 million to settle claims that the bank imposed expensive and unnecessary flood insurance on homeowners whose mortgages the bank serviced.”

Michael Corbat has been CEO of Citigroup since October 2012. Below is just a sampling of the regulatory charges against the bank under Corbat’s reign, including a guilty plea to a felony count in May 2015 which covered conduct that continued after Corbat took the helm.

July 1, 2013: Citigroup agrees to pay Fannie Mae $968 million for selling it toxic mortgage loans.

September 25, 2013: Citigroup agrees to pay Freddie Mac $395 million to settle claims it sold it toxic mortgages.

December 4, 2013: Citigroup admits to participating in the Yen Libor financial derivatives cartel to the European Commission and accepts a fine of $95 million.

July 14, 2014: The U.S. Department of Justice announces a $7 billion settlement with Citigroup for selling toxic mortgages to investors. Attorney General Eric Holder called the bank’s conduct “egregious,” adding, “As a result of their assurances that toxic financial products were sound, Citigroup was able to expand its market share and increase profits.”

November 2014: Citigroup pays more than $1 billion to settle civil allegations with regulators that it manipulated foreign currency markets. Other global banks settled at the same time.

May 20, 2015: Citicorp, a unit of Citigroup becomes an admitted felon by pleading guilty to a felony charge in the matter of rigging foreign currency trading, paying a fine of $925 million to the Justice Department and $342 million to the Federal Reserve for a total of $1.267 billion.

May 25, 2016: Citigroup agrees to pay $425 million to resolve claims brought by the Commodity Futures Trading Commission that it had rigged interest-rate benchmarks, including ISDAfix, from 2007 to 2012.

July 12, 2016: The Securities and Exchange Commission fined Citigroup Global Markets Inc. $7 million for failure to provide accurate trading records over a period of 15 years.

President Donald Trump’s naïve (or willfully blind) notion that Wall Street will work better at raising capital if it is unleashed from strident Federal regulation is unhinged from the facts on the ground. Those facts, as illustrated above, are that the Boards of two of the largest banks in the U.S. are utterly spineless when it comes to holding their CEOs and employees accountable in the face of a tsunami of crimes.

  • © 2017 Wall Street On Parade. Wall Street On Parade ® is registered in the U.S. Patent and Trademark Office. WallStreetOnParade.com is a financial news site operated by Russ and Pam Martens to help the investing public better understand systemic corruption on Wall Street. Ms. Martens is a former Wall Street veteran with a background in journalism. Mr. Martens’ career spans four decades in printing and publishing management.

 

Well that should do it for today

I will see you tomorrow night

Harvey


FEB 22/Gold and silver rebound on FOMC minutes released at 2 pm/GLD and SLV inventory remain constant/Gold and silver equity shares whacked/Both China and Iran angry at the USA/Trump now worried about deficit spending and yet the Dow rises??/

Wed, 02/22/2017 - 13:46

Gold at (1:30 am est) $1232.00 DOWN $5.50

silver was : $17.94:  DOWN 5 CENTS

Access market prices:

Gold: $1237.90

Silver: $18.03

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 22/17 (10:15 pm est last night): $  1245.45

NY ACCESS PRICE: $1236.40 (AT THE EXACT SAME TIME)/premium $9.05

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1246.39

NY ACCESS PRICE: $1235.00 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  11.39

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 22/2017: 5:30 am est:  $1237.50   (NY: same time:  $1237.40   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 22.2017: 10 am est:  $1236.65(NY same time: $1237.60 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  24 NOTICE(S) FOR 2400 OZ.  TOTAL NOTICES SO FAR: 5315 FOR 531,500 OZ    (16.530 TONNES)

For silver:

 

For silver: FEBRUARY

52 NOTICES FILED FOR 260,000 OZ/

TOTAL NO OF NOTICES FILED: 465 FOR 2,325,000 OZ

 

This is options expiry week for both the silver and gold contracts.  First day notice is this Tuesday, Feb 28.2017.  Options will expire on the comex on Thursday and on the OTC market in London, early Tuesday morning.  For the first time comex has silver in backwardation February/March by 2 cents.  The open interest on the silver comex is now over 1 billion oz and no doubt that the London OTC is multiples of that. We will be watching this week with open eyes.

 

As for Agnico eagle I phoned the company and got complete clarification on what is going on.  The company produced record amounts of gold throughout the year and including the 4th quarter. However the last shipment out of Meadowbank could not leave because of inclement weather. Thus the profit which would have occurred in the last quarter will be included in this quarter. There is absolutely nothing wrong with the earnings side of things and the production side of things except the crooks are short selling the stock because they cannot get a hold of real metal to short.

 

 

 

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 2545 contracts UP to 208,147 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.041 BILLION TO BE EXACT or 149% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 24 NOTICE(S) FOR 2400 OZ

In gold, the total comex gold FELL BY 2843 contracts WITH THE FALL IN  THE PRICE GOLD ($0.10 with YESTERDAY’S trading ).The total gold OI stands at 427,168 contracts

we had 24 notice(s) filed upon for 2400 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV:

THE SLV Inventory rests at: 335.281 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by 2545 contracts UP to 208,147 AS SILVER WAS DOWN 3 CENTS with YESTERDAY’S trading. The gold open interest FELL by 2843 contracts DOWN to 428,168 WITH THE FALL IN THE PRICE OF GOLD OF $0.10  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 7.89 POINTS OR .241%/ /Hang Sang CLOSED UP 238.33 POINTS OR 0.99% . The Nikkei closed UP 1.56 POINTS OR 0.01% /Australia’s all ordinaires  CLOSED UP 0.25%/Chinese yuan (ONSHORE) closed UP at 6.8780/Oil FELL to 53.90 dollars per barrel for WTI and 56.27 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8590 yuan to the dollar vs 6.8780  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

 

REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)China is not happy that the USA carriers are patrolling the South China seas. This opens up a huge confrontation with China.

( zero hedge)

ii)China responds by deploying SAM batteries on the South China Sea islands..something that is annoying the Americans

( zero hedge)

4. EUROPEAN AFFAIRS

A flight to safety:  German yields tumble especially on the 2yr and 10 yr as political fears grow.  France: LePen, Germany: Schultz, and Holland: Wilder

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Now it is Iran’s turn to warn the USA: The enemy will receive a strong slap in the face.  The uSA  must be elated with the deal they have done with them;

( zero hedge)

6.GLOBAL ISSUES

A good look at what is going on inside Sweden.  The author is stating that mainstream media is hiding the full picture and Trump is right about the immigrants.  No doubt that the message is getting to France, Germany and Holland with their upcoming elections this year

( zero hedge)

7. OIL ISSUES

 

Oil rises a bit after a surprise inventory draw

( zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)Fascinating:  A Chinese firm Boyuan Mining company manufactured fake gold bars containing only 38% gold and the rest Tungsten. These bars were all used as collateral to get loans from several credit unions inside China.  The total amount loaned out was 1.45 billion USA against this fake collateral

No gold entered the SGE which has strict rules on assays etc.

( Shanghai Daily/GATA)

ii)As I mentioned above, this is expiry option week.  Options on the comex goes off the board on Thursday and on Tuesday morning for the  OTC options.  For the first time we are experiencing a 2 cent backwardation at the comex February over March. This means extreme shortage of metal.  The open interest on the silver comex is now over 1 billion oz and the OTC levels are multiples of that.  This is very dangerous as we will watch how this will play out this week.

a must read…

( James Turk/Kingworldnews)

iii)Craig Hemke details the silver fraud at the comex exactly the way I have described it to you over these past several months;

( Craig Hemke/TFMetals)

10.USA STORIES

i)The FOMC minutes hint at a hike fairly soon but they also warn that Trump’s policies may not materialize.  They also claim that the VIX is too low.

March rate hike odds remained unchanged, the yield curve flattened and gold and silver rose

( zero hedge)

ii)The culture of banking officials for fraud strikes again.  We now have 4 executives fired for the fake accounts scandal and no doubt there will be criminal charges especially now that the Trump administration has taken power in the USA

( Dugan)

iii)It sure looks like Trump wants to put more troops on the ground to defeat ISIS.

( Ron Paul)

iv)This is going to be exciting:  James O’Keefe of  Project Veritas is about to smoke CNN on Thursday:

( zero hedge)

v)This is a surprise;  existing home sales jump a huge 3.3% well above the 1.1% estate despite rising rates:  is the data cooked?

( zero hedge)

vi)My goodness:  Trump calls the huge deficit spending by the USA has “out of control” and the pundits hardly flinched:

( zero hedge)

vii)This is what happens when you tax too much: that famous soda tax in Philadelphia has now caused a huge 30  to 50% plunge in sales and massive layoffs in the SUPERMARKET and other distributor sectors in the Philly area:

 

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL BY 2,843 CONTRACTS UP to an OI level of 427,168 WITH THE FALL IN THE  PRICE OF GOLD ( $0.10 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 187 contracts DOWN to 762.   We had 146 notice(s) served upon yesterday and therefore we LOST 41 contracts or an additional 4100 oz will stand for delivery and  IT LOOKS LIKE THE CASH SETTLEMENTS HAVE RESUMED FOR A  FIAT PROFIT . The next non active contract month of March saw it’s OI FALL by 264 contracts DOWN TO  1616.The next big active month is April and here the OI FELL by 4102 contracts DOWN to 276,960.

We had 24 notice(s) filed upon today for 2400 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx  And now for the wild silver comex results.  Total silver OI ROSE by 2545 contracts FROM 205,602 UP TO 208,147 AS THE PRICE OF SILVER FELL TO THE TUNE OF 3 CENTS with respect to YESTERDAY’S trading.  We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

The  active month of February saw the OI FALL BY 140  contract(s) DOWN TO 140.  We had 3 notice(s) served YESTERDAY so we LOST 137 CONTRACTS  or an additional 685,000 oz will NOT stand for delivery.

The next big active delivery month is March and here the OI decrease by 17,234 contracts down to 50,477 contracts. For comparison purposes last year on the same date only 43,487 contracts were standing.

We had 52 notice(s) filed for 260,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 175,857  contracts which is fair.

Yesterday’s confirmed volume was 267,519 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 22/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   62,823,054 OZ HSBC Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   24 notice(s) 2400 oz No of oz to be served (notices) 738 contracts 73,800 oz Total monthly oz gold served (contracts) so far this month 5315 notices 5315 oz 16.530 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  287,058.4   oz Today we HAD 0 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 1 customer withdrawal(s)  i) Out of HSBC: 62,823.054 oz total customer withdrawal: 62,823.054 oz We had 0  adjustment(s) For FEBRUARY:

Today, 0 notice(s) were 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 24 contract(s)  of which 10 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5315) x 100 oz or 531,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (762 contracts) minus the number of notices served upon today (24) x 100 oz per contract equals 605,300 oz, the number of ounces standing in this  active month of FEBRUARY.   Thus the INITIAL standings for gold for the FEBRUARY contract month: No of notices served so far (5315) x 100 oz  or ounces + {(759)OI for the front month  minus the number of  notices served upon today (24) x 100 oz which equals 605,300 oz standing in this non active delivery month of FEBRUARY  (18.827 tonnes)    we LOST 41 contracts or an additional 4100 oz will stand in this active delivery month.        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 16.530 tonnes vs 7.9876 at the end of Feb). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.9004 tonnes FEB/ 18.827 tonnes total for the 14 months;  244.822 tonnes average 17.487 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,878,394.428 or 276.155 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 276.155 tonnes for a  loss of 27  tonnes over that period.  Since August 8/2016 we have lost 78 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 6 MONTHS  78 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE JANUARY DELIVERY MONTH FEBRUARY INITIAL standings  feb 22. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 621,777.460 0z  CNT Brinks Deposits to the Dealer Inventory nil oz Deposits to the Customer Inventory   nil oz No of oz served today (contracts) 52 CONTRACT(S) (260,000 OZ) No of oz to be served (notices) 121 contracts (605,000  oz) Total monthly oz silver served (contracts) 465 contracts (2,325,000 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   6,683,347.0 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 2 customer withdrawal(s): i) Out of CNT:  618,885.260 oz ii) Out of Brinks:  2892.20 oz TOTAL CUSTOMER WITHDRAWALS: 621,777.460 oz  we had 0 customer deposit(s): ***deposits into JPMorgan have now stopped. total customer deposits;  nil  oz    we had 2  adjustment(s) i) Out of Brinks:  306,965.05 oz was adjusted out of the customer and this landed into the dealer account of Brinks ii) Out of CNT: 251,817.400 oz was adjusted out of the customer account of CNT and this landed into the dealer account of CNT The total number of notices filed today for the FEBRUARY. contract month is represented by 52 contract(s) for 260,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at 465 x 5,000 oz  = 2,325,000 oz to which we add the difference between the open interest for the front month of feb (173) and the number of notices served upon today (52) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the FEBRUARY contract month:  465(notices served so far)x 5000 oz  + OI for front month of FEB.( 173 ) -number of notices served upon today (52)x 5000 oz  equals  2,930,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver.  We LOST 137 contracts or an additional 685,000 oz will NOT stand for delivery.  At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory. END Volumes: for silver comex Today the estimated volume was 100,207 which is gigantic!!! FRIDAY’S  confirmed volume was 158,100 contracts  which is totally unbelievable. To give you an idea of volume today’s confirmed volume::  158,100 contracts equates to 790 million oz or 112% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA   Total dealer silver:  30.640 million (close to record low inventory   Total number of dealer and customer silver:   183.466 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

FEB 22/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Feb 22/2017/ Inventory rests tonight at 841.17 tonnes *IN LAST 94 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 41 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory FEB 22/no changes in inventory at SLV/inventory rests at 335.281 million oz FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 9/no changes in silver Inventory rests at 334.713 million oz feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/ Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/ . Feb 22.2017: Inventory 335.281  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.0 percent to NAV usa funds and Negative 8.0% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.3% Percentage of fund in silver:39.5% cash .+0.2%( feb 22/2017)  . 2. Sprott silver fund (PSLV): Premium FALLS to -.36%!!!! NAV (Feb 22/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.30% to NAV  ( feb 22/2017) Note: Sprott silver trust back  into NEGATIVE territory at -0.36% /Sprott physical gold trust is back into NEGATIVE territory at -0.30%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

 

Gold To Rise – Inflation Rising and Real Chinese Gold Demand Higher Than “Official” By Mark O’ByrneFebruary 22, 20170 Comments

Frank Holmes joins Lawrie Williams, Koos Jansen and many others in questioning the “official” Chinese gold demand numbers. Real gold demand is likely much higher than the official numbers

by Frank Holmes

Inflation just got another jolt, rising as much as 2.5 percent year-over-year in January, the highest such rate since March 2012. Led by higher gasoline, rent and health care costs, consumer prices have now advanced for the sixth straight month. In addition, January is the second straight month for rates to be above the Federal Reserve’s target of 2 percent.

Air fares are also climbing, and speaking of air fares, billionaire investor Warren Buffett added to his domestic airline holdings, we learned last week. Buffett’s holding company, Berkshire Hathaway, is now the second-largest holder of American Airlines, with an 8.79 percent share of the company. It also increased its holdings in Delta Air Lines by over 800 percent, to 60 million shares. The company now owns 43.2 million shares of Southwest Airlines, and it increased its stake in United Continental to about 28 million shares.

A March rate hike now looks all but imminent. Many economists—including the Goldman Sachs economists I had the pleasure to hear speak this week—expect to see at least three such hikes this year alone.

Gold responded accordingly, closing above $1,240 for the first time since soon after the November election. Below you can see the gold price charted against the inflation-adjusted 10-year Treasury yield, which is now in subzero territory.

The question I have is: Why would an investor deliberately choose to lose money? But that’s precisely what’s happening now with inflation where it is.

2-Year 3-Year 10-Year Treasury Yield 1.22% 1.95% 2.45% Consumer Price Index 2.50% 2.50% 2.50% Real Yield -1.28% -0.55% -0.05% As of February 16 Source: Federal Reserve, U.S. Global Investors

These were among some of the topics addressed by former Fed Chair Alan Greenspan, who spoke with the World Gold Council (WGC) for the winter edition of its “Gold Investor.”

“Significant increases in inflation will ultimately increase the price of gold,” Greenspan said. “Investment in gold now is insurance. It’s not for short-term gain, but for long-term protection.”

He also reiterated his view, which I share, that gold is much more than just a metal but a currency:

“I view gold as the primary global currency. It is the only currency, along with silver, that does not require a counterparty signature. Gold, however, has always been far more valuable per ounce than silver. No one refuses gold as payment to discharge an obligation. Credit instruments and fiat currency depend on the credit worthiness of a counterparty. Gold, along with silver, is one of the only currencies that has an intrinsic value. It has always been that way. No one questions its value, and it has always been a valuable commodity, first coined in Asia Minor in 600 BC.”

Although major stock indices continue to hit fresh all-time highs on hopes of tax reform and fiscal stimulus, it’s important to temper the exuberance with a little prudence. The bull market, currently in its eighth year, is facing some significant geopolitical and macroeconomic uncertainty, and we could be getting late in the economic cycle. This makes gold’s investment case even more attractive. For the 10-year period, the yellow metal has shown an inverse correlation to risk assets such as stocks and high-yield bonds.

It might be time to ensure that your portfolio has the recommended 10 percent in gold—that includes 5 percent in gold coins and jewelry, the other 5 percent in quality gold equities and mutual funds.

China and India to Lead World Economy by 2050

The long-term investment case for gold looks just as compelling following bullish reports last week from PricewaterhouseCoopers (PwC) and Morgan Stanley. China and India are the world’s top two consumers of gold, and both countries are expected to make huge economic gains in the next few decades. This is likely to boost gold demand even more, which has a high correlation with discretionary income growth.

China alone consumed approximately 2,000 metric tons in 2016, or roughly 60 percent of all the new gold that was mined during the year, according to veteran mining commentator Lawrie Williams, who based his estimates on calculations made by BullionStar’s Koos Jansen. The 2,000 metric tons is a much higher figure than what analysts and the media have been telling us, but I’ve always suspected China’s annual consumption to run higher than “official” numbers.

 

END

 

Fascinating:  A Chinese firm Boyuan Mining company manufactured fake gold bars containing only 38% gold and the rest Tungsten. These bars were all used as collateral to get loans from several credit unions inside China.  The total amount loaned out was 1.45 billion USA against this fake collateral

No gold entered the SGE which has strict rules on assays etc.

(courtesy Shanghai Daily/GATA)

 

Chinese firm said to have used tungsten to manufacture fake gold bars

Submitted by cpowell on Tue, 2017-02-21 12:52. Section:

Shanghai Gold Exchange Denies Connection with Fraudulent Manufacturer

By Leng Cheng
Shanghai Daily
Tuesday, February 21, 2017

The Shanghai Gold Exchange today denied a media report that it was connected with a supplier that has allegedly cheated loans with fake gold bars.

A Caijing magazine report on Monday accused Boyuan Mining Co., a metal producer based in Lingshan, Henan Province, which used to produce gold-plated tungsten bars, has caused loss of more than 10 billion yuan (US$1.45 billion) during the past decade through fraud.

The report referred the producer as one of the suppliers of Shanghai Gold Exchange since 2010 due to its expansion on assembly lines of gold production.

“Boyuan Mining Co. is not on the list of licensed suppliers,” said an announcement made by the exchange. “Gold ingots, gold bars, and silver ingots traded on the Shanghai Gold Exchange have gone through strict inspections.” …

The Caijing report said that Boyuan Mining Co. managed to produce a type of gold-plated tungsten bars weighing five kilograms with 62 percent tungsten and 38 percent gold since 2005. The bullion price surged more than 30 percent in 2007, marking its biggest rise since 1979.

Caijing said the company used those fake gold bars as collateral to obtain loans from several credit unions in both Henan Province and Shaanxi Province. Main suspects were detained by the police in May 2016, the report added. …

… For the remainder of the report:

http://www.shanghaidaily.com/business/Shanghai-Gold-Exchange-denies-conn…

 

END

 

As I mentioned above, this is expiry option week.  Options on the comex goes off the board on Thursday and on Tuesday morning for the  OTC options.  For the first time we are experiencing a 2 cent backwardation at the comex February over March. This means extreme shortage of metal.  The open interest on the silver comex is now over 1 billion oz and the OTC levels are multiples of that.  This is very dangerous as we will watch how this will play out this week.

a must read…

(courtesy James Turk/Kingworldnews)

Turk sees indications of imminent short squeeze in silver

Submitted by cpowell on Tue, 2017-02-21 15:48. Section:

10:50a ET Tuesday, February 21, 2017

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk, in comments posted today at King World News, describes indications of an imminent short squeeze in silver as investment banks that are short the metal struggle to keep it below $18. Turk’s comments are posted at KWN here:

http://kingworldnews.com/james-turk-warns-massive-short-squeeze-may-send…

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

 

END

 

Craig Hemke details the silver fraud at the comex exactly the way I have described it to you over these past several months;

(courtesy Craig Hemke/TFMetals)

 

Metals Capped Into FOMC Minutes By Turd Ferguson | Wednesday, February 22, 2017 at 11:06 am

An incredible amount of fraudulent, virtual silver is being created in order to cap price and paint the chart. Will JPM and the rest of The Evil Empire be successful once again in capping price and routing the Specs. The reaction to today’s FOMC minutes may help to determine the outcome.

Again, I can’t stress enough the devious and fraudulent nature of this latest attempt to contain and cap price. The past four days have seen the price of Comex Digital Silver pressing up against the key resistance of $18 and the 200-day moving average near $17.93. See below:

Over this same time period, the Comex Silver Banks led by JPM have increased the total supply of Comex silver contracts by 12,809 contracts. So, while price has been flat, total supply of Comex silver contracts has been increased by 6.5%. THIS is how you cap price and paint the chart!

Imagine for a moment where price would be this morning if total open interest was held flat for the past week. How much higher would price be if sellers of existing contracts needed to be found for the 12,809 contracts of buying pressure? On a larger scale, yes the price of Comex Digital Silver is up $2 year-to-date or about 13%, but how much higher would price be if The Banks hadn’t fraudulently added 44,000 new contracts since December 30?

Why do we always describe this as “fraud”? Two primary reasons:

  1. The Banks are selling something that they don’t have. Can you enter into a contract to sell a house or a car if you don’t actually own the house or car you are attempting to sell?
  2. The Banks create this new “silver” from whole cloth without depositing as collateral any additional silver into their Vaults.

Regarding point #2, see below. Note that at the beginning of 2017, total silver within the Comex vaulting structure was 181,903,037 ounces. Total Comex open interest that day was 163,812 contracts. With each contract representing 5,000 ounces of silver, this equates to a virtual exposure of 819,060,000 ounces.

As of last Friday, total open interest had grown to 205,602 contracts or 1,028,010,000 ounces or virtual silver yet the total amount of silver in the Comex vaults was stagnant at 184,088,021 ounces.

So, The Comex Silver Banks have increased the supply of virtual silver by 25% while only increasing the supply of physical silver in the vaults by 2%. This is fraud, this is a scam and this has absolutely ZERO connection to the supply/demand fundamentals of actual physical silver.

And what are The Banks attempting to accomplish in their aggressive efforts to cap price? Two things. First, maintaining price below the 200-day moving average is important in managing future Spec demand for additional Comex paper.

Second and perhaps more important is the chart-painting aspect of keeping price below $18. As you can see on this weekly chart, by capping price here, JPM et al are effectively attempting to paint a massive head-and-shoulder top onto the weekly chart.

So, once again, you must be alert and cautious here. The forces aligned against you in the Comex silver “market” are powerful and these criminals are doing everything in their collective power to rig price in their favor. Will they be successful (again)? That will depend upon a number of factors going forward. For today, at least, you’d be wise to not underestimate the collusive power of The Banks and the fraudulent nature of their paper derivative pricing scheme.

TF

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 STRONGER AT  6.8780(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8590 / Shanghai bourse UP 7.89 POINTS OR .241%   / HANG SANG CLOSED UP 238.33 POINTS OR 0.99% 

2. Nikkei closed UP 1.56 POINTS OR 0.01%   /USA: YEN FALLS TO 113.10

3. Europe stocks opened ALL MIXED     ( /USA dollar index RISES TO  101.61/Euro DOWN to 1.0510

3b Japan 10 year bond yield: FALLS TO    +.083%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.10/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.90  and Brent: 56.27

3f Gold UP/Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 10yr bund FALLS TO  +.256%/Italian 10 yr bond yield DOWN  to 2.190%    

3j Greek 10 year bond yield RISES to  : 7.23%   

3k Gold at $1238.25/silver $18.00(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 23/100 in  roubles/dollar) 57.75-

3m oil into the 53 dollar handle for WTI and 56 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.10 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0126 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0642 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.324%

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

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

4. USA 10 year treasury bond at 2.411% early this morning. Thirty year rate  at 3.021% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS European Rally Fizzles, S&P Futures Turn Red As USDJPY Slides, Bunds Strongly Bid

What started off in familiar fashion, with Asian stocks rising, and Europe hitting multi-month highs and US futures in record territory has stumbled in recent minutes following a continued rush for safety in short-dated German Bunds (the 2Y is now trading at -0.92%) and ongoing selling in the USDJPY, which has pushed Stoxx 600 back to unchanged, and S&P futures to modestly red for the session.

The exact  catalyst is unclear although traders are citing continued French political risks, as the recent OAT selloff continued this morning on Le Pen fears.

Earlier in the session, global stocks hit record highs on Wednesday, pushing gains for the year above those for all of 2016, while the dollar rose before Federal Reserve minutes that will be scoured for clues on the timing of the next U.S. interest rate rise. MSCI’s main index of global stocks, which tracks share prices across 46 countries, hit a second successive record high. It has risen some 5.7 percent so far this year, beating the 5.6 percent gains of 2016. The MSCI Asia Pacific Index was at the highest level since July 2015 as Chinese shares traded in Hong Kong resumed a rally. Japanese equities managed to end higher even after fluctuations in the yen pressured the Topix.

European shares followed Asian bourses higher, buoyed by all main indexes on Wall Street touching record closing highs on Tuesday with Britain’s Lloyds Banking Group was up 3 percent after reporting its highest full-year profit in a decade, although that early optimism appears to have faded.

As a result, markets painted a mixed picture of investor sentiment on Wednesday, as political risk sent both the euro and German two-year bond yields lower while global equities tracked a U.S. rally. The dollar edged higher before the release of Fed minutes, up 0.3% at 101.64, gaining against the euro and sterling, pressuring oil lower.

The day’s most anticipated event for markets will be the release of the minutes of the Fed’s last policy meeting. Fed Chair Janet Yellen said last week it was likely the central bank would need to raise rates at an upcoming meeting. Markets have priced in only a slim chance of a rise next month but a much greater likelihood in May or June. The dollar rose 0.2 percent against a basket of major currencies and 0.3 percent versus the euro.

Economists expect to see further discussion in the minutes of the Fed’s balance sheet strategy given that many monetary policymakers have been publicly discussing the topic, even though it is clear that policymakers have not yet reached a consensus on the particulars of  the Fed’s reinvestment policy. Additionally, DB economists expect the Fed to announce tapering of reinvestments this December, effective in January 2018. However they also expect a slower pace of tapering because the Fed will likely want to put as much distance between the Fed funds rate and the zero rate lower bound before risking greater disruptions to the long end of the Treasury curve. Thus, they still see the Fed hiking four times next year. Another key question many will hope to see some clarity on is whether March is “live” despite the Fed’s generally less than hawkish announcement: it is not clear how the Fed will bridge its actual dovish statement to hawkish minutes that suddenly make the March meeting in play.

Back to markets, where the Euro has dropped for a fourth day, dropping below 1.05 per dollar for the first time in more than six weeks. That lent early momentum to stocks, with the Stoxx Europe 600 Index advancing for a fourth session, however the rally has since fizzled. Germany’s Dax Index, already at an almost two-year high, briefly crossed the 12,000 level.

Technology stocks outperformed with Ericsson surging following an upbeat Bank of America-Merrill Lynch note. Basic resources sector fell, Goldman Sachs strategists wrote in a note commodity markets need proof of demand to rally further. Lloyds Banking Group Plc rose 3.7 percent as the mortgage lender swung to a quarterly profit and boosted its dividend. Futures on the S&P 500 were trading modestly in the red. The index added 0.6 percent Tuesday, with the Dow Jones Industrial Average, the Nasdaq Composite Index and the Russell 200 Index closing at all-time highs.

EU data saw the inflation rates as expected: core y/y unchanged at 0.9%. German IFO current conditions and expectations both exceeded consensus forecasts at 118.4 and 104 respectively.

European politics and the prospect of higher U.S. rates pushed the gap between short-dated U.S. and German benchmark government bond yields to its widest in nearly 17 years. German two-year yields hit a record low of minus 0.92 percent while U.S. equivalents touched 1.24 percent.

Oil prices dipped. Brent crude, the international benchmark, traded at $56.50 a barrel, down 17 cents. Copper also fell, as traders reduced their positions before the Fed minutes, though supply disruptions supported prices. The metal last traded at $6,030 a tonne, down 0.5 percent on the day. Gold edged up 0.1 percent to $1,236 an ounce.

On today’s calendar are the abovementioned minutes from the latest Fed meeting, which traders hope will provide details on whether March is indeed “live” as a bevy of recent Fed speakers have suggested.

Market Snapshot

  • S&P 500 futures down 0.1% at 2,357.75
  • STOXX Europe 600 down less than 0.1% to 373.33
  • MXAP up 0.6% to 146.14
  • MXAPJ up 0.6% to 470.46
  • Nikkei down 0.01% to 19,379.87
  • Topix up 0.1% to 1,557.09
  • Hang Seng Index up 1% to 24,201.96
  • Shanghai Composite up 0.2% to 3,261.22
  • Sensex up 0.4% to 28,879.78
  • Australia S&P/ASX 200 up 0.2% to 5,805.10
  • Kospi up 0.2% to 2,106.61
  • German 10Y yield fell 2.6 bps to 0.275%
  • Euro down 0.3% to 1.0504 per US$
  • Brent Futures down 0.6% to $56.32/bbl
  • Italian 10Y yield rose 6.3 bps to 2.247%
  • Spanish 10Y yield unchanged at 1.683%
  • Brent Futures down 0.6% to $56.32/bbl
  • Gold spot up 0.1% to $1,237.29
  • U.S. Dollar Index up 0.3% to 101.64

Top Overnight News from BBG

  • Fed’s $2.5 Trillion Hoard of Treasuries Seen Barely Shrinking
  • McDonald’s to Cut Prices on Drinks as Fast-Food Industry Slumps
  • Toll Brothers Beats Estimates as Company Delivers More Homes
  • Facebook Said in Talks to Stream Major League Baseball Games
  • Samsonite Says Mulling U.S. Manufacturing, But Not Due to Trump
  • UPS Races to Cut Costs as E-Commerce Shifts Deliveries to Homes
  • ConocoPhillips’ Reserves Drop to 15-Year Low as Oil- Sands Fade
  • Ternium to Buy CSA Siderurgica do Atlantico From Thyssenkrupp
  • Mexico and Canada Say Nafta Should Be Re-Negotiated Trilaterally
  • Aramco Picks JPMorgan, HSBC, MS as Lead Underwriters

Asian markets traded mostly higher following the positive lead from Wall Street where all 3 major US indices posted gains of at least 0.5%. ASX 200 (+0.2%) saw mild upside amid buoyant consumer staples and healthcare sectors, however upside was limited by gold miners. Nikkei 225 (flat) initially declined amid the risk averse sentiment in the region alongside JPY strength, however double digit gains seen in Toshiba shares helped return the index to flat on the session. China was traded higher as Shanghai Comp. (+0.1%) initially lingered in the red following a weak liquidity injection by the PBoC but staged a late recovery, while Hang Seng (+0.8%) outperformed with properties leading the index as China Resources Land and China Overseas shares both surged more than 3%. 10yr JGBs traded higher amid the risk averse tone in the region, while the BoJ bond buying operation also provided support for the Japanese paper.

Top Asian News

  • China’s $9 Trillion Moral Hazard Problem Grows Too Big to Ignore
  • China Home Prices Rise in Fewest Cities in a Year Amid Curbs
  • Petron Malaysia 4Q Net Income 112.6m Ringgit Vs 16.2m Rgt Y/y
  • China Insurance Watchdog Vows to Severely Punish Speculators
  • Anta Sports Proposes Higher Dividend; FY Net in Line With Est.
  • Indonesia Debt Attractive for Manulife Even as Yield Gap Narrows
  • China’s $9 Trillion Moral Hazard Grows Too Big to Ignore

European bourses have faded early gains, with Price action in equity markets has been dictated by the latest slew of earnings. UK financials have been led higher by Lloyds after the bank reported profits were ahead of analyst expectations, while the DAX broke above 12000 to touch its highest level since Apr’15 with Thyssenkrupp leading the index amid reports that they will divest assets of their Brazilian steel plant. Another day, another record low for the Schatz which is now yielding -0.9% amid signals that the ECB is buying German bonds, in particular those with a yield below the -0.4% deposit rate, which implies strong demand. While investors are seemingly holding off selling their short-end German debt as they are used as collateral to receive cash at the ECB, subsequently reigniting the fears of last year of a collateral squeeze which Draghi and Co. attempted to address in December. Additionally, the decline in the 2-yr yield has been much more pronounced (falling 13bps from Friday) since Le Pen’s significant narrowing in the Presidential poll seen at the back-end of last week (now over 40%).

Top European News

  • German Business Sentiment Rises as Bundesbank Sees Growth Pickup
  • Airbus Takes $2.3 Billion A400M Hit, Sees Profit Gain This Year
  • RWE Writes Off 4.3 Billion Euros on Sliding Power Prices
  • U.K. Gained Momentum at End of 2016 on Trade, Consumer Spending
  • May Faces Calls to Tighten Takeover Rules After Kraft- Unilever

In currencies, the Bloomberg Dollar Spot Index rose 0.2 percent, reversing an earlier drop. The yen led advances in major currencies, strengthening 0.5 percent to 113.17 per dollar, following two days of declines.  The British pound weakened 0.3 percent. The EUR is the big mover on the day as the fall out of the recent Le Pen gains (in the polls) continues. This has had a notable impact into short end German paper as investors are driven into ‘safe havens’ – precious metals also benefiting. EU/USD has now tested below 1.0500 and continues to do so, with the early drivers coming from EUR/GBP and EUR/JPY specifically. This looks set to continue as long as the polls remain where they are, and breaking some notable support levels, the cross rates in particular look vulnerable. EU data saw the inflation rates as expected — core y/y unchanged at 0.9%. German IFO current conditions and expectations both exceeded consensus forecasts at 118.4 and 104 respectively.  Both Cable and USD/JPY have been impacted, with the former pushed up through 1.2500 in the early exchanges before 1.2500+ sellers overwhelmed. This pair remains range bound inside 1.2350-1.2600 for now, but the latest Q4 business investment figures disappointed — falling 0.9% vs +0.4% previously, though the GDP rate was revised up slightly to prompt some immediate algo driven buying. USD/JPY has now slipped back to 113.00 as a result, with lacklustre UST yields also playing their pair. The 10yr rate looks pretty stagnant inside the 2.30-2.55% range, but this translates into limited momentum in the spot rate either way

In commodities, gains in Gold (up 0.1% to $1,237) are perhaps more of a function of risk sentiment as the political arena in Europe grabs more of the attention. The polls show Le Pen making some notable gains, albeit still behind in the 2nd round, but enough to unnerve EUR holders at the very least if not investors globally. Safe haven flow has prompted significant moves in shorter end Bunds, but given the safe haven aspect, Gold has also benefited alongside Silver. Energy prices have seen some downside in European trade, paring some of yesterday’s gains which saw WTI fail to make a sustained break above USD 55.00/bbl. Furthermore, participants will likely be looking ahead to today’s rescheduled API release which has recently provided a slew of large builds.. Comments from Barkindo on further compliance have supported, but last night’s rhetoric from Iran suggested a move to $60.00 would hurt OPEC — in terms of deterring fresh production (Shale?). Inventory levels for Iron Ore in China are grabbing more of the headlines, and may put the brakes on some of the moves seen in base metals of late. On the day, Lead is the out-performer, while Copper gives back some of its recent gains, though holds comfortably above $2.70.

Looking at the day ahead, in the US the lone data release is January existing home sales. Later this evening we’ll get the FOMC minutes from the Jan 31st/Feb 1st meeting. Away from the data we’re due to hear from the Fed’s Powell at 6pm GMT, while BoE deputy governor Cunliffe is due to speak later this morning.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior -3.7%
  • 10am: Existing Home Sales, est. 5.55m, prior 5.49m; MoM, est. 1.09%, prior -2.8%
  • 1pm: Fed’s Powell Speaks on Economic Outlook in New York
  • 2pm: FOMC Meeting Minutes

DB’s Jim Reid concludes the overnight wrap

Markets are in a celebratory mood at the moment with the flash European PMI’s for February lending further strength to the argument of an improving growth picture in Europe. Indeed the composite reading for the Euro area surged 1.6pts to 56.0 in February after the consensus was for broadly little change. That is the highest reading since April 2011 while the details revealed a 0.3pt rise in the manufacturing PMI to 55.5 and an even more significant 1.9pt jump in the services reading to 55.6. The country level breakdown also revealed an impressive 1.3pt jump in the composite for Germany to 56.1 and a 2.1pt jump in the composite for France to 56.2. So decent evidence that the European economy is showing signs of strong upward growth momentum in the first quarter of this year with growth also encouragingly broad-based by sector and country.

Significantly that data is also coming despite an increasingly uncertain political environment. Much has been made of the recent tightening in the French polls in favour of Le Pen versus Macron and Fillon. Yesterday we got more evidence of that with the release of another poll. The Elabe poll (covering 18-20 Feb) revealed first round support for Le Pen of 27.5% (up from 26% from the same pollster earlier this month) while support for Fillon actually rose 3 points to 20% and support for Macron fell about five points to 18.5%. In the second round a Le Pen – Fillon race has the latter coming out on top at 56% versus 44% which is unchanged, but a Le Pen – Macron race showed the margin of loss for Le Pen as tightening to 18% (59% versus 41%) from 26%. It’s worth noting that a live TV debate between Fillon, Hamon, Le Pen, Macron and Melenchon has been scheduled for March 20th, so that might be one to note in the calendar.

In terms of markets, French 10y OATs (+2.9bps to 1.080%) again underperform Bunds (+0.3bps to 0.296%) which in turn sent the spread between the two to a new four-and-a-bit year high of 79bps. The peripherals were also anywhere from 3bps to 7bps higher yesterday although in Greece 2y yields (-102bps) hit their lowest level since January following that news that Greece’s creditors are to return to continue discussions, suggesting a political framework is in place to allow an agreement to proceed.

Treasury yields also edged a bit higher with the 10y yield up 1.4bps to 2.429% although that was actually despite some disappointment in the latest PMI’s there (more on that below). Instead it was another day of familiar record highs for US equities which dominated the headlines with the S&P 500 (+0.60%), Dow (+0.58%), Nasdaq (+0.47%) and Russell 2000 (+0.75%) indices all notching up new all time highs. Better than expected results in the retail sector from Wal-Mart and Home Depot seemed to help, as did further gains for Oil with WTI finishing up +1.02% and back above $54/bbl.

Looking ahead to today, while there’s not a huge amount of data scheduled we will get the FOMC minutes later this evening from the Jan 31st/Feb 1st meeting. Our US economists noted in their daily that they expect to see further discussion in the minutes of the Fed’s balance sheet strategy given that many monetary policymakers have been publicly discussing the topic. They note though that it’s clear that policymakers have not yet reached a consensus on the particulars of the Fed’s reinvestment policy. Our economists have however re-evaluated the likely path of Fed balance sheet adjustments. They continue to expect the Fed to announce tapering of reinvestments this December, effective in January 2018. However they also expect a slower pace of tapering because the Fed will likely want to put as much distance between the Fed funds rate and the zero rate lower bound before risking greater disruptions to the long end of the Treasury curve. Thus, they still see the Fed hiking four times next year. Keep an eye on the minutes this evening for any more clues.

Back to markets where this morning in Asia it’s been a bit of a mixed start. While the Nikkei, Kospi and ASX are little changed, the Hang Seng is up +0.82% following stronger than expected GDP data out of Hong Kong (+1.2% qoq in Q4 versus +0.7% expected). On the other hand bourses in China are modestly in the red (Shanghai Comp -0.15%) following a strong start in the first two days of the week. In other markets the US Dollar is flat after the Fed’s Mester said that the Fed doesn’t want to surprise markets on possible future rate hikes. US equity index futures are also little changed Oil has continued to push on and bonds are mixed, albeit with modest moves.

Moving on. Trump related headlines may have abated somewhat in the last week or two but that’s not to say that this will continue. Our FX colleagues pointed out in a piece yesterday that two forthcoming events could bring more clarity to the border adjustment tax debate in particular. Trump is due to address a joint session of Congress on February 28th while the release of the White House’s “phenomenal” tax plan in the next fortnight or so could bring some clarity to the White House’s position. Both occasions could see a definitive endorsement or rejection of the Ryan-Brady BAT proposal and tip the balance in Congress. The team highlight that anecdotally, investors remain unconvinced that border adjustment will happen. Beyond this, it is impossible to derive a market-implied probability. But at least we can gauge the market’s fear of border adjustment from a number of instruments which would be idiosyncratically affected. Specifically, the discount of WTI over Brent futures has widened again since almost closing in early January. Since border adjustment would likely result in WTI trading at a premium, the oil market appears to increasingly discount the reform. The US retail sector, moreover, has almost fully closed its underperformance in the stock market since early January, also reflecting diminished fears of a BTA-driven rise in import costs. Lastly, the US breakeven curve still prices a higher risk of a nearterm, transient inflation shock than earlier this year, but this is probably consistent with lingering expectations of some protectionist measures, not just the BAT proposal. In conclusion our colleagues highlight then that the relevant principal component of these proxies suggests that the market has gradually discounted the border adjustment reform over the past three weeks, and expectations are now even below the peak of early January, prior to President Trump’s critical remarks in the Wall Street Journal on 15 January. Hence, while the market hasn’t fully priced it out, the risk is increasingly skewed toward Trump surprising the market with an endorsement of the Ryan-Brady proposal.

Wrapping up the remaining data yesterday, as noted earlier overall the PMI’s in the US were a little disappointing. Both the flash February services (-1.7pts to 53.9; 55.8 expected) and manufacturing (-0.7pts to 54.3; 55.4 expected) readings fell after expectations were for modest gains. That resulted in a dip in the composite to 54.3 from 55.8 although putting it in context that is still above the levels in 10 of the 12 months in 2016. There was also some Fedspeak to take stock of. Philadelphia Fed President Harker said that “at this point I would not take March off the table” while also highlighting that there is still important data to come. Meanwhile comments from BoE Governor Carney seemed to help Sterling to climb slightly after he said that if the Brexit process proceeds “relatively smoothly to an increasingly clear end-point” then that “would be consistent with a higher path of interest rates”.

Looking at the day ahead, this morning we’ll be kicking things off in Germany where the February IFO survey will be released. Shortly after that we get preliminary Q4 GDP in the UK with the various growth components also due to be released. The other data due out this morning will be the final January revisions for Euro area CPI. This afternoon in the US the lone data release is January existing home sales. Later this evening we’ll get the FOMC minutes from the Jan 31st/ Feb 1st meeting. Away from the data we’re due to hear from the Fed’s Powell at 6pm GMT, while BoE deputy governor Cunliffe is due to speak later this morning.

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 7.89 POINTS OR .241%/ /Hang Sang CLOSED UP 238.33 POINTS OR 0.99% . The Nikkei closed UP 1.56 POINTS OR 0.01% /Australia’s all ordinaires  CLOSED UP 0.25%/Chinese yuan (ONSHORE) closed UP at 6.8780/Oil FELL to 53.90 dollars per barrel for WTI and 56.27 for Brent. Stocks in Europe ALL MIXED. Offshore yuan trades  6.8590 yuan to the dollar vs 6.8780  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  NARROWS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA b) REPORT ON JAPAN c) REPORT ON CHINA

China is not happy that the USA carriers are patrolling the South China seas. This opens up a huge confrontation with China.

(courtesy zero hedge)

China Opposes “Threatening And Damaging” US Carrier Patrols In South China Sea

One day after the US announced it had dispatched the USS Carl Vinson aircraft carrier group in the contested South Chine Sea on “routine” patrols (through a post on the aircraft carrier’s Facebook page), China responded and predictably, it wasn’t thrilled. In a statement by the foreign ministry, Beijing said on Tuesday that it opposed action by other countries “under the pretext of freedom of navigation” that could “threaten and damage” its sovereignty, a clear reference to US patrols in territory that China considers its own.

“China always respects the freedom of navigation and overflight all countries enjoy under international law,” Chinese foreign ministry spokesman Geng Shuang said at a daily news briefing. “But we are consistently opposed to relevant countries threatening and damaging the sovereignty and security of littoral countries under the flag of freedom of navigation and overflight,” Geng said in China’s first official comment on the latest U.S. patrol since it began.

Without explicitly naming the US, Geng said that “we hope relevant countries can do more to safeguard regional peace and stability.”

For the time being, the U.S. carrier strike group has not referred to its recent operations in the South China Sea as “freedom of navigation” patrols, although it will likely have to justify its presence in the region in the coming days, especially if confronted with Chinese naval forces.  As Reuters adds, U.S. ships last year conducted several such patrols to counter any efforts to limit freedom of navigation in the strategic waters.

Meanwhile, China just wrapped up its own naval exercises in the South China Sea on Friday. War games involving its own aircraft carrier have unnerved neighbors with which it has long-running territorial disputes. Beijing most recently warned Washington against challenging its sovereignty in the South China Sea last week. It claims almost all of the resource-rich waters, through which about $5 trillion worth of trade passes each year.

At the same time, Brunei, Malaysia, the Philippines, Taiwan and Vietnam also claim parts of the South China Sea that command strategic sea lanes and have rich fishing grounds, along with oil and gas deposits.

The United States has criticized China’s construction of man-made islands and build-up of military facilities in the sea, and expressed concern they could be used to restrict free movement. Foreign ministers of the Association of South East Asian Nations (ASEAN) on Tuesday expressed concern over what they see as militarization in the South China Sea, Philippines Foreign Secretary Perfecto Yasay said after meeting with his ASEAN counterparts.

While tense relations between the Trump administration and Beijing have eased in recent weeks, following Trump’s concession that he would observe the “One China” policy, the long-running and on occasion violent tensions over the contested naval territories have little hope of resolution for the foreseeable future.

 

END

 

China responds by deploying SAM batteries on the South China Sea islands..something that is annoying the Americans

(courtesy zero hedge)

 

In Latest “Military Escalation” China Prepares Deployment Of SAM Batteries On South China Sea Islands

In China’s latest test of the US response to its escalating claims of islands in the South China Sea, Reuters reports that Beijing has “nearly finished building almost two dozen structures on artificial islands in the South China Sea that appear designed to house long-range surface-to-air missiles.” Predictably, such a development will likely raise questions about whether and how the United States will respond, given its vows to take a tough line on China in the South China Sea. The structures appear to be 20 meters (66 feet) long and 10 meters (33 feet) high.

Official cited by Reuters said the new structures were likely to house surface-to-air missiles that would expand China’s air defense umbrella over the islands. They did not give a time line on when they believed China would deploy missiles on the islands. “It certainly raises the tension,” Poling said. “The Chinese have gotten good at these steady increases in their capabilities.”

China’s Mischief Reef in the disputed Spratly Islands in the South China Sea

Building the concrete structures with retractable roofs on Subi, Mischief and Fiery Cross reefs, part of the Spratly Islands chain where China already has built military-length airstrips, could be considered a military escalation, the U.S. officials said in recent days, speaking on condition of anonymity. “It is not like the Chinese to build anything in the South China Sea just to build it, and these structures resemble others that house SAM batteries, so the logical conclusion is that’s what they are for,” said a U.S. intelligence official, referring to surface-to-air missiles.

Greg Poling, a South China Sea expert at the Center for Strategic and International Studies in Washington, said in a December report that China apparently had installed weapons, including anti-aircraft and anti-missile systems, on all seven of the islands it has built in the South China Sea.

On Tuesday, the Philippines said Southeast Asian countries saw China’s installation of weapons in the South China Sea as “very unsettling” and have urged dialogue to stop an escalation of “recent developments.” Philippine Foreign Secretary Perfecto Yasay did not say what provoked the concern but said the 10-member Association of South East Asian Nations, or ASEAN, hoped China and the United States would ensure peace and stability.

A Pentagon spokesman said the United States remained committed to “non-militarization in the South China Sea” and urged all claimants to take actions consistent with international law. In Beijing, Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday he was aware of the report, though did not say if China was planning on placing missiles on the reefs. “China carrying out normal construction activities on its own territory, including deploying necessary and appropriate territorial defense facilities, is a normal right under international law for sovereign nations,” he told reporters.

Tillerson told the Senate Foreign Relations Committee that China’s building of islands and putting military assets on them was “akin to Russia’s taking Crimea” from Ukraine. In his written responses to follow-up questions, he softened his language, saying that in the event of an unspecified “contingency,” the United States and its allies “must be capable of limiting China’s access to and use of” those islands to pose a threat.

A U.S. intelligence official said that while the structures do not pose a significant military threat to U.S. forces in the region, given their visibility and vulnerability, the construction is a political test of how the Trump administration would respond, he said. “The logical response would also be political – something that should not lead to military escalation in a vital strategic area,” the official said.

Chas Freeman, a China expert and former assistant secretary of defense, said he was inclined to view such installations as serving a military purpose – bolstering China’s claims against those of other nations – rather than a political signal to the United States. “There is a tendency here in Washington to imagine that it’s all about us, but we are not a claimant in the South China Sea,” Freeman said. “We are not going to challenge China’s possession of any of these land features in my judgment. If that’s going to happen, it’s going to be done by the Vietnamese, or … the Filipinos … or the Malaysians, who are the three counter-claimants of note.”

He said it was an “unfortunate, but not (an) unpredictable development.”

The latest escalation over territorial claims in the contested area comes days after the US resumed “routine” aircraft carrier patrols in the South China Sea, a decision which China yesterday slammed as “threatening and dangerous.”

For now, the Trump administration – after vocally challenging China’s geopolitical ambitions in the contested maritime areas – has not provided a diplomatic response to China’s “tests” of its resolve.

 

END

4. EUROPEAN AFFAIRS

A flight to safety:  German yields tumble especially on the 2yr and 10 yr as political fears grow.  France: LePen, Germany: Schultz, and Holland: Wilder

(courtesy zero hedge)

Blow Out In German 2Y Bonds Sends Yield Crashing To Record Low As Political Fears Grow

The ongoing scramble for German safety away from French political uncertainty, has led to yet another blow out day for German 2 Year Schatz, with the yield tumbling to a fresh all time low of -0.92%, as Eurozone breakup concerns have spread from the bond market, and are now pressuring the euro sending the EURUSD below 1.05 for the first time in over a month.

The rush into German paper and out of France, means that the 10Y Greman-French spread has topped 0.8%, the widest in over four years, while the 2Y US-German spread is now well over 2%, the widest since at least 2000.

View image on Twitter

Jonathan Ferro @FerroTV

This

6:29 AM – 22 Feb 2017

Granted, there was a brief moment of respite moments ago, when France 10Y Bonds briefly rallied after the latest OpinionWay poll found momentum for Le Pen stalling, sending French 10y bonds higher, and the yield lower as much as 5bps before paring loss to 2bps, although that burst of optimism appears to have quickly faded.

Adding to the German bid are signals that the ECB is buying German bonds, in particular those with a yield below the -0.4% deposit rate. With investors holding off selling their short-end German debt as they are used as collateral to receive cash at the ECB, fears have reignited of a collateral squeeze similar to late in 2016 which Draghi attempted, and failed, to address in the December ECB meeting.

Ironically, the rush into 2 Year paper took place even as Germany suffered another technically “failed” 30Y auction, in which the Bundesbank was forced to retain 41.8% of the auction as only €733 million bids were tendered for €1 billion in the offered 30Y paper at a yield of 1.04%.

The decline in the 2-Yr yield has been much more pronounced (falling 13bps from Friday) since Le Pen’s significant narrowing in the Presidential poll seen at the back-end of last week (now over 40%). The political uncertainty regarding the French Presidential election has filtered into FX markets, weighing on EUR, which is now hovering at 6-week lows having made a break below 1.0520, however the downside has been curbed at 1.0500 led by the upside in EUR/GBP.

As Bloomberg confirms in a note this morning, “German two-year yields are turning ever more negative in the build-up to France’s elections as demand for the securities saturates supply. It’s a reason for caution, and it’s weighing on the euro. ”

  • Yield reached record-low of -0.915%; the notes are in a sweet spot should investors price in greater risk of a euro- area break-up and pile into securities closest to cash; French candidate Marine Le Pen has threatened to quit euro area
  • German notes are also being supported because they’re the top assets for use as collateral in the euro area and ECB buying has made them more scarce.
  • Bloomberg adds that central banks in Switzerland and the Czech Republic could also be mopping up German securities as part of their efforts to curb their currencies’ appreciation against the euro.
  • France’s notes have been underperforming versus Germany; the two-year yield spread stands at close to 50bps, the widest since May 2012. The spread level is well above its five-year average, and statistical analysis shows it may have room to narrow back toward 36bps. But look to the April 2012 high of 83bps as a guide for how far the spread could go if risks escalate in as France’s election draws near

With US equities ignoring all adverse political news, keep an eye on the German bond market, where the 2Y has emerged as one of the last remaining barometers of political risk.

 

end

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Now it is Iran’s turn to warn the USA: The enemy will receive a strong slap in the face.  The uSA  must be elated with the deal they have done with them;

(courtesy zero hedge)

Iran Warns US: “The Enemy Will Receive A Strong Slap In The Face”

This past Saturday, two weeks after the White House unveiled new sanctions on two dozen Iranian entities in retaliation for a recent ballistic missile test, Iran’s elite Revolutionary Guard announced it was set to conduct military drills this week despite warnings from the United States not to engage in such activity. General Mohammad Pakpour, commander of the force’s ground units, told a news conference that “the manoeuvres called ‘Grand Prophet 11’ will start Monday and last three days.” and warned that “rockets would be used” without specifying which kind.


Head of Iran’s Revolutionary guards ground forces Mohammad Pakpour (C) attends a funeral ceremony

Several days later, as Tehran concluded the previously announced war games, Iran retaliated in the ongoing escalation of sabre rattling, when the abovementioned General Mohammad Pakpour again took to the airwave, and said quoted by Reuters that the United States should expect a “strong slap in the face” if it underestimates Iran’s defensive capabilities, as Tehran concluded war games.

On Wednesday, the Revolutionary Guards concluded three days of exercises with rockets, artillery, tanks and helicopters, weeks after Trump warned that he had put Tehran “on notice” over the missile launch. “The message of these exercises … for world arrogance is not to do anything stupid,” said Pakpour, quoted by the semi-official news agency Tasnim.

The enemy should not be mistaken in its assessments, and it will receive a strong slap in the face if it does make such a mistake,” said General Mohammad Pakpour, head of the Guards’ ground forces, quoted by the Guards’ website Sepahnews.

“Everyone could see today what power we have on the ground.” The Guards said they test-fired “advanced rockets” and used drones in the three-day exercises which were held in central and eastern Iran.

Meanwhile, as tensions also mount with Israel, a military analyst at Tasnim said that Iran-allied Hezbollah could use Iranian made Fateh 110 missiles to attack the Israeli nuclear reactor at Dimona from inside Lebanon. Hezbollah leader Sayyed Hassan Nasrallah said last Thursday that his group, which played a major role in ending Israel’s occupation of Lebanon, could strike Dimona.

“Since Lebanon’s Hezbollah is one of the chief holders of the Fateh 110, this missile is one of main alternatives for targeting the Dimona installations,” Hossein Dalirian said in a commentary carried by Tasnim.

In recent weeks, having been forced to concede geopolitically to China by dropping his demand to negotiate “One China”, Trump has pledged to get tough with Iran, warning the Islamic Republic after its ballistic missile test on Jan. 29 that it was playing with fire and all U.S. options were on the table. Just like China, which as reported earlier today has once again poked Trump by building SAM batteries on disputed islands in the South China Sea to see how far it can push the administration before retaliation, Iran is now engaging in exactly the same exercise, trying to gauge how much of Trump’s bluster will transform into actual actions. So far, Iran’s escalating actions have generated an eerie silence from the White House.

 

end

6.GLOBAL ISSUES

A good look at what is going on inside Sweden.  The author is stating that mainstream media is hiding the full picture and Trump is right about the immigrants.  No doubt that the message is getting to France, Germany and Holland with their upcoming elections this year

(courtesy zero hedge)

Swedish Mainstream Media Is “Hiding The Full Picture”: Trump Is Right About Immigrants

Authored by Chang Frick via Nyheter Idag,

Is it correct that Sweden got major problems handling the immigration? I would say yes. My grounds for claiming that is just by looking out the window where I live, inside a migrant dominated area. Almost every evening cars are set on fire and police officers are attacked by criminal gangs. But you don’t read very much about it in the Swedish main stream media.

There are lots of claims about what is going on in Sweden. On one side you have the Swedish main stream media that are very close to liberal press in the United States. We do not have anything like Fox News in Sweden, so there is not any big ”right-wing” media. Instead of Fox News, there is an ”alternative” scene with different kind of media outlets, some more serious than others. And some of them you can claim is based mostly in fake news.

But, you wont get the whole picture from the Swedish main stream media either. And you might just as well get fooled about specific claims about what is true and not.

My name is Chang Frick and i run this news outlet that you are reading right now. Ive been reporting a lot about whats going on in the suburbs in Sweden. When i work i am very often on the ground with my camera, taking photos and filming. So everything you see in the video above is produced by me. On top of that, i live in an area called ”Hallunda” in southern Stockholm. That is an heavily immigrant dominated area, mostly people from the middle east.

I see myself as a libertarian and if i could choose whoever president i would like to see in the United States it would be Ron Paul. Yeah, i am that kind of guy. But, whatever my personal political opinions are, i always put a big effort to report my stories correctly. When i do an article about something that happened in an immigrant area, i call the police and ask questions. I am always very carefully with presenting whom i talked to and i write down quotes word-by-word.

I talk to people on the ground, i ask what they have seen or heard. I never ask them what they think is going on, just what they know is going on. I also check how they know it, did they see it themselves and so on. That is basic journalism, you have to check stuff very carefully. I am not saying i am perfect, everyone can do a mistake, but i would say i put a lot of an effort to get my reporting correct.

My news outlet is not very big, but i get a lot of traffic in Sweden every time i report about what is going on in the suburbs. I would say my readers trust me a lot in my reporting, and a lot of my readers are politicians. At the same time, some critics claim that even I am producing fake news, but so far i have not seen anyone represent any evidence for it. But of course, anyone is more than welcome to look for wrongdoings from my side – that will just force me to become even better.

So, i will make some claims based on my experience of what is going on in Sweden. This is in the light of what Donald Trump recently said about Sweden.

1. You can’t get the whole picture reading Swedish MSM

The main stream media in Sweden is usually not lying or reporting fake news, even though it happens sometimes. But i would say it is mistakes and not anything that is done with purpose. A big news-outlet publishes lots and lots of stories every day, so of course you can find some wrongdoing once in a while. That does not mean the main stream media is a fake propaganda-machine. Mostly, what they claim, is usually true. There is references and all.

However, the mainstream media in Sweden is not giving you the whole picture. That is a claim I can make. You see, by not reporting some issues, you are not lying. And that, I would say, gives you a better understanding how it works. And it is because of that I built my own news outlet, where I try to fill in the blank spots that you cant find elsewhere from Sweden.

There is a lot going on in the Swedish suburbs that i would say is totally out of control. Ive seen it myself so many times, i have been talking to a lot of people living in these areas. After all, they are my neighbors.

2. No, we did not have any terror attack recently

Some people in social media even thinks that because of what Trump said, there have been a terror attack in Sweden. There have not been any such event in several years. It have happened once, but that was six years ago and nobody, except of the terrorist himself, got killed. What is true however is that Sweden got a lot of people who travel abroad to Syria and Irak to join ISIS.

Those guys get radicalized in Sweden and they also get recruited on Swedish soil. I dont know the numbers, but there is estimates of about a couple of hundreds. Lots of these guys return to Sweden after their participation in Syria and Iraq. So, are those people dangerous to Swedish society? Well, if you look at what happened in Nice or in Berlin, it is essentially enough with just one terrorist to create a lot of mess. And dead people.

3. Is there no go areas in Sweden? Well, it depends who you are…

Some claim that it is really dangerous to go to specific areas in Sweden. There is a term being used in Sweden that is ”no go zones”. I live in an area often described as that and well, i can go outside any time I want and walk around the area and nothing special will happen. But, at the same time, lots of people still does not feel safe in this area. Some of them is security personell and police officers.

And car owners. There is a lot of cars being set on fire. I have not a perfect answer yet to why this is happening. Some cars that are set on fire is about insurance fraud. I would say that more of those fires is about keeping the police busy. Just a few blocks away, there is lots of drugs being sold on the streets. If there is a police with resources to act, it means bad business for the local druglords. So lots of cars being set on fire is related to this, just to keep the police busy.

Some claim that cars being set on fire is about some muslim takeover or some kind of jihad. There is no evidence at all for that. I have never really seen anything than confirms such a claim.

But what is true is that the police get attacked in some of these no go zones. I have seen, and filmed that, myself. Immigrant kids throw rocks and even molotov-cocktails towards police officers during riots. The most known riots was those in Husby in northern Stockholm in 2013. Such riots does not happen very often, but there is definately tensions just below the surface in these areas, so we can most probably expect somewhat similar stuff going on in the future.

And working as a police officer in these areas means you often need back up from your colleagues. It happen more and more often that police officers are getting physical attacked. In an area nearby where i live someone threw a hand grenade towards the police who was sitting in a van. It was pretty much pure luck that they didn’t get injured. At other occasions there is molotov cocktails being thrown at the police and other stuff that can seriously harm, or even kill, a police officer.

So, well, you can’t totally deny that for some people these areas could be considered ”no go areas”. And, oh yes, some of these areas is pretty much ”no go” if you are trying to film or takes photos. There is a big chance that you will be attacked. It have happened to me and a lot of others as well.

4. Can Sweden handle the immigration?

This is a question where the answer is both yes and no. The migration, mainly from the middle east, is changing Sweden a lot. We have areas that are not even close to something we used to have. I am of course referring to the ”no go areas”. And those areas are growing, mostly because it is really hard to get a job if you are born outside Europe. To get a job you have to learn the language, you need education and you also need to understand the social codes in Sweden.

And by social codes i mean that swedes are not very tolerant at all. For example, when i was hanging out in New York i could talk to anyone in the subway. People are open minded and curious in New York, no matter who you are. It is not like that at all in Sweden. In the subway you will find most people being quiet or just talking to someone they already know. I am just trying to pinpoint a small example why it can be hard to ”get in” to the Swedish society. And to get a job, you need to know people.

So, lots of immigrants are living on social welfare. And they have nothing meaningful to do during the days. And the kids usually have their parents as role models, so you can figure out the rest.

This is the biggest problem Sweden is facing today. I base that claim on the political discussion but also where most of the government money is spent. Notice, the discussion about where tax money is going is a tricky one, so i am not presenting any exact numbers. What i am saying is that immigration is one of the biggest, if not the biggest, cost for tax payers in Sweden.

The effect on the society is that the whole society is changing from what it used to be. Not everything with the ”new” Sweden is bad, there are of course a lot of good examples, but as it is today – the sum of the effects – is going the wrong way. More and more people feel insecure, something i am pretty sure is related to immigration – even if i don’t have any scientific paper showing it.

5. Is Donald Trump correct about his claim about Sweden?

Well, the claim i am referring to is the tweet below, a tweet that i think sums it up what mr Trump have tried to say the latest days.

Donald J. Trump @realDonaldTrump

Give the public a break – The FAKE NEWS media is trying to say that large scale immigration in Sweden is working out just beautifully. NOT!

9:15 AM – 20 Feb 2017

And yes, i would say he is correct. This is based on what i see myself, but also what different police officers tells me and other officials working with issues related in one way or another to immigration. The issue with immigrants is the number one political question and still there are no good answers how to deal with it.

And there is another thing that most people does not talk about. It is the law abiding immigrants, which absolutely most immigrants are, that is the true victims here. It is those who is living with constant fear of what is going on. I know that because I talk to them almost every day. They are, after all, my neighbors.

7. OIL ISSUES

Oil rises a bit after a surprise inventory draw

(courtesy zero hedge)

Oil Bounces After Surprise Inventory Draw

While OPEC compliance remains key, it appears fundamental over-supply fears are mounting once again. Against expectations of a crude build and gasoline draw, API reported a surprise crude draw but smaller than expected gasoline draw. Cushing also saw a major drawdown and Distillates saw the biggest draw since Oct 2014. WTI and RBOB prices were marginally higher on the print.

 

API

  • Crude -884k (+3.3m exp)
  • Cushing -1.7mm
  • Gasoline -893k (-1.5mm exp)
  • Distillates -4.229mm

This surprise draw ends the 6 week streak of builds in crude. While gasoline did draw, it was smaller than expected, but Distillates saw the biggest draw since Oct 2014…

 

As a reminder, US crude inventories are already at a new record high…

 

As are gasoline inventories…

Bob Yawger, director of the futures division at Mizuho Securities USA Inc. in New York, said by telephone. “We’re expecting the API and EIA to report another supply build. The focus is returning to the reality that fundamentally we’re oversupplied.”

WTI was lower (despite weaker dollar post-Fed) and RBOB higher heading into the inventory data but both gained as the drawdowns hit. No panic-buying algo though.

“The big question is, will the Saudis cut even more to maintain the price,” James Williams says, an economist at London, Ark.-based energy-research firm WTRG Economics.

8. EMERGING MARKETS

none today

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

Euro/USA   1.0510 DOWN .0031/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL MIXED  

USA/JAPAN YEN 113.10 DOWN 0.560(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2441 DOWN .0045 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3164 UP .0019 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 31 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0510; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 7.89 POINTS OR 0.241%     / Hang Sang  CLOSED UP 238.33 POINTS OR 0.99%    /AUSTRALIA  CLOSED UP 0.25%  / EUROPEAN BOURSES ALL MIXED 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 1.57 POINTS OR 0.01% 

Trading from Europe and Asia:
1. Europe stocks ALL MIXED

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 238.33 POINTS OR 0.99%       / SHANGHAI CLOSED UP 7.89   OR 0.241%/Australia BOURSE CLOSED UP 0.25% /Nikkei (Japan)CLOSED DOWN 1.56 POINTS OR 0.01%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1238.65

silver:$18.00

Early WEDNESDAY morning USA 10 year bond yield: 2.411% !!! DOWN 1 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.021, DOWN 2 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 101.61 UP 17 CENT(S) from THURSDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.965% DOWN 7  in basis point yield from TUESDAY 

JAPANESE BOND YIELD: +.083%  DOWN  1  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.693%  UP 1 IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.197 UP 2 POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 50 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.279% UP 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0555 UP .0015 (Euro UP 15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.46 DOWN: 0.210(Yen UP 21 basis points/ 

Great Britain/USA 1.2440 DOWN 0.0045( POUND DOWN 45 basis points)

USA/Canada 1.3196 UP 0.0051(Canadian dollar DOWN 51 basis points AS OIL ROSE TO $54.27

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This afternoon, the Euro was PU by 15 basis points to trade at 1.0555

The Yen FELL to 113.46 for a GAIN of 21 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 45  basis points, trading at 1.2440/

The Canadian dollar FELL  by 51 basis points to 1.3196,  WITH WTI OIL FALLING TO :  $53.55

The USA/Yuan closed at 6.8764/ the 10 yr Japanese bond yield closed at +.083% PU 1/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1 IN basis points from TUESDAY at 2.434% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.049 UP 2 in basis points on the day /

Your closing USA dollar index, 101.36 DOWN 8 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for WEDNESDAY: 1:00 PM EST

London:  CLOSED UP 27.42 OR 0.38% 
German Dax :CLOSED UP 31.10 POINTS OR 0.26%
Paris Cac  CLOSED UP 7.12 OR 0.15%
Spain IBEX CLOSED DOWN 83.80 POINTS OR 0.88%
Italian MIB: CLOSED DOWN 158.68 POINTS OR 0.83%

The Dow closed UP 32.60 OR 0.16%

NASDAQ WAS closed down 5.32 POINTS OR 0.09%  4.00 PM EST
WTI Oil price;  53.55 at 1:00 pm; 

Brent Oil: 55.76  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  58.00 DOWN 59/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD RISES TO +0.279%  FOR THE 10 YR BOND  1:30 EST

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:$53.85

BRENT: $56.14

USA 10 YR BOND YIELD: 2.415%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.033%

EURO/USA DOLLAR CROSS:  1.0557 up .0016 

USA/JAPANESE YEN:113.28   down 0.382

USA DOLLAR INDEX: 101.29  down 15  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2449 : down 36   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.279%

 

END

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

TRADING IN GRAPH FORM

Dow Jumps To Longest Record-Setting Streak Since 1987

Quick… look over there..

 

The Dow was the only major to close green today… (DD and MMM created 35 points of The Dow’s 32 point gain)

 

The Dow has notched its 9th record close in a row – the longest streak since Jan 1987…

 

The US equity market and VIX have now been decoupled for 8 trading days… (closing higher with stocks for the 2nd day in a row)

Lots of excitement today about the fact that The Dow closed more than 2000 points above its 200-day moving average

But realistically this is less than 10% – well below the 12-14% spread level that has been historically an omen for weakness. Technical analysts at Strategas Research Partners, led by Chris Verrone, pointed to the S&P’s climb relative to its moving average in a Wednesday note, suggesting that while the deviation is large, it hasn’t reached the 12%-to-14% range that marks a “statistically significant overbought signal.”

Notably the yield curve flattened, dollar dropped, and bonds/bullion were bid after The Fed Minutes (and rate hike odds dropped) – a big ‘fail’ given their recent efforts to jawbone March hike odds higher…

 

The Dollar dumped…

 

And The Yield Curve…

 

Only 2Y yields are higher on the week after today’s post-Fed rally…

 

The Dollar dumped after the minutes pushing it negative on the week with CAD surging…

 

PMs pushed back into the green for the week on dollar weakness but crude faded ahead of tonight’s API data…

 

 

end

 

The FOMC minutes hint at a hike fairly soon but they also warn that Trump’s policies may not materialize.  They also claim that the VIX is too low.

March rate hike odds remained unchanged, the yield curve flattened and gold and silver rose

(courtesy zero hedge)

FOMC Minute Hint At Hike “Fairly Soon”, But Warn Trump Policies May “Not Materialize”, VIX Too Low

March rate hike odds are unchanged (below 40%) and the yield curve has flattened since The Fed’s February statement (despite heavy jawboning and higher inflation data) and so the Minutes were expected to help ease the markets to not be surprised. And they were...MANY FED OFFICIALS SAW HIKE `FAIRLY SOON’ IF ECONOMY ON TRACK. However, the Minutes also showed ‘balance’ by not proclaiming concern over inflation – *MANY FED VOTERS SAW ONLY MODEST RISK OF SIGNIFICANT INFLATION and FED OFFICIALS SAW DOWNSIDE RISKS FROM FURTHER DOLLAR STRENGTH.

Here is the key excerpt in which the Fed says a rate hike may be needed “fairly soon” if all goes according to plan…

key segment many participants expressed the view that it might be appropriate to raise the federal funds rate again fairly soon if incoming information on the labor market and inflation was in line with or stronger than their current expectations or if the risks of overshooting the Committee’s maximum-employment and inflation objectives increased.

However in a surprising twist, some Fed members explicitly warned that the market has gotten ahead of itself and that Trump’s fiscal policies may never materialize…

A few participants commented that the recent increase in equity prices might in part reflect investors’ anticipation of a boost to earnings from a cut in corporate taxes or more expansionary fiscal policy, which might not materialize.

The Fed also warned once again that “valuation pressures have risen” since the election:

The staff’s assessment took into account the increase in asset valuation pressures since the November elections… Overall, valuation pressures appeared to have risen for some types of assets.

And in another warning, the same Fed members warned that the VIX is too low:

They also expressed concern that the low level of implied volatility in equity markets appeared inconsistent with the considerable uncertainty attending the outlook for such policy initiatives.

We wonder if the Fed opining on implied vol is part of its 3rd, 4th or 5th mandate.

For those looking for the Fed to discuss the fate of its balance sheet, it only had this to say:

In addition, it was noted that the downward pressure on longer-term interest rates exerted by the Federal Reserve’s asset holdings was expected to diminish in the years ahead in light of an anticipated gradual reduction in the size and duration of the Federal Reserve’s balance sheet. Finally, the view that gradual increases in the federal funds rate were likely to be appropriate also reflected the assessment that the neutral real rate—defined as the real interest rate that is neither expansionary nor contractionary when the economy is operating at or near its potential—was currently quite low and was likely to rise only slowly over time.

And then, for good measure, one more warning:

it was noted that other risks to financial stability might arise as the structure of funding markets evolved or if real estate asset values declined sharply. More broadly, it was pointed out that an  environment of low interest rates and a relatively flat yield curve, if it persisted, had the potential to boost incentives to take on leverage and risk. Several participants emphasized that the increased resilience.

Our sense is that the Fed is not especially fond of the Dow trading above 20,700.

*  *  *

The S&P Tech sector has not had a down day since The Fed’s Feb meeting and while bonds and bullion are higher, it is The Dow that leads…

 

The yield curve has notably flattened…

 

And while March rate hike odds are up, they have stabilized despite equity exuberance…

 

Before the Minutes, March is at 38% and June at 78.4%

 

Full Minutes below (link):

 

end

The culture of banking officials for fraud strikes again.  We now have 4 executives fired for the fake accounts scandal and no doubt there will be criminal charges especially now that the Trump administration has taken power in the USA

(courtesy Dugan)

Wells Fargo fires 4 execs linked to fake-accounts scandal By Kevin Dugan

Wells Fargo on Tuesday said it has sacked four executives who played a role in the bank’s fake-accounts scandal.

The scandal, where roughly 2 million fake accounts were created by branch-level employees in reaction to pressure from mid-level managers to reach quotas, led to the ouster of the bank’s CEO last year, the company announced on Tuesday.

Earlier, the bank had fired over five years roughly 5,000 low-level staffers connected to the scandal.

The four executives were linked to the community banking unit that had paid fines of $185 million to settle federal, state and local probes into the matter.

The four firings, each effective on Tuesday, are the first made public since John Stumf resigned on Oct. 12. The four will forfeit their 2016 bonuses, all unvested stock awards, and vested options.

The highest-ranking executive to get the ol’ heave-ho, Claudia Russ Anderson, the former chief risk officer for the community bank, had been on leave since September. She has been replaced by Vic Albrecht, a 35-year veteran of the bank.

All out the door is Matthew Raphaelson, the San Francisco-based ex-head of community bank strategy and initiatives, had been with the bank since 2003, according to his LinkedIn profile, plus two regional leaders — Pamela Conboy, the Arizona regional president, and Shelley Freeman, the head of consumer credit solutions and former Los Angeles regional president.

Conboy didn’t return a voicemail seeking comment. Russ Anderson and Raphaelson weren’t immediately available. Freeman declined to comment when reached on her cell phone.

Oscar Suris, a bank spokesman, declined to estimate how much in bonuses, stock awards, and unvested options the four executives are being denied.

An announcement suggested that these firings wouldn’t be the last at the 164-year old bank.

“The Board’s independent investigation is ongoing,” the company said. ”The investigation is expected to be completed before the Company’s April 2017 annual meeting of stockholders and its findings and any additional actions will be made public by that time.”

The firings were in connection with the board of directors’ “independent investigation,” according to the announcement.

The fallout from the scandal, where tellers and bankers were pressured to open millions of fake checking accounts and credit cards in customers’ names, is unlikely to abate any time soon. The bank is under a criminal investigation by the Justice Department.

Suris declined to say whether the four executives were under a specific criminal investigation.

The bank is also facing class-action lawsuits of people who say they were terminated wrongly for either whistle-blowing or refusing to open fraudulent accounts.

end

 

It sure looks like Trump wants to put more troops on the ground to defeat ISIS.

(courtesy Ron Paul)

Trump’s ISIS Plan: Another US Invasion?

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Just over a week into the Trump Administration, the President issued an Executive Order giving Defense Secretary James Mattis 30 days to come up with a plan to defeat ISIS. According to the Order, the plan should make recommendations on military actions, diplomatic actions, partners, strategies, and how to pay for the operation.

As we approach the president’s deadline it looks like the military is going to present Trump with a plan to do a whole lot more of what we’ve been doing and somehow expect different results. Proving the old saying that when all you have is a hammer everything looks like a nail, we are hearing increasing reports that the military will recommend sending thousands of US troops into Syria and Iraq.

This would be a significant escalation in both countries, as currently there are about 5,000 US troops still fighting our 13-year war in Iraq, and some 500 special forces soldiers operating in Syria.

The current Syria ceasefire, brokered without US involvement at the end of 2016, is producing positive results and the opposing groups are talking with each other under Russian and Iranian sponsorship. Does anyone think sending thousands of US troops into a situation that is already being resolved without us is a good idea?

In language reminiscent of his plans to build a wall on the Mexican border, the president told a political rally in Florida over the weekend that he was going to set up “safe zones” in Syria and would make the Gulf States pay for them. There are several problems with this plan.

First, any “safe zone” set up inside Syria, especially if protected by US troops, would amount to a massive US invasion of the country unless the Assad government approves them. Does President Trump want to begin his presidency with an illegal invasion of a sovereign country?

Second, there is the little problem of the Russians, who are partners with the Assad government in its efforts to rid the country of ISIS and al-Qaeda. ISIS is already losing territory on a daily basis. Is President Trump willing to risk a military escalation with Russia to protect armed regime-change forces in Syria?

Third, the Gulf States are the major backers of al-Qaeda and ISIS in Syria – as the president’s own recently-resigned National Security Advisor, Michael Flynn, revealed in a 2015 interview. Unless these safe zones are being set up to keep al-Qaeda and ISIS safe, it doesn’t make any sense to involve the Gulf States.

Many will say we should not be surprised at these latest moves. As a candidate, Trump vowed to defeat ISIS once and for all. However, does anyone really believe that continuing the same strategy we have followed for the past 16 years will produce different results this time? If what you are hammering is not a nail, will hammering it harder get it nailed in?

Washington cannot handle the truth: solving the ISIS problem must involve a whole lot less US activity in the Middle East, not a whole lot more. Until that is understood, we will continue to waste trillions of dollars and untold lives in a losing endeavor.

 

end

 

This is going to be exciting:  James O’Keefe of  Project Veritas is about to smoke CNN on Thursday:

 

(courtesy zero hedge)

Is James O’Keefe About To Smoke CNN? Tells Hannity He’s Set To Release “Hundreds of Hours” Of Newsroom Footage “Wikileaks Style”

James O’Keefe of Project Veritas is set to unleash holy hell Thursday on #FakeNews network CNN. Well, he didn’t exactly say it was CNN, but it was heavily implied. Apparently the network has a mole…

O’Keefe is known for undercover sting operations which have led to such bombshells as the DNC’s paid agitator network, the outing of “DisruptJ20” / Antifa organizers which took place at comet ping pong – and netted three arrests (including a suspected pedophile), and most recently New Hampshire election fraud.

Today O’Keefe was interviewed on Sean Hannity’s radio show where he revealed that a major network has been “stung”

O’Keefe: In the next 48 hours, Project Veritas, like Wikileaks, will be releasing hundreds of hours of tape from within the establishment media. Our next target is in fact, the media.

 

Hannity: How long have you been working on this?

 

O’Keefe: We’ve had people on the inside come to us. Just like Julian Assange has people come to him, we’ve had people, sources come to us and give us information, and we’re going to be releasing it “Wikileaks Style” this week.

Moments later:

Hannity: Can you give us a hint what organizations are going to be impacted by this?

 

O’Keefe: It’s one that Trump has really been talking about, you can probably use your imagination.

 

Hannity: So, it’s CNN…

Listen here:

ZeroPointNow @ZeroPointNow

James O’Keefe reveals to Sean Hannity that a “Wikileaks Style” release of information is coming on Thursday. likely target.

11:20 PM – 21 Feb 2017

In other words, a closeted Trump supporter working deep inside hyper-liberal CNN just gave O’Keefe a ton of behind the scenes footage of “The Most Trusted Name In News.” My guess is we’re about to hear a bunch of establishment media puppets revealing their extreme hatred for the sitting President of the United States.

Remember that time CNN employees were laughing about Trump’s plane crashing? If O’Keefe’s release is anything along these lines, popcorn sales are about to go through the roof…

 

end

 

This is a surprise;  existing home sales jump a huge 3.3% well above the 1.1% estate despite rising rates:  is the data cooked?

(courtesy zero hedge)

 

Existing Home Sales Hit Decade High As Prices Jump More Than 7%

So much for concerns that rising rates would slam the US real estate market.

According to the NAR, in January, Existing home sales jumped by 3.3%, well above the 1.1% consensus estimate, and more than reversing last month’s revised -1.6% drop. The annuallized pace of sales rose to 5.69 million, above the 5.54 million estimate, and the biggest monthly jump since March 2016. January’s sales pace was 3.8% higher than a year ago (5.48 million) and surpasses November 2016 (5.60 million) as the strongest since February 2007 (5.79 million).

Praising the rebound in housing transactions, NAR’s chief economist Larry Yun said January’s sales gain signals resilience among consumers even in a rising interest rate environment. “Much of the country saw robust sales activity last month as strong hiring and improved consumer confidence at the end of last year appear to have sparked considerable interest in buying a home,” he said. “Market challenges remain, but the housing market is off to a prosperous start as homebuyers staved off inventory levels that are far from adequate and deteriorating affordability conditions.”

And yet, there remains a glaring disconnect between the housing transactions, and mortgage applications, which as shown in the chart below, have tumbled in recent weeks far below prior years, as a result of rising rates.

The west led housing transaction, with only the midwest posting a 1.5% decline:

  • January existing-home sales in the Northeast jumped 5.3 percent to an annual rate of 800,000, and are now 6.7 percent above a year ago. The median price in the Northeast was $253,800, which is 2.5 percent above January 2016.
  • In the Midwest, existing-home sales decreased 1.5 percent to an annual rate of 1.29 million in January, and are 0.8 percent below a year ago. The median price in the Midwest was $174,900, up 6.5 percent from a year ago.
  • Existing-home sales in the South in January rose 3.6 percent to an annual rate of 2.31 million, and are now 3.1 percent above January 2016. The median price in the South was $201,400, up 9.2 percent from a year ago.
  • Existing-home sales in the West ascended 6.6 percent to an annual rate of 1.29 million in January, and are now 8.4 percent above a year ago. The median price in the West was $332,300, up 6.8 percent from January 2016.

The median existing-home price was $228,900, up 7.1% from January 2016 ($213,700). January’s price increase was the fastest since last January (8.1%) and marks the 59th consecutive month of year-over-year gains.

Total housing inventory at the end of January rose 2.4 percent to 1.69 million existing homes available for sale, but was still 7.1% lower than a year ago (1.82 million) and has fallen year-over-year for 20 straight months. Unsold inventory is at a 3.6-month supply at the current sales pace (unchanged from December 2016). Properties typically stayed on the market for 50 days in January, down from 52 days in December and considerably more a year ago (64 days). Short sales were on the market the longest at a median of 108 days in January, while foreclosures sold in 51 days and non-distressed homes took 49 days. Thirty-eight percent of homes sold in January were on the market for less than a month.

Metro areas where listings stayed on the market the shortest amount of time in January were San Jose-Sunnyvale-Santa Clara, Calif., 43 days; San Francisco-Oakland-Hayward, Calif., 47 days; San Diego-Carlsbad, Calif., 55 days; Seattle-Tacoma-Bellevue, Wash., 57 days; and Nashville-Davidson-Murfreesboro-Franklin, Tenn., Vallejo-Fairfield, Calif., and Greeley, Colo., all at 58 days.

Looking at the composition of buyers, first-time buyers were 33% of sales in January, which is up from 32% both in December and a year ago. NAR’s 2016 Profile of Home Buyers and Sellers revealed that the annual share of first-time buyers was 35% . According to Freddie Mac, the average commitment rate (link is external) for a 30-year, conventional, fixed-rate mortgage decreased slightly in January to 4.15 percent from 4.20 percent in December. The average commitment rate for all of 2016 was 3.65 percent.

Meanwhile, all cash sales continued to rise, and represented 23% of transactions in January, up from 21% in December but down from 26% a year ago. Individual investors, who account for many cash sales, purchased 15 percent of homes in January, unchanged from December and down from 17 percent a year ago. Fifty-nine percent of investors paid in cash in January.

For now it remains unclear whether the recent spike in transactions will persist once consumer confidence fades away even as higher mortgage rates remain.  A further challenge to existing homes: the gradual disappearance of Chinese and other foreign buyers, which as discussed before, has had a substantial impact on ultra high end housing.

 

end

 

My goodness:  Trump calls the huge deficit spending by the USA has “out of control” and the pundits hardly flinched:

(courtesy zero hedge)

“It’s Absolutely Out Of Control”: Did Trump Just Spoil The Deficit-Spending Party?

Seemingly reassuring conservatives, especially his fiscally hawkish former Tea-Party member Budget Director, President Trump warned that America’s “[spending] was out of control,” as officials gathered to discuss the budget, adding that there is “enormous work to do on the national debt.”

While stocks did not blink, Trump’s comments definitely angled more fiscal hawk than free-spending deficit dove.

There is a “moral duty” to taxpayers, President Trump says at White House budget lunch, “we must do a lot more with less.”

 

“Our budget is absolutely out of control” he added, and in the future “will reflect our priorities.”

 

The hiring freeze for non-essential workers will remain.

 

“We have enormous work to do on the national debt”

 

There will be “no more wasted money, we will spend in a careful way.”

Additionally, President Trump confirmed that the Obamacare plan was “moving very well” and would be undertaken before the tax plan.

Notably swap spreads are definitely showing concerns about the looming debt ceiling deadline as the Treasury cash balance begins to fall…

 

 

end

 

This is what happens when you tax too much: that famous soda tax in Philadelphia has now caused a huge 30  to 50% plunge in sales and massive layoffs in the SUPERMARKET and other distributor sectors in the Philly area:

 

(courtesy zero hedge)

Philadelphia Soda Tax Leads To 30-50% Plunge In Sales, Mass Layoffs

When Philadelphia became the first US city to pass a soda tax last summer, city officials were eagerly looking forward to the surplus-tax funded windfall to plug gaping budget deficits (and, since this is Philadelphia, the occasional embezzlement scheme). Then, one month ago, after the tax went into effect on January 1st we showed the tax applied in practice: a receipt for a 10 pack of flavored water carried a 51% beverage tax. And since  PA has a sales tax of 6% and Philly already charges another 2%, the total sales tax was 8%. In other words, a purchase which until last year came to $6.47 had overnight become $9.75.

What happened next? Precisely what most expected would happen: full blown sticker shock, and a collapse in purchases.

According to Philly.com reports, two months into the city’s sweetened-beverage tax, supermarkets and distributors are reporting a 30% to 50% drop in beverage sales and – adding insult to injury – are now planning for layoffs.

One of the city’s largest distributors told the Philadelphia website it would cut 20% of its workforce in March, and an owner of six ShopRite stores in Philadelphia says he expects to shed 300 workers this spring. “People are seeing sales decline larger than anything they’ve seen up to this point in the city,” said Alex Baloga, vice president of external relations at the Pennsylvania Food Merchants Association.

Since all of this is taking place as previewed in a recent post: “The ‘Soda Police’ Just Learned A Valuable Lesson About Taxes“, we doubt it would come as a surprise to anyone, although we are confident that Philadelphia city workers will be amazed by these unexpected developments.

Sure enough, in response instead of admitting the tax was a bad decision, the city lashed out by launching the latest “fake news” campaign, when it questioned the legitimacy of the early figures and predicted that customers responding to the initial sticker shock by shopping outside the city would return. “We have no way of knowing if their sales figures and predicted job losses are anything more than fear-mongering to prevent this from happening in other cities,” said city spokesman Mike Dunn.

Mayor Kenney harshly rebuked reports of coming layoffs late Tuesday night.

“I didn’t think it was possible for the soda industry to be any greedier,” Kenney said in an emailed statement. “…They are so committed to stopping this tax from spreading to other cities, that they are not only passing the tax they should be paying onto their customer, they are actually willing to threaten working men and women’s jobs rather than marginally reduce their seven figure bonuses.”

The 1.5-cent-per-ounce tax on sweetened and diet beverages is funding nearly 2,000 pre-K seats this year as well as several community schools, and the city hopes will bring in $92 million per year for the education programs and to in part fund renovated parks and recreation centers. To hit its annual target, the city needs to collect $7.6 million a month in tax revenue. The first collection was due Feb. 21 but collection information won’t be available until next month.  Early projections from the city’s quarterly manager’s report predict only $2.3 million will come through in the first collection. Dunn says that figure is expected to rise and the city still anticipates hitting its goal for the year.

The city predicted a 27% sales decline industry-wide as a result of the tax but early returns from some beverage sellers show far higher losses, fueling a resurgence of the anti-soda tax coalition that fought vigorously against the tax last summer.

Bob Brockway, chief operating officer of Canada Dry Delaware Valley, which distributes about 20 percent of the city’s soft drinks, said sales were down 45 percent in Philadelphia. The company will lay off 20 percent of its workforce the first week in March. The distributor is a subsidiary of Honickman Affiliates, owned by Harold Honickman, who helped lead the opposition to the tax last summer. The 35 jobs on the line include managers, sales people, and drivers, Brockway said. Sales are up about 20 percent in the suburbs, but that hasn’t helped the business break even, he said.

On the whole, the company’s sales are down about 30 percent, Brockway said: “We don’t anticipate people coming back.”

The situation is worse at other outlets.

Jeff Brown, CEO of Brown’s Super Stores, which manages six ShopRite stores in the city, said beverage sales were down 50 percent from Jan. 1 to Feb. 17 compared with the same period in 2016.

Again, that was to be expected, but what was more troubling is a 15% dip in overall sales at city stores, meaning that instead of merely reallocating funds, the tax has resulted in a net loss of purchasing power. “People didn’t change what they drink,” Brown said. “They changed where they’re buying it.” And the biggest loser: the city of Philadelphia.

But it gets even worse: since January, Brown said, he has had to cut 6,000 employee hours, he said. He said he suspects he will lose about 300 people, which amounts to one-fifth of his total workforce voluntarily and through layoffs in coming months. To keep customers, Brown has ordered more tea and lemonade powders, which are tax-exempt. He’s stocking shelves with lower-quantity sugary drinks, which are easier to sell than the two-liter bottles or 12-packs.

Day’s Beverages, an independent soft-drink distributor, has seen a steep decline in Philadelphia offset by a 50 percent boost in Camden, Wilmington, and Bensalem, owner David Day said. Day also distributes to 18 other states, but Philadelphia makes up 30 percent of his market. His carry-out business has ballooned since the tax, he said.

 

Day is a registered distributor with the city and required to remit a monthly payment on any taxed beverages that go on to be sold in Philadelphia. He sent payment in last week for deliveries he made throughout Philadelphia. But Day doesn’t tax people coming in to buy soda directly from his warehouse.

 

“We’re one block out of Philadelphia, in Delaware County, and you can’t imagine how many stores are coming to our warehouse and picking up our soda. I don’t care what they do — they’re coming here as a cash-and-carry. Our doors are open to everyone,” he said. “We don’t police where it’s going.”

Another loser: labor unions. Danny Grace, head of the Teamsters union, representing many of the drivers, said members have seen pay cut by as much as 70 percent because they’re moving fewer products. “Many of them have quit as a result,” Grace said. He did not provide specific figures.

Not surprisingly, legal challenges against the soda tax persist. The Pennsylvania Food Merchants Association, in conjunction with movie theaters, restaurants, and supermarkets, is mounting a new “Ax the Bev Tax” campaign this week. Participating businesses will hang up signs encouraging people to call their elected representatives. Some legislators in Harrisburg weighed in this month, with an amicus brief calling on the court to overturn the tax. Within City Hall, legislators are taking a wait-and-see approach. Some Council members have encouraged patience.

“Initially people are upset and drive over the city line, but then they do the math and realize the cost of gas or the pure inconvenience doesn’t make it worth it,” Dunn said.

J. Del Conner is one of the 210 distributors registered with the city. He owns Dr. Physick soda, a tiny beverage-maker that sells about 500 cases a year. The soda is named after Conner’s great-great-great-grandfather, a Philadelphia pharmacist who introduced carbonated water into fruit syrup as a way to help relieve gastric disorders.

Conner usually sells about 10 cases a month in winter but didn’t send any money to the city this month.

 

“So far in January and February we’ve had no sales,” he said. “Zero.”

 

end

Well that about does it for tonight

I will see you tomorrow night

H

 


Feb 21/Gold and silver refuse to buckle under the weight of cartel paper selling/At the comex silver over 3.6 million oz are standing for delivery which is huge for a non delivery month/UK to launch similar class action lawsuit against the banks for...

Tue, 02/21/2017 - 14:03

Gold at (1:30 am est) $1237.80 DOWN $0.10

silver was : $17.99:  DOWN 3 CENTS

Access market prices:

Gold: $1236.80

Silver: $18.00

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

TUESDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 21/17 (10:15 pm est last night): $  1244.89

NY ACCESS PRICE: $1233.20 (AT THE EXACT SAME TIME)/premium $11.69

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1244.89

NY ACCESS PRICE: $1234.30 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  10.14

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 21/2017: 5:30 am est:  $1233.20   (NY: same time:  $1233.40   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 21.2017: 10 am est:  $1241.95(NY same time: $1241.90 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  146 NOTICE(S) FOR 14,600 OZ.  TOTAL NOTICES SO FAR: 5291 FOR 529,100 OZ    (16.457 TONNES)

For silver:

 

For silver: FEBRUARY

3 NOTICES FILED FOR 15,000 OZ/

TOTAL NO OF NOTICES FILED: 413 FOR 2,065,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 1085 contracts UP to 205,602 with respect to FRIDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.025 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 146 NOTICE(S) FOR 14600 OZ

In gold, the total comex gold ROSE BY 864 contracts WITH THE FALL IN  THE PRICE GOLD ($2.40 with FRIDAY’S trading ).The total gold OI stands at 430,011 contracts

we had 146 notice(s) filed upon for 14,600 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 841.17 tonnes

.

SLV

we had a changes in silver into the SLV: a deposit of 568,000

THE SLV Inventory rests at: 335.281 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by 1085 contracts UP to 205,602 AS SILVER WAS DOWN 4 CENTS with FRIDAY’S trading. The gold open interest ROSE by 864 contracts UP to 430,011 WITH THE FALL IN THE PRICE OF GOLD OF $2.40  (FRIDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c)  COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 13.36 POINTS OR .41%/ /Hang Sang CLOSED DOWN 182.45 POINTS OR 0.76% . The Nikkei closed UP 130.36 POINTS OR 0.68% /Australia’s all ordinaires  CLOSED DOWN 0.09%/Chinese yuan (ONSHORE) closed DOWN at 6.8845/Oil ROSE to 54.30 dollars per barrel for WTI and 56.96 for Brent. Stocks in Europe ALL IN THE GREEN EXCEPT LONDON. Offshore yuan trades  6.8668 yuan to the dollar vs 6.8845  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  WIDENS CONSIDERABLY AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

  REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)China has had enough with North Korea.  They are suspending all imports of North Korean coal which makes up close to 40% of all of their exports.

This is very deadly to North Korea:

( Reuters)

ii)The following explains why North Korea is in serious trouble with the banning of all coal imports:

( zero hedge) b) REPORT ON JAPAN

We have lots of trouble in Japan with respect to the Fukushima disaster.  Now a second robot breaks down inside the hot No 2 reactor site.

No wonder fish are turning up dead on the west coast of the uSA.  This is a huge disaster and the story is ongoing

(courtesy zero hedge)

c) REPORT ON CHINA

Sunday night;

Sunday night China sends a message to Janet that she should not raise rates.  China weakens the yuan and short term Chinese rates skyrocket:  the 1 week CNH Hibor rises from 3.75% up to 7.388%

( zerohedge)

4. EUROPEAN AFFAIRS

i)Italy

Quite a few PD party members which are in power threatens to splinter off and form their own party as turmoil reigns supreme in Italy.  This forced Renzi to quite as Party Leader (Gentilioni is the Prime Minister and a Renzi ally).  This should trigger a re election battle.

( zero hedge)

 

 

ii)France

Monday:

a)The French/German spread bond yields blows out hugely as investors are waking up to the fact that in the French elections, Le Pen, a Euroskeptic has a chance of winning;

( zero hedge)

b) Tuesday:

LePen gaining on all rivals in the first and second round polls.

( zero hedge)

iii)Spain

The following is an amazing story.  For the first time error central bankers are now being held accountable in the collapse of Bankia.  Too bad the central bankers did not listen to us: the entire “rescue” operation of the Spanish banks was ill fated from the first hour.  It has no chance to survive and it brought down many small investors who could ill afford the losses

( Don Quijones/WolfStreet)

iv)Greece/Germany

A German Minister is calling for a plan B with respect to Greece.  He wants them to pledge gold or real estate for new loans.  If gold is given  then the Greek politicians are just as moronic as Venezuela’s Maduro

( zero hedge)

v)Greek bonds are rallying this morning on revived bailout hopes:

( zero hedge)

vi)UK/GLobe/HSBC

This surprised everyone:  a huge revenue drop causes HSBC to crash by 7%. Major writedowns at this scandal plagued company.

(courtesy zerohedge)

vii)EU

Great reason for the Euro to plummet this morning:  Eurozone PMI jumps to 56 from 54.4

( zerohedge)

viii)We have two clear axes with respect to the EU:

i) the Pence, Mattis Haley foreign policy

ii) Bannon/Trump/Miller foreign policy

 

the latter speaks of the EU as a failed experiment and the USA should engage in bilateral negotitions with each country.

Germany is not very happy as they are the net benefiters of the EU conglomeration because the Euro is lower than it would be if the Mark was used for Germany itself.

(courtesy zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

I wonder if any foul play is prevalent here: Russian Ambassador Churkin dies suddenly in NY

(courtesy zero hedge)

6.GLOBAL ISSUES

Sweden

On Friday, Trump was mocked when he stated that Sweden has a migrant problem. Over the weekend he was vindicated after violent riots erupt in the Swedish suburb:

( zero hedge)

7. OIL ISSUES

i)Bank of America’s Blanch believes with the increased rigs placed by the shale boys will increase production by 700,000 barrels per day.  Thus for 5 days:  3.5 million

( zero hedge)

ii)Gasoline inventories are now at 27 yr highs.  Generally when you see both crude oil inventories and gasoline levels  at record highs you have a problem

( Nick Cunningham/OilPrice.com)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)A huge story:  Investors worldwide could become plaintiffs against the banks in the class action suit against the UK bullion banks. Leon Kaye will probably file its class action suit shortly..
that should be fun…

(  GATA/Leon Kay lawyers/UK)

ii)An Arizona bill would remove state taxes on profits from the sale of gold coins.  That should have been done long ago as there should be no tax on “money”

( Fischer/Arizona Daily Star/Tucson/GATA)

iii)This is why we pay no attention to the mainstream media.  The World Gold Council while interviewing Greenspan fails to ask him on gold leasing and central bank intervention with respect to gold

( WGC/GATA)

iv)Why should this currency be different from any other:  JPMorgan and HSBC are among a dozen banks facing fines for rigging the South African rand

( Bloomberg)

v)Have fun with this:  Ronan Manly illustrates beautifully how paper gold influences the price of physical gold

( Ronan Manly/Bullionstar)

vi)A good illustration of the huge problems facing ordinary Greek citizens after 7 years of bailouts

( Reuters/GATA)

vii)Chinese citizens are sure anxious to get their yuan/dollars out of China as bitcoin soars above 1100.00

( zero hedge)

viii)Is the Fed having problems keeping gold in check?

( Dave Kranzler/IRD)

10.USA STORIES

i)Soft data USA PMI manufacturing index disappoints as the hope category disappoints:

Mfg: 54.3 a drop from 55.0

Service:  53.9 down from 55.6

( zerohedge)

 

ii)Wow!! Jay Sekulow a prominent lawyer in the USA states that Obama changed the way phone conversations/recordings are distributed.  On jan 3 2017 Obama did an executive order whereby 16 other agencies are to receive the above information gathering enterprise. It is illegal to pass on conversations from private  or government officials without a warrant and that did not stop Obama

( zerohedge)

iii)Michael Snyder agrees with Trump with respect to the mainstream media and it is about time we had a President willing to go to war against them:

( Michael Snyder/EconomicCollapseBlog)

 

iv)An in depth look at the Michael Flynn saga through the eyes of David Stockman

a must read…

( David Stockman/Ron Paul Institute)

v)Your new National Security Advisor replacing Michael Flynn

(courtesy zerohedge)

vi)A new memo from the Dept of Homeland Security now reveals that just about anyone living in the USA illegally is now subject to deportation.  They will target the criminals but even a minor offense will subject the illegals back to their home country:

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 864 CONTRACTS UP to an OI level of 430,011 WITH THE FALL IN THE  PRICE OF GOLD ( $2.40 with FRIDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a GAIN of 46 contracts UP to 949.   We had 20 notice(s) served upon yesterday and therefore we GAINED 66 contracts or an additional 6600 oz will stand for delivery and  IT LOOKS LIKE THE CASH SETTLEMENTS HAVE STOPPED THOSE WHO REMAIN ARE NOT INTERESTED IN A FIAT PROFIT BUT REAL METAL.   The next non active contract month of March saw it’s OI FALL by 80 contracts DOWN TO  1880.The next big active month is April and here the OI FELL by 710 contracts DOWN to 281,062.

We had 146 notice(s) filed upon today for 14,600 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx  And now for the wild silver comex results.  Total silver OI ROSE by 1085 contracts FROM 204,517 UP TO 205,602 AS THE PRICE OF SILVER FELL TO THE TUNE OF 4 CENTS with respect to FRIDAY’S trading.  We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

The  active month of February saw the OI RISE BY A WHOPPING 173 contract(s) UP TO  313.  We had 0 notice(s) served YESTERDAY so we GAINED 173 CONTRACTS  or an additional 865,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 7,676 contracts down to 67,711 contracts. For comparison purposes last year on the same date only 60,323 contracts were standing.

We had 3 notice(s) filed for 15,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 245,260  contracts which is good.

Yesterday’s confirmed volume was 177,985 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 21/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   7233.975 OZ HSBC Deposits to the Dealer Inventory in oz nil oz

  Deposits to the Customer Inventory, in oz  203.64 oz Brinks No of oz served (contracts) today   146 notice(s) 14,600 oz No of oz to be served (notices) 803 contracts 80,300 oz Total monthly oz gold served (contracts) so far this month 5291 notices 5291 oz 16.457 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  214,235.3   oz Today we HAD 0 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1  customer deposit(s):  i) Into Brinks: 203.64 oz total customer deposits; 203.64 oz We had 1 customer withdrawal(s)  i) Out of HSBC: 7233.975 oz total customer withdrawal: 7233.975 oz We had 0  adjustment(s) For FEBRUARY:

Today, 0 notice(s) were 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 146 contract(s)  of which 54 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5291) x 100 oz or 529,100 oz, to which we add the difference between the open interest for the front month of FEBRUARY (949 contracts) minus the number of notices served upon today (146) x 100 oz per contract equals 602,800 oz, the number of ounces standing in this  active month of FEBRUARY.   Thus the INITIAL standings for gold for the FEBRUARY contract month: No of notices served so far (5145) x 100 oz  or ounces + {(903)OI for the front month  minus the number of  notices served upon today (20) x 100 oz which equals 609,400 oz standing in this non active delivery month of FEBRUARY  (18.954 tonnes)    we GAINED 66 contracts or an additional 6600 oz will stand in this active delivery month.        xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 16.457 tonnes vs 7.9876 at the end of Feb). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.9004 tonnes FEB/ 18.954 tonnes total for the 14 months;  244.958 tonnes average 17.497 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,941,217.482 or 278.296 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.296 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE JANUARY DELIVERY MONTH FEBRUARY INITIAL standings  feb 21. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 146,907.67 0z Delaware Scotia Deposits to the Dealer Inventory nil oz Deposits to the Customer Inventory   2,985.35 oz Brinks No of oz served today (contracts) 0 CONTRACT(S) (nil OZ) No of oz to be served (notices) 140 contracts (700,000  oz) Total monthly oz silver served (contracts) 410 contracts (2,050,000 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   6,061,569.5 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 2 customer withdrawal(s): i) Out of Scotia::  145,939.97 oz ii) Out of Delaware: 967.70 0oz TOTAL CUSTOMER WITHDRAWALS: 146,907.67 oz  we had 1 customer deposit(s):  i)Into Brinks:2975.35  oz ***deposits into JPMorgan have now stopped. total customer deposits;  2975.35  oz    we had 0  adjustment(s) The total number of notices filed today for the FEBRUARY. contract month is represented by 3 contract(s) for 15,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  413 x 5,000 oz  = 2,065,000 oz to which we add the difference between the open interest for the front month of feb (313) and the number of notices served upon today (3) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the FEBRUARY contract month:  413(notices served so far)x 5000 oz  + OI for front month of FEB.( 313 ) -number of notices served upon today (0)x 5000 oz  equals  3,615,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver.  We GAINED 173 contracts or an additional 865,000 oz will stand for delivery. It sure looks like the silver comex is under siege for physical metal. At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory. END Volumes: for silver comex Today the estimated volume was 148,953 which is gigantic!!! FRIDAY’S  confirmed volume was 75,176 contracts  which is huge. To give you an idea of volume today’s confirmed volume::  148,953 contracts equates to 744 million oz or 106% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA   Total dealer silver:  30.081 million (close to record low inventory   Total number of dealer and customer silver:   184.088 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

FEB 21/no changes in gold inventory at the GLD/Inventory rests at 841.17 tonnes

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Feb 21/2017/ Inventory rests tonight at 841.17 tonnes *IN LAST 93 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 40 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory FEB 21/a deposit of 568,000 oz into the SLV/Inventory rests at 335.281 million oz feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 9/no changes in silver Inventory rests at 334.713 million oz feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/ Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/ . Feb 21.2017: Inventory 335.281  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.5 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.3% Percentage of fund in silver:39.5% cash .+0.2%( feb 21/2017)  . 2. Sprott silver fund (PSLV): Premium FALLS to -.31%!!!! NAV (Feb 21/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.25% to NAV  ( feb 21/2017) Note: Sprott silver trust back  into NEGATIVE territory at -0.31% /Sprott physical gold trust is back into NEGATIVE territory at -0.25%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE

 

Huge story!!  Russia continues with its physical gold buying: 37 tonnes and no doubt the gold is purchased off of the SGE.  SGE is getting it’s gold through Switzerland via England.

 

Russia’s Gold Buying Is Back – Buys One Million Ounces In January By Mark O’ByrneFebruary 21, 20170 Comments

Russia’s Gold Buying Is Back – Buys One Million Ounces In January

Russia gold buying returned in January with the Russian central bank buying a very large 1 million ounces or 37 metric tonnes of gold bullion.

The increase in the gold reserves came after Russia did not buy a single ounce in December – a move seen as potentially a signal or an olive branch to the U.S. and the incoming Trump administration.


It also came after Russia had accelerated its gold buying in the final months of the Obama Presidency. October 2016 saw an increase of 1.3 million ounces or 48 metric tonnes and this was the largest addition of gold to the Russian monetary reserves since 1998. Indeed, it was the biggest monthly gold purchase in this millennium for the Russian central bank.

November 2016 saw another increase of 1 million ounces. Some analysts saw the increased Russian gold buying as a parting ‘gift’ and warning shot by Putin and Russia to his rival outgoing President Obama and the monetary and financial elites in the U.S.

Russian gold reserves increased a very large 199.1 tonnes in 2016 alone.

Concerns about systemic risk, currency wars and the devaluation of the dollar, euro and other major currencies has led to ongoing diversification into gold bullion purchases by large creditor nation central banks such as Russia and of course China.

There was silly speculation in 2013, 2014 and 2015 that the financial challenges facing Russia and the depreciation of the ruble could lead to Russia selling some of its increasingly large gold reserves. We pointed out on Bloomberg TV at the time that this was highly unlikely and pointed out that Russia was much more likely to sell some of its very large dollar and euro reserves and was more likely to continue to diversify into gold.

Russia has been steadily buying bullion since before the global financial crisis and is now the sixth-biggest holder of gold reserves internationally – after the U.S., Germany, Italy, France and the IMF.

The monetary diversification accelerated during the global financial crisis and in recent years. It has more than tripled its gold reserves since 2005 and holds the most gold since at least 1993, IMF data shows.

Although, it is worth noting that countries like Lebanon, Egypt, Laos, Pakistan, Kazakhstan and Turkey all have a much bigger share of gold in their foreign exchange reserves than Russia does – suggesting the recent trend is likely to continue. Especially if politics intercedes and the relationship between Russia, Trump’s U.S., the EU and NATO worsens again in the coming months.

Russia places much strategic importance on its gold reserves. Both President Putin and Prime Minister Medvedev and have been photographed on numerous occasions holding gold bars and coins. In May 2015, we pointed out how the Russian central bank views gold bullion as “100% guarantee from legal and political risks.”

Astute, risk aware investors are following Russia’s lead by diversifying and having an allocation to physical gold coins and bars.

 

http://www.goldcore.com/us/gold-blog/russia-gold-buying-back-buys-one-million-ounces-january/

 

end

 

A huge story:  Investors worldwide could become plaintiffs against the banks in the class action suit against the UK bullion banks. Leon Kaye will probably file its class action suit shortly..
that should be fun…

(courtesy  GATA/Leon Kay lawyers/UK)

 

Investors worldwide could become plaintiffs in class-action suit in UK against bullion banks

Submitted by cpowell on Sun, 2017-02-19 00:56. Section:

7:57p ET Saturday, February 18, 2017

Dear Friend of GATA and Gold:

Investors in nine countries have responded to the announcement two weeks ago that a British law firm, Leon Kaye Solicitors, is contemplating bringing a class-action lawsuit in the United Kingdom under that country’s Competition Act against bullion banks suspected of manipulating the gold and silver markets:

http://www.gata.org/node/17160

The firm wishes to remind investors that they could become plaintiffs in such a lawsuit even if they live outside the United Kingdom.

Information about the potential lawsuit is posted at the Leon Kaye Solicitors internet site here:

http://www.leonkaye.co.uk/class-actions/possible-manipulation-gold-silve…

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

 

END

 

An Arizona bill would remove state taxes on profits from the sale of gold coins.  That should have been done long ago as there should be no tax on “money”

(courtesy Fischer/Arizona Daily Star/Tucson/GATA)

Arizona bill would remove state tax on profit from sale of gold coins

Submitted by cpowell on Sun, 2017-02-19 01:21. Section:

By Howard Fischer
Arizona Daily Star, Tucson
Sunday, February 12, 2017

PHOENIX, Arizona — Arguing that federal policies have made paper money “virtually worthless,” Arizona lawmakers are moving to allow residents to invest in gold coins and not have to pay state taxes on any profits they make when they sell them.

Legislation awaiting a final House vote would carve an exemption in existing laws that require people to report — and pay taxes — on capital gains. So, if you buy art, jewelry, or an antique car for $10,000 and sell if for $12,000, you owe the state tax on that $2,000 profit.

But Rep. Mark Finchem, R-Oro Valley, argues that’s not true if you’re buying U.S. gold coins. He said it’s simply exchanging one form of U.S. currency for another.

“If you were to exchange four quarters for a dollar bill, that’s not a taxable event,” Finchem explained during House debate last week on his HB 2014. …

… For the remainder of the report:

http://tucson.com/news/state-and-regional/arizona-bill-would-remove-stat…

 

END

 

This is why we pay no attention to the mainstream media.  The World Gold Council while interviewing Greenspan fails to ask him on gold leasing and central bank intervention with respect to gold

(courtesy WGC/GATA)

 

World Gold Council fails to ask Greenspan about central bank intervention against gold

Submitted by cpowell on Sun, 2017-02-19 01:51. Section:

8:54p ET Saturday, February 18, 2017

Dear Friend of GATA and Gold:

With the February edition of its newsletter, Gold Investor, the World Gold Council inadvertently proclaims its uselessness by interviewing former Federal Reserve Chairman Alan Greenspan about gold without ever asking him about the largely surreptitious involvement of central banks in the gold market and the objectives of that involvement.

This is an especially spectacular failure in light of Greenspan’s admission of that involvement in his testimony to Congress in July 1998, wherein he acknowledged that central banks are prepared to lease gold in “increasing quantities” to suppress its price:

https://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

Of course the World Gold Council isn’t alone in avoiding these crucial questions. These questions are prohibited throughout the mainstream financial news media. Indeed, it has begun to seem that Greenspan conditions interviews on pledges not to ask him about the surreptitious intervention of central banks in the gold market, though such interventions have been extensively documented by GATA for many years, as here:

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

But mainstream financial news organizations don’t purport to be representing gold producers and investors as the World Gold Council does. Once again the World Gold Council has indicated that it exists primarily to ensure that there never is a world gold council.

The World Gold Council’s February newsletter is posted in PDF format here —

http://www.gold.org/download/file/5497/Gold_Investor_February_2017.pdf

— with the Greenspan interview beginning on Page 11.

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

 

END

 

Why should this currency be different from any other:  JPMorgan and HSBC are among a dozen banks facing fines for rigging the South African rand

(courtesy Bloomberg)

JPMorgan, HSBC among dozen banks facing fines for rigging S. African rand

Submitted by cpowell on Mon, 2017-02-20 12:50. Section:

By Renee Bonorchis and Michael Cohen
Bloomberg News
Wednesday, February 15, 2017

South Africa’s antitrust investigators have urged that a dozen banks be fined for colluding and manipulating trades in the rand, potentially becoming the latest in a string of penalties handed to lenders around the world for rigging currencies.

South African’s Competition Commission identified lenders including Bank of America Merrill Lynch, HSBC Holdings Plc, BNP Paribas SA, Credit Suisse Group AG, HSBC Holdings Plc, JPMorgan Chase & Co., and Nomura Holdings Inc. as among those that participated in price fixing and market allocation in the trading of foreign currency pairs involving the rand since at least 2007. It referred the case to an antitrust tribunal, concluding an investigation that began in 2015. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-02-15/south-africa-to-prose.

 

 

END

 

Have fun with this:  Ronan Manly illustrates beautifully how paper gold influences the price of physical gold

(courtesy Ronan Manly/Bullionstar)

Bullion Star graphic describes how ‘paper gold’ controls the metal’s price

Submitted by cpowell on Mon, 2017-02-20 18:08. Section:

1:10p ET Monday, February 20, 2017

Dear Friend of GATA and Gold:

Bullion Star today publishes an elaborate informational graphic describing how bullion banks create almost infinite amounts of imaginary “paper gold” to control the monetary metal’s price and prevent the price from being determined by physical demand.

Bullion Star summarizes the graphic’s topics this way:

— The identities of the bullion banks.

— The fractional-reserve nature of bullion banking and the paper gold creation process.

— How the staggeringly large paper gold trading volumes are generated.

— The gold price discovery process and how the price of gold is set in London by unallocated trading that channels gold demand away from real physical gold and into paper.

— The secretive nature of the bullion banking club and how its activities in the City of London are deliberately shrouded in secrecy.

— How new participants in the London gold market claim to be providing competition but are actually perpetuating the underlying unallocated gold account system of trading.

The graphic can be found at Bullion Star here:

https://www.bullionstar.com/blogs/bullionstar/infographic-bullion-bankin…

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

 

END

 

A good illustration of the huge problems facing ordinary Greek citizens after 7 years of bailouts

(courtesy Reuters/GATA)

 

After seven years of bailouts, Greeks just sink deeper in poverty

Submitted by cpowell on Tue, 2017-02-21 00:38. Section:

By Karolina Tagaris
Reuters
Monday, February 20, 2017

ATHENS, Greece — Greek pensioner Dimitra says she never imagined a life reduced to food handouts: some rice, two bags of pasta, a packet of chickpeas, some dates, and a tin of milk for the month.

At 73, Dimitra — who herself once helped the hard-up as a Red Cross food server — is among a growing number of Greeks barely getting by. After seven years of bailouts that poured billions of euros into their country, poverty isn’t getting any better. It’s getting worse like nowhere else in the European Union.

“It had never even crossed my mind,” she said, declining to give her last name because of the stigma still attached to accepting handouts in Greece. “I lived frugally. I’ve never even been on holiday. Nothing, nothing, nothing.” …

… For the remainder of the report:

http://www.reuters.com/article/us-eurozone-greece-poverty-idUSKBN15Z1NM

 

 

END

 

Chinese citizens are sure anxious to get their yuan/dollars out of China as bitcoin soars above 1100.00

(courtesy zero hedge)

Bitcoin Soars Above $1100, Near Record Highs As Chinese Bypass Crackdown

Despite concerted efforts by authorities to crackdown on capital outflows – specifically through virtual currencies – prices for Bitcoin are soaring as the Chinese find way around regulatory controls. Bitcoin just topped $1100 – near record highs – as Chinese traders shift their action off regulated-exchanges to local peer-to-peer marketplaces.

China’s central bank has stepped up oversight of bitcoin exchanges this year, leading major trading platforms to impose halts on withdrawals and other checks to appease the regulator. But, as Quartz reports, Chinese traders aren’t playing along—they are apparently flocking to peer-to-peer marketplaces to continue buying and selling bitcoin.

As Yuan trading on bitcoin exchanges has plummeted…

Quartz notes that one of the longest established peer-to-peer marketplaces is LocalBitcoins, which acts as a kind of directory for buyers and sellers to find each other. Users can arrange to meet in person, on chat platforms, or talk on the phone to arrange exchanges involving bitcoin.

Yuan volumes on the marketplace have exploded in the past week. Trading on LocalBitcoins currently accounts for about 6% of the total trading volume in yuan, according to data source Crypto Compare.

 

And Bitcoin prices have practically erased all of the Chinese crackdown losses…

 

It seems the Chinese will not be stopped in their effort to get capital out of the country – even as the PBOC spends billions propping up the currency in the short-term to create the illusion of stability.

 

end

 

Is the Fed having problems keeping gold in check?

(courtesy Dave Kranzler/IRD)

 

 

Bloomberg News Admits The Fed Manipulates Gold  — Published: Tuesday, 21 February 2017 | Print  | Comment – New! 

By Dave Kranzler

“Yellen Can’t Halt Trump Gold Rally That Funds Bet Against” – That was the headline in a Bloomberg news report that was released on Sunday afternoon. There’s a lot going on in that headline – none of it accurate except for the fact that gold is moving higher despite the efforts of western Central Banks to cap the price.

The basic premise of the report is that gold is moving higher in defiance of the Fed’s apparent move to raise interest rates. Reading through the report reveals even more misleading and completely false information than is conveyed by the headline. Here’s a link if you want to read the article:  Bloomberg/Yellen/Gold.

The headline itself and the article content are both highly problematic, riddled with disinformation and completely inaccurate assertions.  Anyone actually who might have read the article and trusted the content has been taken down to “ground zero” intellectually.  Propaganda for the ignorant.  I will be reviewing several ways in which the article content is inaccurate, if not intentionally fraudulent, in the upcoming issue of theMining Stock Journal.

That said, the headline outright acknowledges that the Fed’s goal with respect to the price of gold is to prevent it from moving higher. The idea that Yellen “can’t halt” the rising price of gold implies that such intervention is part of the Fed’s mandate.  It’s the first time I can recall in 16 years of researching, trading and investing in the precious metals market that the mainstream financial media, unwittingly or not,  has acknowledged that the Federal Reserve attempts to intervene in the gold market.

If the implied message of the headline was inadvertent, it means that conversations with respect to the Fed and its role in preventing the price of gold from rising are actively occurring in meeting rooms and reporter “bullpens” at several financial media organizations, with orders from “above” to never publish the truth.   Imagine if the Washington Post had withheld the news about Watergate…

Today’s action in gold exemplifies the tenor of the Bloomberg report.  Almost as if “on cue,” in deference to Yellen’s attempt to “halt” the gold rally from yesterday, gold was slammed for $9 this morning.  The reason generally attributed is “March rate hike hopes”LINK.   I guess that’s all it takes.  Yellen or some Fed clown exhales “rate hike on the table in March” and gold gets slammed by the trading computers.

Allegedly Germany has repatriated a large portion of its gold ahead of schedule (why it was supposed to take 7 years no one can explain).  Notwithstanding whether or not the gold is actually sitting physically in a Bundesbank vault, the announcement of the early repatriation conveys a sense of urgency to do so.  Furthermore, the eastern hemisphere countries are hoovering gold like there’s no tomorrow for fiat currency.

The Feds and the western Central Banks are exuding fear with respect to gold. The escalation in anti-gold propaganda reflects this sense of desperation, as do the shallow sell-offs followed by a move higher in paper gold that are initiated by LBMA and Comex paper traders after the Asian markets close for the day.  The conclusion remains that all sell-offs in the gold market, like today’s, should be capitalized upon by adding to positions in physical gold and silver and in mining stocks.

  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 WEAKER AT  6.8845(HUGE DEVALUATION SOUTHBOUND   /OFFSHORE YUAN WIDENS   TO 6.8668 / Shanghai bourse UP 13.36 POINTS OR .41%   / HANG SANG CLOSED DOWN 182.45 POINTS OR 0.76% 

2. Nikkei closed UP 130.36 POINTS OR 0.68%   /USA: YEN RISES TO 113.66

3. Europe stocks opened ALL IN THE GREEN EXCEPT LONDON      ( /USA dollar index RISES TO  101.52/Euro DOWN to 1.0532

3b Japan 10 year bond yield: RISES TO    +.095%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.66/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.30  and Brent: 56.96

3f Gold DOWN/Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 10yr bund RISES TO  +.324%/Italian 10 yr bond yield UP  to 2.225%    

3j Greek 10 year bond yield FALLS to  : 7.21%   

3k Gold at $1230.90/silver $17.96(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 23/100 in  roubles/dollar) 57.75-

3m oil into the 54 dollar handle for WTI and 56 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.66 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0103 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0639 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.324%

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

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

4. USA 10 year treasury bond at 2.452% early this morning. Thirty year rate  at 3.055% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS US Futures, European Stocks Rise Despite HSBC Plunge; Dollar, Oil Jump

 European stocks rose again with S&P futures higher, while Asian stocks were mixed. The dollar rose jumped on hawkish comments by Philly Fed’s Harker, oil rose following optimistic OPEC comments, while gold dropped. Markets have largely ignored the negative result by financial heavyweight HSBC, which posted its largest fall since mid-2015 after reporting a 62% plunge in pretax profit, weighing on UK financials, with the FTSE 100 modestly underperforming.

The Bloomberg Dollar Spot Index rose the most in more than three weeks after a Federal Reserve policy maker reinforced the chances for a U.S. interest-rate increase as soon as next month. The U.S. currency advanced against most of its major peers after Philly Fed President Patrick Harker told MNI in a Friday interview he “would not take March off the table at this point.” Recent comments from policy makers have leaned on the hawkish side. A voting member of the rate-setting Federal Open Market Committee this year, Harker had said Feb. 15 that he sees three 25-basis point rate increases as appropriate for 2017.

In Europe, mining stocks climbed as surging commodities prices boosted corporate earnings even as HSBC fell the most since August 2015 after its profit missed estimates. Gold slumped and oil climbed toward $54 a barrel. As a result the Stoxx 600 climbed 0.2% as gains in mining companies overshadowed HSBC Holdings Plc’s results. Financial heavyweight HSBC has posted its largest fall since mid-2015 after reporting a 62% fall in pretax profit, weighing on UK financials, with the FTSE 100 modestly underperforming. Elsewhere, mining names have seen a lift with BHP returning to profitability while Anglo American results beat analyst expectations. However, despite the early softness, equities saw a turnaround amid better than expected PMI figures for the Eurozone and Germany. Germany’s DAX rose 0.5 percent, with automakers including Daimler AG and Volkswagen AG among the top gainers.

A closer look at HSBC Holdings which today reported a 62% slump in annual pre-tax profit that fell way short of analysts’ estimates as the British bank took hefty writedowns from restructuring and pointed to brakes on revenue growth. For the quarter, HSBC reported a $3.4 billion fourth-quarter loss, against analysts’ expectations for a profit, on a $3.2 billion impairment in its private banking business as the lender’s accounting valuation of the unit caught up with years of declining performance. HSBC CEO Stuart Gulliver said the restructured private bank is now viable as a slimmed-down operation providing advice to wealthy clients referred from the lender’s other business lines.

“What this doesn’t mean is that we are selling the private bank… it means we have restructured the private bank and that’s now behind us,” Gulliver told Reuters.

As a result, HSBC shares slid more than 6 percent after the company reported revenues fell by a fifth from 2015, underscoring the challenge it faces to boost returns amid low global interest rates and slowing economic growth in its core markets of Britain and China. Europe’s biggest bank by assets generated profit before tax of $7.1 billion in 2016 compared to $18.87 billion for the previous year, well below the average analyst estimate of $14.4 billion. HSBC also announced a new $1 billion share buy-back, as the lender continued to return cash to shareholders from the sale of its Brazilian business. The bank signaled a number of factors that would pressure its revenues in 2017, including a $500 million increase in regulatory capital costs, lower interest rates in Britain and adverse foreign exchange rates.

“We think weak income trends and significant guided headwinds mean consensus downgrades today,” Jason Napier, analyst at UBS, wrote in a research note on Tuesday.

Also in Europe we got the latest PMI data which showed that the Eurozone private sector and manufacturing growth unexpectedly accelerated to near a six-year high in February and job creation reached its fastest since August 2007, propelled by strong demand and optimism about the future, the surveys found. IHS Markit’s eurozone flash composite Purchasing Managers’ Index, seen as a good overall growth indicator, rose sharply to 56.0, the highest since April 2011, from 54.4 in January, reversing expectations for a slight dip to 54.3. The broad-based acceleration, which showed France’s momentum getting close to Germany’s, suggests that if sustained, economic growth could hit 0.6 percent in the first quarter, according to Markit.

“The increased momentum is due to demand growing at a stronger rate, but also that upturn becoming more broad-based,” said Chris Williamson, chief business economist at IHS Markit. “Importantly, what we now have is France joining the party. It’s been a laggard in the region, and a drag on the euro zone upturn for a few years … and there are finally signs the drag is easing.”

Also of note in Europe, we saw Greek bonds rally, with 2y yield dropping 115bps to 8.31%, while 10y falls 25bps to 7.25%.  The positive sentiment emerged after creditors agreed on Monday for auditors to resume talks in Athens over steps needed to continue bailout of nation. The Greek government accepted to legislate reforms that will be implemented starting 2019 under the prerequisite that they are fiscally neutral, a Greek govt official said in e-mail to reporters, speaking on condition of anonymity. Greek bond strip, the most liquid bundle of the country’s government bonds issued after its last restructuring, is up 1.39c to 68.27c

Asian stocks rose, with South Korea’s benchmark climbing 0.9 percent to the highest level since July 2015. Hong Kong’s Hang Seng slipped 0.8 percent, the most in more than a month. Japan’s Topix index, which reached a peak at the start of the year, is trading within a range of about three percentage points over the past 49 days — the narrowest since 1988.  Bourses in Japan are riding high perhaps reflecting the decent flash manufacturing PMI print in the country which saw the reading bounce 0.8pts to 53.5 and to the highest since March 2014. Elsewhere the Hang Seng and Kospi rose while in China the Shanghai Comp is +0.4%. There’s a story going around on Bloomberg suggesting that Chinese authorities may be considering easing limits on foreign ownership of life insurers, which may also be helping the positive tone.

Global equities continue to trade near a record as hopes the Trump rally will continue to generate optimism in economic growth amid signs of an inflation pickup. Yet there remains caution in the markets, with the dollar trading below this year’s highs and investors clamoring for detail on spending plans under Trump’s administration.

In global rates, the yield on 10-year Treasuries advanced four basis points to 2.45 percent. German 10-year yields rose three basis points after better-than-expected PMI euro- area manufacturing data. The yield on the equivalent French benchmark climbed four basis points. Default insurance on HSBC’s subordinate bonds increased one basis point to 140. The smaller-than-expected buyback could boost the bank’s senior bonds as it implies a less-leveraged balance sheet.

The Fed releases minutes this week from its most recent meeting, giving investors a look into how members see Trump’s policies. Data should show the U.S. housing market perking up at the start of the year. The PMI is expected to rise slightly. It’s International Petroleum Week in London and top OPEC, government and company officials are attending.

Market Snapshot

  • S&P 500 futures up 0.2% to 2,353.00
  • STOXX Europe 600 up 0.2% to 371.90
  • MXAP up 0.01% to 145.16
  • MXAPJ down 0.05% to 466.90
  • Nikkei up 0.7% to 19,381.44
  • Topix up 0.6% to 1,555.60
  • Hang Seng Index down 0.8% to 23,963.63
  • Shanghai Composite up 0.4% to 3,253.33
  • Sensex up 0.4% to 28,773.36
  • Australia S&P/ASX 200 down 0.07% to 5,791.03
  • Kospi up 0.9% to 2,102.93
  • German 10Y yield rose 1.8 bps to 0.314%
  • Euro down 0.6% to 1.0552 per US$
  • Brent Futures up 0.9% to $56.68/bbl
  • Italian 10Y yield fell 0.6 bps to 2.184%
  • Spanish 10Y yield rose 0.8 bps to 1.617%
  • Brent Futures up 0.9% to $56.68/bbl
  • Gold spot down 0.6% to $1,230.84
  • U.S. Dollar Index up 0.5% to 101.40

Top Overnight News from BBG:

  • HSBC Shares Fall After Missing Profit Estimates on Revenue Drop
  • Burger King Owner Said in Advanced Talks to Buy Popeyes Chain
  • Buffett Takes His Own Advice in Walking Away From Unilever Bid
  • Fed’s Harker Not Taking March Rate Rise Off the Table, MNI Says
  • Fed Minutes May Show Inflation Confidence, Discuss Balance Sheet
  • Telefonica to Sell Telxius Stake to KKR for $1.35 Billion
  • InterContinental Hotels Rises After Announcing Special Dividend
  • Qualcomm Says Samsung Scandal Weakens Korea Antitrust Ruling
  • Trump Picks Outspoken Army ‘Rebel’ as National Security Adviser
  • China Said to Draft Rules to Rein in Asset Management Risks
  • Canadian Court Approves InterOil Transaction With Exxon Mobil
  • Uber Taps Eric Holder to Investigate Discrimination Claims
  • Iron Futures Extend 2017’s Rally to 33% as BHP Warns on Outlook
  • BlackRock Says Space Images Can Help Monitor Chinese Companies

Asia equity markets traded mixed with Wall Street closed the day prior, with Nikkei 225 (+0.7%) outperforming amid a weak JPY with USD/JPY holding firmly above 113.00. ASX 200 (-0.1%) recovered most of its early losses after declines seen in the gold and utilities sectors weighed the index. Shanghai Comp. (+0.4%) was boosted by retail names and the telecoms sector, despite a weak CNY 100bIn liquidity injection by the PBoC, while Hang Seng (-0.8%) underperformed after HSBC reported disappointing FY16 earnings and index heavyweight Tencent shares saw losses of over 1%. Finally, 10yr JGBs were flat despite a strong enhanced liquidity auction, while the 40yr yield printed 11-month highs

Top Asian News

  • China Said to Mull Easing Foreign Stake Limits in Life Insurers
  • Chinese Banks’ Off-Book Wealth Products Exceed $3.8 Trillion
  • Ambani’s Jio to Start Charging for Services as Rivals Cry Foul
  • China Retailers Surge as CICC Lauds Alibaba’s ‘New Retail’ Model
  • China Said to Mull Easing Limits on Foreign Life Insurers
  • Over Twinkies and Tweets, China Seeks Clues on Trump Policy
  • Hong Kong Developers Advance Ahead of City’s Budget Speech

European bourses rose after a soft start with price action dictated by the latest batch of earning updates. Financial heavyweight HSBC has posted its largest fall since mid-2015 after reporting a 62% fall in pretax profit, consequently weighing on UK financials, with the FTSE 100 modestly underperforming. Elsewhere, mining names have seen a lift with BHP returning to profitability while Anglo American results beat analyst expectations. However, despite the early softness, equities saw a turnaround amid better than expected PMI figures for the Eurozone and Germany. Across fixed income markets, peripheral debt is outperforming led by Greece with markets somewhat positive over talks between Greece and its creditors yesterday with the 2-yr yield falling 140bps. Elsewhere, GE-FR spread has dropped back below 80bps after yesterday hitting its highest level since mid-2012 following the continued narrowing between Le Pen and her opponents in the French Presidential polls.

Top European News

  • Euro-Area Economy Picks Up Speed as Orders and Optimism Surge
  • Le Pen Advances in French Polls as Security Concerns Sway Voters
  • Citigroup Agrees $5.4 Million Fine to Settle Rand Collusion
  • Rosneft to Buy Crude Oil From Kurdistan Amid Expansion in Iraq
  • U.K. Posts Record Surplus in Pre-Budget Boost for Hammond
  • Brent Oil Holds Gain as Citigroup Lifts Short-Term Price Outlook
  • Vucic Clears Hurdle to Serb Presidency as Incumbent Steps Aside

In currencies, the USD is pushing higher, but the drivers are a little mixed as UST yields show modest gains on the day as yet. The key 10yr rate is still around 2.45%, still well inside the recent 2.30-2.55% range, but the modest gains have been enough to put USD/JPY back in the upper 113.00’s. The Bloomberg Dollar Spot Index gained 0.5 percent as of 10:30 a.m. in London. The greenback rose after Market News International cited Harker, who votes on policy this year, saying a rate move next month is not “off the table at this point.” That followed hawkish congressional testimony last week from Fed Chair Janet Yellen. The moves look tentative as yet, but with the equity markets on a stable footing, near term JPY weakness may well extend a little further before the selling intensifies. The BoJ is showing no signs of letting up on its reinflation process, maintaining ‘the line’ that the exchange rate is not the target of policy measures currently in play. For EUR/USD, the downside is just as much a consequence of the gaining popularity of Le Pen as it is the broader USD view, with French-German yields widening to the detriment of the EUR across the board. The lead spot rate is now refocusing on the lows seen last week, when we hit a 1.0521 base, but EUR/JPY and EUR/CHF now also pressured as sellers target all currencies.

In commodities,  oil advanced as Citigroup Inc. raised its short-term price outlook, citing good OPEC compliance with its output-cut agreement and growing demand in Asia. West Texas Intermediate gained 0.6 percent to $54.04 a barrel and Brent added 0.7 percent to $56.85. Oil prices continue to hold familiar ranges – notably WTI inside USD50.00-55.00. Growing inventory levels offset by strong cooperation with the OPEC agreed cuts, but ongoing scepticism keeps the upside contained despite hedge funds holding significant long positions in both WTI and Brent. Copper prices lead the way for base metals, fighting against USD based weakness near term as supply concerns emanating from the industrial action in Chile support. Industrial metals dropped, partially reversing their biggest gain in a week as funds were seen selling. Aluminum fell 0.4 percent to $1,893 a metric ton and copper lost 0.4 percent.  Gold declined 0.7 percent to $1,229.65 an ounce as the dollar advanced before the U.S. Federal Reserve releases minutes that may give indications of the pace of interest-rate increases. The yellow metal has tested back down to USD1230.00, this from pre USD1245.00 highs. Support remains into USD1,200 in the near term, as the risk perspective maintains an element of caution. Buyers of Silver partially reflects this. U.S. natural gas extended its decline into a third day due to forecasts for warmer-than-normal weather across the east coast. Futures fell 2.4 percent to $2.765 per million British thermal units, the lowest level in three months.

In the US calendar we’ll also get the flash PMI’s where the consensus is for a 0.3pt pickup in the manufacturing print and 0.2pt pickup in the services reading. Away from that there’s some Fedspeak due today with Kashkari (8.501m GMT), Harker (12.00pm) and Williams (3.30pm) all scheduled.

US Event Docket

  • 8:50am: Fed’s Kashkari Speaks on Economy in Golden Valley, MN
  • 9:45am: Markit US Manufacturing PMI, est. 55.3, prior 55
  • 9:45am: Markit US Services PMI, est. 55.8, prior 55.6
  • 9:45am: Markit US Composite PMI, prior 55.8
  • 12pm: Fed’s Harker to Speak on Economic Outlook
  • 3:30pm: Fed’s Williams Speaks to Students in Boise, Idaho

DB’s Jim Reid concludes the overnight wrap

One of the reasons why volatility remains so low in the face of increasingly elevated political risk is that global growth numbers have held up so well in recent weeks and months. Well today’s flash PMI numbers in the face of fresh supportive polls for Le Pen in France are a good test of this stand-off. Indeed yesterday’s OpinionWay poll in France revealed that support for Le Pen in the first round of the presidential election has crept up 1% to 27% with support for Macron and Fillon unchanged at 20%. More significantly though, the second round polling revealed that Macron would defeat Le Pen by a score of 58% versus 42%, a tighter margin than the 60% versus 40% in results from the same pollster just four days ago. In fact if you go back to the start of February, the gap was actually as wide as 65% versus 35%. Yesterday’s poll also revealed that a second round contest between Fillon and Le Pen would have the former coming out on top at 56% versus 44%, a tighter gap compared to 57% to 43% four days ago and 61% versus 39% at the start of the month.

Those results did come prior to the news yesterday that Le Pen’s Party headquarters was raided over the probe concerning whether Le Pen had used European Parliament funds to pay for fictitious jobs, so we may have to see if that has an impact at all, but the positive momentum in the polls for Le Pen is significant nonetheless. While the polls are also suggesting a tightening in support in favour of Le Pen versus Macron and Fillon, the implied probabilities based on bookmaker odds tell a similar tale. In the PDF today we show a graph showing the recent trend in the implied probabilities with the main takeaway being  that the range between the 3 candidates is hovering around the lowest – at 8% – over the last month. Indeed the implied probabilities stand out 37.8% for Macron, 34.2% for Le Pen and 29.5% for Fillon. That probability for Le Pen is up from 25.5% about a month ago while the probability for Macron has fallen from a high of over 50%. It’s fair to say that these numbers reflect a weight of money staked and that the market sees nowhere near as high a probability of a Le Pen victory. Nevertheless it’s the recent trend that’s interesting.

In what was an otherwise quiet day in markets given the US holiday it was the underperformance in French assets which stood out. In equities the CAC ended with a modest -0.05% decline but that compared to a decent +0.60% bounce for the DAX while the Stoxx 600 finished +0.22%. It was the moves in bonds which caught most investors’ eyes though. While 10y Bund yields edged down -0.5bps to 0.293%, 10y OAT’s finished the day up +2.3bps at 1.051% but, more notably, were up as much as +10.0bps at one stage following the poll, touching a high of 1.129% and coming close to the high mark this year of 1.156%. The spread between Bunds and OATs finished at 76bps (and just off the 4 and a bit year high of 77bps) but did blow out as wide as 84bps intraday at one stage and the most since August 2012.

The other notable price mover yesterday was Greek bonds. 2y yields rally nearly 70bps and dropped to a one-week low after the Eurogroup meeting yesterday to discuss Greece’s bailout suggested some progress was being made. Eurogroup president Jeroen Dijsselbloem said that the meeting was “very positive and a good step” and that the EU and IMF will soon return to Athens to continue with discussions, including laying out the more specific details around reforms. Greek finance minister Tsakalotos also confirmed that important progress had been made yesterday and sufficient for bailout auditors to continue talks.

Aside from that there wasn’t a huge amount more to report in markets yesterday. Gilts (+1.7bps) and the FTSE 100 (0.00%) also underperformed a bit yesterday. The House of Lords draft law debate kicked off with Bloomberg reporting that 30 amendments have so far been proposed. That’s far less than the 250 submitted by the House of Common’s but the lack of a Conservative majority in the upper house does raise some risks for PM May. The general debate is due to continue today but the more substantive discussions are not expected until next week.

This morning in Asia we’ve seen most markets get off to another positive start. Bourses in Japan in particular are riding high (Nikkei +0.68%) perhaps reflecting the decent flash manufacturing PMI print in the country which saw the reading bounce 0.8pts to 53.5 and to the highest since March 2014. Elsewhere the Hang Seng is +0.12% and Kospi is +1.06% while in China the Shanghai Comp is +0.26%. There’s a story going around on Bloomberg suggesting that Chinese authorities may be considering easing limits on foreign ownership of life insurers, which may also be helping the positive tone. Meanwhile US equity index futures are up about +0.20%.

Moving on. There wasn’t much to report on the data front yesterday. In the UK the CBI industrial trends survey for February revealed an increase in the output diffusions index by 7pts to 33 which is a level matched only once in the last 16 years. The proportion of firms expecting selling prices to rise increased further too with the index up 4pts to 32 and to the highest since April 2011. Elsewhere in Germany PPI in January was up a much higher than expected +0.7% mom (vs. +0.3% expected) while the flash consumer confidence reading for the Euro area in February fell 1.4pts to -6.2 (vs. -4.9 expected) and so putting it back at November levels. Finally we also got the latest CSPP holdings data at the ECB. Total holdings as of last Friday totalled €64.97bn which implies net purchases settled last week of €2.05bn or an average daily run rate of €409m, which is a little bit more than the average €367m since the program started.

Looking at the day ahead, this morning in Europe the main focus will be on the release of the February flash PMI’s which the market is expecting to remain relatively stable compared to the January figures. Also due out will be the final CPI revisions in France as well as public sector net borrowing data in the UK. In the US this afternoon we’ll also get the flash PMI’s where the consensus is for a 0.3pt pickup in the manufacturing print and 0.2pt pickup in the services reading. Away from that there’s some Fedspeak due today with Kashkari (1.50pm GMT), Harker (5.00pm GMT) and Williams (8.30pm GMT) all scheduled. BoE Governor Carney and Chief Economist Andy Haldane will speak at a Treasury Select Committee hearing on the UK February inflation report.

3. ASIAN AFFAIRS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 13.36 POINTS OR .41%/ /Hang Sang CLOSED DOWN 182.45 POINTS OR 0.76% . The Nikkei closed UP 130.36 POINTS OR 0.68% /Australia’s all ordinaires  CLOSED DOWN 0.09%/Chinese yuan (ONSHORE) closed DOWN at 6.8845/Oil ROSE to 54.30 dollars per barrel for WTI and 56.96 for Brent. Stocks in Europe ALL IN THE GREEN EXCEPT LONDON. Offshore yuan trades  6.8668 yuan to the dollar vs 6.8845  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE  WIDENS CONSIDERABLY AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

China has had enough with North Korea.  They are suspending all imports of North Korean coal which makes up close to 40% of all of their exports.

This is very deadly to North Korea:

(courtesy Reuters)

China to suspend all imports of coal from North Korea China recently rejected a coal shipment from North Korea after Pyongyang tested a ballistic missile.

By Reuters February 19, 2017 12:25 PM (UTC+8)

China will suspend all imports of coal from North Korea starting Feb. 19, the country’s commerce ministry said in a notice posted on its website on Saturday, as part of its efforts to implement United Nations sanctions against the country.

The Ministry of Commerce said in a short statement that the ban would be effective until Dec. 31.

The ministry did not say why all shipments would be suspended, but South Korea’s Yonhap news agency reported last week that a shipment of North Korean coal worth around $1 million was rejected at Wenzhou port on China’s eastern coast.

The rejection came a day after Pyongyang’s test of an intermediate-range ballistic missile, its first direct challenge to the international community since U.S. President Donald Trump took office on Jan. 20.

China announced in April last year that it would ban North Korean coal imports in order to comply with sanctions imposed by the United Nations and aimed at starving the country of funds for its nuclear and ballistic missile programmes.

But it made exceptions for deliveries intended for “the people’s wellbeing” and not connected to the nuclear or missile programmes.

Despite the restrictions, North Korea remained China’s fourth biggest supplier of coal last year, with non-lignite imports reaching 22.48 million tonnes, up 14.5 percent compared to 2015.

end

The following explains why North Korea is in serious trouble with the banning of all coal imports: (courtesy zero hedge) North Korea’s Regime In Jeopardy After China Bans All Coal Imports

North Korea just lost a very big ally.

On Saturday, China said that it was suspending all imports of coal from North Korea as part of its effort to implement United Nations Security Council sanctions aimed at stopping the country’s nuclear weapons and ballistic-missile program. The ban, according to a statement posted on the website of the Chinese Commerce Ministry, takes effect on today and will last until the end of the year. While China will hardly suffer material adverse impacts, Chinese trade – and aid – have long been a vital economic crutch for North Korea, and the decision strips North Korea of one of its most important sources of foreign currency.

The ban comes six days after the North Korean test of a ballistic missile that the Security Council condemned as a violation of its resolutions that prohibited the country from developing and testing ballistic missile technology. In the test, – which took place during a dinner between Japan’s Prime Minister and Donald Trump – North Korea claimed that it had successfully launched a new type of nuclear-capable missile. It said its intermediate-range Pukguksong-2 missile used a solid-fuel technology that American experts say will make it harder to detect missile attacks from the North.

According to the NYT, China’s decision has the potential to cripple North Korea’s already moribund economy: coal accounts for 34-40% of North Korean exports in the past several years, and almost all of it was shipped to China, according to South Korean government estimates. As Yang Moo-jin, a professor at the University of North Korean Studies in Seoul confirms, coal sales accounted for more than 50 percent of North Korea’s exports to China last year, and about a fifth of its total trade. China had previously bought coal under exemptions that allowed trade for “livelihood” purposes. China’s Ministry of Commerce didn’t respond to faxed questions outside office hours.

“Of course they may have methods to replace the damage, but just by looking at the size of the loss, that’s a pretty big blow,” Yang said.

China’s import ban follows a UN Security Council resolution adopted in November in response to the North’s fifth and most powerful nuclear test, according to which the country should not be allowed to export more than 7.5 million metric tons of coal a year or bring in more than $400 million in coal sales, whichever limit is met first. It was unclear whether that cap has already been reached for this year.

Officials of the United States and its allies, including President Trump, have suggested that China, North Korea’s principal economic patron, should be more aggressive in enforcing sanctions. But while it does not approve of the North’s weapons program, China has also been seen as reluctant to inflict crippling pain on North Korea, for fear that it might destabilize its Communist neighbor.

That, however, changed on Saturday and as Bloomberg says “China’s move to ban coal imports from North Korea, effectively slicing the country’s exports by about half, came with a message for the U.S. and its allies: It’s time to do a deal“ even if it means risking political upheaval.

While China has previously resisted calls by the U.S. to apply greater pressure on Kim’s regime, North Korea is increasingly becoming a strategic liability, according to Zhou Qi, director of the National Strategy Institute at Tsinghua University in Beijing. “What we’re seeing now is Beijing is showing a new willingness to bring the North to near the breaking point,” she said. “There is still some room to squeeze the regime. But of course, it’s a risky card to play.”

“The Chinese are getting more frustrated with North Korea,” Eurasia Group President Ian Bremmer said in an interview at the same conference. “They clearly don’t feel that they have a lot of influence and they’re worried that the U.S. under Trump is going to blame China as opposed to continuing a multilateral process.”

At the same time as China announce the coal import bank, Chinese officials said that pushing North Korea into a corner won’t work as Kim’s regime will keep developing its nuclear capability until it feels safe. Instead, it’s time to restart talks and “break the negative cycle on the nuclear issue,” Chinese Foreign Minister Wang Yi said in a statement on Sunday after meeting South Korean counterpart Yun Byung-se at a security meeting in Munich.

As Bloomberg adds, China’s call for a new initiative contrasts with a more hawkish tone out of Washington.

President Donald Trump, who during his campaign said he could negotiate with Kim over a hamburger, this month promised to deal with North Korea “very strongly” after its latest missile test. He also called on China to get tougher. The U.S. is putting a defense system called Thaad in South Korea — a move that also potentially threatens Beijing’s military capabilities.

China may soon have company in making the shift. South Korea’s President Park Geun-hye was impeached in December and the leading candidates to replace her all take a softer line on North Korea, with front-runner Moon Jae-in saying that the next administration should review the decision to deploy Thaad.

Meanwhile, last week’s bizarre assassination of Kim’s estranged half-brother, who was protected by Chinese authorities, added to calls in Beijing’s foreign policy establishment to take stronger action, according to Shi Yongming, an associate research fellow at the Foreign Ministry-run China Institute of International Studies. “The case fully exposed the desperate irrationality of the Kim regime,” Shi said. “Beijing still wants to bring him to a negotiation table – and that’s where the U.S. role lies – because the collapse of the regime is right now outside China’s realistic capacity to handle.

Making the recent situation somewhat embarrassing for Beijing, China has backed the Kim dynasty since it took charge after the Korean War, in part to prevent having a U.S. ally on its border.

With the international community enforcing sanctions on North Korea after a series of nuclear tests, China now accounts for more than 90 percent of its total trade, according to Bloomberg data.

Whether the Chinese ban will bring Kim’s regime to the negotiating table is unclear. North Korea has accelerated its development of nuclear bombs and ballistic missiles since 2009, when it walked away from six-party talks involving the U.S., South Korea, China, Russia and Japan. However, losing perhaps the biggest source of outside funding will almost certainly lead to political chaos in the communist nation.

The question on everyone’s lips, but which few dare to ask in public, is whether Kim Jong-Un, pressed into a corner, will – after years of posturing with his ballistic missile tests, finally launch a rocket into one of the neighboring nations. Trump’s administration has said it will deploy the missile defense system this year in South Korea and back Japan “100 percent” in moves to deter North Korea.

Since it may have no choice but to test out this defense system in the very near future, one hopes that any North Korean “desperation” launches are safely brought down.

end

b) REPORT ON JAPAN

We have lots of trouble in Japan with respect to the Fukushima disaster.  Now a second robot breaks down inside the hot No 2 reactor site.

No wonder fish are turning up dead on the west coast of the uSA.  This is a huge disaster and the story is ongoing

(courtesy zero hedge)

Fukushima Aborts Latest Robot Mission Inside Reactor; Radiation At “Unimaginable” Levels

Two years after sacrificing one robot, TEPCO officials have aborted their latest robot mission inside the Fukushima reactor after the ‘scorpion’ became unresponsive as it investigated the previously discovered hole where the core is believed to have melted.

A “scorpion” robot sent into a Japanese nuclear reactor to learn about the damage suffered in a tsunami-induced meltdown had its mission aborted after the probe ran into trouble, Tokyo Electric Power company said Thursday. As Phys.org reports, TEPCO, the operator of the Fukushima nuclear plant, sent the remote-controlled device into the No. 2 reactor where radiation levels have recently hit record highs.

The “scorpion” robot, so-called because it can lift up its camera-mounted tail to achieve better viewing angles, is also designed to crawl over rubble inside the damaged facility.

But it could not reach its target destination beneath a pressure vessel through which nuclear fuel is believed to have melted because the robot had difficulty moving, a company spokeswoman said.

“It’s not immediately clear if that’s because of radiation or obstacles,” she said, adding that TEPCO is checking what data the robot was able to obtain, including images.

The robot, 60 centimetres (24 inches) long, is made by Toshiba and equipped with two cameras and sensors to gauge radiation levels and temperatures.

“Scorpion’s mission is to take images of the situation and collect data inside the containment vessel,” TEPCO spokesman Shinichi Nakakuki said earlier.

“Challenges include enduring high levels of radiation and moving on the rough surface,” he said.

Radiation levels inside the reactor were estimated last week at 650 sieverts per hour at one spot, which can effectively shut down robots in hours.

This is not the first robot to become disoriented under the extreme stress of the Fukushima environment…

The robot sent to inspect a reactor’ containment vessel at the Fukushima Daiichi nuclear power plant stopped responding three hours into the operation.

TEPCO hoped to take a look inside the vessel containing one of the three reactors, which underwent a meltdown in the 2011 nuclear disaster.

A group of approximately 40 workers sent the remotely-controlled device, allegedly capable of withstanding high levels of radiation, into the vessel at 11:20 a.m. The robot stopped functioning after covering two thirds of the route at approximately 2:10 p.m., according to the Tokyo Electric Power Co.

But as Michael Snyder recently noted, radiation inside one of the damaged reactors at the Fukushima nuclear power facility has reached an “unimaginable” level according to experts. Because so much nuclear material from Fukushima escaped into the Pacific Ocean, there are many scientists that believe that it was the worst environmental disaster in human history, but most people in the general population seem to think that since the mainstream media really doesn’t talk about it anymore that everything must be under control. Unfortunately, that is not true at all. In fact, PBS reported just last year that “it is incorrect to say that Fukushima is under control when levels of radioactivity in the ocean indicate ongoing leaks“. And now we have just learned that the radiation level inside reactor 2 is so high that no human could possibly survive being exposed to it.

According to the Japan Times, the level of radiation inside the containment vessel of reactor 2 is now estimated to be “530 sieverts per hour”…

The radiation level in the containment vessel of reactor 2 at the crippled Fukushima No. 1 power plant has reached a maximum of 530 sieverts per hour, the highest since the triple core meltdown in March 2011, Tokyo Electric Power Co. Holdings Inc. said.

Tepco said on Thursday that the blazing radiation reading was taken near the entrance to the space just below the pressure vessel, which contains the reactor core.

The high figure indicates that some of the melted fuel that escaped the pressure vessel is nearby.

It is hard to find the words to convey how serious this is.

If you were exposed to a radiation level of just 10 sieverts per hour, that would mean almost certain death. So 530 sieverts per hour is simply off the charts. According to the Guardian, this recent measurement is being described by scientists as “unimaginable”…

The recent reading, described by some experts as “unimaginable”, is far higher than the previous record of 73 sieverts an hour in that part of the reactor.

A single dose of one sievert is enough to cause radiation sickness and nausea; 5 sieverts would kill half those exposed to it within a month, and a single dose of 10 sieverts would prove fatal within weeks.

And the really bad news is that there appears to be a 2 meter hole that was created by melted nuclear fuel “in the metal grating under the pressure vessel in the reactor’s primary containment vessel”.

The following comes from Bloomberg

New photographs show what may be melted nuclear fuel sitting under one of Japan’s wrecked Fukushima reactors, a potential milestone in the search and retrieval of the fuel almost six years after it was lost in one of the worst atomic disasters in history.

Tokyo Electric Power Co. Holdings Inc., Japan’s biggest utility, released images on Monday showing a grate under the Fukushima Dai-Ichi No. 2 reactor covered in black residue. The company, better known as Tepco, may send in a scorpion-like robot as soon as February to determine the temperature and radioactivity of the residue.

If that isn’t frightening enough, one Japanese news source is reporting that this melted nuclear fuel “has since come in contact with underground water flowing from the mountain side”…

The melted fuel has since come in contact with underground water flowing from the mountain side, generating radioactively contaminated water every day. In order to dismantle the reactor, it is necessary to take out the melted fuel, but high radiation levels inside the reactor had hampered work to locate the melted debris.

If this disaster was just limited to Japan, the entire northern hemisphere would not be at risk.

But that is not the case.

Most of the nuclear contamination from Fukushima ended up in the Pacific Ocean, and from there it was literally taken around the rest of the planet. The following was reported by PBS

More than 80 percent of the radioactivity from the damaged reactors ended up in the Pacific — far more than reached the ocean from Chernobyl or Three Mile Island. Of this, a small fraction is currently on the seafloor — the rest was swept up by the Kuroshio current, a western Pacific version of the Gulf Stream, and carried out to sea where it mixed with (and was diluted by) the vast volume of the North Pacific.

We don’t know if there is a connection, but it is extremely interesting to note that fisheries up and down the west coast of the United States are failing because of a dramatic decrease in fish populations. Just check out the following excerpt from a story that was posted on January 18th

U.S. Secretary of Commerce Penny Pritzker today determined there are commercial fishery failures for nine salmon and crab fisheries in Alaska, California and Washington.

In recent years, each of these fisheries experienced sudden and unexpected large decreases in fish stock biomass or loss of access due to unusual ocean and climate conditions. This decision enables fishing communities to seek disaster relief assistance from Congress.

Things are particularly bad up in Alaska, and biologists are “stumped” as to why this could be happening…

In 2016, the pink salmon harvests in Kodiak, Prince William Sounds, Chignik and lower Cook Inlet came in woefully under forecast and stumped biologists as to why.

The estimated value of Kodiak’s 2016 haul was $2.21 million, compared to a five-year average of $14.64 million, and in Prince William Sound the ex-vessel value was $6.6 million, far less that the $44 million five-year average. The total state harvest was the smallest since the late 1970s.

Although state biologists weren’t ready to declare a cause for the poor pink salmon performance, the Commerce Department press release attributed the disasters to “unusual ocean and climate conditions.”

Further south, it was being reported last month that millions of dead sardines are washing up on the shores of Chile.

I could go on and on with a lot more examples like this, but hopefully you get the point.

Something really strange is happening in the Pacific, and a lot of people believe that there is a link to Fukushima.

Not too long ago, I wrote about how the elite of Silicon Valley are “feverishly prepping“, but the truth is that all of us should be. If you need some tips on how to get started, you can find my prepping book right here. Our planet is becoming increasingly unstable, and the Fukushima nuclear disaster is just one piece of the puzzle.

But it is definitely a very important piece. The nuclear material from Fukushima is continuously entering the food chain, and once that nuclear material gets into our bodies it will slowly irradiate our organs for years to come. The following is an excerpt from an absolutely outstanding opinion piece by Helen Caldicott that was published in the Guardian

Internal radiation, on the other hand, emanates from radioactive elements which enter the body by inhalation, ingestion, or skin absorption. Hazardous radionuclides such as iodine-131, caesium 137, and other isotopes currently being released in the sea and air around Fukushima bio-concentrate at each step of various food chains (for example into algae, crustaceans, small fish, bigger fish, then humans; or soil, grass, cow’s meat and milk, then humans). After they enter the body, these elements – called internal emitters – migrate to specific organs such as the thyroid, liver, bone, and brain, where they continuously irradiate small volumes of cells with high doses of alpha, beta and/or gamma radiation, and over many years, can induce uncontrolled cell replication – that is, cancer. Further, many of the nuclides remain radioactive in the environment for generations, and ultimately will cause increased incidences of cancer and genetic diseases over time.

Are you starting to understand the gravity of the situation?

Sadly, this crisis is going to be with us for a very, very long time.

According to Bloomberg, they are not even going to start removing melted nuclear fuel from these reactors until 2021, and it is being projected that the overall cleanup “may take as long as 40 years”…

Decommissioning the reactors will cost 8 trillion yen ($70.4 billion), according to an estimate in December from the Ministry of Economy, Trade and Industry. Removing the fuel is one of the most important steps in a cleanup that may take as long as 40 years.

The unprecedented nature of the Fukushima disaster means that Tepco is pinning its efforts on technology not yet invented to get the melted fuel out of the reactors.

The company aims to decide on a fuel removal procedure for the first reactor during the fiscal year ending March 2019, and to begin removing fuel in 2021.

A lot of people that end up dying as a result of this crisis may never even know that it was Fukushima that caused their deaths.

Personally, I am convinced that this is the greatest environmental crisis that humanity has ever experienced, and if the latest reading from reactor 2 is any indication, things just took a very serious turn for the worse.

c) REPORT ON CHINA

Sunday night;

Sunday night China sends a message to Janet that she should not raise rates.  China weakens the yuan and short term Chinese rates skyrocket:  the 1 week CNH Hibor rises from 3.75% up to 7.388%

(courtesy zerohedge)

China Responds To Fed Jawboning March “Live” – Weakens Yuan, Spikes Money Market Rates

After a week of jawboning markets into believing that the March FOMC meeting is now “live”, it appears China has decided to send a little message.

After weakening the fix by the most since Jan 9th, Chinese money market rates are soaring (1 week CNH HIBOR up 303bps) despite notable liquidity injections…

Of course an unexpected rate hike in March is an implicit tightening of the world’s financial conditions and thus liquidity withdrawal… reversing recent improvements in global dollar liquidity.

As Mark St.Cyr asks (and answers), is China about to begin pre-emptively devaluing the yuan?

Remember when any member of the Federal Reserve, regardless of the action be it a speech, interview, what they had for breakfast et cetera, was met with panting breaths by the financial media? You know, like it was back in the old days, say around 90 days ago more or less. My how time both flies and changes.

Today? Like it or not (and I presume they disdain it) the President as opposed to a Fed. president, has reclaimed all the oxygen, print, airwaves, bandwidth, and more from not only the general news, but the business/financial news as well. I have a feeling that’s not sitting well within the confines of the Eccles Building. Remember: Elites don’t like sharing stages, especially with those they deem as “outsiders.”

So what does the above have anything to do with March and the Yuan you may be asking? It’s this:

You or I may be enjoying a respite from the media where the Fed. (or central bankers in general) aren’t dominating every topic of business/financial discussion. Yet, the one audience I’ll contend that’s still hanging on every syllable for meaning and intent is China. And China is the, and I mean just that – the – only audience that matters. The reasoning is simple:

China, overnight, can bring the entire global markets crashing to its knees via one wrong move, exponentially faster than any Fed. misstep, intentional, or otherwise. Period.

In other words, the Fed. more often than not will signal first (yet they can surprise) and the move would cause turmoil, but the move (and resulting chaos) itself would be more reaction to surprise than substance, where knee-jerk-selling is met with horns-over-hooves buying from Bulls just itching to buy the next dip. (i.e., 1/4% unannounced or unanticipated hike or something else in kind.)

China on the other hand could intentionally devalue the Yuan in whole number, even double-digit percentages, unannounced overnight, and the chaos could quickly transform into unstoppable monetary bedlam. And there’s recent precedent for clues. e.g., August of 2015.

So with the above for context the question that should be first and foremost in everyone’s mind is this:

If China believes there’s a rate hike in March, regardless of what the rest of the world (and academia) might think. Will it force  China into delivering a monetary strike first, and deal with its aftermath later, rather, than simply waiting around to then deal with any potential monetary aftermath or chaos unleashed by the Fed. later?

I believe not only will they move first – the move borders on inevitable.

I base this on no other reasoning than watching the Fed. continuing to throw ever-the-more fuel onto this “monetary powder keg” that brings that response on quicker, rather than later. For the more they pile on, the more this “monetary powder keg” moves from in-need-of-a-match, into self-igniting.

I am of the opinion China’s ever-growing capital flight problems, and more can not withstand another rate hike, let alone one so close after December. And the tell-tale signs for this to be more plausible than not have been occurring in plain sight with far more telling frequency (and I’ll imply: intent) than previously. And the ones who seem to not be reading the “tea leaves” is none other than the Fed. itself.

Here’s some of my reasoning from the article, “Feb’s FOMC Meeting: A Powder keg In Search Of A Match” To wit:

“If China feels that it is in a no-win situation (and it’s easily conceivable using the Fed’s latest words, speeches, shift in policy signaling and a whole lot more) They might decide after coming back from their New Year holiday and – act first – question later.”

Guess what the politburo did when they returned? Hint: Everything and anything but (and it’s a very big but) the one thing they always did in unison – defend the Yuan.

Everything in China went ballistic. Bonds, stocks, commodities, all up. The Yuan? Tumbled to one-month lows.

I’ll contend this is an overt signaling action which screams warning signs everywhere. For why did China, this time, throw so much money everywhere else except for the one place it basically threw the “kitchen sink” at only a month or so prior? (e.g., The Yuan as to strengthen it away from the much dreaded psychological USD/CNH 7.00 cross.)

Was this a test to see what reaction (both market and political) would take place doing something other than something solely Yuan centric? Or, was this a move of desperation as to subside further capital flight? After all: This is precisely the exact opposite of what one should/would do if the plan was to strengthen, rather than weaken one’s currency, correct?

Again: Why would you throw enormous sums of money into actions which not only have a negative effect, but a canceling effect on what you just threw (again) enormous sums of money only a month prior? Does the old joke “Drilling holes in the bottom of the boat to let the water coming in out.” come to mind here? Which is why I’m siding on the side of desperation – first, as opposed to  a test. And here’s why, as stated by economist, and China watcher Andy Xie (one of the few economists I admire) to wit:

“China’s domestic woes and international challenges are largely due to its inefficient system. The government is obsessed with concentrating economic resources in its own hands, and asset markets are like casinos, sucking people in and making them lose money. The government uses its vast resources inefficiently. Hence, China’s currency has a tendency to depreciate.”

Using the above for a prism it’s easy to see how the politburo can do two things at the same time which seem diametrically opposed to what was professed (or signaled) only weeks prior. Why? Because when elites panic – they’ll throw money everywhere and anywhere first, because that’s all they know. And I believe this demonstrates China is beginning to panic.

The real question (and problem) now is: How far, and how fast, from the “beginning” to “end game” they decide to proceed going forward from here? I believe all we have to do is look to our own Fed. for clues, for they appear utterly clueless to what is taking place right before their own eyes.

So what kind of signaling (hence exacerbating China nervousness) is forthcoming from the Fed you ask? Fair question, to wit:

From Reuters™ “Dollar Index Rises As Yellen Signals More Rate Hikes”

“Waiting too long to remove accommodation would be unwise,” Yellen said in prepared remarks before the U.S. Senate Banking Committee, the first of her two-day testimony before Congress.

That was just a few days ago from Fed. chair Janet Yellen’s televised two-day testimony before Congress.

But what went along with the above was what went nearly unreported (as I implied when stating “the old days”) when none other than the Fed’s Dennis Lockhart (another Fed. president retiring at the end of the month) stated in an interview with Bloomberg™ “March meeting is live.”

That’s a lot of confirmation that March is to be considered live, is it not?

As I’ve iterated before, I believe the rest of the world (or “markets”) are still of the idea that the Fed. is once again “crying wolf” as they did all throughout 2016. For China? I think they’re back to an August 2015 frenzy caught between what to do next, never-mind, what not to do. And it’s getting more complicated for them by the day.

Think I’m over exaggerating? Fair point, so here’s just a few “other” headlines China returned from holiday to read and think about, let alone, needing a response to:

“…Trump Backs Japan Over Disputed East China Sea Islands”

Or how about this from the WSJ™ implying further retaliation, “U.S. Eyes New Tactic To Press China”

So where are we now? As I stated in my previous article, I believe it’s all about the Fed. minutes, to wit:

During that time I believe China will wait for the minutes to be released, and if it is made apparent that there was indeed further discussion as to bolster the inferences that the Fed. may be actively considering a path as to embark on a march towards higher rates, along with the thinning of its balance sheet, which would inevitably send the $Dollar rocketing skywards?

They’ll act first and ask (or maybe not) questions later. Sending everything that is now taken for granted in the “markets” (e.g., “It’s good to be long!) into total chaos. All before March 15th’s next meeting. Again, which just so happens to be the exact date originating the “Ides of March” warning.”

If the actions by China after returning from their holiday break are any clue? Than the possibility for a “monetary first strike” is all the more plausible, if not probable, than these “markets” are signaling, let alone contemplating.

China has thrown buckets of capital at not only the Yuan, but its credit markets in unison – and capital flight is accelerating still on all fronts. All while the $Dollar strengthens, and Yuan weakens seemingly against the will of both monetary bodies.

So again, with all the above for context, as I said in the title…

If March Is indeed “live?”  Then so too is the mother of all monetary shocks.

We shall see our first clues for the minutes of the latest FOMC meeting are to be released this week. And if they are indeed “hawkish?” I believe it will force China’s hand before the next meeting. Whether anyone is prepared for it, or not.

And if any clues are to be extrapolated by current “market” action? The answer is self-evident: nobody thinks such a thing is possible anymore, let alone – positioned for it, making things more problematic than they already are. If that’s even possible.

*  *  *

Finally we wonder if – just as was the case after the Shanghai Accord had fulfilled its Plunge Protection Team role in Q1 2016 – whether the same is about to occur…

Notice that the Yuan has been strengthening against the USD for the last 2 months (despite all the gnashing or political teeth over its manipulation). A Fed rate hike is the perfect excuse to let that pretense slide again.

 

end

4. EUROPEAN AFFAIRS

Italy

Quite a few PD party members which are in power threatens to splinter off and form their own party as turmoil reigns supreme in Italy.  This forced Renzi to quite as Party Leader (Gentilioni is the Prime Minister and a Renzi ally).  This should trigger a re election battle.

(courtesy zero hedge0

New Political Turmoil In Italy After Renzi Quits As Ruling Party Leader, Triggering Re-election Battle

Two months after an unexpected, landslide loss in the December 4 constitutional referendum which cost him his job as Italy’s prime minister, on Sunday Matteo Renzi quit as leader of Italy’s ruling party, in the process triggering a re-election fight against minority dissidents that threatens the stability of the center-left government, Bloomberg reports. Renzi told a national assembly of the ruling PD that he had handed in his resignation acknowledging he was set back by defeat in last year’s referendum, one day after critics from leftist factions threaten to abandon the Democratic Party.

“Everything stems from the referendum,” Renzi told more than 600 party delegates. “I feel responsible for the defeat, there is a before and an after. That referendum was a blow for the whole country, starting with the economic system and we must now put the car back on the road.” Renzi denounced “blackmail by a minority” and infighting that he called “a gift” to the anti-establishment Five Star Movement. He is expected to stand for re-election at a congress in April or May.

As Bloomberg adds, concerns about a party split have pushed Italian bond yields higher and led to the widest spread between Italian and German 10-year bonds since February 2014. The selloff may accelerate as Renzi’s resignation could benefit Five Star, which is neck-and-neck with the party in opinion polls and wants a referendum on Italian membership of the euro area. Renzi has faced challenges to his reformist strategy and leadership especially since losing the referendum, which prompted him to resign as premier and sponsor current Prime Minister Paolo Gentiloni, a Renzi loyalist and fellow PD member, as his successor.

Renzi, who has pushed for early national elections in June or September, made no such appeal on Sunday and instead urged his audience to support Gentiloni and his government.

“Basta (enough) with discussions and polemics on the government,” Renzi said. “I ask you to applaud Gentiloni and his government because it is unthinkable that the congress be turned into a congress on the government.”

Renzi’s critics have urged him to drop pleas for early elections and pledge support for Gentiloni to remain premier until the end of the parliamentary term in early 2018. They also want more time to prepare a congress and primaries, and a more leftist program.

Meanwhile, at a meeting of party dissidents on Saturday, critics of Renzi sang “Bandiera Rossa (Red Flag)”, an iconic song of the Italian labor movement. Enrico Rossi, president of the Tuscany region, called for “a party which is on the side of the workers” and derided Renzi for “trying to present himself as the Italian Macron.” Dissidents also include Roberto Speranza, a former PD chief whip in the lower house, and Michele Emiliano, president of the southern Apulia region and a possible challenger for the PD leadership.

However, a breakaway could backfire on the dissidents in making early elections more likely as it could see some 20 members of the lower house, and about a dozen senators, leave the PD and weaken the coalition government, potentially leading to further political instability in Italy.

“The Gentiloni government is our government. We back it and will continue to back it until” Italian President Sergio Mattarella decides to call elections, Matteo Orfini, PD chairman, said on the eve of Sunday’s assembly. “A split would shrink parliamentary support for the government and put it at risk.”

“We’re walking on a tightrope,” Gentiloni confided to his ministers, newspaper La Repubblica reported on Sunday.

Meanwhile, the competition between the PD and Beppe Grillo’s Five Star movement is neck and neck: an Ipsos opinion poll published in newspaper Corriere della Sera on Saturday found that Five Star would have 30.9% of the vote, against 30.1% for the PD, 13% for Forza Italia of ex-premier Silvio Berlusconi and 12.8% for the anti-immigrant Northern League. Meanwhile, a breakaway faction from the PD would have limited support with only 4.3% of voters backing a new leftist party.

 

end

 

Monday:

France

The French/German spread bond yields blows out hugely as investors are waking up to the fact that in the French elections, Le Pen, a Euroskeptic has a chance of winning;

(courtesy zero hedge)

Political Turmoil Returns To Europe: French-German Spread Blows Out To Five Year Wides

Despite a calm start to European trading, with local equity bourses posting solid early gains, European political fears have returned this morning, leading to a blow out in French government bond yields, pushing the 10y yield now higher by 5bps and 5y up 8bps, as early losses extend after latest poll shows support for anti-euro presidential candidate Marine Le Pen rising in both election rounds.

As a result, the French-German 10Y govt spread has jumped to 85 bps, following an accelerated selloff, to the widest level since July 2012.

As Bloomberg notes, after opening tighter vs core bonds, OATs have been pressured as talks between left-wing candidates Melenchon and Hamon are set to continue, while Bloomberg reports that Emmanuel Macron may have harmed his own campaign after becoming entangled in controversies over France’s colonial past.

More to the point, the latest daily French election poll by OpinionWay shows first-round support for Marine Le Pen rising by 1 percentage point to 27%. Both Emmanuel Macron and Francois Fillon’s 1st-round support remains unchanged at 20%, while first round support for Jean-Luc Melenchon down 1 point to 12% as support for socialist candidate Benoit Hamon stable at 16%. While in the second round, Macron is still expected to defeat Le Pen with 58% of the vote vs 42% for Le Pen, this is a smaller margin from February 17, when the poll showed him at 60% vs Le Pen at 40%. Similarly, Fillon’s margin of victory has declined: he would defeat Le Pen with 56% of vote vs 44% for Le Pen, down from 57% to 43% on Feb. 17

Weakness in French bonds is exacerbated by poor liquidity environment, given U.S. holiday, according to a London trader. Additionally as Markit notes, the CDS spread is starting to catch up with relatively insulated Spain.

zerohedge @zerohedge

Political Turmoil Returns To Europe: French-German Spread Blows Out To Five Year Wides http://www.zerohedge.com/news/2017-02-20/political-turmoil-returns-europe-french-german-spread-blows-out-five-year-wides …

Simon Colvin @Simon_MSF

@zerohedge CDS spread catching up with Spain… pic.twitter.com/MJc1wIvrU1

7:51 AM – 20 Feb 2017

The return of the European “fear” trade has sent German 2y yields to a record low of -0.85%, down 4bps on the day, as continued selloff in French bonds prompts risk-off moves across core bonds. Bund futures rally to 164.68, volumes surge to the largest of the session, with resistance at 164.64 (Feb. 17 high) taken out

Sharp selling is pressuring peripherals, led by Italy as 10y yield rises 3bps to 2.22%. Adding to concerns about Italy was the previously reported confirmation that former PM Renzi has quit as leader of the PD, triggering a party re-election. Primaries are expected to take place at the end of April or in the first half of May. According to DB economists, there is an increasing probability of a split of Renzi’s PD with the left wing minority apparently intentioned to breakup. They note that if it materialises, the likelihood of a victory of eurosceptic parties at the general election would increase – currently the polls give the PD a small advantage over the 5SM. Hence, markets could interpret a PD split negatively. DB’s central case is a break-up of the PD with the consequence being a further increase in political fragmentation by damaging the only large party that remains pro-European. The main question, then, would become how much political support the PD would lose if historical left-wing leaders were to abandon the party. In Deutsche Bank’s view, a split of the PD could open the door to a victory of the eurosceptic parties in the coming election.

There was more political concern out of German politics as well: a weekend poll by the Emnid Institute and published in the Bild newspaper showed that the centre-left Social Democrats party have widened their lead over Merkel’s CDU party. The poll found that the SPD’s support increased 1% in a week to 33%, while the CDU’s share fell 1% to 32%. The poll also suggests that the SPD’s overall percentage has increased 12% in the last four weeks. That is the 3rd poll that we have found which shows a 1% lead for the SPD over the CDU, although the absolute percentage share for the SPD is the highest in this latest Emind poll.

As Reuters adds, the SPD’s unexpected surge of some 12 points in the last month has caught Merkel and her conservatives off guard, analysts said, just seven months before the Sept. 24 election, where she had expected to win a fourth term easily. The Emnid poll of 1,885 voters gave the SPD 33 percent of the vote, up 1 point in the last week, while the Christian Democrats (CDU) and their Bavarian sister party the Christian Social Union (CSU) would win 32 percent, down 1 point.

View image on Twitter

Holger Zschaepitz @Schuldensuehner

‘s SPD moves ahead of Merkel’s party in poll. http://reut.rs/2lvOXB3 

12:31 PM – 19 Feb 2017

The SPD has now gained a record-breaking 12 points in the last four weeks, according to Bild am Sonntag newspaper, since former European Parliament president Martin Schulz was named as its candidate to run against Merkel in the Sept. 24 election.

“The increase is unmatched in the history of the Bild am Sonntag polls,” the newspaper wrote.

The SPD, junior partner in Merkel’s ruling coalition, had trailed her conservative bloc for years in opinion polls until nomination of Schulz revived the party. It last won an election under Gerhard Schroeder in 2002.

“This is a serious poll showing the SPD coming from nowhere to overtake the CDU/CSU,” Thomas Jaeger, a political scientist at Cologne University, told Reuters. “It’s amazing to see how unprepared the CDU was for someone like Schulz … They assumed the SPD was going to stay stuck in the 20-25 percent range. They’ve been caught pants down.”

The confluence of these three political narratives has put French and Italian bonds on the back foot, and has spilled over into underperforming Italian and French stock markets.

Oh, and then there is Greece: today we’ve also got the scheduled Eurogroup finance ministers meeting in Brussels where ministers are due to discuss the Greece’s bailout. Hopes for progress have seemingly stalled until after the upcoming European elections although German finance minister Wolfgang Schaeuble did reiterate his confidence over the weekend that Greece is on the right path and that he also expects the IMF to participate in a third bailout package.

According to a Reuters report, Schaeuble doesn’t expect euro zone finance ministers to reach a final deal on Greece at their meeting today in Brussels, a spokesman said on Monday. Euro zone finance ministers are meeting in the Belgian capital to assess Greece’s progress in fulfilling the conditions of its bailout.

“We do not expect a final agreement from the Eurogroup meeting, rather it is an evaluation of a progress report, and with this expectations the minister left to Brussels,” Finance Ministry spokesman Juerg Weissgerber said.

“We hope that the institutions can return relatively quickly to Greece,” he added.

end

 

LePen gaining on all rivals in the first and second round polls.

(courtesy zero hedge)

Selling Of French Bonds Accelerates As Le Pen Extends Lead, Macron Tumbles In Latest Poll

Another day, another headache for owners of French bonds. In the latest French presidential poll, conducted by Elabe for TV broadcaster BFMTV, Marine Le Pen extended her lead by another 2-3 points, while support for her primary centrist challenger Emmanuel Macron, tumbled by 5 points in the last week.

The poll, released today, showed that Le Pen’s lead rose by either 1.5 points to 27% or by 2 points to 28%, depending whether centrist candidate Francois Bayrou would take part in the election…

… or withdraw.

The most surprising result, however, is the plunge in Macron’s odds, who lost five points in the first round voting intentions compared to the same poll conducted two weeks ago. Macron, who is the former French economy minister and who is running on a pro-EU platform, fell to third place behind right-wing candidate Francois Fillon, whom he eclipsed earlier in the month after a major embezzlement scandal erupted in which Fillon was accused of using public funds to pay for his family’s wages. Fillon gained 3 points in both variations of the poll.

But more concerning for her opponents, was the notable gains Le Pen made in the second round, where while still trailing behind both Fillon and Macron, she has seen a 4 points gain in the past week, shrinking the difference between Macron in the runoff round to 59-41. Until several weeks ago, she was firmly in the 20% range.

Meanwhile, as we have observed virtually every single day in the past three weeks, the better Le Pen does the polls, the higher French yields rise, and the greater the spread to German bunds….

… over fears that a Le Pen victory would be the last nail in the coffin for the Eurozone. Le Pen’s FN party has warned it would take France out of the Eurozone, return to the French franc, and would redenominate billions in French debt, a step which leading economists and rating agencies last week declared would to “massive sovereign default” and global financial chaos.

 

end

 

Spain

 

The following is an amazing story.  For the first time error central bankers are now being held accountable in the collapse of Bankia.  Too bad the central bankers did not listen to us: the entire “rescue” operation of the Spanish banks was ill fated from the first hour.  It has no chance to survive and it brought down many small investors who could ill afford the losses

(courtesy Don Quijones/WolfStreet)

The Unthinkable Just Happened In Spain

Submitted by Don Quijones via WolfStreet.com,

Untouchable. Inviolable. Immunity. Impunity. These are the sort of words and expressions that are often associated with senior central bankers, who are, by law, able to operate more or less above the law of the jurisdictions in which they operate.

Rarely heard in association with senior central bankers are words or expressions like “accused”, “charged” or “under investigation.” But in Spain this week a court broke with that tradition, in emphatic style.

As part of the epic, multi-year criminal investigation into the doomed IPO of Spain’s frankenbank Bankia – which had been assembled from the festering corpses of seven already defunct saving banks – Spain’s national court called to testify six current and former directors of the Bank of Spain, including its former governor, Miguel Ángel Fernández Ordóñez, and its former deputy governor (and current head of the Bank of International Settlements’ Financial Stability Institute), Fernando Restoy. It also summoned for questioning Julio Segura, the former president of Spain’s financial markets regulator, the CNMV (the Spanish equivalent of the SEC in the US).

The six central bankers and one financial regulator stand accused of authorizing the public launch of Bankia in 2011 despite repeated warnings from the Bank of Spain’s own team of inspectors that the banking group was “unviable.”

Though they have so far only been called to testify, the evidence against the seven former public “servants” looks pretty conclusive. Testifying against them are two of Banco de España’s own inspectors who have spent the last two years investigating Bankia’s collapse on behalf of the trial’s presiding judge, Fernando Andreu. There are also four emails from the Bank of Spain’s inspector in charge of overseeing Bankia’s IPO, José Antonio Casaus, to the assistant director general of supervision at the Bank of Spain, Pedro Comín, that very clearly express concerns about the bank’s “serious and growing” profitability, liquidity, and solvency issues.

Here are four brief excerpts:

  • [April 8, 2011] “Bankia is unviable, both economically and financially. In the end, the FROB [Spain’s state-owned Fund for Orderly Bank Restructuring] will have to convert its debt into shares for the BFA [Spain’s state-owned banking group] and refund holders of Bankia’s subordinate bonds and “preferentes” shares. […] Find a buyer for the group.”
  • [April 14,2011] “This is not working, it’s getting worse. […] Bankia’s capacity to generate resources is deteriorating.”
  • [May 10, 2011, uppercase used by Causus for emphasis] “The endogenous solution put forward by Bankia — a public listing with a double banking structure without the necessary structural changes — WILL NOT WORK AND WILL HAVE A DEVASTATING IMPACT ON TAXPAYERS.”
  • [May 16, 2011, 2 months before the IPO] “The (bank’s) board is highly politicized and unprofessional. It still has the same directors that led the former entities to need public assistance: [they are] discredited in the eyes of the markets.”

As the court’s edict reads, the contents of the emails unequivocally demonstrate that the Bank of Spain’s management was perfectly aware of the “inviability of the group” as well as “the fabricated financial results it had presented.” Yet, together with the CNMV, it lent its blessing to those results, knowing full well they bore no relation to reality .

Featured in the IPO prospectus, those results were crucial in luring 360,000 credulous investors into buying shares in the soon-to-be-bankrupt bank, not to mention the 238,000 people who bought “preferentes” shares or other forms of high-risk subordinate debt instruments being peddled by Bankia’s sales teams as “perfectly safe investments.” Most have since been refunded by Spanish taxpayers.

The IPO prospectus was also signed off on by Bankia’s auditor, Deloitte, whose Spanish representatives are also warming the defendants’ bench. Deloitte was not just the bank’s auditor, it was also the consultant responsible for formulating its accounts. As El Mundo put it, first Deloitte built Bankia’s balances, then it audited them, in complete contravention of the basic concept of auditor independence [read: Deloitte About to Pay for its Spanish Sins?].

Given this deeply compromising, not to say illegal, set-up, it’s hardly any surprise that Deloitte was happy to confirm in Bankia’s IPO prospectus that the newly born frankenbank was in sound financial health, having made a handsome profit of €300 million just before its public launch. It was a blatant lie: in reality Bankia was bleeding losses from every orifice.

Now, just about everybody who played a role in this momentous deception, with the exception of the government itself, is standing trial. That includes 65 former members of Bankia’s management team including its former President and ex-chief of the IMF, Rodrigo Rato, who faces charges of money laundering, tax fraud, and embezzlement.

In his testimony to the court almost exactly two years ago, Rato argued (quite rightly) that the blame for Bankia’s collapse should be much more evenly spread out. Bankia’s public launch “was not a whimsical decision” taken by its chief executives, he said, but was the inevitable result of regulatory changes at the beginning of 2011. According to Rato, the CNMV even played an active role in drawing up the bank’s lie-infested IPO brochure.

Now, two years later, some of Spain’s most senior central bankers and financial regulators find themselves in the rare position of having to explain and defend the actions and decisions they took that helped pave the way to the biggest bank bailout in Spanish history. It will be one of the first times that senior members of the global central banking complex have had to face trial for the consequences of their actions.

That’s not to say that justice will prevail. Spain’s legal system is notoriously slow, especially when it’s convenient, and heavily politicized. There’s also the possibility that the ECB may intervene as it did in Slovenia’s investigation of its central bank’s alleged misuse of bailout funds. The last Spanish judge that dared to take on the financial elite, Elpidio Silva, sent Caja Madrid’s CEO Miguel Blesa to jail — not once, but twice – and was barred from the bench for 17 years. As such, the presiding judge of the current case, Fernando Andreu, would do well to tread carefully; he risks stepping on some very important toes.

Now a hot new bail-in-able debt got cooked up by financial engineers in France. And it’s a big hit. Read…  Biggest EU Banks Embark on the Mother of All Debt Binges

 

end

 

Greece/Germany

 

A German Minister is calling for a plan B with respect to Greece.  He wants them to pledge gold or real estate for new loans.  If gold is given  then the Greek politicians are just as moronic as Venezuela’s Maduro

(courtesy zero hedge)

German Minister Calls For ‘Plan B’: “Greece Should Pledge Gold, Real Estate For New Loans”

Bavaria’s 50-year-old finance minister Markus Soeder was previously named by German weekly Der Spiegel as one of the Ten Most Dangerous European Politicians (defined as “every politician who is resorting to cheap populism in order to rack up domestic political points”).

For the Greeks, this may well be true.

During the Greek government-debt crisis, Soeder was among the most vocal in calling for Greece to leave the Eurozone. By 2012, he said in an interview: “Athens must stand as an example that this Eurozone can also show teeth.”

And now, according to an interview with Bild, the CSU politician said that:

…new billions should only flow when Athens implemented all the reforms.

Even then, however, aid should only be given against a pledge “in the form of cash, gold or real estate”.

Soeder added, “We need a plan B.”

One wonders if this was Germany’s end-game all along?

Notably Greek gold reserves stand around EUR4 billion while the supposed ‘cost’ to leaving the EU – according to TARGET2 balances – is around EUR72 billion…

end

 

Greek bonds are rallying this morning on revived bailout hopes:

(courtesy zero hedge)

 

Greek Bonds Rally On Revived Bailout Hopes

The yield on Greece’s bonds have tumbled the most since June after creditors agreed on Monday to resume talks in Athens over steps needed to continue a bailout of the nation, driving expectations that Greece will be able to meet its deadline for debt redemption by July.

As The FT reports, bailout monitors are now due to return to Greece following a meeting of finance ministers and IMF officials in Brussels yesterday, where creditors claimed a partial breakthrough in talks.

In return, the Greek government has agreed to examine ways in which it can raise its income tax threshold and reduce pension spending – measures the IMF has pushed for if the country is to meet its budget targets over the next decade or so. Investors seem to be taking cheer in the developments…

Tuesday’s rally notwithstanding, some analysts sounded a note of caution…

“Yesterday’s positive Eurogroup meeting broke the stalemate and increased the odds that the second review will conclude earlier than what the market had priced in,” said Thanassis Drogosis, the Athens-based head of institutional equities at Pantelakis Securities SA. “Still, there are some crucial questions such as time lines, the role of the International Monetary Fund, remain unanswered.”

 

“We would caution against too much optimism, as we agree with the IMF’s debt-sustainability analysis, which concluded that Greece’s debt is unsustainable,” said Peter Chatwell, the London-based head of rates strategy at Mizuho. “We expect it will be very difficult politically to arrive at solution which keeps all parties happy.”

So bonds are rallying as the 3rd or 4th (we lose count) bailout looms – only agreed if Greeks sacrifice more of their pensions and living standards? (or their gold?)

However, in hints of a change in tone from the EU, Eurogroup president Jeroen Dijsselbloem stressed that Greece’s reform efforts would shift “away from austerity and putting more emphasis on deep reforms”.

 

 

end

 

UK/GLobe/HSBC

This surprised everyone:  a huge revenue drop causes HSBC to crash by 7%. Major writedowns at this scandal plagued company.

(courtesy zerohedge)

Canary In A Contained Coalmine? HSBC Crashes Most Since Crisis On ‘Surprise’ Revenue Plunge

Just over 10 years ago, HSBC was the first canary in the world’s financial crisis coalmine to signal trouble ahead. Today’s 7% bloodbath in the banking behemoth is the biggest drop since the financial crisis after reporting fourth-quarter profit that missed estimates on a surprise drop in revenue, which it warned could fall again this year.

As we recently noted, 10 years ago this month, HSBC Holdings, the world’s third-largest bank at the time (and one of the most aggressive players in the U.S. market for low-quality mortgages), sent a chill through the financial world with news that its bad-debt charges will be 20% higher than forecast… and became the first canary in the coalmine of what would become the worst financial crisis of a generation.

“This is a material negative surprise for HSBC,” said John-Paul Crutchley, an analyst at Merrill Lynch.

 

Foreclosures jumped 35% in December versus a year earlier, according to recent data from RealtyTrac. For the fifth straight month, more than 100,000 properties entered foreclosure because the owner couldn’t keep up with their loan payments, the firm noted.

 

For its part, HSBC said its overall charge will be about $10.56 billion, about 20% higher than the average analyst forecast of $8.8 billion.

 

In explaining the outcome, the bank said its own risk projections had failed to predict how many borrowers would fall behind on mortgages as interest rates climbed and saddled them with higher monthly payments.

 

HSBC’s warning comes just weeks ahead of its planned report of annual results and follows a December trading update that was already bearish on U.S. mortgage debt.

 

The problem is with HSBC’s portfolio of sub-prime mortgages, which it snapped up in 2005 and 2006, before the U.S. housing slowdown began to bite. Sub-prime loans are sold to home buyers who fail to meet the strictest lending standards.

And that set the ball rolling.

And now, HSBC’;s stock is plunging most since the financial crisis after what Citigroup’s Ronit Ghose called “Weak Revenues, Messy Quarter.” Ghose also noted “an unusually large amount of one-offs” in the period, including a multibillion-dollar writedown on the value of its scandal-hit European private bank.

HSBC reported a $3.4 billion pretax loss for the quarter that it blamed on slowing growth in its core markets of Hong Kong and the U.K., while its adjusted profit fell $1.2 billion short of analyst estimates. Chief Executive Officer Stuart Gulliver is battling to reverse five years of declining revenue as he pares back HSBC’s sprawling global footprint and reduces expenses. The bank increased its cost-cutting target by $1 billion to $6 billion of savings, while cautioning it faces more than $3 billion of revenue headwinds in 2017, including currency movements and record-low interest rates in the U.K. Executives also warned U.S. President Donald Trump’s protectionist stance and Brexit could damage their business.

The unadjusted loss was driven by $6.1 billion of “significant items” in the quarter, more than six times what Credit Suisse Group AG analysts had forecast. The items included a $2.4 billion writedown of the value of its European private bank and a $1.6 billion adjustment in the bank’s own credit spreads.

Of course, in a desperate bid to curry favor with shareholders and prove their confidence in the bank, the lender said it will buy back $1 billion of stock in the first half and signaled it may repurchase more later this year.

* * *

We are sure all the one write-offs are ‘one-offs’ and that this is “contained” – just like it was 10 years ago.

 

end

 

EU

Great reason for the Euro to plummet this morning:  Eurozone PMI jumps to 56 from 54.4

(courtesy zerohedge)

Eurozone PMI Jumps To 56, Highest Since April 2011; Job Creation Best In A Decade As Inflation Surges

Eurozone private sector and manufacturing growth unexpectedly jumped to the highest in six years in February and job creation reached its fastest since August 2007, propelled by strong demand and optimism about the future, the latest Markit PMI survey found. The Markit Eurozone PMI registered 56.0 in February, up from 54.4 in January , the highest reading since April 2011.

“The pace of eurozone economic growth improved markedly to hit a near six-year high in February, according to PMI survey data. Job creation was the best seen for nine and a half years, order book growth picked up and business optimism moved higher, all boding well for the recovery to maintain strong momentum in coming months.”

The broad-based acceleration, which showed France’s momentum getting close to Germany’s, suggests that if sustained, economic growth could hit 0.6 percent in the first quarter, according to Markit. That is faster than the 0.4 percent economists predicted in a Reuters poll earlier this month and suggests an economy in rude health before key national elections this year in France, Germany and the Netherlands.

The euro zone flash manufacturing PMI rose to 55.5 from January’s 55.2, the highest since April 2011. New export orders also rose to a near six-year high of 55.5 from January’s 55.2, suggesting a weaker currency is helping boost demand. The services PMI was also buoyant, with the business activity index rising to 55.6 from 53.7, easily beating the Reuters poll expectation of no change at 53.7 and the most optimistic forecast in the survey. The services sub-index measuring incoming new business, at 55.8, was also the highest in nearly six years.

According to the survey, growth accelerated in both manufacturing and services to rates not seen since early-2011, with the goods-producing sector again enjoying the faster rate of expansion. February also saw the largest overall increase in new business since April 2011. Inflows of new work grew at the strongest rates for almost six years in both manufacturing and services, reflecting a broad-based upturn in demand. Manufacturers’ order books again received an extra boost from rising exports1, which also swelled to the greatest extent since April 2011 due to the combination of rising demand and the weaker euro.

However, adding to ECB concerns that tapering of QE may be inevitable, “Inflationary pressures meanwhile continued to intensify.” An indicator of inflationary pressures, Input Prices rose for the 6th straight month to the highest since May 2011 while output price inflation rose to a 68-month high, putting the ECB squarely in the spotlight.

“The increased momentum is due to demand growing at a stronger rate, but also that upturn becoming more broad-based,” said Chris Williamson, chief business economist at IHS Markit. “Importantly, what we now have is France joining the party. It’s been a laggard in the region, and a drag on the euro zone upturn for a few years … and there are finally signs the drag is easing.”

Finally, here is the summary from Goldman’s Timothy Munday:

BOTTOM LINE: The Euro area flash PMI reached a 70-month high, rising from 54.4 to 56.0, against consensus expectations and our own forecast of 54.3. The increase was predominantly caused by a robust increase in the services PMI. There were gains in both the German and French PMIs. RETINA’s median estimate of Q1 Euro area GDP growth rose 0.1pp based on today’s data (to +0.8%qoq).

 

1. The Euro area PMI breakdown revealed rises in both the services PMI (from 53.7 to 55.6) and the manufacturing PMI (from 55.2 to 55.5).

 

2. The manufacturing breakdown showed increases in output (+1.1pt) and new orders (+0.1pt), but a decline in employment (-0.3pt). Within the services PMI, the signals from the forward-looking components (which are not part of the headline services PMI figure) were robust, with ‘incoming new business’ increasing by +2.1pt, and ‘business expectations’ rising by 3.5pt.

 

3. On an individual country basis, the German composite PMI rose from 54.8 to 56.1, while the French composite PMI rose from 54.1 to 56.2. There are no published flash estimates for Italy or Spain.

end

 

We have two clear axes with respect to the EU:

i) the Pence, Mattis Haley foreign policy

ii) Bannon/Trump/Miller foreign policy

 

the latter speaks of the EU as a failed experiment and the USA should engage in bilateral negotitions with each country.

Germany is not very happy as they are the net benefiters of the EU conglomeration because the Euro is lower than it would be if the Mark was used for Germany itself.

(courtesy zero hedge)

Bannon Breaks With Pence, Delivers Warning To Europe

Two days ago, when describing the two opposing foreign policy tracks emerging within Trump’s administration (which led to disappointment inside Russia, which was hoping for a more aggressive detente between Putin and Trump), we said that “there are two clear axes developing within the Trump administration: a Pence/Mattis/Haley foreign policy and a Trump/Bannon/Miller foreign policy.”

As a reminder, over the weekend first Secretary of Defense Jim Mattis and then Vice President Mike Pence assured participants at the Munich Security Conference that Trump would “hold Russia accountable” and vowed “unwavering support” to both NATO and EU.

Today, confirming that there is indeed a schism when it comes to the administration’s diplomatic objectives, Reuters writes that in the week before VP Mike Pence visited Brussels and pledged America’s “steadfast and enduring” commitment to the European Union, Trump’s chief strategist Steve Bannon met with the German ambassador and delivered a different message. Bannon, according to Reuters’ sources, signaled to Germany’s ambassador to Washington that he viewed the EU as a flawed construct and favoured conducting relations with Europe on a bilateral basis.

In other words, Bannon voiced the same conerns made by others about the sustainability of the European experiment, if not in polite company, and was preparing how to address Europe’s “failure” through bilateral trade treaties, the same as the recently “free” UK is doing currently with all of its former trading partners.

There was some push back to the Reuters report: a White House official who checked with Bannon in response to a Reuters query confirmed the meeting had taken place but said the account provided to Reuters was inaccurate. “They only spoke for about three minutes and it was just a quick hello,” the official said. The White House said there was no transcript of the conversation. The sources who had been briefed on it described it as polite and stressed there was no evidence Trump was prepared to go beyond his rhetorical attacks on the EU – he has repeatedly praised Britain’s decision to leave – and take concrete steps to destabilise the bloc.

However, Reuters’ sources described a longer meeting in which Bannon took the time to spell out his world view. They said his message was similar to the one he delivered to a Vatican conference back in 2014 when he was running the right-wing website Breitbart News.

In those remarks, delivered via Skype, Bannon spoke favourably about European populist movements and described a yearning for nationalism by people who “don’t believe in this kind of pan-European Union.”

 

Western Europe, he said at the time, was built on a foundation of “strong nationalist movements”, adding: “I think it’s what can see us forward”.

The Bannon encounter reportedly unsettled people in the German government, in part because some officials had been holding out hope that Bannon might temper his views once in government and offer a more nuanced message on Europe in private.

One source briefed on the meeting said it had confirmed the view that Germany and its European partners must prepare for a policy of “hostility towards the EU”. A second source expressed concern, based on his contacts with the administration, that there was no appreciation for the EU’s role in ensuring peace and prosperity in post-war Europe.

 

“There appears to be no understanding in the White House that an unraveling of the EU would have grave consequences,” the source said.

Anxiety over the White House stance led French Foreign Minister Jean-Marc Ayrault and Wolfgang Ischinger, chairman of the Munich Security Conference, to issue unusual calls last week for Pence to affirm during his visit to Europe that the U.S. was not aiming to break up the EU.

And, as discussed before, Pence obliged pledging strong ties between the United States and the EU, and making clear his message was shared by the president. “President Trump and I look forward to working together with you and the European Union to deepen our political and economic partnership,” he said.

However, despite the message of reassurance by Pence and Mattis, Europeans remain unconvinced as the real question – as suggested previously – remains unanswered: which axis is dominant: that of Trump/Bannon/Miller or Pence/Mattis/Haley. Indeed, as Reuters adds, the Pnence tour did not end the concerns in European capitals.

“We are worried and we should be worried,” Thomas Matussek, senior adviser at Flint Global and a former German ambassador to the Britain and the United Nations, told Reuters. “No one knows anything at the moment about what sort of decisions will be coming out of Washington. But it is clear that the man on top and the people closest to him feel that it’s the nation state that creates identity and not what they see as an amorphous group of countries like the EU.”

With elections looming in the Netherlands, France and Germany this year, European officials said they hoped Pence, Secretary of Defense Jim Mattis and Secretary of State Rex Tillerson could convince Trump to work constructively with the EU, overriding Bannon’s skepticism.

What is the worst-case scenario, if only perceived through the eyes of Europe? It was described by Ischinger in an article published last week, entitled “How Europe should deal with Trump”.

He said that if the U.S. administration actively supported right-wing populists in the looming election campaigns it would trigger a “major transatlantic crisis”.

Translation: should the “far right” win in the Netherlands, France and/or Italy, Europe already has a prepared scapegoat who to blame, and not surprisingly, it has nothing to do with the real culprits who over the past decade cared only about central banks’ failed reflationary policies which however succeeded in blowing the world’s biggest asset bubble, and unleashing an unprecedented tide of social discontent, leading to where the world finds itself now.

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

I wonder if any foul play is prevalent here: Russian Ambassador Churkin dies suddenly in NY

(courtesy zero hedge)

Russian Ambassador To UN Vitaly Churkin Has “Died Suddenly” In New York

Vitaly Churkin, who served as Russia’s permanent representative to the United Nations since 2006, “died suddenly” in New York, the Russian Foreign Ministry announced. Churkin died one day before his 65th birthday. Russia’s deputy U.N. ambassador, Vladimir Safronkov, told AP that Churkin became ill and was taken to Columbia Presbyterian Hospital, where he died Monday.

Churkin was at the Russian embassy on East 67th Street when he became sick with a “cardiac condition” around 9:30 am, sources told the New York Post. A Russian Embassy spokesperson told CBS News that they believe Churkin died of a heart attack but they do not yet have official word on the cause of death.

As the AP adds, Churkin has been Russia’s envoy at the United Nations for a little over a decade and was considered Moscow’s great champion at the U.N. He had a reputation for an acute wit and sharp repartee especially with his American and Western counterparts. He was previously ambassador at large and earlier served as the foreign ministry spokesman.

Colleagues took to social media to react to Churkin’s death:

Matthew Rycroft @MatthewRycroft1

Absolutely devastated to hear that my friend & colleague Vitaly Churkin has died. A diplomatic giant & wonderful character. RIP

12:16 PM – 20 Feb 2017 Maleeha Lodhi @LodhiMaleeha

Saddened to hear news of a colleague Amb Vitaly Churkin of Russian Federation suddenly passing away. Our condolences to his family & country

12:17 PM – 20 Feb 2017 Juan Carlos Mendoza @jcmendozagarcia

Our sincere condolences on the passing away of Permanent Representative Vitaly Churkin. We are saddened by the news of your loss @RussiaUN

12:11 PM – 20 Feb 2017 · Manhattan, NY

The announcement “of Churkin’s passing this morning” was met with shock when it was delivered during a session at the UN headquarters. “He was a dear colleague of all of us, a deeply committed diplomat of his country and one of the finest people we have known,” a UN official who delivered the news to her colleagues said.

@kamaNY @kamapradipta

Shocking news to hear the passing away of Amb Vitaly Churkin. A brilliant ambassador who served his country & people. May he rest in peace.

12:04 PM – 20 Feb 2017 · UN Trusteeship Council Chamber

The Russian foreign ministry gave no details on the circumstances of his death but offered condolences to his relatives and said the diplomat had died one day before his 65th birthday. Here is the statement issued moments ago from the Russian Foreign Ministry:

A prominent Russian diplomat has passed away while at work. We’d like
to express our sincere condolences to Vitaly Churkin’s family.

The Russian Foreign Ministry deeply regrets to announce that Russia’s Permanent Representative to the United Nations Vitaly Ivanovich Churkin has died suddenly in New York on February 20, a day ahead of his 65th birthday.

“He was an outstanding person. He was brilliant, bright, a great diplomat of our age,” Russian Foreign Ministry spokeswoman Maria Zakharova said, adding that the news of Churkin’s death was “completely shocking.”

YouTube ‎@YouTube Alexey Yaroshevsky @Yaro_RT

Interviewed Churkin just 2 weeks ago. He looked in good health and was very energetic during the interview. Shockedhttps://youtu.be/1J514rtxado 

12:19 PM – 20 Feb 2017 · Washington, DC

According to Sputnik, Russia’s Deputy Permanent Representative to the United Nations Yevgeniy Zagaynov said about Churkin that he kept working “till the very end.” The representative of the UN Secretary-General said that the UN was shocked by the news, extending their condolences to Moscow.

Perhaps the best known Russian diplomat alongside Sergey Lavrov, Vitaly Ivanovich Churkin was born in Moscow in 1952. He graduated from the Moscow State Institute of International Relations in 1974, beginning his decades-long career at the Ministry of Foreign Affairs shortly.

Ambassador Churkin, who held a Ph.D in history, served as Russia’s Permanent Representative to the United Nations since 2006, where he has clashed on numerous occasions with opposing members of the Security Council whose decisions Russia has vetoed more than once. Prior to this appointment, he was Ambassador at Large at the Ministry of Foreign Affairs of the Russian Federation (2003-2006), Ambassador to Canada (1998-2003), Ambassador to Belgium and Liaison Ambassador to NATO and WEU (1994-1998), Deputy Foreign Minister and Special Representative of the President of the Russian Federation to the talks on Former Yugoslavia (1992-1994), Director of the Information Department of the Ministry of Foreign Affairs of the USSR/Russian Federation (1990-1992).

Churkin is survived by his wife and two children.

 

end

6.GLOBAL ISSUES

Sweden

On Friday, Trump was mocked when he stated that Sweden has a migrant problem. Over the weekend he was vindicated after violent riots erupt in the Swedish suburb:

(courtesy zero hedge)

 

“It Looks Like A War Zone”: Trump Vindicated After Violent Riot Erupts In Swedish Suburb

As we reported last night, just days after the media mocked Trump for his allegations of major problems with Swedish migrant policies, the president was vindicated after a violent riot broke out in the borough of Rinkeby, also known as “little Mogadishu.” Now that the incident is over, in their “post-mortem” Swedish officials confirm that riots erupted in the “heavily immigrant Stockholm suburb” Monday night, as masked looters set cars ablaze and threw rocks at cops, injuring one police officer, Swedish officials said.

The violence erupted just days after President Trump was ridiculed during a Saturday campaign rally for mentioning Sweden alongside a list of European targets of terror. Trump later said his “You look at what’s happening last night in Sweden” remark was in response to a Fox News report on the country’s refugee crime crisis that aired on Friday evening.

“Sweden. They took in large numbers [of refugees],” Trump added at the Florida rally. “They’re having problems like they never thought possible.”

Sweden’s official Twitter account – which is operated by a different user each week – tweeted at Trump on Monday morning: “Hey Don, this is @Sweden speaking! It’s nice of you to care, really, but don’t fall for the hype. Facts: We’re OK!”

Events just hours later refuted that optimistic assessment.

The violence in Rinkeby began around 8 p.m., when officers arrested a suspect at an underground station on drug charges, The Local reported. A group soon gathered, hurling rocks and other objects at officers and prompting one cop to fire his gun “in a situation that demanded he use his firearm,” police spokesman Lars Bystrom said.

View image on Twitter

The Local Sweden @TheLocalSweden

Swedish press photographer assaulted in Rinkeby riots http://dlvr.it/NRBdLN 

4:54 AM – 21 Feb 2017

Hours later, the Rinkeby riots began, with a second wave starting around 10:30 p.m. Seven or eight cars were set on fire and many stores saw looting, The Local reported. A photographer from media outlet Dagens Nyheter said a group of 15 people beat him as he tried to document the chaos. Swedish Police were forced to fire warning shots at the unidentified group of rioting protesters, who set cars on fire, throwing stones at police and looting local stores.

A police officer was injured during the clashes, forcing law enforcers to fire several warning shots at the crowd, Swedish public service broadcaster SVT reported, citing a local police spokesperson.

A policeman investigates a burnt car in Rinkeby, Sweden February 21, 2017

The silver lining is that “nobody has been found injured at the scene and we have checked the hospitals and there hasn’t been anyone with what could be gunshot wounds,” Bystrom added.

“I was hit with a lot of punches and kicks both to my body and my head. I have spent the night in hospital,” said the photographer, who was not named. “It looks like a war zone” he added.

The rioting ended just after midnight.

No arrests were made; however, reports were filed on three violent acts, violence against a police officer, two assaults, vandalism and aggravated thefts, authorities said.

As we reported last night, Rinkeby is the same area where an Australian “60 Minutes” crew was attacked by a group of men in April 2016. The film crew was attempting to enter a so-called “no go zone,” which authorities deny they use as a label. Rinkeby, however, has been officially classified as one of 15 “particularly vulnerable” areas across Sweden.

The country’s prime minister, Stefan Lofven, said Monday, “Yes, we have challenges like all other countries. There’s no doubt. We have a situation in the world where 65 million people had to flee their countries last year, the year before that. 65 million. So that’s a war for us together.” He also said Sweden was investing more in housing, technology and its welfare system.

Reports of rapes in Sweden jumped 13 percent in 2016 compared to the previous year, and reports of sexual assaults were up 20 percent, according to preliminary data from the Swedish National Council for Crime Prevention. Recent migration to Sweden hit its peak in 2015 with more than 160,000 asylum applications. It dropped to almost 30,000 in 2016.

The mainstream media, so eager to mock Trump’s “error” on Saturday, has been oddly delayed in reporting on last night’s Swedish violence.

 

 

END

 

7. OIL ISSUES

Bank of America’s Blanch believes with the increased rigs placed by the shale boys will increase production by 700,000 barrels per day.  Thus for 5 days:  3.5 million

(courtesy zero hedge)

US Shale Production To Soar By 3.5 Million Barrels/Day Over Next Five Years: BofA Explains Why

Two years ago, when Saudi Arabia launched on an unprecedented campaign to crush high-cost oil producers, in the process effectively putting an end to the OPEC cartel (at least until last year’s attempt to cut production), it made a bold bet that US shale producers would be swept under when the price of oil tumbled, leading to a tsunami of bankruptcies, as well as investment and production halts. To an extent it succeeded, but where it may have made a glaring error is the core assumption about shale breakeven costs, which as we reported throughout 2016, were substantially lower than consensus estimated.

In his latest note, BofA’s Francisco Blanch explains not only why a drop in shale breakevens costs is what is currently the biggest wildcard in the global race to reach production “equilibrium”, but also why US shale oil production could surge in the coming years, prompting OPEC to boost production in hopes of recapturing market share.  Specifically, Blanch predicts that US shale oil production could grow by a whopping 3.5 million barrels per day over the next five years.

Here’s why: as he explains “many oil companies around the world have survived the price meltdown by bringing down breakeven costs in the last two years.

But what parts of the world can grow output in the years ahead? In BofA’s view, US shale oil producers will come out ahead and deliver outsized market share gains by 2022. Shale oil output in the US may grow sequentially by 600 thousand b/d from 4Q16 to 4Q17 on increased activity in oil rigs and fast productivity gains. Importantly, breakeven costs for key major US plays now stand around the $55/bbl mark.


As crude oil prices recover further, cost reflation may partly offset reduced costs linked to less regulation. So assuming a gradual recovery in oil prices into a long-term average of $60 to $70/bbl, BofA  projects average annual US shale oil growth of 700 thousand b/d in 2017-22, or roughly 3.5 million bpd over the next 5 years.

Shale production could rise even more if prevailing oil prices are higher than $55/barrel. Here is BofA’s sensitivity analysis:

We estimate that US shale production will decline annually by 270 thousand b/d, on average, until 2022 in a $40/bbl WTI environment. At $50/bbl, growth returns, though only at a small average of 240 thousand b/d. Should WTI trade at $60 for the next five years, growth reaches 700 thousand b/d, and at $70/bbl it reaches 950 thousand b/d (Chart 15). It goes without saying that the level of US shale output in 2022  will highly depend on the average price of WTI in the next five years (Chart 16).

It’s not just the US however: in addition to US shale, BofA sees incremental growth in Brazil, Russia, Kazakhstan and Canada over the next five years, driven by giant projects in the Lula, Kashagan or Johan Sverdrup fields. However, many of the gains in supply from non-OPEC non-shale producers will come on the back of investments dating to before the collapse in global oil prices. Meanwhile, countries such as Mexico and the UK will keep facing output declines. All in, BofA projects non-OPEC output to reach 61.7 million b/d by 2022. This equates to 830 thousand b/d of annual average growth in the next five years, or around the 20-year average of 790 thousand b/d (Chart 3).

Put differently, Blanch sees 84% of the incremental non-OPEC supply gains coming from US shale, as production in many parts of the world either stagnates or declines outright (Chart 4).

Which brings us back to square one, and specifically the migraine-causing dilemma faced by OPEC, which Saudi Arabia had hoped to eliminate in 2014: volume or price?

With non-OPEC poised to grow again, OPEC will need to increase oil output by just 2.2 million b/d to meet global incremental oil demand of about 5.5 million b/d over the 2017-22 period, according to BofA calculations. So about 1/3 of global oil supply growth will come from OPEC in 2017-22 (Chart 5). In this context, Blanch believes that Saudi, Iraq and the UAE are the only countries able to increase their output in the medium term, while Algeria, Nigeria or Venezuela would need massive investments to reverse current trends and boost output.

This may be true, unless of course just like US shale, production breakeven costs are sliding across the world. Furthermore the actions of such giant “vendor-financing” providers as China (seen best in the case of Venezuela, where China continues to provide Caracas with much needed funds in exchange for far below market oil deliveries) remain unpredictable, and may afford these non-core OPEC nations just the funds they need to also steal market share from Saudi, Iraq and UAE.

According to BofA, while OPEC countries have the resources to grow production, its previous work shows that OPEC revenue would likely be higher if no additional investments are made compared to scenarios where increased OPEC production leads to lower prices (Chart 6).

For this reason, Francisco Blanch says he expects limited OPEC oil output growth over the next 5 years.

We, however, disagree, especially following today’s news that Russia overtook Saudi Arabia as the world’s largest crude producer in December, when both countries started restricting supplies ahead of agreed cuts with other global producers to curb the worst glut in decades.

As Bloomberg reported earlier, Russia pumped 10.49 million barrels a day in December, down 29,000 barrels a day from November, while Saudi Arabia’s output declined to 10.46 million barrels a day from 10.72 million barrels a day in November, according to data published Monday on the website of the Joint Organisations Data Initiative in Riyadh. That was the first time Russia beat Saudi Arabia since March. Iraq came in fourth at 4.5 million barrels a day, followed by China at 3.98 million barrels a day, the data show. The US, which has emerged as the oil swing producer, was the third-largest producer, at 8.8 million barrels a day in December compared with 8.9 million barrels a day in November, according to JODI.

It is unlikely that if BofA is right and US shale manages to boost oil output by 3.5 million bpd – or more, if oil prices rise further – over the next five years, potentially surpassing Saudi Arabia should the kingdom’s production remain stagnant, that Riyadh will sit and watch as not only Russia but the US threatens its standing as the world’s biggest producer of crude.

Whether this is accurate will be revealed over the coming months based on what happens to the record level of crude inventories currently in the US. Should the much anticipated “rebalancing” fail as excess demand fails to materialize, the oil-rich kingdom may have no choice but to once again try to put marginal producers out of business but breaking up the OPEC cartel and replaying the post-2014 episode once again, sending crude prices in freefall.

 

 

end

 

 

Gasoline inventories are now at 27 yr highs.  Generally when you see both crude oil inventories and gasoline levels  at record highs you have a problem

(courtesy Nick Cunningham/OilPrice.com)

Biggest Gasoline Glut In 27 Years Could Crash Oil Markets

Submitted by Nick Cunningham via OilPrice.com,

Oil prices are stuck in a holding pattern, waiting for more definitive data on what comes next. OPEC compliance is helping keep prices afloat, but rising U.S. oil production is acting as a counterweight.

A new problem that has suddenly emerged is the record levels of gasoline sitting in storage. The market has already had to digest the fact that U.S. crude oil stocks were rising, and investors have done their best to explain away the trend. But now gasoline inventories are climbing to unexpected heights.

It would be one thing if crude stocks were rising, perhaps because refiners were going offline for maintenance. But if that were the case, then gasoline stocks would draw down on lower refining runs. But if both crude and refined product inventories are going up at the same time, then there should be some reasons for worry.

In fact, the glut of gasoline is now the worst in 27 years. At 259 million barrels, U.S. gasoline storage levels are now at their highest level since the EIA began tracking the data back in 1990.

(Click to enlarge)

Part of the reason for the glut, of course, are high levels of production. Although gasoline production ebbs and flows seasonally, U.S. production has been on an upward trend in recent years. Instead of bouncing around in a range of 8.5 to 9.5 million barrels per day before 2014, U.S. production since the collapse of oil prices has steadily climbed to a range of 9 to 10 mb/d.

(Click to enlarge)

But that increase came in order to satisfy rising demand (which, of course, was stoked by lower prices). More demand should have soaked up that excess supply. However, that is where the problem gets worse. Lately, U.S. demand has faltered.

(Click to enlarge)

U.S. gasoline demand plunged to just 8.2 million barrels per day in January, and sales were down 4 percent from a year earlier. It was also the lowest level in four years. Weak demand is raising some red flags for the market.

Demand is seasonal, with softer demand in winter months, but this winter’s ‘valley’ is lower than any other since 2012.

The problem becomes particularly acute when you take into account the fact that refiners have actually cut back on gasoline production in recent weeks. Even with lower refining runs, gasoline storage levels continued to rise.

The data is worrying, especially since broader economic data does not point to deep problems with the U.S. economy. Some, including the EIA, speculate that higher prices are cutting into demand. That would be surprising given that prices at the pump are still a fraction of what they were a few years ago.

The drop off in demand could be temporary, with consumption rebounding in a few months. Warmer temperatures tend to lead to more driving, and if demand rises it will halt the climb in gasoline inventories. But even a small hiatus in demand has led to a buildup in storage levels to such a degree that it will take time to bring down. “It kind of ruins your whole year potentially,” Sam Margolin, an analyst at Cowen, told the WSJ. “Demand growth appears to be the riskiest element of the oil equation in 2017, and the rally could pause until driving season.”

The glut of gasoline has led to tankers being turned away at New York Harbor in recent weeks, diverted to ports in the Caribbean. However, even that did not resolve the glut on the U.S. east coast. “Record-high inventories in the region are now pushing prices low enough to turn the typical trade flow on its head,” Bloomberg reports. The east coast typically imports a lot of crude oil and refined products. But refined products are instead heading in the other direction because of the buildup in supply.

If demand does not rebound, then gasoline inventories will rise further. At that point, refiners will be forced to cut back on production, which means a reduction of their purchases of crude oil. Less oil sales means higher crude oil inventories, pushing down prices. Ultimately, that could force drillers to reduce supply. In short, if U.S. demand – and by extension, global demand – does not come through for the oil market, then oil prices could decline this year.

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

Euro/USA   1.0532 DOWN .0076/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL IN THE RED  

USA/JAPAN YEN 113.66 UP 0.392(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2402 DOWN .0069 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3146 UP .0043 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS TUESDAY morning in Europe, the Euro FELL by 76 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0532; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 13.36 POINTS OR 0.41%     / Hang Sang  CLOSED DOWN 182.45 POINTS OR 0.76%    /AUSTRALIA  CLOSED DOWN 0.09%  / EUROPEAN BOURSES ALL IN THE GREEN EXCEPT LONDON 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 130.36 POINTS OR 0.68% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN EXCEPT LONDON 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 182.45 POINTS OR 0.76%       / SHANGHAI CLOSED UP 13.36   OR 0.41%/Australia BOURSE CLOSED DOWN 0.09% /Nikkei (Japan)CLOSED UP 130.36 POINTS OR 0.68%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1230.50

silver:$17.92

Early TUESDAY morning USA 10 year bond yield: 2.4520% !!! UP 1 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.0551, UP 1 IN BASIS POINTS  from FRIDAY night.

USA dollar index early TUESDAY morning: 101.52 UP 62 CENT(S) from THURSDAY’s close.

This ends early morning numbers TUESDAY MORNING

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 4.034% UP 1  in basis point yield from FRIDAY 

JAPANESE BOND YIELD: +.095%  UP  1/10  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.682%  UP 5 IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.247 UP 5 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 56 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.301% DOWN 1/10 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0546 DOWN .0063 (Euro DOWN 63 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.53 UP: 0.264(Yen UP 26 basis points/ 

Great Britain/USA 1.2465 DOWN 0.0007( POUND DOWN 7 basis points)

USA/Canada 1.3154 UP 0.0051(Canadian dollar DOWN 51 basis points AS OIL ROSE TO $54.27

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This afternoon, the Euro was DOWN by 63 basis points to trade at 1.0546

The Yen FELL to 113.53 for a LOSS of 26 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 7  basis points, trading at 1.2465/

The Canadian dollar FELL  by 51 basis points to 1.3154,  WITH WTI OIL RISING TO :  $54.27

The USA/Yuan closed at 6.8845/ the 10 yr Japanese bond yield closed at +.095% PU 1/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield PAR IN basis points from FRIDAY at 2.42% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.025  PAR in basis points on the day /

Your closing USA dollar index, 101.38 UP 48 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for TUESDAY: 1:00 PM EST

London:  CLOSED DOWN 25.03 OR 0.34% 
German Dax :CLOSED UP 139.87 POINTS OR 1.18%
Paris Cac  CLOSED UP 23.77 OR 0.49%
Spain IBEX CLOSED UP 34.40 POINTS OR 0.36%
Italian MIB: CLOSED UP 64.93 POINTS OR 0.34%

The Dow closed UP 118.95 OR 0.58%

NASDAQ WAS closed up 27.37 POINTS OR 0.47%  4.00 PM EST
WTI Oil price;  54.27 at 1:00 pm; 

Brent Oil: 56.85  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.75 UP 22/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.301%  FOR THE 10 YR BOND  1:30 EST

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:$54.02

BRENT: $56.61

USA 10 YR BOND YIELD: 2.431%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.04%

EURO/USA DOLLAR CROSS:  1.0532 down .0076 

USA/JAPANESE YEN:113.66   down 0.392

USA DOLLAR INDEX: 101.46  up 56  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2474 : up 3   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.301%

 

END

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

TRADING IN GRAPH FORM

Tech Stocks Extend Record Winning Streak As Dow Tops 20,700

Overheard everywhere today…

 

Dow, S&P, and Nasdaq all hit fresh record highs today

(as Reuters notes)

The S&P is trading at 17.8 times earnings estimates for the next 12 months, above the long-term average of 15 times, according to Thomson Reuters Datastream.

 

“There is no doubt in anyone’s mind that the market has become over-extended and is due for a pullback,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

 

“That said, when you have this kind of momentum, it is very hard to sit on the sidelines.”

This is the 14th straight day of gains for the S&P 500 Tech sector… an all-time record…

 

And is the most overbought in history…

 

50 days in a row without a 1% move.

Dow topped 20,700 and while VIX was crushed lower it ended the day higher with stocks – once again very unusual…

 

VIX and Stocks are completely decoupled…

 

Gold remains 2017’s winner but the melt-up in stocks is catching up fast…

 

Overnight weakness in Treasuries was well bid during the US day session…

 

The Dollar Index roundtripped from overnight strength intraday…

 

Led by Cable strength…(yest4erday the USd was deastock during the President’s Day holiday)

 

The Peso surged below 20/$…

 

Copper and Crude are marginally higher from Friday’s close, PMs flat…

 

RBOB ended the day lower below $1.50 and crude rolled over but ended green…

 

 

end

 

Soft data USA PMI manufacturing index disappoints as the hope category disappoints:

Mfg: 54.3 a drop from 55.0

Service:  53.9 down from 55.6

(courtesy zerohedge)

 

US PMIs Tumble, Catch Down To ‘Hard Data’ Disappointment As “Post-Election Upturn Loses Momentum”

Despite soaring ‘soft’ survey data from around the world, US manufacturing and services PMI printed disappointing drops in February – catching down to the ‘hard’ data declines since Trump’s election.

The Soft data hope is fading fast… (Manufacturing dropped from 55.0 to 54.3, Services slumped from 55.6 to 53.9).

The composite PMI dropped 1.50 points – the biggest drop in a year.

Digging into the details exposes some ugly realities…

Manufacturers signalled that input cost inflation was at its highest level since September 2014. This was linked to increased prices for a range of raw materials, particularly metals and oilrelated inputs. However, factory gate price inflation was only marginal and slipped to a three-month low in February, thereby suggesting a continued squeeze on operating margins.

 

“Service sector job creation moderated to its slowest for  three  months in February”

 

Growth of business output, new orders and hiring all waned, as did inflationary pressures.

 

Some service providers commented on a greater degree of caution in terms of client spending

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

“The drop in the flash PMI numbers for February suggest that the post-election upturn has lost some momentum. Growth of business output, new orders and hiring all waned, as did inflationary pressures.

 

“February also saw a sharp pull-back in business optimism about the outlook over the next 12 months, which suggests companies have become more cautious about spending, investing and hiring.

 

“However, even with the February dip, the PMI remains at a level broadly consistent with the economy growing at a 2.5% annualized rate in the first quarter. The survey’s employment index is meanwhile indicating that a respectable 165,000 jobs were added to the economy in February.

end

 

Wow!! Jay Sekulow a prominent lawyer in the USA states that Obama changed the way phone conversations/recordings are distributed.  On jan 3 2017 Obama did an executive order whereby 16 other agencies are to receive the above information gathering enterprise. It is illegal to pass on conversations from private  or government officials without a warrant and that did not stop Obama

 

(courtesy zerohedge)

Jay Sekulow: Obama Should Be “Held Accountable” For The “Soft Coup” Against Trump

In light of the recent flurry of leaks by the so-called “deep state”, which includes such agencies as the NSA and FBI and which last week lead to the resignation of Mike Flynn after a phone recording of his  phone conversation with the Russian ambassador was leaked to the WaPo and other anti-Trump publications, an article published on January 12 by the NYT has generated renewed interest. One month ago, the NYT reported that “In its final days, the Obama administration expanded the power of the National Security Agency to share globally intercepted personal communications with the government’s 16 other intelligence agencies before applying privacy protections.”

The new rules significantly relax longstanding limits on what the N.S.A. may do with the information gathered by its most powerful surveillance operations, which are largely unregulated by American wiretapping laws. These include collecting satellite transmissions, phone calls and emails that cross network switches abroad, and messages between people abroad that cross domestic network switches. The change means that far more officials will be searching through raw data. Essentially, the government is reducing the risk that the N.S.A. will fail to recognize that a piece of information would be valuable to another agency, but increasing the risk that officials will see private information about innocent people.

While previously the N.S.A. filtered information before sharing intercepted communications with another agency, like the C.I.A. or the intelligence branches of the F.B.I. and the Drug Enforcement Administration, and furthermore N.S.A.’s analysts passed on only information they deemed pertinent, screening out the identities of innocent people and irrelevant personal information, following passage of Obama’s 11th hour rule, “other intelligence agencies will be able to search directly through raw repositories of communications intercepted by the N.S.A. and then apply such rules for “minimizing” privacy intrusions.

In other words, what until recently was a trickle of private data captured about US individuals by the NSA with only a handful of people having full, immersive access, suddenly became a firehose with thousands of potential witnesses across 16 other agencies, each of whom suddenly became a potential source of leaks about ideological political opponents. And with the universe of potential “leaking” culprits suddenly exploding exponentially, good luck finding the responsible party.

However, the implications are far more serious than just loss of privacy rights.

According to civil right expert and prominent First Amendement Supreme Court lawyer, Jay Sekulow, what the agencies did by leaking the Trump Administration information was not only illegal but “almost becomes a soft coup”, one which was spurred by the last minute rule-change by Obama, who intentionally made it far easier for leaks to propagate, and next to impossible to catch those responsible for the leaks.

This is his explanation:

There was a sea-change here at the NSA with an order that came from president Obama 17 days before he left office where he allowed the NSA who used to control the data, it now goes to 16 other agencies and that just festered this whole leaking situation, and that happened on the way out, as the president was leaving the office.

Why did the Obama administration wait until it had 17 days left in their administration to put this order in place if they thought it was so important. They had 8 years, they didn’t do it, number one. Number two, it changed the exiting rule which was an executive order dating back to Ronald Reagan, that has been in place until 17 days before the Obama administration was going to end, that said the NSA gets the raw data, and they determine dissemination.

Instead, this change that the president put in place, signed off by the way by James Clapper on December 15, 2016, signed off by Loretta Lynch the Attorney General January 3, 2017, they decide that now 16 agencies can get the raw data and what that does is almost creates a shadow government. You have all these people who are not agreeing with President Trump’s position, so it just festers more leaks.

If they had a justification for this, wonderful, why didn’t they do it 8 years ago, 4 years ago, 3 years ago. Yet they wait until 17 days left.

One potential answer: they knew they had a “smoking gun”, and were working to make it easier to enable the information to be “leaked” despite the clearly criminal consequences of such dissemination.

As this point Hannity correctly points out, “it makes it that much more difficult by spreading out the information among 16 other agencies, if they want to target or take away the privacy rights, and illegally tap the phones, in this case General Flynn, it’s going to be much harder to find the perpetrator.”

Sekulow confirms, noting that back when only the NSA had access to this kind of raw data, there would be a very small amount of people who have access to this kind of data. “But this change in the Obama Administration was so significant that they allowed dissemination to 16 other agencies, and we wonder why there’s leaks.”

The lawyer’s conclusion: “President Obama, James Clapper, Loretta Lynch should be held accountable for this.”

Full clip below: see zero hedge.

 

end

Michael Snyder agrees with Trump with respect to the mainstream media and it is about time we had a President willing to go to war against them:

(courtesy Michael Snyder/EconomicCollapseBlog)

 

Snyder: “It’s About Time We Had A President Willing To Go To War With Mainstream Media”

Submitted by Michael Snyder via The Economic Collapse blog,

Thursday afternoon’s press conference was perhaps the most memorable moment of Donald Trump’s presidency so far.  Trump’s blistering attack on the media was quite a spectacle, but the truth is that it was desperately needed.  For decades, the mainstream media has dominated political discourse in this country no matter who has been in control of the White House or Congress.  They have become masters of guiding and shaping public opinion, and in recent years they have completely discarded any pretense of being “unbiased” or “objective”.  These monolithic media organizations relentlessly push the progressive agenda of their owners (the global elite), and that is why the “news” always seems to be just about the same no matter which network it is coming from.  Their monopoly is slowly being broken by the rise of the alternative media, but the truth is that most Americans still rely on just a handful of ultra-powerful media organizations for their news.

So when Trump brutally attacked the mainstream media at his press conference on Thursday, millions upon millions of Americans greatly rejoiced, because they finally got what was coming to them.  And then on Friday, Trump posted a message to Twitter calling the New York Times, NBC, ABC, CBS and CNN “the enemy of the American people”…

Donald J. Trump @realDonaldTrump

The FAKE NEWS media (failing @nytimes, @NBCNews, @ABC, @CBS, @CNN) is not my enemy, it is the enemy of the American People!

4:48 PM – 17 Feb 2017

After Donald Trump’s surprise election victory in November, many in the mainstream media started referring to the pro-Trump alternative media as “fake news”, but now Trump has totally turned that insult against them.

For weeks Trump has been referring to CNN as “fake news”, but on Friday he said that he was now going to refer to them as “very fake news”.  The following exchange between Trump and CNN’s Jim Acosta comes from the official White House website

Q    Just because of the attack of fake news and attacking our network, I just want to ask you, sir —

THE PRESIDENT:  I’m changing it from fake news, though.

Q    Doesn’t that undermine —

THE PRESIDENT:  Very fake news now.  (Laughter.)

We have never seen an exchange quite like that between a president of the United States and a prominent member of the mainstream media, but it was well overdue

For eight years, the mainstream media gushed and fawned over Barack Obama because he supported the progressive agenda of the global elite, but now that Trump is in the White House virtually every story from the mainstream media is negative.

So when Chief White House Strategist Steve Bannon refers to them as “the opposition party” he is right on target…

In a rare interview with The New York Times last month, Chief White House Strategist Steve Bannon, the former chair of the far-right Breitbart News, called reporters the “opposition party” and said “the media should be embarrassed and humiliated and keep its mouth shut and just listen for a while.”

“They don’t understand this country,” Bannon said. “They still do not understand why Donald Trump is the president of the United States.”

At this point, the mainstream media is so desperate to portray Trump as a bad guy that they have resorted to a modern day version of McCarthyism.  For decades, liberals always pointed to McCarthyism as one of the greatest examples of paranoia and intolerance in modern American history, but now they are doing the exact same thing to Trump

A bizarre feature of the present confrontation is that the Democrats and liberals have relaunched McCarthyism, something they would have decried as a toxic episode in American political history until a few months ago. Just as Senator Joe McCarthy claimed in 1950 to have a list of communist infiltrators in the State Department, so any contact between a Trump supporter or official and a Russian is now being reported as suspicious and potentially treacherous. It is difficult to see where Trump is wrong when he tweeted that “the Democrats had to come up with a story as to why they lost the election, and so badly, so they made up a story – RUSSIA. Fake news!”

The reason why many of us constantly refer to the mainstream media as a single entity is because it really is very tightly controlled.  You see, the truth is that more than 90 percent of the news, information and entertainment that Americans get through their televisions comes from just 6 giant media corporations.  And of course those 6 enormous corporations are owned and controlled by the elite of the world.

The war for our society is a war for hearts and minds, and the reason why the elite have made so much progress is because most Americans allow thousands upon thousands of hours of “programming” to be constantly pumped into their heads.

The following numbers come directly from Nielsen, and they show how much news, information and entertainment average Americans consume through various methods each day…

  • Watching live television: 4 hours, 32 minutes
  • Watching time-shifted television: 30 minutes
  • Listening to the radio: 2 hours, 44 minutes
  • Using  a smartphone: 1 hour, 33 minutes
  • Using Internet on a computer: 1 hour, 6 minutes

When you add the top two categories together, the average American consumes more than five hours of television every single day.

And when you add all of those categories together, the average American is plugged into “the matrix” in some way for more than 10 hours a day.

We are literally subjecting ourselves to a form of very powerful mind control, and the extraordinary power of the media is something that I addressed in my novel.  There are some people that actually cannot stand complete silence because they have become so accustomed to having something “on” all the time.  As a society, we are absolutely addicted to entertainment, but there is always an agenda behind that entertainment.  This is something that I talked about in a previous article

Virtually every television show, movie, song, book, news broadcast and talk show is trying to shape how you view reality.  Whether you realize it or not, you are constantly being bombarded with messages about what is true and what is not, about what is right and what is wrong, and about what really matters and what is unimportant.  Even leaving something out or ignoring something completely can send an extremely powerful message.

When Donald Trump said that the mainstream media is “the enemy of the American People”, he was 100 percent correct.

If our country is going to have a positive future, the immense power that these media corporations have over the general population must be broken.

It is about time that we had a president that was willing to go to war with the mainstream media, and I greatly applaud President Trump for the stand that he is taking.

 

end

 

An in depth look at the Michael Flynn saga through the eyes of David Stockman

a must read…

(courtesy David Stockman/Ron Paul Institute)

 

Stockman Warns Trump “Flynn’s Gone But They’re Still Gunning For You, Donald”

Submitted by David Stockman via The Ron Paul Institute for Peace & Prosperity,

General Flynn’s tenure in the White House was only slightly longer than that of President-elect William Henry Harrison in 1841.  Actually, with just 24 days in the White House, General Flynn’s tenure fell a tad short of old “Tippecanoe and Tyler Too”.  General Harrison actually lasted 31 days before getting felled by pneumonia.

And the circumstances were considerably more benign. It seems that General Harrison had a fondness for the same “firewater” that agitated the native Americans he slaughtered at the famous battle memorialized in his campaign slogan. In fact, during the campaign a leading Democrat newspaper skewered the old general, who at 68 was the oldest US President prior to Ronald Reagan, saying:

Give him a barrel of hard [alcoholic] cider, and… a pension of two thousand [dollars] a year… and… he will sit the remainder of his days in his log cabin.

That might have been a good idea back then (or even now), but to prove he wasn’t infirm, Harrison gave the longest inaugural address in US history (2 hours) in the midst of seriously inclement weather wearing neither hat nor coat.

That’s how he got pneumonia! Call it foolhardy, but that was nothing compared to that exhibited by Donald Trump’s former national security advisor.

General Flynn got the equivalent of political pneumonia by talking for hours during the transition to international leaders, including Russia’s ambassador to the US, on phone lines which were bugged by the CIA. Or more accurately, making calls which were “intercepted” by the very same NSA/FBI spy machinery that monitors every single phone call made in America.

Ironically, we learned what Flynn should have known about the Deep State’s plenary surveillance from Edward Snowden. Alas, Flynn and Trump wanted the latter to be hung in the public square as a “traitor”, but if that’s the solution to intelligence community leaks, the Donald is now going to need his own rope factory to deal with the flood of traitorous disclosures directed against him.

In any event, it was “intercepts” leaked from deep in the bowels of the CIA to the Washington Post and then amplified in a 24/7 campaign by the War Channel (CNN) that brought General Flynn down.

But here’s the thing. They were aiming at Donald J. Trump. And for all of his puffed up bluster about being the savviest negotiator on the planet, the Donald walked right into their trap, as we shall amplify momentarily.

But let’s first make the essence of the matter absolutely clear. The whole Flynn imbroglio is not about a violation of the Logan Act owing to the fact that the general engaged in diplomacy as a private citizen.

It’s about re-litigating the 2016 election based on the hideous lie that Trump stole it with the help of Vladimir Putin. In fact, Nancy Pelosi was quick to say just that:

‘The American people deserve to know the full extent of Russia’s financial, personal and political grip on President Trump and what that means for our national security,’ House Minority Leader Nancy Pelosi said in a press release.

Yet, we should rephrase. The re-litigation aspect reaches back to the Republican primaries, too. The Senate GOP clowns who want a war with practically everybody, John McCain and Lindsey Graham, are already launching their own investigation from the Senate Armed Services committee.

And Senator Graham, the member of the boobsey twins who ran for President in 2016 while getting a GOP primary vote from virtually nobody,  made clear that General Flynn’s real sin was a potential peace overture to the Russians:

Sen. Lindsey Graham also said he wants an investigation into Flynn’s conversations with a Russian ambassador about sanctions: “I think Congress needs to be informed of what actually Gen. Flynn said to the Russian ambassador about lifting sanctions,” the South Carolina Republican told CNN’s Kate Bolduan on “At This Hour. And I want to know, did Gen. Flynn do this by himself or was he directed by somebody to do it?”

We say good riddance to Flynn, of course, because he was a shrill anti-Iranian warmonger. But let’s also not be fooled by the clinical term at the heart of the story. That is, “intercepts” mean that the Deep State taps the phone calls of the President’s own closest advisors as a matter of course.

This is the real scandal as Trump himself has rightly asserted. The very idea that the already announced #1 national security advisor to a President-elect should be subject to old-fashion “bugging,” albeit with modern day technology, overwhelmingly trumps the utterly specious Logan Act charge at the center of the case.

As one writer for LawNewz noted regarding acting Attorney General Sally Yates’ voyeuristic pre-occupation with Flynn’s intercepted conversations, Nixon should be rolling in his grave with envy:

Now, information leaks that Sally Yates knew about surveillance being conducted against potential members of the Trump administration, and disclosed that information to others. Even Richard Nixon didn’t use the government agencies themselves to do his black bag surveillance operations. Sally Yates involvement with this surveillance on American political opponents, and possibly the leaking related thereto, smacks of a return to Hoover-style tactics. As writers at Bloomberg and The Week both noted, it wreaks of ‘police-state’ style tactics. But knowing dear Sally as I do, it comes as no surprise.

Yes, that’s the same career apparatchik of the permanent government that Obama left behind to continue the 2016 election by other means. And it’s working. The Donald is being rapidly emasculated by the powers that be in the Imperial City due to what can only be described as an audacious and self-evident attack on Trump’s Presidency by the Deep State.

Indeed, it seems that the layers of intrigue have gotten so deep and convoluted that the nominal leadership of the permanent  government machinery has lost track of who is spying on whom. Thus, we have the following curious utterance by none other than the Chairman of the House Intelligence Committee, Rep. Devin Nunes:

‘I expect for the FBI to tell me what is going on, and they better have a good answer,’ he told The Washington Post. ‘The big problem I see here is that you have an American citizen who had his phone calls recorded.’

Well, yes. That makes 324 million of us, Congressman.

But for crying out loud, surely the oh so self-important chairman of the House intelligence committee knows that everybody is bugged. But when it reaches the point that the spy state is essentially using its unconstitutional tools to engage in what amounts to “opposition research” with the aim of election nullification, then the Imperial City has become a clear and present danger to American democracy and the liberties of the American people.

As Robert Barnes of LawNewz further explained, Sally Yates, former CIA director John Brennan and a large slice of the Never Trumper intelligence community were systematically engaged in “opposition research” during the campaign and the transition:

According to published reports, someone was eavesdropping, and recording, the conversations of Michael Flynn, while Sally Yates was at the Department of Justice. Sally Yates knew about this eavesdropping, listened in herself (Pellicano-style for those who remember the infamous LA cases), and reported what she heard to others. For Yates to have such access means she herself must have been involved in authorizing its disclosure to political appointees, since she herself is such a political appointee. What justification was there for an Obama appointee to be spying on the conversations of a future Trump appointee?

Consider this little tidbit in The Washington Post. The paper, which once broke Watergate, is now propagating the benefits of Watergate-style surveillance in ways that do make Watergate look like a third-rate effort.  (With the) FBI ‘routinely’ monitoring conversations of Americans…… Yates listened to ‘the intercepted call,’ even though Yates knew there was ‘little chance’ of any credible case being made for prosecution under a law ‘that has never been used in a prosecution.’

And well it hasn’t been. After all, the Logan Act was signed by President John Adams in 1799 in order to punish one of Thomas Jefferson’s supporters for having peace discussions with the French government in Paris. That is, it amounted to pre-litigating the Presidential campaign of 1800 based on sheer political motivation.

According to the Washington Post itself, that is exactly what Yates and the Obama holdovers did day and night during the interregnum:

Indeed, the paper details an apparent effort by Yates to misuse her office to launch a full-scale secret investigation of her political opponents, including ‘intercepting calls’ of her political adversaries.

So all of the feigned outrage emanating from Democrats and the Washington establishment about Team Trump’s trafficking with the Russians is a cover story. Surely anyone even vaguely familiar with recent history would have known there was absolutely nothing illegal or even untoward about Flynn’s post-Christmas conversations with the Russian Ambassador.

Indeed, we recall from personal experience the thrilling moment on inauguration day in January 1981 when word came of the release of the American hostages in Tehran. Let us assure you, that did not happen by immaculate diplomatic conception — nor was it a parting gift to the Gipper by the outgoing Carter Administration.

To the contrary, it was the fruit of secret negotiations with the Iranian government during the transition by private American citizens. As the history books would have it because it’s true, the leader of that negotiation, in fact, was Ronald Reagan’s national security council director-designate, Dick Allen.

As the real Washington Post later reported, under the by-line of a real reporter, Bob Woodward:

Reagan campaign aides met in a Washington DC hotel in early October, 1980, with a self-described ‘Iranian exile’ who offered, on behalf of the Iranian government, to release the hostages to Reagan, not Carter, in order to ensure Carter’s defeat in the November 4, 1980 election.

The American participants were Richard Allen, subsequently Reagan’s first national security adviser, Allen aide Laurence Silberman, and Robert McFarlane, another future national security adviser who in 1980 was on the staff of Senator John Tower (R-TX).

To this day we have not had occasion to visit our old friend Dick Allen in the US penitentiary because he’s not there; the Logan Act was never invoked in what is surely the most blatant case ever of citizen diplomacy.

So let’s get to the heart of the matter and be done with it. The Obama White House conducted a sour grapes campaign to delegitimize the election beginning November 9th and it was led by then CIA Director John Brennan.

That treacherous assault on the core constitutional matter of the election process culminated in the ridiculous Russian meddling report of the Obama White House in December. The latter, of course, was issued by serial liar James Clapper, as national intelligence director, and the clueless Democrat lawyer and bag-man, Jeh Johnson, who had been appointed head of the Homeland Security Department.

Yet on the basis of  the report’s absolutely zero evidence and endless surmise, innuendo and “assessments”, the Obama White House imposed another round of its silly school-boy sanctions on a handful of Putin’s cronies.

Of course, Flynn should have been telling the Russian Ambassador that this nonsense would be soon reversed!

But here is the ultimate folly. The mainstream media talking heads are harrumphing loudly about the fact that the very day following Flynn’s call — Vladimir Putin announced that he would not retaliate against the new Obama sanctions as expected; and shortly thereafter, the Donald tweeted that Putin had shown admirable wisdom.

That’s right. Two reasonably adult statesman undertook what might be called the Christmas Truce of 2016. But like its namesake of 1914 on the bloody no man’s land of the western front, the War Party has determined that the truce-makers shall not survive.

The Donald has been warned.

 

end

 

A new memo from the Dept of Homeland Security now reveals that just about anyone living in the USA illegally is now subject to deportation.  They will target the criminals but even a minor offense will subject the illegals back to their home country:

(courtesy zero hedge)

New DHS Memos Reveal That Almost Anyone Living In The US Illegally Is Now Subject To Deportation

The Department of Homeland Security released on Tuesday documents translating President Trump’s executive orders on immigration and border security into policy, providing details on how it will prosecute undocumented immigrants and criminal immigrants, repealing nearly all of the Obama administration’s guidances, and bringing a major shift in the way the agency enforces the nation’s immigration laws.

As the WSJ notes, “almost everybody living in the U.S. illegally is now subject to deportation, and more undocumented arrivals at the southern border would be jailed or sent back to Mexico to await a hearing rather than released into the U.S.” according to the new guidance.

“The Department no longer will exempt classes or categories of removable aliens from potential enforcement,” the enforcement memo says. “Department personnel have full authority to arrest or apprehend an alien whom an immigration officer has probable cause to believe is in violation of the immigration laws.”

Secretary John Kelly’s two memos expand raids and the definition of criminal aliens, while diminishing sanctuary areas and enlisting local law enforcement to execute federal immigration policy.

The memos still outline priority groups, starting with serious criminals. But the priorities are much broader and include people charged with crimes who haven’t been convicted, people guilty only of immigration-related crimes such as using false documents, and anybody who an immigration officer believes is a risk to public safety.

While DHS officials said they wouldn’t target otherwise law-abiding undocumented immigrants and don’t plan roundups of illegal immigrants, and said their limited resources would still require a focus on those people who pose a public-safety risk, they also said that people who don’t fall into a priority group aren’t exempt from deportation, and the DHS memo says exceptions would be made on a case-by-case basis.

Previously, under Obama guidelines, undocumented immigrants convicted of serious crimes were the priority for removal. Now, immigration agents, customs officers and border patrol agents have been directed to remove anyone convicted of any criminal offense. That includes people convicted of fraud in any official matter before a governmental agency and people who “have abused any program related to receipt of public benefits.” The only Obama-era guidances left in place were those relating to undocumented immigrants brought to the United States as children.

According to the NYT, the policy also calls for an expansion of expedited removals, allowing Border Patrol and Immigration and Customs Enforcement agents to deport more people immediately. Under the Obama administration, expedited removal was used only within 100 miles of the border for people who had been in the country no more than 14 days. Now it will include those who have been in the country for up to two years, and located anywhere in the nation. The change in enforcement priorities will require a considerable increase in resources. With an estimated 11 million people in the country illegally, the government has long had to set narrower priorities, given the constraints on staffing and money.

Some more details from the NYT:

In the so-called guidance documents released on Tuesday, the department is directed to begin the process of hiring 10,000 new immigration and customs agents, expanding the number of detention facilities and creating an office within Immigration and Customs Enforcement to help families of those killed by undocumented immigrants. Mr. Trump had some of those relatives address his rallies in the campaign, and several were present when he signed an executive order on immigration last month at the Department of Homeland Security.

 

The directives would also instruct Immigration and Customs Enforcement, as well as Customs and Border Protection, the parent agency of the Border Patrol, to begin reviving a program that recruits local police officers and sheriff’s deputies to help with deportation, effectively making them de facto immigration agents. The effort, called the 287(g) program, was scaled back during the Obama administration.

The memos were decried by immigration advocates, and face resistance from many states and dozens of so-called sanctuary cities, which have refused to allow their law enforcement workers to help round up undocumented individuals.

“These memos lay out a detailed blueprint for the mass deportation of 11 million undocumented immigrants in America,” Lynn Tramonte, Deputy Director of America’s Voice Education Fund, said Tuesday in a statement. “They fulfill the wish lists of the white nationalist and anti-immigrant movements and bring to life the worst of Donald Trump’s campaign rhetoric.”

Senior Homeland Security officials told reporters Tuesday morning that the directives were intended to more fully make use of the enforcement tools that Congress has already given to the department to crack down on illegal immigration. The officials emphasized that some of the proposals for increased enforcement would roll out slowly as the department finalizes the logistics and legal rules for more aggressive action.

According to Bloomberg, the memos could further inflame tensions between the U.S. and Mexico, which has advised its citizens living in the U.S. to take precautions in the face of Trump’s new immigration policy. DHS is considering employing a rarely used law to return people who traveled to the U.S. illegally through Mexico back into Mexico, even if they are not Mexican nationals. Officials said that returning Central American refugees to Mexico to await hearings would be done only in a limited fashion, and only after discussions with the government of Mexico, which however would most likely have to agree to accept the refugees.

While nothing in the directives would change the program known as Deferred Action for Childhood Arrivals, which provides work permits and deportation protection for the young people commonly referred to as Dreamers, officials made clear that the department intended to aggressively follow Mr. Trump’s promise that immigration laws be enforced to the maximum extent possible, marking a significant departure from the procedures in place under President Barack Obama.

That promise has generated fear and anger in the immigrant community, and advocates for immigrants have warned that the new approach is a threat to many undocumented immigrants who had previously been in little danger of being deported.

Meanwhile Trump, who said during his campaign that he would cancel the program, has since changed his stance, calling those covered by DACA “incredible kids.” “The DACA situation is a very, very — it’s a very difficult thing for me because you know, I love these kids,” Trump said at a Feb. 16 press conference. “I find it very, very hard doing what the law says exactly to do and you know, the law is rough.”

Your new National Security Advisor replacing Michael Flynn

(courtesy zerohedge)

Trump Names Lt. Gen. HR McMaster As National Security Adviser


Lt. Gen. H.R. McMaster

In a brief statement from Mar-a-Lago, President Trump said on Monday that Lieutenant General Herbert Raymond McMaster would be his new national security adviser, again turning to the U.S. military to play a central role on his foreign policy team. Trump also named Keith Kellogg, a retired U.S. Army General who has been serving as the acting national security adviser, as chief of staff to the National Security Council.

Speaking to reporters in West Palm Beach where he spent the weekend, Trump said John Bolton, a former U.S. ambassador to the United Nations, would serve the administration in another capacity. Trump spent the weekend considering his options for replacing Flynn. His first choice, retired Vice Admiral Robert Harward, turned down the job last week.

BREAKING: Trump picks retired Gen. H.R. McMaster as next national security adviser https://t.co/BHiYnKtXJe

— NBC News (@NBCNews) February 20, 2017

McMaster is a highly regarded military tactician and strategic thinker, but his selection surprised some observers who wondered how McMaster, who is known for questioning authority, would deal with a White House that has not welcomed criticism, Reuters wonders.  He replaces a Trump loyalist. Michael Flynn, a retired Army lieutenant general, was fired as national security adviser on Feb. 13 after reports emerged that he had misled Vice President Mike Pence about speaking to Russia’s ambassador about U.S. sanctions before Trump’s inauguration.

McMaster, 54, is a West Point graduate known as “H.R.,” with a PhD in U.S. history from the University of North Carolina at Chapel Hill. He was listed as one of Time magazine’s 100 most influential people in 2014, partly because of his willingness to buck the system. A combat veteran, he gained renown in the first Gulf War – and was awarded a Silver Star – after he commanded a small troop of the U.S. 2nd Army Cavalry Regiment that destroyed a much larger Iraqi Republican Guard force in 1991 in a place called 73 Easting, for its map coordinates, in what many consider the biggest tank battle since World War Two.

As one fellow officer put it, referring to Trump’s inner circle of aides and speaking on condition of anonymity, the Trump White House “has its own Republican Guard, which may be harder for him to deal with than the Iraqis were.” The Iraqi Republican Guard was ousted dictator Saddam Hussein’s elite military force. As Reuters adds, McMaster’s fame grew after his 1997 book “Dereliction of Duty” criticized the country’s military and political leadership for poor leadership during the Vietnam War.

* * *

According to Foreign Policy’sThomas Ricks says, picking McMaster is not a bad thing.

I’ve known him since he was major. He’s smart, energetic, and tough. He even looks like an armored branch version of Harward. (That’s him, working out with a punching bag in Iraq, in the foto. I took it in the citadel in downtown Tell Afar one sunny winter day about 10 years ago.) (Btw, Harward was scheduled to appear on ABC’s “This Week” yesterday morning, but backed out an hour before airtime. )

Once Trump was turned down by Harward, it became more likely that he would turn to the active duty military for his 3rd pick for the job. McMaster is among the best of them out there. For his Ph.D. dissertation, he wrote one of the best books on the Vietnam War, Dereliction of Duty: Johnson, McNamara, the Joint Chiefs of Staff, and the Lies That Led to Vietnam.

He has good combat experience, he was a good trainer, and he led the 3rd Armored Cavalry Regiment well in his deployment to Iraq, most notably in pacifying Tell Afar, to the west of Mosul.

I wrote about his operations there in my book The Gamble. I am traveling so I don’t have it with me, but I remember him telling his soldiers that understanding counterinsurgency really wasn’t hard: “Every time you disrespect an Iraqi, you’re working for the enemy.” They even had “Customer Satisfaction Forms” that detainees were asked to fill out upon release: Were you treated well? How was the food? What could we do better?

There are two big differences between him and Harward: First, he is on active duty. (Though the Army inexplicably couldn’t find a four star job for him, and had told him to plan to retire later this year.) Second, his wife won’t kill him if he takes the job, as Harward’s wife might have.

That said, the basic problems remain. To do the job right, McMaster needs to bring in his own people. And it remains unclear if he can get that.

As for relations with the Pentagon: McMaster knows Mattis, but not well. (They both spoke at a conference at the University of North Carolina in April 2010.) But they are similar people and will respect each other.  Ricks adds that he did an informal poll of people who have worked for McMaster, asking if they would be willing to follow him to the National Security Council staff. To a surprising degree, they replied, Yes, they would. That’s an indication of loyalty to and confidence in him.

* * *

Herbert Raymond “H.R.” McMaster’s full public bio is below:

Herbert Raymond “H. R.” McMaster (born July 24, 1962 in Philadelphia, Pennsylvania) is an American soldier, and a career officer in the U.S. Army. His current assignment is Director, Army Capabilities Integration Center and Deputy Commanding General, Futures, U.S. Army Training and Doctrine Command. His previous assignment was commander of the Maneuver Center of Excellence at Ft. Benning, Georgia. McMaster previously served as Director of Combined Joint Interagency Task Force-Shafafiyat (CJIATF-Shafafiyat) (Transparency) at ISAF (International Security Assistance Force) Headquarters in Kabul, Afghanistan. He is known for his roles in the Gulf War, Operation Iraqi Freedom, Operation Enduring Freedom, and his reputation for questioning U.S. policy and military leaders regarding the Vietnam War.

McMaster graduated from Valley Forge Military Academy in 1980, where he served as a company commander with the rank of cadet captain. He is a 1984 graduate of West Point, where he played rugby.

He holds Master of Arts and Ph.D. degrees in American history from the University of North Carolina at Chapel Hill, and authored a thesis critical of American strategy in the Vietnam War, which is detailed in his 1997 book Dereliction of Duty.It harshly criticizes high-ranking officers of that era, arguing that they inadequately challenged Defense Secretary Robert McNamara and President Lyndon Johnson on their Vietnam strategy. The book is widely read in Pentagon circles and is on the official reading list of the Marine Corps.

Early Career

His first assignment after commissioning was to the 2nd Armored Division at Fort Hood, where he served in a variety of platoon and company level leadership assignments with 1st Battalion 66th Armor Regiment. In 1989, McMaster was assigned to the 2nd Armored Cavalry Regiment at Warner Barracks in Bamberg, Germany, where he served until 1992, including deployment to Operation Desert Storm.
During the Gulf War in 1991 he was a captain commanding Eagle Troop of the 2nd Armored Cavalry Regiment at the Battle of 73 Easting. During that battle, though significantly outnumbered and encountering the enemy by surprise as McMaster’s lead tank crested a dip in the terrain, the nine tanks of Eagle Troop destroyed over eighty Iraqi Republican Guard tanks and other vehicles without loss, due to the Abrams tank being state-of-the-art armored technology while the Iraqi equipment included grossly outdated T-62s and -72s of the Soviet era as well as similarly dated Type 69s of Chinese manufacture.

“At 4:10 p.m. Eagle Troop received fire from an Iraqi infantry position in a cluster of buildings at UTM PU 6801. Eagle troop Abrams and Bradleys returned fire, silenced the Iraqi guns, took prisoners, and continued east with the two tank platoons leading. The 12 M1A1 tanks of Eagle Troop destroyed 28 Iraqi tanks, 16 personnel carriers and 30 trucks in 23 minutes with no American losses. At about 4:20 Eagle crested a low rise and surprised an Iraqi tank company set up in a reverse slope defence on the 70 Easting. Captain McMaster, leading the attack, immediately engaged that position, destroying the first of the eight enemy tanks to his front. His two tank platoons finished the rest. Three kilometers to the east McMaster could see T-72s in prepared positions. Continuing his attack past the 70 limit of advance, he fought his way through an infantry defensive position and on to high ground along the 74 Easting. There he encountered and destroyed another enemy tank unit of eighteen T-72s. In that action the Iraqis stood their ground and attempted to maneuver against the troop. This was the first determined defense the Regiment had encountered in its three days of operations. Still, the Iraqi troops had been surprised because of the inclement weather and were quickly destroyed by the better trained and better equipped American troops.”

McMaster was awarded the Silver Star. The battle features in several books about Desert Storm and is widely referred to in US Army training exercises. It also receives coverage in Tom Clancy’s 1994 popular non-fiction book Armored Cav. McMaster served as a military history professor at West Point from 1994 to 1996, teaching among other things the battles in which he fought. He graduated from the United States Army Command and General Staff College in 1999.

Later Career

From 1999 to 2002, McMaster commanded 1st Squadron, 4th Cavalry Regiment, and then took a series of staff positions at U.S. Central Command (USCENTCOM), including planning and operations roles in Iraq.

In his next job, as lieutenant colonel and later colonel, McMaster worked on the staff of USCENTCOM as executive officer to Deputy Commander Lieutenant General John Abizaid. When Abizaid received four-star rank and became Central Command’s head, McMaster served as Director, Commander’s Advisory Group (CAG), described as the command’s brain trust.

In 2003 McMaster completed an Army War College research fellowship at Stanford University’s Hoover Institution.

In 2004, he was assigned to command the 3rd Armored Cavalry Regiment (3rd ACR). Shortly after McMaster took command the regiment deployed for its second tour in Iraq and was assigned the mission of securing the city of Tal Afar. That mission culminated in September with Operation Restoring Rights and the defeat of the city’s insurgent strongholds. President Bush praised this success, and the PBS show Frontline broadcast a documentary in February, 2006 featuring interviews with McMaster. CBS’ 60 Minutes produced a similar segment in July, and the operation was the subject of an article in the April 10, 2006 issue of The New Yorker.

Author Tim Harford has written that the pioneering tactics employed by 3rd ACR led to the first success in overcoming the Iraqi insurgency. Prior to 2005, tactics included staying out of dangerous urban areas except on patrols, with US forces returning to their bases each night. These patrols had little success in turning back the insurgency because local Iraqis who feared retaliation would very rarely assist in identifying them to US forces. McMaster deployed his soldiers into Tal Afar on a permanent basis, and once the local population grew confident that they weren’t going to withdraw nightly, the citizens began providing information on the insurgents, enabling US forces to target and defeat them.

McMaster passed command of the 3rd Armored Cavalry Regiment on June 29, 2006 and joined the International Institute for Strategic Studies in London, as a Senior Research Associate with a mandate described as “conducting research to identify opportunities for improved multi-national cooperation and political-military integration in the areas of counterinsurgency, counter-terrorism, and state building”, and to devise “better tactics to battle terrorism.”

From August, 2007 to August, 2008 McMaster was part of an “elite team of officers advising US commander” General David Petraeus on counterinsurgency operations while Petraeus directed revision of the Army’s Counterinsurgency Field Manual during his command of the Combined Arms Center. Petraeus and most of his team were stationed in Fort Leavenworth at the time but McMaster collaborated remotely, according to senior team member John Nagl.

Career as General Officer

McMaster was passed over for promotion to Brigadier General in 2006 and 2007, despite his reputation as one of “the most celebrated soldiers of the Iraq War.” Though the rationale for promotion board decisions is not made public, it is generally agreed that McMaster was held back because of his tendency to argue against the status quo. It should be noted that McMaster was the second person in his 1984 West Point Class to be promoted to Brigadier General behind only William Rapp and the third in the entire 1984 Year Group. No officers from later year groups are senior to him except for Special Corps officers, e.g. Medical and Judge Advocate General Corps. This should call into question the assertion that he was ever “passed over” for promotion.

McMaster was selected for Brigadier General on the 2008 promotion list. Secretary of the Army Pete Geren had requested General Petraeus to briefly return from Iraq to take charge of the promotion board as a way to ensure that the best performers in combat received every consideration for advancement, and it is generally acknowledged that Petraeus’s presence ensured that McMaster was among those selected.

In August, 2008 McMaster assumed duties as Director, Concept Development and Experimentation (later renamed Concept Development and Learning), in the Army Capabilities Integration Center (ARCIC) at Fort Monroe, Virginia, part of U.S. Army Training and Doctrine Command. In this position McMaster was involved in preparing doctrine to guide the Army over the next ten to twenty years. He was promoted on June 29, 2009.

In July 2010 he was selected to be the J-5, Deputy to the Commander for Planning, at ISAF (International Security Assistance Forces) Headquarters in Kabul, Afghanistan. Additionally, McMaster directed a joint anti-corruption task force (CJIATF-Shafafiyat) at ISAF Headquarters.

As with his promotion to Brigadier General, McMaster was the second member of his 1984 West Point class behind William Rapp to be selected for promotion to Major General and all six Year Group 84 officers selected that year were promoted within 2 months of each other. Rapp was selected the previous year and was the only Line Year Group 84 officer selected that year. Army Chief of Staff General Martin Dempsey called McMaster “probably our best Brigadier General.”

McMaster was nominated for Major General on January 23, 2012. In April, 2012 he was announced as the next commander of the Army’s Maneuver Center of Excellence (MCoE) at Ft. Benning. On June 13, 2012 McMaster assumed command of the MCoE and was promoted to Major General in a ceremony at Ft. Benning with a date of rank of 2 August 2012.

On February 18, 2014 Defense Secretary Chuck Hagel announced the nominations of four officers for promotion to Lieutenant General, including McMaster, who was selected to become Deputy Commander of the Training and Doctrine Command and Director of TRADOC’s Army Capabilities Integration Center.

“It is heartening to see the Army reward such an extraordinary general officer who is a thought leader and innovator while also demonstrating sheer brilliance as a wartime brigade commander,” retired Army Gen. Jack Keane, a former Army vice chief, said of the promotion.

In April 2014, Maj General McMaster made Time magazine’s list of 100 most influential people in the world. He is hailed as “the architect of the future U.S. Army” in the accompanying piece written by retired Lt. Gen. Dave Barno, who commanded U.S. and allied forces in Afghanistan from 2003 to 2005.

“Major General Herbert Raymond McMaster might be the 21st century Army’s pre-eminent warrior-thinker,” Barno wrote. “Recently tapped for his third star, H.R. is also the rarest of soldiers—one who has repeatedly bucked the system and survived to join its senior ranks.”

McMaster is cited for his “impressive command and unconventional exploits in the second Iraq war,” Barno wrote.

In July 2014 McMaster was promoted to Lieutenant General and began his duties at the Army Capabilities Integration Center.

END


Feb 17/GLD loses 2.37 tonnes of gold inventory/SLV inventory remains constant again/Gold lowers by $2.40 and silver by 4 cents/Bubble bursts in USA AUTO LOANS/Robert Harward rejects Trump’s offer for National Security Advisor/Chaffetz seeks charges...

Fri, 02/17/2017 - 14:01

Gold at (1:30 am est) $1237.60 down $2.40

silver was : $18.02:   down 4 CENTS

Access market prices:

Gold: $1235.50

Silver: $18.01

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

FRIDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 17/17 (10:15 pm est last night): $  1248.41

NY ACCESS PRICE: $1238.25 (AT THE EXACT SAME TIME)/premium $10.16

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1248.41

NY ACCESS PRICE: $1238.20 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  10.28

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 17/2017: 5:30 am est:  $1241.40   (NY: same time:  $1241.20   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 17.2017: 10 am est:  $1241.95(NY same time: $1241.90 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  20 NOTICE(S) FOR 2000 OZ.  TOTAL NOTICES SO FAR: 5145 FOR 514,500 OZ    (16.003 TONNES)

For silver:

 

For silver: FEBRUARY

0 NOTICES FILED FOR nil OZ/

TOTAL NO OF NOTICES FILED: 406 FOR 2,030,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 5,314 contracts UP to 204,517 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  1.028 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 0 NOTICE(S) FOR nil OZ

In gold, the total comex gold ROSE BY A WHOPPING 9,001 contracts WITH THE RISE IN  THE PRICE GOLD ($8.30 with YESTERDAY’S trading ).The total gold OI stands at 429,147 contracts

we had 20 notice(s) filed upon for 2000 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had another change in tonnes of gold at the GLD: this time a withdrawal of 2.37 tonnes of gold.

Inventory rests tonight: 841.17 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by 5314 contracts UP to 204,517 AS SILVER WAS UP 11 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 11,944 contracts UP to 429,147 WITH THE RISE IN THE PRICE OF GOLD OF $8.30  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c)  COT report

(Harvey)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 27.54 POINTS OR .85%/ /Hang Sang CLOSED DOWN 73.96 POINTS OR 0.58% . The Nikkei closed DOWN 112.91 POINTS OR 0.58% /Australia’s all ordinaires  CLOSED DOWN 0.21%/Chinese yuan (ONSHORE) closed DOWN at 6.8678/Oil FELL to 53.13 dollars per barrel for WTI and 55.28 for Brent. Stocks in Europe ALL IN THE RED EXCEPT LONDON. Offshore yuan trades  6.8478 yuan to the dollar vs 6.8678  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS WIDENS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

  REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea’s largest company Samsung has its Chief Executive Officer arrested for bribery perjury and embezzlement

( zero hedge)

b) REPORT ON JAPAN c) REPORT ON CHINA 4. EUROPEAN AFFAIRS

This should be interesting:  the two left wing candidates are to meet and decide on one candidate in the upcoming April elections.  The combined vote may be enough for them to come in second place and thus  remove the centrist candidates

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

none today

7. OIL ISSUES

i)A great in depth analysis of the global oil market and why Berman believes that WTI is likely to be below 50 dollars than at 70 dollars

( Art Berman/Oil Price.com)

ii)Oil rigs continue to be utilized in the Permian basin which is causing a record amount of WTI oil glut

( zero hedge)

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)Bloomberg also catches the above story

( Bloomberg/GATA)

ii)John Ing states that due to the world financial and political situation gold is the only vehicle that makes sense

( Ing/Kingworldnews)

iii)Lawrie Williams/ of Sharp’s Pixley gives his take on gold and silver.  Both are rising despite some negative news:

( Lawrie Williams/Sharp’s Pixley

10.USA STORIES

i)All is not well in the auto loan department.  The bubble seems to have burst in this 1.1 trillion USA market as subprime delinquencies  (greater than 60 days) skyrocket. There are over 1 million auto loans borrowers that are behind greater than 60 days.

( zero hedge)

ii)This is a little troubling:  Robert Harward has rejected Trump’s offer to becomes the next National Security Advisor.  I guess it is David Patraeus or Keith Kellogg and nobody else can fill the roll:

( zero hedge)

iii)Trump tweets that General Keith Kellogg is in play for the NSA job

( zero hedge)

iv)This is interesting:  farm incomes and equipment purchases are tanking while John Deere’s stock soars due to hedge fund purchases

( zerohedge)

v)Bellwether stock (global sales) records it’s 50th consecutive month of declining global sales

( zero hedge)

vi)Two important commentaries discuss how Michael Flynn was removed by the “Deep State” or intelligence community.

a must read..

(courtesy Michael Snyder/Pepe Escobar)

vii)Pam and Russ Martens discuss how Mary Jo White totally misled the USA senate when she became  SEC chair:

(courtesy Pam Martens.Russ Martens/Wall Street on Parade)

viii)It starts;  Chaffetz seeks charges against Hillary aid, Pagliano who decided not to show up to Congress once he was subpoenaed. He claims the 5th amendment but the FBI already had granted immunity to him so there was no reason for him not to testify.

 

( zerohedge)

ix)Pay attention to David Stockman as he outlines correctly what will happen in the next few months with respect to the USA economy:

( DailyReckoning/David Stockman)

x)The lawsuit has been going on for at least 5 years.  The unsealing of the documents came last night as finally the government sues the largest USA Health Insurer on fraudulent overbilling

( zero hedge)

xi)The Senate confirmed Pruitt.  He has been an very outspoken critic on global warming etc.

( zero hedge)

xii) This week’s wrap courtesy of Greg Hunter.

(Greg Hunter/USAWatchdog)

Let us head over to the comex:

The total gold comex open interest ROSE BY 9,001 CONTRACTS UP to an OI level of 429,147 WITH THE RISE IN THE  PRICE OF GOLD ( $8.30 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 27 contracts DOWN to 903.   We had 1 notice(s) served upon yesterday and therefore we LOST 26 contracts or an additional 2600 oz will not stand for delivery and NO DOUBT THEY WERE CASH SETTLED.   The next non active contract month of March saw it’s OI FALL by 62 contracts DOWN TO  1960.The next big active month is April and here the OI ROSE by 6656 contracts UP to 281,772.

We had 20 notice(s) filed upon today for 2000 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 5,314 contracts FROM  199,203 UP TO 204,517 AS THE PRICE OF SILVER ROSE TO THE TUNE OF 11 CENTS with respect to YESTERDAY’S trading.  We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

The  active month of February saw the OI FALL by 8 contract(s) DOWN TO  140.  We had 24 notice(s) served YESTERDAY so we GAINED 16 CONTRACTS  or an additional 80,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 4,939 contracts down to 75,387 contracts. For comparison purposes last year on the same date only 74,409 contracts were standing.

We had 0 notice(s) filed for 120,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 159,278  contracts which is poor to fair.

Yesterday’s confirmed volume was 210,537 contracts  which is good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 17/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   nil OZ Deposits to the Dealer Inventory in oz 1999.900 oz

Brinks Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   20 notice(s) 2000 oz No of oz to be served (notices) 883 contracts 88,300 oz Total monthly oz gold served (contracts) so far this month 5145 notices 514,500 oz 16.003 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  207,001.3   oz Today we HAD 0 kilobar transaction(s)/ Today we had 1 deposit(s) into the dealer:  i) Into Brinks: 1999.90 oz total dealer deposits:  1999.90 oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 0 customer withdrawal(s) total customer withdrawal: nil oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx For FEBRUARY:

Today, 0 notice(s) were 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 20 contract(s)  of which 8 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5145) x 100 oz or 514,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (903 contracts) minus the number of notices served upon today (20) x 100 oz per contract equals 602,800 oz, the number of ounces standing in this  active month of FEBRUARY.   Thus the INITIAL standings for gold for the FEBRUARY contract month: No of notices served so far (5145) x 100 oz  or ounces + {(903)OI for the front month  minus the number of  notices served upon today (20) x 100 oz which equals 605400 oz standing in this non active delivery month of FEBRUARY  (18.830 tonnes)    we lost 26 contracts or an additional 2600 oz will stand in this active delivery month and these were cash settled which is against comex contract law.         xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 16.003 tonnes vs 7.9876 at the end of Feb). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.9004 tonnes FEB/ 18.749 tonnes total for the 14 months;  244.753 tonnes average 17.482 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 1,418,640.029 or 44.125 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,948,247.817 or 278.328 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.328 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE JANUARY DELIVERY MONTH FEBRUARY INITIAL standings  feb 17. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 2837.100 0z Brinks Deposits to the Dealer Inventory nil oz Deposits to the Customer Inventory   873,830.260 oz Brinks CNT No of oz served today (contracts) 0 CONTRACT(S) (nil OZ) No of oz to be served (notices) 140 contracts (700,000  oz) Total monthly oz silver served (contracts) 410 contracts (2,050,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month   5,914,661.8 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 1 customer withdrawal(s): i) Out of Brinks:  2837.100 oz TOTAL CUSTOMER WITHDRAWALS: 2837.100 oz  we had 2 customer deposit(s):  i)IntoBrinks: 273,532.850 oz ii) Into CNT: 600,297.410 oz ***deposits into JPMorgan have now stopped. total customer deposits;  873,830.260  oz    we had 0  adjustment(s) The total number of notices filed today for the FEBRUARY. contract month is represented by 0 contract(s) for nil oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  410 x 5,000 oz  = 2,050,000 oz to which we add the difference between the open interest for the front month of feb (140) 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 FEBRUARY contract month:  410(notices served so far)x 5000 oz  + OI for front month of FEB.( 140 ) -number of notices served upon today (0)x 5000 oz  equals  2,750,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver.  We GAINED 16 contracts or an additional 80,000 oz will stand for delivery. At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory. END Volumes: for silver comex Today the estimated volume was 65,767 which is excellent!!! FRIDAY’S  confirmed volume was 95,791 contracts  which is huge. To give you an idea of volume yesterday’s confirmed volume::  98,547 contracts equates to 479 million oz or 68% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA   Total dealer silver:  30.081 million (close to record low inventory   Total number of dealer and customer silver:   184.231 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

feb 17/a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 841.17 tonnes

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

Jan 13/17/there were no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Feb 16/2017/ Inventory rests tonight at 841.17 tonnes *IN LAST 92 TRADING DAYS: 108.64 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 39 TRADING DAYS: A NET  16.57 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1/2017:    42.10 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory feb 17/2017/again no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 9/no changes in silver Inventory rests at 334.713 million oz feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/ Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/ Jan 13/2017/on changes in the SLV inventory/rests tonight at 338.356 million oz/ Jan 12.2017/ no changes in the SLV Inventory/ rests at 338.356 million oz Jan 11/ A HUGE WITHDRAWAL F 2.843 MILLION OZ/INVENTORY RESTS AT 338.356 MILLION OZ/ JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ . Feb 17.2017: Inventory 334.713  million oz  end At 3;30 pm we receive the COT report.  Let us see how the commercials fared this week: Steve Mnuchin already had 1 day on the job as Sec Treasure when this report was based on. Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 212,259 102,507 57,432 105,674 233,462 375,365 393,401 Change from Prior Reporting Period -4,149 3,248 5,685 -350 -6,708 1,186 2,225 Traders 169 106 78 46 50 250 200     Small Speculators         Long Short Open Interest       39,763 21,727 415,128       -1,601 -2,640 -415       non reportable positions Change from the previous reporting period   COT Gold Report – Positions as of Tuesday, February 14, 2017

Our Large Specs:

Those large specs that have been long in gold pitched 4149 contracts just as gold was about to rise??

those specs that have been short in gold added 3248 contracts to their short side??

 

Our commercials:

those commercials that have been long in gold pitched 350 contracts from their long side.

those commercials that have been short in gold covered in a hurry : 6708 contracts.

 

Our small specs:

those small specs that have been long in gold pitched 1601 contracts from their long side.

those small specs that have been short in gold covered 2640 contracts.

 

Conclusions:

strange COT: the commercials go net long by 6356 which is bullish.

 

Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 104,765 19,953 16,346 48,659 147,686 6,205 -330 -3,040 -1,413 4,902 Traders 100 37 49 34 35 Small Speculators Open Interest Total Long Short 195,338 Long Short 25,568 11,353 169,770 183,985 -350 -130 1,402 1,752 1,532 non reportable positions Positions as of: 159 106   Tuesday, February 14, 2017   © SilverSeek.com

Wow!! what a strange COT especially silver

 

Our large specs:

those large specs that have been long in silver added a whopping 6205 contracts to their long side and that is what we should have expected with a rising silver price.

 

those large specs who have been short in silver covered a tiny 330 contracts and they are certainly brave little souls.

Our commercials:

those commercials that have been long in silver pitched 1413 contracts from their long side.

those commercials that have been short in silver added a whopping 4902 contracts to their short side.

 

Our small specs;

those small specs that have been long in silver added 5995 contracts to their long side.

those small specs that have been short in silver covered a tiny 696 contracts.

 

Conclusions:

the commercials go net short by a rather large 6313 contracts with an advancing silver price.

Note the huge difference between silver and gold. Somebody is taking on the crooked banks in silver and in gold.  In silver they are supplying the paper.  In gold they are covering.

 

 

 

 

 

NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.5 percent to NAV usa funds and Negative 8.5% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.3% Percentage of fund in silver:39.5% cash .+0.2%( feb 17/2017)  . 2. Sprott silver fund (PSLV): Premium FALLS to -.31%!!!! NAV (Feb 17/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.25% to NAV  ( feb 17/2017) Note: Sprott silver trust back  into NEGATIVE territory at -0.31% /Sprott physical gold trust is back into NEGATIVE territory at -0.25%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE

Every Citizen Should Own 3.5 Ounces of Gold Bullion – Central Bank By Mark O’ByrneFebruary 17, 20170 Comments
  • Central bank governor has “dream” for every citizen to own at least 100 grams of gold bullion
  • Governor of Central Bank of Kyrgyzstan said the central bank had sold around 140 kilos of gold bullion to the domestic population already
  • Central Asian country’s central bank continues to diversify into gold bullion
  • “Gold can be stored for a long time … doesn’t lose its value for the population as a means of savings”
  • “I’ll try to turn the dream into reality faster…”

The Governor of the Central bank of Kyrgyzstan has told Bloomberg News in an interview that it is his “dream” for every citizen in his country to own at least 100 grams (3.5 ounces) of gold as a way to protect their savings.

Diversifying one’s savings so that they are not solely held in fiat paper or electronic currencies in frequently vulnerable banks in a vulnerable banking and financial system is prudent advice in these uncertain times.

Indeed, there is a strong case to be made that the policies of most central banks in recent years have led to a massive debt bubble and the risk of another financial crisis, currency wars and currency debasement on a grand scale.

Hence, it was very refreshing to hear the actual governor of a central bank passionately advocate and proactively helping his fellow citizens to protect their savings by diversifying and having an allocation to physical gold.

From Bloomberg:

One of the first post-Soviet republics to adopt a new currency and let it trade freely, Kyrgyzstan’s central bank wants every citizen to diversify into gold. Governor Tolkunbek Abdygulov says his “dream” is for every one of the 6 million citizens to own at least 100 grams (3.5 ounces) of the precious metal, the Central Asian country’s biggest export.

“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he said in an interview. “I’ll try to turn the dream into reality faster.”

In the two years that the central bank has offered bars directly to the population, about 140 kilograms of bullion have been sold, Abdygulov, 40, said by phone from the capital, Bishkek.

“We are hopeful that our country’s population will learn to diversify its savings into assets that are more liquid and — more importantly — capable of retaining their value,” he said. In rural areas, cattle is still the asset of choice for investors and savers, according to Abdygulov.

Kyrgyzstan has bucked a trend among central banks, the biggest owners of bullion, by stepping up buying even as its counterparts cut purchases in 2016 to a six-year low. Global combined bar and coin demand fell, according to the World Gold Council.

Across the emerging world, gold — often seen as the ultimate haven at times of upheaval — hardly needs any extra promotion. India, the world’s largest consumer after China, is in fact taking steps to curb imports of the precious metal by encouraging its citizens to deposit private gold holdings in banks.

In Turkey, where banks can use bullion as part of their reserve assets, President Recep Tayyip Erdogan last year called on people to convert their foreign-currency savings into liras and gold.

What makes Kyrgyzstan unique is the central bank’s effort to win converts by providing infrastructure for safe-keeping and investment. The central bank produces bars of different sizes, varying in weight from 1 to 100 grams.

The central bank governor believes his plan is realistic, even though it means the population would own about 600 tons of gold, equivalent to 30 times the nation’s current annual output. Abdygulov declined to specify the timeframe for when his goal of 100 grams per person can be met.

The options available for storage include safe deposit boxes at commercial lenders or with the central bank, he said. Some people opt to keep gold at home or possibly even bury it in the ground, according to Abdygulov.

With Kyrgyzstan enduring upheaval from economic crises in the early 1990s to bank failures during the last decade, gold is seen as a far safer bet than securities, he said.

“For Kyrgyzstan, gold is an alternative instrument of investment,” Abdygulov said. “The National Bank has ensured liquidity for gold — we aren’t only selling, but also buying back gold bars that we produced and sold.”

As Abdygulov took the reins of the central bank in 2014, Kyrgyz policy makers decided to raise gold’s share in its own reserves, now keeping about 10 percent of its $2 billion holdings in bullion. After years of capping the amount at 2.6 tons, the stockpile surged by more than 70 percent since 2012 to 4.5 tons at the end of the third quarter in 2016, according to the latest data compiled by the London-based World Gold Council.

With Kyrgyzstan’s output at about 20 tons a year, the central bank uses the national currency, the som, to buy gold mined locally, which can then be sold abroad if needed, according to Abdygulov. The governor said he’s counting on higher output in the future.

Abdygulov, who has masters degrees from Nagoya University in Japan and the University of North Texas, may be a gold enthusiast, but he’s no advocate for dislodging the dollar completely. His advice is based on the “rule of three” — splitting up savings between the som, foreign currency and gold.

As for the metal’s prospects, he’s upbeat, even after it surged the most in five years in 2016 and continued to post gains in 2017. Bullion has rallied more than 7 percent this year as concerns that Donald Trump’s policies on trade and immigration could derail U.S. growth boosted speculation that the Federal Reserve would be slow to raise borrowing costs.
End>


“Common sense is not so common” as Voltaire said. Financial and monetary common sense regarding gold and the importance of diversifying ones savings and investments is even more uncommon.

As one of the larger gold bullion delivery and storage specialists in the world and a vested commercial interest, GoldCore would obviously greatly welcome the central bank governors of Ireland, UK, U.S. and all western nations to urge their citizens to diversify their savings and own a small amount of gold.

As a specialist in the logistics of delivery and storage of physical gold, we can of course work with them and help them in this regard and we look forward to hearing from them.

We have long been passionate advocates of owning physical gold and have spent a lot of time educating about gold’s safe haven characteristics. This has been seen clearly in history and during the recent global financial crisis and indeed in the large body of new academic and independent research on gold in recent years.

The Governor clearly understands gold’s value and is acting accordingly in the interests of his fellow citizens.

Bravo Governor and Happy Friday folks !

 

 

end

Bloomberg also catches the above story

(courtesy Bloomberg/GATA)

Kyrgyzstan wants everyone to have 100 grams of gold

Submitted by cpowell on Thu, 2017-02-16 13:26. Section:

By Evgenia Pismennaya and Anna Andrianova
Bloomberg News
Thursday, February 15, 2017

A landlocked nation perched between China and Kazakhstan is embarking on an experiment with little parallel worldwide: shifting savings from cattle to gold.

One of the first post-Soviet republics to adopt a new currency and let it trade freely, Kyrgyzstan’s central bank wants every citizen to diversify into gold. Governor Tolkunbek Abdygulov says his “dream” is for every one of the 6 million citizens to own at least 100 grams (3.5 ounces) of the precious metal, the Central Asian country’s biggest export.

“Gold can be stored for a long time and, despite the price fluctuations on international markets, it doesn’t lose its value for the population as a means of savings,” he said in an interview. “I’ll try to turn the dream into reality faster.”

In the two years that the central bank has offered bars directly to the population, about 140 kilograms of bullion have been sold, Abdygulov, 40, said by phone from the capital, Bishkek. …

… For the remainder of the report:

https://www.bloomberg.com/politics/articles/2017-02-15/currency-pioneers…

 

END

 

John Ing states that due to the world financial and political situation gold is the only vehicle that makes sense

(courtesy Ing/Kingworldnews)

 

John Ing: The primary ‘Trump trade’ is to buy gold

Submitted by cpowell on Fri, 2017-02-17 03:39. Section:

10:40p ET Thursday, February 16, 2017

Dear Friend of GATA and Gold:

Canadian fund manager John Ing tonight gives King World News a comprehensive review of the world financial and political situation and concludes that the primary “Trump trade” is probably to buy gold. Ing’s commentary is posted at KWN here:

http://kingworldnews.com/man-asked-to-speak-to-chinese-officials-issues-…

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

 

END

 

Lawrie Williams/ of Sharp’s Pixley gives his take on gold and silver.  Both are rising despite some negative news:

(courtesy Lawrie Williams/Sharp’s Pixley)

LAWRIE WILLIAMS: Gold and silver defying HFT take-down efforts FEB
17

The past few days have been somewhat encouraging for precious metals investors.  Despite some seeming attempts, probably by the bullion banks, to bring gold and silver prices downwards, both made some significant recoveries. While the price recoveries may have been subsequently capped, with gold at around the $1,240 level and silver at around $18, this has to be seen as something of a victory for the gold bulls, although perhaps a pyrrhic one as the HF traders are probably not finished with their attacks yet.

Indeed this all happened in the light of some seemingly gold-negative news: An apparently slightly more hawkish Janet Yellen, some fairly positive U.S. economic data, news that long time gold supporter John Paulsen had liquidated some of his gold holdings in the GLD gold ETF and that George Soros had sold his Barrick Gold stock, taking some substantial profits.  All seemingly bad news for gold, and by association for the other precious metals.  Yet, despite all this gold has risen almost 8% year to date and silver around 13% and the major gold ETFs have been adding gold so far.  The biggest of all, GLD, has added just short of 30 tonnes of gold this year, much of it in the past 2 weeks after seeing around 15 tonnes of sales in January.

This ‘safe haven’ gold demand seems to show few signs of diminishing, particularly given the apparent unpredictability of the USA’s new President and his unpopularity with much of the media, the self-styled intelligentsia, the intelligence community and the deep state.  There is already talk of impeachment, but then there are major concerns about the kind of Administration a President Pence might preside over.  Could be a case of ‘better the devil you know’!

If anything, silver has been performing better than gold with the Gold:Silver ratio (GSR) at around 69, down from around 72 at the beginning of the year.  Indeed the GSR had been back at 68.6 during the past couple of days before coming back to just over 69 in today’s trading.  Generally silver outperforms in a rising gold price scenario so if gold can break out above $1,250 there is a good chance the GSR will fall further.  We have been predicting 65 as a likely level to be reached during the  current year.  Some consider this unrealistic but if anything we think a 65 level may prove to be conservative.

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 WEAKER AT  6.8678(SMALL DEVALUATION SOUTHBOUND   /OFFSHORE YUAN WIDENS   TO 6.8478 / Shanghai bourse DOWN 27.54 POINTS OR .85%   / HANG SANG CLOSED DOWN 73.96 POINTS OR 0.31% 

2. Nikkei closed DOWN 112.91 POINTS OR 0.58%   /USA: YEN FALLS TO 112.83

3. Europe stocks opened ALL IN THE RED EXCEPT LONDON      ( /USA dollar index RISES TO  100.61/Euro UP to 1.0654

3b Japan 10 year bond yield: FALLS TO    +.094%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 112.83/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.13  and Brent: 55.28

3f Gold UP/Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 10yr bund FALLS TO  +.306%/Italian 10 yr bond yield DOWN  to 2.178%    

3j Greek 10 year bond yield RISES to  : 7.85%   

3k Gold at $1241.80/silver $18.03(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 52/100 in  roubles/dollar) 58.14-

3m oil into the 53 dollar handle for WTI and 55 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 112.83 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9985 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0638 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.371%

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

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

4. USA 10 year treasury bond at 2.420% early this morning. Thirty year rate  at 3.021% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS S&P Futures, Global Stocks Slide As European Political Fears Return; Gold Jumps

S&P equity futures followed Asian and European stocks lower, driven by weakness in French and Italian markets, as French political concerns returned; the pound tumbled after UK monthly retail sales unexpectedly dropped pushing the dollar higher and Euro lower.

About an hour after the European open, major indices experienced softness despite no fundamental catalyst to see Euro Stoxx 50 lower by 0.5%.  The euro weakened and French bonds declined after the French Socialist Party’s presidential candidate, Benoit Hamon, said he’s in talks with far-left candidate Jean-Luc Melenchon about a single candidacy that would increase the likelihood of a stand -off with far-right front runner Marine le Pen, sending 10y OAT yields up 5bps and 6bps wider against Germany. Gold rebounded 0.2% as a quiet push into safe assets continued.

Global equity markets are set to end the week on a softer footing on Friday, after setting record highs in the previous two sessions, as investors looked for clarity on U.S. President Donald Trump’s policies on tax and trade. Confusion over US fiscal and monetary policy has grown as traders have gone back and forth assessing the prospects for President Donald Trump’s economics plans and the timing of U.S. interest-rate increases. Financial conditions have continued to tighten as March rate hike odds jumped after Yellen’s congressional testimony: the renewed uptick in 3M OIS and LIbor have yet to impact broader asset classes.

Trump’s plans last week to unveil a “phenomenal” tax policy spurred a rally in stocks, the dollar and emerging-market assets. In Congressional testimony this week, Yellen warned against waiting too long to tighten policy and said a healthier economy may warrant higher interest rates.

Speaking to Bloomberg, Naeem Aslam, chief market analyst at Think Markets said “many do believe that the market is getting ahead of itself and there is just too much optimism about how far Trump can go with his fiscal and tax plans as he still needs full approval from congress,” said “The chances of that are not that great and this is what makes some investors a little pessimistic.”

Much of the action was again in currencies, with the USDJPY sliding most of the overnight session, dragging global risk sentiment lower. Although the dollar was 0.3 percent firmer on the day, it was hovering near a one-week low against a basket of currencies .DXY and headed for its sixth week of losses in the last eight, as investors awaited substantive market-friendly news from President Donald Trump on tax reform. The greenback hit a one-month high on Wednesday after U.S. Federal Reserve Chair Janet Yellen supported a near-term rate hike due to signs of robust economic growth. Junichi Ishikawa, senior forex strategist at IG Securities in Tokyo said the dollar’s recent bounce lacked conviction.

“This shows that the market is still trying to work out the implication of President Trump’s policies, of which his approach to trade may not be supportive for the dollar,” he said.

The pound fell half a percent to $1.2427 after data showing retail sales in Britain fell shaprly 0.3% month-on-month last month, on expectations for a 0.9% rise.

The MSCI All-Country World index was headed for its fourth straight week of gains after hitting a record high on Thursday, but Asian and European markets eased as investors cashed in recent gains.

The MSCI’s index of Asia-Pacific shares outside Japan pulled back 0.2%, Tokyo stocks closed down 0.6 percent and the pan-European STOXX 600 index was 0.5 percent lower, although it remained near its highest level in 13 months.

Equities in Europe fell, paring a second weekly advance, led by commodity producers as prices of industrial metals were dragged down by further signs of tightening liquidity in China.

“It’s too soon to tell what divergent monetary policy will do to equity markets, but higher rates in the U.S. may help financials do better,” said Ramakrishnan.

In commodities, gold was set for its third week of gains as political uncertainty spurred demand for the safe haven precious metal. Spot gold was up 0.2% on the day. Brent crude futures were down 0.8%, paring back earlier gains. OPEC sources told Reuters the producers’ club could extend its output cut in order to rein in global oversupply. Copper was set to end the week lower as profit-taking pared back the price of the three-month copper contract, though concerns over supply from Chilean and Indonesian mines remained.

Bond yields slipped pretty much across the board. Yields on 10Y Treasuries hovered at 2.43% having crept higher during the week on U.S. rate hike speculation, while yields on Europe’s benchmark, German Bunds, were down 3 basis points at 0.32%. There has been a noticeable divide this week, with safe-haven Bunds and other core countries like France and Austria have seeing yields rise, while Spain and Italy have seen theirs fall for the first week in five, helped by some soothing noises from the European Central Bank. The ECB’s minutes on Thursday indicated little appetite for curbing stimulus, setting the scene for a divergence in central bank policy between the U.S. and Europe.

Market Snapshot

  • S&P 500 futures down 0.3% to 2,339.00
  • STOXX Europe 600 down 0.5% to 368.27
  • German 10Y yield fell 3.0 bps to 0.319%
  • Euro down 0.2% to 1.0650 per US$
  • Brent Futures down 0.1% to $55.57/bbl
  • Italian 10Y yield fell 8.6 bps to 2.156%
  • Spanish 10Y yield rose 0.7 bps to 1.61%
  • MXAP down 0.2% to 144.97
  • MXAPJ down 0.3% to 466.19
  • Nikkei down 0.6% to 19,234.62
  • Topix down 0.4% to 1,544.54
  • Hang Seng Index down 0.3% to 24,033.74
  • Shanghai Composite down 0.9% to 3,202.08
  • Sensex up 0.6% to 28,470.70
  • Australia S&P/ASX 200 down 0.2% to 5,805.82
  • Kospi down 0.06% to 2,080.58
  • Brent Futures down 0.1% to $55.57/bbl
  • Gold spot up 0.2% to $1,241.35
  • U.S. Dollar Index up 0.2% to 100.67

Top Overnight News from BBG

  • Mnuchin Warned by Japan, Germany as G-20 Sees New Economic Order
  • Sage CEO Says Biotech Firm Has Received Takeover Interest
  • U.S. House Steps Up Effort to Derail Exxon Climate Probe
  • UnitedHealth Accused of Overcharging Medicare by Billions
  • Trump’s Second Pick for Labor Differs More in Style Than Policy
  • Boeing, SpaceX Safety Risks May Delay U.S. Astronaut Travel
  • Macau Casino Stocks Flash Warnings That Preceded 2014 Crash
  • U.K. Retail Sales Unexpectedly Decline as Inflation Bites
  • Calpers, Others to Push Banks on Dakota Access Pipeline: FT

* * *

Asia equity markets traded negative following the subdued lead from the US, where the Nasdaq and S&P 500 ended their string of records, although the DJIA still edged a fresh all-time closing high with minimal gains of 0.04%. ASX 200 (-0.2%) was lower amid a lack of drivers with the index weighed down by the healthcare sector, whilst Nikkei 225 (-0.6%) was the laggard as exporters suffered from the recent JPY strength. China markets were also weak with the Shanghai Comp. (-0.9%) and Hang Seng (-0.4%) dampened after the PBoC’s liquidity operations amounted to a consecutive net weekly drain. 10yr JGBs were higher following advances in T-notes and amid the risk averse sentiment in Japan, while the curve was mixed with mild outperformance in the long-end. PBoC injected CNY 50bIn 7-day reverse repos, CNY 50bIn in 14-day reverse repos and CNY 50bIn in 28-day reverse repos for a net weekly drain of CNY 150bIn vs. Prev. CNY 625bn drain last week.

Top Asian News

  • UOB Profit Declines as Bank Boosts Energy Loan Provisions
  • Singapore’s Economy Expands at Fastest Pace in More Than 5 Years
  • PBOC’s Cash Moves Act to Lower Banks’ Reserve Ratios, Data Show
  • Coal-Loving Indonesian Investor Doubles Down After 39% Gain
  • China’s H Shares Pare Weekly Advance as Banking Rally Stumbles
  • Singapore, Hong Kong Restart Dual-Class Push to Snag IPOs
  • China Futures Volume Surges as Brokers Climb on Looser Curbs

European stocks are also lower, with the Stoxx 600 down 0.5%, as this morning has seen a typically quiet Friday in terms of newsflow, however with price action garnering some attention. Around an hour into equity trade, major indices experiences softness amid no new fundamental catalyst to see Euro Stoxx 50 lower by 0.5%. In terms of a sector specific basis, energy is among the worst performers, while healthcare outperforms after Shire’s earnings yesterday and with AstraZeneca’s Lynparza met its primary endpoint. Elsewhere, the most notable earnings from the past 24 hours has come from Allianz, with an impressive beat and a share buyback program seeing Co. shares soar. In tandem with the downside seen in equities by mid-morning, fixed income markets pushed higher as Bunds retake the 164 level and retrace all the softness seen throughout the week. The US 10Y yield is also approaching pre-Yellen levels at around 2.64.

Top European News

  • ECB Shows Readiness to Flex Rules If Inflation Goal’s at Stake
  • Allianz Plans $3.2 Billion Share Buyback as Profit Climbs (3)
  • U.K.’s Clark Meets PSA Chiefs to Make Case for Vauxhall
  • Sprint by Turkish Stocks Leaves Fund Managers in Starting Blocks
  • Swedish Muzak Startup Ditches Spotify in World Expansion Bid

In currencies, UK retail sales data was the only top tier release for the day, and came in far weaker than expected despite some correction expected due to the drop seen in the previous month. The Jan data missed on all counts, with headline M/M falling 0.3% vs a +0.9% rise expected. GBP was falling ahead of the release, with Cable trade above 1.2500 all too brief and followed up by a move through the 1.2400’s to retest the lows around 1.2385 seen earlier in the week. EUR/GBP raced up towards 0.8600 after a temporary dip towards 0.8500, but it looks as though heavy GBP/JPY sales provided just as much of the impetus as pre 142.00 trade earlier in the day led to an eventual drop below 140.00. The flow may well have been encouraged by the weakness in USD/JPY, which has now dropped below 113.00 putting the support from 112.50 back under threat as UST yields continue to struggle despite this week’s events/data.

In commodities, the Bloomberg Commodity Index fell 0.4 percent, heading for its fourth weekly drop in five. Oil declined 0.2 percent to $53.28 a barrel. Crude is heading for its first weekly decline in five weeks as expanding U.S. crude stockpiles countered output cuts from OPEC and other producing nations. Gold nudged 0.2 percent higher to $1,241.56 an ounce and is and is set for its seventh weekly gain in eight weeks. Front and centre at present is the rise in Gold, and despite the obvious negative correlation with the USD, the risk tone has turned a little to cause some wobbles on Wall Street. The Dow may have eked out some fresh record highs, but not after a confused start exacerbated by the rise in Treasuries. Base metals across the board have eased back off better levels on the week due to risk sentiment also, but minor outperformance seen in Platinum. USD weakness will also underpin Oil prices, but with the growth in inventories dismissed due to the future impact of the OPEC agreed productions, support in WTI looks well established and comfortably ahead of USD50.00, though little to prompt a move on USD55.00+ for now. Support in Brent comes in ahead of USD55.00.

Looking at the day ahead it looks set to be a fairly quiet end to the week. In Europe this morning the only data came from the UK where the January retail sales figures disappointed (-0.3%, Exp. 0.9%, last -1.9%) while in the US this we’ve got the Conference Board’s leading indicator for January. Earnings wise Allianz headlines a small list.

US Event Calendar

  •     10am: Leading Index, est. 0.5%, prior 0.5%
  • * * *

DB’s Jim Reid concludes the overnight wrap

On a relatively dull day markets wise the ECB minutes brought a little excitement to European bonds at least. The minutes said that implementing the planned QE programme would “inevitably” require “limited and temporary deviations” from the ECB’s capital key. Although ‘limited’ and ‘temporary’ don’t indicate anything substantial this was still enough to help peripherals rally strongly. Indeed 10y yields in Italy, Spain and Portugal finished -10.3bps, -8.9bps and -10.4bps lower respectively and so tightening their spreads to Bunds which ended -2.5bps on the day. 10y Treasury yields (-4.8bps to 2.445%) also finished lower for the first time since February 8th. Not even a bumper Philly Fed manufacturing index reading which saw the index surge nearly 20pts to 43.3 in February and the highest since 1984 could halt the reversal. The jump in the data was in fact the single biggest in a month since 2009 and came hot on the heels of a decent NY Fed manufacturing survey on Wednesday.

For the most part the reversal for bonds was also the case for risk assets. Despite staging a typical late bounce-back into the close the S&P 500 (-0.09%) finally snapped a run of 7 consecutive daily gains and finished lower for the first time since February 6th. The Dow (+0.04%) did manage to just eke out a small gain and extend the record high for another day although the runs did come to an end for the Nasdaq (-0.08%) and Russell 2000 (-0.36%) indices too. The overall tone in Europe had been relatively soft too (Stoxx 600 -0.37%) with Banks and Energy sectors under pressure. Oil was particularly volatile in the afternoon as we saw WTI touch as high at $53.59/bbl, before tumbling to $52.68/bbl, and then reverse again into the close to actually finish up +0.60% at around $53.36/bbl. A combination of growing US inventories following the latest EIA data and a Reuters report suggesting that OPEC could look to extend the six-month production cut both seemed to play their part.

Elsewhere there was a bit of excitement in the spike up in the VIX (+7.40%) to 12.86 in the early evening which saw it reach a new high for the month, only for the index to completely retrace into the close and end more or less flat. Currencies were a bit more one-way however with the Dollar index (-0.73%) down for the second day in a row following ten successive daily gains. The Yen (+0.81%) was a big beneficiary against that and we’re seeing that weigh on Japanese equities this morning with the Nikkei currently -0.55%. The Hang Seng (-0.15%), ASX (-0.14%) and Kospi (-0.17%) are also down while bourses in China were initially up helped by the news of the China futures exchange relaxing curbs on stock index futures trading, but are now down a similar amount.

Moving on. While there was some focus on the President Trump press conference yesterday, more so for its typical entertainment than any material updates for markets, House Speaker Ryan did emphasise separately that a tax reform “has to happen” and that following the President’s Day break on Monday, the House intends to “introduce legislation and repeal and replace Obamacare”. Ryan also said that a much anticipated border adjustment tax is needed to spur US manufacturing and that currency adjustment would occur with tax law harmonization.

Closer to home, time is ticking down now to the Eurogroup meeting on Monday and it seems that there is growing scepticism out there that a Greek deal will be struck in time. Germany parliamentary members stressed the need to have IMF participation yesterday which they also said is precisely the position taken by euro area finance ministers. The FT also ran an article downplaying hope of an agreement by next week, suggesting instead that a deal may be months away now. While Greece is likely able to stand on its own two feet until July (when heavy bond maturities are due) its looking like any progress will go on the backburner until the Dutch and first round of French elections are out of the way over the next couple of months.

Before we wrap up, the only other data yesterday in the US came in the housing sector where housing starts revealed a suspiring -2.6% mom decline in January (vs. 0.0% expected) but permits jumped a better than expected +4.6% mom (vs. +0.2% expected). Initial jobless claims rose 5k last week to 239k but remain at low levels still. Elsewhere, Fed Vice-Chair Fischer also spoke but didn’t give much away in terms of timing for the next rate hike while also declining to say whether or not he expects two or three moves this year.

While we’re on the Fed, it’s worth drawing your attention to our economists’ latest Global Economic Perspectives piece where they have taken a look at the looming leadership shake-up. They note that President Trump will have considerable scope to reshape the Fed. By April, there will now be at least three vacancies on the seven-seat Board of Governors (following Governor Tarullo’s resignation), whilst Fed Chair Janet Yellen’s term as Chair will end in January next year. They note that at this point there is substantial uncertainty about who could replace Chair Yellen – there has been little indication from the Trump administration about possible candidates. Our team discuss several of the candidates that have been mentioned (these include current Governor Jerome Powell, past Governor Kevin Warsh, and academic John Taylor). Based on Trump’s past comments, the makeup of his economic advisors and appointments, and the political leanings of Congressional Republicans, they argue that it would seem that Trump may prefer a candidate that: (1) has significant experience in markets and/or business (i.e., a market practitioner rather than an academic economist), (2) does not have strong hawkish leanings that would work against Trump’s growth agenda, and (3) does not forcefully reject greater Congressional oversight of the Fed. They write that who occupies the Chair’s seat would be critical for markets in any environment. But Yellen’s replacement could be even more important, as he or she may well preside over an economy that is near full employment and that is given a large dose of fiscal stimulus. This raises the risk that the Fed could fall behind the curve.

Looking at the day ahead it looks set to be a fairly quiet end to the week. In Europe this morning the only data comes from the UK where we’ll get the January retail sales figures (where a rebound is expected) while in the US this afternoon we’ve got the Conference Board’s leading indicator for January. Earnings wise Allianz headlines a small list

3. ASIAN AFFAIRS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 27.54 POINTS OR .85%/ /Hang Sang CLOSED DOWN 73.96 POINTS OR 0.58% . The Nikkei closed DOWN 112.91 POINTS OR 0.58% /Australia’s all ordinaires  CLOSED DOWN 0.21%/Chinese yuan (ONSHORE) closed DOWN at 6.8678/Oil FELL to 53.13 dollars per barrel for WTI and 55.28 for Brent. Stocks in Europe ALL IN THE RED EXCEPT LONDON. Offshore yuan trades  6.8478 yuan to the dollar vs 6.8678  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS WIDENS A BIT AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea’s largest company Samsung has its Chief Executive Officer arrested for bribery perjury and embezzlement

(courtesy zero hedge)

 

Samsung Chief Arrested For Bribery, Perjury And Embezzlement

Exactly one month ago, South Korea’s political crisis – recall that the country’s president Park Geun-hye was impeached last December – spilled over into the corporate sector when the country’s special prosecutor unexpectedly sought a warrant to arrest the head of Samsung, the country’s largest conglomerate, accusing him of paying multi-million dollar bribes to a friend of impeached President Park Geun-hye. On the night of January 16, investigators had grilled the head of Samsung, the world’s largest maker of smartphones, flat-screen TVs and memory chips, Jay Y. Lee for 22 straight hours last week as a suspect in a massive corruption scandal, which last month led to parliament impeaching president Park.

As a quick tangent, putting Samsung’s size and importance in context, the company generates $230 billion in annual revenue, equivalent to about 17% of South Korea’s export-oriented economy, the fourth largest in Asia.

The special prosecutor’s office had accused Lee of paying bribes total 43 billion won ($38 million) to organizations linked to Choi Soon-sil, a friend of the president who is at the center of the scandal, in order to secure the 2015 merger of two affiliates and cement his control of the family business. The 48-year-old Lee, who became the de facto head of the Samsung Group after his father, Lee Kun-hee, was incapacitated by a heart attack in 2014, was also accused of embezzlement and perjury.  Prosecutors allege that Lee, 48, funded Park’s associates as he tried to consolidate control over the sprawling conglomerate founded by his grandfather.

But whereas on January 19 the court rejected a request from prosecutors to arrest Lee, one month later it changed its mind. Fast forward to today, when in denial of some cynics who suggested it would could not happen, Samsung chief Jay Y. Lee was formally arrested on allegations of bribery, perjury and embezzlement, “an extraordinary step that jeopardizes the executive’s ascent to the top role at the world’s biggest smartphone maker and the nation’s most powerful company.”


Samsung chief, Jay Y. Lee, leaves for the Seoul Central District Court,
February 16, 2017. Reuters

The Seoul Central District Court issued the warrant for Lee’s arrest early Friday and the 48-year-old Lee was taken into custody at the Seoul Detention Centre, where he had awaited the court’s decision following a day-long, closed-door hearing that ended on Thursday evening. According to Reuters, the judge’s decision was announced at about 5:30 a.m. (2030 GMT) on Friday, more than 10 hours after Lee, the sprawling conglomerate’s third-generation leader, had left the court. There’s a chance the suspect could destroy evidence or flee, so arresting him is appropriate, a court spokesperson said.

On Tuesday, the special prosecutor’s office had requested a warrant to arrest him and another executive, Samsung Electronics president Park Sang-jin, on bribery and other charges.  The court rejected the request to arrest Park, who also heads the Korea Equestrian Federation, saying it was not needed given his “position, the boundary of his authority and his actual role”.

The court reversed its opinion because, as Reuters reports, the prosecution said it had secured additional evidence and brought more charges against Lee in the latest warrant request. “We acknowledge the cause and necessity of the arrest,” a judge said in his ruling, citing the extra charges and evidence.

When he testified at a parliamentary hearing in December, Lee said he never ordered donations to be made in return for preferential measures and rejected allegations he received wrongful government support to push through a merger of two Samsung affiliates in 2015. Still, Lee, who has been put under a travel ban, confirmed he had private meetings with Park and that Samsung had provided a horse worth 1 billion won that was used for equestrian lessons by Choi’s daughter.

That said, according to Bloomberg, when Including procedural steps and appeals, it may take as long as 18 months for a trial and verdict.

Meanwhile, a Samsung spokeswoman said no decision had been made about whether Lee’s arrest would be contested or whether bail would be sought.

Samsung and Lee have denied wrongdoing in the case. “We will do our best to ensure that the truth is revealed in future court proceedings,” the Samsung Group said in a brief statement after Lee’s arrest.

While Lee’s arrest is not expected to hamper day-to-day operation of Samsung Group companies, which are run by professional managers, experts have said it could affect strategic decision-making by South Korea’s biggest conglomerate.  “There are more than 100,000 of us (in Samsung Electronics). It wouldn’t make sense for a company of that size to not function properly just because the owner is away. It’s business as usual for us,” said an engineer at Samsung Electronics, who declined to be identified.

Of course, when the boss of one of the world’s biggest companies is arrested for bribery, perjury and embezzlement, it is hardly ever a good thing.

To be sure, Lee’s arrest would have an impact on longer-term investment decisions, said Kim, now a professor at Sungkyunkwan University. “Samsung presidents are evaluated on an annual basis, so they cannot make bold bets about the future. They need a chairman when making long-term investment decisions,” he said.

Ultimately, Lee may be just a pawn, albeit very powerful, in the ongoing legal crusade against President Park and her close friend Choi Soon-sil, who is in detention and faces charges of abuse of power and attempted fraud. As reported last month, prosecutors focused their investigations on Samsung’s relationship with Park, 65, who was impeached by parliament in December and has been stripped of her powers while the Constitutional Court decides whether to uphold her impeachment.

They accused Samsung of paying bribes totaling 43 billion won ($37.74 million) to organizations linked to Choi to secure the government’s backing for a merger of two Samsung units. That funding includes Samsung’s sponsorship of the equestrian career of Choi’s daughter, who is in detention in Denmark, having been on a South Korean wanted list.

If parliament’s impeachment is upheld by the Constitutional Court, Park will become South Korea’s first democratically elected leader to be forced from office early. Park remains in office but stripped of her powers while she awaits the Constitutional Court’s decision.

“This is a painful event for Vice Chairman Lee,” said Kim Sang-jo, a shareholder activist and economics professor at Hansung University who was questioned by the special prosecutor as a witness in the probe. “But this will be an important opportunity for Samsung Group to sever ties with the past,” he said, referring to links between the government and the country’s conglomerates, also known as chaebol.

What happens to the company’s stock? It is unlikely that the market will be too excited about this rather unexpected outcome.

“In the short term, it could have an impact on the stock, only because of sentiment, and also because the stock has risen a lot recently,” Jung Sang-jin, a fund manager at Korea Investment Management, told Bloomberg. “In the long-term, there won’t be much impact on the stock, given previous times when other chaebol heads were arrested with few problems for their companies to keep running the business.”

Perhaps he is being too optimistic: keep an eye on the Kospi where trading may be more volatile than usual after today’s news. On the other hand, we are confident the fund manager is right: in the long run, it will most likely be business as usual.

END

b) REPORT ON JAPAN c) REPORT ON CHINA 4. EUROPEAN AFFAIRS

This should be interesting:  the two left wing candidates are to meet and decide on one candidate in the upcoming April elections.  The combined vote may be enough for them to come in second place and thus  remove the centrist candidates

(courtesy zero hedge)

French Bonds Tumble As Left-Wing Coalition Sparks More Le Pen Anxiety

The French presidential election campaign just proved that ‘two wrongs do not make a right’.

French bonds tumbled relative to Bunds as Bloomberg reports, Socialist Party presidential candidate Benoit Hamon said he’s holding further talks with far-left candidate Jean-Luc Melenchon about a potential single candidacy.

A merger could bring about a showdown with Marine Le Pen’s anti-euro National Front, with the latest polls showing the combined vote share of the two candidates would see them qualify for the second round of voting in May.

View image on Twitter

Europe Elects @EuropeElects

France, Opinion Way poll:

Le Pen (FN-ENF): 26%
Macron (EM-NI) 20% ↓
Fillon (LR-EPP): 20%
Hamon (PS-S&D) 16%
Mélenchon (FG-LEFT): 13% ↑

7:37 AM – 17 Feb 2017

And Le Pen’s odds are rising on the news of the potential merger…

 

And the reaction is clear… French bond risk is resurging…

“This is clearly not a positive for French bonds,” said Kim Liu, a strategist at ABN Amro Bank.

It increases the odds of a Le Pen victory, with French bonds already being very vulnerable to political risks. It’s too early to call if this is a game changer as we do not know how serious the merger talks are, but certainly this is not something the market is waiting for.

 

end

 

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

none today

7. OIL ISSUES

A great in depth analysis of the global oil market and why Berman believes that WTI is likely to be below 50 dollars than at 70 dollars

(courtesy Art Berman/Oil Price.com)

Why Sub $50 Oil Is More Likely Than $70 Oil

Submitted by Arthur Berman via OilPrice.com,

It is more likely that oil prices will fall below $50 per barrel than that they will continue to rise toward $70. Prices have increased beyond supply and demand fundamentals because of premature expectations about the effects of an OPEC production cut on oil inventories.

Last week’s 13.8 million barrel addition to U.S. storage was the second largest in history. It moved U.S. crude oil inventories to new record high levels.

Meanwhile, 130 horizontal rigs have been added to tight oil drilling since the OPEC cut was first announced in September. That means that U.S. output will surge and will continue to be a drag on higher prices.

Comparative inventory analysis suggests that the current ~$53 per barrel WTI oil price is at least $6 per barrel too high. Don’t hold your breath for $70 oil prices.

Inventory Is The Key

Most analysts believe prices will increase steadily now that OPEC has decided to cut production. Their logic is that over-production caused lower oil prices and lower output should bring markets into production-consumption balance.

The problem is that production is not the same as supply and consumption is not the same as demand. Inventories lie in-between and modulate the flows from both sides of the production-consumption equation.

Inventory is clearly part of supply but is also a component of demand. Excess production goes into inventory when demand is less than supply. When consumption exceeds production, oil is withdrawn from inventory reflecting increased demand.

The International Energy Agency (IEA) reported last week that global liquids markets would move to a supply deficit by the first quarter of 2017 if OPEC production cuts take place as announced (Figure 1).

Figure 1. IEA Demand/Supply Balance until 2Q17. Source: IEA February 2017 Oil Market Report.

Yet the OECD inventories on which IEA’s forecast is based have increased and are now more than 400 million barrels above the 5-year average (Figure 2). In order for a supply deficit to develop in the first quarter of 2017, those stocks would have to be drastically reduced over the next 6 weeks. Comparative inventory analysis provides some context for the necessary magnitude of that reduction.

(Click to enlarge)

Figure 2. OECD Incremental Inventories Are At Record High Levels Although Absolute Inventories Have Flattened in Recent Months. Source: EIA and Labyrinth Consulting Services, Inc.

Comparative inventories index current storage levels against a moving average of values for the same calendar date over the previous 5 years. This provides the most reliable way of understanding oil-price trends by normalizing stock changes for seasonal variations and comparing them with 5-year average values.

Figure 3 shows that current OECD comparative inventories (C.I.) are at an all-time high level of more than 300 million barrels (absolute inventories are 3.1 billion barrels).

C.I. values around zero (+/- about 50 mmb) correspond to periods of high oil prices (>$80 per barrel) over the past decade. That suggests that comparative inventories need to fall approximately 200 to 300 million barrels to support $70 to $80 per barrel oil prices.

(Click to enlarge)

Figure 3. OECD Comparative Inventories Are At An All-Time High & Need to Fall 200-300 mmb To Support $70-$80 Per Barrel Oil Prices. Source: EIA STEO and Labyrinth Consulting Services, Inc.

What the IEA is apparently showing in Figure 1 as a “demand/supply balance” is really a demand/production balance. If OPEC cuts move forward as announced, consumption will exceed production in the first two quarters of 2017 and withdrawals from storage will occur. That is a legitimate demand increase.

The billions of barrels of working capacity remaining in inventory are not considered supply in this calculation of balance. That distorts the supply-demand relationship.* At the very least, it does not treat the ~550 million barrels of incremental inventory that has accumulated since December 2013 in Figure 2 as supply.

Inventory is like a savings account for oil. It may be in a separate account from checking but it is part of total available supply. This sort of confusion over definitions of supply and demand is easily avoided by considering comparative inventories. Related: Is $60 Oil Within Reach?

Figure 4 is a cross-plot of OECD comparative inventories and Brent prices. It shows that current prices of ~$55 per barrel are approximately $10 per barrel over-valued compared to the trend line. It further shows that comparative inventory levels must fall ~200 million barrels to support ~$70 per barrel oil prices.

(Click to enlarge)

Figure 4. OECD Comparative Inventories At Record Highs–Comparative Inventory Suggests That Current Prices Are ~$10/Barrel Over-Valued. Source: EIA and Labyrinth Consulting Services, Inc.

Movement toward market balance cannot help but accelerate as a result of OPEC production cuts. Still, the massive stock reductions necessary to support higher oil prices will only occur over a much longer period.

It will take at least a year to reduce OECD inventories 400 mmb down to the 5-year average. This assumes that all OPEC cuts take place as announced and continue beyond the 6-month term of those agreements. It also assumes that non-OPEC production declines or at least remains static.

U.S. Production Will Not Remain Static

It is worth recalling that over-production by the U.S. and Canada was the trigger for the global oil-price collapse in 2014 (Figure 5). These two countries accounted for almost half (44 percent) of the incremental increase in crude oil and lease condensate production in the world as of March 2015 peak production levels.

(Click to enlarge)

Figure 5. U.S. + Canada Incremental Ouput: The Major Contributor to Low Oil Prices. Source: EIA and Labyrinth Consulting Services, Inc.

U.S. production fell more than 1 million barrels per day (mmb/d) from April 2015 through September 2016 but is now recovering because of higher oil prices (Figure 6). EIA forecasts that field production will increase to 9.28 mmb/d by the end of 2017 and will reach almost 10 mmb/d by December 2018.

(Click to enlarge)

Figure 6. U.S. Crude Oil Production Has Increased 290 kb/d in The Last 4 Months After Falling 1.06 mmb/d From Apr 2015 to Sept 2016. Source: EIA February 2017 STEO and Labyrinth Consulting Services, Inc.Related: Energy Storage Set To Boom In 2017

EIA does not predict that WTI oil prices will exceed $60 per barrel throughout this 2-year period. It is interesting to note that EIA shows prices falling below $50 per barrel in February 2017 and remaining at that level through mid-year.

After OPEC announced that a production cut agreement was evolving in September 2016, the U.S. horizontal tight oil rig count accelerated. Since then, 130 rigs have been added and 67 percent have been in the Permian basin tight oil play (Figure 7). In recent weeks, the Eagle Ford play rig count has made impressive gains and the Bakken rig count has steadily increased also.

(Click to enlarge)

Figure 7. 130 Tight Oil Rigs Added Since Mid-Sept 2016: 67 percent Are In The Permian Basin. Source: Baker Hughes, EIA, Bloomberg and Labyrinth Consulting Services, Inc.

This reflects a massive flow of capital into these plays that will certainly result in production increases. Approximately $10 billion was spent in 2016 on Permian basin drilling and completion costs for horizontal tight oil wells. An additional $28 billion was spent on Permian land acquisitions.

Don’t Hold Your Breath for $70 Oil Prices

Traders, analysts and the press have consistently looked for every possible reason to anticipate higher prices since the collapse in 2014. Expectation of an OPEC production cut or freeze has provided an artificial lift to oil prices for at least a year and now, probably accounts for at least $6 per barrel of current $53 per barrel NYMEX futures prices.

A recent Wall Street Journal article noted a new record in long crude oil futures positions during the last week in January. It went on to speculate that this meant a possible end to the over-supply of oil and that prices should increase.

That observation is not supported by history. In fact, record long positions are commonly followed by a drop in oil prices. Notable examples shown in Figure 8 include price declines around the 2008 Financial Collapse, the 2014 world oil-price collapse, and the brief rally to $60 prices in the Spring of 2015.

(Click to enlarge)

Figure 8. Record Long Positions on Crude Oil Futures Suggests That Prices Will Fall. Source: CFTC, EIA and Labyrinth Consulting Services, Inc.

Inventory data provides compelling evidence that present oil prices are over-valued. Last week, 13.8 million barrels (mmb) were added to U.S. crude oil storage. That’s the second highest weekly addition ever–the highest was 14.2 mmb on October 28, 2016 when WTI prices were about $5 per barrel lower.

(Click to enlarge)

Figure 9. Crude Oil Inventories Are At Record Levels 140 mmb Above the 5-Year Average. Source: EIA and Labyrinth Consulting Services, Inc.

Comparative inventories are also near record highs (Figure 10). When C.I. was at this level in March 2016, WTI prices were around $39 per barrel. When C.I. was slightly lower in August 2016, prices were about $47 per barrel. The trend line in Figure 10 shows that oil prices are probably about $6 or $7 per barrel over-valued.

(Click to enlarge)

Figure 10. Comparative Inventories Near Record High Levels–Comparative Inventories Suggest Current Prices Are ~$7 Per Barrel Over-Valued. Source: EIA and Labyrinth Consulting Services, Inc.

Oil prices do not always reflect underlying fundamentals but markets eventually adjust because of them. Comparative inventory analysis suggests that current oil prices are over-valued. It is possible that markets have already priced in anticipated uplift from OPEC production cuts. If so, prices may not increase much beyond present levels and expectations of $70 prices any time soon are improbable.

OPEC cuts have almost certainly put a floor under oil prices but volatility will continue to characterize markets as it has for the past 2 years. U.S. production is a wild card that will almost certainly be a drag on upward price movement. My guess is that WTI prices are likely to move below $50 per barrel until effects of OPEC production cuts are reflected in falling global inventories.

*To its credit, IEA shows 2016 inventory declines reaching the maximum levels of the 2011-2015 average. That doesn’t change the fact that current stock levels are 400 mmb above the 2012-2016 5-year average. That’s why comparative inventories are essential.

 

end

 

Oil rigs continue to be utilized in the Permian basin which is causing a record amount of WTI oil glut

(courtesy zero hedge)

 

Permian Panic Continues As Rig Counts Rise Amid Record Glut In Crude

With a record glut of crude and gasoline, US crude production pushed to new cycle highs this week and continues to track lagged rig counts.

US crude inventories are at a new record high…

 

And so are Gasoline inventories…

 

And the rig ccount keeps rising with lagged oil prices…

  • *U.S. OIL RIG COUNT UP 6 TO 597 , BAKER HUGHES SAYS      :BHI US

Highest since October 2015

 

Production keeps rising, and has a long way to go to catch up to the lagged rig count…

 

And the oil algo idiocy from DOE data has been erased with RBOB back below $1.50…

 

The surge in rigs has been driven almost 100% in the Permian, but as OilPrice.com’s Nick Cunningham asks, how much longer that the Permian craze continue?

The two great dueling forces in the world oil market, OPEC and American production, have created an atmosphere of uncertainty, as prices hover above $50. Last week the EIA reported another record inventory and an increasing rig count, while analysts point to a possible crisis as a market held aloft by buoyant predictions of OPEC cuts slowly faces up to insufficient demand.

Crucial to this situation is the state of the U.S. patch, particularly the Permian Basin, which since late last year has been the focus of recovering production. The EIA data for the field is good, with new well production rising sharply and overall production of oil and gas rising sharply in 2017. While some speculate the bubble may burst, prospects for companies already invested in the Permian look positive, even if production costs are rising.

The Permian has seen the highest increase in rig count of any U.S. basin. Six of the twelve rigs added last week went up in the Permian, and its total now stands at 301 rigs, up from 172 a year ago, out of a total U.S. count of 741. In total the count is up 83 percent from May 2016, though it has yet to reach the booming numbers of 2013, when over two thousand rigs were in operation. Even 2015, as the U.S. sector was being squeezed by low prices, saw the total count hovering near two-thousand, according to Baker Hughes.

The increase is coming hot on the heels of the OPEC production deal, and seems to be in direct correlation with the OPEC announcement of nearly 900,000 bpd in cut production this month. For now, markets are happy, but underlying fundamentals remain as they were: cut production in Saudi Arabia and elsewhere will be made up by a resurgent American sector.

Last month, ExxonMobil paid $6.6 billion in order to double its exposure in the Permian, the single largest domestic U.S. oil deal since the price collapse in 2014, according to Forbes. Noble Energy announced in January 2017 it was acquiring Clayton Williams Energy for $2.7 billion, adding seventy-one thousand acres to its holdings in the Permian, specifically in the Southern Delaware Basin.

Austin-based Parsley Energy has been acquiring more acreage, amounting to $2.8 billion, and looks set to be a major Permian player, though its acquisitions came in at a steep $37,000/undeveloped acre.

That looks better when compared to other recent Permian purchases, where land is going for as much as $60,000/undeveloped acre, according to Bloomberg. Those prices are ten-times what drillers pay in the Bakken field in North Dakota, where oil production has fallen off, according to EIA data, and the rig count has fallen. Parsley got a better deal than Concho Resources Inc.’s acquisition last year from Reliance Energy, where the price averaged $45,000/undeveloped acre.

Bloomberg is predicting the steep prices in the Permian will drive away some investors and trigger a backlash. Companies without a foothold will look elsewhere. This thinking explains why Exxon and Parsley made such big grabs, before prices really got out of control.

But for those with the wherewithal, the Permian pays off better than any other field. Occidental Petroleum Corp., which thinks of the Permian as its “growth engine,” has indicated its keeping its primary focus on its 2.5 million acres there, where production costs are so low a price threshold below $40/barrel still assures profitability. The Permian’s so rich, one Occidental exec noted to Natural Gas Intel, “It is pretty hard to drill a dry hole there.” With that in mind, however, Occidental has looked to cut its costs in the Permian by as much as twenty-five percent, in order to make up for steep losses in 2016 Q4.

Other companies that are focused entirely on the Permian, like Diamondback Energy Inc., are not backing out. The company announced its production climbed thirty-eight percent, with Q4 production rising sixteen percent. The late-year boost, the result of the rise in prices on the back of the OPEC deal, helped out other Permian producers. But costs are rising, as running a well per-day rose from $13,900 to $16,000 in the space of a few months last year, according to CNBC.

The high price of getting into the Permian may be offset by the relatively low costs of producing there, as well as the abundance of oil and natural gas that await almost any driller who sinks a well. But if the land rush is in fact over, and attention swings elsewhere, the surge in Permian activity may slacken. That, of course, may be affected if the current bullish swing in prices comes to an end, and if analysts’ predictions of a sharp reduction in prices come to pass.

Some storm clouds related to the high cost of land may inhibit Permian growth, but with production costs low and opportunities bountiful, for those companies already invested the Permian will likely continue to pay off for at least the next year.

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

Euro/USA   1.0654 DOWN .0017/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL IN THE RED  

USA/JAPAN YEN 112.83 DOWN 0.489(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2423 DOWN .0061 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3081 UP .0006 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS FRIDAY morning in Europe, the Euro FELL by 17 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0654; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 27.54 POINTS OR 0.85%     / Hang Sang  CLOSED DOWN 73.96 POINTS OR 0.31%    /AUSTRALIA  CLOSED DOWN 0.21%  / EUROPEAN BOURSES ALL IN THE RED EXCEPT LONDON AND INDIA 

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED DOWN 112.91 POINTS OR 0.58% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED EXCEPT LONDON 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 73.96 POINTS OR 0.31%       / SHANGHAI CLOSED DOWN 27.54   OR 0.85%/Australia BOURSE CLOSED DOWN 0.21% /Nikkei (Japan)CLOSED DOWN 112.91 POINTS OR 0.58%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1242.30

silver:$18.03

Early FRIDAY morning USA 10 year bond yield: 2.420% !!! DOWN 3 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.021, DOWN 2 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 100.61 UP 11 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 4.028% UP 4  in basis point yield from THURSDAY 

JAPANESE BOND YIELD: +.094%  DOWN 5/10  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.636%  UP 3 IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.190 UP 4 POINTS  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 56 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.302% DOWN 5 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

Closing currency crosses for FRIDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0617 DOWN .0053 (Euro DOWN 53 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 112.79 DOWN: 0.510(Yen UP 51 basis points/ 

Great Britain/USA 1.2431 DOWN 0.0054( POUND DOWN 54 basis points)

USA/Canada 1.3109 UP 0.0034(Canadian dollar DOWN 34 basis points AS OIL ROSE TO $53.09

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This afternoon, the Euro was DOWN by 53 basis points to trade at 1.0617

The Yen ROSE to 112.31 for a GAIN of 54 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 54  basis points, trading at 1.2431/

The Canadian dollar FELL  by 34 basis points to 1.3109,  WITH WTI OIL RISING TO :  $53.09

The USA/Yuan closed at 6.8665/ the 10 yr Japanese bond yield closed at +.094% DOWN 5/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from THURSDAY at 2.42% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.023  DOWN 2 in basis points on the day /

Your closing USA dollar index, 100.88 UP 38 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for FRIDAY: 1:00 PM EST

London:  CLOSED UP 22.04 OR 0.30% 
German Dax :CLOSED UP 0.22 POINTS OR 0.00%
Paris Cac  CLOSED DOWN 31.88 OR 0.65%
Spain IBEX CLOSED DOWN 54.40 POINTS OR 0.57%
Italian MIB: CLOSED DOWN 81.08 POINTS OR 0.42%

The Dow closed UP 4.28 OR 0.02%

NASDAQ WAS closed up 23.68 POINTS OR 0.41%  4.00 PM EST
WTI Oil price;  53.01 at 1:00 pm; 

Brent Oil: 55.62  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.52 DOWN 30/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.302%  FOR THE 10 YR BOND  1:30 EST

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:$53.42

BRENT: $55.73

USA 10 YR BOND YIELD: 2.448%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.049%

EURO/USA DOLLAR CROSS:  1.0673 up .0071 

USA/JAPANESE YEN:113.24   down 0.880

USA DOLLAR INDEX: 100.48  down 61  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2488 : up 22   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.302%

 

END

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

TRADING IN GRAPH FORM

Dow, VIX, Gold All Up As Yet Another Ratio Screams “Record High”

This market reminds us of this…“none shall fall”

 

Gold remains 2017’s biggest gainer, oil is down, bonds flat and the panic bid this week dragged The Dow higher…

 

After 6 straight intraday ramps in the S&P 500, the last two days – since Catalyst stopped its forced covering – have seen the character of the market shift notably…

 

On the week, Nasdaq was the big winner, followed by The Dow (as GS, JPM offset UNH)…NOTE the panic buying into the close…

 

The S&P Tech sector is up 13 days in a row – every day in Feb -the longest streak in its 28 year history

 

Just look at the panic in VIX crushing to spike The Dow green…

 

This is easy…

View image on Twitter

is-deciderHtmlWhitespace" cite="https://twitter.com/zerohedge/status/832689569359396864">

zerohedge @zerohedge 3:33 PM – 17 Feb 2017

Financials were the week’s best performer (best week for banks in over 2 months) and Energy the biggest loser (worst week in over 3 months)…

 

VIX was up and stocks were up…

 

This was the largest divergence week between VIX and S&P in years… (S&P +1.3%, VIX +6.5%)

 

Notable decoupling between stocks and bonds this week…

 

Bonds end the week marginally higher in yield (2Y unch)… 4 days in a row of strong buying pressure during the US day session

 

The USD limped higher to end the week green led by Cable weakness…

 

Crude broke a 4-week winning streak and closed red (as the dollar rose for the second week), but PMs managed to eke out a gain…

 

Stocks don;t care about oil anymore…

 

NOTE: Hedge funds boost bullish WTI crude bets by 30,951 net longs to 390,338, new record high

Finally, as Bloomberg’s Cameron ‘macroman’ Crise notes, if you’re looking for another reason to get bearish US equities, try this: the ratio of equity to bond returns is approaching all-time highs in data going back 29 years.

 

 

end

 

All is not well in the auto loan department.  The bubble seems to have burst in this 1.1 trillion USA market as subprime delinquencies  (greater than 60 days) skyrocket. There are over 1 million auto loans borrowers that are behind greater than 60 days.

 

(courtesy zero hedge)

Auto Bubble Burst Begins As Subprime Delinquencies Soar To 2009 Levels

For months we’ve argued that record auto sales have been propped up by low interest rates, a perpetual loosening of auto lending standards with terms being stretched to the max and a wave of leases, all of which have allowed the American consumer to trade up to more expensive vehicles while maintaining low monthly payments.

That said, with rates recently on the rise and a flood of lease returns driving down used cars prices (see “Record High Lease Returns Set To Wreak Havoc On Used Car Prices“), the tailwinds that have propelling auto sales to record highs over the past several months look set to change course.

Certainly, a quick look at the 61+ day delinquencies in General Motors’ subprime securitization book would seem to support our rather negative thesis on future auto sales with January 2017 delinquency rates soaring to the highest levels since late 2009 / early 2010.

Meanwhile, looking at GM’s subprime data going back to 2001 implies that historical spikes in 2-month delinquency rates is a fairly decent indicator that all is not well.

Moreover, as the Financial Times pointed out today, it’s not just subprime borrowers that are having problems making their monthly auto payments.  According to data pulled from Transunion, more than 1 million U.S. auto borrowers, subprime and otherwise, were behind on their payments as of Q4 2016 as overall delinquency rates also soared to 2009 levels.

More than a million US consumers have fallen at least two months behind on car loan repayments as the delinquency rate reaches its highest level since 2009, in the latest sign of stress in the $1.1tn market.

The proportion of soured car loans showed a 13 per cent increase to 1.44 per cent in 2016, according to data published on Thursday by TransUnion, the US credit bureau with an anonymised database of 220m consumers.

The rise in bad loans comes despite persistently low borrowing costs and unemployment levels — suggesting lenders may be letting consumers take on bigger debt burdens than they can handle. Lending to consumers with weak credit scores has been one of the fastest growing parts of the industry.

Though warning signs have been evident for some time now, at least to us anyway, lenders are just now starting to dial back their subprime exposures.

Nancy Bush, an analyst at NAB Research, said: “Auto lending was so hot for a while. It’s almost inevitable the credit quality would be stretched.

“Investors have tended to worry less than they should about banks going out on a limb with credit quality, just because we haven’t seen the evidence up until the last few quarters.”

Across the industry, subprime car loan originations fell 3 per cent in the third quarter from a year ago. In contrast, so-called prime plus and super prime originations rose.

“This is at a period where we, as an industry, should stay disciplined,” Dean Athanasia, co-head of consumer banking at Bank of America, told an investor conference last week.

“You got to watch credit. You got to make sure we’re not diving too deep into the lower end,” he added.

And while underwriters of auto loans will undoubtedly reassure investors that subprime auto securitizations performed relatively well, even at the height of the 2009 ‘great recession’, we would note that borrowers have never been so underwater of their cars as they are right now.

Losses are never possible on those highly-engineered, complex wall street structures…until they are.

 

end

 

It starts;  Chaffetz seeks charges against Hillary aid, Pagliano who decided not to show up to Congress once he was subpoenaed. He claims the 5th amendment but the FBI already had granted immunity to him so there was no reason for him not to testify.

should be interesting..

(courtesy zerohedge)

 

Chaffetz Seeks Charges Against Former Hillary IT Aide Bryan Pagliano

Back in September, at the height of the Hillary emailgate investigation, Clinton’s IT aid who helped setup her private email server, Bryan Pagliano, apparently decided that Congressional subpoenas, like federal record retention laws, were merely optional suggestions that did not require compliance.  As such, Pagliano elected to skip not one, but two, Congressional hearings in front of Jason Chaffetz’ (R-Utah) House Oversight Committee despite his direct involvement in setting up he private servers.

The move did not sit well with Chaffetz, Chair of the House Oversight Committee, who blasted Pagliano’s move saying that “subpoenas are not optional” and subsequently voted to hold Pagliano in contempt of Congress.

As it turns out, after all these months, Chaffetz is still not over Pagliano’s aloof response to his committee’s subpoena and has sent a letter to Trump’s new Attorney General Jeff Sessions asking him to convene a grand jury or bring charges against Pagliano for his failure to appear before Congress.  According to Fox News, Chaffetz said in a statement that allowing Pagliano’s conduct “to go unaddressed would gravely harm Congress’ ability to conduct oversight.”

 

To our complete shock, Representative Elijah Cummings of Maryland, the ranking Democrat on the committee, blasted Chaffetz’ call for charges saying that pursuing charges against Pagliano would be a waste of time and money.

“Apparently, Chairman Chaffetz and President Trump are the only two people in Washington today who think we should still be investigating Secretary Clinton,” Cumming said in a statement. He added: “The Oversight Committee can’t afford to be distracted by political vendettas against Hillary Clinton while our constituents are begging us to conduct responsible oversight of President Trump.”

Of course, Pagliano’s attorneys defended his actions back in September saying that he had already “asserted his Fifth Amendment rights” and refused to answer any questions.  Therefore, they argued that additional appearances before Congress served no “valid legislative purpose.”

“You and the committee have been told from the beginning that Mr. Pagliano will continue to assert his Fifth Amendment rights and will decline to answer any questions put to him by your committee,” according to the letter.

 

A subpoena issued by a Congressional committee is required by law to serve a valid legislative purpose and there is none here,” reads the letter, which refers to the committee’s efforts to force Pagliano to testify as a “naked political agenda” with “no valid legislative aim.”

Of course, as our readers are already aware, Pagliano, like Paul Combetta (the infamous “Oh Shit” guy) and a host of other Clinton aides, was granted an immunity deal by the Department of Justice in return for his FBI testimony regarding the Clinton private email servers.  Unfortunately, that immunity deal won’t help him with these new charges.

Finally, we’ll end with the same warning that we offered Pagliano back in September:

“We would caution Pagliano that, as suggested by the pic above, he would probably be well served to tread lightly…not many people share the Clintons’ particular talent for escaping scandal after scandal without repercussions.”

 

 

 

end

 

This is a little troubling:  Robert Harward has rejected Trump’s offer to becomes the next National Security Advisor.  I guess it is David Patraeus or Keith Kellogg and nobody else can fill the roll:

(courtesy zero hedge)

Robert Harward Rejects Trump’s Offer To Become Next National Security Advisor

It has been a day of turmoil for President Trump, who after finding himself on the defensive following Monday’s resignation by Mike Flynn (which may or may not lead to legal charges) and allegedly getting snubbed by Vladimir Putin, now has another potential crisis on his hands: according to both the FT and CBS, Trump’s pick for National Security Advisor, Robert Harward – Lockheed Martin’s CEO for the UAE – has turned down the President’s offer, citing “obvious dysfunctionality” in the administration.

According to the FT, it is not yet a complete rejection as “Trump is trying to convince his preferred candidate to succeed Michael Flynn as national security adviser to change his mind after the retired admiral tapped for the role told the US president that he could not accept the White House position.”

Mr Trump asked Robert Harward, a retired navy special forces officer to succeed Mr Flynn, who was fired as national security adviser on Monday. At a press conference on Thursday, he said his decision to replace Mr Flynn had been made easier because he had an “outstanding” candidate to serve as a replacement.

But Mr Harward is said to have turned Mr Trump down. “Harward is conflicted between the call of duty and the obvious dysfunctionality,” said one person with first hand knowledge of the discussions between Mr Trump and Mr Harward. The second person said Mr Trump had asked Mr Harward to return to the White House for another meeting to try to change his mind.

As the FT adds, “one of the people familiar with Mr Harward’s decision said he was concerned about whether the top advisers around Mr Trump would allow him to install his own staff on the NSC — particularly after suggestions that KT McFarland, Mr Flynn’s deputy, had been asked to remain. When he was offered the position, Mr Harward had told Mr Trump that he wanted some time to think over the idea.”

A separate report by CBS gives the courting process more closure, stating that “Robert Harward turns down Trump’s offer to be new national security adviser.”

Vice Admiral Robert Harward has rejected President Trump’s offer to be the new national security adviser, CBS News’ Major Garrett reports.

Sources close to the situation told Garrett Harward and the administration had a dispute over over staffing the security council.

Two sources close to the situation confirm Harward  Harward demanded his own team, and the White House resisted. Specifically, Mr. Trump told Deputy National Security Adviser K. T. McFarland that she could retain her post, even after the ouster of National Security Adviser Michael Flynn. Harward refused to keep McFarland as his deputy, and after a day of negotiations over this and other staffing matters, Harward declined to serve as Flynn’s replacement.

Should Harward’s position remain unchanged, it would mean that Trump may have no choice but to turn to David Petraeus:

One of the other contenders for the job was David Petraeus, a retired general who was widely respected, but fell from grace during his time as head of the Central Intelligence Agency for passing secret information to his mistress. The final candidate was Keith Kellogg, a retired army general who had served as chief of staff to Mr Flynn on the NSC and who is serving as the interim head of the inter-agency body.

While it remains to be seen if Harward is indeed out, it is troubling if suddenly Trump can not even find willing and qualified candidates to fill the gaping holes among his top security advisors.

 

 

end

 

Trump tweets that General Keith Kellogg is in play for the NSA job

(courtesy zero hedge)

Snubbed By Harward, Trump Tweets “General Keith Kellogg Is Very Much In Play For NSA”

Hours after news broke that Lockheed senior executive Robart Harward had rejected Trump’s offer to become the next National Security Advisor as he was Harward is “conflicted between the call of duty and the obvious dysfunctionality”, moments ago Trump tweeted that General Keith Kellogg – the acting national security advisor –  “who I have known for a long time, is very much in play for NSA – as are three others.”

Donald J. Trump @realDonaldTrump

General Keith Kellogg, who I have known for a long time, is very much in play for NSA – as are three others.

8:16 AM – 17 Feb 2017

So as attention refocuses on Kellogg, here is a brief profile of the retired general, courtesy of the Guardian:

Retired General Keith Kellogg in the lobby of Trump Tower

Kellogg, 72, was born in Ohio and served 36 years in the military: in the army in Vietnam, as a special forces officer in Cambodia, and during the first Iraq war as chief of staff for the 82nd Airborne Division. Kellogg rose to command the airborne division from 1997 to 1998 and later came to national prominence when he served as chief operating officer for Baghdad’s provisional government through 2004 – a year of mistakes by the transitional administration that haunted Iraq through the next decade of war.

After his retirement, Kellogg joined a series of contracting firms including tech giant Oracle – the company gave him a leave of absence to help the Bush administration in Iraq. “I was given the opportunity to establish a homeland security business unit at Oracle,” he told the Washington Post in 2005, “based on the skills I developed in the military and on the value that information technology can bring to homeland security.”

Kellogg later joined another tech contractor, CACI, in 2005, and then left for a defense contractor, Cubic Defense, in 2009, where he was responsible for the firm’s “ground combat training business”. In March, after Kellogg joined Trump’s campaign as an adviser, the New York Times reported that the last defense contractor to employ the retired general “had no information on his whereabouts”.

The retired general has kept a low profile in the White House compared with his predecessor. He was granted a formal role in Trump’s transition team and later named chief of staff and executive secretary of the National Security Council, making him one military counterweight to an unusually prominent civilian on the council, Trump’s chief strategist, Steve Bannon.

Although Trump may yet formalize Kellogg as his permanent adviser, rumors quickly began to spread on Monday night that another candidate was en route to the White House: retired general David Petraeus, the former CIA director who resigned in disgrace having admitted to giving classified information to his lover.

 

end

This is interesting:  farm incomes and equipment purchases are tanking while John Deere’s stock soars due to hedge fund purchases

(courtesy zerohedge)

The Ag Paradox: Farm Incomes And Equipment Purchases Tank While John Deere’s Stock Soars

Last week we wrote about the U.S Department of Agriculture’s latest biannual report of farm incomes which painted a very bleak picture for the American farmer.  In its first forecast for 2017, the USDA saw real farm cash receipts down 14% versus 2015 and 36% from the previous high set in 2012 as farm debt continued to soar and leverage surged to all-time highs.

Below is a summary of some of the key takeaways:

Real farm incomes in 2017 are expected to sink below 2010 levels which represents a 36% decline from the recent peak and a 14% decline since 2015.

Meanwhile farm debt continues to rise at an astonishing rate…

While farmer leverage has spiked to the highest level since at least 1960.

And of course, lower incomes means less money to spend on shiny new John Deere tractors with equipment capex expected to decline 35% compared to 2015.

And finally, farmer returns have crashed to the lowest levels ever.  We’re not sure about you but a 2.1% ROIC seems a “little low” even in our current rigged interest rate environment. 

In summary, farmers are making no money but are managing to barely stay afloat by adding a massive amount of debt and slashing capital expenditures.

Moreover, the summary above was seemingly confirmed recently when ISI released their latest data on North American sales volumes for tractors and combines.  Not surprisingly, January volumes were down anywhere from 20% to nearly 50% YoY, as they were for most of 2015 and 2016.

Which leads us to our final point, which is, what exactly are John Deere investors seeing that we’re not?

While we certainly understand the concept of investing in cyclical stocks at the bottom of their earnings cycle, we’re somewhat less familiar with the strategy of completely pricing in a recovery multiple years in advance while continuing to buy those same cyclical stocks at all-time highs and peak multiples.

That said, we’re sure those multiples have room to get even “peak-ier” tomorrow when John Deere reports earnings…we can’t wait to see efficient markets at work.

 

 

end

 

Bellwether stock (global sales) records it’s 50th consecutive month of declining global sales

(courtesy zero hedge)

 

Caterpillar Records 50 Consecutive Months Of Declining Global Sales

As Caterpillar’s stock hits multi year highs, its operations continue to sink.

With sellside firms suggesting that CAT should be valued on 2018, and in some case 2019 results, Caterpillar shareholders have been happy to comply with the recent euphoria, sending the stock soaring 18% since the Trump presidential victory, and back to multi-year highs on hopes a Trump’s infrastructure push would make excavators great again, coupled with expectations that an infrastructure push out of China will result in a rebound in the company’s profits. For now, however, operational woes at the heavy industrial manufacturer continue, with yet another month of declining global sales.

To be sure, there was a glimmer of hope for CAT out of Asia, where retail sales continued the rebound after posting positive gains in the prior five month, surging 26% in January, the biggest annual gain since July 2012. This however was offset by continuing declines in North America, the EAME and Latin America regions, which declined by 8%, 13%, and 29%, although all regions posted a modest rebound from December Y/Y numbers.

However, as has been the case for the past 4 years, it was on a global blended basis, where the headwinds facing CAT refuse to go away, and after the latest, January, decline in retail sales of -8%, we find that the company has not reported a single monthly uptick in sales for record 50 consecutive months, starting in December 2012, a period which is now 2.5x longer than the far more acute 19 month drop observed during the post-financial crisis period.

Source: Caterpillar

 

 

end

 

Two important commentaries discuss how Michael Flynn was removed by the “Deep State” or intelligence community.

a must read..

(courtesy Michael Snyder/Pepe Escobar)

 

A Civil War For Control Of The US Government Has Erupted Between “The Deep State” And Donald Trump

Submitted by Michael Snyder via The End of The American Dream,

The ruthless political assassination of Michael Flynn was just one battle of a major civil war that has erupted for control of the U.S. government. Donald Trump and his new administration are now under relentless assault by “the deep state”, and at this point it is not clear who will emerge as the victor. There are many that use the term “deep state” as a synonym for the intelligence community, but the truth is that it is much broader than that. In reality, the deep state encompasses thousands upon thousands of unelected, unaccountable bureaucrats that never seem to change no matter which party wins an election. Certainly the intelligence community is at the heart of this system, but there are countless others that are embedded within key government agencies and the Pentagon that deeply resent Donald Trump and the kind of change that he is attempting to bring to Washington.

There is a vast and exceedingly complex tapestry of laws, rules and regulations that govern the behavior of government officials. In past administrations, those laws, rules and regulations have been very selectively enforced, but now the “deep state” intends to use them as weapons against the Trump administration.

In essence, Donald Trump and his team are walking through a minefield, and his enemies are watching like a hawk for even the smallest slip up.

Theoretically, everyone working for the federal government is now working for Donald Trump. But in reality that is not the case. I wrote about the sabotage that is being done by Obama loyalists a few days ago, and it isn’t going to stop until Donald Trump does a complete housecleaning.

Michael Flynn was taken out because he was an easy target. But now that he is gone, the saboteurs are immediately going to proceed to their next targets.

For example, just today we learned that Trump’s choice for labor secretary, Andrew Puzder, was forced to withdraw.

Trump’s political enemies are going go after whoever they can. Trump’s family, friends and business associates are all fair game. Politics in America has become an exceedingly dirty game, and many believe that this is an indication that our republic is in the process of failing. I really like how Damon Linker described this in an article for The Week

The whole episode is evidence of the precipitous and ongoing collapse of America’s democratic institutions — not a sign of their resiliency. Flynn’s ouster was a soft coup (or political assassination) engineered by anonymous intelligence community bureaucrats. The results might be salutary, but this isn’t the way a liberal democracy is supposed to function.

Unelected intelligence analysts work for the president, not the other way around. Far too many Trump critics appear not to care that these intelligence agents leaked highly sensitive information to the press — mostly because Trump critics are pleased with the result. “Finally,” they say, “someone took a stand to expose collusion between the Russians and a senior aide to the president!” It is indeed important that someone took such a stand. But it matters greatly who that someone is and how they take their stand. Members of the unelected, unaccountable intelligence community are not the right someone, especially when they target a senior aide to the president by leaking anonymously to newspapers the content of classified phone intercepts, where the unverified, unsubstantiated information can inflict politically fatal damage almost instantaneously.

For many years, I have written about how the U.S. government has been transformed into a police state. And ultimately it is not the politicians that have been spying on all of us – it is the deep state that has been doing it.

According to USA Today, the deep state has been intercepting communications from Trump and his team for “months”, and so this “investigation” was actually going on all the way back during the election. And now the deep state is disclosing the “dirt” that they have collected in order to destroy political reputations. As Bloomberg has pointed out, this “is what police states do”…

Normally intercepts of U.S. officials and citizens are some of the most tightly held government secrets. This is for good reason. Selectively disclosing details of private conversations monitored by the FBI or NSA gives the permanent state the power to destroy reputations from the cloak of anonymity. This is what police states do.

This entire episode makes me deeply ashamed of my country.

In the end, it doesn’t even matter that much if Michael Flynn would have done a good job in his position or not.

What matters is that we have an intelligence community that has gone rogue and that is completely out of control.

And now that this “civil war” has begun, it is being reported that there are some within the intelligence community that are absolutely determined to destroy Donald Trump. In fact, one former NSA analyst says that he got a message from a friend still inside the intelligence community that stated that Trump “will die in jail” once this civil war is over…

According to former NSA analyst John Schindler, elements of the intelligence community have gone “nuclear” against President Donald Trump and are now vowing “he will die in jail”.

Schindler, a former professor at the Naval War College, is known to be provocative with his tweets, but what he revealed earlier today is still raising eyebrows.

Schindler was asked by another Twitter user, “What do you think is going on inside NatSec right now after Trump’s “intelligence” tweet this morning?”

That was a reference to Trump tweeting that information was being illegally leaked by members of the CIA and NSA to the Washington Post and the New York Times.

Schindler responded, “Now we go nuclear. IC war going to new levels. Just got an EM fm senior IC friend, it began: “He will die in jail.”

Can you see why I am describing this conflict as a “civil war”? To me, this is definitely treason…

John Schindler @20committee

Now we go nuclear. IC war going to new levels. Just got an EM fm senior IC friend, it began: “He will die in jail.”https://twitter.com/JWal077/status/831871381570781184 …

9:27 AM – 15 Feb 2017

For now, this civil war is a “cold war”, but we aren’t too far away from it potentially becoming a “hot war”.

I have previously written about how the U.S. is on the verge of major civil unrest, and it is also a major theme in my novel. The anger and frustration that have been building up in this country for a very long time could explode at any moment. All it is going to take is some sort of trigger event.

And there are many that very much agree with me. For example, just today I saw an article by Charlie Daniels in which he warned that we could soon see “blood on the streets”…

I see young people interviewed on television who can’t even articulate the reason they are protesting. Others bent on destruction who probably espouse no cause but chaos.

I’ve seen hysterical protestors screaming about First Amendment rights which they seem to think only protect them and those who think like them and that the opposition has no First Amendment protection and should be shouted down at all costs.

The rhetoric is becoming hotter and more nonsensical, the radical element more apparent, the violence and destruction of property more common place.

The pot is boiling and it’s only a matter of time before there will be blood on the streets.

If I was Donald Trump, I would make a major housecleaning of every government agency and the Pentagon my top priority.

Because if he allows thousands of saboteurs to remain embedded in key positions within the government, his administration will fail.

So let us hope that we see the biggest wave of firings and resignations in modern American history in the weeks and months ahead, because that is what is going to be necessary for Donald Trump to win this struggle for control of the government.

 

end

The Swamp Strikes Back

Authored by Pepe Escobar, originally posted at SputnikNews.com,

The tawdry Michael Flynn soap opera boils down to the CIA hemorrhaging leaks to the company town newspaper, leading to the desired endgame: a resounding victory for hardcore neocon/neoliberalcon US Deep State factions in one particular battle. But the war is not over; in fact it’s just beginning.

Even before Flynn’s fall, Russian analysts had been avidly discussing whether President Trump is the new Victor Yanukovich – who failed to stop a color revolution at his doorstep. The Made in USA color revolution by the axis of Deep State neocons, Democratic neoliberalcons and corporate media will be pursued, relentlessly, 24/7. But more than Yanukovich, Trump might actually be remixing Little Helmsman Deng Xiaoping: “crossing the river while feeling the stones”. Rather, crossing the swamp while feeling the crocs.

Flynn out may be interpreted as a Trump tactical retreat. After all Flynn may be back – in the shade, much as Roger Stone. If current deputy national security advisor K T McFarland gets the top job – which is what powerful Trump backers are aiming at – the shadowplay Kissinger balance of power, in its 21st century remix, is even strengthened; after all McFarland is a Kissinger asset.

This call won’t self-destruct in five seconds

Flynn worked with Special Forces; was head of the Defense Intelligence Agency (DIA); handled highly classified top secret information 24/7. He obviously knew all his conversations on an open, unsecure line were monitored. So he had to have morphed into a compound incarnation of the Three Stooges had he positioned himself to be blackmailed by Moscow.

What Flynn and Russian ambassador Sergey Kislyak certainly discussed was cooperation in the fight against ISIS/ISIL/Daesh, and what Moscow might expect in return: the lifting of sanctions. US corporate media didn’t even flinch when US intel admitted they have a transcript of the multiple phone calls between Flynn and Kislyak. So why not release them? Imagine the inter-galactic scandal if these calls were about Russian intel monitoring the US ambassador in Moscow.

No one paid attention to the two key passages conveniently buried in the middle of this US corporate media story.1) “The intelligence official said there had been no finding inside the government that Flynn did anything illegal.” 2) “…the situation became unsustainable – not because of any issue of being compromised by Russia – but because he [Flynn] has lied to the president and the vice president.”

Recap: nothing illegal; and Flynn not compromised by Russia. The “crime” – according to Deep State factions: talking to a Russian diplomat.

Vice-President Mike Pence is a key piece in the puzzle; after all his major role is as insider guarantor – at the heart of the Trump administration – of neocon Deep State interests. The CIA did leak. The CIA most certainly has been spying on all Trump operatives. Flynn though fell on his own sword. Classic hubris; his fatal mistake was to strategize by himself – even before he became national security advisor. “Mad Dog” Mattis, T. Rex Tillerson – both, by the way, very close to Kissinger – and most of all Pence did not like it one bit once they were informed.

A “man of very limited abilities”

Flynn was already compromised by his embarrassingly misinformed book co-written with neocon Michael Ledeen, as well as his juvenile Iranophobia. At the same time, Flynn was the point man to what would have been a real game-changer; to place the CIA and the Joint Chiefs of Staff under White House control.

A highly informed US source I previously called “X”, who detailed to Sputnik how the Trump presidency will play out, is adamant “this decision makes Trump look independent. It is all going according to script.”

“X” stresses how “the NSA can penetrate any telephone system in the world that is not secure. Flynn was a man of very limited abilities who talked too much. You never hear from the real powers in intelligence nor do you know their names. You can see that in Flynn’s approach to Iran. He was disrupting a peace deal in the Middle East relating to Russia, Iran and Turkey in Syria. So he had to go.”

“X” adds, “the Russians are not stupid to talk among themselves on unsecured lines, they assumed that Flynn controlled his own lines. Flynn was removed not because of his Russian calls but for other reasons, some of which have to do with Iran and the Middle East. He was a loose cannon even from the intelligence perspective. This is a case of misdirection away from the true cause.”

In direct opposition to “X”, an analytical strand now rules there’s blood on the tracks; the hyenas are circling; a vulnerable Trump has lost his mojo; and he also lost his foreign policy. Not yet.

In the Grand Chessboard, what Flynn’s fall spells out is just a pawn out of the game because the King would not protect him. We will only know for sure “draining the swamp” – the foreign policy section – is doomed if neocons and neoliberalcons continue to run riot; if neoliberalcons are not fully exposed in their complicity in the rise of ISIS/ISIL/Daesh; and if the much vaunted possibility of a détente with Russia flounders for good.

What’s certain is that the fratricide war between the Trump administration and the most powerful Deep State factions will be beyond vicious. Team Trump only stands a chance if they are able to weaponize allies from within the Deep State. As it stands, concerning the Kissinger grand design of trying to break the Eurasian “threat” to the unipolar moment, Iran is momentarily relieved; Russia harbors no illusions; and China knows for sure that the China-Russia strategic partnership will become even stronger. Advantage swamp.

 

end

 

Pay attention to David Stockman as he outlines correctly what will happen in the next few months with respect to the USA economy:

 

 

(courtesy DailyReckoning/David Stockman)

David Stockman: This is Game Over

[Ed. Note: To see exactly what this former Reagan insider has to say about Trump and specifically what he believes must be done, David Stockman is sending out a copy of his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back out to any American willing to listen. To learn how to get your free copy CLICK HERE.]

David Stockman joined Yahoo Finance show The Final Round to discuss what’s unfolding in the U.S capitol and what to expect from the markets and the economy going forward. As Yahoo Finance host, Jen Rogers introduced the bestselling author she remarked that the current markets are living in a “fantasy land” and that Stockman believes this environment both in government and in the markets is “complete insanity.”

David Stockman is the former Office of Management and Budget Director under President Ronald Reagan, which is the office specifically responsible for producing the President’s Budget. In this role he was the point person for measuring the quality and efficiency of agency programs and various policies within government. Stockman also served as a two-term Congressman followed by a tenure of Wall Street where he worked at various firms. He is now a bestselling author and has recently released his book Trumped! A Nation on the Brink of Ruin… And How to Bring It Back (learn how to score your FREE copy of this insiders look at what Trump must do in office – CLICK HERE).

To set the tone, the Yahoo Finance host Jen Rogers began by asking Stockman his take on President Trump’s much discussed press conference on Thursday, February 16. Stockman remarked, “Maybe he is shooting to be the Fidel Castro of American politics – the “dear leader” who never stops talking. The problem is, this whole rally is based on talk – opium. I think it is going to be over within days, and certainly by March 15. Because that is when the Federal Reserve is going to raise interest rates, finally. They have been dithering for 96 months at the zero bound. By their Keynesian lights they are at full employment and have no choice.”

“Second, this debt ceiling which has been in suspension for the last year goes back into effect. Suddenly people will realize that there is $200 billion of cash in the U.S Treasury and it is running out very quickly.”

“There will be a crisis this summer and by March 15th it will be evident.”

When Rogers pressed that during the Trump press conference to expect tax reform to be on the way Stockman responded, “There is no tax cut coming. Its phenomenal, it’s massive, it’s a great hope, probably in some alternative world it would be a good thing to do – but he is not going to get it through Congress.”

“They were going to repeal Obamacare the first week. They’re not going to get that done this year – if ever. They’re going to be totally bogged down in these battles that Trump has created over the travel ban and deportations. This whole fight over the intelligence agencies and whether or not people in his campaign were communicating with the Russians.”

“This is the deep state getting even… They’re not distractions, they’re the heart of the problem!”

“We are sitting on $20 trillion of debt and there is $10 trillion more built in under current policy over the next decade. They can only pass a tax bill if it is roughly deemed “revenue neutral.” That means they’ll need big revenue sources to pay for the corporate tax rate cuts – and that says nothing of what he promised yesterday about “cuts for all” and that “every bracket and every taxpayer.” Now that’s four of five trillion dollars. Where is he going to get it? The only way to get it is the border adjustment tax, the VAT, and he was meeting with the retailers who were sitting around the table saying we are here to kill this thing dead because “brick and mortar America” can’t stand a 20% increase in their cost of goods.”

“It is delusional to think they can get a revenue neutral tax bill through the Congress this year. Without reconciliation they are going to have a filibuster and sixty votes. To get reconciliation you need a ten year budget resolution and they can’t pass it.”

When asked about the comparisons of Reagan’s administration and his economy to Trump and what the secular bull market that is expected to take off means, Stockman shook his head in contrarian style. “This is not the second coming of Ronald Reagan. When Reagan came in, the national debt was only $1 trillion dollars and 30% of GDP. It is now $20 trillion in national debt and 106% of GDP. Even then we had stock market crash, bond market disorder, 18% interest rates for two years. The bull market did not come until 1983-1984 but there was a horrendous downside before. I think we are in the same scenario today.”

“There is going to be a huge correction when the market figures out no Fed, no tax stimulus, their home alone and they’ve got the market trading at twenty six times trailing earnings and an economy that is running out of gas with headwinds coming from all over the world. It is only a matter of days before this whole thing tips over because it is basically the machines raging on headlines.”

The Yahoo Finance host noted provocatively that the market is currently at all-time highs stirring Stockman to respond, “I remember well that we were at all-time highs in March 2000 before we went down 60%. We were at all-time highs in October 2007, it was an artificial market before we crashed and had a crisis. The market is assuming a massive recovery in the economy with a huge increase in earnings – those are not going to happen. Once that becomes clear there will be a huge adjustment.”

When asked what sectors in the economy he liked and felt were secure given the current environment according to his forecasts he said emphatically, “Gold. Because what is going to happen is that central banks around the world are in the process of being discredited. Fiscal policy around the world is out of control. Debt everywhere in the developed world is bogging down governments into dysfunctional crisis.”

“Once the market really figures that out and that there is no stimulus left, there’s nothing more that can be done either fiscally or by the money printers at the central banks – then I think it is game over.”

“It is only a matter of when we reach the inflection point, where it becomes obvious to everybody that this is artificial and there is no more stimulus. This is what they were saying in December and February of 1999, there had been an 8 year rally, it ended in a thundering crash. This is what they said in most of late 2007 and most of 2008, then suddenly – within the matter of 40 days the Russell 2000 dropped by an equivalent of 60%. The way this bubble finance works, along with central bank policy, it takes nearly 7 years on an escalator to work its way up and it takes about 7 weeks on an elevator down.”

To catch Stockman’s full interview covering the economy and more on Yahoo Finance click here (starts at minute 12:49). To get your FREE copy of his latest bestseller, TRUMPED! click here to learn more.

Regards,

Craig Wilson, @craig_wilson7
for the Daily Reckoning

end

 

Pam and Russ Martens discuss how Mary Jo White totally misled the USA senate when she became  SEC chair:

(courtesy Pam Martens.Russ Martens/Wall Street on Parade)

Mary Jo White Seriously Misled The US Senate When She Became SEC Chair

Submitted by Pam Martens and Russ Martens via WallStreetOnParade.com,

Less than two weeks after Mary Jo White was nominated to become Chair of the Securities and Exchange Commission by President Barack Obama on January 24, 2013, White filed an ethics disclosure letter advising that she would “retire” from her position representing Wall Street banks at the law firm Debevoise & Plimpton. White wrote on this subject in great detail, stating:

“Upon confirmation, I will retire from the partnership of Debevoise & Plimpton, LLP. Following my retirement, the law firm will not owe me an outstanding partnership share for either 2012 or any part of 2013. As a retired partner, I will be entitled to the use of secretarial services, office space and a blackberry at the firm’s expense. For the duration of my appointment, I will forgo these three benefits, though I may pay for some secretarial services at my own expense. Pursuant to the Debevoise & Plimpton, LLP Partners Retirement Program, I will receive monthly lifetime retirement payments from the firm commencing the month after my retirement. However, within 60 days of my appointment, the firm will make a lump sum payment, in lieu of making monthly retirement payments for the next four years. Within 60 days of my appointment, I also will receive payouts of my interest in the Debevoise & Plimpton LLP Cash Balance Retirement plan and my capital account.”

Yesterday it was widely reported in the business press that Mary Jo White is returning to her former law firm as a partner representing clients who face government investigations. She will also fill the newly created position of Senior Chair of the law firm.

This news is highly significant because it would appear that the U.S. Senate was seriously misled by White’s ethics letter in its deliberations to confirm her as the top cop of Wall Street.

The news is also highly significant because it will mark the fourth time in four decades that Mary Jo White has spun through the revolving doors of Debevoise & Plimpton (where she represented serial law violators) to government service (prosecuting serial law violators). The timeline is as follows:

2002 to 2013: White is a Debevoise & Plimpton partner, representing some of Wall Street’s serially charged banks: JPMorgan Chase, UBS, Bank of America, Morgan Stanley;

1993 to 2002: White is U.S. Attorney for the Southern District of New York (where Wall Street is located);

1990 to 1993: White serves as First Assistant United States Attorney and Acting United States Attorney in the Eastern District of New York;

1983 to 1990: White is litigation partner at Debevoise & Plimpton, where she focuses on white collar defense work, SEC enforcement matters and other corporate work;

1978 to 1981: White works as Assistant United States Attorney in the Southern District of New York, where she became Chief Appellate Attorney of the Criminal Division;

1976 to 1978: White is Associate at Debevoise & Plimpton.

White’s representation in 2013 that she was retiring proved very financially beneficial to her. Her Partners Retirement Program entitled her to receive $42,500 per month or $510,000 per year. But as White writes in her ethics letter, (ostensibly as a gesture toward removing the conflict of receiving ongoing monies from her old law firm), Debevoise was going to give her a “lump sum” for four years of payments, or more than $2 million. The Partner’s plan was unfunded, meaning the law firm had to stay in business to make those payments. Getting a cool $2 million out of harm’s way is a smart financial move. On top of that, White indicated in her ethics letter that she was cashing out of the “Debevoise & Plimpton LLP Cash Balance Retirement plan and my capital account.”

Not only was Mary Jo White a deeply conflicted candidate for SEC Chair but her husband, John White, also represented the big Wall Street banks as a partner at Cravath, Swaine & Moore LLP. Under Federal ethics rules, the conflicts of the spouse become the conflicts of the government employee. None of this persuaded members of the U.S. Senate Banking Committee (many of whom are richly financed in their political campaigns by Wall Street) to reject Mary Jo White’s nomination. The lone dissenter in the Committee’s 21-1 vote was Senator Sherrod Brown, who stated:

“At a time when our Attorney General says that the biggest Wall Street banks are in many ways above the law and the SEC is blocking shareholders’ efforts to break up the banks that they own, we need regulators who will fight every day for taxpayers, Main Street investors, and retirees. But too often we have seen public servants who settle for the status quo, instead of demanding accountability.

“I don’t question Mary Jo White’s integrity or skill as an attorney. But I do question Washington’s long-held bias towards Wall Street and its inability to find watchdogs outside of the very industry that they are meant to police. Mary Jo White will have plenty of opportunities to prove me wrong. I hope she will.”

Mary Jo White did not prove Senator Brown wrong. During her tenure, the long-awaited Consolidated Audit Trail (CAT) failed to get up and running – allowing all of those high frequency traders and Dark Pools on Wall Street to continue to loot the investing public with impunity. White also allowed the big banks to continue their jaded practice of engaging in capital relief trades as her former law firm gushed that the deals could be “effective use of balance sheet capital as banking organizations adjust to the post-crisis regulatory paradigm.”

During White’s tenure, a 25-year veteran trial lawyer at the SEC, James Kidney, retired in March 2014. At his retirement party, he delivered a scathing critique of SEC management. Kidney said that “On the rare occasions when Enforcement does go to the penthouse, good manners are paramount. Tough enforcement – risky enforcement – is subject to extensive negotiation and weakening.” White brought along her Enforcement Chief at the SEC, Andrew Ceresney, from Debevoise & Plimpton. He also returned to the law firm.

By June of 2015, White’s management of the SEC was so problematic that Senator Elizabeth Warren sent her a harsh 13-page critique of her performance. Warren called out White’s failure to finalize rules requiring disclosure of the ratio of CEO pay to the median worker; her continuing use of waivers for companies that violate securities law; the SEC’s continued practice of settling the vast majority of cases without requiring meaningful admissions of guilt; and White’s repeated recusals from investigations because of her prior employment and her husband’s current employment at law firms representing Wall Street.

In February 2015, the New York Times reported that the conflicts of White and her husband had resulted in her recusing herself “from more than four dozen enforcement investigations.” Instead of an SEC Chair, that sounds like a part-time worker.

Given this demoralizing experience with the gold-plated Washington-Wall Street revolving door, one would have expected that President Trump, the man promising to drain the swamp in Washington, to have come up with a better plan for stewardship of the SEC. Instead, Trump’s doubling down. His nominee for SEC Chair is Jay Clayton, a law partner at Sullivan & Cromwell, which has represented Goldman Sachs since the late 1800s. On top of that, Clayton’s wife is a Vice President of (wait for it) Goldman Sachs.

Until there is meaningful legislative reform of political campaign financing and revolving door appointments, Americans will continue to be relegated to the status of dumb tourist in their own country.

 

end

 

The lawsuit has been going on for at least 5 years.  The unsealing of the documents came last night as finally the government sues the largest USA Health Insurer on fraudulent overbilling

(courtesy zero hedge)

Dow Dragged Lower By UnitedHealth After Government Sues Largest US Health Insurer

The Dow Jones “Industrial” Average is suffering one of its worst intraday declines in weeks as a result of a 3.6% drop in UnitedHealth shares, which are sinking on news that the DOJ joined a whistleblower lawsuit against the insurer filed by a former executive claiming the country’s largest health insurer overcharged Medicare hundreds of millions of dollars.

The company denied the allegations, with UnitedHealth spokesman Matthew Burns saying in a statement that “we reject these more than five-year-old claims and will contest them vigorously.”

Alleging insurance fraud, the lawsuit which was filed in 2011 and unsealed on Thursday, claims UnitedHealth Group overcharged Medicare by claiming the federal health insurance program’s members nationwide were sicker than they were, according to the law firm Constantine Cannon LLP. Overnight, the DOJ also joined in allegations against WellMed Medical Management Inc, a Texas-based healthcare company UnitedHealth bought in 2011.

The lawsuit by whistleblower Benjamin Poehling, a former UnitedHealth executive, has been kept under seal in federal court in Los Angeles while the Justice Department investigated the claims for the past five years. Constantine Cannon posted the lawsuit online when it was unsealed on Thursday.  No total damages were specified in the lawsuit.

UNH’s drop is the biggest contributor to the DJIA’s intraday slide, accounting for nearly 80% of the total point loss in the index.

Despite the lawsuit, Wall Street’s sellside analysts – most of whom are bullish on the company – have quickly come to its defense, via Bloomberg

Oppenheimer (Michael Wiederhorn)

  • DOJ claims center on UNH’s efforts to improve coding, date back to 2011
  • While headlines aren’t positive, these processes take a long time and “typically result in manageable settlements”
  • Expects UNH will get past this overhang, sees weakness as buying opportunity
  • Rates UNH outperform, PT $186

Leerink (Ana Gupte)

  • Risk is overblown; recommends buying UNH, Humana, WellCare and other Medicare Advantage (MA) stocks on weakness today
  • Expects Trump administration will favor private MA plans with deregulation and more industry-friendly policies
  • Rates UNH outperform, PT $195

Credit Suisse (Scott Fidel)

  • DOJ joining whistleblower case is negative headline, especially since market has been bullish for prospects for MA under Republican leadership
  • Even so, regulatory scrutiny isn’t new issue and Centers for Medicare & Medicaid Services has said MA revenue should benefit from more accurate risk coding
  • Rates UNH outperform, PT $180

Evercore ISI (Michael Newshel)

  • While DOJ joining case adds to risk, complaint doesn’t have “any particularly damning new evidence”
  • Believes many of coding optimization practices described are common to industry
  • Rates UNH buy, PT $185

 

The unsealed lawsuit is below: (see zero hedge)

 

 

end

 

The Senate confirmed Pruitt.  He has been an very outspoken critic on global warming etc.

(courtesy zero hedge)

EPA Foe Pruitt Confirmed To Lead Agency

The Senate voted to confirm Scott Pruitt, an outspoken critic of Obama-era climate rules, to lead the Environmental Protection Agency – the very agency he has clashed with in the past – ushering in what are likely to be dramatic changes to the agency.

In a 52-46 vote that passed largely along party lines, the Republican-controlled Senate on Friday cleared Pruitt’s nomination to be EPA chief over objections of Democrats who argued he would undermine the agency’s core mission of safeguarding the air and water. All Republicans except Sen. Susan Collins (R-Maine) voted for Pruitt, while all Democrats except Sens. Joe Manchin (D-W.Va.) and Heidi Heitkamp (D-N.D.) voted against him.

The confirmation vote passed despite pleas from Democrats to delay the vote due to ongoing litigation regarding emails that a liberal group had requested from the office of Pruitt, who is currently Oklahoma’s attorney general until he is sworn in as the EPA administrator.

Pruitt is expected to quickly begin work to fulfill President Donald Trump’s vow to eliminate a water pollution rule and the Clean Power Plan that forces states to slash greenhouse gas emissions from electricity generation. Trump is poised to sign directives setting those changes in motion soon after Pruitt is confirmed.

As Bloomberg reports, Pruitt built his political career fighting federal regulations he said stripped power away from states, often confronting the very agency he will now head. As Oklahoma’s attorney general, Pruitt led or joined more than a dozen lawsuits challenging EPA rules governing power plant pollution, carbon dioxide emissions and wetlands.

Pruitt promised senators last month that his “cooperative federalism” approach would not mean an end to nationwide environmental regulation, but rather “meaningful collaboration between the EPA and the states to achieve important environmental objectives.”

 

“The states are not mere vessels of federal will; they don’t exist simply to carry out federal dictates from Washington,” Pruitt said at his confirmation hearing.

Pruitt joined more than two dozen other states in challenging the Clean Power Plan, saying the Obama administration overstepped its authority by establishing statewide goals and giving regulators a variety of ways to meet them. Under a plan he set out in 2014, the regulation would be limited to imposing carbon-cutting mandates on individual power plants, resulting in relatively negligible reductions. Some conservatives want Pruitt to go further and undo the legal underpinning for that regulation: the EPA’s 2009 conclusion that greenhouse gas emissions endanger public health and welfare.

According to the Hill, Republicans said Pruitt will bring much-needed change to an agency that exemplifies eight years of executive overreach by the administration of former President Obama.  “The nominee before us … thinks it’s time for the EPA to get back to the clean air and clean water business instead, and to do so with an appreciation for the complexity of our modern world,” Senate Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor.

Democrats said Pruitt’s record of animosity toward Obama’s EPA — including filing more than a dozen lawsuits to block regulations — shows that he opposes the EPA’s most important functions, and that he is too friendly to the fossil fuel industry. “This Trump administration has nominated as administrator at the EPA a tool of the fossil fuel industry, a man who demonstrably will not take his government responsibilities seriously because he never has,” said Sen. Sheldon Whitehouse (D-R.I.) “He has never taken EPA’s responsibility seriously. He has done nothing but sue them.”

Senate Democrats said Pruitt didn’t provide substantive answers to their questions and rebuffed requests for an assortment of documents – including e-mails and other records of his interaction with agricultural and oil companies – by recommending senators use public records requests to get the material from Oklahoma officials.

As Bloomberg adds, Pruitt joined more than two dozen other states in challenging the Clean Power Plan, saying the Obama administration overstepped its authority by establishing statewide goals and giving regulators a variety of ways to meet them. Under a plan he set out in 2014, the regulation would be limited to imposing carbon-cutting mandates on individual power plants, resulting in relatively negligible reductions. Some conservatives want Pruitt to go further and undo the legal underpinning for that regulation: the EPA’s 2009 conclusion that greenhouse gas emissions endanger public health and welfare.

But the biggest challenge to Pruitt’s changes may come from internal opposition from an agency that had made combating climate change its top priority over the past few years. EPA employees have organized to try to block Pruitt, with current staffers protesting at a rally in Chicago, nearly 800 former employees signing a letter arguing against his confirmation and the union representing agency employees launching an online campaign to “Save the EPA.

“Pruitt’s record and public statements strongly suggest that he does not share the vision or agree with the underlying principles of our environmental laws,” the former employees said in their letter.

Democrats warned that Republicans could pay a political price for backing Pruitt. “Those who vote for this man will own this vote,” said Senator Sheldon Whitehouse, a Democrat from Rhode Island. “This isn’t the end of the story. This is the beginning of the story.”

For now, however, Pruitt has full control. He is set to be sworn in at 5 p.m.

 

end

Trump Destroys Very Fake News, NSA Leaks on Trump the Real Story, Fed Scared to Death

By Greg Hunter On February 17, 2017 In Weekly News Wrap-Ups

The mainstream media (MSM) is in an absolute frenzy over the resignation of Michael Flynn, who was the top national security advisor for the Trump Administration. President Trump says Flynn was forced out because of illegal leaks. In a press conference, Trump told the national media that it was “dishonest” and that CNN’s new name is now “very fake news” instead of simply “fake news.” Trump also said the MSM is “full of hatred” and is biased against him and his administration. Former U.N. Ambassador Michael Bolton says the left is “engaging in collective hysteria because it cannot make substantive arguments” against Trump and his new policies.

Wiki Leaks is charging that Trumps National Security advisor resigned after a “destabilizing campaign by U.S. spies, Democrats and the press.” Trump said the “real story is illegal leaks.” Former Democrat Congressman Dennis Kucinich issued a warning about the leaks and the power of the so-called “deep state,” or secret government. Larry Klayman, founder of Freedom Watch, echoed those concerns. Klayman got an injunction in federal court against the NSA for illegal data collection. Now, Klayman says the leaks within the Trump Administration by the intelligence services are an “outrage beyond imagination and must be stopped.” He also says the “intel agencies are more powerful than the President,” and illegally collected data and phone calls can be used to “blackmail people.”

Gregory Mannarino of TradersChoice.net says the Fed is “scared out of its mind” that people will crash the bond market with a massive selloff. Fed Head Janet Yellen says “economic growth is . . . weak and disappointing,” and yet she is still pushing the ideal of a needed rate hike. Meanwhile, St. Louis Fed President James Bullard recently said there is no need to raise rates, at least through 2017. There are record highs on all stock indexes, and the Fed is not celebrating. Is the Fed keeping a lid on interest rates to prop up the bond market while letting the stock market explode? Mannarino says yes, and it will all end badly. We just don’t know exactly when it will end.

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

(There is much more in the video newscast.)

Video Link

http://usawatchdog.com/weekly-news-wrap-up-2-17-17-greg- hunter/

There is much more in the video newscast.)

(There is much more in the video newscast.)

 

After the Wrap-Up: 

Dane Wigington of GeoEngineeringWatch.org will be the guest interview on the “Early Sunday Release

Well that should do it for this week

I will see you Tuesday night

Monday is a holiday.

H

 

 


FEB 16/Gold advances by $8.30/silver by 11 cents and surpasses big resistance at 18 dollars/Open interest in silver rises to 199,000 plus contracts/South Korea’s court issues an arrest warrant for CEO Lee/Citizens in Greece removing huge amounts of...

Thu, 02/16/2017 - 13:58

Gold at (1:30 am est) $1240.00 UP $8.30

silver was : $18.06:   UP 11 CENTS

Access market prices:

Gold: $1239.40

Silver: $18.10

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 16/17 (10:15 pm est last night): $  1243.46

NY ACCESS PRICE: $1235.60 (AT THE EXACT SAME TIME)/premium $8.06

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1244.06

NY ACCESS PRICE: $1233.80 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  10.26

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London FIRST Fix: Feb 16/2017: 5:30 am est:  $1236.75.75   (NY: same time:  $1237.21   (5:30AM)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Second fix Feb 16.2017: 10 am est:  $1240.55(NY same time: $1240.50 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  1 NOTICE(S) FOR 100 OZ.  TOTAL NOTICES SO FAR: 5125 FOR 512,500 OZ    (15.941 TONNES)

For silver:

 

For silver: FEBRUARY

24 NOTICES FILED FOR 120,000 OZ/

TOTAL NO OF NOTICES FILED: 406 FOR 2,030,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 3,865 contracts UP to 199,203 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  .996 BILLION TO BE EXACT or 142% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 24 NOTICE(S) FOR 120,000 OZ

In gold, the total comex gold ROSE BY  5,018 contracts WITH THE RISE IN  THE PRICE GOLD ($7.80 with YESTERDAY’S trading ).The total gold OI stands at 420,146 contracts

we had 1 notice(s) filed upon for 100 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no change in tonnes of gold at the GLD:

Inventory rests tonight: 843.54 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz

end

.

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

1. Today, we had the open interest in silver ROSE by 3,865 contracts UP to 199,203 AS SILVER WAS UP 8 CENTS with YESTERDAY’S trading. The gold open interest ROSE by 5,018 contracts UP to 420,146 WITH THE RISE IN THE PRICE OF GOLD OF $7.80  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.63 POINTS OR .52%/ /Hang Sang CLOSED UP 112.83 POINTS OR 0.47% . The Nikkei closed DOWN 90.45 POINTS OR 0.47% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed UP at 6.85873/Oil ROSE to 53.39 dollars per barrel for WTI and 56.04 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8451 yuan to the dollar vs 6.85873  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

  REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea Court has issued an arrest warrant for Samsung’s Lee

(courtesy Bloomberg)

END

b) REPORT ON JAPAN

The banks in Japan are having real trouble with profitability due to negative interest rates.  On top of that, they are having a tough time with the B. of J’s communication re their yield curve policy where they are capping the long term rate at 0%.

It seems that the banks in Japan are undergoing Mutiny on the Bounty as they do not trust them one bit.  With a debt to GDP of 250% who could blame them

( zero hedge)

c) REPORT ON CHINA

This is not good:  rumours are circulating that USA ships will not be allowed to pass through the China South seas.

( zero hedge)

4. EUROPEAN AFFAIRS

i)EU

A terrific commentary from Mish Shedlock today.  He comments on the Chatham House poll which suggests that only 20% of Europe approves of the immigration policy of of the EU. The number one problem in France is the violence/chaos/ created by Muslims.  Shedlock suggests that the polls in the upcoming election may have it wrong and that the real support for Le Pen may be much stronger

(courtesy Mish Shedlock/Mishtalk)

 

ii)Germany

Meet the probable new German Chancellor when the elections will be held in Sept/2017

( Bornsdorf/Saxo Bank)

iii)Greece

This should be alarming to the EU.

1.In the last 45 days:2.5 billion euros left the bank

2. from the beginning of the crisis in 2011, 120 billion euros have left the bank system

3. from a report in Nov 2015: in the preceding one yr: 45 billion euros have left the banking system of which 36 billion euros never returned.

Ladies and gentlemen; we have another bank run.  I guess more controls are coming!

( zerohedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Tillerson meets Lavrov.  You can bet that Crimea will be discussed and Russia will no doubt state that this is a non starter:

( zero hedge)

6.GLOBAL ISSUES

none today

7. OIL ISSUES 8. EMERGING MARKETS 9.   PHYSICAL MARKETS

i)Craig Hemke reports that the increase in inflation in the uSA is not sudden at all as the dollar has been depreciating for quite some time

( Craig Hemke/TFMetals)

ii)Agnico Eagle will invest in infrastructure to the too of 1.2 billion dollars in the Canadian Artic:

(COURTESY DANIELLE BOCHOVE/BLOOMBERG)

iii)Seeking alpha is got it right concerning Agnico Eagle.  The stock stumbled today despite increasing reserves as well as indicating that they will hit 2.0 million oz of production by 2020

( seeking alpha)

iv)We have been pointing this out to you already this year:  Chinese holdings of USA treasuries dropping like a stone

( Bloomberg News/GATA)

v)Trading in the physical markets today:  copper and oil booth down due to the world finally perceiving that there is no growth:

(zero hedge)

vi)John Brimelow reports that premiums of 10 dollars per oz is quite prevalent in the Indian gold market indicating robust demand.

Over at the SGE a whopping 162 tonnes of gold was received on Monday.  This is just one day’s report and it is the highest on record. Kranzler comments on the last two trading days with respect to gold as the bullion banks supplied huge quantities of paper gold trying to tame the gold price

 

( Dave Kranzler/IRD)

10.USA STORIES

i)Initial jobless claims raise but still the lowest levels in many years.

( zerohedge)

ii)Housing starts disappoints and this is coupled with a huge rise in building permits (driven by rentals).

( zero hedge)

iii)Another soft data report:  The Philly Fed explodes to a 33 yr high and this is a 10 standard deviation beat:

( zero hedge)

iv)The CEO of insurance giant Aetna claims that Obamacare is in a death spiral because of huge premiums and risk polls are deteriorating.  This is causing insurance companies pulling out of exchanges:

( zero hedge)

v)Maddog Mattis issues his ultimatum to NATO:  Boost military spending  (with contributions coming from NATO countries) or else the USA will cut its support

(courtesy zero hedge)

vi)Maddog rejects any military cooperation with Russia especially in Syria

( zero hedge)

vii)UNBELIEVABLE!!  Wall Street Journal reports that uSA intelligent officials have withheld information from President Trump due to concerns that it could be leaked or compromised.

what on earth is going on in the USA?

( zerohedge)

viii)Trump and Chaffetz are attacking the leakers.  Chaffetz has now requesting a Dept. of Justice probe into the source of the leaks.

( zero hedge)

ix)Your new Labour secretary and the fellow should be an easy confirmation.  However the Donald is still angry on the leaks

( zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 5,018 CONTRACTS UP to an OI level of 420,146 WITH THE RISE IN THE  PRICE OF GOLD ( $7.80 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 110 contracts DOWN to 930.   We had 1 notice(s) served upon yesterday and therefore we LOST 109 contracts or an additional 10,900 oz will not stand for delivery and NO DOUBT THEY WERE CASH SETTLED.   The next non active contract month of March saw it’s OI RISE by 0 contracts REMAINING AT  2022.The next big active month is April and here the OI ROSE by 3038 contracts UP to 275,116.

We had 1 notice(s) filed upon today for 100 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 3,865 contracts FROM  195,338 UP TO 199,203 AS THE PRICE OF SILVER ROSE TO THE TUNE OF 8 CENTS with respect to YESTERDAY’S trading.  We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

The  active month of February saw the OI FALL by 2 contract(s) DOWN TO  148.  We had 26 notice(s) served YESTERDAY so we GAINED 24 CONTRACTS  or an additional 120,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 10,389 contracts down to 80,326 contracts. For comparison purposes last year on the same date only 78,261 contracts were standing.

We had 24 notice(s) filed for 120,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 190,451  contracts which is good.

Yesterday’s confirmed volume was 234,771 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 16/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   96.453 OZ Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz  3215.000 oz JPMorgan No of oz served (contracts) today   1 notice(s) 100 oz No of oz to be served (notices) 929 contracts 92,900 oz Total monthly oz gold served (contracts) so far this month 5125 notices 512,500 oz 15.941 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  207,001.3   oz Today we HAD 1 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1  customer deposit(s):  i) Into JPMorgan 32,150.0000 oz  (1000 kilobars) dubious!! total customer deposits; 32,150.000 oz We had 1 customer withdrawal(s)  i) Out of Brinks: 96.453 oz total customer withdrawal: 96.453 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx For FEBRUARY:

Today, 0 notice(s) were 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(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the FEBRUARY. contract month, we take the total number of notices filed so far for the month (5125) x 100 oz or 512,500 oz, to which we add the difference between the open interest for the front month of FEBRUARY (930 contracts) minus the number of notices served upon today (1) x 100 oz per contract equals 605,400 oz, the number of ounces standing in this  active month of FEBRUARY.   Thus the INITIAL standings for gold for the FEBRUARY contract month: No of notices served so far (5125) x 100 oz  or ounces + {(930)OI for the front month  minus the number of  notices served upon today (1) x 100 oz which equals 605400 oz standing in this non active delivery month of FEBRUARY  (18.830 tonnes)    we lost 109 contracts or an additional 10,900 oz will stand in this active delivery month and these were cash settled which is against comex contract law.         xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx On first day notice for FEB 2016, we had 20.124 tonnes of gold standing. At the conclusion of the month we had only 7.9876 tonnes standing. The data suggests that we had almost identical amounts standing in Feb ’16 and Feb 2017; however today’s totals already surpassed the final amt which eventually stood  in 2016.(already 15.941 tonnes vs 7.9876 at the end of Feb). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2016:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2016: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.9004 tonnes FEB/ 18.830 tonnes total for the 14 months;  244.84 tonnes average 17.488 tonnes per month vs last yr  59.51 tonnes total for 14 months or 4.250 tonnes average per month (last yr). xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 1,416,640.129 or 44.06 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,946,247.917 or 278.26 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.26 tonnes for a  loss of 25  tonnes over that period.  Since August 8/2016 we have lost 76 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 6 MONTHS  76 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE JANUARY DELIVERY MONTH FEBRUARY INITIAL standings  feb 16. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 241,602.134 0z Delaware HSBC Scotia Deposits to the Dealer Inventory nil oz Deposits to the Customer Inventory   1046.024 oz Delaware No of oz served today (contracts) 24 CONTRACT(S) (120,000 OZ) No of oz to be served (notices) 124 contracts (620,000  oz) Total monthly oz silver served (contracts) 410 contracts (2,050,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month   5,911,824.7 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 3 customer withdrawal(s): i) Out of Delaware:  1046.024 oz ii) Out of HSBC: 165,091.93 oz iii) Out of Scotia: 75,464.180 oz TOTAL CUSTOMER WITHDRAWALS: 241,602.134 oz  we had 1 customer deposit(s):  i)Into Delaware:  1046.024 oz ***deposits into JPMorgan have now stopped. total customer deposits;  241,602.134  oz    we had 1  adjustment(s) i) Out of CNT:  499,191.140 oz leaves the dealer and enters the customer account of CNT ii) out of Delaware:  309,695.340 oz leaves the customer and enters the dealer account of Delaware. The total number of notices filed today for the FEBRUARY. contract month is represented by 24 contract(s) for 120,000 oz. To calculate the number of silver ounces that will stand for delivery in FEBRUARY., we take the total number of notices filed for the month so far at  410 x 5,000 oz  = 2,050,000 oz to which we add the difference between the open interest for the front month of feb (148) and the number of notices served upon today (24) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the FEBRUARY contract month:  410(notices served so far)x 5000 oz  + OI for front month of FEB.( 148 ) -number of notices served upon today (24)x 5000 oz  equals  2,670,000 oz  of silver standing for the Feb contract month. This is  huge for a non active delivery month in silver.  We GAINED 24 contracts or an additional 120,000 oz will stand for delivery. At first day notice for the FEB/2016 silver contract month we initially had 515,000 oz standing for delivery.  By the conclusion of the delivery month we had 835,000 oz stand as some of the bankers required immediate silver inventory. END Volumes: for silver comex Today the estimated volume was 84,069 which is huge!!! FRIDAY’S  confirmed volume was 100,877 contracts  which is huge. To give you an idea of volume yesterday’s confirmed volume::  98,547 contracts equates to 504 million oz or 72% of ANNUAL GLOBAL PRODUCTION EX CHINA EX RUSSIA   Total dealer silver:  30.081 million (close to record low inventory   Total number of dealer and customer silver:   183.364 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

FEB 16/we had no changes in the GLD inventory today/Inventory rests at 843.54 tonnes

Feb 15./another deposit of 2.67 tonnes of gold into the GLD inventory despite another attempted whacking of gold/inventory rests at 843.54 tonnes

FEB 14/another deposit of 4.14 tonnes of gold into the GLD inventory/rests at  840.87 tonnes

FEB 13/another deposit of 4.15 tonnes of gold into the GLD/Inventory rests at 836.73 tonnes

Feb 10/no changes at the GLD/Inventory rests at 832.58 tonnes

feb 9/no changes at the GLD/Inventory rests at 832.58 tonnes

Feb 8/another “deposit” of 5.63 tonnes of gold into the GLD/The addition is a paper addition/total inventory: 832.58 tonnes

Feb 7/another huge fake deposit of 8.30 tonnes of gold into the GLD/the addition is a paper addition and no doubt not physical/ total inventory: 826.95 tonnes

FEB 6/a huge deposit of 7.43 tonnes of gold into the GLD/Inventory rests at 818.65 tonnes

FEB 3/no change in gold inventory at the GLD/Inventory rests at 811.22 tonnes

Feb 2/another huge deposit of 1.48 tonnes/inventory rests at 811.22 tonnes

Feb 1/a huge “deposit” of 10.67 tonnes of gold into the GLD/Inventory rests at 809.74 tonnes.  this should stop GLD from sending gold to Shanghai.

JAN 31/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

jan 30/no change in gold inventory at the GLD/Inventory rests at 799.07 tonnes

Jan 27/no changes at the GLD/Inventory rests at 799.07 tonnes

Jan 26/no changes at the GLD/Inventory rests at 799.07 tonnes/

jan 25/another exactly the same withdrawal as yesterday: 5.04 tonnes and again this was used in the whacking of gold today/inventory rests at 799.07 tonnes

jan 24/a huge withdrawal of 5.04 tonnes and probably this was used today in the whacking of gold/inventory rests at 804.11 tonnes

Jan 23/a big change/this time a deposit of 1.19 tonnes of gold into the GLD/inventory rests at 809.15 tonnes.  The drainage of gold from the GLD to Shanghai has now stopped!

Jan 20/no changes in gold inventory a the GLD/Inventory rests at 807.96 tonnes

Jan 19/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 18/no changes in gold inventory at the GLD/Inventory rests at 807.96 tonnes

Jan 17/17/a deposit of 2.96 tonnes of gold/inventory at the GLD rests at 807.96 tonnes.  I guess there is no more gold inventory to sent to C+Shanghai

Jan 13/17/there were no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Feb 16/2017/ Inventory rests tonight at 840.87 tonnes *IN LAST 90 TRADING DAYS: 106.27 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 37 TRADING DAYS: A NET  18.94 TONNES HAVE NOW BEEN ADDED INTO GLD INVENTORY. *FROM FEB 1:    44.47 TONNES HAVE BEEN ADDED.

end

Now the SLV Inventory FEB 16/we had no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz/ Feb 15./no changes in silver inventory at the SLV/inventory rests at 334.713 million oz FEB 14/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz FEB 13/no changes in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 10/no change in silver inventory at the SLV/Inventory rests at 334.713 million oz Feb 9/no changes in silver Inventory rests at 334.713 million oz feb 8/No changes in inventory at the SLV/Inventory rests at 334.713 million oz Feb 7/no change in inventory at the SLV/Inventory rests at 334.713 million oz Feb 6/a we had no changes at the SLV/Inventory rests at 334.713 million oz FEB3/ a tiny withdrawal of 136,000 oz to pay for fees etc/inventory rests at 334.713 million oz Feb 2/no changes in silver inventory at the SLV/Inventory rests at 334.849 million oz Feb 1/a withdrawal of 948,000 oz from the SLV/Inventory rests at 334.849 million oz Jan 31.no change in inventory at the SLV/Inventory rests at 335.797 million oz jan 30/no change in inventory at the SLV/Inventory rests at 335.797 million oz Jan 27/we had a deposit of 758,000 oz into the SLV/Inventory rests at  335.797 million oz Jan 26./ a huge withdrawal of 2.369 million oz from the SLV/Inventory rests at 335.039 million oz Jan 25./another changes at the SLV/Inventory rests at 337.408 million oz jan 24/ a withdrawal of 948,000 oz at the SLV/Inventory rests at 337.408 million oz Jan 23/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 20/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz jan 19/no changes in silver inventory at the SLV/Inventory rests at 338.356 million oz Jan 18/no changes in silver inventory/inventory rests at 338.356 million oz/ Jan 17/no change in silver inventory at the SLV/Inventory rests at 338.356 million oz/ Jan 13/2017/on changes in the SLV inventory/rests tonight at 338.356 million oz/ Jan 12.2017/ no changes in the SLV Inventory/ rests at 338.356 million oz Jan 11/ A HUGE WITHDRAWAL F 2.843 MILLION OZ/INVENTORY RESTS AT 338.356 MILLION OZ/ JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ . Feb 16.2017: Inventory 334.713  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 7.9 percent to NAV usa funds and Negative 7.9% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.1% Percentage of fund in silver:39.7% cash .+0.2%( feb 16/2017)  . 2. Sprott silver fund (PSLV): Premium rises to -.16%!!!! NAV (Feb 16/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.19% to NAV  ( feb 16/2017) Note: Sprott silver trust back  into NEGATIVE territory at -0.16% /Sprott physical gold trust is back into NEGATIVE territory at -0.19%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

Gold Is Undervalued – Leading Money Managers By janskoylesFebruary 16, 2017No Comments
  • Gold is undervalued according to a record number of fund managers
  • Last time gold was considered undervalued, the price surged
  • BAML surveyed 175 money managers with $543 billion in assets under management
  • 34% of investors believe protectionism is the biggest threat to markets
  • Gold viewed as the best protectionist investment by a third of investors

Gold in USD – 10 Years (GoldCore)

For the third time in a decade fund managers surveyed by Bank of America Merrill Lynch (BAML) believe that gold is undervalued. After the last two occasions the price of gold shot up.

The Bank of America Merrill Lynch Fund Managers survey spoke to 175 money managers with $543 billion in assets under management. It provides key indicators each month of those who run and manage the world’s investments. The news that they are buying gold and believe it is undervalued, is worth paying attention to.

As we often mention the status quo amongst money managers is for them to be bearish about gold, regardless of the price and state of the global economy. But this month, a majority of those surveyed (by a net margin of 15%) believe that gold is a buy, something that hasn’t been seen since January 2009 and January 2015.

As Brett Arends writes on Marketwatch, this is significant:

“The latest survey opinion is of more than passing interest. These guys typically do not hold gold in their portfolios. Indeed, to buy some, most of them will have to go through investment committees, which takes weeks or months. But if they are interested, and they stay interested, that will presumably drive more demand for gold as an investment in the months ahead.”

But why are they only interested now, what has them running for gold and what does this mean for gold investors?

Inflation, stagflation and protectionism

The interest in gold comes from two parts.

Firstly the clear risks on the horizon. Namely stagflation, inflation and protectionism. As well as rising interest rates and potential conflict (trade and otherwise) around the world. The second part is our increasingly familiar friend, uncertainty.

This may come as a surprise given the boost to economic projections thanks to Trump’s win. But even an initial enthusiast of Trump’s policies Ray Dalio, head of the world’s biggest hedge fund, Bridgewater Associates, has since changed his mind. In a recent letter to clients he explained:

“Nationalism, protectionism and militarism increase global tensions and the risks of conflict. For these reasons, while we remain open-minded, we are increasingly concerned about the emerging policies of the Trump administration.”

In the BAML survey, fund managers are optimistic about the macro outlook, with 23% saying they expect a “boom” compared to 1% one year ago but when it comes to the fundamentals things don’t look so good, with 43% saying they expect “secular stagnation”.

36% said European elections raising disintegration risk were the biggest tail risk closely followed by a trade war (3%) and a crash in global bond markets (13%).

The most likely bear market catalyst according to 34% of respondents was protectionism, followed by higher rates (28%) and a financial event (18%).

So whilst things might be looking rosy at the moment, the future is making investors’ nervous. It is the uncertainty surrounding these potential events, not knowing what specifically they will be, what they will impact and when they might happen that adds to list of unknown uknowns that we were talking about earlier this week.

Trump trade could take you too close to the Sun

Staying too positive about Trump’s impact on the US and wider economy has lead some to issue warnings. Michael Hartnett the chief investment strategist at BAML and his team wrote of the Icarus trade, earlier this year.

“Our tactical view: after a Jan/Feb wobble, we believe stocks & commodities will have one last 10% melt-up in H1. Call it the ‘Icarus trade.’ The current melt up, which started back in Feb 2016, will be followed by a meltdown later in ‘17,” they wrote.

For those who need reminding Icarus was the son of Daedalus. When his father made him some wings held together by wax he was warned not to fly too close the sun, but Icarus ignored his father’s warnings and did just that. His wings melted and he plunged back to earth.

The decision by fund managers to go long gold is a reflection of this Icarus trade. These investors are buying gold as a form of insurance. In the same way that we should have insurance for our homes or cars but we just cannot predict the future, investors are now appreciating gold will do well when financial and political upheaval unexpectedly take a turn for the worst. However, this is a short-term perspective and many are saying that these fund managers are not looking at gold in the long-term, playing a crucial role in their portfolios.

Big money gets into gold

The news that fund managers are getting into gold should really come as no surprise, we have brought you multiple stories of wealthy investors, fund managers and family offices diversifying into gold.

In June 2016, gold accounted for 8% of the £2.8 billion portfolio managed by Rothschild’s investment house RIT Capital Partners.

Reasons for the portfolio allocation were given as

‘”The six months under review have seen central bankers continuing what is surely the greatest experiment in monetary policy in the history of the world. We are therefore in uncharted waters and it is impossible to predict the unintended consequences of very low interest rates, with some 30 per cent of global government debt at negative yields, combined with quantitative easing on a massive scale. In times like these, preservation of capital in real terms continues to be as important an objective as any in the management of your company’s assets.”

More recently we reported on Stanley Druckenmiller buying gold in late December and January, having sold on the night of the election claiming that “all the reasons I owned it for the last couple of years seem to be ending”.

However since then Druckenmiller has bought gold back seemingly because he too believes it is currently undervalued,  he “wanted to own some currency and no country wants its currency to strengthen…Gold was down a lot, so I bought it.”

And just this week we brought an interview with Jim Rogers to you in which he warned investors to “Get prepared” as “we’re going ‘to have the worst economic problems we’ve had in your lifetime or my lifetime’. With this in mind he is holding onto gold and silver and is accumulating bullion on dips, looking to ‘own more’.

Conclusion: unconventional appeal of gold as insurance

Despite the apparent support of some investment managers this is seen as very much short-term and gold is still not seen as a conventional investment.

Coverage of this most recent BAML survey has picked up on this rekindled love for gold and generally writes that the metal is being bought as an insurance policy, as opposed to a key investment ‘mainstay’.

This idea suggests that there are times when it isn’t necessary to have gold in your portfolio.

The approach of the fund managers seems a funny way to look at things when you consider the long-term appeal and strength of the gold price. In the short-term the price does well during periods of declining confidence, as we are seeing now but in the long-term having an allocation to gold to gold in your portfolio has been shown to benefit the long-term performance, as we have written about in our investment guides.

These money managers who are now investing in gold as a sort-of short term insurance are certainty looking at things from a narrow focused perspective. This is something that Doug Kass drew our attention to earlier this year.

Kass quoted Howard Marks who wrote:

“First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in: ‘The outlook for the company is favorable, meaning the stock will go up.’

However, Kass writes that to be good investors we need to engage in ‘second-level thinking’ which is ‘deep, complex and convoluted…The second-level thinker takes many things into account:’

Few assets seem to generate as much controversy as gold when it comes to mainstream investors and the media. Many like to point to Warren Buffet who argues that we just dig it out of the ground in order to store it in another hole in the ground. Critics like to argue that it offers no yield, no dividend, and is difficult to value according to modern financial theory.

Yet, interest in what is happening with the gold price and who is buying gold will always be covered by the mainstream. There is in an innate fascination with gold, but the majority only turn to it when it seems there is an obvious reason for it to climb.

The reason gold has survived so many years and performed so well is because there is no such thing as an intrinsic value calculation – too many elements feed into the gold price, and most of them are unknown until they occur. Hence why it performs so well during times of uncertainty.

Gold is money. It is a borderless currency that cannot be inflated, devalued or controlled by central bankers and politicians. Contrast that to the likes of the US dollar (and indeed the euro or sterling) which can fall victim to all of those things, and given Trump’s comments on the strong dollar, perhaps more than we have ever seen before.

Gold is undervalued at present and will no doubt benefit from the bullishness of these money managers. However it is not just undervalued and worth buying because people fail to appreciate the impact of protectionism, stagflation and inflation.

It is undervalued for many reasons, the main one is the lack of understanding of gold as a proven safe haven asset and of how well it performs during times of uncertainty.

 

http://www.goldcore.com/us/gold-blog/gold-undervalued-leading-money-managers/

 

end

 

Craig Hemke reports that the increase in inflation in the uSA is not sudden at all as the dollar has been depreciating for quite some time

(courtesy Craig Hemke/TFMetals)

 

 

TF Metals Report: Inflation’s ‘sudden’ onset isn’t sudden at all

Submitted by cpowell on Wed, 2017-02-15 20:39. Section:

3:40p ET Wednesday, February 15, 2017

Dear Friend of GATA and Gold:

Inflation is not suddenly surging, as the financial establishment wants people to believe, but has been rising steadily all along as the U.S. dollar has been depreciating. That’s today’s commentary from the TF Metals report, headlined “The Sudden Onset of Inflation,” posted here:

https://www.tfmetalsreport.com/blog/8163/sudden-onset-inflation

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

 

END

 

Agnico Eagle will invest in infrastructure to the too of 1.2 billion dollars in the Canadian artic:

 

 

(COURTESY DANIELLE BOCHOVE/BLOOMBERG)

Agnico plans to invest $1.2 billion in gold projects in Canada’s north

Submitted by cpowell on Thu, 2017-02-16 02:09. Section:

By Danielle Bochove
Bloomberg News
Wednesday, February 15, 2017

Agnico Eagle Mines Ltd. plans to invest more than $1.2 billion in Canada’s subarctic in the next three years as it builds one new mine and expands another.

North America’s fourth-largest gold miner by market value is moving ahead with plans to develop its Meliadine project and a deposit near its Meadowbank mine in Nunavut, the company said today in its fourth-quarter earnings statement. The decision will boost Agnico’s gold production to 2 million ounces a year by 2020, about 20 percent more than last year’s output of 1.66 million ounces.

“This is very much low-risk, high-quality growth because it’s an extension of what we’ve been doing for the last many, many years,” Chief Executive Officer Sean Boyd said in an interview at the company’s Toronto offices. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-02-15/agnico-to-invest-1-2-

 

END

 

Seeking alpha is got it right concerning Agnico Eagle.  The stock stumbled today despite increasing reserves as well as indicating that they will hit 2.0 million oz of production by 2020

 

(courtesy seeking alpha)

Agnico Eagle: The Future Is Bright About: Agnico Eagle Mines Limited (AEM)

Long only, gold & precious metals, oil & gas, contrarian Summary

Agnico Eagle recently reported its Q4 2016 and full-year 2016 financial results.

I didn’t think it was the best quarter, as Agnico’s cash flow fell compared to last year.

However, Agnico is forecasting strong production growth to 2020, with an expected reduction in cash costs. Net debt was also reduced quite a bit in 2016.

I think Agnico is a solid gold miner, but are shares a buy here?

Agnico Eagle Mines: Mixed Q4 Results, But the Future is Bright

AEM data by YCharts

Agnico Eagle Mines (NYSE:AEM) reported its fourth-quarter and full-year 2016 financial results Wednesday evening, and overall, I thought it was a mixed quarter. Still, there is a lot to be excited about as Agnico is forecasting pretty strong production growth and falling cash costs based on its four-year guidance. Here, I break down Agnico’s earnings report and give my updated thoughts on the stock.

Previously, I covered Agnico following the company’s Q2 2016 financial results. At the time, I praised Agnico’s strong earnings and its net debt reduction, as well as the 25% bump in the dividend. However, I felt shares were a little overvalued at the time, and shares were trading near 2012 prices of $55 per share. So I recommended holding off on buying shares and waiting for a pullback.

That turned out to be the right call. Since that article on July 28, 2016, Agnico has declined to the current stock price of $48.22, a 12.59% decline (the right time to buy would have been in early December, when shares traded at a low of $37).

Well, Agnico just released its quarterly earnings for Q4 2016, and it was a mixed quarter in my opinion. According to Seeking Alpha, Agnico earned $.02 EPS, which missed estimates by $.06; revenue of $499.21 million was a 3.4% improvement from last year, but missed estimates by $13.83 million.

Production in Q4 was 426,433 ounces of gold, in-line with Q4 2015 production of 422,328 ounces. Total cash costs were essentially unchanged at $552 per ounce. Net cash provided by operating activities was $120.6 million in Q4, compared to $140.7 million last year, which was disappointing in my view.

For the full-year 2016, however, things look a bit better.

For the fifth consecutive year, Agnico says its annual gold production has exceed its annual guidance. The company’s production for the full year 2016 was 1,662,888 ounces of gold, compared to guidance of 1.6 million ounces. Total cash costs per ounce for the full year 2016 were $573, which was below guidance of between $580 and $620; AISC for 2016 was $824 per ounce, below guidance of between $840 and $880.

Finally, Agnico ended the year with a solid balance sheet, with its net debt reduced by $346 million to $666 million in 2016. That’s one of the lowest net debt balances among the major gold producers. Agnico has $548 million in cash, cash equivalents, and short-term investments, and has $1.2 billion available in an undrawn credit line.

When you look at Agnico’s four-year production and cash cost guidance, things look even better. By 2020, Agnico expects to produce 2 million ounces of gold, a 30%+ increase from current levels. Meanwhile, Agnico expects lower capital expenditures and lower AISC by 2020 as the Meliadine and Amaruq project have been approved for construction; Amaruq is expected to start up in Q3 2019, while production at Meliadine is forecast to begin a year earlier than previously expected, in Q3 2019. The company is guiding for 2020 AISC to fall below the low-end of 2017 guidance of $850 per ounce.

In conclusion, this certainly wasn’t a great quarter by any means, as Agnico produced lower cash flow and missed revenue and earnings estimates. However, for the full-year 2016, Agnico hit its targets and had a pretty strong year. Looking forward to 2020, Agnico has a strong internal growth plan with its two new projects just approved, and a solid balance sheet to support this growth.

While Agnico didn’t crack my top 10 gold stocks to own in 2017, I think it is still one of the best managed companies among the senior miners, and should outperform peers in the future. Shares are down in after-hours trading by 2.4% due to the earnings miss. I think this could be a decent buying opportunity for long-term investors. I’d prefer to buy shares under $45 personally. So I think investors should exercise some patience and wait for a better buying opportunity, or perhaps initiate a small position here and then dollar-cost average on any dips.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

END

We have been pointing this out to you already this year:  Chinese holdings of USA treasuries dropping like a stone

(courtesy Bloomberg News/GATA)

China’s holdings of Treasuries dropped in 2016 by most on record

Submitted by cpowell on Thu, 2017-02-16 00:40. Section:

By Sarah McGregor and Andrea Wong
Bloomberg News
Wednesday, February 15, 2017

China’s holdings of U.S. Treasuries declined by the most on record last year, as the world’s second-largest economy dipped into its foreign-exchange reserves to buttress the yuan. Japan, America’s largest foreign creditor, trimmed its holdings for a second straight year.

A monthly Treasury Department report released in Washington today showed China held $1.06 trillion in U.S. government bonds, notes, and bills in December, up $9.1 billion from November but down $188 billion from a year earlier. It was the first monthly increase since May.

The People’s Bank of China, owner of the world’s biggest foreign-exchange reserves, has burned through a quarter of its war chest since 2014 in an effort to underpin the yuan and deter capital from fleeing the country. Chinese sales have made borrowing more costly for the U.S. government: 10-year yields rose to 2.6 percent last year, from as low as 1.3 percent. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-02-15/china-s-holdings-of-t…

 

END

 

John Brimelow reports that premiums of 10 dollars per oz is quite prevalent in the Indian gold market indicating robust demand.

Over at the SGE a whopping 162 tonnes of gold was received on Monday.  This is just one day’s report and it is the highest on record. Kranzler comments on the last two trading days with respect to gold as the bullion banks supplied huge quantities of paper gold trying to tame the gold price

(courtesy Dave Kranzler/IRD)

U.S. Political Crisis Foments While China & India Devour Gold February 16, 2017Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , ,

The demand for gold in India and China so far this year has soared, a fact which is completely ignored by the western financial media. The ex-duty Indian gold import premiums (approximately $10 earlier this week) are quite remarkable, “as the need to import kilo bars only arises if Indian demand is not satisfied by Dore imports (which had a duty advantage of $15.52/oz this afternoon) and smuggled gold. Reports of apprehensions at Indian airports are continuing to appear, indicating that smuggling has in fact revived” – John Brimelow’s Gold Jottings, brimelowgoldjottings@gmail.com).

Brimelow also reported that 162 tonnes of gold were delivered into into Shanghai Gold Exchange on Monday this week, preceded by 79 tonnes on Friday. The Friday delivery is the largest by far that I’ve observed in watching this statistic over the last several years.

While the eastern hemisphere is busy converting fiat currency into physically delivered gold, the United States political system is becoming increasingly unstable and unpredictable, as the Trump White House, in an effort to repair the frayed relations with Russia, is under systematic attack from the Deep State.  Trump’s erratic leadership combined with the Deep State’s political terrorism will likely spark political and social chaos in the U.S.

The relentless buying strength of physical gold in the east along with the incipient instability of the U.S. are fundamental catalysts to drive the price of gold and silver a lot higher.  Furthermore, the emergence of accelerating price inflation thrown into the mix has the potential to create the “perfect storm” for higher precious metals prices.

In an earlier post I explain why now is the time to use the manipulated paper gold price take-downs as buying opportunities.  This viewpoint was vindicated during the two-day Fed Chairman staged Congressional propaganda event, which historically is a period  in which the banks slam the gold market with tonnes of paper gold in order to prevent the price of gold from signaling a message that conflicts with the economic and financial fairytale artfully spun by the Fed-head (or not so artfully, as it were, in Yellen’s case).

Gold was slammed nearly $20 just prior to and during Yellen’s hot air exhalation sessions on Capitol Hill on Tuesday and Wednesday.  The catalyst was a series of paper gold volume surges on the Comex in which the NY Fed and its agent bullion banks drop a payload of gold futures on both the Comex floor and into the CME Globex trading system, targeting the stop-losses set by hedge funds that are long gold contracts.  This detonates an avalanche of selling by momentum-chasing hedge fund algos.

Subsequent Yellen’s freak show on Capitol Hill, gold promptly defied the paper market deviance and shot up $21 to a new year-to-date high.  If the deteriorating economic fundamentals manage to chew through the safety-net that has been placed beneath the stock market, a real rush into gold – physical and derivative – will be triggered.   In the meantime, the nature of the precious metals trading has shifted from shorting rallies and covering those shorts on sell-offs to buying dips and selling rallies.   Eventually the hedge fund algos will be programmed to buy dips and aggressively buy rallies.  That’s when the real fun begins, especially in the junior mining stocks…

 

end

 

Trading in the physical markets today:  copper and oil booth down due to the world finaly perceiving that there is no growth:

(zero hedge)

Growthiness Hope Fades: Copper, Crude Clubbed To One-Week Lows

If everything is so awesome in the world, why are Copper (who appears only to be an Economics PhD when it is rising in price) and Oil prices tumbling (despite a lower dollar)?

It seems yesterday’s algo panic bid after record inventory data has been erased…

As Bloomberg also points out, Spreads still show glut:

The shortest-term oil prices show that an oversupply endures. The nearest Brent and West Texas Intermediate contracts remain in a structure known as contango, which typically occurs when there is too much supply, depressing short-term prices. While the market remains in contango, it is costly for traders to hold on to oil contracts from one month to the next, diminishing the profits of those speculatively betting on rallies. JBC sees no global reduction so far in inventories, although it’s still just six weeks since OPEC and its allies started to implement their cuts.

And don’t forget, spec positioning is all one way…

And all that China hype, supply anxiety, has collapsed in copper…

 

Maybe Copper and Crude have lost their economic vision?

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 STRONGER AT  6.8573(SMALL REVALUATION NORTHBOUND   /OFFSHORE YUAN NARROWS   TO 6.8451 / Shanghai bourse UP 16.63 POINTS OR .52%   / HANG SANG CLOSED UP 112.83 POINTS OR 0.47% 

2. Nikkei closed DOWN 90.45 POINTS OR 0.47%   /USA: YEN FALLS TO 113.58

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index FALLS TO  100.69/Euro UP to 1.0644

3b Japan 10 year bond yield: RISES TO    +.099%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 113.58/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.39  and Brent: 56.04

3f Gold UP/Yen UP

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“HELICOPTER MONEY” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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 10yr bund FALLS TO  +.365%/Italian 10 yr bond yield DOWN  to 2.201%    

3j Greek 10 year bond yield RISES to  : 7.78%   

3k Gold at $1236.90/silver $18.04(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 2/100 in  roubles/dollar) 57.19-

3m oil into the 53 dollar handle for WTI and 56 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 113.52 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0002 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0648 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.371%

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

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

4. USA 10 year treasury bond at 2.477% early this morning. Thirty year rate  at 3.071% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Futures, European Shares Stumble After Massively Overbought World Stocks Hit Record High

Whether it is due to overnight news that much of the recent rally may have been due to one specific fund’s “gamma trap” and rapid cover of a synthetic “short SPY” trade, or just because algo traders have gotten a case of overbought robotic vertigo, S&P futures dropped 0.2% in early Thursday trading as risk appetite fizzled and European shares dropped on concern the longest rally since July 2015 went too far, while the yen, bonds and gold advanced as the dollar fell.

Europe’s Stoxx 600 declined, snapping a seven-day rally with Nestle SA dropping by the most this year after saying it will target lower growth. The dollar depreciated against G10 peers even as traders increased bets for higher U.S. interest rates following faster-than-expected U.S. inflation.

Despite the early weakness in US futures, world stocks hit an all time high on Thursday on renewed growth expectations and hopes that major economies like the United States will soon be serving up large helpings of fiscal stimulus: in this regard China has already done its share injecting a record $540 billion in credit last month. MSCI’s All Country World index, which spans 46 countries, notched the milestone as Wall Street hit its latest record and Asia and Europe consolidated the roughly 10 percent gains both have made since mid-December.

As showed on Valentine’s Day, global stocks have jumped in value to more than $70 trillion after Trump’s November victory. As further discussed, the 30-day relative strength index for the MSCI broadest measure of global equities crossed a level that indicates to some traders its due for a correction. The odds for a U.S. rate hike in March jumped to 42 percent from 30 percent two days ago.

“Following the sharp rally we’ve seen in cyclical shares since early November, investors are now getting reluctant to just buy whole sectors such as mining and banks, and are starting to pick the best stocks within the sectors,” Stephane Ekolo, chief European strategist at Market Securities, in London. “These stocks will prove more resilient when the selloff comes.” This despite strong economic data reports which showed surges in exports from Indonesia and Taiwan, falls in unemployment in Europe from Sweden to the Netherlands while stronger U.S. retail sales and inflation data on Wednesday came as Donald Trump again promised mass tax cuts.

Another reason for the upbeat mood has been that, unlike in recent years, the prospect of U.S. interest rate rises does not seem to be spooking markets. While monetary policy has taken a back seat to Trump’s fiscal promises, overnight Fed’s Dudley (Voter, Dove) stated the Fed would end bond reinvestments and reduce Fed portfolio when they are confident the economy can withstand it and added reducing the balance sheet could stretch out the rate hike path. Dudley also commented the economy is growing slightly above trend and that he expects Fed to raise rates gradually a little further in the months ahead if forecasts pans out.

The dollar is still down for the year despite a strong run over the last couple of weeks, while Treasury yields, have barely risen, which has helped propel emerging market bonds, stocks and many currencies higher. As Reuters notes, the dollar hit the brakes again on Thursday as the glow of the previous day’s upbeat data faded. U.S. government bond yields eased too, taking German Bunds and Europe’s other benchmarks with them. Upcoming elections in the Netherlands, France, Germany and possibly Italy, have kept investors interested in “safe” government bonds particularly with anti-euro and anti-EU sentiment on the increase throughout the continent.

Overnight oil prices recovered from a knock from data showing record high U.S. crude and gasoline inventories. Brent and U.S. crude both inched up 0.3 percent to $55.92 and $53.28 a barrel respectively, while gold prices also rose as the dollar drifted down. Industrial bellwether copper, which has surged 30 percent since late October, eased however to $6,028 a tonne after China’s overseas investment weakened. China is the world’s top copper user, but prices were supported by the prospect of supply disruptions in Chile and Indonesia.

The mildly weaker metals prices meant European shares couldn’t quite hold their ground either despite the sentiment boost from the new record high in global stocks. The STOXX 600 index was 0.3% lower by 1000 GMT – the first decline since Feb. 6, with only technology, healthcare and telecommunications shares eking out gains –  but this year’s rally has been underpinned by the fact European company earnings are expected to grow 14% this year, according to Thomson Reuters I/B/E/S data.

Asia had no such problems overnight. MSCI’s main Asia index rose 0.2 percent to its highest since July 2015 after Wall Street had again pushed relentlessly into record-high territory. Chinese shares traded in Hong Kong continued a rally and the Hang Seng climbed to the highest since August 2015.  The MSCI Asia Pacific Index added 0.5%, though more stocks fell than rose.

* * *

Overnight Bulletin Summary from RanSquawk

  • European equities trade modestly lower this morning with energy the notable laggard, while defensive sectors such as healthcare outperform
  • Further losses suffered in the major USD pairings, with reports of China selling 1yr CNH setting the flow  theme for the day
  • Highlights include: US Jobless Claims, Philadelphia Fed Manufacturing Index, ECB Meeting Minutes and comments from ECB’s Coeure

Market Snapshot

  • S&P 500 futures down 0.2% to 2,347.00
  • STOXX Europe 600 down 0.3% to 370.26
  • German 10Y yield unchanged at 0.372%
  • Euro up 0.3% to 1.0635 per US$
  • Brent Futures up 0.3% to $55.92/bbl
  • Italian 10Y yield rose 0.9 bps to 2.242%
  • Spanish 10Y yield fell 1.2 bps to 1.671%
  • MXAP up 0.5% to 145.19
  • MXAPJ up 0.4% to 467.88
  • Nikkei down 0.5% to 19,347.53
  • Topix down 0.2% to 1,551.07
  • Hang Seng Index up 0.5% to 24,107.70
  • Shanghai Composite up 0.5% to 3,229.62
  • Sensex up 0.5% to 28,307.33
  • Australia S&P/ASX 200 up 0.1% to 5,816.31
  • Kospi down 0.1% to 2,081.84
  • Brent Futures up 0.3% to $55.92/bbl
  • Gold spot up 0.3% to $1,237.83
  • U.S. Dollar Index down 0.4% to 100.73

Top Global Headlines

  • China Said Mulling Coal Mining Curbs Again as Winter Ends
  • German Steel Lobby Group Warns Against Further U.S. Measures
  • GM, PSA Lose Europe Market Share as Carmakers Mull Regional Deal; German Economy Minister to Discuss Opel With French Counterpart
  • Cisco Says Improved U.S. Economy Bolstering Corporate Demand
  • Nestle Braces for Slowdown as New CEO Plans Restructuring
  • Snap Said to Set IPO Valuation at as Much as $22.2 Billion
  • Trump’s F-35 Calls Came With a Surprise: Rival CEO Was Listening
  • Trump Tax Cuts Could Boost Profit $12 Billion at Big U.S. Banks
  • Dakota Access Approval Seals $2 Billion Deal for Energy Transfer
  • CBS Sales Dragged Down by Fewer Games; Profit Tops Estimates

Asian stocks traded mostly positive following another record day on Wall St. where all three US majors printed fresh all-time highs once again following strong US data and President Trump reiterating that his tax plans would involve reducing taxes for businesses. ASX 200 (+0.1%) closed relatively flat as upside was capped by the telecoms sector after a lacklustre H1 profit report from Telstra, while Nikkei 225 (-0.5%) underperformed after USD/JPY pulled back from recent gains to a sub-114.00 level. Elsewhere, Shanghai Comp (+0.5%) and Hang Seng (+0.5%) outperformed their regional peers after the PBoC more than doubled its liquidity injection today. Finally, 10yr JGBs saw mild losses despite a negative risk tone in Japan with underperformance in the super-long end following an enhanced liquidity auction for 20yr, 30yr and 40yr JGBs which showed an increase in allotment at the highest accepted spread.PBoC injected CNY 80bIn 7-day reverse repos, CNY 80bIn in 14-day reverse repos and CNY 90bIn in 28-day reverse repos.

European markets trade modestly lower this morning with energy the notable laggard, while defensive sectors such as healthcare outperform. Elsewhere, airlines are flying high this morning, with the likes of IAG and Lufthansa the best performers in their respective indices, in sympathy with Air France after a strong earnings report. Fixed income markets were initially subdued with participants waiting on the sidelines ahead of supply from both France and Spain. Spanish paper moved higher in the wake of the solid auction once the supply had been absorbed whilst their French counterpart was somewhat unfazed by this morning’s auction. Of note, with French elections very much in focus, Presidential candidate Fillon will continue to be investigated according to prosecutors, although little reaction was seen to this in the GE/FR 10Y spread.

In currencies, the dollar dropped with losses suffered in the major USD pairings, with reports of China selling 1yr CNH setting the flow theme for the day. Moves have been exacerbated by the aggressive USD buying off the back of a hawkish Fed chair testimony, backed up by strong US inflation and retail sales date out Wednesday. The reversal was pretty rapid, and although continuing this morning, may run out of steam as UST yields hold their ground. Fed rhetoric suggests the FOMC is moving towards 3 rather than 2 rate hikes this year, USD dip buyers will be happy to accommodate these latest moves. USD/JPY has dropped back into the mid 113.00’s as EUR/USD tests the mid 1.0600’s. If the latter can hold above 1.0615-20 tonight, the USD correction may have more to go. Cable has also benefited from this latest USD fall, with the spot rate taking out 1.2500, but upside set to be limited as the latest jobs report suggests a greater negative impact from rising inflation. This will pale into insignificance at the mere mention of triggering Article 50, and sellers will pounce on GBP rallies into end Q1, though the EUR/GBP picture is muddied by the political tensions across Europe.

In commodities, in light of the recent comments from OPEC that production cuts have followed last year’s agreement to a larger degree (over 90% at last measure), as well as the inexplicable buying algos which appears 15 minutes after the DOE report, the rise in inventories is having minimal impact on Oil prices of late, with hopes that these will be addressed on the pass through effects further down the line. As such, WTI remains well camped inside the USD50-55 range, and unless we break out of these limits, Oil prices will stay out of the limelight. Notable gains in Gold prices as the yellow metal pulls back to USD1240.00 — this as a pure impact of the USD sell off which has had a marginally positive impact on Oil but perhaps less so on base metals. Copper prices have balanced out a little, with marginal losses on the day in the likes of Zinc and Lead, but base metals set to stay on a firm footing as China demand is forecast to continue.

Looking at the day ahead in the US we’ll get January housing starts and building permits data (expected to print at 0.0% mom and +0.2% mom respectively), initial jobless claims and the Philly Fed manufacturing survey for February. Away from the data we’re due to hear from both the EU’s Juncker and Moscovici at various stages, while the ECB’s Coeure speaks this afternoon and Fed’s Fischer and Williams also.

* * *

US Event Calendar

  • 8:30am: Housing Starts, est. 1.23m, prior 1.23m; MoM, est. 0.0%, prior 11.3%
  • 8:30am: Building Permits, est. 1.23m, prior 1.21m; MoM, est. 0.16%, prior -0.2%
  • 8:30am: Initial Jobless Claims, est. 245,000, prior 234,000; Continuing Claims, est. 2.05m, prior 2.08m
  • 8:30am: Philadelphia Fed Business Outlook, est. 18, prior 23.6
  • 9:45am: Bloomberg Consumer Comfort, prior 47.2; Bloomberg Economic Expectations, prior 56

DB’s Jim Reid concludes the overnight wrap

Treasuries have been playing snakes and ladders over the last few weeks as as soon as we’ve got to the top of the recent yield range we’ve rallied hard. Well yesterday the stronger US data (especially CPI – see below) saw USTs back up near to the top of their 2017 range only a week after being near the bottom of it. Indeed the 10y closed up another 2.3bps yesterday at 2.493% having touched 2.324% just over a week ago. That’s feeding through into Fed pricing too and it’s hard to ignore the recent jump in the probability of a March hike now which, based on Bloomberg’s calculator, is up to 44% from just 28% last Friday (and a 25%-35% range for much of this year). There’s been a lot of chatter from Fed officials recently and also Yellen’s testimony where she kept the possibility of a March move open. Our US economists still peg the June FOMC meeting as the most likely timing. Still, it’s been a fairly significant shift this week.

Meanwhile the incredible surge for equity markets also continues to hog the spotlight. Yesterday was another day of record highs for the big 4 US indices with the S&P 500 (+0.50%), Dow (+0.52%), Nasdaq (+0.64%) and Russell 2000 (+0.54%) all up as US Banks surged to a +1.23% return. Just on the S&P, yesterday’s move was the 7th day in a row that the index has finished up which is the longest run since September 2013 when the index also closed up 7 times on the trot. You have to go back to July 2013 to find the last time the index was up 8 days in a row. The other remarkable stat is the last time the index closed with a move up or down by more than 1%. That run now stands at 47 consecutive sessions (the last time was December 7th). April to July 2014 was the last time we had a longer run – at 62 days in a row – so there is still some way to go to match that. In fact yesterday also saw global equities (based on the MSCI all-country world index) rally +0.57% and in turn record a new fresh record high after overtaking the previous highs from May 2015. We’ve run a chart of that index going back a couple of decades which you can find in the PDF. Also of note, yesterday there was a rare recent double digit surge for the VIX (+11.45%) which is only the second double-digit rise since November last year. That said it doesn’t take away from the fact that the index is still stuck in the midst of what is just a 4.7pt range (based on intraday values) in 2017. Finally it’s worth noting that the Greenback (-0.07%) finally snapped what had been a run of 10 consecutive daily gains.

Coming back now to that CPI data in the US yesterday which followed some higher prints in Europe earlier this week. Headline CPI came in at a higher than expected +0.6% mom (vs. +0.3% expected) which had the effect of increasing the YoY rate to +2.5% from +2.1% and to the highest since March 2012. The core reading also came in a bit above market at +0.3% mom (vs. +0.2% expected), helped by rising goods prices, which pushed the YoY rate up one-tenth to +2.3% and so matching the post financial crisis high. So fairly impressive all round. As we refresh our screens the momentum for equities seems to have faded a bit in Asia this morning. While Chinese bourses have risen (Shanghai Comp +0.19%, CSI 300 +0.36%) along with the Hang Seng (+0.36%), Japanese equities are struggling for traction (Nikkei -0.57%) – not helped by the Yen (+0.28%) being the best performing currency this morning – while the Kospi (-0.10%) and ASX (-0.08%) are also both down, albeit modestly. Elsewhere the Dollar (-0.21%) and Treasury yields (10y yield -1.3bps) are a both a bit lower despite NY Fed President Dudley saying overnight that he expects the Fed to “snug up interest rates a little further in the months ahead”.

Moving on and there wasn’t a huge amount to report from President Trump’s meeting with a number of big US retail CEO’s yesterday. According to Reuters there was plenty of discussion about potential tax code revisions as well as infrastructure improvements, while a few CEO’s were said to have urged the President to oppose a proposal for a new border tax on imported goods. That meeting actually came after some bumper retail sales numbers in the US yesterday. During the month of January headline retail sales rose +0.4% mom (vs. +0.1% expected) while there was also a sizeable four-tenths of a percent upward revision to the December data. The ex-auto and gas reading also beat (+0.7% mom vs. +0.3% expected) as did the control group component (+0.4% mom vs. +0.3% expected).

It wasn’t all good news on the US data front yesterday though with industrial production reported as surprisingly falling in January (-0.3% mom vs. 0.0% expected) and capacity utilization edging down three-tenths to 75.3%. Manufacturing production did however nudge up +0.2% mom as expected while the NY Fed’s empire manufacturing index came in at 18.7 for this month which is up from 6.5 in January. Interestingly the Atlanta Fed cut their Q1 GDP forecast yesterday to 2.2% from 2.7% despite the positive retail sales surprise. That cut puts their forecast close to the 2% predicted by our US economists.

Over in Europe there wasn’t a huge amount to report data wise. In the UK the ILO unemployment rate printed at 4.8% in the three months to December which was unchanged while growth in average weekly earnings excluding bonuses slowed to +2.6% from +2.7%. In Sweden the Riksbank left policy unchanged as expected but was fairly (and surprisingly) dovish in their overall outlook.

In terms of markets in Europe yesterday we saw a similar weakness in sovereign bond markets with 10y Bunds edging up another 0.8bps to 0.370% and yields in the periphery also up between 1bp and 5bps. There was a similar positive performance for equity markets with the Stoxx 600 closing up +0.34% too. On that note, in his report “What to do when everyone is bullish?”, DB’s European equity strategist Sebastian Raedler argues that a combination of factors points to a period of consolidation ahead for European equities. He highlights that the equity market has rallied in line with rising global macro surprises, but that these are already in the top 5% of their historical range and have tended to fade back to zero when they were at current levels in the past (which would be consistent with a 5% pull-back in equities). Secondly, the fair-value P/E on his model has dropped to an 18-month low on the back of wider peripheral spreads, also pointing to 5% downside from current levels. Thirdly, a number of sentiment  indicators have risen to peak levels, with the US bull / bear ratio, for instance, hitting a 30-year high last week. On the positive side, European earnings continue to recover (they are up 9% from their mid-2016 trough).

Staying in Europe and specifically in Greece, yesterday EU Commissioner Pierre Moscovici confirmed that the “will to get to solution is there” between Greece and its creditors and that talks have made progress but ultimately more steps are still needed. The Commissioner did however say that his goal was for an agreement at the February 20th Eurogroup meeting to conclude the parameters for a deal.

Before we wrap up, yesterday DB’s Marco Stringa also published a note that highlighted the details of ex-PM Renzi’s call for a leadership contest and noted its implications for the broader political and economic situation in Italy. He notes that in accelerating the leadership contest Renzi aims to regain control of a party divided into many factions, while leaving the door open to an early election in September. The probability of a June election has plummeted to about 15%, while the most likely dates now seem to be September 2017 (45% probability) followed by February 2018 (40%). However, while a PD leadership contest in the spring has changed the likely timing of the election, it does not affect the issue of the electoral law under which Italy will head into the next election. The two main options are (i) a new proportional system with a small majority premium for both Houses, or (ii) no compromise reached on amending the current electoral laws or (similarly) the current Lower House electoral law is extended to the Upper House but applied at a regional level. However, both alternatives would mean no significant structural reforms and a continuation of Italy’s sluggish economic growth. Given the present situation, the key events to monitor in the near term are the electoral law parliamentary debate which should start again on 27 February; a break-up of the PD (Probability of 33%) that would further increase political fragmentation; and the NPL systemic issue which has not yet been resolved. We should also highlight that a Dow Jones report said last night that Renzi doesn’t expect elections in June and that a September election is most likely – in line with Marco’s view.

Looking at the day ahead the only data due in Europe this morning comes from France where the Q4 employment data is out. The ECB minutes from last month’s Governing Council meeting are also due. In the US this afternoon we’ll get January housing starts and building permits data (expected to print at 0.0% mom and +0.2% mom respectively), initial jobless claims and the Philly Fed manufacturing survey for February. Away from the data we’re due to hear from both the EU’s Juncker and Moscovici at various stages, while the ECB’s Coeure speaks this afternoon and Fed’s Fischer (11.30am GMT) and Williams  (8.10pm GMT) also.

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 16.63 POINTS OR .52%/ /Hang Sang CLOSED UP 112.83 POINTS OR 0.47% . The Nikkei closed DOWN 90.45 POINTS OR 0.47% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed UP at 6.85873/Oil ROSE to 53.39 dollars per barrel for WTI and 56.04 for Brent. Stocks in Europe ALL IN THE RED. Offshore yuan trades  6.8451 yuan to the dollar vs 6.85873  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN STRONGER AS IS OFFSHORE YUAN COUPLED WITH THE WEAKER DOLLAR

3a)THAILAND/SOUTH KOREA/NORTH KOREA

South Korea Court has issued an arrest warrant for Samsung’s Lee

(courtesy Bloomberg)

South Korea Court Issues Arrest Warrant for Samsung’s Jay Y. Lee Bloomberg News February 16, 2017, 3:48 PM EST

Seoul Central District Court issued an arrest warrant for Samsung Electronics Vice Chairman Jay Y. Lee, according to an official, Bloomberg News reports.

Developing..

END

b) REPORT ON JAPAN

The banks in Japan are having real trouble with profitability due to negative interest rates.  On top of that, they are having a tough time with the B. of J’s communication re their yield curve policy where they are capping the long term rate at 0%.

It seems that the banks in Japan are undergoing Mutiny on the Bounty as they do not trust them one bit.  With a debt to GDP of 250% who could blame them

(courtesy zero hedge)

 

 

“Market Players No Longer Trust The BOJ”: Why Kuroda Is Suddenly Facing Market Mutiny

While we doubt anyone will laugh, we find it amusing that none other than arguably the “last holdout” of ZIRP and then NIRP, BOJ governor Haruhiko Kuroda, finally joined the chorus of people warning that low interest rates will “sow the seeds of the next financial crisis.” Echoing concerns voiced by Deutsche Bank and virtually every other bank over the past year, Kuroda said that “a new challenge has emerged in the form of low profitability at financial institutions,” adding that rapid growth in shadow banking and new financial technology were bringing big changes to the global banking environment.

“These developments suggest that a different kind of financial crisis could happen in the future,” he told an international conference on deposit insurers on Thursday, without elaborating. As Reuters writes overnight, “the remarks contrast with Kuroda’s previous comments emphasizing that the benefits of massive stimulus on the economy make up for potential negatives such as the hit to banks.”

Hoping to spread the blame, Kuroda said the problem of low interest rates hurting bank profitability was a global one, pointing to bad loans piling up at some European banks and headwinds plaguing Japanese banks from sluggish lending driven by an aging population.“For the financial system to ensure future stability, it is becoming more and more important in the long term to think about possible responses to low profitability at financial institutions,” he said.

In other words, Kuroda must have gotten an earful in his last meeting with bank execs.

And yet, we said this statement is amusing? Why? Because one look at the BOJ’s balance sheet explains precisely why Japan is currently grappling with trillions in negative yielding bonds.

That, and of course the BOJ’s impulsive decision, taken as a result of “peer pressure” suffered during last year’s Davos meeting, to unleash negative rates in Japan for the first time in history.

And now that it is no longer “fake news” to criticize central banks’ failing policies, Reuters takes Kuroda to task:

Four years of aggressive money printing by the BOJ have failed to pull Japan sustainably out of stagnation, forcing the central bank to revamp its policy framework to one better suited for a long-term battle with deflation.

 

But the attempts to revive Japan’s anemic consumer spending through unconventional monetary policy have created new problems for the central bank in its dealings with markets and financial institutions.

It’s not just Reuters who unloaded on the cartoonish central banker.

In a separate report looking at the confusion sowed by the BOJ’s decision to launch “Yield Curve Control” or YCC last September, Reuters also reports that the sometimes contradictory market operations directives are sowing confusion over the BOJ’s intentions, creating tensions between the central bank and the market and underscoring the challenges of its unprecedented policy.”

“What’s clear is that market players don’t hold trust in the BOJ,” said Mari Iwashita, chief market economist at SMBC Friend Securities. “If there was trust, things wouldn’t be this messy.”

It sounds like a rising tide of mutinous discontent is rising against the BOJ’s monetary policy by Japan’s bond market, some of it even internally sourced: “It’s true, controlling long-term rates is an unprecedented policy,” BOJ Deputy Governor Hiroshi Nakaso told reporters last week, acknowledging that the bank was still learning how best to communicate its intentions to markets. However, he believes the BOJ has the necessary “skill and tools” to control yields.

Market players aren’t convinced, complaining about the lack of clarity on how the BOJ wants to guide long-term rates. “So many things are unclear, such as at what level the BOJ will step in to curb yield rises,” said a money market trader in Tokyo. A domestic bond market investor said “a lot of market players got burnt” from the volatility caused by the BOJ, which could discourage investors and dealers from trading actively.

The BOJ has put the job of controlling yields in the hands of a small group of relatively junior bureaucrats, who have no say on monetary policy but execute the board’s orders through daily transactions in the interest rate markets. Their actions have resulted in some substantial intraday swings in both the Yen and JGB yields, as reported recently. Under the YCC framework, the BOJ seeks to control the yield curve by targeting short-term rates at minus 0.1 percent and the 10-year yield around zero. The task of capping long-term rates, a feat never tested by a major central bank, is entrusted to a team of around 40 staff running the BOJ’s market operations.

As Reuters adds, a “handful of junior-ranking bureaucrats in the team, mostly in their 40s, decides when, how and to what degree the BOJ offers to buy bonds. Guidance from the board is vague and kept at a minimum to allow the team to respond flexibly to daily market moves.”

However, market participants say this ambiguity causes confusion as the bureaucrats, mandated to meet the board’s orders, do not focus much on the impact of their moves on the broader economy. The BOJ’s task is also made difficult by the conflicting goals embedded in the new framework. While targeting rates, the BOJ maintains a loose pledge to buy bonds at a set pace to appease advocates of aggressive asset purchases in the board.

The BOJ has caught markets off-guard several times. Yields spiked when it skipped a much-anticipated auction in January, stoking fears it may soon taper asset purchases. It then offered to buy unlimited amounts of bonds on Feb. 3, when the 10-year yield spiked to 0.15 percent.

 

BOJ officials say they have no plan to offer more specific guidance on their market operations, and stress their dominance in the market gives them enough power to suppress yields.

 

“Communication is important. But that doesn’t mean the BOJ should meet each and every request from the market,” said a source familiar with the central bank’s thinking.

And where this whole narrative comes together is that on one hand Kuroda suddenly wants higher rates, on the other he has some 40 junior bureaucrats in charge of making sure it does not happen, thanks to YCC. Adding pressure on Kuroda is that he suddenly finds himself alone in a world in which all other central banks have launched curve steepening experiments – whose outcome remains unclear – and as a result analysts doubt whether the BOJ could keep battling market forces if global yields continue to rise, particularly with its massive bond purchases seen as unsustainable.

Brightening prospects for Japan’s economy, usually good news for policymakers, could also heighten the BOJ’s challenges in capping bond yields. Japan’s economy expanded for four straight quarters in 2016 thanks to a rebound in global demand while analysts expect inflation to accelerate to near 1 percent later this year, which could push up Japanese yields.

Former BOJ central banker, Sayuri Shirai, who served on the BOJ’s board from 2011 to 2016, said the central bank’s YCC policy in its current form is confusing and causes big market distortions. “To make the framework more sustainable, it’s better to raise the yield target and gradually reduce bond purchases,” Shirai told Reuters in an interview on Wednesday.

That however will not happen. What however will happen is that Kuroda will be right: a financial crisis is likely headed for Japan, however not for the reason he believes; instead it will manifest itself once the market, which is already rising in mutiny against the BOJ’s policies, hits a tipping point, and the selling in the country with the 250% debt/GDP, and where the central bank owns 40% of all outstanding debt, begins.

END c) REPORT ON CHINA

This is not good:  rumours are circulating that USA ships will not be allowed to pass through the China South seas.

(courtesy zero hedge)

 

China May Bar US Ships From Passing Through Its Waters

In a preemptive move to limit foreign naval presence in proximity to China and especially the disputed South and East China Sea islands, China’s People’s Daily reports the Beijing is set to revise its 1984 Maritime Traffic Safety Law, which would allow the relevant authorities to “bar some foreign” (read U.S.) ships from passing through Chinese territorial waters. The Legislative Affairs Office of the State Council announced Tuesday it is soliciting public opinions on the revisions. Think of it as an Air Defense Identification Zone, only in the water.

According to the Chinese press, the draft would empower maritime authorities to prevent foreign ships from entering Chinese waters if it is decided that the ships may harm traffic safety and order.  The draft revisions would grant authorities the right to designate specific areas and temporarily bar foreign ships from passing through those areas according to their own assessment of maritime traffic safety. The revisions are based on the UN Convention on the Law of the Sea and Chinese laws on the sea, adjacent areas and exclusive economic zones, the office said.

It was not clear how China would implement and enforce this bar, or what the punishment for transgressors would be.

Wang Xiaopeng, a maritime border expert at the Chinese Academy of Social Sciences, told the Global Times on Wednesday that the revisions will provide legal support for China to safeguard its maritime rights.

As a sovereign State and the biggest coastal State in, for example, the South China Sea, China is entitled to adjust its maritime laws as needed, which will also promote peace and stable development in the waters.” 

Quoted by the Daily, Yang Cuibai, a professor with the School of Law at Sichuan University, agreed, saying that “the revisions will strengthen China’s management over territorial waters in a new era when the country’s communication and trade with foreign countries in the waters have sharply increased.” Yang added that China should take the lead to establish the legal order in the Yellow Sea, the East China Sea and the South China Sea.

Additionally, the draft said that foreign submarines would travel on the surface, display national flags and report to Chinese maritime management administrations when they pass China’s water areas. They should also get approval from the relevant administrations to enter China’s internal waters and ports.

Foreign military ships that are approved to enter China’s waters should apply for pilotage. Foreign ships that enter Chinese waters without approval will be fined 300,000-500,000 yuan ($43,706-72,844) and those violating Chinese laws would be expelled, it said.

“China’s waters are open to foreign ships as long as they do not damage the waters’ safety, order, or China’s sovereignty,” Yang said.

 

The draft also states that people in distress at sea have the right to be rescued without charge, adding that human lives should come before the environment and assets.

The State Council and local governments should set up maritime search and rescue centers, if needed, to organize, coordinate and command rescue operations, the draft says. Civilian groups are also encouraged by the revised regulations to set up rescue teams and participate in such operations.

Aside from the contested islands, the waterway in question is one of the biggest focal points of global naval trade: should China implement a mandatory check of each and every naval vessel, it may have a chilling effect on global seaborne trade, which would come at a time when worldwide commerce is already declining and could be further impacted in coming months should Trump implement his protectionist trade agenda.

4. EUROPEAN AFFAIRS

EU

 

A terrific commentary from Mish Shedlock today.  He comments on the Chatham House poll which suggests that only 20% of Europe approves of the immigration policy of of the EU. The number one problem in France is the violence/chaos/ created by Muslims.  Shedlock suggests that the polls in the upcoming election may have it wrong and that the real support for Le Pen may be much stronger

(courtesy Mish Shedlock/Mishtalk)

 

 

Only 20% Of Europeans Want Muslim Immigration To Continue, ‘Massive’ Poll Finds

Submitted by Mike Shedlock via MishTalk.com,

Nigel Farage made a brief speech in European Parliament on Monday in which he stated:  

Chatham House, the reputable group, published a massive survey from 10 European states, and only 20% of people want immigration from Muslim countries to continue.”

Here is the Chatham House poll referenced by Farage: What Do Europeans Think About Muslim Immigration?

Chatham House Poll

In our survey, carried out before President Trump’s executive order was announced, respondents were given the following statement: ‘All further migration from mainly Muslim countries should be stopped’. They were then asked to what extent did they agree or disagree with this statement. Overall, across all 10 of the European countries an average of 55% agreed that all further migration from mainly Muslim countries should be stopped, 25% neither agreed nor disagreed and 20% disagreed.

Majorities in all but two of the ten states agreed, ranging from 71% in Poland, 65% in Austria, 53% in Germany and 51% in Italy to 47% in the United Kingdom and 41% in Spain. In no country did the percentage that disagreed surpass 32%.

To state things more precisely, 55% are against further immigration, 20% disagree, and 25% appear to have some reservations with the statement, most likely in reference to the word “all”.

Had Chatham worded the question slightly differently, it’s possible nearly all of those in the “neither” category may have agreed, and some of those in the “disagree” category may have switched.

Interestingly, Poland is most against migration. Once again, had the question been worded just a bit differently, I suspect Poland would have topped the 90% mark easily.

Socio-Demographic Difference

Degree Holders and Millennials 

Those with degrees and the millennials aged 18-29 stood apart from the rest.

Is this a case of the liberal elite plus the naive youth against everyone else? If so, isn’t that precisely what happened in Brexit?

Also take a good look France in the first chart. 61% want to stop all further immigration and only 16% disagree.

Let that sink in.

As I have stated before, mainstream media, the polls, and the liberal elite are seriously underestimating eurosceptic candidate Marine le Pen’s chances of winning the next French election.

 

 

END

 

Germany

Meet the probable new German Chancellor when the elections will be held in Sept

(courtesy Bornsdorf/Saxo Bank)

The German ‘Anti-Trump’ That Could Beat Merkel

Submitted by Saxo Bank’s Clemens Bomsdorf via TradingFloor.com,

  • Martin Schulz has announced his intention to challenge Angela Merkel
  • The race for heading Germany’s government is open again
  • Schulz’s Social Democrats have gained tremendously in polls
  • Merkel’s party only ranks second in recent poll
  • Schulz is as pro-European as Merkel and might want to govern with the left parties
  • Germany continues on its growth path with GDP up 1.9% in 2016

Social Democrat Martin Schulz aims at making his party Germany’s biggest again and at becoming Merkel’s successor.

German politics = boring politics – in recent decades this equation has generally held true. At least that’s how many observers would put it.

Fortunately, governments in Germany – Europe’s largest economy – have been much more stable than those in, for example, Italy. Even after the new right-wing party AfD entered the stage a few years ago, it seemed that Angela Merkel and her grand coalition with the Social Democrats was here to stay. German politics therefore remained reassuringly boring.

And yet, with the new Europe we face, that perhaps is no longer the best thing for them to be. Suddenly politics in Germany has become very interesting and the race for the chancellorship looks open again.

While the rest of the world appears to be pivoting to the right, Merkel’s challenger has come from the left. He presents a liberal alternative to the narrative that’s propelled the Donald Trumps of this world, that change can only be achieved from a protectionist and isolationist platform.

Martin Schulz, who was nominated on January 29 in a surprise move as the Social Democrats’ main candidate, has a realistic chance of winning against Merkel and her Christian Democratic Union of Germany and bringing an unprecedented coalition into office.

His nomination has boosted his Social Democratic Party considerably. The week prior to Schulz’s nomination, SPD was the preferred party of 21% of the electorate, according to polls by Bild. Now it’s polling at 31%, meaning it gained almost 50% (or 10 percentage points) and is doing better in the polls than Merkel’s CDU.

The latter dropped from 32.5% to 30% over the same period. At the same time, Germany is continuing on its moderate growth path as the latest data from the statistical office shows. Its unemployment rate is at 6.3%.

In contrast to the Netherlands, France or of course the US, in Germany, the politician on the rise does not want to disintegrate his country and is not issuing scathing critiques of globalisation and internationalisation while at the same time claiming to be the only legitimate representative of the people. Instead, like his competitor Merkel, Schulz is an advocate of cooperation, particularly within the European Union.

He also makes the case that doing politics means finding compromises.

Obama is history as US president. Unlike him, Merkel can run again as head of government – also to counterweight successor Donald Trump.

Unlike the current chancellor though, he calls for change – to create a fairer and more just Germany. No wonder his supporters compare him to Barack Obama. They have even created a picture similar to the iconic Obama Hope poster, but showing Schulz and stating “MEGA”.

The four-letter word stands npt only for Schulz’s fans belief in him as a fantastic candidate, but also as an abbreviation for “Make Europe Great Again”. The play on Trump’s slogan makes an ironic reference to the US president’s promise. At the same time, it probably also appeals to those that are fascinated by Trump’s approach and dislike the so-called establishment.

This fits into the emerging reality that the far right Alternative fur Deutschland, or AfD, lost support since Schulz announced his intention to run. The aforementioned Bild poll sees AfD now (week 6 – see chart above) polling at 12%, down from 14.5%. Additionally, Schulz also manages – at least in the polls – to summon support from those that otherwise would not have wanted to vote, according to another Bild survey.

Fan page for Schulz on Reddit.

In an interview with Der Spiegel, however, he declared that while he “want[s] to win them [AfD voters] back,” he would never “run such a campaign [as Trump’s] under any circumstances.” he added that the US president “is gambling with the safety of the Western world. Donald Trump must be taken seriously. He is fulfilling his dangerous campaign.”

While he is very clear on that, the policies Schulz wants to implement remain vague. His values, however, are not. As does Merkel, he believes in Europe as “a region of freedom and peace, of security, law, democracy, tolerance and mutual respect,” as he put it in the interview.

Schulz had been a member of the European Parliament since 1994 and its president since 2012; he left both positions earlier this year. Taking into account the criticism the EU is currently facing, this might be seen as a position of weakness. However, it turns out that it seems far more important that he was not part of the coalition with Merkel in Berlin – and that his rhetorical powers clearly top hers.

Schulz also told the magazine that Germany, “as the largest European Union member state, found the correct response in an historic situation” by accepting large numbers of refugees in 2015 – an act Merkel since has been heavily criticized for, including by her fellow politicians.

As mentioned above, fairness will be a major focus for him when running for chancellor. This will also affect business, as it includes more controls to ensure companies comply with minimum wage legislation as well as tax increases: “People who work hard for their money cannot be placed in a worse position than those who allow their money to work for them,” as he told Der Spiegel.

Trump in campaign-mode. Now he is the US president and wants to “make America great again”.

Speaking of money, Greece also deserves a mention. Merkel’s fellow party member and serving finance minister Wolfgang Schäuble has always taken a hard stance on the Mediterranean nation, incurring the ire of many Greeks against himself and the German chancellor. Schulz, on the other hand, told Die Welt that a Grexit is not what he wants.

“Anyone flirting with the idea of Grexit risks breaking Europe apart. This may be in the interest of Donald Trump or [French National Front leader] Marine Le Pen, but it is certainly not in the interest of Germany and Europe. It is extremely dangerous,” reads the Guardian’s translation.

A concrete programme is still due and what Schulz and his party will be able to realise is highly dependent on what coalitions end up getting formed.

If the strengthening of the Social Democrats continues, a coalition with the left party Die Linke and the Greens could become an option. That constellation has never been seen before in Germany on a national level. Neither has an alliance between Merkel’s CDU and the liberal FDP – which has been the preferred partner – and the Greens. While the former would clearly mean a shift to the left, the latter could strengthen liberal positions.

One thing remains clear: the only coalition that would definitely have a strong majority also after September 2017 is the current one of Merkel’s CDU and Schulz’ SPD. Going down that path again, however, would be both sides’ worst case scenarios, one reason being that a coalition of the two biggest parties in parliament could see the extremists getting more support.

Cologne, one of the largest German city’s, is only one-hour drive from Würselen, where Martin Schulz began his political career as a mayor

 

 

end

 

Greece

This should be alarming to the EU.

 

1.In the last 45 days:2.5 billion euros left the bank

2. from the beginning of the crisis in 2011, 120 billion euros have left the bank system

3. from a report in Nov 2015: in the preceding one yr: 45 billion euros have left the banking system of which 36 billion euros never returned.

Ladies and gentlemen; we have another bank run.  I guess more controls are coming!

(courtesy zerohedge)

 

Greek Bank Run Re-accelerates: Massive Deposit Withdrawals Despite Capital Controls

Delays in the talks between Greece and its lenders have brought back the ghost of Grexit.

The grave disagreement between the International Monetary Fund and the European lenders, Grexit bombshells flying around and Greece’s reluctance to accept additional austerity measures have increased uncertainty among citizens – for one more time.

And so, as KeepTalkingGreece.com notes, what do citizens do when they feel political and economical insecurity? The run to banks and withdraw deposits.

2.5 billion euros left Greek banks in the last 45 days.

 

And this despite the capital controls that allow Greeks to withdraw a maximum of just 1,800 euro per month.

However, in better situation are those who brought back cash to the banks. Cash that was largely withdrawn before the capital controls were imposed in July 2015 as a result of a major bank run from November 2014 until end of June 2015. Those who pulled the cash from under the mattress and brought it to bank are allowed to withdraw money above the 1800-euro cap.

According to newspaper Eidiseis, the cash withdrawal in the last 45 days has set bankers in alert.

In addition to cash withdrawals, business loans and mortgage, amounting a total of 500 million euros, turned red. A sign that the delay in the conclusion of the second review has increased uncertainty among the Greeks, as the daily notes.

Speaking to the daily, sources from the Union of Greek Banks said that “time is not working in our favor.”

They stressed that the government and the lenders should reach a compromise.

Beginning of February, Greek websites for economic news had reported that more than one billion euros was withdrawn in January 2017.

According to a report of November 2015, more than 120 billion euros left the Greek banks during the years of the crisis. 45 billion euro left the banks during November 2014 – 2015.Eighty percent of this amount, that is some €36 billion are been kept in homes, company safes or in bank lockers.

* * *

Time to increase capital controls once again!!??

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Tillerson meets Lavrov.  You can bet that Crimea will be discussed and Russia will no doubt state that this is a non starter:

(courtesy zero hedge)

Russia’s Lavrov To Tillerson: “We Do Not Interfere In The Domestic Matters Of Other Countries”

Secretary of State Rex Tillerson met his Russian counterparty, Foreign Minister Sergey Lavrov, at a G20 summit in Germany in the pair’s first meeting since Tillerson became secretary of state, and comes as a possible Russia-US rapprochement is in the spotlight. Moscow and Washington have much to discuss, Lavrov told Tillerson at their first meeting in Bonn, Germany, on Thursday.

“Mostly, it includes issues addressed by the two presidents during their phone conversation. I think that we could identify parameters of our future cooperation on each of those topics,” he stated.

More importantly, Lavrov once again focused on current developments in Washington in which Trump administration links to Russia are under the spotlight, and said that these are US domestic affairs, in which Moscow has no interest in meddling.

You should know we do not interfere in the domestic matters of other countries,” Lavrov told reporters when asked if “turbulence” in the American capital has ramifications for US-Russia relations.

RT @RT_com

Lavrov meets with US Secretary of State Tillerson in Germany http://on.rt.com/83b2 

8:50 AM – 16 Feb 2017

He spoke days after U.S. President Donald Trump asked for the resignation of his key national security adviser Michael Flynn amid questions about his conversations with Russian officials. He added the two countries had “plenty of issues” to discuss.”

Earlier comments from the Russian Foreign Ministry suggested that Syria and sensitive bilateral issues would be discussed at the meeting, RT reported.

The US State Department told reporters the upcoming conversation with Lavrov “obviously will be a very important one,” adding that Tillerson is likely to use the occasion to seek “ways for pragmatic and constructive cooperation in areas where our interests overlap.” Areas of mutual interest might include “counter-ISIS [Islamic State] and counterterrorism” efforts, State Department officials said at a special briefing.

The officials also said that Tillerson would not soften Washington’s stance on Ukraine, a crisis which remains largely unresolved. The secretary of state would “push for full implementation of the parties’, including Russia’s, commitments under the Minsk agreement for the Donbass.”

 

Ukraine and the issue of economic sanctions look like becoming a stumbling block for future dialogue between Moscow and Washington. President Donald Trump has claimed that Crimea – a region that was reunited with mainland Russia following a 2014 referendum – was “taken” by Moscow, prompting a measured but swift response from the Russian Foreign Ministry.

 

“Crimea is part of the Russian Federation,” Zakharova told reporters on Wednesday.

It will be the first time Lavrov has met the newly-appointed Tillerson. It comes as US-Russia relations are under particular scrutiny following the election of President Trump, who has repeatedly pledged to mend ties with Moscow.

6.GLOBAL ISSUES

none today

7. OIL ISSUES 8. EMERGING MARKETS Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings THURSDAY morning 7:00 am

Euro/USA   1.0644 UP .0041/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING INTEREST RATE/EUROPE BOURSES ALL IN THE RED  

USA/JAPAN YEN 113.58 DOWN 0.538(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2506 PU .0041 (Brexit by March 201/UK government loses case/parliament must vote/PRIME MINISTER MAY  DECIDES ON A HARD BREXIT/LOWER HOUSE PASSES BILL TO BEGIN THE BREXIT PROCESS)

USA/CAN 1.3029 DOWN .0039 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 41 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0644; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 16.63 POINTS OR 0.52%     / Hang Sang  CLOSED UP 112.83 POINTS OR 0.47%    /AUSTRALIA  CLOSED UP 0.07%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 90.45 POINTS OR 0.47% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED  

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 112.83 POINTS OR 0.47%       / SHANGHAI CLOSED UP 16.63   OR 0.52%/Australia BOURSE CLOSED UP 0.07% /Nikkei (Japan)CLOSED DOWN 90.45 POINTS OR 0.47%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1237.00

silver:$18.04

Early THURSDAY morning USA 10 year bond yield: 2.477% !!! UP 0 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.071, UP 0 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 100.69 DOWN 40 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.98% DOWN 11  in basis point yield from WEDNESDAY 

JAPANESE BOND YIELD: +.099%  UP 8/10  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.601%  DOWN 8 IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 2.156 DOWN 9 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 66 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.349% DOWN 3 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/1:00 PM 

Euro/USA 1.0654 UP .0051 (Euro UP 51 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 113.42 DOWN: 0.706(Yen UP 71 basis points/ 

Great Britain/USA 1.2462 DOWN 0.0003( POUND DOWN 3 basis points)

USA/Canada 1.3053 DOWN 0.0013(Canadian dollar UP 15 basis points AS OIL FELL TO $53.01

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This afternoon, the Euro was UP by 51 basis points to trade at 1.0654

The Yen ROSE to 113.42 for a GAIN of 71 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 3  basis points, trading at 1.2462/

The Canadian dollar ROSE  by 15 basis points to 1.3053,  WITH WTI OIL RISING TO :  $53.07

The USA/Yuan closed at 6.8516/ the 10 yr Japanese bond yield closed at +.099% UP 8/10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 5 IN basis points from WEDNESDAY at 2.2456% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.044  DOWN 5 in basis points on the day /

Your closing USA dollar index, 100.63 DOWN 46 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for THURSDAY: 1:00 PM EST

London:  CLOSED DOWN 24.49 OR 0.34% 
German Dax :CLOSED DOWN 36.69 POINTS OR 0.31%
Paris Cac  CLOSED DOWN 25.40 OR 0.52%
Spain IBEX CLOSED DOWN 29.40 POINTS OR 0.31%
Italian MIB: CLOSED UP 31.38 POINTS OR 0.16%

The Dow closed UP 7.91 OR 0.04%

NASDAQ WAS closed DOWN 4.54 POINTS OR 0.08%  4.00 PM EST
WTI Oil price;  53.01 at 1:00 pm; 

Brent Oil: 55.62  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  57.52 DOWN 30/100 ROUBLES/DOLLAR 

TODAY THE GERMAN YIELD FALLS TO +0.349%  FOR THE 10 YR BOND  1:30 EST

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:$53.42

BRENT: $55.73

USA 10 YR BOND YIELD: 2.448%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.049%

EURO/USA DOLLAR CROSS:  1.0673 up .0071 

USA/JAPANESE YEN:113.24   down 0.880

USA DOLLAR INDEX: 100.48  down 61  cents ( HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2488 : up 22   BASIS POINTS.

German 10 yr bond yield at 5 pm: +.349%

END

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

TRADING IN GRAPH FORM

Stock Dip Kills Longest Win Streak In 4 Years As Catalyst-Crusher Comes To An End

Once again all eyes were on “soft” data (Philly Fed) as “hard” data (housing starts miss) disappointed and the forced buy-in pressure lifted…

 

7 days up in a row for the S&P 500 (longest streak since March 2013) was the limit it seems as Catalyst’s statement that it had completed its forced buy-in to cover and Trump’s comments about how awesome stocks are capped it…

The Dow managed to creep green (record high) as VIX was crushed…

 

Just how much of the last 150 S&P points are due to the liquidation of ‘Catalyst’ (and strategies like it)?

 

Catalyst’s footprints are clear in options volumes… As Bloomberg notes, Options Data Show Footprints of Furious Buyer as S&P 500 Jumped

Above-average volume in S&P futures options earlier this week helped drive demand for stocks amid reports of volatility funds buying back deep in the money calls. February contracts alone represented ~$19B of notional value. The most active contracts according to the CME Group website include:

February 15

  • 5.9k SPU Jun. $2325 calls
  • 8.9k SPU Feb. $2270 calls

February 14

  • 10.9k SPU Feb. $2280 calls

February 13

  • 6.8k SPU Feb. $2270 calls
  • 7.1k SPU Feb. $2275 calls
  • 6.8k SPU Apr. $2315 calls
  • 7.1k SPU May. $2330 calls

One wonders if Catalyst CEO comments were 100% truthful about being out?

 

VIX was very chaotic…crushed back below 12 to ensure Dow green close..

 

But the decoupling remains…

 

“Most Shorted” stocks were actually allowed to fall today – the biggest drop since November…

 

Energy stocks are the week’s laggard and banks remain the leaders…

 

Bonds decoupled from stocks yesterday and stocks started to catch down…

 

And Real yields are entirely decoupled…

 

Treasuries extended their gains from post-data yesterday but remain higher in yield on the week…

 

The USD Index fell for the 2nd day in a row – biggest drop since January…

 

Shifting the USD into the red for the week…

 

The Dollar seems to following 2016’s analog very well still…

 

Dollar weakness sent PMs higher…

 

Note the spike bounce higher in crude prices (just like after DOE data yesterday) which entirely decoupled from Energy stocks…

end

 

Initial jobless claims raise but still the lowest levels in many years.

(courtesy zerohedge)

Initial Jobless Claims Divergence Of The Week

Initial jobless claims rose modestly on the week but remain at the lowest levels since Watergate…

 

As it appears the labor market entirely ignores the demise of actual “hard” data since the election…

 

 

end

 

Housing starts disappoints and this is coupled with a huge rise in building permits (driven by rentals).

(courtesy zero hedge)

 

Housing Starts Disappoint As Building Permits Surge, Driven By Rentals

While having been gradually relegated to B-grade economic data status, today’s housing starts and building permits report from the Commerce Department, painted a mixed picture, with January starts declining 2.6%, from 1.279million to 1.246 million, below expectations of a 0.1% increase, however due to the upward prior revision, today’s absolute print beat expectations of 1.222 million units started (forecast range 1168k – 1320k from 77 economists). Looking inside the data, single family starts rose to 823k, while multifamily starts fell to 423k in Jan.

But while January housing starts were lukewarm, building permits jumped by far more impressive 4.6%, rising from 1.228MM to 1.285MM, driven entirely by multi-family, aka rental, units which soared by 23.5%, as single-family unit permits declined by 2.7% to 808K.

Finally, while little tracked, housing completions fell to 1047k in Jan., from 1109k the prior month, as single-family completions rose to 800k; multifamily completions fell to 247k in Jan.

Overall, s table housing report, although as the charts below show, both starts and permits remain locked in a multi-year range, well below the pre-crisis highs, as builders are looking for a signal to take take a major push forward in new home construction.

Housing Starts:

Building Permits:

 

 

end

 

Another soft data report:  The Philly Fed explodes to a 33 yr high and this is a 10 standard deviation beat:

(courtesy zero hedge)

Philly Fed Explodes To 33-Year Highs – A 10-Standard-Deviation Beat

Against expectations of a 18.0 print, February’s Philly Fed exploded higher to 43.3 – the highest since January 1984. This is a 10-standard-deviation beat, led by a surge in new orders and the workweek, despite a decline in ‘hope’ and the number of employees.

Everything is Awesome America… especially in Philapdelphia?

The index for current manufacturing activity in the region increased from a reading of 23.6 in January to 43.3 this month and has remained positive for seven consecutive months.

The share of firms reporting growth continues to increase: More than 48 percent of the firms reported increases in activity this month compared with 40 percent last month. The index for current new orders increased 12 points this month (with 44 percent of the firms reporting increases and just 6 percent reporting decreases).

 

For context, that is a 10-sigma event…

 

But ‘hope’ declined…

 

And as the full breakdown shows, the number of employees declined, as did inventories and prices received.

Unfilled Orders, Delivery Times, Priced Paid were all largely unchanged.

Is this as good as it gets?

 

 

end

 

The CEO of insurance giant Aetna claims that Obamacare is in a death spiral because of huge premiums and risk polls are deteriorating.  This is causing insurance companies pulling out of exchanges:

(courtesy zero hedge)

Aetna CEO Says Obamacare In “Death Spiral” And “It’s Getting Worse”

Back in the summer of 2016, as Obamacare rates were being set for the 2017 plan year, we repeatedly argued that the entire system was on the “verge of collapse” as premiums were soaring, risk pools were deteriorating and insurers were pulling out of exchanges all around the country leaving many Americans with just a single ‘option’ for health insurance (see “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“).

And while Democrats may be all too willing to quickly dismiss our analysis, they may want to listen to the warnings of the CEO of one of the country’s largest health insurers who says that Obamacare is in a “death spiral.”  In speaking with the Wall Street Journal, Aetna CEO Mark Bertolini said, among other things, that the “risk pools are deteriorating in the ACA” to a point that it would inevitably result in more withdrawals this year.   Per The Hill:

“It’s not going to get any better; it’s getting worse.”

“That logic shows just how much the risk pools are deteriorating in the ACA,” Bertolini said.

He added: “I think you will see a lot more withdrawals this year. … There isn’t enough money in the ACA as structured, even with the fees and taxes, to support the population that needs to be served.”

“It is in a death spiral,” he said, but did not say whether Aetna would participate in the exchanges in 2018.

And, while his commentary was mostly doom and gloom, if there was one silver lining from Bertolini’s interview, it was his acknowledgement that at least “mathematics education in the United States is working” since consumers seem to be able to run the simple math required to figure out that paying ~$12,000 per year in premiums for a family of 4, plus $6,000 in deductibles, all for a service they never use, is a bad deal.

“You know that mathematics education in the United States is working when someone says, let me see, i’m going to pay this much premium, i’ve got a $6,000 deductible, and when I go to the doctor i’m going to pay cash…so premium, plus deductible, plus paying cash…why do I do this?  I’ll just pay the penalty and move on.”

“And so that risk keeps leaving and risk inside the pool keeps getting worse…the rates continue to chase it…and the participants start to leave, either at the bottom of the risk pool or the plans themselves.”

Of course, Bertolini’s comments today followed yesterday’s announcement from Humana that, due to an “unbalanced risk pool” (i.e. not enough healthy, young people paying massive premiums to balance out the risk of older, sicker customers), they would be pulling out of all Obamacare exchanges nationwide in 2018.  Per Humana’s press release:

Regarding the company’s individual commercial medical coverage (Individual Commercial), substantially all of which is offered on-exchange through the federal Marketplaces, Humana has worked over the past several years to address market and programmatic challenges in order to keep coverage options available wherever it could offer a viable product. This has included pursuing business changes, such as modifying networks, restructuring product offerings, reducing the company’s geographic footprint and increasing premiums.

All of these actions were taken with the expectation that the company’s Individual Commercial business would stabilize to the point where the company could continue to participate in the program. However, based on its initial analysis of data associated with the company’s healthcare exchange membership following the 2017 open enrollment period, Humana is seeing further signs of an unbalanced risk pool. Therefore, the company has decided that it cannot continue to offer this coverage for 2018. Through the remainder of 2017, Humana remains committed to serving its current members across 11 states where it offers Individual Commercial products. And, as it has done in the past, Humana will work closely with its state partners as it navigates this process.

Meanwhile, Trump seized on the announcement saying that as “Obamacare continues to fail” his administration would “repeal, replace & save healthcare for ALL Americans.”

Donald J. Trump @realDonaldTrump

Obamacare continues to fail. Humana to pull out in 2018. Will repeal, replace & save healthcare for ALL Americans. https://origin-nyi.thehill.com/policy/healthcare/319538-humana-to-drop-out-of-obamacare-marketplace-at-end-of-2017 …

5:50 PM – 14 Feb 2017 Humana to drop out of ObamaCare at end of 2017

The insurer said the market has not stabilized enough to participate next year.

origin-nyi.thehill.com

Frankly, we’re shocked at all of this!  Turns out that whole “adverse selection bias” was a real thing…who could have known

 

 

end

 

Your new Labour secretary and the fellow should be an easy confirmation.  However the Donald is still angry on the leaks

(courtesy zerohedge)

 

President Trump Announces New Labor Secretary Pick – Live Feed

President Trump just surprised The White House press corps by announcing he will hold a press conference at 1230ET today to announce his labor secretary pick. For now we do not know if he will answer any questions, but given the tweets in th elast 24 hours, he certainly has lots to say…

He is expected to announce his new labor secretary, following Andy Puzder’s withdrawal… Alexander Acosta is a former member of the National Labor Relations Board and is currently the dean of Florida International University’s law school.

John Roberts @johnrobertsFox

WH new pick for labor secty Alexander Acosta should be easy confirmation – fmr NLRB member – deputy AG in Civil Rights Division

11:45 AM – 16 Feb 2017

Given the tweetstorms of the last 24 hours, we suspect he will rage against “leakers” – promising they will “pay a big price”

 

Washington Examiner @dcexaminer

Trump: “We’re going to find the leakers. They’ll pay a big price for leaking.”

11:24 AM – 16 Feb 2017

Wewould be surprised if the topic of his election victory and the establishment’s disappointment doesn’t come up…

Donald J. Trump @realDonaldTrump

The Democrats had to come up with a story as to why they lost the election, and so badly (306), so they made up a story – RUSSIA. Fake news!

9:39 AM – 16 Feb 2017

 

“People are trying to cover up for a terrible loss that the Democrats had under Hillary Clinton”

We are sure the topic of Mike Flynn will come up – which President Trump will likely note – much to Nancy Pelosi’s disappointment – that The FBI is pursuing no charges against him.

Trump will undoubtedly mention the record high stock prices, having already pointed out the lack of media attention to it. But as BofA notes…

Our Make America Great Again indicator off to a good start in recent months; we regard housing in particular as absolutely key to bond markets. Path of least resistance for yields is higher until rates rise to a level that hurts housing.

 

And finally, the topic of an Intelligence Community coup (or withholding intel) will likely come up.

So grab your popcorn, take cover if you’re a CNN or NYTimes reporter, and enjoy… (due at 1230ET)…

We also wonder if any TIME magazine reporter will be called out…

 

end

 

Maddog Mattis issues his ultimatum to NATO:  Boost military spending  (with contributions coming from NATO countries) or else the USA will cut its support

(courtesy zero hedge)

Pentagon Chief’s Ultimatum To NATO: “Boost Military Spending Or The U.S. Will Cut Its Support”

Ahead of Jim Mattis’ first official trip to Brussels as the new head of the Pentagon, NATO members were on edge to see if America’s new Defense Secretary would push the same agenda which Trump had vocalized during his presidential campaign, namely that he would withdraw US support of NATO unless its member states boosted their spending in support of the international military organization.

To their disappointment, he did and in an ultimatum to America’s allies, Mattis told fellow NATO members Wednesday to increase military spending by year’s end or risk seeing the U.S. curtail its defense support, a move which AP dubbed was “a stark threat given Europe’s deep unease already over U.S.-Russian relations.”

“Americans cannot care more for your children’s future security than you do,” Mr. Mattis said in his first speech to NATO allies since becoming defense secretary. “I owe it to you to give you clarity on the political reality in the United States and to state the fair demand from my country’s people in concrete terms.” Mattis went further than his predecessors in apparently linking American contributions to the alliance to what other countries spend.

“If your nations do not want to see America moderate its commitment to this alliance, each of your capitals needs to show support for our common defense,” he said.

Echoing Trump’s demands for NATO countries to assume greater self-defense responsibility, Mattis said Washington will “moderate its commitment” to the alliance if countries fail to fall in line. He didn’t offer details, but the pressure is sure to be felt, particularly by governments in Europe’s eastern reaches that feel threatened by Russian expansionism.


Defense Secretary Jim Mattis, left, and the secretary general of NATO,
Jens Stoltenberg, in Brussels on Wednesday.

The reason for Mattis’ – and Trump’s – and displeasure is shown in the chart below. According to the NATO charter, member countries must allocate at least 2% of their GDP toward the organization (among other reasons, so that each country can defend itself without relying too much on other members). However, of 28 NATO members, only five meet this requirement.

Which is why, as the AP reports, the entire alliance seemed to hang on Mattis’ every word Wednesday. Officials crowded around televisions at the NATO meeting in Brussels to watch the retired general’s initial appearance with Secretary-General Jens Stoltenberg. Defense ministers clustered around Mattis as he entered the meeting room.

Citing danger from Russia, Mattis told the closed meeting of ministers they must adopt a plan this year that sets dates for governments to meet a military funding goal of 2 percent of gross domestic product. He called the funding increase a “fair demand” based on the “political reality” in Washington, an apparent reference to Trump’s past criticism of NATO as “obsolete” and his much-touted “‘America First” mantra.

Mattis did not say how the United States might back away from its obligations to NATO members, though there are several steps the Trump administration could take short of refusing to come to the aid of an ally under attack. That would be an abrogation of its treaty responsibilities, but the United States could reduce the number of American troops stationed in certain European countries or raise the bar for what it considers a military attack.

Noting the threat posed by the Islamic State group in Iraq and Syria, Mattis said: “Some in this alliance have looked away in denial of what is happening.” “We have failed to fill gaps in our NATO response force or to adapt,” he added.

In recent months, Trump has challenged the alliance to take on a greater share of military costs, even rattling European nations by suggesting the U.S. might not defend allies unwilling to fulfill their financial obligations as NATO members. Mattis didn’t go that far, and Wednesday’s focus appeared to be on simply increasing military funding if not fully reaching the target. Still, just that demand may prove to be very controversial as many European governments face hostility to more military spending, especially as their slow economic recoveries force belt-tightening elsewhere.

The United States is by far NATO’s most powerful member, spending more on defense than all the others combined. It devoted 3.61 percent of American GDP last year to military spending, according to NATO estimates — a level that has somewhat tapered off in recent years. Germany, by contrast, spent 1.19% of its overall budget on defense. Ten countries commit even less, and seven — including Canada, Italy and Spain — would have to virtually double military spending to reach the target. Luxembourg would require a fourfold increase to get close. None of these spending expansions are realistic, absent a substantial increase in these countries’ budget deficits, which could result in political instability at a very sensitive time, especially for Italy.

Along with the U.S., the other countries that do reach NATO’s benchmark for military spending are Britain, Estonia, Poland and, inexplicably, debt-ridden Greece.

British’s defense chief, Michael Fallon, said Mattis appeared to welcome a British proposal to create a road map for increased spending. “An annual increase that we’re asking them to commit to would at least demonstrate good faith,” he said.

One NATO official characterized the mood in the heavily fortified compound as tense and said allies were waiting to see if the message Mattis presented on Wednesday differed in tone from what Mr. Trump has said. In one important way, the defense secretary amplified the president’s previous statements. Though Mattis acknowledged “concern in European capitals about America’s commitment to NATO and the security of Europe,” he said allies must do more to reach their commitments to spend 2 percent of their G.D.P. on their militaries.

No longer can the American taxpayer carry a disproportionate share of the defense of western values,” he said.

Asked about Mattis’ ultimatum, NATO chief Stoltenberg said allies need time to develop plans. Many are already talking about increasing commitments, he said. “This is not the U.S. telling Europe to increase defense spending,” Stoltenberg said, noting that allies committed three years ago already to increase spending over the next decade. He said: “I welcome all pressure, all support, to make sure that happens.”

ACtually, this is the US telling Europe to increase its defense spending, at least until such time as the consequences of such a spending boost catch up with NATO, and Washington, and Trump relents on his demands.

Meanwhile, despite the sharpness of his demand, Mattis appeared to recognize Europe’s worries and its leaders’ desire for clarity on America’s commitment to NATO. In a brief public statement, made while standing alongside Stoltenberg, Mattis called the alliance “a fundamental bedrock for the United States and for all the trans-Atlantic community.”

 

end

 

Maddog rejects any military cooperation with Russia especially in Syria

(courtesy zero hedge)

Pentagon Chief Rejects Military Cooperation With Russia

One day after Defense Secretary Jim Mattis told US NATO allies they will have to pay up and meet their mandatory quota of 2% of GDP (which only 5 nations currently satisfy, among them the US and Greece), on Thursday the Pentagon’s new chief also had some bad news for Russia when he rejected any kind of military collaboration with Russia, despite previous calls by Putin for the West to work with his country on Syria and other issues.

Quoted by the WSJ, Mattis said at NATO’s Brussels headquarters that “We are not in a position right now to collaborate on a military level” adding that  “our political leaders will engage and try to find common ground or a way forward where Russia, living up to its commitments, will return to a partnership of sorts, here with NATO.” Prior to the meeting, Russian Defense Minister Sergei Shoigu expressed hope for cooperation but warned that “attempts to build a dialogue from a position of strength with regard to Russia are hopeless.”

Mattis’s remarks came after Mr. Putin made a plea for the alliance and other nations to cooperate with Russia. “It’s in everyone’s interest to resume dialogue between the intelligence agencies of the United States and other members of NATO,” said Mr. Putin, addressing Russia’s Federal Security Service (FSB) on Thursday.

The sudden chill in US-Russian relations is understandable: the Trump administration remains in turmoil over questions about the extent of Trump administration contacts with Russia, and tensions have been rising.

Elsewhere, as reported previously, the top US general, Joseph Dunford, chairman of the Joint Chiefs of Staff, is scheduled to meet his Russian counterpart, Gen. Valery Gerasimov, in Baku, Azerbaijan. The meeting will mark the highest-level military contact between Washington and Moscow since 2014. Shoigu added that the Russians “await clarification of the position of the Pentagon” at the Baku meeting.

Of particular interest will be any discussion between the US and Russia on the topic of NATO expansion.

NATO has been pursuing a multinational force on its eastern flank as a deterrent over Moscow’s aggression in the region. Secretary-General Jens Stoltenberg said the allies didn’t want to isolate Russia but still wanted “a firm predictable approach, including credible deterrence.”

 

He announced that alliance defense ministers had approved a plan to bolster its naval forces in the Black Sea, which is bordered by Russia, Ukraine, Turkey and other countries, and would improve military intelligence in the area.

 

Mr. Stoltenberg said the alliance’s standing maritime fleets would make more frequent visits to the Black Sea and step up military exercises. “It will be measured, it will be defensive and it will be no way aim at provoking a conflict or escalating tensions,” Mr. Stoltenberg said.

Understandably, Russia has taken frequent issue with operations in the Black Sea by naval vessels from nations that don’t border it.

Also of note, Russia’s military intervention in Syria on behalf of President Bashar al-Assad in late 2015 also caused friction between the U.S. and Russia, although both sides agreed to establish military communication to reduce the risk of incidents in the skies over Syria. As the WSJ further adds, “The meeting in Baku is expected to focus on a proposal pushed by senior uniformed officers at the Pentagon to improve that system. Gen. Dunford has pushed the plan, which would elevate the military contacts to a the three-star general level. Currently, the two militaries communicate by phone at the colonels’ level to share information about where each is operating.

The plan has been floated for months, but went nowhere under Defense Secretary Ash Carter, who was wary of higher level coordination with the Russian military. The proposal wouldn’t likely mean the U.S. and Russian militaries would coordinate with each other or share intelligence. The system is thought to have worked well, but has had some problems. The U.S. mistakenly hit Syrian forces in Deir Ezzour rather than Islamic State targets after a Russian colonel couldn’t immediately locate his American counterpart on the phone.

With US-Russian relations about to be scrutinized in the US, keep a close eye on the diplomatic exchanges between the two countries for hints on whether another chill is about to fall between D.C. and Moscow.

 

end

 

UNBELIEVABLE!!  Wall Street Journal reports that uSA intelligent officials have withheld information from President Trump due to concerns that it could be leaked or compromised.

 

what on earth is going on in the USA?

(courtesy zerohedge)

On The Verge Of Treason: US Spies Withhold Intelligence From Trump

Following President Trump’s exclamations today with regard “un-American” leaks of classified intel, it appears he has a bigger, more serious problem on his hands. WSJ reports that US intel officials have withheld information from President Trump due to concerns it could be leaked or compromised.

The Wall Street Journal, citing unidentified current and former officials familiar with the matter, reports that officials’ decision to keep information from Mr. Trump underscores the deep mistrust that has developed between the intelligence community and the president over his team’s contacts with the Russian government, as well as the enmity he has shown toward U.S. spy agencies. On Wednesday, Mr. Trump accused the agencies of leaking information to undermine him.

In some of these cases of withheld information, officials have decided not to show Mr. Trump the sources and methods that the intelligence agencies use to collect information, the current and former officials said. Those sources and methods could include, for instance, the means that an agency uses to spy on a foreign government.

In some ways Trump may not care: according to the WSK, “Trump doesn’t immerse himself in intelligence information, and it isn’t clear that he has expressed a desire to know sources and methods. The intelligence agencies have been told to dramatically pare down the president’s daily intelligence briefing, both the number of topics and how much information is described under each topic, an official said. Compared with his immediate predecessors, Mr. Trump so far has chosen to rely less on the daily briefing than they did.”

However, now that the WSJ brought up this topic, one can be absolutely sure the first demand Trump will make during his next intel briefing: “show me all the information.” That’s when things could get rough.

The officials quoted by the WSJ emphasized they know of no instance in which crucial information about security threats or potential plotting has been omitted, although if indeed “some” information is withheld, it is the functional equivalent of Trump making decisions blind.

While a White House official said: “There is nothing that leads us to believe that this is an accurate account of what is actually happening”, Rep. Adam Schiff (D., Calif.), the ranking member of the House Intelligence Committee, said he has heard concerns from officials about sharing especially sensitive information with Mr. Trump.

“I’ve talked with people in the intelligence community that do have concerns about the White House, about the president, and I think those concerns take a number of forms,” Mr. Schiff said, without confirming any specific incidents.

“What the intelligence community considers their most sacred obligation is to protect the very best intelligence and to protect the people that are producing it.”

So, why are they worried?

The current and former officials said the decision to avoid revealing sources and methods with Mr. Trump stems in large part from the president’s repeated expressions of admiration for Russian President Vladimir Putin and his call, during the presidential campaign for Russia to continue hacking the emails of his Democratic rival, Hillary Clinton.

As the long-running tensions between the pro-Hillary intelligence community and President Trump rise, it is becoming increasingly clear that this escalating distrust between the top US spies on one hand and the White House on the other, will lead to a vicious circle of less information-sharing and implicitly more distrust until Trump moves from tweet-castigation to treason charges, or alternatively the spooks dig deep into the NSA server’s bag of goodies, and unleash full out mutiny (see John Schindler’s narrative for big details how this may play out).

 

END

Trump and Chaffetz are attacking the leakers.  Chaffetz has now requesting a Dept. of Justice probe into the source of the leaks.

(courtesy zero hedge)

 

Trump Attacks “Low-Life Leakers” After Chaffetz Requests DOJ Probe Into Source Of Leaks

In his second and third tweet of the day, Trump doubled-down his attack against what he sees the biggest threat to his administration, namely the leakers who quickly disclose everything that takes place around the new president to the WaPo, NYT and CNN, and said “Leaking, and even illegal classified leaking, has been a big problem in Washington for years. Failing @nytimes (and others) must apologize!” followed by a tweet that “The spotlight has finally been put on the low-life leakers! They will be caught!”

Donald J. Trump @realDonaldTrump

Leaking, and even illegal classified leaking, has been a big problem in Washington for years. Failing @nytimes (and others) must apologize!

6:58 AM – 16 Feb 2017 Donald J. Trump @realDonaldTrump

The spotlight has finally been put on the low-life leakers! They will be caught!

7:02 AM – 16 Feb 2017

Trump’s tweets were likely in response to news that late on Wednesday, House Oversight Committee Chairman Rep. Jason Chaffetz on Wednesday asked the DOJ’s inspector general Michael Horowitz to investigate the intelligence leaks that led to the ousting of National Security Advisor Michael Flynn.

“Over the last several days, there have been a series of news articles recounting potentially classified national security information,” Chaffetz wrote in a letter, also signed by the chair of the House Judiciary Committee Rep. Bob Goodlatte (R-Va.). In the letter Chaffetz expressed concern over “potentially classified national security information” circulated in recent news reports leading up to the resignation of the former national security adviser.

“We have serious concerns about the potential protection of classified information here … the release of classified information can, by definition, have grave effects on national security. In light of this, we request that your office begin an immediate investigation into whether classified information was mishandled here,” the lawmakers wrote.

“No matter where you are on the political spectrum, you cannot have classified information migrating out into a non-classified setting,” Chaffetz said during an interview with Fox News on Wednesday.

“Same with Hillary Clinton, same with Donald Trump, and same with those in the intelligence world or at the Department of Justice who get to see this information,” the lawmaker said. “They just can’t hand it out like candy and favors to those in the news media. Can’t do it.” Chaffetz also said the Oversight Committee won’t probe the circumstances surrounding Flynn.

As Politico adds, Chaffetz told reporters on Tuesday, following Flynn’s resignation, that he had no plans to have the Oversight Committee investigate Flynn’s communications with Russian officials, saying that the situation was “working itself out.”

Prior to his Thursday tweets, Donald Trump on Wednesday similarly criticized the information leaks, blasting the media for reporting on Flynn “very unfairly.” And just hours before his ouster Flynn himself also denounced the leaks as “criminal” in an interview with the Daily Caller.

“You call them leaks. It’s a criminal act. This is a crime. It’s not just a wink and a nod,” Flynn told the outlet from his White House office Monday. “In some of these cases, you’re talking about stuff that’s taken off of a classified system and given to a reporter. That’s a crime.”

Chaffetz’ letter below (link)

END

Well that about does it for tonight

I will see you tomorrow night

Harvey


FEB 15/WORK IN PROGRESS/ /COMMENTARY WILL BE FINALIZED BY 6:15 EST TONIGHT

Wed, 02/15/2017 - 14:01

Gold at (1:30 am est) $1231.70 UP $7.80

silver was : $17.95:   UP 8 CENTS

Access market prices:

Gold: $XXX

Silver: $XXX

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning

The fix for London is at 5:30  am est (first fix) and 10 am est (second fix)

Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai FIRST morning fix Feb 15/17 (10:15 pm est last night): $  1242.67

NY ACCESS PRICE: $1226.50 (AT THE EXACT SAME TIME)/premium $16.17

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Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1241.83

NY ACCESS PRICE: $1224.70 (AT THE EXACT SAME TIME/2:15 am)

   SPREAD/ 2ND FIX TODAY!!:  17.13

China rejects NY pricing of gold  as a fraud/arbitrage will now commence fully

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London FIRST Fix: Feb 15/2017: 5:30 am est:  $1225.15   (NY: same time:  $1225.50   (5:30AM)

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London Second fix Feb 15.2017: 10 am est:  $1224.40 (NY same time: $1224.80 (10 am)

 

It seems that Shanghai pricing is higher than the other  two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.

Also why would mining companies hand in their gold to the comex and receive constantly lower prices.  They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

end

For comex gold: FEBRUARY/ 

NOTICES FILINGS FOR FEBRUARY CONTRACT MONTH:  1 NOTICE(S) FOR 100 OZ.  TOTAL NOTICES SO FAR: 5124 FOR 512,400 OZ    (15.937 TONNES)

For silver:

 

For silver: FEBRUARY

26 NOTICES FILED FOR 130,000 OZ/

TOTAL NO OF NOTICES FILED: 386 FOR 1,930,000 OZ

Let us have a look at the data for today

.

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In silver, the total open interest FELL by A  slight 752 contracts DOWN to 195,338 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e.  .977 BILLION TO BE EXACT or 140% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH: THEY FILED: 26 NOTICE(S) FOR 130,000 OZ

In gold, the total comex gold ROSE BY A WHOPPING 7,277 contracts DESPITE THE FALL IN  THE PRICE GOLD ($0.50 with YESTERDAY’S trading ).The total gold OI stands at 415,128 contracts

we had 1 notice(s) filed upon for 100 oz of gold.

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

GLD:

We had another huge change in tonnes of gold at the GLD: a deposit of 2.67 tonnes despite the attempted whacking of gold today.

Inventory rests tonight: 843.54 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 334.713 million oz

end

.

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

1. Today, we had the open interest in silver FALL by 752 contracts DOWN to 195,338 AS SILVER WAS UP 7 CENTS with YESTERDAY’S trading…probably some short covering! The gold open interest ROSE by 7,277 contracts UP to 415,128 WITH THE FALL IN THE PRICE OF GOLD OF $0.50  (YESTERDAY’S TRADING)

(report Harvey

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 4.94 POINTS OR .15%/ /Hang Sang CLOSED UP 291.86 POINTS OR 1.23% . The Nikkei closed UP 199.00 POINTS OR 1.03% /Australia’s all ordinaires  CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed DOWN at 6.8717/Oil FELL to 52.85 dollars per barrel for WTI and 55.62 for Brent. Stocks in Europe ALL IN THE GREEN. Offshore yuan trades  6.8717 yuan to the dollar vs 6.8553  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS POBC ATTEMPTS TO STOP USA DOLLARS FROM LEAVING CHINA’S SHORES. ONSHORE YUAN WEAKER AS IS OFFSHORE YUAN COUPLED WITH THE STRONGER DOLLAR

  REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA/NORTH KOREA

More of the poisoning assassination of Kim Jong Un’s brother:

(courtesy zero hedge)

b) REPORT ON JAPAN c) REPORT ON CHINA 4. EUROPEAN AFFAIRS

i)Beware:  there is a new type of debt issuance from Europe and this will be very dangerous to holders of this debt: “senior non-preferred bonds”.  

These bonds are bailable bonds:  in other words they can be used for a bail in if the bank is insolvent.  Judging from the actions of French banks, all of our ailing European banks want to issue these as fast as possible.

( Don Quijones)

ii)Nigel Farage warns the European Parliament on the immigration issue and on the upcoming French election:

( Mish Shedlock/Mishtalk(

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i) Russia/Crimea

This is a non starter: Trump expects Putin to return Crimea to Ukraine!!

not a chance!!!

( zero hedge)

ii)ISRAEL/PALESTINE/USA

The big meeting is today and uSA policy is set to drop the two state solution. However they want peace between these two factions.

( zerohedge)

6.GLOBAL ISSUES 7. OIL ISSUES

i)Yesterday we had API report much higher inventories of crude.  Today it was DOE’s turn and they also report a huge increase in crude along with large gasoline builds. Down goes crude prices.

( zerohedge)

ii)Our very reliable Nick Cunningham states that there is going to be a bloodbath in the oil market as USA production increases and the cuts in OPEC production is minimal

( Nick Cunningham/Oil Price.com)

iii)I wish that the crooks would manipulate gold and silver like they do oil! For no reason, WTI rises in price again despite the higher inventories!

( zerohedge)

 

8. EMERGING MARKETS 9.   PHYSICAL MARKETS

i)Canadian Mike Ballanger talks about the work of GATA and Hunter Thompson

(courtesy Mike Ballanger/GATA)

ii)James Cook talks about Ted Butler’s latest thesis that we have a new type of hedge fund buyer in silver;  these guys are long term players and are buying silver at the lower end of banker initiated raids and they accumulate.  He strongly believes that these guys have 400 million oz of paper silver long contracts to their name and they are in the waiting game..ready to pounce when silver is higher.

Remember also that he believes that JPMorgan owns 550 million oz of physical to their name.

I ask the question:  if these investors know full well the silver crime and they know that huge quantities of physical silver is not present, why are they waiting especially if they know that they may not get their required physical silver?

I have been writing that yes, the longs are in strong hands.  The only difference between Ted and myself is that the longs are a sovereign and that sovereign is China

( Cook/SilverSeek/Ted Butler/GATA)

iii)James Turk and Alasdair Macleod talk about gold and what we must be cognizant of in the New Year

( GoldMoney.com/GATA)

iv)Lawrie Williams comments on the great work of Koos Jansen who is without a doubt the authority on gold demand in China

( Lawrie Williams/Sharp’s Pixley)

v)The SPDR gold trust gets certification that it is sharia compliant.  That should boost demand

( Reuters)

10.USA STORIES

i)Not good; consumer price rage higher in the fastest pace in 5 years.  This is coupled with real wages tumbling.  This is not what Janet wants

( zero hedge)

ii)Retail sales jump .4% probably on the excitement of a Trump Presidency.  This is coupled with the red hot CPI rise of 2.3% year/year

( zerohedge)

iii)This is not good: mortgage delinquencies rise the most in 7 years as mortgage rates rise. And Janet wants to raise rates more?

( zero hedge)

iv)The NY Empire Mfg Fed index soars to 2 1/2 yr highs confirming the excitement of a Trump victory. However I would like to point out that this is soft data.

( zero hedge)

v)We have been reporting on a huge increase in production from the shale oil and gas sector these past several weeks.  This however has been coupled with a n downturn in the rest of the industrial sector

( zero hedge)

vi)Trump slams fake news media again and he is right.

( zero hedge)

vii)Another hedge fund in trouble with huge redemptions;  Daniel Och’s Och Ziff hedge fund:

(courtesy zero hedge)

viii)Meet your new National Security Advisor:  Robert Harward

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest ROSE BY A WHOPPING 7,277 CONTRACTS UP to an OI level of 415,128 DESPITE THE FALL IN THE  PRICE OF GOLD ( $0.50 with YESTERDAY’S trading). We are now in the contract month of FEBRUARY and it is one of the better delivery months  of the year. In this next big active delivery month of February we had a LOSS of 37 contracts DOWN to 1040.   We had 1 notice(s) served upon yesterday and therefore we LOST 36 contracts or an additional 3600 oz will not stand for delivery and NO DOUBT THEY WERE CASH SETTLED.   The next non active contract month of March saw it’s OI RISE by 56 contracts UP to 2022.The next big active month is April and here the OI ROSE by 2,987 contracts UP to 272,078.

 

We had 1 notice(s) filed upon today for 100 oz

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And now for the wild silver comex results.  Total silver OI FELL by 752 contracts FROM  196,090 DOWN TO 195,338 DESPITE THE FACT THAT THE PRICE OF SILVER ROSE TO THE TUNE OF 7 CENTS with respect to YESTERDAY’S trading. We must have had some short covering by the banks. We are moving CLOSER TO the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

The  active month of February saw the OI RISE by 26 contract(s) UP TO  150.  We had 0 notice(s) served YESTERDAY so we GAINED 26 CONTRACTS  or an additional 130,000 oz will stand for delivery.

The next big active delivery month is March and here the OI decrease by 6784 contracts down to 90,715 contracts. For comparison purposes last year on the same date only 78,261 contracts were standing.

We had 26 notice(s) filed for 130,000 oz for the FEBRUARY contract.

VOLUMES: for the gold comex

Today the estimated volume was 217,662  contracts which is good.

Yesterday’s confirmed volume was 247,856 contracts  which is very good

volumes on gold are getting higher!

INITIAL standings for FEBRUARY  Feb 15/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   nil OZ Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   1 notice(s) 100 oz No of oz to be served (notices) 1039 contracts 103,900 oz Total monthly oz gold served (contracts) so far this month 5124 notices 512,400 oz 15.937 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL oz Total accumulative withdrawal of gold from the Customer inventory this month  206,905.4   oz Today we HAD 0 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 0 customer withdrawal(s) total customer withdrawal: nil oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx For FEBRUARY:

Today, 0 notice(s) were 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(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

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