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Updated: 10 hours 53 min ago

August 23/Gold and silver rise but not gold/silver equity shares/High libor is causing shortage of dollars and causing losses at European and Japanese banks i.e. a double whammy: negative interest rates coupled with high libor/

Tue, 08/23/2016 - 18:59

Gold:1340.60 up $2.90

Silver 18.91  up 7 cents

 

In the access market 5:15 pm

Gold: 1338.40

Silver: 18.82

.

For the August gold contract month,  we had a good sized 261 notices served upon for 26,100 ounces. The total number of notices filed so far for delivery:  13,387 for 1,338,700 oz or  tonnes or 41.639 tonnes.  The total amount of gold standing for August is 42.777 tonnes.

In silver we had 9 notices served upon for 45000 oz. The total number of notices filed so far this month:  480 for 2,400,000 oz.

We now enter in earnest the options expiry  for gold and silver.  The comex options expiry is: Friday, August 26.

Options expiry for the OTC /London’s LBMA contracts expire at noon August 31.

Today we witnessed gold and silver rise yet gold/silver equity shares falter. Generally this is a good sign that the crooks are orchestrating another raid in the next 24 hours. The silver situation is no doubt bothering them immensely.

 

 

Let us have a look at the data for today

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In silver, the total open interest FELL BY 71 contracts DOWN to 205,045 AND MOVING AWAY FROM ITS AN ALL TIME RECORD. THE OPEN INTEREST ON FRONT MONTH OF SILVER CONTRACTED BY A TINY AMOUNT DESPITE THE FACT THAT THE SILVER PRICE WAS WHACKED PRETTY HARD TO THE TUNE OF  46 CENTS IN YESTERDAY’S TRADING .In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.025 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia &ex China).

In silver we had 9 notices served upon for 45,000 oz

In gold, the total comex gold FELL 1,657 contracts as the price of gold FELL BY $3.70 yesterday . The total gold OI stands at 572,845 contracts.

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

GLD

we had no changse today at the GLD/

Total gold inventory rest tonight at: 958.37 tonnes of gold

SLV

we had no changes in the SLV,  / THE SLV Inventory rests at: 358.793 million oz.

 

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

1. Today, we had the open interest in silver FELL by 71 contracts DOWN to 205,045 despite the fact that the price of silver FELL HARD BY 46 cents with YESTERDAY’S trading.The gold open interest FELL 1,657 contracts DOWN to 572,845 as the price of gold FELL by $3.70 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 4.91 POINTS OR 0.16%/ /Hang Sang closed UP 1.02 points or 0.01%. The Nikkei closed DOWN 100.83 POINTS OR 0.61% Australia’s all ordinaires  CLOSED UP 0.70% Chinese yuan (ONSHORE) closed UP at 6.6430/Oil FELL to 47.06 dollars per barrel for WTI and 48.76 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6537 yuan to the dollar vs 6.6430 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS  MORE USA DOLLARS ATTEMPTS  LEAVE CHINA’S SHORES  

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

i)We have been highlighted the following to you on several occasions.  Now from CLSA: the Bank of Japan has basically nationalized the Japanese stock market.

( CLSA/zero hedge)

ii)Here is another casualty of the higher Libor and its increasing costs to foreign banks. We showed (below) that the higher libor costs make buying of USA bonds impossible because their higher costs negates the deal.  Now we see that Japanese banks are having trouble locating scarce dollars in the money markets and that will have a devastating effect on their profitability

( zero hedge)

b) REPORT ON CHINA

China has spooked its market as they seem to wish to withdraw from conventional QE and instead go their less powerful 14 repos:  bond yields spike as there will be nobody to buy their bonds:

( zero hedge)

4 EUROPEAN AFFAIRS

i)Last week we reported on the scarcity of Great Britain bonds (GILTS).  Today there was a rush to purchase anything with a yield and thus scarcity of bonds is back

( zero hedge)

ii)Shear lunacy…now Mario is buying private placement debt.  They are purchasing debt equivalent to 1 trillion euros per year.  It ends in March 2017:

( Mish Shedlock)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

An excellent commentary, with the subject that the new Russia-China- Iran alliance totally pushed the USA out of much middle east influence..

( Darius Shahtamasebi/AntiMedia.org)

6.GLOBAL ISSUES

i)A must read…the lunacy of QE and why this will bring the whole house of cards down

( David Stockman/ContraCorner)

ii)Good question:  just what are central banks terrified about…

( Phoenix Capital)

7.OIL ISSUES

i)Oil moves higher on false algo rumour of an Iran support to prop up oil market. It was denied by Iran but oil still rebounds higher

( zero hedge)

ii)Then it slides back to earth after the biggest inventory build in the last 4 months

( zero hedge)

8.EMERGING MARKETS

VENEZUELA: 

The authorities now are banning lines from forming outside bakeries

( Fisher/Reason.com/Hit & Run blog)

9.PHYSICAL STORIES

i)The biggest bond traders are continuing by buy negative yielding bonds because central banks have a huge appetite for bonds and they are hoping for capital gains instead of interest rate.

(Bloomberg/Gata)

ii)Bullion Star’s Ronan Manly discusses why China wanted inclusion into the SDR’s and how they are going to supplant the USA as a reserve currency of the world:

(courtesy Bullion Star/Ronan Manly))

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

i)Early trading today:figure out who is right and who is wrong!

S& P up! gold up! and yield on 30 yr down  (bond prices up?)

( zero hedge)

ib)The bond market, this afternoon delivered its potential verdict on Yellen’sJackson Hole address this Friday with yields falling to .76% on the two year note. The bond market is expecting nothing but dovishness:

(courtesy zero hedge)

 

ii)The USA flash manufacturing PMI for August printed a very disappointing 52.1.This is a preliminary number but it does not bode well for the USA economy:

( zero hedge/FlashPMI) iii)Wow! what a huge downward move:  the Richmond mfg Fed survey collapses the most on record:  + 10 to – 11.

( zero hedge)

iv) New rules coming will cause problems for our derivative players as they will need to increase their margins.  The major problem of course is the lack of collateral caused by bankers soaking up everything.  This is going to hurt the bankers quite a bit…

another important read…

(Bloomberg/Sabrush)

v)Another very important commentary.  I have been pointing out to you for the past several months the continual decline in foreign demand for USA government bonds.  The latest TIC report shows aggressive foreign selling.  The big question is why? The answer lies in the cost to hedge the USA dollar.  Even though the USA has a good positive yield compared to anybody else at sovereign AAA, it is the cost to hedge that kills the trade (buy USA short EU eg.)  If investors want yield that must do so unhedged and with a USA policy to tighten that is not a very good idea

a must read…

( zero hedge)

vi)The Fed admits that another 4 trillion uSA will be needed to offset another economic shock or in other words, the doubling of the Fed’s balance sheet.

It would be a mess…

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 572,845 for a LOSS of 1657 contracts as the price of gold fell by $3.70 with yesterday’s trading. We are now in the active month of August.  As I stated this month:”Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we have witnessed in May, June and July whereby the front delivery month increases in I standing for metal or a slight contraction.  We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice. 

The big active contract month of August saw it’s OI fall by 46 contracts down to 627.  We had 46 notices filed upon yesterday so we neither gained nor lost any gold ounces that will  stand for delivery in August.  The next contract month of Sept saw it’s OI fall by 190 contracts down to 4218.  The September contract still remains extremely elevated and we may have another of those high deliveries rare for a non active month. The next active delivery month is October and here the OI ROSE by 85 contracts UP to 47,760.  The estimated volume today (which is just comex ales during regular business hours of 8:20 until 1:30 pm est) was POOR at 152,660.  The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 164.774 contracts. The comex is not in backwardation.

Today we had  261 notices filed for  26,100 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI fell by only 71 contracts from 205,116 down to 205,045 despite the HARD fall in the price of silver to the tune of 46 cents yesterday.  We are moving away from the all time record high for silver open interest set on Wednesday August 3:  (224,540). The non active month of August saw it’s OI fall by 1 contract down to 15.  We had 0 notices served upon yesterday, so we  lost 1 silver contract or an additional 5,000 will not stand for silver in this non active delivery month of August.  The next active month is September and here the OI fell by only 13,903 contracts down to 68,374 .We have 6 days left before first day notice.  The volume on the comex today (just comex) came in at 92,896 which is  HUGE but many rollovers.  The confirmed volume yesterday (comex and globex) was also huge  at 129,696( with many rollovers). Silver is not in backwardation.  London is in backwardation for several months. we had 9 notices filed for 45,000 oz INITIAL standings for AUGUST  August 23. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil nil Deposits to the Dealer Inventory in oz 3,999.970 oz

Brinks

  Deposits to the Customer Inventory, in oz    nil No of oz served (contracts) today 261 notices  26,100 oz No of oz to be served (notices) 627 contracts (62,700 oz) Total monthly oz gold served (contracts) so far this month 13,387 contracts (1,338,700 oz) (41.639 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    538,.816.3 OZ Today:  HUGE activity at the gold comex AND 1 KILOBAR ENTRY// Today we had 1 dealer DEPOSIT i) into Brinks:3999.970 oz what happened to our usual 4,000.00 oz??? total dealer deposit: 3,999.97    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 0 customer deposit: Total customer deposits: nil OZ Today we had 0 CUSTOMER withdrawals Total customer withdrawals  nil OZ Today we had 4 adjustment:  i) Out of BRINKS:  5979.900 oz (186 KILOBARS) was adjusted out of the customer and this landed into the dealer account of BRINKS: ii)Out of Delaware:  295.371 oz was transferred out of the customer account and this landed into the dealer account of Delaware iii) Out of HSBC:  1639.701 oz was adjusted out of the dealer and this landed into the customer account of HSBC; a deemed settlement iv) Out of Scotia; 4006.36 oz was adjusted out of the dealer and this landed into the customer account of Scotia. total deemed settlement : .1756 tonnes Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 261 contracts of which 2 notice was stopped (received) by JPMorgan dealer and 191 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (13,387) x 100 oz  or 1,338,700 oz , to which we  add the difference between the open interest for the front month of AUGUST  (627 CONTRACTS) minus the number of notices served upon today (261) x 100 oz   x 100 oz per contract equals 1,375,300 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (13,387) x 100 oz  or ounces + {OI for the front month (627) minus the number of  notices served upon today (261) x 100 oz which equals 1,375,300 oz standing in this non  active delivery month of AUGUST  (42.777 tonnes). We neither gained nor lost any gold ounces that will stand for delivery in this  active delivery month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.777 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418, aug 23: .1756 tonnes/THEREFORE 91.663 tonnes still standing against 73.047 tonnes available.  Total dealer inventor 2,348,477.836 oz or 73.047 tonnes Total gold inventory (dealer and customer) =11,020,512.828 or 342.78 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.78 tonnes for a  gain of 40  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

   end And now for silver   AUGUST INITIAL standings  august 23.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory NIL Deposits to the Dealer Inventory  NIL OZ Deposits to the Customer Inventory 877,523.735 OZ CNT DELAWARE SCOTIA No of oz served today (contracts) 9 CONTRACTS (45,000 OZ) No of oz to be served (notices) 15 contracts 75,000 oz) Total monthly oz silver served (contracts) 480 contracts (2,400,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  10,150,179.0 oz today we had 0 deposit into the dealer account:  Total dealer deposits;  NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 0 customer withdrawal: Total customer withdrawals: NIL oz We had 3 customer deposit: i) Into CNT;  983.555 oz ii) Into Delaware; 1978.100 oz iii) Into Scotia; 874,562.08 oz total customer deposits:  877,523.735   oz        we had 0 adjustments The total number of notices filed today for the AUGUST contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (480) x 5,000 oz  = 2,400,000 oz to which we add the difference between the open interest for the front month of AUGUST (15) and the number of notices served upon today (9) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the AUGUST contract month:  480(notices served so far)x 5000 oz +(15 OI for front month of AUGUST ) -number of notices served upon today (9)x 5000 oz  equals  2,430,000 oz  of silver standing for the AUGUST contract month. we lost 5,000 additional silver ounces that will not stand for silver metal in this non active delivery month of August.   Total dealer silver:  27.453 million (close to record low inventory   Total number of dealer and customer silver:   157.511 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD August 23/no change in gold inventory at the GLD/Inventory rests at 958.37 tonnes August 22/ a deposit of 2.38 tonnes of gold into the GLD/Inventory rests at 958.37 tonnes August 19/no changes at the GLD/inventory resets at 955.99 tonnes August 18/a withdrawla of 6.24 tonnes of gold from the gLD/Inventory rests at 955.99 tonness August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 23/ Inventory rests tonight at 958.37 tonnes

end

Now the SLV Inventory August 23/no change in silver inventory at the SLV/Inventory rests at 358.793 million oz. August 22/a huge addition of 3.324 million oz into the SLV/Inventory rests at 358.793 million oz August 19/no change in silver SLV/Inventory rests at 355.469 million oz/ August 18/ a massive paper deposit of 2.185 million oz into the SLV/Inventory rests at 355.469 million oz August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/ August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 23.2016: Inventory 358.793 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.4 percent to NAV usa funds and Negative 4.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 60.3% Percentage of fund in silver:38.5% cash .+1.2%( August 23/2016). 2. Sprott silver fund (PSLV): Premium rises to +1.65%!!!! NAV (august 23/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.90% to NAV  ( august 23/2016) Note: Sprott silver trust back  into POSITIVE territory at +1.65% /Sprott physical gold trust is back into positive territory at 0.90%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,TUESDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Germans Warned To ‘Stockpile’ Cash In Case Of ‘War’ By abidpashaAugust 23, 20160 Comments

The German government is warning its people to ‘stockpile’ food, water and cash in case of ‘war’.

For the first time since the end of the Cold War, the German government is set to tell citizens to stockpile food, water, medicine, fuel and cash in case of war, an attack, catastrophe or “national emergency”, the Frankfurter Allgemeine Sonntagszeitungnewspaper reported on Sunday.

Angela Merkel, Francois Hollande and Matteo Renzi on Aircraft Carrier Garibaldi yesterday. Photo: Guido Bergmann / DPA

Angela Merkel’s government is to “encourage the population” to have their own “personal supplies” including having some reserves of cash in their homes. People will also be urged to keep supplies of medicines, warm blankets, coal, wood, candles, torches, batteries and matches.

Regarding the advice to own cash outside the banking system, Deutsche Wellepointed out that:

“A wad of cash is another important part of any household’s emergency supplies. There may not be time to rush to a bank, and ATMs won’t work if the power is out.”

This is one of the primary reasons that one should own physical gold coins and bars outside the banking, financial and indeed the “technological system” and its dependence on electrical grids and supplies. Many of these systems are antiquated and vulnerable to attack such as from electromagnetic pulse (EMP) warfare that could quickly take out a large city or indeed a nation’s electricity infrastructure and supplies.

Frankfurter Allgemeine Sonntagszeitung  reported that the

“Population should be able to protect themselves before government measures start to ensure an adequate supply of food, water, energy and cash.”


“The population will be obliged to hold an individual supply of food for ten days,” the newspaper quoted the government’s “Concept for Civil Defence” – which has been prepared by the Interior Ministry – as saying. According to information leaked toFrankfurter Allgemeine Sontagszeitung they include advice to citizens to stockpile enough food for ten days and clean drinking water for five days.

“The population should be urged by appropriate means to keep two litres of drinking water per person per day,” the newspaper quoted a government paper as saying.

The 69-page report does not see an attack on Germany’s territory, which would require a conventional style of national defense, as likely. However, the precautionary measures demand that people “prepare appropriately for a development that could threaten our existence and cannot be categorically ruled out in the future,” the paper cited the report as saying.

The government is to increase stocks of smallpox vaccine and antibiotics in case of biological attack, and set up reserves of petrol and oil at 140 locations around Germany to ensure a supply for 90 days. Other provisions include setting up decontamination sites outside hospitals in case of nuclear, biological or chemical attack.

German newspapers like Deutsche Welle have complied handy checklists such as What emergency supplies do you need?

It is important to note that another global financial crisis and collapse of the global banking and financial system would also necessitate citizens being prepared. Deutsche Bank’s share price has all the hallmarks of that of Lehman Brothers prior to Lehman’s collapse.

Political and financial complacency reigns today as it tends to do regarding geopolitical risk. The complacency of the world between 1900 and 1914 is the best example of this. There is little analysis of the potential impact of terrorism and war on the lives of citizens or indeed on their personal finances.

Owning some gold coins and bars outside the banking and financial system will protect from these scenarios. As ever, it is prudent to hope for the best but be prepared for less benign scenarios.

Gold and Silver Bullion – News and Commentary

Silver tumbles to 7-wk low, but outlook remains supportive (Bulliondesk)

Gold steady as markets await U.S. rate hike clues (Reuters)

CME Group suspends gold, natural gas trader for spoofing (Reuters)

Dollar Advances as Fischer Tips Fed Balance Toward Tightening (Bloomberg)

Mint selling more American Eagle gold bullion coins (CoinWorld)

Pomboy: Grim Outlook for Economy, Stocks; Positive On Gold (Barrons)

Fed comments push gold lower but outlook “remains solid” (CNBC)

The US National Debt: Facing a debt crisis  (MoneyInsights)

Bubbles In Bond Land——A Central Bank Made Mania (DSCC)

Bank Of Ireland And RBS To Charge Negative Interest Rates To Depositors – Remember MF Global? (Forbes)

Gold Prices (LBMA AM)

23Aug: USD 1,338.50, GBP 1,015.25 & EUR 1,181.09 per ounce
22Aug: USD 1,334.30, GBP 1,018.20 & EUR 1,181.26 per ounce
19Aug: USD 1,346.85, GBP 1,026.30 & EUR 1,189.67 per ounce
18Aug: USD 1,347.10, GBP 1,023.93 & EUR 1,190.84 per ounce
17Aug: USD 1,342.75, GBP 1,031.23 & EUR 1,191.96 per ounce
16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce

Silver Prices (LBMA)

23Aug: USD 18.98, GBP 14.40 & EUR 16.75 per ounce
22Aug: USD 18.91, GBP 14.45 & EUR 16.74 per ounce
19Aug: USD 19.42, GBP 14.80 & EUR 17.14 per ounce
18Aug: USD 19.78, GBP 15.04 & EUR 17.47 per ounce
17Aug: USD 19.57, GBP 15.04 & EUR 17.37 per ounce
16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce


Recent Market Updates

– Ireland’s Biggest Bank Charging Depositors – Negative Interest Rate Madness
– Rothchilds Buying Gold On “Greatest Experiment” With Money In “History of the World”
– Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich
– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million

abidpasha Published in Daily Market Update

END

 

The biggest bond traders are continuing by buy negative yielding bonds because central banks have a huge appetite for bonds and they are hoping for capital gains instead of interest rate.

(courtesy Bloomberg/Gata)

Biggest bond traders are on a negative-yield binge, and can make it pay

Submitted by cpowell on Mon, 2016-08-22 16:03. Section:

By Brian Chappatta and Andrew Wong
Bloomberg News
Sunday, August 21, 2016

It might be considered absurd, if not for the unprecedented contortions in global financial markets.

Pacific Investment Management Co.’s largest international bond fund and China are piling into negative-yielding Japanese debt, buying securities that pay out less than the purchase price. And there’s a way to turn a tidy profit off the trade.

At the heart of the strategy is the world’s insatiable appetite for dollar assets, which is presenting an opportunity for investors with greenbacks to spare: the chance to pick up extra yield, a luxury in an era of record-low interest rates. For dollar lenders, even three-month Japanese bills, trading at a rate of negative 0.24 percent, offer juicy returns through a swap transaction that locks in exchange rates. …

… For the remainder of the report:

http://www.bloomberg.com/news/articles/2016-08-21/pimco-china-show-no-fe..

END.

 

Bullion Star’s Ronan Manly discusses why China wanted inclusion into the SDR’s and how they are going to supplant the USA as a reserve currency of the world:

(courtesy Zero hedge)

Song Xin: Increase Gold Reserves And Join SDR. by BullionStar Aug 23, 2016 2:37 PM

The Chairman of the China Gold Association and General Manager and Party Committee Secretary of China National Gold Group Corporation, the latter being China’s largest gold mining enterprise, is Song Xin and happens to be one of my favorite commentators in China. This gentleman made waves in July 2014 when he candidly wrote on Sina Finance that the People’ Bank Of China (PBOC) should slowly raise its official gold reserves to 8,500 tonnes, more than what the US Treasury claims to hold. The article was published in Chinese but translated by BullionStar to share the views by Song Xin with the English speaking world:

For China, gold’s strategic mission lies in the support of renminbi internationalization, and so let China become a world economic power and make sure that the China Dream is realized. … gold forms the very material basis for modern fiat currencies. Gold is the world’s only monetary asset that has no counter party risk… That is why, in order for gold to fulfill its destined mission, we must raise our gold holdings a great deal, and do so with a solid plan. Step one should take us to the 4,000 tonnes mark, more than Germany and become number two in the world, next, we should increase step by step towards 8,500 tonnes, more than the US.

In the next translation further below you will read more on how Song Xin views gold’s role in China’s financial strategy. The bullet points from the article:

  • China continuously accumulates gold reserves to support and accelerate renminbi internationalization.
  • Renminbi confidence and gold are closely related. Gold reserves are the cornerstone for renminbi internationalization.
  • In modern times gold plays an important role in managing economic risk and maintaining China’s financial safety.
  • China is continuously increasing its official gold reserves in conjunction to joining the SDR.
  • The ratio of China’s official gold reserves to its GDP should be more in line with the US and other developed countries. At this moment China’s official gold reserves are still relatively low.
  • The Silk Road economic project, also called “One Belt and One Road” (OBOR), has huge development opportunities for the Chinese gold industry. Song Xin mentions that the in ground gold reserves of countries along OBOR reach 21,000 tonnes. In 2015, witnessed by Chairman Xi Jinping and President Putin, China National Gold Group Corporation and Russia’s largest gold mine Polyus have signed a strategic cooperative agreement and they are promoting detailed relevant cooperative issues at present.

What he didn’t mention is that China is striving to boost gold trade along OBOR to be settled in renminbi through the Shanghai International Gold Exchange.

Is The SDR A Means Or And End For China? 

In the mainstream media we often read China wants the SDR to replace the US dollar as the world reserve currency, based on statements from PBOC Governor Zhou Xiaochuan – among others:

Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency.

Since 2009 China has vigorously pressured the IMF for renminbi inclusion into the SDR. Finally, in 2015 the IMF decided the renminbi would be added to its currency basket in October 2016.

Zhou and other prominent economists at the PBOC are clearly pushing the SDR, but what’s China’s exact strategy?

In advance of the official inclusion of the renminbi into the SDR, which will take place on October 1, 2016, developments regarding the International Monetary Fund’s synthetic reserve currency are unfolding rapidly.

Author of the Big Reset, Willem Middelkoop, reported this August a “Substitution Fund” is being discussed in the higher echelons of the monetary elites, to facilitate dollar exchange for SDRs outside the market, and thus creating an escape from dollar reserves without putting downward pressure on the dollar.

Also in August, The PBOC allowed a division of the World Bank (the IBRD) to issue bonds denominated in SDRs in the Chinese market. The bonds worth $2.79 billion dollars can be created “soon” – presumably within a month. In addition, the Chinese government-linked China Development Bank will issue SDR notes worth somewhere in between $300 million to $800 million dollars. Both issues are “SDR-denominated financial market instruments” called M-SDRs by the IMF. Though experts think the M-SDRs will encounter many practical challenges when implemented and demand will be tepid, nevertheless the intention by the PBOC to launch these instruments is clear.

On the surface we can observe China has a vast interest in the SDR, but is the SDR a means or an end for China? What if China is simply using the SDR as a vehicle to achieve other objectives? For example:

  1. Dethroning the dollar. The SDR can be an excellent tool to unwind the dollar hegemony. In addition the Substitution Fund could help an orderly exit from China’s lob-sided dollar reserves.
  2. Internationalize the renminbi. Inclusion of the renminbi into the SDR boosts global renminbi acceptance as a reserve currency.
  3. Reduce capital outflows from China. With respect to M-SDRs, David Marsh of financial think tank the Official Monetary and Financial Institutions Forum (OMFIF) wrote:

Beijing’s SDR capital market initiative will allow domestic Chinese investors to subscribe to domestic bond issues with a significant foreign currency component, which will help dampen capital outflows… 

I think for China the SDR is just a means to an end. The end being to internationalize the renminbi, which of course is connected to the dollars retreat. And as Song Xin clearly states, “gold forms the very material basis for modern fiat currencies” and, “gold reserves should become the cornerstone … for renminbi internationalization”.

In my humble opinion the financial crisis has shown (once again) the inherent flaws of all fiat currencies. A bundle of some of these currencies will not solve the problems ahead of us; at best provide tools or a next level printing press. I still prefer gold as a store of value.

I find it interesting that Song Xin mentions the importance of the ratio between China’s official gold reserves and GDP. This concept was also brought forward by Jim Rickards. If the PBOC would have 5,000 tonnes of official gold reserves their “gold to GDP ratio” would be roughly on par with to the US, Europe and Russia.  One of the theories about our current international monetary system – that was detached from gold in 1971 – is that it can shift to a new gold anchored system when the power blocks have equalized the chips (Jim Rickards). In other words, if the US, Europe, Russia and China all have a roughly equal ratio of official gold reserves to their GDP, the international monetary system could make a transition towards gold.

According to my estimates the PBOC has roughly 4,000 tonnes in official gold reserves, in contrast to what is publicly disclosed at 1,800 tonnes. Perhaps the PBOC is “nearly there”.

Song Xin who was also a speaker at the “Renminbi Internationalization and China’s Gold Strategy Seminar” in Beijing on 18 September 2015.

Original source of the article below is the China Gold Association website. [Brackets added by Koos Jansen]

Song Xin, Chairman of the China Gold Association, General Manager and Party Committee Secretary of the China National Gold Group Corporation: Stick to the gold mission and boost innovative development

March 14, 2016

As the sole central enterprise in the gold industry, China National Gold Group Corporation is a firm defender of renminbi internationalization, pioneering demonstrator of the country’s “One Belt and One Road”, and faithful guardian of a happy life for people. It’s the direction that we should strive for.

On March 10 during the two assemblies, Song Xin, Chairman of the China Gold Association, General Manager and Party Committee Secretary of the China National Gold Group Corporation, was the guest in Xinhuanet’s 2016 two assemblies special Interview. In the program Dialogue with New State-owned Enterprises and Cheer up in the “13th Five-Year Plan”, he proposed the conclusions above. Besides, in the in-depth dialogue, Song Xin systematically illustrated topics including the functions of renminbi internationalization, effectively enhancing gold supply, realizing improved quality and efficiency of enterprises, practicing the central party’s “Five Development Theories”, and fulfilling the responsibilities of central enterprises.

About Gold’s Functions: Increase Gold Reserves And Accelerate Renminbi Internationalization. A Close Relationship between Increasing Gold Reserves And Joining The SDR

When the credit lines of paper currency declines and there are enough gold reserves, people can be less worried about the existing credit system and enhance their confidence in the currency.

Last year, China joined the IMF (International Monetary Fund) Special Drawing Rights (SDR), signifying the renminbi’s march towards internationalization.

Song Xin pointed out that the renminbi is closely related to gold. Gold is priced in US dollars throughout the world and in renminbi in China. There is a special relation between the renminbi and gold. We have continuously increased gold reserves since China strove to join the SDR basket of currencies. By the end of February this year, our gold reserves have increased to 1788.45 tonnes. In other words, China has continuously increased its official gold reserves and publicized the amount to the world, keeping a close relation with renminbi internationalization and joining the SDR.

Further increase gold reserves to adapt to economic strength

China’s existing gold reserves are only about 1/5 of America’s. With the acceleration of renminbi internationalization, the renminbi should further increase its gold reserves in order to reach a level matching the national economic aggregate [GDP], especially if the renminbi wants to become a global currency.

Song Xin mentioned that China’s gold reserves once maintained around 1,054 tons. In the second half of last year, it started to increase these reserves substantially. Now, it has been increased by 70%. The increase range is big, but small compared to that of developed countries. At present, our economic aggregate [GDP] reaches second place in the world, but our gold reserves only reach the sixth place in the world. If the IMF’s reserves are excluded, China’s reserves rank in fifth place according to national rankings.

Possessing sufficient gold can strengthen confidence in a currency

Song Xin said, “There is a remarkable distance between China’s gold reserves and America’s gold reserves. America’s gold reserves are 8,133 tons and it even reached over 20,000 tons before. In those days, America controlled most of the gold in the world, which laid an important foundation for the US dollars to become a global currency.”

Before the Bretton Woods system was disintegrated in the 1970s, gold was directly connected with the US dollar. After the Bretton Woods system was corrupted, gold was disconnected from the US dollar, but America still kept sufficient gold reserves.

Song Xin believes that it has a relation with the global governing system. When the global economic aggregate was not so big, the gold standard had a certain advantage. With the expansion of the economic aggregate, the Bretton Woods system was disintegrated, and gold was disconnected from the US dollar. America announced that gold was unimportant then under this circumstance. However, in fact, when a financial crisis happens in America, its gold reserves don’t reduce at all. Americans firmed up people’s confidence in the US dollar by sufficient gold reserves.

Talk about supply reform: increase the effective supply of gold to boost quality and efficiency of enterprises rather than excess capacity, the gold industry needs to increase supply

In 2015, our domestic gold mine output reached about 450 tons, ranking the top in the world for nine consecutive years. Meanwhile, gold [retail] consumption reached almost 986 tons, surpassing India for three consecutive years and becoming the largest gold consumption country in the world.

Song Xin mentioned that our gold production can’t satisfy consumption demand and it doesn’t include the central bank’s reserves. Therefore, for the gold industry, increasing gold production and rapidly supplementing the gap above are the important missions for the gold industry.

Regarding how to increase the effective supply of gold, Song Xin believes that enterprises in the gold industry should offer more suitable marketing paths, especially customers’ favorite gold jewelries and gold investments with cultural connotation and innovation.

Maintain national financial safety and fulfill political responsibility 

“The political responsibility of the China National Gold Group Corporation is to make enterprises strong, excellent and big. Besides that, it is also to allow staff to enjoy the achievement of enterprise development. More importantly, it is to increase the effective supply of gold, to satisfy the demands of people and country for gold products, and to maintain the healthy and harmonious development of the industry”, said Song Xin.

Song Xin introduced that gold played a very important role in different historical periods. In the revolutionary war period, the underground party delivered abundant gold to Yan’an from the Jiaodong base area in order to get medicine and materials, playing a positive role for the Communist Party to gain victory. In the beginning of reform and opening up, the country’s foreign exchange was in a shortage and our country vigorously increased gold productivity, once amounting to 70% of the whole country’s foreign exchange reserve which is mainly for gold swap transactions and purchasing devices, etc. and guaranteeing foreign exchange demand of economic development. In the new era, gold has played an important role in resisting economic risk, maintaining the country’s financial safety and assisting with renminbi internationalization.

Song Xin thinks that the China National Gold Group Corporation shoulders the important mission of increasing gold reserves and production and adding trust for renminbi internationalization for the country. He said, “Gold reserves should become the cornerstone or ballasting stone for renminbi internationalization, which can improve the gold content of renminbi. In these aspects, the China National Gold Group Corporation is obligated to fulfill its own political duty.”

Talk about “Five Major Development Concepts”: Explore Profound Meaning Based on Practical Conditions for Enterprise.

Make achievement in the “One Belt and One Road” With the implementation of “One Belt and One Road”, the China National Gold Group Corporation can accomplish a lot in “going out” and “going out” is an important constituent of our reform and opening up in the new era. “One Belt and One Road” has brought huge development opportunity for Chinese gold industry and enterprises. Song Xin mentioned that the gold [in ground] resources of countries along the “One Belt and One Road” reached 21,000 tons, taking up 41.5% in the world. The gold production of countries along the line reached 1,116 tons, occupying 1/3 in the world. In addition, 6 gold mines are located here among top 20 gold mines in the world.

“The consumption amount of gold jewelry in the area accounts for 82.4% of the global consumption amount. Physical gold item demand including gold bars takes up 77% of the global demand. Gold resource development potential and gold market consumption potential in the area are quite huge, bringing important strategic opportunities for Chinese gold enterprises”, he said.

Song Xin introduced that the China National Gold Group Corporation is constructing mines in Kyrgyzstan and Congo. Last year, witnessed by Chairman Xi Jinping and President Putin, China National Gold Group Corporation and the largest Russian gold enterprise have signed a strategic cooperative agreement and they are promoting detailed relevant cooperative issues at present. Meanwhile, they are preparing to export devices to countries along the “One Belt and One Road” including Russia and Kazakhstan. In the practice of open concept, China National Gold Group Corporation is comprehensive and systematical.

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

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6430(SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6537) / Shanghai bourse  UP 4.97 OR 0.16%   / HANG SANG CLOSED UP 1.02 or 0.01%

2 Nikkei closed DOWN 100.83 OR .61% /USA: YEN FALLS TO 100.10

3. Europe stocks opened  IN THE GREEN,     /USA dollar index DOWN to 94.35/Euro UP to 1.1341

3b Japan 10 year bond yield: FALLS TO  -.080%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.10

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  47.12  and Brent: 48.76

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” ON THE TABLE 

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.081%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 6.97%/: 

3j Greek 10 year bond yield RISE to  : 8.15%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1340.75-/silver $19.02(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 27/100 in  roubles/dollar) 64.54-

3m oil into the 47 dollar handle for WTI and 48 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.10 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9612 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0901 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -0.081%

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

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

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

4. USA 10 year treasury bond at 1.556% early this morning. Thirty year rate  at 2.242% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS Stocks Creep Higher As Dollar Resumes Falling, Oil Slides For Second Day

While the summer doldrums continue, with little market-moving newsflow overnight and zombified volumes, US futures crept higher and European shares rose after EU PMIs printed modestly better than expected, while a return to dollar weakness pushed emerging markets higher, even if it failed to boost oil which as we noted last night was downgraded by Goldman on various fundamental reasons.

Commodity producers led gains in European equities and S&P 500 futures crept higher suggesting a green open. Even as markets swing between gains and losses, volatility across asset classes remained subdued, with a measure for U.S. stocks near a two-year low. Top news stories include: Bayer, Monsanto said to move closer to deal as talks advance, Google said to recruit web stars, Hulu for virtual reality push, Wal-Mart reviews Welspun records after target pulls sheets.

Perhaps the top story of the day is the ongoing dollar softness, which has promptly faded any residual Fischer/Dudley/Williams hawkishness and is back to Friday’s lows. The US currency slid against all except two of its 16 major peers as market participants raise doubts that Yellen will build upon recent hawkish comments by Fed officials at her Jackson Hole speech this Friday. Cited by Bloomberg, traders in Europe and Lonaon said that real money names for once seem to share this view, as they have been actively selling the dollar this week.  A report by a Fed staffer suggested that the Fed may have to unleash up to $4 trillion in QE if the US economy were to encounter a sharp recession.

As investors turn their attention to this week’s main event, Yellen’s speech at an annual symposium in Jackson Hole, Wyoming, on Aug. 26, they are skeptical whether she will endorse comments from other Fed officials in the past week. The dollar capped its biggest two-day gain in a month on Monday as fed fund futures showed traders increased bets for an increase this year above 50 percent.  There are “fluid expectations for Yellen’s Jackson Hole speech,” said Peter Rosenstreich, head of market strategy at Swissquote Bank SA, in Gland, Switzerland. “Hawkish comments last week and rally in yield caused traders to question their expectations for no hike in September. The data is improving but it’s still at a very soft level and there’s really no need for the Fed to tighten prematurely at this point.”

EUROPEAN PMI

The euro-area economy maintained its momentum in August, with growth showing little sign of being curtailed by fallout from the U.K.’s Brexit vote as a composite Purchasing Managers Index for the 19-nation region posting its strongest expansion in seven months, rising for a second month to 53.3 from 53.2 in July. That was the best reading in seven months. The increase was driven by an improvement in services, while manufacturing activity slipped.

  • Eurozone Aug. Flash Composite PMI 53.3; Est. 53.1
  • Eurozone Aug. Flash Services PMI 53.1; Est. 52.8
  • Eurozone Aug. Flash Manufacturing PMI 51.8; Est. 52
  • Germany Aug. Flash Composite PMI 54.4; Est 55.1
  • France Aug. Flash Composite PMI 51.6 Vs 50.1; Est 50.4

“The PMIs suggest that growth still is more robust in the service sector than in manufacturing – a phenomenon that can be observed in many regions and that goes hand in hand with slow growth of global goods trade,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen.

As a result, European shares advanced as commodity producers rebounded on higher metals prices while all 19 Stoxx 600 sectors rise with basic resources, retail outperforming and health care, oil & gas underperforming. 86% of Stoxx 600 members gain, 12% decline. “We’ve had a decent rebound, largely driven by the basic- resource sector and some decent data,” said Michael Hewson, a market analyst at CMC Markets in London. “Yesterday we saw a bit of a selloff, largely as a result of a decline in oil prices. Now we’re seeing some light buying on the back of some decent results from the housebuilding sector here in the U.K. and some fairly decent PMI data. There’s nothing really that came out this morning that would suggest that the rally we’ve seen thus far is under threat.”

In Asia, South Korea, Australia and Shanghai .SSEC all gained, while Japan’s Nikkei .N225 went the other way, easing 0.6 percent as the yen ground higher on the dollar. A survey of Japanese manufacturing activity for August showed output rose for the first time in six months, but the improvement was marginal and investors fixed their focus on the Fed instead.

10-year U.S. Treasury yields ticked up to 1.55 percent after falling 4 basis points overnight. German Bund yields nudged up as well along with the rest of the euro zone and UK Gilts. Fed fund futures imply around a 24 percent chance of an easing in September, rising to around 50 percent by December. A quarter-point hike is not fully priced in until September 2017.

In commodity markets, oil remained under pressure after shedding 3 percent on Monday amid worries about burgeoning Chinese fuel exports, more Iraqi and Nigerian crude shipments and a rising U.S. oil rig count. Brent crude lost 25 cents to $48.96 a barrel. It hit a two-month high of $51.22 on Friday. U.S. crude futures fell 36 cents to $47.07, after the September contract expired on Monday at $47.05.

Market Snapshot

  • S&P 500 futures up 0.3% to 2187
  • Stoxx 600 up 0.7% to 343
  • FTSE 100 up 0.5% to 6863
  • DAX up 0.8% to 10577
  • German 10Yr yield up 1bp to -0.08%
  • Italian 10Yr yield up 3bps to 1.14%
  • Spanish 10Yr yield up 2bps to 0.95%
  • S&P GSCI Index down 0.8% to 361.4
  • MSCI Asia Pacific up less than 0.1% to 139
  • Nikkei 225 down 0.6% to 16497
  • Hang Seng up less than 0.1% to 22999
  • Shanghai Composite up 0.2% to 3090
  • S&P/ASX 200 up 0.7% to 5554
  • US 10-yr yield up 2bps to 1.56%
  • Dollar Index down 0.12% to 94.41
  • WTI Crude futures down 1.3% to $46.79
  • Brent Futures down 1.2% to $48.56
  • Gold spot up less than 0.1% to $1,339
  • Silver spot up 0.6% to $19.03

Global Headlines

  • Bayer, Monsanto Said to Move Closer to Deal as Talks Advance: Companies said on track to reach agreement in next two weeks. CEOs said to meet several times, price differences narrowing
  • Google Said to Recruit Web Stars, Hulu for Virtual Reality Push: Company to release Daydream virtual reality service in weeks. Google said to back games, short films with YouTube celebs
  • VW Resolves Standoff With Supplier After All-Night Negotiations: Six plants in Germany suspended production as parts withheld. Supplier’s unprecedented reaction affected 27,700 VW workers
  • The Giant of Tokyo’s Stock Market Reveals Its Investment Secrets: Japan pension fund is top owner of MUFG, Honda, many more
  • China’s Best Bank Called a ‘Mirage’ Built on Murky Shadow Loans: Case of Bank of Tangshan highlights opaque financial risks across nation
  • World Bank Said to Be Planning SDR Bond Sale Next Week in China: Notes are set to price on Aug. 31, people familiar say
  • Wal-Mart Reviews Welspun Records After Target Pulls Sheets: Retailer says it’s looking at Welspun certification records. Stock slumps 36% in two days; market value below $1b

Looking at regional markets, Asian stocks trade mixed following the subdued lead from the US in which the energy sector was the laggard after crude prices fell around 3%. Nikkei 225 (-0.6%) was weighed on by a firmer JPY as USD/JPY approached 100.00 to the downside, although the index rebounded off its worst levels and briefly turned positive with movements in the currency the main catalyst for price-action. ASX 200 (+0.7%) outperformed with advances in the financial sector spearheading the index to near 1% gains. Chinese markets were mixed with the Shanghai Comp (+0.2%) led higher on talk of reduced costs for businesses, while the Hang Seng (flat) was flat following some lacklustre earnings reports. 10yr JGBs traded higher amid a lack of risk-appetite in Japan, while today’s 20yr auction also provided support after the tail in price narrowed and bid to cover increased from the prior month. Japanese Manufacturing PM! (Aug) M/M 49.6 (Prey. 49.3), 6th consecutive month of contraction. (Newswires) PBoC set CNY mid-point at 6.6586 (Prey. 6.6652) and injected CNY 100bIn via 7-day reverse repos. (Newswires)

Top Asian News

  • The Giant of Tokyo’s Stock Market Reveals Its Investment Secrets: Japan pension fund is top owner of MUFG, Honda, many more
  • China’s Best Bank Called a ‘Mirage’ Built on Murky Shadow Loans: Case of Bank of Tangshan highlights opaque financial risks across nation
  • World Bank Said to Be Planning SDR Bond Sale Next Week in China: Notes are set to price on Aug. 31, people familiar say
  • China Telecom Profit Beats Estimates on Increase in Subscribers: Co. added about 32m 4G subscribers in 1H
  • Doosan Bobcat Said to Gauge Korea IPO Demand in Early September: Korea Exchange said last week it approved co.’s share sale

EUropean equities have spent the session in the green (Euro Stoxx 50: +0.7%), with housing names among the best performers in the wake of Persimmon’s earnings (+3.7%), while material names also outperform, to pare some of yesterday’s losses. Separately on a stock specific note, automakers have been stealing the headlines, with Volkswagen (+2.3%) moving to session highs after making a deal with suppliers to end the recent suspension of production, while Renault (-1.6%) are among the worst performers after members of a state enquiry suggested a French government report omitted significant details of how Co.’s diesel cars were able to emit fewer emissions in official testing. Elsewhere, fixed income markets have seen another muted session of trade, with Bund futures continuing to hover around 167.50 and remain flat on the day, while the highlight may come later in the session in the form of the US 2-year note auction.

Top European News

  • VW Resolves Standoff With Supplier After All-Night Negotiations: Six plants in Germany suspended production as parts withheld. Supplier’s unprecedented reaction affected 27,700 VW workers
  • Schneider Said to Weigh Sale of Agriculture Data Service DTN: French company said to speak with potential sale advisers. Euromoney, others have previously shown interest in the unit
  • UniCredit Jumps as PZU CEO Reported to Discuss Pekao Takeover: PZU CEO Krupinski will fly to Milan for talks, Dziennik says. UniCredit has been seeking to sell assets to boost capital

In FX, the Bloomberg Dollar Spot Index lost 0.1 percent as of 6 a.m. in New York, after jumping 0.6 percent over the previous two trading days. South Korea’s won led gains among the 16 major currencies, jumping 1 percent versus the greenback. The yen appreciated 0.1 percent to 100.22 per dollar. “The U.S. dollar may have pulled back on hopes that the Jackson Hole symposium may focus on lower-for-longer type of policy rather than the need to imminently tighten policy,” said Vishnu Varathan, a senior economist at Mizuho Bank Ltd. in Singapore. “But in the run-up to Jackson Hole we do expect markets to be hyper-sensitive on U.S. policy hints, real or perceived, and so the U.S. dollar and U.S. yields will be volatile.” The New Zealand dollar surged as much as 1 percent after central bank Governor Graeme Wheeler said that while he intends to lower interest rates further to revive inflation, a series of rapid cuts is not justified. The South African rand was the next biggest gainer, appreciating 0.4 percent.

The commodity complex remains in focus, with WTI and Brent futures residing in close proximity to USD 47 and USD 49 respectively after the downside seen during yesterday’s session. Separately, the precious metals complex benefitted from the aforementioned USD softness early in the session, but the likes of gold and silver have failed to sustain these gains and now trade relatively flat on the session. Goldman Sachs maintained its USD 45-50/bbl estimate for Brent crude through to summer next year and added that an OPEC freeze and the USD is not sufficient to support oil further. GS added that an OPEC freeze with some non-OPEC nations could be self-defeating because it would mean that prices could rise and enable other producers to ramp up supply.

Bulletin Headline Summary From RanSquawk and Bloomberg

  • European equities enter the North American crossover in positive territory in what has been a quiet session once again and Eurozone PMIs dissipating some fears of a post-Brexit slowdown
  • USD has been a key focus in FX markets as participants continue to question how committed Fed Chair Yellen will be at the Jackson hole speech on Friday
  • Looking ahead, highlights include Turkish & Hungarian Interest Rate Decisions, US manufacturing PMIs, New Home Sales, APIs, ECB’s Coeure, Fed Discount Minutes and a US 2yr Note Auction
  • Treasuries slip overnight, though remain in ranges, amid higher equities after Markit eurozone composite PMI rose for a second month to 53.3 from 53.2 in July; Treasury to sell $26b 2Y notes at 1pm ET, WI 0.765% vs 0.760% last month.
  • The Fed is facing two big questions related to interest rates — one short-term and one long-term — and it’s important to understand that policy makers approach them separately
  • Companies across Japan have a new name in their top 10 shareholder lists: the world’s largest pension fund as the $1.3t GPIF is top owner of Mitsubishi UFJ Financial Group Inc., Honda Motor Co. and at least 119 other Tokyo-listed firms
  • As China’s sovereign bond yields tumble to decade-lows, investors are piling into the most defensive part of the stock market in search of returns
  • China will further open its economic borders to investors from abroad in a move intended to counter sliding confidence in the outlook for the world’s second-largest economy
  • Negotiations between Bayer AG and Monsanto Co. are advancing toward a deal after the companies made progress on issues including the purchase price and termination fee, people familiar with the matter said

DB’s Jim Reid concludes the overnight wrap

August this year is proving to be very different to last year where risk assets were being routed following the fallout from the shock PBoC devaluation. In fact glancing back to the EMR on this day last year the Shanghai Comp was in the midst of a huge three-day slump in which the index capitulated 19%. Twelve months on and markets have rarely been this quiet. A little bit of to and fro from Fed speakers has at least caused some excitement but in general markets have had very little to feed off since earnings season wrapped up.

The main story over the last 24 hours has probably been the abrupt end to the recent rally for Oil with WTI (-3.46%) ending its run of seven consecutive daily gains. It barely caused a dent in US equity markets though with the S&P 500 ending -0.06% despite energy stocks coming under pressure. In fact the S&P 500 has now gone 31 consecutive sessions with daily moves up or down of less than 1% and in that time has traded in just a 61pt range.

Today we get the August flash PMI’s in Europe which should give markets something to focus on however. This will give us another important post-Brexit indicator which so far have been pretty resilient. Remember that the Euro area composite PMI actually edged up 0.1pts to 53.2 in July. Market expectations today is for the composite to stay pretty much unchanged (consensus forecast is 53.1) with the same said for both the manufacturing and services surveys. We’ll also get the readings for Germany and France with the manufacturing survey data for the UK, Spain and Italy coming next week and services data the week after.

Also out today is more data in the UK with the August CBI industrial trends orders and selling prices survey. Current market expectations are for the industrial orders data to deteriorate further. Later this afternoon we’ll also get the latest Euro area consumer confidence reading. So all that to look forward to today.

This morning in Asia it’s been yet another mixed start in markets. In Japan the Nikkei (+0.05%) and Topix (+0.04%) are little changed despite the Nikkei manufacturing PMI for Japan improving 0.3pts to 49.6 this month in the flash reading. The Hang Seng (-0.30%) is lower however while there have been gains for the Shanghai Comp (+0.47%), Kospi (+0.20%) and ASX (+0.84%). Sovereign bond markets are generally stronger while in FX Markets most emerging market currencies are up slightly. The other data out in Asia this morning came in China where the MNI business indicator for August fell 1.2pts to 54.3.
Moving on. Following on from the Fed Vice-Chair Fischer’s comments over the weekend, the initial reaction in the US Dollar was to rally with the index up as much as half a percent as we went to print yesterday. However that rally faded as the day progressed with the index eventually finishing unchanged. Treasuries followed a similar path. 2y and 10y yields were up as much as +3.2bps and +2.0bps respectively, but then unwound and actually rallied into the close, finishing -0.8bps and -3.6bps lower respectively.

The probability of a Fed rate hike by December ended up unchanged at 51% although pricing for September did actually nudge up slightly to 24% from 22%. It was the move in Oil which probably got the most attention though with that decline for WTI the largest since August 1st. The fingers of blame were pointed at increased expectations of more supply out of Iraq and also the news that a cease-fire was declared in the Niger Delta region, although this was also being met with some caution. Meanwhile metal markets were also a touch softer yesterday which weighed on commodity names in Europe. The Stoxx 600 closed +0.09% after initially climbing +0.90%.

With little in the way of economic data yesterday there was some focus on the informal European leaders meeting between Merkel, Hollande, and Renzi, intended to show their commitment to the EU post Brexit. According to the FT the leaders discussed forgoing a common plan to bolster Europe’s economy and also security, while the talks were also supposedly seen as a show of support for Renzi from Merkel ahead of the upcoming constitutional reform referendum in Italy.

Staying in Europe the latest ECB CSPP numbers were out yesterday. Impressively, given that it covers mid-August, they upped their purchases from a €250mn daily run rate the week before to €321mn this past week. The average daily number since the program started in June is around €350mn with July and Augusts’ purchases probably healthier than most would have expected given the holiday season. At this rate the €17.8bn total purchased so far is only within 2-3 weeks of exceeding the total ABS purchases of €20.3bn made since that program started in November 2014.

.

ASIA MARKETS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed UP 4.91 POINTS OR 0.16%/ /Hang Sang closed UP 1.02 points or 0.01%. The Nikkei closed DOWN 100.83 POINTS OR 0.61% Australia’s all ordinaires  CLOSED UP 0.70% Chinese yuan (ONSHORE) closed UP at 6.6430/Oil FELL to 47.06 dollars per barrel for WTI and 48.76 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6537 yuan to the dollar vs 6.6430 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS SLIGHTLY AS  MORE USA DOLLARS ATTEMPTS  LEAVE CHINA’S SHORES  

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

We have been highlighted the following to you on several occasions.  Now from CLSA: the Bank of Japan has basically nationalized the Japanese stock market.

(courtesy CLSA/zero hedge)

CLSA: “The Bank Of Japan Has Nationalized The Japanese Stock Market”

Following the recent announcement by the BOJ that it would double its ETF purchases to ¥6 trillion, or $58 billion, up from the current ¥3.3 trillion, which is the equivalent to the Fed purchasing $580 billion in ETFs over the next two years, we noted that according to a Bloomberg analysis this would make the Bank of Japan the top shareholder of 55 companies by the end of 2017.

It should, therefore, come as no surprise that as CLSA’s NIcholas Smith wrote in a research report, the “BOJ is nationalizing the stock market” because that is precisely what it is doing with every incremental intervention in the stock market.

Of note in Smith’s note, first reported by CNBC, is that the BOJ’s purchases are focused largely on funds tracking the Nikkei 225 index, estimating that more than half of the BOJ’s ETF buying was likely in Nikkei-tied funds.”That was particularly distorting because that gauge was “a Flintstones index from an abacus age,” due to its arbitrary inclusions.” He noted that Uniqlo owner Fast Retailing had the largest weighting in the index, but that was primarily due to its high share price after avoiding any stock splits since April 2002. He estimated that BOJ buying of Nikkei-tied ETFs worked out to more than 16 percent of the stock’s free float each year. By comparison, Toyota Motor had the biggest market capitalization of any Japan stock, but was only ranked 15th by weight in the Nikkei index.

“If it seems strange that the BOJ is hamstringing the price discovery mechanism of the Japanese stock market by partially nationalizing it, it is all the stranger that it chooses to do so by substantially skewing its buying towards such a distorting index. The arbitrary decisions of the Nikkei committee get to choose the destination of trillions of yen of BOJ – and hence government – money.”

Smith then laments an issue that has especially plagued bond buyers in Europe over the past few months: the CLSA analyst expects that as long as the BOJ continued to buy ETFs, the Japanese market’s performance would become increasingly a function of liquidity in the central bank’s buying basket. Considering that the BOJ will have to intervene far more aggressively in both the bond and stock market in the coming months to push the Yen weaker, liquidity is only set to get worse.

CLSA wasn’t the only one to lament the nationalization of the Japanese market. In a Friday note, Deutsche Bank said that the BOJ’s purchases of Japan real-estate investment trusts (J-REITs) had also lost market-based “price discovery.”

Quoted by CNBC, they said that on August 18, the BOJ purchased around 1.2 billion yen worth of J-REITs for a total of around 61.2 billion yen worth so far this year and 330 billion yen worth since October of 2010. Last week’s BOJ action caused the TSE REIT index to drop sharply in the morning session then surge later in the afternoon, the report said.  Because the J-REIT market is so small, the BOJ’s purchases have an even stronger tendency to distort the market than the central bank’s ETF purchases, Deutsche Bank said.

“While real estate majors are trading at more than 30 percent discounts to net asset value, their price levels are exactly opposite those of J-REITs, which are at premiums of above 30 percent,” Deutsche Bank said, noting that both sectors should be tied to Japan’s real-estate market.

“The elimination of the price discovery function leads to lost buying opportunities for investors and ultimately weakens the investment appetite,” the report said, calling it a “serious error” by the BOJ.

Finally, Reuters summarizes these widespread fears of central bank incursion into the stock market, warning that the “Bank of Japan’s near doubling of its purchases of Tokyo shares is causing investors to worry the central bank will dominate financial markets, which could lead to price distortions as it continues to grease the economy.”

The BOJ’s buying spree will make it harder for investors to sift good companies from bad, and raises a host of other problems including misallocating capital, making equities trading more speculative and reducing incentives for companies to meet shareholder needs, analysts say.

More than three years of massive monetary stimulus has already resulted in the central bank cornering the Japanese government bond (JGB) market and distorting interest rates.

“The increased BOJ purchasing provides a very favorable demand environment for listed equities,” said Michael Kretschmer, chief investment officer at Pelargos Capital in the Hague. “Nevertheless, in the long run we strongly doubt these type of monetary gimmicks aimed at price setting of risk assets can have a sustained positive impact on economic growth.”

In retrospect, what the BOJ is doing is not new: it is merely the latest act of desperation in a process that stretches over 30 years:

Some liken the increased purchases by the BOJ – the only central bank in the world that buys stocks at the moment – to failed government efforts over more than two decades to prop up the market by pressing government-related financial institutions to buy after the bursting of the late-1980s asset bubble.

Actually, one can add the SNB to the list of banks that are open about their stock purchases. As for central banks, such as the Fed which transacts in the equity market via a very “close” relationship between NY Fed and Citadel, they are for now ignored.

As for Japan, “the market is driven completely by the BOJ’s buying rather than views on each companies’ earnings,” said a fund manager at a Japanese asset management firm.

This means that fundamental data and news are now completely ignored: all that matters – as has been the case for years in the US – is central bank intervention, either direct or indirect.

Some worry the stock market could start to resemble the bond market, where the BOJ’s purchases – about 110-120 trillion yen annually – have made traders fixate on its bond buying and pay scant attention to economic data.

The BOJ’s tactics “could weaken the market’s function in the long run,” said Keita Matsumoto, head of investor sales at Citigroup Global Markets Japan. “I’m worried that could lead to a ‘JGB-ification’ of stocks.”

Yet what is obvious to all but the BOJ is that the good times will not last, and is why some are already casting glances at the exit signs: “The rise in share prices may seem desirable but it causes harm as well,” said Shingo Ide, chief equity strategist at NLI Research Institute. “Even if companies need to improve their management, shareholders may not take them seriously if share prices are not falling.”

The endgame, when it strikes, will hardly be a surprise: a quick historical lesson of what happens when the government nationalizes all capital markets, if one can even call them that, look at what happened with the USSR. For now, however, the money printers are spinning and “one has to dance.”

Finally, one can probably absolve Kuroda of his sins – after all he is merely following orders of bankers from the private sector (recall that the BOJ launched NIPR following “peer pressure” at Davos) – by admitting that what the BOJ is doing is no different from the creeping capital markets nationalization that all other central banks around the globe have unleashed. Their redemption? They are doing it “for the people.

 

end

 

Here is another casualty of the higher Libor and its increasing costs to foreign banks. We showed (below) that the higher libor costs make buying of USA bonds impossible because their higher costs negates the deal.  Now we see that Japanese banks are having trouble locating scarce dollars in the money markets and that will have a devastating effect on their profitability

(courtesy zero hedge)

 

The First Victims Of The Libor Surge Have Emerged… In Japan

When we last looked at the blowout in US short-term funding rates, most notably Libor, which has been broadly attributed to regulatory reasons ahead of the October 14 money fund reform deadline, we pointed out that with trillions in debt tracking Libor, it was only a matter of time before something snapped.

Since then Libor has slowed down its dramatic ascent, so far plateauing in the low 0.8% range, however, the materially “tighter financial conditions” have remained.

 

Yet while many have been looking for clues in the US banking sector about financial stress, they have been so far unsuccessful. The reason for that, as IFR reports, is that they were looking in the wrong place.

Instead, it is not US but Japanese megabanks who have emerged as the biggest victims of a worsening squeeze in the US $1 trillion commercial paper market, “as high swap costs leave them with few satisfactory alternatives for dollar funding.”

As we reported a month ago, investors have pulled billions out of prime money-market funds ahead of new Securities and Exchange Commission (SEC) regulations aimed at preventing a repeat of the liquidity crisis following the collapse of Lehman Brothers in 2008. In anticipation, investors have slashed their allocations to prime funds, the main buyers of commercial paper and certificates of deposit from corporations, including Japanese lenders.

So far US banks have escaped largely unscathed, but the higher funding costs and shrunken market are hitting Japanese banks particularly hard, IFR reports, as they have been sourcing as much as a third of their U.S. dollar liquidity in the short-term U.S. market. Citigroup estimates Japanese banks have about $125 billion to $150 billion of CP and CDs maturing before the end of September.

Adding Libor surging insult, to profit-draining NIRP injury (recall that Japanese banks have seen their profits shrink as a result of the BOJ’s recent implementation of negative rates), rising U.S. dollar funding rates pose a further threat to profitability at Japanese banks. Corporate clients are also at risk, as lenders look to pass on the higher costs.

To be sure, some Japanese lenders have been trying to pre-empt the blow from reforms and the Libor blow out. Sumitomo Mitsui Financial Group cut its global CP and CD funding by $7 billion in the year to June, while a $28 billion jump in deposits outpaced a $19 billion increase in lending globally, according to Deutsche Bank. As a result, its loan-to-deposit ratio shrank from 149.6 percent in March 2015 to 135.5 percent at end-June. Mitsubishi UFJ also saw its ratio fall to 115.1 percent from 117.8 percent in March 2015 on the back of a rise in deposits.

In the short term, however, Japanese lenders will be unable to raise enough from deposits to replace the U.S. money markets. Prime money-market funds slashed their holdings of Japanese securities to $115 billion at the end of July, down 25% from $153 billion two months ago, according to ICI. Previously second to only the U.S. by country of issuer, Japan has now fallen to third behind France.

Being increasingly locked out of money markets means that beyond paying up subsantially for U.S. dollars, Japanese banks have few options. Leverage requirements mean global banks are reluctant to provide repos, while foreign-exchange swaps would be a more expensive way to access U.S. dollar funding, said Koichi Sugisaki, a rates strategist at Morgan Stanley MUFG Securities. Three-month CP and CDs now cost roughly 80bp-90bp on an annual basis, but three-month FX forwards have also become more expensive at around 1.5 percent per year, he said.

The surge in Libor, which has also resulted in a spike in the cross-currency basis, has also meant that Japanese buyers are increasingly shying away from US Treasuries which when fully FX hedged no longer generate a notably yield pick up as we reported earlier.

FX hedging costs are at their highest since the financial crisis. The three-month JPY/USD forward is now at -39 pips, the lowest since December 2008. The more negative the reading, the more expensive it is for Japanese issuers to swap yen to U.S. dollars. It also means that the shortage of dollars, from a Japanese perspective, has never been greater.

Rising Libor rates could push FX swap rates out further by the end of this year, Sugisaki estimated. “An increase of the cost of funding in CP and CDs would be definitely negative for the banks,” he said. “For the Japanese banks, it’s going to be very tough.”

One option for Japanese banks is to access US dollar bond funding, by directly selling short-dated, US-denominated bonds, which could provide Japanese banks with some respite from short-term dollar funding pressure. “Japanese banks could consider issuing short-end bonds from the operating bank level in the future to meet short-term liquidity needs as an alternative to CP/CDs,” said Masanori Kato, head of debt capital markets for J.P. Morgan in Tokyo. “Short-term notes would be a possible alternative avenue, and demand would be there for it as Japanese banks are seen as a safer haven due to Brexit concerns.”

He suggested that, although it was difficult to say whether issuing U.S. dollar bonds could be cheaper than using FX forwards, the possibility remained that U.S. dollar bond funding might become more  competitive. Some high-rated European banks have already taken this approach, finding that two-year or three-year bonds offer similar funding costs to CP.

However, as IFR notes, this option will have to be tested first, as Japanese banks have rarely issued U.S. dollar bonds at tenors of less than three years.

The strain on short-term funding is not expected to end soon, with Citigroup estimating that three-month Libor could rise another 5bp-10bp before October 14.

In the absence of cost-effective alternatives, Japanese banks will have to continue issuing CPs at a higher cost, pressuring their profit margins, leading to an even greater shortage of US dollars, higher Libor rates, and so on, until the Libor spike spills over across the Pacific and claims its first US and European banking victims.

b) REPORT ON CHINA

China has spooked its market as they seem to wish to withdraw from conventional QE and instead go their less powerful 14 repos:  bond yields spike as there will be nobody to buy their bonds:

(courtesy zero hedge)

China Has Its First Taste Of “VaR Shock” As PBOC 14 Day Repo Sparks Treasury Dump

Chinese Treasury futures tumbled overnight, posting their sharpest fall in three months, after the local market was spooked when the PBOC surprised bondholder by hinting it could avoid broad easing and instead may bring back a far less powerful tool. Overnight, the People’s Bank of China asked banks about demand for 14-day reverse bond repurchase agreements for the first time since February, suggesting it may be expanding its strategy of using targeted, short-term injections rather than cutting interest rates or banks’ reserve requirements (RRR).

As a result, and confirming once again that fundamentals are dead even in China where only liquidity injections matter just like across the entire “developed” market, the price of Chinese 10- Y treasury futures tumlbed 0.38%. This was also China’s first glimpse of what a VaR shock in government bonds will look like once yields spike from recent record lows.

A senior trader at a major Chinese state-owned bank in Shanghai, cited by Reuters, said that “the market interprets the move as another sign that the central bank won’t cut interest rates and RRR for now as it injects more short-term money into the banking system.”  He added that the PBOC announcement “is likely to set a floor for the fall of the yields of government bond futures, and thus investors sold the futures on the news.”

The People’s Bank of China (PBOC) has relied on issuance of seven-day reverse repos in daily open market operations this year, injecting cash on a regular basis to manage short-term money supply. The adjustment may imply the PBOC is preparing to extend the tenor of its short-term money management strategy.

While many have been expecting the PBOC to ease anew, with both housing data and the broader economy once again rolling over while trade data remains subdued, the PBOC has not cut RRR since March, and has not cut long-term guidance interest rates since October.

Still, while the economy urgently needs more easing, if only judged by the recent collapse in Chinese yields, the PBOC knows that more aggressive monetary policy easing will put unwanted additional pressure on the yuan currency, which is near six-year lows, and risk more capital outflows.

However, now that it has tipped its hand, a new risk emerges: VaR shock, something China has not experienced yet.

While that has yet to manifest itself, as Reuters adds, policymakers have clearly grown more concerned recently about the risks of prolonged, debt-fuelled stimulus, and appear to have turned their focus to more government spending instead.

Money markets were mixed after the PBOC’s move, with the volume weighted average of the 14-day repo down just two basis points (bps) to 2.7 percent and the seven-day weighted average rate up six bps at 2.40 percent.  Although the 14-day repo rate has been moving higher in recent days, the weighted average remains far below its recent peak of 2.82 percent in late July.

With the central bank conducting seven-day reverse repos on a nearly daily basis, the benchmark seven-day rate has remained steady for most of 2016, but the 14-day has been more volatile.

So far in 2016, the PBOC has injected a net 654.3 billion yuan ($98.44 billion) through open markets year to date by the week ending Aug 20. It has also injected funds through medium-term lending facilities which allow it to channel money to more vulnerable sectors such as agricultural firms or small businesses.

Finally, China has also injected trillions in bank debt, both in the form of conventional loans and shadow debt, neither of which have merely slowed down the decline.

EUROPEAN AFFAIRS

Last week we reported on the scarcity of Great Britain bonds (GILTS).  Today there was a rush to purchase anything with a yield and thus scarcity is back in this arena

(courtesy zero hedge)

Gilts Spike After Cover Ratio In Today’s 15Y+ POMO Tumbles, BOE Buys All Bonds At Premium

While last week the UK bond market breathed a sigh of relief when the BOE found more than enough willing sellers into its longest-maturity, 15Y+ repurchase, or POMO, operation, following the uncovered operation two weeks ago, today concerns have returned anew when moments ago the BOE reported that its GBP1.170 billion repurchase operation was covered “only” 1.54x (with GBP 1.799 billion in offers), down nearly by half from last week’s 2.93x, and suggesting that supply of longer-dated gilts may once again be getting scarce.

Just as importantly, the BOE bought all bonds at premium, with highest price paid at 141p and 151p. Most bonds were previously bought at a discount of 7p-45p, with just three issues bought at a premium of 1p-9p

In response, the yield on the 30Y gilt immediately tumbled as investors once again rushed into the longest dated bond as fears of a bond shortage have once again reemerged.

end

 

Shear lunacy…now Mario is buying private placement debt.  They are purchasing debt equivalent to 1 trillion euros per year.  It ends in March 2017:

(courtesy Mish Shedlock)

Madness In Mario-World: European Companies Issue Debt Simply Because The ECB Will Buy That Debt

Submitted by Michael Shedlock via MishTalk.com,

Debt Seller’s Paradise

Things are so absurd in the Eurozone that the ECB is buying private placement debt with little regard for safety.In turn, private equity companies issue debt simply because they know in advance the ECB will buy it.

It’s a startling example of how the market is adapting to extremes of monetary policy, and it’s a safe conclusion the experiment will not end well.

For now, it’s a Seller’s Paradise as Companies Build Bonds for European Central Bank to Buy.

The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks and companies are creating new debt especially for the central bank to buy.

In two instances, the ECB has bought bonds directly from European companies through so-called private placements, in which debt is sold to a tight circle of buyers without the formality of a wider auction.

Now, they are all but inviting private actors to concoct specific things for them to buy so they can continue pumping money into the financial system.

The furious central-bank buying has been a relief to companies and governments that can now borrow at rock-bottom interest rates. But it has also spurred criticism that the extreme policies are killing the returns available to other investors, such as pension funds, and loading up the economy and financial system with potentially overpriced debt.

The ECB was late to the central-bank party—it began quantitative easing only in 2015, years after the U.S., the U.K. and Japan—but it has embraced bond-buying with fervor. In March, it boosted its purchases to €80 billion ($90.6 billion) a month from €60 billion and surprised investors by saying it would soon add corporate bonds to its shopping list.

It had already bought so many government bonds that it was running out of things to purchase.

Private placements are private debt sales not open to the broader market, typically relying on a handful of investors that want to buy a company’s bonds. “Typically there won’t be a prospectus, there won’t be any transparency, there won’t be a press release. It’s all done discreetly,” said Apostolos Gkoutzinis, head of European capital markets at law firm Shearman & Sterling LLP.

The ECB executes bond purchases through the eurozone’s national central banks, which function like branches.

The Bank of Spain holds some of a €500 million private placement issued by Spanish oil company Repsol SA on July 1, and some of a €200 million deal from Spanish power utility Iberdrola SA sold on June 10, two days after the ECB program got under way.

Both deals were solely arranged by Morgan Stanley and are the only private placements issued since the start of the ECB’s corporate buying program to have been bought by national central banks, according to the Journal analysis. Morgan Stanley declined to comment.

“We’re all looking at the data,” said the head of credit trading at a major European bank. “They’re only one new customer—but it’s a big one.”

And banks are rushing to serve it. Credit Suisse Group AG reshuffled its sales coverage of national central banks in recent weeks when the trading desk realized it wasn’t doing enough business with the new largest buyer in town, according to a person familiar with the matter.

ECB Effect

The ECB only announces what it will buy, not how much of it. Yet, that has spawned a guessing game driving yields lower and lower.

As soon as the ECB does buy an issue, the interest rate on those bonds collapse. And now we see private placement of debt, specifically designed with the ECB in mind.

QE is supposed to spur lending and investment. In practice, it’s killing pension plans while fostering bond bubbles.

As long as the companies do not default, the ECB can simply hold the debt to term, just as the Fed is doing now. Meanwhile, the bubbles continue to inflate.

end

  RUSSIAN AND MIDDLE EASTERN AFFAIRS

An excellent commentary, with the subject that the new Russia-China- Iran alliance totally pushed the USA out of much middle east influence..

(courtesy Darius Shahtamasebi/AntiMedia.org)

New Russia-China-Iran Alliance Could Push US Out Of Much Of The Middle East

Submitted by Darius Shahtamasebi via TheAntiMedia.org,

When the current Syrian conflict first erupted in 2011 – and then enflamed in 2012 – a small minority of the American public probably wondered why President Obama was not intervening to help the Syrian people as he had done in Libya (they were likely completely unaware the president had already been interfering heavily in Syria since the conflict began). However, some pundits speculated that Obama would eventually intervene directly, and that this intervention would be the beginning of the end of the American empire as we know it.

What started out as a seemingly hollow prediction has become as true a statement as any. First, American involvement began with funding, arming, and training violent rebels to try to overthrow the Syrian government. Then came attempts to misrepresent so-called “intelligence” to justify military intervention against Assad in 2013. And finally, like a dream come true, Washington was then able to capitalize  on the growth of ISIS in Syria, a growth predicted by their own security establishment in 2012, which then became an excuse to start bombing Syrian territory in 2014. By interfering so forcibly in the affairs of Syria, the U.S. has forced a number of countries  — notably Iran, China and Russia — to step up and strike back at U.S. efforts to destabilize the region.

Since the beginning of the conflict, Iran has been heavily involved due to the fact Syria is an important ally to the Islamic republic, bound by a mutual defense agreementMuch to the anger of the U.S., just this week, Iran allowed Russia to strike Syrian territory from its Hamadan air base. Iran is supplying ground troops, advisement, and high level training to Syrian pro-Assad forces. They are also providing a credit line, and Iranian involvement is growing in tandem with the two nuclear powers also working in defense of the Syrian regime.

Russia has a history of being involved in Syria, but following its direct military intervention last year, they have shown they can set up their own no fly zone within the country at any moment(note that the Russian intervention is arguably legitimate given that they have received authority from the Assad regime to do so). Despite this, they have continued to extend a hand to Washington to achieve their stated goals of defeating ISIS together.

China has sided with Russia and Syria for some time now, using its veto power at the U.N Security Council level to block resolutions on Syria – after Russia and China were completely dupedby the Security Council resolution on Libya in 2011. China has warned the U.S. against attacking Syria and Iran, and now, they have officially stated they are looking to join the fight on the side of the Syrian government, further complicating the issue from Washington’s standpoint.

Unless the U.S. wants to confront these players directly, it has no choice but to accept that they have lost a war they directly and indirectly started through covert CIA operations that began in 2011 (and as some would argue, well before that). This isn’t a loss in the Iraq or Vietnam sense — which are arguably victories in the eyes of the elite class. Rather, the Syrian war is an operation that has left them with less influence in the region than when the Syrian crisis began (cue picture of John Kerry dining with Bashar al-Assad in Damascus in 2009).

It will be back to the drawing board for Washington, whose only real move is to continue arming and funding fanatical jihadists or encourage Saudi Arabia and Turkey to deliver on their threat to send ground troops into Syria. This will only delay the inevitable, however, and eventually they will have to either admit they have completely lost influence in the Shia-Crescent region of the Middle East — which has, in turn, been snatched up by Russia and China — or directly confront these nuclear powers in an all-out war.

Or they can just wait until Hillary is elected president.

GLOBAL ISSUES

A must read…the lunacy of QE and why this will bring the whole house of cards down

(courtesy David Stockman/ContraCorner)

Bubbles In Bond Land——A Central Bank Made Mania, Part 1 by  • August 22, 2016

NOTE TO READERS

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystalize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas. Another of these is included below.

I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming later this month.

…..Sometimes an apt juxtaposition is worth a thousand words, and here’s one that surely fits the bill.

Last year Japan lost another 272,000 of its population as it marched resolutely toward its destiny as the world’s first bankrupt old age colony. At the same time, the return on Japan’s 40-year bond during the first six months of 2016 has been an astonishing 48%.

That’s right!

We aren’t talking Tesla, the biotech index or Facebook. To the contrary, like the rest of the Japanese yield curve, this bond has no yield and no prospect of repayment.

But that doesn’t matter because it’s not really a sovereign bond anymore.These Japanese government’s bonds (JGBs) have actually morphed into risk free gambling chips.

Front-running speculators are scooping up whatever odds and sots of JGB’s that remain on the market and are selling them to the Bank of Japan (BOJ) at higher and higher and higher prices.

At the same time, these punters face virtually no risk. The BOJ already owns 426 trillion yen of JGB’s, which is nearly half of the outstandings. And that’s saying something, given that Japan has more than one quadrillion yen of government debt which amounts to 230% of GDP.

Moreover, it is scarfing up the rest at a rate of 80 trillion yen per year under current policy, while giving every indication of sharply stepping-up its purchase rate as it segues to outright helicopter money.

It can therefore be well and truly said that the BOJ is the ultimate roach motel. At length, virtually every scrap of Japan’s gargantuan public debt will go marching into its vaults never to return, and at “whatever it takes” in terms of bond prices to meet the BOJ’s lunatic quotas.

The Big Fat Bid Of The World’s Central Banks

Surely, BOJ Governor Kuroda will go down in history as the most foolish central banker of all-time. But in the interim the man is contributing—-along with Draghi, Yellen and the rest of the central bankers’ guild—-to absolute mayhem in the global fixed income market.

The effect of their massive bond purchases or so-called QE policies has been to radically inflate sovereign bond prices. The Big Fat Bid of central bankers in the benchmark government securities sector, in turn, has caused drastic mispricing to migrate into the balance of the fixed income spectrum via spread pricing off the benchmarks, and from there into markets for converts, equities and everything else.

Above all else, the QE driven falsification of bond prices means that central banks have supplanted real money savers as the marginal source of demand in the government bond markets. But by their very ideology and function, central bankers are rigidly and even fiercely price inelastic.

For example, the madman Draghi will pay any price—-absolutely any price—–to acquire his $90 billion per month QE quota. He sets the price on the margin, and at present that happens to be a yield no lower than negative 0.4% for a Eurozone government security of any maturity. Presumably that would include a 500-year bond if the Portuguese were alert enough to issue one.

Needless to say, no rational saver anywhere on the planet would “invest” in the German 10-year bund at its recent negative20 bps of yield. The operational word here is “saver” as distinguished from the hordes of leveraged speculators (on repo) who are more than happy to buy radically over-priced German bunds today.

After all, they know the madmen at the ECB stand ready to buy them back at an even higher price tomorrow.

Yet when you replace savers with central bankers at the very heart of the financial price discovery process in the benchmark bond markets, the system eventually goes tilt. You go upside down.

The Fiscal Equivalent Of A Unicorn—–“Scarcity” In Sovereign Debt Markets

That condition was aptly described in a recent Wall Street Journal piece about a new development in sovereign debt markets which absolutely defies human nature and the fundamental dynamics of modern welfare state democracies.

To wit, modern governments can seemingly never issue enough debt. This is due to the cost of their massive entitlement constituencies, special interest racketeers of every stripe and the prevalence of Keynesian-style rationalizations for not extracting from taxpayers the full measure of what politicians are inclined to spend.

Notwithstanding that endemic condition, however, there is now a rapidly growing “scarcity” of government debt—-the equivalent of a fiscal unicorn. As the WSJ noted:

A buying spree by central banks is reducing the availability of government debt for other buyers and intensifying the bidding wars that break out when investors get jittery, driving prices higher and yields lower. The yield on the benchmark 10-year Treasury note hit a record low Wednesday.

“The scarcity factor is there but it really becomes palpable during periods of stress when yields immediately collapse,’’ he said. ”You may be shut out of the bond market just when you need it the most.’’

Owing to this utterly insensible “scarcity”, central banks and speculators together have driven the yield on nearly $13 trillion of government debt—or nearly 30% of total outstandings on the planet—into the subzero zone. This includes more than $1 trillion each of German and French government debt and nearly $8 trillion of Japanese government debt.

Nor is that the extent of the subzero lunacy. The Swiss yield curve is negative all the way out to 48 years, where recently the bond actually traded at -0.0082%.

So we do mean that the systematic falsification of financial prices is the sum and substance of what contemporary central banks do.

Forty years from now, for example, Japan’s retirement colony will be bigger than its labor force, and its fiscal and monetary system will have crashed long before. Yet the 10-year JCB traded at negative 27 bps recently while the 40-year bond yielded a scant 6 basis points!

When it comes to government debt, therefore, it can be well and truly said that “price discovery” is dead and gone. Japan is only the leading edge, but the trend is absolutely clear. The price of  sovereign debt is where central banks peg it, not even remotely where real money savers and investors would buy it.

Still, that’s only half the story, and not even the most destructive part. The truth of the matter is that the overwhelming share of government debt is no longer owned by real money savers at all. It is owned by central banks, sovereign wealth funds and leveraged speculators.

As to the latter, do not mistake the repo-style funding deployed by speculators with genuine savings. To the contrary, their purchasing power comes purely from credit (repo) extracted from the value of bond collateral, which, in turn, is being driven ever higher by the Big Fat Bid of central banks.

What this means is that real money savings—– which must have a positive nominal yield—-are being driven to the far end of the sovereign yield curve in search of returns, but most especially ever deeper into the corporate credit risk zone in quest of the same.

The Pure Lunacy Of Mario Draghi

Nowhere is the irrational stampede for yield more evident than in the European bond markets. After $90 billion per month of QE purchases by the ECB, European bond markets have been reduced to a heap of raging  financial market lunacy.

It seems that Ireland has now broken into the negative interest rate club, investment grade multinationals are flocking to issue 1% debt on the euro-bond markets and, if yield is your thing, you can get all of 3.50% on the Merrill Lynch euro junk bond index.

That’s right. You can stick your head into a veritable financial meat grinder and what you get for the hazard is essentially pocket change after inflation and taxes.

Remember, the average maturity for junk bonds is in the range of 7-8 years. During the last ten years Europe’s CPI averaged 2.0% and even during the last three deflationary years the CPI ex-energy averaged 1.2%.

So unless you think oil prices are going down forever or that the money printers of the world have abolished inflation once and for all, the real after-tax return on euro junk has now been reduced to something less than a whole number. It might be wondered, therefore, whether the reckless stretch for “yield” has come down to return free risk?

Well, no it hasn’t. Yield is apparently for desperate bond managers and other suckers.

In fact, among the speculators who wear big boy pants the bond markets are all about capital gains and playing momo games. It’s why euro junk debt—-along with every other kind of sovereign and investment grade debt—-is soaring. In a word, bond prices are going up because bond prices are going up. It’s an utterly irrational speculative mania that would do the Dutch tulip bulb punters proud.

In the days shortly before Draghi issued his “whatever it takes” ukase, for instance, the Merrill Lynch euro high yield index was trading at 11.5%. So speculators who bought the index then have made a cool 230% gain if they were old-fashioned enough to actually buy the bonds with cash.

And they are laughing all the way to their estates in the South of France if their friendly prime broker had arranged to hock them in the repo market even before payment was due. In that case, they’re in the 1000% club and just plain giddy.

Does Mario Draghi have a clue that he is destroying price discovery completely? Do the purported adults who run the ECB not see that the entire $20 trillion European bond market is flying blind without any heed to honest price signals and risk considerations at all?

Worse still, do they have an inkling that the soaring price of debt securities has absolutely nothing to do with their macroeconomic mumbo jumbo about “deflation” and “low-flation”?  Or that they are in the midst of a financial mania, not a ” weak rate environment” due to the allegedly “slack” demand for credit in the business and household sectors?

In fact, European financial markets are being stampeded by a herd of front runners who listen to Draghi reassure them on a regular basis that come hell or high water, the ECB will buy every qualifying bond in sight at a rate of $90 billion per month until March 2017. Full stop.

Never before has an agency of the state so baldy promised speculators literally trillions in windfall gains by the simple act of buying today what Draghi promises he will be buying tomorrow.

And that will be some tomorrow. As more and more sovereign debt sinks into the netherworld of negative yield and falls below the ECB’s floor (-0.4%), there will be less supply eligible for purchase from among the outstanding debt of each nation in the ECB’s capital key.

This is price fixing with a vengeance. It is no wonder that repo rates recently have plunged into negative territory.

But here’s the thing. The geniuses at the ECB are not cornering the market; they are being cornered by the speculators who are recklessly front-running the central bank with their trigger finger on the sell button.

Everything in the European fixed income market—sovereign and corporate—– is now so wildly over-priced and disconnected from reality that the clueless fools in Frankfurt dare not stop. They dare not even evince a nuance of a doubt.

So this is a house of cards like no other. Greece remains a hair from the ejection seat, yet everything is priced as if there is no “redenomination” risk.

Likewise, with the European economies still dead in the water, and notwithstanding some short-term data squiggles in the sub-basement of historic trends, the debt of Europe’s mostly bankrupt states is priced as if there is no credit risk anywhere on the continent outside of Greece.

Well then,  just consider three fundamentals that scream out danger ahead. Namely, public debt ratios continue to rise, GDP continues to flat-line, and the Eurozone superstate in Brussels continues to kick the can and bury its member states in bailout commitments that would instantly result in political insurrection in Germany, France and every other major European polity were they ever to be called……

 

END

 

Good question:  just what are central banks terrified about…

(courtesy Phoenix Capital)

 

Central Banks Are Terrified… But of What? by Phoenix Capital… Aug 23, 2016 8:36 AM

A quick question for the “recovery” enthusiasts…

If the recovery is real and as strong as the “data” suggests… why are Central Banks engaged in the most aggressive stimulus in history?

Consider Europe.

According to the official data, the EU’s Services and Manufacturing PMI’s were 53.1 and 51.8 in August. Both were significantly above 50 (which represents contraction)…

Moreover, the EU’s inflation rate has risen over 0.4% in four months, rising from -0.2% in April to 0.2% today.

And yet, despite this data, the ECB continues to hold interest rates at -0.4% while also spending  €80 billion per month in QE (the equivalent of $90 billion). At this pace, the ECB will spend nearly €1 TRILLION IN QE PER YEAR.

Put another way, the ECB is engaged in the most aggressive monetary policy in its history (even more aggressive than at the heart of the 2012 EU banking crisis) at a time when the EU economy, according to official data, is well above contraction.

Then there’s Japan.

According to the official data, the Japanese economy has “bounced back” and avoided recession, posting a growth rate of 0.5% in 1Q16.

Granted, this is not great, but it’s much better than the -0.4% growth rate for 4Q15.

On top of this, while Japan’s August Manufacturing PMI was 49.3 (just below contraction levels) it has been rising for the last three months from the low of sub-48 back in May. That same month Services PMI broke above contraction levels to 50.4.

Despite this, the Bank of Japan maintains interest rates at -0.1% and is currently spending nearly $800 billion per year buying assets. Astoundingly, the BoJ is actually buying all of Japan’s new Government debt issuance per year.

It is also is a top 5 shareholder for 81 of the 225 companies trading on the Nikkei 225. And it owns 60% of the Japan’s ETFs.

Put another way, like the ECB in Europe, the BoJ is engaged in the single most aggressive monetary policy in its history… at a time when, according to the data, Japan is NOT even in a recession.

Looking at this, it is obvious that something is very wrong. Either the data is inaccurate, or Central Banks know something we don’t. After all, they’re behaving as if they’re absolutely terrified at a time when the data is claiming their economies aren’t even in contraction!!!

Just what are they scared of?

We firmly believe the markets are preparing to enter another Crisis. With over 30% of global bonds posting negative yields, the financial system is a powder keg ready to blow.

The Bond Bubble is THE bubble. And with over $555 trillion in derivatives trading based on bond yields, this bubble is over 10 times the size of the one that nearly took down the system in 2008.

We are already preparing our clients for this with a 21-page investment report titled the Stock Market Crash Survival Guide.

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

We are giving away just 1,000 copies of this report for FREE to the public.

To pick up yours, swing by:

https://www.phoenixcapitalmarketing.com/stockmarketcrash.html

Best Regards

Graham Summers

Phoenix Capital Research

 

end

 

EMERGING MARKETS

VENEZUELA: 

 

The authorities now are banning lines from forming outside bakeries

(courtesy Fisher/Reason.com/Hit & Run blog)

 

Venezuela’s Latest Response To Food Shortages: Ban Lines Outside Bakeries

Submitted by Anthony Fisher via Reason.com’s Hit & Run blog,

The tragedy of Venezuela continues unabated, but that doesn’t mean the government of President Nicolás Maduro has stopped trying to fix problems like the devastating scarcity of food which has led to malnutrition, riots, food truck hijackings, vigilante lynchings of petty thieves, and thestarvation of zoo animals.

No, Maduro hasn’t admitted the failure of Chavismo — the brand of Bolivarian socialism imposed on the oil-rich country by his late predecessor Hugo Chavez — instead, Venezuela’s embattled leader has launched a war on “anxiety.”

The National Superintendency of Fair Prices has reportedly instituted a policy of fining bakeries that allow lines to stretch out their front doors, according to PanAmPost. The head of this particular bureaucracy, William Contreras, claims the lines aren’t a true indicator of a severe shortage of bread, but rather, a political “strategy of generating anxiety.”

Contreras claims there is no shortage of raw materials to make bread, but seems to not understand that bakeries just bake bread, they don’t process the different kinds of wheat used to make the flour that’s then used to make bread.

But this is indicative of the magical thinking of Venezuela’s socialist government: the breakdown of the economy couldn’t possibly because of failed economic policy, and scarcity must be the result of a greater conspiracy.

Contreras was also quoted by El Tiempo as saying the long lines represented “fairly clear political intentions and purposes” such as “destabilizing the economy and break[ing] the morale of the people.” This is in keeping with Maduro’s deflection of the blame he deserves for destroying Venezuela’s economy, which he puts at the feet of U.S.-backed agitators engaging in “economic war” by keeping things like toilet paper off supermarket shelves.

Even in a time of crisis when infants are dying in electricity-deprived hospitals, Maduro insisted on putting on a brave face and keeping with his government’s practice of lavishly asinine spendingby dropping over $400,000 on a week of celebrating the 90th birthday of the president of anotherimpoverished Latin socialist nation — Fidel Castro.

This whole battle over both the cause and greater meaning of long lines at bakeries must come as a shock to former presidential candidate and noted democratic socialist Bernie Sanders, who once argued that bread lines in socialist or communist countries were a “good thing” because they proved that everyone is suffering equally.

Meanwhile, a major rally by the Venezuelan opposition which is calling for Maduro’s recall is scheduled in Caracas for September 1. 80 percent of the Venezuelan people reportedly want Maduro to be removed from office.

 

END

OIL ISSUES

Oil moves higher on false algo rumour of an Iran support to prop up oil market. It was denied by Iran but oil still rebounds higher

(courtesy zero hedge)

Crude Explodes Higher After Iran ‘Reportedly’ “May Support Actions To Prop Up Oil Market”; Ignores Iran Denial

Another day, another strategically timed headline meant to trigger an HFT algo momentum ignition spike, and sure enough oil explodes higher, even though as Goldman explained yesterday, even an OPEC freeze will do nothing for actual production.

This hit from Reuters, which once again relies on “anonymous sources” to generate the primary source of Reuters revenue: FX volatility, in this case in the CAD.

  • IRAN SENDING POSITIVE SIGNALS THAT IT MAY SUPPORT JOINT ACTION TO PROP UP OIL MARKET – SOURCES IN OPEC, OIL INDUSTRY

Iran is sending positive signals that it may support joint action to prop up the oil market, Reuters says, citing unidentified people in OPEC and the oil industry.

Iran appears to be more willing to reach an understanding with other oil producers, though it has not decided whether to join a new effort, Reuters says, citing unidentified people.

“Negotiations are ongoing. I see positive signs coming from OPEC ’majors’,” Reuters says, citing an unidentified senior person in the industry familiar with the discussions, referring to Riyadh and Tehran

and then this happened:

Yuuuge volume too, which suggest that this is just the latest headline triggered squeeze.

Which was met with what appears like an official ‘denial’ headline shortly thereafter… but by then momentum had been ignited…

Which should not be a surprise, as Bloomberg notes, Iran is unlikely to support an oil output freeze even when its production reaches pre-sanctions level, while other OPEC countries continue to boost supply, writes Bloomberg oil strategist Julian Lee.

  • Iran to continue to raise output as much as it can even after it regains pre-sanctions level of ~4m b/d: Lee
  • Country produced 3.55m b/d in July: Bloomberg survey
  • Iran targeting 4m b/d as soon as late Sept.
  • Output from fields bordering Iraq seen rising to 290k b/d by March 2017 from 220k now
  • Iran won’t restrict output growth while watching neighboring Iraq, rival Saudi Arabia raise supply
  • Iraq produced 4.36m b/d in July, close to record 4.51m seen in Jan., accord. to Bloomberg survey
  • Country quickly to boost exports by ~150k b/d after agreement on resuming shipments from Kirkuk fields
  • Iraq’s Halfaya field to double output by mid-2018: state-run Missan Oil
  • Exxon, Petrochina in talks to develop 2 fields in south Iraq: deputy oil minister; ministry seeks to boost combined production from both fields to 550k b/d from 70k b/d

Still what really matters is algorothmic momentum ignition and the appearance that all is well.

 

end

 

Then it slides back to earth after the biggest inventory build in the last 4 months

(courtesy zero hedge)

WTI Slides After Biggest Inventory Build In 4 Months

Amid the volatility of crude prices, inventory levels, and headline hockey; API printed a surprisingly large 4.464mm crude build (against expectations of a 850k draw). Having spiked early in the day on Iran rumors (and failed to fall on denials), WTI kneejerked lower after the API data showed the biggest crude build in over 4 months (and a bigger than expected build at Cushing).

API

  • Crude +4.464mm (-850k exp)
  • Cushing +417k (+200k exp)
  • Gasoline -2.2mm (-1.7mm exp)
  • Distillates -834k

Biggest build in crude in over 4 months… (4th weekly draw in gasoline)

 

The initial reaction was a kneejerk lower.. but not much…

 

 

So to summarize, Goldman points out that even if the agree a freeze, it will be self-defeating, Iraq wants to up its output, Nigeria is set to increase supply, and Iran officials denied the unconfirmed rumors of its support for a freeze. As Michael Loewen, commodities strategist at Scotiabank, noted“It’s speculation. It’s more OPEC jawboning.”

 

Charts: Bloomberg

end

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

Euro/USA   1.1341 UP .0024 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.10  DOWN .163(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3181 UP .0050 

USA/CAN 1.2900 DOWN .0040

Early THIS TUESDAY morning in Europe, the Euro ROSE by 24 basis points, trading now well above the important 1.08 level FALLING to 1.1381; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED UP 4.91 POINTS OR 0.16%    / Hang Sang CLOSED UP 1.02 POINTS OR 0.01%     /AUSTRALIA IS HIGHER BY .70% / EUROPEAN BOURSES ALL  IN THE GREEN

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 DOWN 100.83 POINTS OR 0.61%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 1.02 POINTS OR 0.01%  ,Shanghai CLOSED UP 4.91  POINTS OR 0.16%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE RED   /INDIA’S SENSEX IN THE  GREEN 

Gold very early morning trading: $1340.50

silver:$18.99

Early TUESDAY morning USA 10 year bond yield: 1.556% !!! UP 1  in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.242 UP 1 in basis points from MONDAY night. 

USA dollar index early TUESDAY morning: 94.35 DOWN 19 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

 

END

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.01% DOWN 2 in basis points from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.08% DOWN 2 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:0.935% PAR IN basis points from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.12  UP 2 in basis points from MONDAY 

the Italian 10 yr bond yield is trading 17 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.095% DOWN  1/2 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/3:30 PM

 

Euro/USA 1.1309 DOWN .0008 (Euro DOWN 8 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.16 DOWN .108(Yen UP 11 basis points/

Great Britain/USA 1 .3198 UP 0.0066 ( Pound UP 66 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2910 DOWN 0.0030 (Canadian dollar UP 30 basis points AS OIL ROSE(WTI AT $48.09). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 8 basis points to trade at 1.1309

The Yen ROSE to 100.16 for a GAIN of 11 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 66 basis points, trading at 1.3198 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 30 basis points to 1.2910, WITH WTI OIL AT:  $48.00

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.63378

the 10 yr Japanese bond yield closed at -.08% DOWN 2 IN  points / yield/

Your closing 10 yr USA bond yield:UP 1 IN basis points from MONDAY at 1.549% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.234 DOWN 1/5 in basis points on the day /

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

Your closing USA dollar index, 94.50  DOWN 4 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED UP 39.97 OR 0.59%
German Dax :CLOSED UP 98.53 OR  0.94%
Paris Cac  CLOSED UP 31.51  OR 0.72%
Spain IBEX CLOSED UP 112.90 OR 1.33%
Italian MIB: CLOSED UP 408.91 POINTS OR 2.50%

The Dow was up 17.88 points or 0.10%

NASDAQ up   15,48 points or 0.30%
WTI Oil price; 47.05 at 4:30 pm;

Brent Oil: 49.16

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.43 (ROUBLE UP  37/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.095%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:47.64

BRENT: 49.55

USA 10 YR BOND YIELD: 1.546% 

USA DOLLAR INDEX: 94.57 DOWN 1 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.31947 UP .0064 or 64 basis pts.

German 10 yr bond yield at 5 pm: -0.095%

END

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

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

Stocks Spike To Record Highs, Close Not “Off The Lows”

US and European manufacturing PMIs disappointed (but don’t tell the mainstream media), European consumer confidence tumbled, Richmond Fed business survey crashed… but New Home Sales managed a completely normal 6 standard deviation beat...

 

and so stocks rallied…

 

While not as obvious as yesterday’s malarkey, today’s market action had an odd pattern to it – the on-the-hour selling pressure… (note the overnight mini flashs crashes in VIX – which seemed to provide a day session marker)

 

As Realized Vol has collapsed to its lowest since 1994…

 

Stocks gapped higher at the open thanks to pre-market exuberance in futures, with S&P banging new record highs during the day… but – apart from Small Caps – stocks drifted lower from the gap open

 

Small Caps spiked on yet another short-squeeze…

 

Homebuilders were the best performers…

 

Trannies and The Dow fell back to red on the week…

 

Elon Musk managed to overpromise and underdeliver again…

 

Treasury yields whipsawed up, down, and up to end the day basically unchanged but lower/flatter on the week… Notice solid 2Y auction suggests no hope for a hike from Yellen

 

The USD Index also ended the day unchanged – reversing early weakness during the US day session – even as Cable surged back over 1.32…

 

Copper lost ground on the day but PMs managed to hold unchanged as Crude spiked on denied Iran rumors… Interesting that Crude ripped up to recouple with silver and stayed there…

 

Oil prices spiked on anonymous sourced comments on Iran… then refused to drop when Iran flatly denied them…

 

Seems like crude algos were playing catch up to stocks today…

 

Charts: Bloomberg

Bonus Chart: Stocks are at their richest to the Fed Balance Sheet…

end

 

Early trading today:

figure out who is right and who is wrong!

S& P up! gold up! and yield on 30 yr down  (bond prices up?)

(courtesy zero hedge)

What’s Wrong With This Picture? (Again)

Stocks at the high of the day, Treasury yields at the low of the day, gold at the high of the day… someone is wrong or the ‘QE trade’ is back…

Buy everything stupid!

More safe-haven buying…

Even crude is sliding. But VIX is extremely noisy with 3 mini flash crashes overnight…

 end The bond market, this afternoon delivered its potential verdict on Yellen’sJackson Hole address this Friday with yields falling to .76% on the two year note. The bond market is expecting nothing but dovishness: (courtesy zero hedge) Bond Market Gives Its Verdict On Yellen’s Jackson Hole Speech With Stellar 2 Year Auction

If today’s 2 Year auction was supposed to telegraph what the bond market thinks of Janet Yellen’s Jackson Hole statement, then the message is clear: there won’t even be a sliver of hawkishness, because while the When Issued market was expecting the note to price at 0.771%, it stopped through the When Issued by 1.1bps, printing at 0.76%, which incidentally is where the July 2 Year auction priced as well, only that particular auction tailed by 1.2 bps.

The internals were strong, with the Bid to Cover jumping from last month’s multi year low of 2.52 to a far more stable 2.831, the second highest since February. Dealers took down 29%, the lowest since July 2014, offset by an unexpcted surge in Direct bids which were allotted 25.2% of the final paper, up solidly from last month’s 10.3%. This meant Indirects were left holding 45.8% of the paper.

And while foreign central banks were somewhat leery to bid today, the key message from this auction is that 3 days ahead of Janet Yellen’s speech on Friday, the bond market is convinced: there won’t even be a trace of hawkishness when the Fed Chair speaks on Friday.

The USA flash manufacturing PMI for August printed a very disappointing 52.1.This is a preliminary number but it does not bode well for the USA economy: (courtesy zero hedge/FlashPMI) US Manufacturing Flashes “Warning Light” As New Orders, Employment Tumble

Following the eurozone’s disappointing drift lower in Manufacturing PMI (and weakness in German Services),August’s US preliminary manufacturing PMI printed a disasppointing 52.1 (against expectations of 52.6). Weakness in Employment (lowest in 4 months) and New Orders underpin the drop from 52.9 to 52.1 as the 2 month hope-fueled bounce has faded…

Renaissance over…

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

“The August drop in the PMI is a disappointment but less worrying when looked at in the context of July’s better than expected reading. Taking the July and August readings together suggests that manufacturing is enjoying its best growth so far this year in the third quarter, and should help drive stronger GDP growth.

“With August seeing the largest rise in exports for almost two years, the improved trade performance should also help drive faster economic growth.

“However, a slowdown in overall order book growth is a warning light that domestic demand has waned in August, and the pull-back in hiring suggests manufacturers have become increasingly cautious about the outlook. Inflationary pressures have meanwhile eased.

“Policymakers will therefore be pleased to see signs that the economy may have picked up speed in the third quarter, but the Fed looks unlikely to tighten policy again until the upturn has stronger foundations, suggesting any interest rate rise looks unlikely before December.”

Charts: Bloomberg

 

 

 

end

 

Wow! what a huge downward move:  the Richmond mfg Fed survey collapses the most on record:  + 10 to – 11.

(courtesy zero hedge)

Richmond Fed Manufacuring Survey Collapses By Most On Record

Following flash PMI’s drop, another early August indicator has collapsed as Richmond Fed’s manufacturing survey plunges to -11 (lowest since Jan 2013) missing expectations of +6. The plunge from July’s +10 to August’s -11 is the largest on record – back to 1993.

Biggest drop on record…

Weakness was across the board with new orders crashing from +15 to -20, order backlogs and capacity utlization crashing, and average workweek slumping. The only thing stopping this from being a monumental crash was hope that sent future shipment expectations from +19 to +41 – the highest in a year.

 

end

New rules coming will cause problems for our derivative players as they will need to increase their margins.  The major problem of course is the lack of collateral caused by bankers soaking up everything.  This is going to hurt the bankers quite a bit…

another important read…

(Bloomberg/Sabrush)

Banks Sprint to Meet $493 Trillion Swaps Market Margin Rules  Sabrush
  • Rules could require more than 700 billion euros in collateral
  • U.S., Japan start start Sept. 1; Hong Kong, Singapore delay

The world’s largest banks are racing to meet a U.S. and Japanese deadline next month when billions of dollars in new collateral requirements will begin to hit the over-the-counter derivatives market, even as new regulatory fault lines emerge.

Firms are testing systems for exchanging collateral for the trades, signing new legal documents and pursuing regulatory approval for models that could help blunt the cost of compliance, according to lawyers, executives and consultants helping firms meet one of the biggest changes in decades to the swaps market. The rules are taking effect in the U.S. and Japan on Sept. 1, while the European Union, Singapore, Hong Kong and Australia have announced delays.

The hundreds of pages of restrictions are the result of years of deliberation by regulators around the world after the financial crisis when risk built up directly between traders. Global regulators estimate that the rules could eventually require more than 700 billion euros ($790 billion) in cash, government bonds and other forms of collateral to protect against the threat that the default of one trader spreads risk to others and potentially throughout the financial system.

“This has been on the horizon for a while, but it was always going to be a challenging timetable and it’s just going to go right to the wire,” Deepak Sitlani, a London-based partner at Linklaters LLP law firm, said in an interview.

Global Deadline

In the U.S. to Japan, swap-dealing divisions of banks including JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc., will have to start complying with the requirements on Sept. 1. In Europe, regulators said they couldn’t meet next month’s global deadline and intend for the rules to take effect early next year, threatening to fracture the market.

Regulators in Singapore and Australia said in statements on Monday that they will take more time to impose the requirements. Singapore said the decision would help avoid unintended disruptions to financial markets and takes into account cross-border coordination issues and the level of industry preparedness. The Hong Kong Monetary Authority also decided to delay “due to recent developments in other major jurisdictions,” a spokesperson said by e-mail. The three jurisdictions didn’t set new deadlines.

The Bank for International Settlements puts the size of the over-the-counter derivatives market at $493 trillion as of the end of last year. U.S. regulators said firms would eventually need about $315 billion in initial margin to meet the requirements. Buyers and sellers of swaps in the EU market may need at least 200 billion euros, the bloc’s regulators said this year.

‘Complex Work’

The actual cost of financing collateral would be smaller, though the U.S. Federal Reserve has said it could still cost banks billions of dollars. The rules take effect for big banks first and will be phased in for smaller firms. Banks and their clients must exchange variation margin to offset risks during the life of a transaction starting on March 1.

“Final regulations from domestic regulators emerged relatively late in the day, in some cases less than six months before the scheduled Sept. 1 start date,” said Scott O’Malia, chief executive of the International Swaps and Derivatives Association. “Given much of the detailed preparation and implementation couldn’t begin until final rules were published, this has meant a huge amount of complex work has had to be done in a very compressed time frame.”One of the banks’ top priorities ahead of the deadline is to get approval to use a framework developed by ISDA, the industry’s main trade group, for calculating margin requirements instead of the one-size-fits-all method set by regulators. Banks would be able to adjust ISDA’s system, known as the standard initial margin model, to fit their specific situation.

‘Significant Multiples’

ISDA has said that it is essential for banks to be able to use models because the amounts of margin required under the regulators’ method are too onerous. The Fed in its final rule said it expected banks to be able to rely on models and that the amount of margin would be $315 billion rather than the $3.6 trillion the industry estimated based on the regulatory method.

“You could easily be talking about the standardized numbers coming out as being very significant multiples of the SIMM results,” according to Nicholas Newport, managing director in London at InteDelta, a consulting firm that’s working with banks on the requirements.

In the U.S., bank regulators must approve some models before they can be used, while the industry-funded National Futures Association is in charge of reviewing other models. NFA said its reviews could take 90 days and include an on-site exam. The NFA doesn’t plan to disclose its decisions, though firms could tell each other if they’ve won approval.

Law Firms

ISDA is drafting standard legal documents for banks to comply with the rules. The rules have forced banks to have legal relationships with counterparties, set up accounts at custody banks where collateral can be deposited and seek opinions from law firms about contractual standards in countries around the world, lawyers said.

Many banks have multiple divisions that are registered in the U.S., each of which needs to set up new arrangements. European and Asian banks also have units that are registered in the U.S. and may also need to meet the requirement even if their parent companies are headquartered abroad.

“Even between just two dealers, you could have a number of legal entity pairings that require an IM arrangement,” Sitlani said, referring to initial margin. “Multiply that out by the number of dealers subject to the rules and you quickly get to a lot of new agreements that need to be signed up.”

AcadiaSoft Inc., a Norwell, Massachusetts-based company owned and backed by the industry runs a system that is designed to help firms automate the process of managing collateral. Thirty financial entities are participating in the system and 700 people across the firms have been working on the project since the beginning of the year, said Chris Walsh, AcadiaSoft’s chief executive.

“The infrastructure is in place,” Walsh said in an interview. “But there is still a lot of on-boarding and testing.”

 

end

 

Another very important commentary.  I have been pointing out to you for the past several months the continueal decline in foreign demand for USA government bonds.  The latest TIC report shows aggressive foreign selling.  The big question is why? The answer lies in the cost to hedge the USA dollar.  Even though the USA has a good positive yield compared to anybody else at sovereign AAA, it is the cost to hedge that kills the trade (buy USA short EU eg.)  If investors want yield that must do so unhedged and with a USA policy to tighten that is not a very good idea

a must read…

(courtesy zero hedge)

“It’s Gone” – Why Foreign Demand For US Treasuries Has Disappeared

Last week’s TIC data confirmed something the Fed’s Treasury custody account has indicated for the past several months: foreign demand for US government bonds has not only tumbled, but there has been aggressive selling.

So much so, in fact, that in the past 12 months foreign central banks have sold a gargantuan $335 billion in US Treasuries (and $242 billion when looking at all foreign transactions including private).

But how is this possible: after all the yield differential between US government bonds and the rest of the DM complex is approaching record wides.

It turns out that the answer lies in the ongoing blow out of the cross-currency basis, i.e., the implicit global dollar shortage, something we highlighted several months ago, and which has only gotten worse in the months since, following the spike in dollar hedging costs and short-term funding costs (see Libor).

The collapse in demand for US paper as a result of the blow out in swap spreads is the topic of this morning’s FX Daily by Deutsche Bank’s George Saravelos who notes in a note titled “It’s Gone” that “a remarkable hunt for yield has taken place over the last few years. Foreigners have fled negative rates and flocked to US fixed income to take advantage of positive rates. Currency hedging these purchases has been a popular strategy: investors buy long-end bonds and use short-dated forwards to eliminate the FX risk.”

However, apropos to the current basis spread environment, something significant has happened in recent months:buying 10-yr US treasuries is no longer profitable. It is not only Europeans or Japanese, there now isn’t any global fixed income investor that can make decent money by buying hedged USTs.

Even more remarkably, the reason behind this lack of return isn’t that long-end yields have compressed: the rate differential between the US and the rest of the world has stayed quite stable. Instead, it is diverging central bank policy (Fed hike vs cuts elsewhere) and the widening in cross-currency basis (which is the cost of hedging using a forward over and above that implied by covered interest rate parity; the drivers are regulatory tightening, differing investor liquidity and hedging preferences, as well as bank credit risk) that now makes it very costly for investors to hedge.

Deutsche Bank draws three conclusions from these simple observations.

  • First, it is hard to see the relentless foreign buying of hedged US fixed income continuing at the same pace. Unless other bond yields decline deep into negative territory (they are already zero), there may be limits to how much more UST yields can compress.
  • Second, the rise in forward costs is bullish USD. If investors want to pick up AAA yield, they will have to do so unhedged, which will generate demand for dollars. If they don’t want FX risk, investors will have to buy higher-yielding corporate bonds or other riskier US assets.
  • Finally, cross-currency basis and the US short-end may prove material drivers of global capital flows going forward. On the one hand, the widening in cross-currency basis is essentially a “tax” on hedging costs distorting global capital flows. On the other hand, a Fed tightening will make FX hedging even more expensive, counter-intuitively forcing investors to increase, rather than reduce, FX, credit or duration risk.

Keep an eye on the Fed’s weekly custody holdings of Treasuries for the most current data if basis hedging is pushing even more foreigners out of the world’s most liquid fixed income security.

end

 

The Fed admits that another 4 trillion uSA will be needed to offset another economic shock or in other words, the doubling of the Fed’s balance sheet.

It would be a mess…

(courtesy zerohedge)

Fed Admits Another $4 Trillion In QE Will Be Needed To Offset An “Economic Shock”

In a Fed Staff working paper released over the weekend titled “Gauging the Ability of the FOMC to Respond to Future Recessions” and penned by deputy director of the division of research and statistics at the Fed, the author concludes that “simulations of the FRB/US model of a severe recession suggest that large-scale asset purchases and forward guidance about the future path of the federal funds rate should be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in most, but probably not all, circumstances.”

So far so good, however, there are some notable problems with the paper’s assumptions, as Citi head of G10 FX, Steven Englander, observes.

He writes that the paper’s basic framework is to take the standard US economic model used by the Fed, give it a negative shock big enough to push the unemployment rate up by 5 percentage points (big but not unprecedented over the last 50 years) and deploying the Fed’s policy rate, QE and forward guidance tools to see if they are adequate to get the economy back on track. Negative rates and helicopter money are not used.

The two simulations assume:

  1. the economy is in equilibrium initially with inflation at 2%, r* at 1%, so equilibrium nominal fed funds is 3%
  2. the economy is in equilibrium initially with inflation at 2%, r* at zero (secular stagnation) and equilibrium nominal fed funds at 2%

He compares three policy approaches. The first assumes a linear world where fed funds can go into negative territory but there is no breakdown in the structure of economic relationships. It is probably not a realistic view of policy ineffectiveness at negative rates, but it is mean to be a baseline. The second just takes fed funds down to zero and keeps it there long enough for unemployment to return to baseline.

The third takes fed funds down to zero and augments it with additional USD2trn of QE and forward guidance. A variation on the third policy response function doubles the amount of QE in the second simulation.

In other words, the Fed is already factoring in a scenario in which a shock to the economy leads to additional QE of either $2 trillion, or in a worst case scenario, $4 trillion, effectively doubling the current size of the Fed’s balance sheet.

He continues his critique of the Fed’s argument as follows:

In the simulations. QE and forward guidance take 10yr yields down 225-300 bps depending on the starting point for fed funds and whether you do $2 trillion or $4 trillion for QE. But that is not going to work very well if by design fed funds and 10yr yields can’t go below zero. And if expected rates are already low then forward guidance does not have much room. Fed official will gave to keep a straight face while saying they we will keep rates at zero … forever.

What makes it work is that QE and committing to low rates for longer gets the long rate down quickly and this compensates for the inability to take short rates down as far as you would want. In the unconstrained model, the maximum drop in short rates is almost 9 percentage points, almost twice as much as in the constrained model, but the QE/forward guidance  lower takes (and keeps) long rates 75bps lower than when the Fed takes rates to zero and stops. When the Fed is starting from 3% fed funds, the combo can almost entirely offset the zero constraint, but only if the full $4 trillion QE is brought to bear. Starting from 2%, QE of $2 trillion is not enough to get long rates down far or fast enough to offset the shock.

All of which brings Englander to the following stunning conclusion:

I would have rewritten the conclusion as: “large-scale asset purchases and forward guidance about the future path of the federal funds rate have almost no ability to offset a shock in current circumstances, but down the road may be able to provide enough additional accommodation to fully compensate for a more limited [ability] to cut short-term interest rates in some, but not all and maybe even not most, circumstances.” The italics and colors show my changes.

Just as troubling, Englander admits that the nuanced read of the Fed paper admits it is effectively powerless to withstand a sharp recession: “The key policy issues and what drives the paper’s conclusions and my variant is the starting point. Were we to have a recession today or a year (or even two years) from now, it is very unlikely that the Fed weapons have anywhere near the potency that the paper describes. The FOMC had an end-2018 median fed funds rate of 2.4% at the June meeting and my guess is that it is lower now. Markets don’t price in even 100bps in fed funds till the end of 2019 (taking Eurodollar rates and subtracting 40bs or so.) That said, a 5% shock to the unemployment rate is pretty extreme, if the Fed is not stepping on the brakes hard or world not falling apart for other reasons.”

How much room does the Fed have? Very little:

In the simulation is looks as if it takes about 160-180bps of fed funds reductions (peak response) to offset an 1% UR shock, so right now they could offset maybe an 0.20% shock to the UR with the rates room that they have.

But most troubling of all, is just how critical starting conditions are for further easing; considering monetary conditions right now are unprecedented, it means the Fed has its work cut out for it:

The problem the paper outs in relief is that the effectiveness of rate cuts/QE/rate guidance goes up with the starting point of rates – so the combined policy tools are much more effective if the fed funds rate is 3% than if it is 2% and certainly a lot more than if it is 40bps. There is a good reason the paper does not examine the options for fighting recessions under current conditions. The drop in fed funds also takes 10 year yields down, and roughly 30-40bps in 10s for every 100 bps in fed funds,  so if you are starting with fed funds at 40bps and 10yr yields at 160bps, rates policy/QE/forward guidance are not going to do much. Short rates, long rates and rate expectations have nowhere to go, unless you bring negative rates into the discussion, which does not occur.

And, as noted above, not less than $4 trillion in QE would be enough to “get long rates down far or fast enough to offset the shock.”

What are the implications for the Fed, and thus to the market, as a result of the paper? It depends on whetyher one is a hawk or a dove:

To the doves fast growth and higher inflation inoculates the Fed and the economy from policy ineffectiveness at the zero bound so it is a very dovish outcome. Insofar as having 2.5% or 3% inflation makes policy more effective in a downturn there is a case for loosening the target, or not admitting to loosen but reacting to an overshoot anyway.

Hawks may argue that there is a case for raising rates faster, not slower, but the argument has to be made carefully. Assume that the next recession comes in a year from a source not related to Fed policy – the EU falling apart or a major geopolitical event. If fed funds is at 100bps, for example, they may have a meeting or two to stimulate by taking policy rates down while laying the ground for the much bigger stimulus from fiscal or helicopter money that would  be needed. If fed funds are very low, investors, households and firms may lose confidence when they recognize that policy has nowhere to go. But this logic depends crucially on this confidence effect which may or may not exist. Hawks can at any point argue that the risks of the zero bound are overstated or that easy Fed policy makes the next recession more likely by making a financial crisis more likely at some point, but that is outside the scope of the paper.

Incidentally, all of the above is a long-winded way of saying the Fed hiked rates, only to be forced it will have to not only cut them, as Japan did 7 months after its ill-fated August 2000 rate hike as we cautioned last August

 

… but that when the US economy slides into the next sharp recession, no less than $4 trillion in QE will be needed to stabilize the economy, bringing the Fed’s total holdings of government bonds to well over 30%. And with that in mind, we look forward to what “upside rate hike surprises” Yellen has in store for the market this coming Friday, especially if the politically-tasked Bureau of Labor Services continues to surprise to the upside with fresh record numbers of minimum-wage restaurant workers and bartenders.

 

END A very good paper by Michael Snyder as he describes how Obamacare has killed the middle class: (courtesy Michael Snyder/Economic Collapse blog) As Predicted, Obamacare Is Absolutely Killing The Middle Class

submitted by Michael Snyder via The Economic Collapse blog,

The critics of Obamacare have been proven right.  The Obama administration promised that health insurance premiums would go down.  Instead, they have absolutely skyrocketed.  The Obama administration promised that Obamacare would not kill jobs.  Instead, firms are hiring fewer workers because of suffocating health care costs.  As you will see below, even the Federal Reserve is admitting this.  The Obama administration also promised that the big health insurance companies would love the new Obamacare plans and would eagerly compete with one another to win customers in the new health insurance marketplaces.  Instead, many of the big health insurance companies are now dropping Obamacare plans altogether.

We witnessed the latest stunning example of this phenomenon just a few days ago.  It turns out that Aetna has been losing hundreds of millions of dollars on plans sold through the health exchanges, and now they plan to pull out of the program almost entirely

Earlier this week, Aetna, which covers about 900,000 people through the health exchanges created under Obamacare, announced that it would dramatically reduce its presence those exchanges. Instead of expanding into five new states this year, as the insurer had previouslyplanned, the company said that it would drop out of 11 of the 15 states in which it currently sells under the law.

Aetna’s decision follows similar moves from other insurers: UnitedHealth announced in April that it would cease selling plans on most exchanges. Shortly after, Humana pulled out of two states, Virginia and Alabama. Morethan a dozen of the nonprofit health insurance cooperatives set up under the law—health insurance carriers created using government-back loans in order to spur competition—have failed entirely. While some insurers are entering the exchanges, even more are leaving.

Another one of “the big five”, UnitedHealth, is going to lose more than half a billion dollars on Obamacare plans.  So just a few months ago they also announced that they would be dramatically scaling back their participation in the program.

Because of the ridiculous costs, health insurance companies are either going to have to abandon the exchanges completely or they will have to raise rates substantially.

Needless to say, the people that are going to ultimately feel the pain from all of this are consumers

Customers who are now forced to obtain insurance or pay a hefty fine that grows more costly over time are being left in a difficult position. Americans are essentially stuck between a rock and hard place, either losing coverage entirely, or having to cough up money for a plan they can’t afford.

Something has to give,” said Larry Levitt, a healthcare law expert at the Kaiser Family Foundation. “Either insurers will drop out or insurers will raise premiums.

On the low end of the spectrum, tens of millions of poor Americans benefit from government programs that provide health care at little or no cost.

On the other end of the spectrum, the very wealthy can afford to pay the ridiculously high health insurance premiums that we are seeing under Obamacare.

So what this means is that the people that are being hurt the most by Obamacare are those that belong to the middle class.

As I mentioned above, employers are now hiring less workers because of Obamacare, and that is very bad news for the middle class.  One recent study conducted by the Federal Reserve Bank of New York discovered that nearly one out of every five firms is “employing fewer workers” because of this insidious law

According to a new survey by the Federal Reserve Bank of New York, 20.9% of manufacturing firms in the state said they were employing fewer workers because of the Affordable Care Act, the healthcare law known as Obamacare, while 16.8% of respondents in the service sector said the same.

And middle class Americans that have to pay for their own health insurance are being hit with much higher bills these days.  According to one recent study, it is being projected that the average Obamacare premium will go up 24 percent in 2016…

Now, courtesy of a new study by independent analyst Charles Gaba – who has crunched the numbers for insurers participating in the ACA exchanges in all 50 states – we can also calculate what the average Obamacare premium increase across the entire US will be: using proposed and approved rate increase requests, the average Obamacare premium is expected to surge by a whopping 24% this year.

Even NBC News, which is about as pro-Obama as you can get, is reporting on the crippling premium increases that are devastating the middle class…

Millions of people who pay the full cost of their health insurance will face the sting of rising premiums next year, with no financial help from government subsidies.

Renewal notices bearing the bad news will go out this fall, just as the presidential election is in the home stretch.

“I don’t know if I could swallow another 30 or 40 percent without severely cutting into other things I’m trying to do, like retirement savings or reducing debt,” said Bob Byrnes, of Blaine, Minnesota, a Twin Cities suburb. His monthly premium of $524 is already about 50 percent more than he was paying in 2015, and he has a higher deductible.

All over the nation people are getting hit like this.

Personally, my health insurance company wanted to nearly double the rate I was paying when Obamacare fully kicked in.  So I searched around and found another plan that was only about a 30 percent increase, but at least it wasn’t nearly double what I had been paying before.

But when the time came to renew that plan, they wanted to jump my premium up another 50 percent per month.

Those of us that are in the middle are being crushed by Obamacare.  We aren’t poor enough to qualify for government assistance, and we aren’t wealthy enough for these ridiculous health insurance premiums not to matter.

Just about everything that Barack Obama promised us about Obamacare has turned out to be a lie.

So where is the accountability?

This is one of the big reasons why nearly one out of every five U.S. adults lives with their parents or their grandparents these days.  Many young adults cannot afford the basics of life such as health insurance, and so they have got to find a way to cut back expenses somewhere.  If that means moving back in with Mom and Dad, that is what some of them are going to do.

I am astounded that our system of health care has become so messed up.  But this is just more evidence of how our society is falling apart in thousands of different ways, and I am not optimistic that things will be turned around any time soon.

 

end

 

Well that about does it for tonight

I will see you tomorrow night

Harvey


August 22/Huge increase in GLD (2.38 tonnes) and a huge 3.324 million oz gain in SLV/Raid today on our precious metals with the target being silver/Sabre rattling between Japan and China intensifies along with Russia and the USA/Hillary’s troubles...

Mon, 08/22/2016 - 19:39

Gold:1337.70 down $3.70

Silver 18.84  down 46 cents

In the access market 5:15 pm

Gold: 1339.30

Silver: 18.92

.

For the August gold contract month,  we had a good sized 46 notices served upon for 4600 ounces. The total number of notices filed so far for delivery:  13126 for 1,312,600 oz or  tonnes or 40.827 tonnes.  The total amount of gold standing for August is 42.777 tonnes.

In silver we had 0 notices served upon for nil oz. The total number of notices filed so far this month:  471 for 2,355,000 oz.

 

Today the raid orchestrated by the crooks was aimed at silver.  The relatively high OI for the new upcoming front month of September as well as huge numbers of options in the money is scaring our bankers and thus the need to raid.

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY 962 contracts DOWN to 205,116 AND MOVING AWAY FROM ITS AN ALL TIME RECORD. ALSO THE HIT ON SILVER WAS TINY COMPARED TO THE HUGE WHACK IN   THE  PRICE WHICH FELL  BY 42 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.025 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold FELL 5,319 contracts as the price of gold FELL BY $10.80 yesterday . The total gold OI stands at 574,502 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had a huge change today at the GLD/ a deposit of 2.38 tonnes

Total gold inventory rest tonight at: 958.37 tonnes of gold

SLV

we had another huge change  into the SLV, a deposit of 3.324 million oz/   THE SLV/Inventory rests at: 358.793 million oz.

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

1. Today, we had the open interest in silver FELL by 962 contracts DOWN to 205,116 despite the fact that the price of silver FELL BY 42 cents with YESTERDAY’S trading.The gold open interest FELL 5,319 contracts DOWN to 574,502 as the price of gold FELL by $10.80 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

 

3. ASIAN AFFAIRS

 i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 23.30 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.75% Australia’s all ordinaires  CLOSED DOWN 0.21% Chinese yuan (ONSHORE) closed UP at 6.6544/Oil FELL to 47.16 dollars per barrel for WTI and 49.31 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6635 yuan to the dollar vs 6.6544 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

More sabre rattling as Japan doubles its F 15 missile payload as escalation in the South China seas escalates:

(courtesy zero  hedge)

b) REPORT ON CHINA

i)Hong Kong based Cathay Pacific earnings are totally crushed as corporate travel within China collapses as tourism into China falters terribly

( zero hedge).

ii)The following is a big story.  On Oct 1, China will finally see its yuan included in SDR’s. Now we see the IMF has allowed a new Chinese bond offering denominated in SDR’s with interest paid in yuan.  As China gets to issue more of these bonds there will be less use of dollars circulating the globe. The unwanted dollars would then return to the USA and inflation and quite possibly hyperinflation will be the inevitable

(courtesy Chris Vermeulen/the Gold and Oil Guy) 4 EUROPEAN AFFAIRS

i)The vote for a BREXIT certainly did not cause Armageddon for Britain. However it is giving the country many opportunities to right itself in the face of no growth in Europe.  It is proposing to cut corporate taxes something that Sweden is against but cannot do anything about it.

It sure looks like Britain will be the clear winner with its Brexit with the clock set to start by April 2017:

( Mish Shedlock/)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)As we outlined to you on Friday, the Vancouver housing market is imploding as the new tax seems to have a devastating effect on the market.

( zero hedge)

ii)Jim Grant on the global economy:  the lack of growth and negative interest rates:

In his words:  “this will turn out to very bad for many people”

(Jim Grant/Christoph Gisiger/Finanz und Wirtschaft)

7.OIL ISSUES

none today

8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)A very important commentary from Stephen Leeb.  He describes how gold will eventually land as the 6th component in the new SDR’s and with that, the only way the world can save itself

( Stephen Leeb/Kingworldnews)

ii)Join Chris Powell, Bill Murphy and all the gang for a gold conference in New Orleans:

(COURTESY CHRIS POWELL/GATA)

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

i)Markets reaction to Fisher’s hawkish comments at Jackson Hole that a rate hike in 2016 may be in the offering:

( zerohedge)

ii)Looks like our good friend Hillary is in trouble with this:

New emails reveal Hillary Clinton provided special access to foundation donors.

The Clinton Foundation is nothing but a racket and Hilary lied about providing everything work related:

( zero hedge)

iii)And late this afternoon Hillary’s troubles continues as the FBI finds 15,000 more business related emails:

( zero hedge)

 

Let us head over to the comex:

The total gold comex open interest FELL to an OI level of 574,502 for a LOSS of 5,319 contracts as the price of gold fell by $10.80 with Friday’s trading. We are now in the active month of August.  As I stated this month:”Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we have witnessed in May, June and July whereby the front delivery month increases in I standing for metal or a slight contraction.  We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice. 

The big active contract month of August saw it’s OI fall by 165 contracts down to 673.  We had 157 notices filed upon Friday so we lost 8 gold contracts or an additional 800 oz will not stand for delivery in August and these guys no doubt were cash settled for a fiat bonus. The next contract month of Sept saw it’s OI fall by 42 contracts down to 4408.  The September contract still remains extremely elevated and we may have another of those high deliveries rare for a non active month. The next active delivery month is October and here the OI FELL by 277 contracts DOWN to 47,675.  The estimated volume today (which is just comex ales during regular business hours of 8:20 until 1:30 pm est) was POOR at 147,918.  The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 192,312 contracts. The comex is not in backwardation.

Today we had  46 notices filed for  4,600 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI fell by only 962 contracts from 206,725 down to 205,116 despite the HARD fall in the price of silver to the tune of 42 cents on Friday.  We are moving away from the all time record high for silver open interest set on Wednesday August 3:  (224,540). The non active month of August saw it’s OI fall by 78 contracts down to 16.  We had 78 notices served on Friday, so we neither gained nor lost any silver contracts (ounces) will stand for silver in this non active delivery month of August.  The next active month is September and here the OI fell by only 10,659 contracts down to 82,277.We have 7 days left before first day notice.  The volume on the comex today (just comex) came in at 121,295 which is ABSOLUTELY HUGE but many rollovers.  The confirmed volume yesterday (comex and globex) was also huge  at 107,389( with many rollovers). Silver is not in backwardation.  London is in backwardation for several months. we had 0 notices filed for nil oz INITIAL standings for AUGUST  August 22. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 76,106.900 oz SCOTIA BRINKS INCL 50 KILOBARS Deposits to the Dealer Inventory in oz 1400.000 oz

Brinks

??? Deposits to the Customer Inventory, in oz   64,302.000 oz Brinks ??? suppose to be 2,000 kilobars got wrong weight No of oz served (contracts) today 46 notices  4600 oz No of oz to be served (notices) 627 contracts (62,700 oz) Total monthly oz gold served (contracts) so far this month 13,126 contracts (1,312,600 oz) (40.827 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    538,.816.3 OZ Today:  HUGE activity at the gold comex AND 3 KILOBAR ENTRIES// PLUS OUR USUAL AND CUSTOMARY FRAUDULENT ENTRY IN BRINKS Today we had 1 dealer DEPOSIT i) into Brinks:  another of those crazy and no doubt fraudulent deposits: 1400.000 oz this is not divisible by 32.15 oz, therefore this is not a kilobar entry. total dealer deposit: 1,400.0000    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 1 customer deposit:  i) Into HSBC:  64,302.000 oz***  (2000.06 kilobars) ** strange entry:  the correct weight for 2,000 kilobars:  64,150.000 oz Total customer deposits: 64,302.000 OZ Today we had 2 CUSTOMER withdrawals  i) Out of SCOTIA:  1,607.500 OZ  (50 kilobars) ii) OUT OF brinks  74,499.100 OZ  real oz leaving Total customer withdrawals  76,106.900 OZ Today we had 2 adjustment:  i) Out of BRINKS:  1929.000 oz (60 KILOBARS) was adjusted out of the customer and this landed into the dealer account of BRINKS: ii)Out of Delaware:  1319.149 oz was transferred out of the customer account and this landed into the dealer account of Delaware Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 46 contracts of which 0 notice was stopped (received) by JPMorgan dealer and 34 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (13,126) x 100 oz  or 1,312,600 oz , to which we  add the difference between the open interest for the front month of AUGUST  (673 CONTRACTS) minus the number of notices served upon today (46) x 100 oz   x 100 oz per contract equals 1,375,300 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (13,126) x 100 oz  or ounces + {OI for the front month (673) minus the number of  notices served upon today (46) x 100 oz which equals 1,375,300 oz standing in this non  active delivery month of AUGUST  (42.777 tonnes). We lost 8 contracts or an additional 800 oz will not stand for delivery in this  active delivery month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.777 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418 tonnes/THEREFORE 91.839 tonnes still standing against 72.900 tonnes available.  Total dealer inventor 2,343,748.656 oz or 72.900 tonnes Total gold inventory (dealer and customer) =11,016,512.858 or 342.659 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.659 tonnes for a  gain of 40  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

   end And now for silver   AUGUST INITIAL standings  august 22.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory 1,125,195.400 OZ BRINKS,CNT Deposits to the Dealer Inventory  NIL OZ Deposits to the Customer Inventory 299,047.63 OZ CNT No of oz served today (contracts) 0 CONTRACTS (nil OZ) No of oz to be served (notices) 16 contracts 80,000 oz) Total monthly oz silver served (contracts) 471 contracts (2,355,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  10,150,179.0 oz today we had 0 deposit into the dealer account:  Total dealer deposits;  NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 2 customer withdrawal: i) Out of CNT:  1,074,893.410 OZ ii) Out of Brinks:  50,301.990 oz Total customer withdrawals: 1,125,195.400 oz We had 1 customer deposit: i) Into CNT;  299,047.630 oz total customer deposits:  299,047.630  oz        we had 0 adjustments The total number of notices filed today for the AUGUST contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (471) x 5,000 oz  = 2,355,000 oz to which we add the difference between the open interest for the front month of AUGUST (16) 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 AUGUST contract month:  471(notices served so far)x 5000 oz +(16 OI for front month of AUGUST ) -number of notices served upon today (0)x 5000 oz  equals  2,435,000 oz  of silver standing for the AUGUST contract month. we neither gained nor lost any silver ounces that  will stand for silver metal in this non active delivery month of August.   Total dealer silver:  27.453 million (close to record low inventory   Total number of dealer and customer silver:   156.634 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD August 22/ a deposit of 2.38 tonnes of gold into the GLD/Inventory rests at 958.37 tonnes August 19/no changes at the GLD/inventory resets at 955.99 tonnes August 18/a withdrawla of 6.24 tonnes of gold from the gLD/Inventory rests at 955.99 tonness August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 22/ Inventory rests tonight at 958.37 tonnes

end

Now the SLV Inventory August 22/a huge addition of 3.324 million oz into the SLV/Inventory rests at 358.793 million oz August 19/no change in silver SLV/Inventory rests at 355.469 million oz/ August 18/ a massive paper deposit of 2.185 million oz into the SLV/Inventory rests at 355.469 million oz August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/ August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 22.2016: Inventory 358.793 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 3.6 percent to NAV usa funds and Negative 3.5% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 60.2% Percentage of fund in silver:38.6% cash .+1.2%( August 22/2016). 2. Sprott silver fund (PSLV): Premium rises to +1.29%!!!! NAV (august 22/2016)  3. Sprott gold fund (PHYS): premium to NAV  rises TO  1.05% to NAV  ( august 22/2016) Note: Sprott silver trust back  into POSITIVE territory at +1.29% /Sprott physical gold trust is back into positive territory at 1.05%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,MONDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Ireland’s Biggest Bank Charging Depositors – Negative Interest Rate Madness By Mark O’ByrneAugust 22, 20160 Comments

Deposits at Bank of Ireland are soon to face charges in the form of negative interest rates after it emerged on Friday that the bank is set to become the first Irish bank to charge customers for placing their cash on deposit with the bank.

This radical move was expected as the European Central Bank began charging large corporates and financial institutions 0.4% in March for depositing cash with them overnight.

Bank of Ireland is set to charge large companies for their deposits from October. The bank said it is to charge companies for company deposits worth over €10 million.

The bank was not clear regarding what the new negative interest rate will be but it is believed that a negative interest rate of 0.1 per cent will initially be charged to such deposits by Ireland’s biggest bank.

BOI recently failed the EU stress tests and is seen as one of the most vulnerable banks in the EU – along with Banca Monte dei Paschi di Siena (MPS), AIB and Ulster Bank’s parent RBS. All the banks clients, retail, SME and corporates are unsecured creditors of the bank and exposed to the new bail-in regime.

Only larger customers will be affected by the charge for now. The bank claims that it has no plans to levy a negative interest rate on either personal or SME customers but negative interest rates seem likely as long as the ECB continues with zero percent and negative interest rates. Indeed, they are already being seen in Germany where retail clients are being charged 0.4% to hold their cash in certain banks such as Raiffeisenbank Gmund am Tegernsee.

The news came days after it emerged that FBD, one of Ireland’s largest insurance companies, have been moving cash out of Irish bank deposits and into bonds. Fiona Muldoon, the FBD CEO cited extremely low returns on deposits and bail-ins as the reason they were withdrawing cash from Irish banks and diversifying into corporate and sovereign bonds. Muldoon said as reported by the Irish Independent that

“As they mature, and as the bank bail-in rules come into play, it’s no longer the case that for corporate investors depositing at a bank is risk free,” she added.
“To be honest, the return is abysmal now. We’ve gone back to a more typical investment portfolio for an insurance company.”

“You have to be paid for the risk you take,” she added. “You might entertain the bail-in risk if you were being properly paid. But if you’ve a bank trying to charge you for leaving your money with them, you’re not inclined to take any risk at all.”

The monetary policies being pursued by the ECB and other central banks is making deposits, banks and the banking system vulnerable. Central bank policies are contributing to individuals and companies withdrawing deposits from banks which is making already fragile banks even more fragile.

It is important to note that while there are “deposit guarantees” in place in most jurisdictions in the EU, these guarantees are only as good as the solvency of the nation providing them. Many nations in the EU remain insolvent or at least border line insolvent. Thus, the deposit guarantee level of €100,000 in many EU states and £75,000 in the UK is likely to be arbitrarily reduced to lower levels in the event of deposit “haircuts” in the next banking and financial crisis.

Prudent retail, SME and corporate clients are realising the increasing risks facing their deposits. They can no longer afford to simply leave their deposits in a single bank account or indeed even in a few bank accounts. Diversification into other assets, including an allocation to physical gold, is becoming an important way to hedge the risks posed by negative interest rates and bail-ins.

Download Bail-in Guide

Gold and Silver Bullion – News and Commentary

Gold hits one-week low on U.S. rate hike prospects (Reuters)

Dollar Boosted by Hawkish Fed Comments as Oil Drops With Gold (Bloomberg)

Gold books largest daily decline in 2 weeks (MarketWatch)

Gold Lower, Weighed by Dollar, Fed Remarks (Nasdaq)

House prices forecast to fall after Brexit (Telegraph)

Let’s not crack open the post-Brexit champagne quite yet – Warner (Telegraph)

Technology revolution comes full circle (MoneyWeek)

Gold Spending in India Set to Get a Boost from Strong Monsoon Season – Holmes (GoldSeek)

Impossibility Of Helicopter Money And Why The Casino Will Crash – Stockman (ZeroHedge)

The Decade of Zero and its Chaotic Unwinding – Hussman (HussManFunds)

Gold Prices (LBMA AM)

22Aug: USD 1,334.30, GBP 1,018.20 & EUR 1,181.26 per ounce
19Aug: USD 1,346.85, GBP 1,026.30 & EUR 1,189.67 per ounce
18Aug: USD 1,347.10, GBP 1,023.93 & EUR 1,190.84 per ounce
17Aug: USD 1,342.75, GBP 1,031.23 & EUR 1,191.96 per ounce
16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce

Silver Prices (LBMA)

22Aug: USD 18.91, GBP 14.45 & EUR 16.74 per ounce
19Aug: USD 19.42, GBP 14.80 & EUR 17.14 per ounce
18Aug: USD 19.78, GBP 15.04 & EUR 17.47 per ounce
17Aug: USD 19.57, GBP 15.04 & EUR 17.37 per ounce
16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce


Recent Market Updates

– Rothchilds Buying Gold On “Greatest Experiment” With Money In “History of the World”
– Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich
– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market

Mark O’Byrne Executive Director Published in Daily Market Update

END-

 

A very important commentary from Stephen Leeb.  He describes how gold will eventually land as the 6th component in the new SDR’s and with that, the only way the world can save itself

(courtesy Stephen Leeb/Kingworldnews)

Including yuan, gold in SDRs will launch gold’s strongest rise, Leeb says

Submitted by cpowell on Sun, 2016-08-21 00:28. Section:

8:27p ET Saturday, August 20, 2016

Dear Friend of GATA and Gold:

Fund manager Stephen Leeb tells King World News today that China will welcome the International Monetary Fund’s recomposition of its Special Drawing Rights with the yuan and gold, prompting the biggest bull market in history for the monetary metal. Leeb’s commentary is posted at KWN here:

http://kingworldnews.com/this-historic-event-is-about-to-shock-the-world…

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

 

END

Join Chris Powell, Bill Murphy and all the gang for a gold conference in New Orleans:

 

(COURTESY CHRIS POWELL/GATA)

Join GATA at the New Orleans conference because you can’t lose

Submitted by cpowell on Sun, 2016-08-21 16:14. Section:

12:15p ET Sunday, August 21, 2016

Dear Friend of GATA and Gold:

Will you join GATA Chairman Bill Murphy and your secretary/treasurer at the New Orleans Investment Conference in the last week of October?

Conference director Brien Lundin notes in the letter below that you really can’t lose. He guarantees that if, as a result of what you learn at the conference, you don’t at least quadruple your registration fee, your fee will be refunded.

Having participated in the conference for many years, GATA can say that nothing surpasses it for financial and political insight and, thanks to the city itself, plain old fun. I don’t mean the cliched honky-tonkiness of Bourbon Street. (Anyone in the monetary metals sector learns early how to drink plenty just staying home.) I mean the history, geography, culture, climate, and of course the restaurants of the city. At this conference there is always so much to learn inside — many of the speakers are GATA favorites — and to explore outside.

So please read Lundin’s letter below and if you’re persuaded to consider attending, use the link at the bottom of his letter to find out more about the conference and register for it. The conference has kindly offered GATA a commission for every GATA supporter who uses the link to register.

Hoping to see you there.

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

* * *

Your Guarantee that You Can’t Lose at the New Orleans Investment Conference

By Brien Lundin
New Orleans Investment Conference
Sunday, August 21, 2016

Gold and silver are soaring.

Negative interest rates are spreading across the world like a wildfire. The economy is slowing. Stocks are peaking while the presidential election promises to roil global markets.

This is the riskiest — and potentially most profitable — investment opportunity in decades.

And there’s only one way to play it that guarantees a four-for-one profit.

My message is simple: You can’t afford to miss this opportunity.

That’s because the best place to be in a gold bull market is the New Orleans Investment Conference.

More than four decades of history have proven this, time and time again.

It’s where the top metals and mining stock experts and most successful investors gather every year.

It’s where the most powerful investment strategies are detailed.

It’s where the hottest new opportunities are unveiled.

And as I said, the results speak for themselves: The stock picks given out at the New Orleans Conference often multiply five, 10, even 20 or more times over after the event.

How reliable and profitable are these results?

Enough so that we can guarantee you’ll quadruple your investment in the event … or get your entire registration fee back.

The only way you can lose is not attend.

And there are plenty of reasons to come.

With our amazing agenda this year, coupled with the remarkable turn the markets have made in our favor, you’re going to learn more, profit more, and just have more fun than you could anywhere else.

Don’t cheat yourself — click on the link below to learn why this year’s New Orleans Conference is going to be the event of the decade:

http://neworleansconference.com/wp-content/uploads/2016/08/2016_Powell.h…

END

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

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6544(SMAL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6635) / Shanghai bourse  DOWN 23.30 OR 0.75%   / HANG SANG CLOSED UP 52.37 or 0.32%

2 Nikkei closed UP 52.37 OR .32% /USA: YEN RISES TO 100.53

3. Europe stocks opened  IN THE RED,     /USA dollar index UP to 94.72/Euro DOWN to 1.12970

3b Japan 10 year bond yield: RISES TO  -.060%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.53

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  47.16  and Brent: 49.31

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” ON THE TABLE 

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.069%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 6.54%/: 

3j Greek 10 year bond yield FALL to  : 8.03%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1336.60-/silver $18.97(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 67/100 in  roubles/dollar) 64.57-

3m oil into the 47 dollar handle for WTI and 49 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.53 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9629 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0882 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.069%

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

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

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

4. USA 10 year treasury bond at 1.581% early this morning. Thirty year rate  at 2.280% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS US Futures Fall, European Stocks Rise As Stronger Dollar Sends Oil Lower

European stocks rose and US S&P futures fell after the dollar strengthened following the latest hawkish comments from Fed vice-chair Stanley Fischer signalled that a 2016 rate hike is still being considered and again boosted speculation that US rates will rise this year. The rising dollar pressured commodities and notably oil, which dropped 2% breaking a 7 days stretch of increases; emerging markets retreated. 

Top news stories include Pfizer reportedly nearing Medivation deal, ChemChina winning CFIUS approval for Syngenta acquisition, Renesas said to be in talks to buy Intersil.

Bloomberg’s dollar index climbed to a one-week high after Fed Vice Chairman Stanley Fischer said Sunday the U.S. economy is already close to meeting the central bank’s goals and that growth will pick up. On the other side of the Pacific, the Yen fell following comments from Kuroda that more September easing may be on the table. Emerging-market shares and currencies declined for a second day, oil fell below $48 a barrel and silver led losses among precious metals. European equities advanced after their biggest weekly slide in two months and government bonds rebounded. The chart below shows the USD’s reactions to just last week’s Fed jawboning.

Global markets have been buffeted over the past week by comments from Fed officials flagging the possibility of higher borrowing costs as early as next month, even though minutes of the central bank’s last meeting struck a more dovish tone. The focus will shift to Janet Yellen’s speech this week at a gathering of global central bankers in Jackson Hole, Wyoming. Futures traders on Friday assigned a 22 percent probability to a September rate increase by the Fed, up from 16 percent a week earlier.

Still, as we showed last night, being hawkish – or dovish – is nothing new for the Fed, which has seen it share of contradictory statements in the past several months, all largely market, and economy, dependent.

Responses were mixed: “The Fed is a bit all over the shop so it’s going to be Janet Yellen’s job this Friday to try to centralize all of these messages into a coherent message that markets can react to,” says Matthew Sherwood, head of investment strategy at Perpetual Ltd. in Sydney.

“We’ve had a full spectrum of messages in the past week or so,” said Josh O’Byrne, a currency strategist at Citigroup Inc. in London. The dollar will “probably hold if indeed she backs up Fischer,” he said. “ I think the consensus is that she will be a bit more dovish.”

While it remains to be seen if Yellen will announce anything truly market moving, the recent dollar strength has led to some early selling in crude oil, while dropped 2.0% to $47.28. Selling was accelerated after OPEC’s second-biggest producer, Iraq, said it will boost exports by about 5% in coming days. Another downside catalyst was the previously reported ceasefire announcement by the militant Niger Delta Avengers, as well as the record collapse in short WTI positions, which has led to speculation the short squeeze may be largely over. Oil had jumped 9.1% last week on speculation that OPEC talks next month could lead to an output freeze. U.S. drillers added rigs for an eighth week, the longest run since April 2014.

The stronger dollar also pressured previous metals with silver dropping as much as 3% to a seven-week low, while gold was down 0.6% amid the dollar’s advance.

The MSCI Emerging Markets Index slid 0.6 percent, with shares in Shanghai dropping 0.8 percent, the most in three weeks. Saudi Arabia’s Tadawul All Share Index led losses in Gulf stocks, sliding 1.5 percent.

In equity markets, Europe’s Stoxx 600 Index added 0.7%, with banks leading gains while trading volumes were about 40 percent lower than the 30-day average. Automakers advanced as the euro weakened, while miners were the only industry group to decline. Syngenta jumped 12 percent, the most in more than a year, as China National Chemical Corp. received approval from U.S. national security officials for its $43 billion takeover of the Swiss chemical company.

S&P 500 Index futures were down 0.2% after U.S. stocks slipped for the first time in three days on Friday, with a recent rally showing signs of tiring amid elevated valuations and rising speculation that borrowing costs will increase before year-end. Medivation Inc. jumped 21% in premarket New York trading after people familiar with the situation said Pfizer Inc. is close to an agreement to buy the biotechnology company for about $14 billion.

Market Snapshot

  • S&P 500 futures down 0.2% to 2181
  • Stoxx 600 up 0.8% to 343
  • MSCI Asia Pacific down 0.2% to 139
  • US 10-yr yield up 1bp to 1.59%
  • Dollar Index up 0.24% to 94.74
  • WTI Crude futures down 1.5% to $47.79
  • Brent Futures down 1.7% to $50.04
  • Gold spot down 0.6% to $1,334
  • Silver spot down 1.7% to $18.99

Top Global News

  • Fischer Signals 2016 Rate Hike With Economy Nearing Fed Goals: Fed vice chair talks days before Yellen’s Jackson Hole address
  • Pfizer Said Close to $14b Deal to Acquire Medivation: Deal may be announced as early as Monday, according to people familiar with the situation
  • ChemChina Clinches U.S. Security Nod for Syngenta Purchase: Deal would be biggest in record year of Chinese takeovers
  • Renesas Said to Be in Talks for $3b Intersil Acquisition: Discussions may not result in a deal, person familiar says
  • Nomura Back in Hiring Mode for U.S. Bankers After Cutting Costs: COO Ozaki sees “tremendous business opportunities for M&A”
  • ‘Ben-Hur’ Remake Stumbles to Fifth Place in Box-Office Debut: Warner Bros.’ ‘Suicide Squad’ holds onto No. 1 for third week
  • Marvell Said to Continue Steps Exploring Sale: DealReporter
  • China to Scrap Anti-Dumping Measures on EU, Japan Steel Tubes
  • Focus Financial Partners Said to File for IPO: WSJ
  • Former Travelers CEO Fishman Has Died, Dasburg to Be Chairman
  • Lockheed Martin Gets 10-Yr C-130J Air Force Contract for $10b

* * *

Looking at regional markets, Asian stocks began the week in a choppy fashion which followed Friday’s subdued US close, where market-thin trade and a pull-back in energy hindered sentiment. Nikkei 225 (+0.3%) outperformed its counterparts, underpinned by a weaker JPY after dovish comments from BoJ Governor Kuroda over the weekend, while trade in the ASX 200 (-0.2%) was flat after mixed earnings. Markets in China were also indecisive with both the Hang Seng (flat) and Shanghai Comp (-0.8%) swinging between gains & losses despite the PBoC increasing its liquidity injections, as debt concerns persisted. Price-action in 10yr JGBs was subdued amid the increased risk-appetite seen across Japanese equities, while participants look to tomorrow’s 20yr auction. BoJ Governor Kuroda commented that he wouldn’t rule out cutting rates deeper into negative territory and added that there is a sufficient possibility the BOJ will add to its easing programme in September. India picked RBI Deputy Governor Urjit Patel as the central bank’s next governor to succeed Governor Rajan when his term ends next month. Deputy Governor Patel is seen as a hawkish, continuity candidate to follow Rajan.  PBoC set CNY mid-point at 6.6652 (Prey. 6.6211) and injected CNY 110bIn via 7-day reverse repos.

Top Asian News

  • India’s New Central Banker Faces Nervy Markets After Rajan Rally: Patel’s inflation hawk reputation seen reducing rate- cut odds
  • Paul Singer’s Elliott Seizes on Bank of East Asia’s Profit Slide: Paul Singer’s fund gets more ammunition for shake-up campaign
  • China Overseas Land 1H Net HK$19.7b vs HK$16.3b Year Ago: Co. raises FY16 sales target by 17%

In Europe, the morning has seen a subdued start to a, so far, typical mid-August week, with a particularly light calendar for the day. European equities trade in positive territory across the board, with Syngenta (+11.8%) the notable outperformer after announcing US clearance for their USD 44b1n ChemChina deal. Elsewhere, material names drag on the FTSE, with the likes of Anglo-American (-3.2%), Glencore (-1.9%) and Rio Tinto (-2.5%) among the worst performers on the continent. Finally, fixed income markets have been particularly subdued this morning, with bunds trading in modest positive territory and above 167.00. In terms of going forward, participants will be looking ahead to the BoE 3-7yr Gilt purchases this afternoon.

Top European News

  • London Housing Boom to End in 2017 as Brexit Bites, Broker Says: Countrywide sees home values falling for first time since 2009
  • VW Restarts Talks as Supplier Feud Expands to Golf Production: Six factories face partial production halt beginning Monday
  • Getinge Ousts CEO After Less Than 18 Months as Views Differ: Surgical Workflows unit head Lindoff appointed acting CEO, shares fall
  • Europe Plans for Life After Brexit as Merkel Meets Allies at Sea: Renzi hosts Merkel, Hollande on Italian warship off Naples
  • Teleperformance to Buy LanguageLine Solutions for $1.52b: Co. sees deal accretive to EPS by ~10% on a pro forma basis for 2016
  • Sanofi Updates NDA on Diabetes Product; Pdufa Date Now in Nov.
  • Linde-Praxair Plan to Put Headquarters in Europe: Handelsblatt

In FX, the Bloomberg Dollar Spot Index rose 0.3% in early trading, after losing ground in each of the last two weeks. The yen dropped 0.5% to 100.75 per dollar. Bank of Japan Governor Haruhiko Kuroda Kuroda told the Sankei newspaper that the BOJ is conducting a comprehensive review of Japan’s economy and finances and said there is “sufficient chance” of more easing at next month’s policy meeting. Hedge funds and other large speculators raised net wagers for a weaker pound to a record in the week ended Aug. 16. That’s the seventh straight week of increases. The U.K currency gained 0.3 percent against the dollar to $1.3109. The MSCI Emerging Markets Currency Index dropped 0.3 percent. South Africa’s rand, South Korea’s won and the Taiwanese dollar posted the biggest declines among 16 major currencies measured against the greenback, sinking at least 0.5 percent. Turkey’s lira lost 0.6 percent. Fitch Ratings cut the outlook on the country’s investment grade credit to negative from stable after a failed coup attempt in July increased political risks. The rupee weakened 0.2 percent after India named Urjit Patel to take over from Raghuram Rajan as central bank governor from Sept. 4.

In commodities, the Bloomberg Commodity Index declined 0.8 percent, after slipping from a one-month high in the last session. Crude oil slid 2.0% to $47.65 a barrel in New York after Iraq, OPEC’s second-biggest producer, said it will boost exports by about 5 percent in coming days. The price jumped 9.1 percent last week on speculation that OPEC talks next month could lead to an output freeze. U.S. drillers added rigs for an eighth week, the longest run since April 2014, Baker Hughes Inc. data show. Silver dropped as much as 3 percent to a seven-week low, while gold was down 0.6 percent amid the dollar’s advance. Silver has rallied 37 percent this year while gold jumped 26 percent as the Fed refrained from tightening and other central banks embraced negative rates, benefiting bullion which doesn’t pay interest. Base metals fell, with aluminum declining for a third day and nickel sagging as much as 1.8 percent.

It’s a quiet start to the week today with only the Chicago Fed national activity index in the US this afternoon to note of

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities enter the North American crossover higher with the FTSE 100 the notable laggard amid softness in commodity names
  • JPY lost ground against the major overnight amid dovish rhetoric from Kuroda who hinted at further easing next month
  • Looking ahead, the calendar is particularly light with Chicago Fed National Activity at 1330BST
  • Treasuries dropped during Asia, European sessions after Fed Vice Chair Stanley Fischer said U.S. economy is close to the central bank’s goals; started paring drop toward end of overnight trading as European equities reversed gains.
  • Fed fund futures pricing 50/50 chance of rate hike in Dec. 2016; fully pricing next rate hike around June 2017, implied rate 62bp, near midpoint of 50-75bp target range
  • Pimco’s largest international bond fund and China are piling into negative-yielding Japanese debt, buying securities that pay out less than the purchase price. And there’s a way to turn a tidy profit off the trade
  • The world’s largest banks are racing to meet a deadline next month when billions of dollars in new collateral requirements will begin to hit the over-the-counter derivatives market
  • GDP is so 20th century. Whether compiled by production, income or expenditure approaches — GDP is increasingly struggling to keep up with the pace of economic change
  • The U.K. economy has shown some post-Brexit strength. All it needs now is stamina as the focus is on whether the economy can sustain the initial robust readings that came last week

US Event Calendar

  • 8:30am: Chicago Fed Nat Activity Index, July, est. 0.20 (prior 0.16)

DB’s Jim Reid concludes the overnight wrap

There won’t be much skiing this weekend at the Jackson Hole symposium but there will be focus on Yellen’s speech on Friday where we’ll see whether she brings the Fed’s message back on piste after a few recent moguls created by various Fed speakers over the last week.

Indeed the usually dovish NY Fed President Dudley caused the first bump when he said on Tuesday that a September hike was ‘possible’ and that ‘we’re edging closer towards the point in time where it will be appropriate to raise rates further’. Dudley also made the comment that he thought 10y Treasuries were ‘pretty low given the circumstances’. On the same day Atlanta Fed President Lockhart (a centrist) added that he thought at least one rate increase could be appropriate later this year. Late on Thursday we then heard from San Francisco Fed President Williams (also largely seen as a centrist) who said that every meeting should ‘be in play’, including September.

The latest addition to the debate over the weekend was Fed VC Stanley Fischer who suggested that the Fed “are close to their targets”. Although he didn’t comment on when they should hike it was a generally upbeat reflection on the US economy. The main theme of the speech though was the slowdown in productivity in recent years and how monetary policy wasn’t equipped to reverse the slump and that fiscal and regulatory policy were likely to be more effective. Although Fischer is known to be on the hawkish side (albeit moderately) and Yellen on the more dovish side, he probably wouldn’t want his comments in the week of the Jackson Hole get together to be interpreted in a manner completely different to his boss. So this sets up an interesting Friday.

In terms of Fed hike pricing, we went into last week with September and December probabilities of 16% and 42% respectively. Post Dudley’s comments we went to 22% and 51%. The FOMC minutes on Wednesday moderated things a little with September staying unchanged at 22% but December nudging down to 49%. Following Williams we ended the week back at 22% and 51% however.

Indeed the US Dollar also took heart from Williams’ comments late last week with the Dollar index finally closing up on Friday (+0.38%) for the first time in six sessions. It’s up a similar amount this morning too while US 2y and 10y Treasury yields, which closed up 4.4bps and 4.3bps respectively at 0.748% and 1.579% are also higher this morning (+2.8bps and +1.5bps respectively). Emerging market currencies were the biggest losers on Friday while US equity markets (S&P 500 -0.14%) and credit indices (CDX IG +0.9bps) ended a touch weaker.

Elsewhere this morning equity markets are off to another mixed start in Asia. A weaker sessions for the Yen (-0.55%) is providing some respite for the Nikkei (+0.24%) and Topix (+0.40%), while the ASX (+0.10%) is also up slightly. The Hang Seng (-0.45%), Shanghai Comp (-0.34%) and Kospi (-0.65%) all appear to be following the lead from the US on Friday however. US equity index futures are in the red by a similar amount this morning although there’s also been a bit of M&A focus over the weekend with the news that Pfizer is nearing a $14bn takeover of Medivation.

Moving on. Along with the various chatter out of the Fed, the relentless move higher for Oil last week was the other big focus for markets. Indeed WTI climbed +9.06% last week and even more impressively is up nearly 16% over the last 8 sessions. The prospect of some sort of coordinated major producers production freeze has been at the centre of the rally however our commodity strategists don’t think that a freeze would have much fundamental impact. Indeed they highlighted in their report on Friday that as before, the parameters of the proposed deal are likely to be very weak. They note that this is before we consider the impact of national oil companies who may try to ‘game’ the system by ramping up volume this month to set a high-water mark before the meeting on the sidelines of the International Energy Forum in Algeria on 26-28th September. They go on to note that since the terms of a deal are unlikely to pose upside constraints to Libya, Iraq or Nigeria, OPEC production could still exceed their 2017 assumption of 33.5mmb/d in the event of an agreement. Their fair value models currently suggest that oil is close to fair value of $46.6/bbl.

Elsewhere, it was a very quiet end to the week on Friday for economic data. There were no reports out in the US while in Europe the only data we got came in Germany, where PPI rose +0.2% mom (vs. +0.1% expected) in July, and also the UK where public finances (excluding bank groups) were in surplus to the tune of £1bn in July, boosted by a 3.4% rise in receipts. European equity markets actually ended the week on a bit of a sour note with the Stoxx 600 closing -0.81% as Italian equities (-2.18%) and Bank Stocks (-1.40%) struggled in particular.

Turning now to this week’s calendar. It’s a quiet start to the week today with only the Chicago Fed national activity index in the US this afternoon to note of. Tomorrow morning we kick off in Asia where we’ll get the flash manufacturing PMI reading for August in Japan and also the MNI business indicator out of China. During the European session we’ll get the August flash PMI’s for the Euro area, Germany and France (manufacturing, services and composites) along with CBI trends data for the UK. In the US we’ll also get the flash manufacturing PMI along with the Richmond Fed manufacturing index and new home sales for July. The Euro area consumer confidence reading for August will also get released in the afternoon. Turning to Wednesday the highlight of the morning session in Europe will likely be the final Q2 GDP revisions for Germany, along with the various subcomponent readings. The data in the US on Wednesday is focused on the housing market with existing home sales for July and the FHFA house price index reading due. With little in the way of data to note of in Asia on Thursday we’re starting in France where the August confidence indicators are due to be released. Shortly after that the IFO survey in Germany for August is due. There’s a number of important releases in the US on Thursday starting with the flash durable and capital goods order data for July, along with the remaining flash PMI’s (services and composite), initial jobless claims and the Kansas City Fed’s manufacturing index. The end of the week on Friday is a big one for data. In Japan we’ll get the July CPI report early on. German and France consumer confidence readings follow this, along with UK Q2 GDP. We then end the week in the US with the second reading of Q2 GDP and core PCE, the advance goods trade balance reading in July and the final University of Michigan consumer sentiment reading.

Away from the data the other big focus will be Fed Chair Yellen speaking at the Jackson Hole Policy Symposium on Friday. Another potentially interest event to keep an eye on is a meeting between Merkel, Hollande, Renzi and Tusk today in Italy where they are due to speak on Brexit

end

ASIA MARKETS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed DOWN 23.30 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.75% Australia’s all ordinaires  CLOSED DOWN 0.21% Chinese yuan (ONSHORE) closed UP at 6.6544/Oil FELL to 47.16 dollars per barrel for WTI and 49.31 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6635 yuan to the dollar vs 6.6544 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

More sabre rattling as Japan doubles its F 15 missile payload as escalation in the South China seas escalates:

(courtesy zero  hedge)

Japan To Double F-15 Missile Payload Ahead Of “China Confrontation” After Latest Chinese Threat

In the most recent escalation involving China’s latest foray into the East China Sea, we reported that Japan’s coast guard released a video of several hundred Chinese ships located near the disputed naval territory, among which 18 patrol vessels of which seven were equipped with what looked like machine guns. “Actions by the Chinese side like this, which will escalate the situation, are not tolerable,” the Japanese Coast Guard said in a statement.

This took place just days after Japan announced it would deploy land-to-sea missiles with a 300 km range to protect the nation’s isolated islands, including the Senkakus, with costs for the deployment borne by the defense ministry’s budgetary request for the March 2018 fiscal year, which means even more bonds for the BOJ to monetize.

China’s nationalist Global Times paper immediately responded, saying :”Japan’s decision to develop surface-to-sea missiles with a range of 300 kilometers to cover the disputed islands shows the country may be eyeing a shift to an offensive posture, analysts said. “Japan is trying to use the missile system to lock down the Miyako Strait and prevent Chinese forces from entering the Western Pacific Ocean,” Zhou Yongsheng, a professor at the Institute of International Relations of China Foreign Affairs University, told the Global Times.

And since neither side was willing to backtrack in this series of escalating threats, earlier today Japan’s Defense Ministry announced it wants its 200 F-15 fighter jets to carry twice as many air-to-air missiles as they do now, in preparation for a possible confrontation with Chinese Air Force around disputed East China Sea islands, RT reported. These upgrades would double the number of air-to-air missiles carried by ASDF F-15s, from eight to 16 per each aircraft. In addition, damaged wings and other parts of the fighter jets will be repaired to extend their lifespan.

Currently, the Japanese Air Force operates 200 F-15s in combat and trainer variants as well as roughly 90 Mitsubishi F-2 multirole fighters, a development of F-16 design. The 2017 military budget worth $51 billion will reportedly include a separate purchase of an undisclosed number of controversial fifth-generation F-35 stealth fighter jets, said to be deployed at the Misawa Airbase at the northern tip of Honshu, Japan’s main island.

Tokyo says China’s “assertive” actions near the disputed Senkaku Islands – or Diaoyu in Chinese – makes Japan’s military to respond with re-deploying forces closer to the troubled area and investing into strengthening combat capabilities. “As the cruising range of Chinese military aircraft has gotten longer, they are coming ever closer to our territories,” a Japanese Defense Ministry official was cited by Nikkei Asian Review.The ministry also added the ASDF has been scrambling fighter jets 199 times from April until June to intercept Chinese planes over the East China Sea, a 75 percent increase from the same period last year.

And while Japan is focusing on expanding its airborne presence in proximity to the disputed islands, China – which would not leave Tokyo have the final word – warned Tokyo of a harsh response if it ever crossed a “red line” in deciding to sail with US warships near disputed waters surrounding China’s artificially reclaimed islands under the pretext of the Freedom of Navigation principle, Japanese media reported.

Tokyo will “cross a red line” if Japan’s Self-Defense Forces sail with the Americans, Chinese Ambassador to Japan Cheng Yonghua allegedly told a Japanese official in Tokyo, Kyodo reported citing a source.

“Japan should not take part in a “joint military action with US forces that is aimed at excluding China in the South China Sea,” Cheng reportedly told Japanese officials late in June. “(China) will not concede on sovereignty issues and is not afraid of military provocations.

While Japan’s official reassured the ambassador that Japan had no plans to join the US sails, which have intensified lately by constant American warship maneuvering near artificial islands that China has built in the South China Sea, it is unlikely that Japan will hold to its word, especially since earlier this week, Japanese media reported that China continues to expand military infrastructure next to the disputed waters, erecting a military pier on Nanji Island, one of 52 islands in the Nanji chain that are part of China’s Zhejiang Province.

Furthermore, to counter the perceived Chinese threat, Tokyo is seeking a record defense budget of 5.16 trillion yen ($51 billion) for next year to strengthen the Japanese coast guard near the disputed waters with China. Part of the funding will also be spent on neutralizing the North Korean threat by deploying PAC-3 missile defense system and the joint Japanese-US production of the Block IIA version of the Standard Missile-3 system. Japan also seeks to purchase an upgraded version of the F-35 stealth fighter.

Meanwhile, Beijing has finished long-range combat drill in the Sea of Japan with its East China Sea Fleet by launching simulated attacks to improve the capability of continuous strikes at maximum range, CCTV reported. The exercise also included air force simulation of air-to-ship missile launches against enemy vessels. The Chinese navy called the drill “routine” and in accordance with international law.

Tensions in the area were heightened even further when four Chinese coastguard ships sailed into territorial waters surrounding the disputed islands in the East China Sea on Sunday morning. The Japanese foreign Ministry responded by issuing a note of protest against the “incursion” and the violation of Japanese sovereignty.

“Despite Japan’s repeated strong protests, the Chinese side has continued to take unilateral actions that raise tensions on the ground, and that is absolutely unacceptable,” the statement said.

As the sabrerattling continues, we anticipate that so will the escalations on both sides, and while these will not spill over into a full blown conflict between the two nations, may result in another collapse in trade between the two nations, in a repeat of events that took place in late 2013, when nationalistic tensions on both sides soared, leading to the boycott of many Japanese goods on mainland China. If this transpires, it will come at a very troubling time for China, which is now growing at a quarter of the pace it did three years ago, and will likely force Beijing to issue even more debt to compensate for the lack of growth, at a time when unofficial estimate calculate China’s total debt at a staggering 350%+ of GDP.

b) REPORT ON CHINA

Hong Kong based Cathay Pacific earnings are totally crushed as corporate travel within China collapses as tourism into China falters terribly

(courtesy zero hedge).

Cathay Pacific Crushed As Chinese Corporate Travel Collapses

Cathay Pacific announced earnings earlier this week which paint a fairly ominous picture for China.  The airline posted a 9.3% YoY drop in revenue and an 82% decline in net profit which they attributed to, among other things, “weak passsenger demand, particularly in the premium class“.  Comments from the Cathay’s press release clearly indicate weak corporate travel with the company pointing out that corporate enplanements in Hong Kong declined for the first time since 2009:

  • The slowdown in the Mainland China economy and economic fragility elsewhere caused restrictions to be placed on corporate travel. This adversely affected premium class demand, particularly on long-haul routes.
  • Yield was further affected by strong competition, adverse currency movements and asignificant reduction in premium corporate travel.
  • Demand for travel originating from Hong Kong was strong in the first two months of the year, but weakened thereafter. Corporate travel originating in Hong Kong was well below expectations, particularly to London and New York. Numbers travelling declined for the first time since 2009, when business was affected by the financial crisis.
  • Tourism from Mainland China to Hong Kong is weak.

A couple of tables from Cathay’s earnings presentation help sum up the story.

Passenger yields tanked in 1H16 on lower corporate travel…

Marking the lowest yields since 2009…

While cargo yields plunged through 2009 levels…

Unfortunately, Chairman John Slosar doesn’t expect things to improve in the back half of 2016:

We expect the operating environment in the second half of the year to continue to be impacted by the same adverse factors as in the first half. The overall business outlook therefore remains challenging. We expect passenger yield to remain under pressure. Overcapacity and economic fragility will dampen cargo demand.  We will also continue to be vigilant on costs.

Meanwhile, the company’s earnings presentation noted the following for 2H16 outlook:

  • The challenging business environment is expected to continue.
  • Yields are expected to continue to be under intense pressure.
  • Lower Hong Kong traffic with more 6th Freedom travel.
  • The cargo business will continue to be adversely affected by overcapacity and economic fragility.

And, of course, Mr. Market was not happy…

end The following is a big story.  On Oct 1, China will finally see its yuan included in SDR’s. Now we see the IMF has allowed a new Chinese bond offering denominated in SDR’s with interest paid in yuan.  As China gets to issue more of these bonds there will be less use of dollars circulating the globe. The unwanted dollars would then return to the USA and inflation and quite possibly hyperinflation will be the inevitable (courtesy Chris Vermeulen/the Gold and Oil Guy) China Announces New Loan In International Reserve Asset Which May Affect Gold

By Chris Vermeulen of TheGoldAndOilGuy

Saturday, August 20, 2016 7:59 PM EDT

The People’s Bank of China (PBOC) has received approval from the World Bank allowing its issuance of bonds which are denominated in Special Drawing Rights (SDRs). The World Bank is the first entity to approve of it and consequently marks the launch of the SDR bond market of the worlds’ second- largest economy.

Jim Yong Kim, The World Bank Group President, said “This is a landmark development for China’s bond market and for the SDR as an international reserve asset. We are very pleased to support China’s growing role in global financial markets. World Bank issuance of SDR bonds in China will support the G-20’s objective of expanding the use of SDRs and help promote the development of China’s domestic capital market. It will also increase Chinese investors’ access to foreign currencies in the domestic bond market, while opening up new opportunities for international investors seeking high-quality investment products in the country.”

This new bond issuance is 2 billion SDRs which is equivalent to $2.8 billion. The bonds will be denominated in SDRs and payable in Chinese renminbi (RMB). The precise timing of issue and individual bond terms will be based on favorable market conditions, at the time of issuance.

The World Bank approval of China, as being the first issuer of SDR-denominated bonds, is a further step in the “internationalization” of the Chinese capital markets. It shows the vital role of the World Bank and how it assists in opening new markets as well as developing local capital markets. The World Bank SDR-denominated bonds in the Chinese market are a fantastic opportunity for Chinese investors to support the World Bank’s sustainable development activities via a new product. These bonds will also be attractive to international investors who are seeking SDR products to hedge SDR liabilities.

The World Bank raises $50-$60 billion, in the international capital markets, each year. The new SDR program in China is part of the World Bank’s strategy to open and support the development of new markets and will therefore expand World Bank’s product offerings which attract new domestic and international investors to World Bank bonds.

Officially, as of October 1st, 2016, the new mix of the SDR will include the Yuan. It now joins the dollar, euro, pound and yen in an exclusive club of currencies that have special drawing rights. The yuan will be weighted at 10.92%. This is the first change in the SDR basket since 1999. In the past, the IMF rejected the yuan in 2010.

For many in the markets, this has been the year of the yuan. When China suddenly devalued its’ currency, earlier this year, it sent the global markets into a tailspin. Currently, the yuan is depreciating even further since traders believe that the Chinese government will step down from its’ intervention in the currency. Being included in the exclusive club is a sign that the currency has ‘grown up’, in a manner of speaking.

This story began in 2009 with the global financial crisis. The People’s Bank of China said that the economic shocks were due to the financial system being overly reliant on a single currency – the US dollar. It has been pushing for inclusion ever since.

But what effect will this have on both the Chinese economy and other currencies in the basket? The Euro, for example, will surely be affected by this decision. The currency shared by 19 nations within the Eurozone has had a terrible decade and now it appears that things could get worse.

When it comes to this special basket, the weighting of the currency is the most important aspect. If a new currency is introduced, then all of the others have to give up their share. Therefore, the yuan will be weighted at 10.97%, which means that the share of the euro will drop from 37.4% to 30.93%.

As for China, this announcement is nothing but good news. This move by the IMF is more than just ‘symbolic’. Being counted as a reserve currency mainly means that the government has taken the right steps to free up its economy. It has reined in intervention and has allowed the currency to be more ‘free’ within the international markets.

Central Banks, around the world, which hold SDRs in reserve, have this new currency as an option to convert into. This means that a lot more Chinese bonds (maybe a trillion dollars’ worth) will now be able to find their way into the market.

Additionally, there is no indication that Central Banks have a lot of demand for the Yuan. This decision gives them the option to convert into the currency, but whether or not they will is a question yet to be answered. The US dollar is still the worlds’ reserve currency.

I question how the SDR will maintain any value if all of its’ underlying currencies, that it has been composed of, have become worthless.

If this is what does occur, then they will be forced to back these fiat currencies with a tangible asset in order to accept this standard. The only money that has lasted for over 5,000 years is gold. I would not be surprised to see a new gold standard set in some way, but that is still a long way away and some serious catastrophes have to happen first.

With that said, the markets tend to move before major events happen, so as things worsen globally, it only makes sense for precious metals (physical currency) to strengthen over time.

http://www.talkmarkets.com/content/global-markets/china- announces-new-loan-in-international-reserve-asset-which-may- affect-gold?post=103953

-END-

EUROPEAN AFFAIRS

The vote for a BREXIT certainly did not cause Armageddon for Britain. However it is giving the country many opportunities to right itself in the face of no growth in Europe.  It is proposing to cut corporate taxes something that Sweden is against but cannot do anything about it.

It sure looks like Britain will be the clear winner with its Brexit with the clock set to start by April 2017:

(courtesy Mish Shedlock/)

Brexit: Worst Case Scenario For EU; Armageddon Promise Now Exposed As Pack Of Lies

Submitted by Michael Shedlock via MishTalk.com,

Project Fear predicted economic meltdown if Britain voted leave. Where are the devastated high streets, job losses and crashing markets?

In other Brexit news, Sweden warns the UK about cutting corporate taxes. How should the UK respond? Who is in control?

What Happened to Promised Armageddon?

The Guardian reports Brexit Armageddon was a Terrifying Vision – but it Simply Hasn’t Happened.

Unemployment would rocket. Tumbleweed would billow through deserted high streets. Share prices would crash. The government would struggle to find buyers for UK bonds. Financial markets would be in meltdown. Britain would be plunged instantly into another deep recession.

Remember all that? It was hard to avoid the doom and gloom, not just in the weeks leading up to the referendum, but in those immediately after it. Many of those who voted remain comforted themselves with the certain knowledge that those who had voted for Brexit would suffer a bad case of buyer’s remorse.

The financial markets are serene. Share prices are close to a record high, and fears that companies would find it difficult and expensive to borrow have proved wide of the mark. Far from dumping UK government gilts, pension funds and insurance companies have been keen to hold on to them.

City economists had predicted an immediate rise in the claimant count measure of unemployment in July. That hasn’t happened either. This week’s figures show that instead of a 9,000 rise, there was an 8,600 drop.

Pack of Lies Clearly Visible

Armageddon fears were purposely over-hyped from the beginning. Now reality has set in.

Project fear backfired. People can easily see what liars David Cameron and the nannycrats in Brussels were.

Project Remain: Where are the admissions “We were wrong?”

Worst Case Scenario for EU

That the UK has gone on as normal has to be one of the worst fears for the nannycrats in Brussels. There is life, not death after Brexit. What country will be next to figure that out?

Some rough times are likely ahead for the global economy, including the UK. But in the long run, Brexit will be a good thing for the UK, which means it will be a bad thing from the point of view of Brussels.

Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks

The nannycrats are now worried that the UK will do something smart, like lower corporate taxes again.

Today, Sweden Warns U.K. Against Aggressive Tax Cuts Amid Brexit Talks.

The U.K. should avoid any drastic steps to cut corporate taxes, or similar measures, as it prepares to start talks on leaving the European Union, Swedish Prime Minister Stefan Loefven said.

If the U.K. wants some time to think about the situation, this will also give EU countries some time,” Loefven told Bloomberg after giving a speech in Stockholm on Sunday. “On the other hand, you hear about plans in the U.K. to, for example, lower corporate taxes considerably. If they, during this time, begin that kind of race, that will of course make discussions more difficult.

Stellar Opportunity for UK to Set Example for the World

By all means the UK should precisely make things more difficult.

Everyone says, Brexit terms need to be negotiated. Actually, the UK can pick up its marbles and go home. Who could stop the UK from doing just that?

On July 11, I wrote Stellar Opportunity for UK to Set Example for the World.

In that post I proposed among other things a recommendation “The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.”

I was unaware at the time that UK chancellor George Osborne had already decided to cut taxes, but by a lesser amount than I suggested.

Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan

In a follow-up post I wrote Precise Way to Start Negotiations with EU Mules: Get France to Piss and Moan.

Michel Sapin Pisses and Moans

First Step in Training a Mule

There’s an old saying “The first step in training a mule is to hit it as hard as you can in the head with a stick.”

I don’t really advise that with mules, but it is the precise thing to do to EU nannycrats.

Mike Shedlock @MishGEA

The first step in training EU mules is to hit them in the head as hard as you can with a stick. Osborne just smacked French and German mules

Reflections on Clearness

It’s clear that the UK can’t participate in the big decisions involving the EU’s future,” said Emmanuel Macron, France’s economy minister.

Well, it’s equally clear the EU cannot participate in big decisions involving the UK’s future.

And with his plan to cut corporate taxes, chancellor Osborne just hit nannycrat mules in Germany, France, and Belgium in the head with not a stick, but a brick.

Trade War the Right Way

The UK should preemptively stick it to the EU by slashing its corporate tax rate to 10%, lower than any country in the EU.

Set Example for the World

Shed of inane EU rules and regulations coupled with the freedom to do anything it wants, the UK has a golden opportunity to embrace the benefits of genuine free trade and growth via low taxes.

I have often stated the first country that fully embraces free trade, regardless of what any other country does, will come out stunningly ahead.

The UK now has that chance.

Negotiation Progress

Mike Shedlock @MishGEA

Sweden is pissing and moaning along with Germany and France about UK tax rates. I call this progress. Advantage UK in Negotiations.

I suggest the UK cram it straight down their throats by lowering taxes to 10% right now. This will set proper the negotiation tone  and inform the nannycrats in Brussels who calls the shots.

France and Germany threatened to make things difficult for the UK. But as I have stated all along, the UK, not the EU, has the upper hand in these negotiations.

Import/export math proves the point. The UK imports more from the the EU than it exports to them.

For details, please see “No Cherry Picking” Says Merkel; Risk of Global Trade Collapse says Mish.

The more the EU pisses and moans, the more successful Brexit will be for the UK.

END

 

Germans are not happy with the Bundesbank proposal that people must work until the age of 69 to collect a pension;

(courtesy zerohedge)

Germans Furious After Bundesbank Demands People Work Until Age 69

there’s something rotten in Denmark’s neighbor. Amid rising islamic terror incidents, Merkel denies any link to her immigration policies… but the government suggests the citizenry arm itself and stash 10 days worth of food and water “in case of attack or emergency,” and now, despite constant proclamations of Germany’s economy at the heart of European economic ‘strength’, the Bundesbank is calling for people to work until they are 69 (up from the current retirement age of 62)… and neither the government nor the people are happy.

As Germans live longer and lower birth rates mean fewer workers are available to replace retirees, the Bundesbank says people will need to work longer in order to meet pension demands. As The Local reported last week,

The German Federal Bank (Bundesbank) said in its monthly report on Monday that by 2060 Germany should increase the retirement age to 69 from the current 65.

The retirement age is already set to reach 67 by 2030, but the Bundesbank said that even with the current favourable financial situation and this increase, “further adjustments are inevitable”.

“At the same time, a longer working life will not be taboo,” said the report.

Because Germans are now living longer and having fewer children, the current system will not be enough to meet targets. Once the baby-boomers have all retired, there will be fewer new workers to fill the gaps and thus fewer contributors into the system – especially since Germany has been seeing lower birth rates in recent years.

A longer working life should be able to stabilize pension levels so that retirees would receive 44 percent of their average salary: maintaining the current plan could see pension levels fall to just over 40 percent.

And what the bank proposed to ensure stability of the pensions system is a further gradual increase in the legal retirement age, already set to go from 65 to 67 by 2029, to reach 69 years by 2060.

The proposal has sparked fury among Germans and federal government officials are speaking out against the central bank’s demands...

Economy Minister and Vice-Chancellor Sigmar Gabriel was swift to condemn it, saying: “A factory worker, a shop assistant, a nurse, a care-giver would find this idea nuts. So do I.”

Political parties, which are already warming up for general elections next year, are expected to make pensions a key theme of their campaigns.

With 20 million retirees eligible to vote, politicians will be seeking to win on issues ranging from the level of future pensions and the question of equalising pension payments in east and west Germany, to the amount of contributions to be levied on future working generations.

But no one expects to win votes by telling Germans they would have to work two years longer,as the issue is making many nervous, particularly at a time when many savers are seeing little gain from their long-term investments against the backdrop of the European Central Bank’s low interest rate expansionary policy.

“Working until 70 while others feast on canapes and some are unemployed,” huffed a reader on Spiegel Online.

Huether however argued that the Bundesbank’s suggestion was likely to be the “least damaging solution for everyone”.

But, German politicians’ refusal to address the issue on what comes after 2030 simply shows a “fear of confronting the truth,” said Boersch-Supan, an economist at the Max Planck institute, adding that “what the Bundesbank is talking about actually concerns those who are born after 1995, that means people who are only turning 20 now. It’s not about making someone who is working now retire only at 69 or 70.”

We suppose he meant this in some “wee it’s not so bad” way… but the bottom line is that under the surface of a market (bond, stock, credit) representing the manipulated view of the world is a Germany that is anything but stable…both socially and economically; and with the core of  the EU on such shaky ground ahead of elections, one can only add that brick to the wall of worry to climb when buying dips in the stock market.

 

end

RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

GLOBAL ISSUES

As we outlined to you on Friday, the Vancouver housing market is imploding as the new tax seems to have a devastating effect on the market.

(courtesy zero hedge)

As The Vancouver Housing Market Implodes, The “Smart Money” Is Rushing To Get Out Now

Three weeks after we suggested that the Vancouver housing bubble had popped in the aftermath of the implementation of the July 25, 15% property tax in British Columbia targeting the Chinese free for all in Vancouver real estate, we got confirmation of that last week when we reported that only one word could describe what has happened to Vancouver housing in the past month: implosion.

Zolo, a Canadian real estate brokerage, which keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price”, showed as of last week a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.

The number of transactions has likewise slammed shut: while August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.

In short, the Vancouver housing bubble has poppsed, and  not surprisingly the “smart money”, which rode the bubble all the way up, has duly noticed, and wants out. Immediately.

As Bloomberg reports, the Ontario Teachers’ Pension Plan is quietly seeking buyers for a minority stake in its C$4 billion ($3.1 billion) real-estate portfolio in Vancouver, including office towers and shopping malls, according to people familiar with the matter.

Cadillac Fairview, the real-estate unit of Canada’s third-biggest pension fund, is looking to raise about C$2 billion from the sale. Cadillac Fairview has hired CBRE Group Inc. and Royal Bank of Canada for the sale.

According to Bloomberg, Cadillac Fairview is the latest pension group seeking to reduce its holdings in the Vancouver commercial market, where prices have reached record highs amid an influx of foreign cash even as new supply drives up vacancy rates. Ivanhoe Cambridge and the Healthcare of Ontario Pension Plan are seeking about C$800 million for their office towers in Burnaby, British Columbia, just outside of Vancouver.

The Cadillac Fairview portfolio, which hasn’t yet started marketing, includes 14 properties in downtown Vancouver and Richmond, with some of Canada’s largest shopping centers, office towers, and historic buildings up for grabs. The assets include a portfolio of waterfront properties including Waterfront Centre, a 21-story tower on the harbor built in 1990; the 238,000-square-foot PricewaterhouseCoopers Place; and The Station, a historic property built in 1912 that serves as North America’s largest transport hub, currently pending approval for an added office tower.

The liquidation has a whiff of panic as some of the country’s biggest retail assets are also in the mix, such as the Pacific Centre, a downtown retailer with 1.6 million square feet for which Cadillac Fairview submitted a proposal this year to expand. It’s the third-most profitable shopping mall in Canada, according to brokerage Avison Young, with C$1,599 in sales per square foot Bloomberg adds. The center also contains eight office towers of two million square feet, including 701 West Georgia and the HSBC building.

In recent years, alongside the plain vanilla housing bubble, commercial real estate soared too, as demand for Vancouver offices sent prices of properties to record highs in recent transactions, including the purchase by Anbang Insurance Group – another notorious Chinese offshore buyer – of the Bentall Centre.

Meanwhile, a warning sign had emerged even before the July property tax hike as the vacancy rate in the city rose to a 12-year high of 10.4% as of June 30 as tenants absorbed 1 million square feet of new space since the same time last year, according to Avison Young.

It is only set to get worse, because in a rerun of what happened to the Alberta office market in early 2015 after oil cratered, additional space is set to flood the market, with six office towers under construction for delivery as soon as this year totaling about 802,700 square feet, and 10 buildings proposed for the city, including Cadillac Fairview’s Waterfront Tower, according to Avison Young’s mid-year 2016 report. Despite the vacancy, rental rates for the best quality assets in Vancouver are the highest in Canada and some U.S. cities such as Chicago and L.A. at about C$30 a square foot, Avison Young said.

And so, Vancouver – after enjoying years of unprecedented upside in both residential and commercial real estate – is on the edge of full blown, freely falling hangover, just like the one the OECD prudently warned about three months ago, when it said that a “disorderly housing market correction” notably in Toronto and Vancouver, is the biggest threat to Canada’s economy, one which “would damp residential investment and private consumption, and could threaten financial stability.” One can now add commercial investment and consumption to that list as well.

In the coming months, if not weeks, we will find out just how accurate the OECD’s gloomy forecast was.

end

 

Jim Grant on the global economy:  the lack of growth and negative interest rates:

In his words:  “this will turn out to very bad for many people”

Jim Grant/Christoph Gisiger/Finanz und Wirtschaft)

Jim Grant: “This Will Turn Out To Very Bad For Many People”

Submitted by Christoph Gisiger via Finanz und Wirtschaft,

James Grant, Wall Street expert and editor of the investment newsletter «Grant’s Interest Rate Observer», warns of a crash in sovereign debt, is puzzled over the actions of the Swiss National Bank and bets on gold.

From multi-billion bond buying programs to negative interest rates and probably soon helicopter money: Around the globe, central bankers are experimenting with ever more extreme measures to stimulate the sluggish economy. This will end in tears, believes James Grant. The sharp thinking editor of the iconic Wall Street newsletter «Grant’s Interest Rate Observer» is one of the most ardent critics when it comes to super easy monetary policy. Highly proficient in financial history, Mr. Grant warns of today’s reckless hunt for yield and spots one of the biggest risks in government debt. He’s also scratching his head over the massive investments which the Swiss National Bank undertakes in the US stock market.

Jim, for more than three decades Grant’s has been observing interest rates. Is there anything left to be observed with rates this low?

Interest rates may be almost invisible but there is still plenty to observe. I observe that they are shrinking and that the shrinkage is causing a lot of turmoil because people in need of income are in full hot pursuit of what little of yields remains.

What are the consequences of that?

It reminds me of the great Victorian English journalist Walter Bagehot. He once said that John Law can stand anything but he can’t stand 2%, meaning that very low interest rates induced speculation and reckless investing and misallocation of capital. So I think Bagehot’s epigraph is very timely today.

John Law was mainly responsible for the great Mississippi bubble which caused a chaotic economic collapse in France in the early 18th century. How is the story going to end this time?

It will turn out to be very bad for many people. If Swiss insurance and reinsurance executives are reading this right now they might be rolling their eyes and they might be frustrated to hear an American scolding from a distance of 3000 miles about the risk of chasing yield. After all, if you’re in the business of matching long term liabilities with long term assets you have little choice but to wish for a better, more sensible world. But you have to take the world as it is and today’s world is barren of interest income. The fact is, that these are very risk fraught times.

Where do you see the biggest risks?

Sovereign debt is my nomination for the number one overvalued market around the world. You are earning nothing or less than nothing for the privilege of lending your money to a government that has pledged to depreciate the currency that you’re investing in. The central banks of the world are striving to achieve a rate of inflation of 2% or more and you are lending certainly at much less than 2% and in many  cases at less than nominal 0%. The experience of losing money is common in investing. But where is the certitude of loss even before your check clears? That’s the situation with sovereign debt right now.

On a worldwide basis, more than a third of sovereign debt is already yielding less than zero percent.

There is not quite a bestseller, but a very substantial book called «The History of Interest Rates». It was written by Sidney Homer and Richard Sylla. Sidney Homer is no longer with us, but Richard Sylla is alive and well at New York University. So I called him and said: « Richard, I’ve read many pages but not every single page in your book which traces the history of interest rates from 3000 BC to the present. Have you ever come across negative bond yields?» He said no and I thought that would be kind of a major news scoop: For the first time in at least 5000 years we have driven interest rates below the zero marker. I thought that was an exceptional piece of intelligence. But I notice however that nobody seems to have picked up on it.

It’s now already two years ago since the ECB was the first major central bank to introduce negative rates.

There are some other historical settings: In Europe, ??Monte dei Paschi di Siena, this 500 and plus year old bank in Italy, is struggling and as broke as you can be without being legally broke. Monte dei Paschi has survived for half a millennium and now it is on the ropes. Meanwhile, the Bank of England is doing things today that it has never done in its history which is 300 plus years. So I suggest that these are at least interesting times and in many respects unprecedented ones.

So what’s the true meaning of all this?

In finance, mostly nothing is ever new. Human behavior doesn’t change and money is a very old institution and so are our markets. Of course, techniques evolve, but mostly nothing is really new.However, with respect to interest rates and monetary policy we are truly breaking new ground.

Now central bankers are even talking openly about helicopter money. Will they really go for it?

I already hear the telltale of beating rotor blades in the sky. I also hear the tom-toms of fiscal policy being pounded. There seems to be some kind of a growing consensus that monetary policy has done what it can do and that what me must do now – so say the «wise ones» – is to tax and spend and spend and spend. That seems to be the new big idea in policy. In any case, it is not good for bondholders.

Interestingly, nobody seems to be talking about the growing government debt anymore. Also, budget politics are just a side note in the ongoing presidential elections.

The trouble with this election is that somebody has to win it. I have no use for Donald Trump but I have equally no use for Hillary Clinton. The point is that one of those two is going to win. That is the tragedy! So we at Grant’s regret that one of them is going to win.

The financial crisis and the weak economic recovery likely have spurred the rise of Donald Trump. Why isn’t the US economy in better shape after all those monetary programs?

I wonder how it would have been if markets had been allowed to clear and if prices had been allowed to find their own level in real estate in 2008. Central banks have intervened to quell financial panics for at least 200 years. For instance, in 1825 the bank of England lent without stint and was not – as they said – overnice about the kind of collateral. That was a very dramatic intervention. So it’s not as if we have never before seen the lender of last resort at work. But what is new is the medication of markets through this opiate of quantitative easing year after year after year following the financial crisis. I think that this kind of intervention has not only not worked but it has been very harmful. Around the world, the economies are not responding despite radical monetary measures. To some degree, I believe,  they are not recovering because of radical monetary measures.

What’s exactly the problem with the US economy?

There is another side of what we are seeing now: In America certainly the Federal Reserve and bank regulators generally are very heavy handed in their interventions. I’m sure they have every good intention. But with their regulatory charges they are suppressing the recovery in credit that takes place  in a normal economic recovery and in this particular case after a depression or after a liquidation.

Then again, a revisit of the financial crisis would be catastrophic.

The new rules with respect to financial reform have absorbed not only forests worth of paper but also the time and attention of legions of lawyers. If you talk to a banking executive what you hear is that thebanks have been overwhelmed by the need to hire compliance and regulatory people. This is especially bearing on the smaller banks. I think that’s part of the story of the lackluster recovery:Monetary policy has been radically open in the creation of new credit. But it has been radically restrictive with regard to risk taking in the private world.

So what should be done to get the economy back on track?

There are guides in history on how to do this. For more than a hundred years in Britain, in the United States and probably as well in Switzerland, the owners of the equity of a bank themselves were responsible for the solvency of the bank. If the bank became impaired or insolvent they had to stump up more capital to pay off the liability holders, including the depositors. But over the past hundred years collective responsibility in banking has gradually replaced individual responsibility. The government, with the introduction of deposit insurance, new regulations and interventions has superseded the old doctrine of the responsibility of the owners of a property. That’s why I think we need to go away from government intervention and go more towards market oriented solutions such as the old doctrine of responsibility of the bank owners.

At least in the US, the Fed is trying to go back to a more normal monetary policy. Do you think Fed chief Janet Yellen will make the case for another rate hike at the Jackson Hole meeting next week?

Janet Yellen is by no means an impulsive person. According to the « Wall Street Journal», she arrives for a flight at the airport hours early – and that’s plural! So this is a most deliberative and risk averse person. Also, as a labor economist, she’s a most empathetic person. She believes what most interventionist minded economists believe: They have very little faith in the institution of markets and they don’t believe that the price mechanism is anything special. They want to normalize rates and yet they can always find an excuse for not doing so. We have been hearing for years now that the next time, the next quarter, the next fiscal year they will act. So I believe what I’m seeing: None of these days the Federal Funds Rate will go higher than 0.5%. I can’t see that happening.

Wall Street seems to think along the same lines. So far, many investors don’t take the renewed chatter of a rate hike too seriously.

The Fed is now hostage to Wall Street. If the stock market pulls back a few percent the Fed becomes frightened. In a way I suppose, the Fed is justified in that belief because it is responsible to a great degree for the elevation of financial asset values. Real estate cap rates are very low, price-earnings-ratios of stocks  are very high and interest rates are extremely low. One can’t be certain about cause and effect. But it seems to me that the central banks of the world are responsible for a great deal of this levitation in values. So perhaps they feel some responsibility for letting the world down easy in a bear market. It has come to a point where the Fed is virtually a hostage of the financial markets. When they sputter, let alone fall, the Fed frets and steps in.

Obviously, the financial markets like this cautious mindset of the Fed. Earlier this week, US stocks climbed to another record high.

Isn’t that a funny thing? The stock market is at record highs and the bond market is acting as if this were the Great Depression. Meanwhile, the Swiss National Bank is buying a great deal of American equity.

Indeed, according to the latest SEC filings the SNB’s portfolio of US stocks has grown to more than $60 billion.

Yes, they own a lot of everything. Let us consider how they get the money for that: They create Swiss francs from the thin alpine air where the Swiss money grows. Then they buy Euros and translate them into Dollars. So far nobody’s raised a sweat. All this is done with a tab of a computer key. And then the SNB calls its friendly broker – I guess UBS – and buys the ears off of the US stock exchange. All of it with money that didn’t exist. That too, is something a little bit new.

Other central banks, too, have become big buyers in the global securities markets. Basically, it all started with the QE-programs of the Federal Reserve.

It is a truism that central banks do this. They’ve done this of course for generations. But there is something especially vivid about the Swiss National Bank’s purchases of billions of Dollars of American equity. These are actual profit making, substantial corporations in the S&P 500. So the SNB is piling up big positions in them with money that really comes from nothing. That’s a little bit of an existential head scratcher, isn’t?

So what are investors supposed to do in these bizarre financial markets?

I’m very bullish on gold and I’m very bullish on gold mining shares. That’s because I think that the world will lose faith in the PhD standard in monetary management. Gold is by no means the best investment. Gold is money and money is sterile, as Aristotle would remind us. It does not pay dividends or earn income. So keep in mind that gold is not a conventional investment. That’s why I don’t want to suggest that it is the one and only thing that people should have their money in. But to me, gold is a very timely way to invest in monetary disorder.

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

Euro/USA   1.1298 DOWN .0020 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.53  UP .402(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3089 UP .0020 

USA/CAN 1.2917 UP .0050

Early THIS MONDAY morning in Europe, the Euro ROSE by 20 basis points, trading now well above the important 1.08 level FALLING to 1.1287; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED DOWN 23.30 POINTS OR 0.75%    / Hang Sang CLOSED UP 60.69 POINTS OR 0.26%     /AUSTRALIA IS LOWER BY .21% / 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 MONDAY morning CLOSED UP 52.37 POINTS OR 0.32%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 60.69 POINTS OR 0.26%  ,Shanghai CLOSED DOWN 23.30  POINTS OR 0.75%    / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE GREEN   /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1336.40

silver:$18.94

Early MONDAY morning USA 10 year bond yield: 1.581% !!! PAR  in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.280 PAR in basis points from FRIDAY night. 

USA dollar index early MONDAY morning: 94.72 UP 12 CENTS from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

END

And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.03% UP 3 in basis points from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.06% UP 2 in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD:0.935% DOWN 2 IN basis points from FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.104  DOWN 3 in basis points from FRIDAY 

the Italian 10 yr bond yield is trading 16 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.09% DOWN  6 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.1321 UP .0003 (Euro UP 3 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.32 UP .193(Yen DOWN 19 basis points/

Great Britain/USA 1 .3136 UP 0.0068 ( Pound UP 68 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2946 UP 0.0079 (Canadian dollar DOWN 79 basis points AS OIL FELL(WTI AT $47.06). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 3 basis points to trade at 1.1321

The Yen FELL to 100.32 for a LOSS of 19 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 68 basis points, trading at 1.3136 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar FELL by 79 basis points to 1.2946, WITH WTI OIL AT:  $47.05

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6473

the 10 yr Japanese bond yield closed at -.06% UP 2 IN  points / yield/

Your closing 10 yr USA bond yield:DOWN 4 IN basis points from FRIDAY at 1.542% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.236 DOWN 5 in basis points on the day /

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

Your closing USA dollar index, 94.54  DOWN 6 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 30.41 OR 0.44%
German Dax :CLOSED DOWN 50.01 OR  0.47%
Paris Cac  CLOSED DOWN 10.58  OR 0.24%
Spain IBEX CLOSED UP 17.40 OR 0.21%
Italian MIB: CLOSED UP 59.08 POINTS OR 0.36%

The Dow was DOWN 23.15 points or 0.12%

NASDAQ DOWN  6.22 points or 0.12%
WTI Oil price; 47.05 at 4:30 pm;

Brent Oil: 49.16

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.680 (ROUBLE down  78/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.09%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:47.05

BRENT: 49.16

USA 10 YR BOND YIELD: 1.542% 

USA DOLLAR INDEX: 94.54 DOWN 6 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3196 UP .0002 or 2 basis pts.

German 10 yr bond yield at 5 pm: -0.090%

END

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

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

“Orchestrated Chaos” – Stocks Rollercoaster Despite Oil, Dollar, Bond Yield Tumble

“Whatever the disease… The Fed is the cure…”

 

Today’s market action was up there for the “most fucking idiotically algo-driven ever” award…as equity indices and VIX were spanked at 930, 1030, 1130, 1230, 1330, and 1430 before the self-organization idiots figured out their own pattern and backed off… (NO, there was no headline catalysts for these moves)

This has the smell of major gamma in options markets with the flushes in VIX anchoring around 18500.Also note that the plunge in VIX after NYMEX closed had little to no effect on stocks.

As Nanex illustrated oh so well – this was algo-driven orchestrated chaos…

View image on Twitter

is-deciderHtmlWhitespace" cite="https://twitter.com/nanexllc/status/767785151237611520">

Eric Scott Hunsader @nanexllc

Orchestrating Chaos.
A detailed look at momentum ignition eventshttp://www.nanex.net/aqck2/4045.html 

2:06 PM – 22 Aug 2016

Which left stocks mixed on the day – Small Caps and Nasdaq gained (another squeezefest) and Trannies were the biggest loser…

 

“Most Shorted” stocks saw 5 squeeze attampts today…

 

Ironically, Fed Veep Fischer’s hawkish tone sparked some USDollar strength in Sunday trading and through Asian trading but early morning as USDJPY neared 101.00, the surge stalled and USD Index fell all day…

 

So stocks did what they did – in some manic-bipolar dance – but bonds, the dollar, and oil did not…

 

CAD was whacked today on weaker oil but cable rallied most of the majors offsetting Fischer’s hawkish tone on Sunday…leaving the USDollar index lower on the day..

 

Treasury yields all fell on the day (with 2Y underperforming)

 

Collapsing 2s30s to its post-Brexit lows…

 

Which financials no longer care about…

 

Commodities were all lower (despite the usd weakness) but gold outpeformed (silver slammed on the open after Fischer) as crude was crushed…

 

Nigeria’s Delta Avengers ceasefire chatter and increased supply from Iraq – along with early USD strength – sent crude lower…

 

Notably the gold/silver ratio keep surging – the last 2 days are the biggest gold outperformance since China’s devaluation in Aug 2015…

 

Charts: Bloomberg

end

 

Markets reaction to Fisher’s hawkish comments at Jackson Hole that a rate hike in 2016 may be in the offering:

(courtesy zerohedge)

VIX Surges As Market Confusion Reigns After Fischer’s J-Hole Comments

Market confusion remains following Fischer’s hawkish tone yesterday at J-Hole. Despite market-implied rate-hike odds have barely budged but the USDollar, stocks, VIX, bonds, and commodities are moving notably.

Rate-hike odds barely budged after Fischer – 16% chance of Sept hike (slight rise) and 32% of Dec (so a 48% cumulative chance of a 2016 cut)…

The Dollar is now falling – having risen after Fischer’s comments…

Bond yields are tumbling (even 2Y) – having risen after Fischer’s comments…

Stocks are fading fast – having risen after Fischer’s comments…

Oil’s drop is being driven by three main factors – Iraq boosting exports 5%, Niger Delta Avengers backing off, and the Fischer-effect on the USD.

And VIX is surging…

Charts: Bloomberg

 

end

 

Looks like our good friend Hillary is in trouble with this:

New emails reveal Hillary Clinton provided special access to foundation donors.

The Clinton Foundation is nothing but a racket and Hilary lied about providing everything work related:

(courtesy zero hedge)

 

From Soccer Stars To Bahrain Princes: New Emails Reveal Hillary Clinton Gave Special Access To Foundation Donors

The farce continues as detailed reckoning of Hillary Clinton’s State Department emails reveal former Hillary Clinton’s top aide Huma Abedin provided influential Clinton Foundation donors special, expedited access to the secretary of state. In many instances, as Judicial Watch exposes, the preferential treatment provided to donors (from a British soccer player to the crown prince of Bahrain) was at the specific request of Clinton Foundation executive Douglas Band.

As JudicialWatch.com details, the new documents included 20 Hillary Clinton email exchanges not previously turned over to the State Department, bringing the known total to date to 191 of new Clinton emails (not part of the 55,000 pages of emails that Clinton turned over to the State Department).  These records further appear to contradict statements by Clinton that, “as far as she knew,” all of her government emails were turned over to the State Department.

The Abedin emails reveal that the longtime Clinton aide apparently served as a conduit between Clinton Foundation donors and Hillary Clinton while Clinton served as secretary of state. In more than a dozen email exchanges, Abedin provided expedited, direct access to Clinton for donors who had contributed from $25,000 to $10 million to the Clinton Foundation. In many instances, Clinton Foundation top executive Doug Band, who worked with the Foundation throughout Hillary Clinton’s tenure at State, coordinated closely with Abedin. In Abedin’s June deposition to Judicial Watch, she conceded that part of her job at the State Department was taking care of “Clinton family matters.”

Included among the Abedin-Band emails is an exchange revealing that when Crown Prince Salman of Bahrain requested a meeting with Secretary of State Clinton, he was forced to go through the Clinton Foundation for an appointment. Abedin advised Band that when she went through “normal channels” at State, Clinton declined to meet. After Band intervened, however, the meeting was set up within forty-eight hours. According to theClinton Foundation website, in 2005, Salman committed to establishing the Crown Prince’s International Scholarship Program (CPISP) for the Clinton Global Initiative. And by 2010, it had contributed $32 million to CGI. The Kingdom of Bahrain reportedly gave between $50,000 and $100,000 to the Clinton Foundation. And Bahrain Petroleum also gave an additional $25,000 to $50,000.

From: Doug Band

To: Huma Abedin

Sent: Tue Jun 23 1:29:42 2009

Subject:

Cp of Bahrain in tomorrow to Friday

Asking to see her

Good friend of ours

From: Huma Abedin

To: Doug Band

Sent: Tue Jun 23 4:12:46 2009

Subject: Re:

He asked to see hrc thurs and fri thru normal channels. I asked and she said she doesn’t want to commit to anything for thurs or fri until she knows how she will feel. Also she says that she may want to go to ny and doesn’t want to be committed to stuff in ny…

From: Huma Abedin [Huma@clintonemail.com]

Sent: Thursday, June 25, 2009 10:35:15 AM

To: Doug Band

Subject:

Offering Bahrain cp 10 tomorrow for meeting woith [sic] hrc

If u see him, let him know

We have reached out thru official channels

Also included among the Abedin-Band emails is an exchange in which Band urged Abedin to get the Clinton State Department to intervene in order to obtain a visa for members of the Wolverhampton (UK) Football Club, one of whose members was apparently having difficulty because of a “criminal charge.” Band was acting at the behest of millionaire Hollywood sports entertainment executive and President of the Wasserman Foundation Casey Wasserman. Wasserman has donated between $5 million and $10 million to the Clinton Foundation through the Wasserman Foundation.

From: Tim Hoy [VP Wasserman Media Group]

Date: Tue. 5 May 2009 10:45:55 – 0700

To: Casey Wasserman

Subject: [Redacted] Wolverhampton FC/visa matter

Casey: Paul Martin’s [popular English footballer] client [Redacted] needs to get an expedited appointment at the US Embassy in London this week and we have hit some road blocks. I am writing to ask for your help.

The Wolverhampton FC is coming to Las Vegas this Thursday for a “celebration break.” [Redacted] so he cannot get a visa to the US without first being “interviewed” in the visa section of the US Embassy in London …

I contacted Senator Boxer’s office in SF for help … They balked at the criminal charge and said they “couldn’t help.”

I’m now trying to get help from Sherrod Brown’s office but that’s not going well either. So do you have any ideas/contacts that could contact the US Embassy in London and ask that they see [Redacted] tomorrow?

From: Casey Wasserman

To: Doug Band; Trista Schroeder [Wasserman Media Group executive]

Sent: Tue May 05 2:23:50 2009 [PT]

Subject: FW [Redacted] Wolverhampton FC/visa matter

Can you help with the below [Hoy email], or maybe Huma??? I am copying trista as I am on the plane in case I lose connection … thx.

From: Doug Band

Sent: Tue May 05 7:08:21 2009 [ET]

To: Casey Wasserman; Trista Schroeder

Subject: Re: [Redacted] Wolverhampton FC/visa matter

Will email her.

From: Doug Band

To: Huma Abedin

Sent: Tue May 5 7:26:49 2009

Subject: Fw: [Redacted] Wolverhampton FC/visa matter

[As per subject line, Band apparently forwarded Abedin material sent to him by Casey.]

From: Huma Abedin [Huma@clintonemail.com]

Sent: Tuesday, May 05, 2009 7:39:38 PM

To: Doug Band

Subject: Re: [Redacted] Wolverhampton FC/visa matter

I doubt we can do anything but maybe we can help with an interview. I’ll ask.

From: Huma Abedin

To: Doug Band

Sent: Tue May 05 5:50:09 2009

Subject: Re: [Redacted] Wolverhampton FC/visa matter

I got this now, makes me nervous to get involved but I’ll ask.

From: Doug Band

To: Huma Abedin

Sent: Tuesday, May 05, 2009 7:43:30 PM

Subject:  Re: [Redacted] Wolverhampton FC/visa matter

Then don’t

The Abedin emails also reveal that Slimfast tycoon S. Daniel Abraham was granted almost immediate access to then-Secretary of State Clinton, with Abedin serving as the facilitator. According to the Clinton Foundation website, Abraham, like the Wasserman Foundation, has given between $5 million and $10 million to the Clinton Foundation. The emails indicate that Abraham was granted almost immediate access to Clinton upon request:

From: Huma Abedin

To: H

Sent: Mon May 04 4:40:34 2009

Subject: Danny

Danny abraham called this morning. He is in dc today and tomorrow and asked for 15 min with you. Do u want me to try and fit him in tomorrow?

From: H

To Huma Abedin

Sent: Mon May 04 5:14:00 2009

Subject: Re: Danny

Will the plane wait if I can’t get there before 7-8?

From: Huma Abedin

Sent: Monday, May 04, 2009 5:15:30 PM

Subject: Re: Danny

Yes of course

Additional Abedin emails in which the top Clinton aide intervenes with the State Department on behalf of Clinton Foundation donors include the following:

  • On Friday, June 26, 2009, Clinton confidant Kevin O’Keefe wrote to Clinton saying that “Kevin Conlon is trying to set up a meeting with you and a major client.” Clinton wrote to Abedin, “Can you help deliver these for Kevin?” Abedin responded, “I’ll look into it asap” Kevin O’Keefe donated between $10,000 and $25,000 to the Clinton Foundation. Kevin Conlon is a Clinton presidential campaign “Hillblazer” who has raised more than $100,000 for the candidate.
  • On Tuesday, June 16, 2009, Ben Ringel wrote to Abedin, “I’m on shuttle w Avigdor Liberman. I called u back yesterday. I want to stop by to see hrc tonite for 10 mins.” Ringel donated between $10,000 and $25,000 to the Clinton Foundation.
  • On Monday, July 6, 2009, Maureen White wrote to Abedin, “I am going to be in DC on Thursday. Would she have any time to spare?” Abedin responded, “Yes I’ll make it work.” White donated $75,000 to the Clinton Foundation.
  • In June 2009, prominent St. Louis political power broker Joyce Aboussie exchanged a series of insistent emails with Abedin concerning Aboussie’s efforts to set up a meeting between Clinton and Peabody Energy VP Cartan Sumner. Aboussie wrote, “Huma, I need your help now to intervene please. We need this meeting with Secretary Clinton, who has been there now for nearly six months. This is, by the way, my first request. I really would appreciate your help on this. It should go without saying that the Peabody folks came to Dick [Gephardt] and I because of our relationship with the Clinton’s.” After further notes from Aboussie, Abedin responded, “We are working on it and I hope we can make something work… we have to work through the beauracracy [sic] here.” Aboussie donated between $100,000 and $250,000 to the Clinton Foundation.
  • On Saturday, May 16, 2009, mobile communications executive and political activist Jill Iscol wrote to Clinton,“Please advise to whom I should forward Jacqueline Novogratz’s request [for a meeting with the secretary of state]. I know you know her, but honestly, she is so far ahead of the curve and brilliant I believe she could be enormously helpful to your work.” Clinton subsequently sent an email to Abedin saying, “Pls print.” Jill and husband Ken Iscol donated between $500,000 and $1 million to the Clinton Foundation. Clinton subsequently appointed Novogratz to the State Department’s Foreign Affairs Policy Board.

The newly obtained Abedin emails also contain a memorandum sent to Cheryl Mills from State Department White House liaison Laura Pena revealing that Rajiv Fernando was proposed for his controversial appointment to the sensitive International Security Advisory Board as early as June 2009. Fernando was not actually appointed until 2011, and his appointment raised a firestorm because, according to an ABC News report,“he had no obvious experience in the field.” Fernando donated $1 million to the Clinton Foundation.

The Abedin emails reveal that even U2’s Bono got into the act when former Bill Clinton aide Ben Schwerin, who helped set up the Clinton Foundation, urged Abedin to help the aging rock star broadcast from the international space station. In a May 27, 2009, email with the subject line “Bono/NASA,” Schwerin wrote, “Bono wants to do linkup with the international space station on every show during the tour this year.… Any ideas? Thks.” Bono has been a donor to the Clinton Global Initiative. And in 2011, he gathered top entertainers for “A Decade of Difference: A Concert Celebrating 10 Years of the William J. Clinton Foundation.” According to USA Today, “Some tickets were sold to the public for $50 to $550, and premium seats went for $1,000 to $5,000 on the Foundation website.”

“These new emails confirm that Hillary Clinton abused her office by selling favors to Clinton Foundation donors,” said Judicial Watch President Tom Fitton. “There needs to be a serious, independent investigation to determine whether Clinton and others broke the law.”

This is the tenth set of records produced for Judicial Watch by the State Department from the non-state.gov email accounts of Huma Abedin.  The documents were produced under a court order in a May 5, 2015, Freedom of Information (FOIA) lawsuit against the State Department (Judicial Watch, Inc. v. U.S. Department of State (No. 1:15-cv-00684)) requiring the agency to produce “all emails of official State Department business received or sent by former Deputy Chief of Staff Huma Abedin from January 1, 2009 through February 1, 2013, using a ‘non-state’.gov email address.”

In June, Judicial Watch uncovered two batches (here and here) of new Clinton email records through court-ordered discovery.  Twice in May, Judicial Watch uncovered new Clinton emails, including emails that show Clinton knew about the security risk of her BlackBerry (see here and here).

Recently, Judicial Watch released other State Department emails (one batch of 103 pages, the second of 138 pages), with newly discovered Clinton emails also going back as far as January 2009.

In March, Judicial Watch released Clinton State Department emails dating from February 2009 that also call into question her statements about her emails. Those emails contained more evidence of the battle between security officials in the State Department, National Security Agency, Clinton and her staff over attempts to obtain secure BlackBerrys.

On August 9, Judicial Watch produced a 2009 email in which Band directed Abedin and Mills to put Lebanese-Nigerian billionaire and Clinton Foundation donor Gilbert Chagoury in touch with the State Department’s “substance person” on Lebanon. Band noted that Chagoury is “key guy there [Lebanon] and to us.” Chagoury has donated between $1 million to $5 million to the Foundation, according to foundation documents. He also pledged $1 billion to the Clinton Global Initiative.

Hillary Clinton has repeatedly stated that she believes that the 55,000 pages of documents she turned over to the State Department in December 2014 included all of her work-related emails.  In response to a court order in other Judicial Watch litigation, she declared under penalty of perjury that she had “directed that all my emails on clintonemail.com in my custody that were or are potentially federal records be provided to the Department of State, and on information and belief, this has been done.” This new email find is also at odds with her official campaign statement suggesting all “work or potentially work-related emails” were provided to the State Department.

 

END

 

And late this afternoon Hillary’s troubles continues as the FBI finds 15,000 more business related emails:

(courtesy zero hedge)

 

FBI Uncovers Over 15,000 More Emails In Clinton Probe

Updating our earlier note, it appears The State Department’s stalling has been disallowed… (as Bloomberg reports)

A judge ordered the State Department to expedite its review of almost 15,000 previously undisclosed documents recovered by the FBI from Hillary Clinton’s private e-mail servers.

 

U.S. District James Boasberg on Monday ordered the State Department to process those recovered records by Sept. 22 and report back to him that day. He didn’t set a schedule for public release. The department raised the possibility of a phased release starting Oct. 14, which left open how many would be disclosed before the Nov. 8 presidential election.

As we detailed earlier, in yet another incident pointing to Hillary’s ‘above the law’ persistent lies, WaPo reports The FBI’s year-long investigation of Hillary Clinton’s private email server uncovered tens of thousands more documents from her time as secretary of state that were not previously disclosed by her attorneys. Worse still, as Judicial Watch details, “it looks like the State Department is trying to slow roll the release of the records.”

Having suffered blowback from throwing Colin Powell under the bus over the weekend, The Clinton campaign is likely back in panic mode as The Washington Post reports the number of emails to be released is nearly 50 percent more than the 30,000-plus that Clinton’s lawyers deemed work-related and returned to the department in December 2014

The State Department is expected to discuss when and how it will release the emails Monday morning in federal court.

 

Monday’s hearing comes seven weeks after the Justice Department on July 7 closed a criminal investigation without charges into the handling of classified material in Clinton’s email set-up, which FBI Director James B. Comey Jr. called “extremely careless.”

 

The FBI on Aug. 5 completed transferring all of what Comey said were several thousand previously undisclosed work-related Clinton emails that the FBI found in its investigation for the State Department to review and make public. Government lawyers until now have given no details about how many emails the FBI found or when the full set would be released. It’s unclear how many of the 15,000 or so documents might be attachments, duplicates or exempt from release for various legal reasons.

 

Government lawyers disclosed last week that the FBI turned over six computer discs of information: one including e-mails and attachments that were sent directly to or from Clinton, or to or from her at some point in an e-mail chain, and not previously turned over by her lawyers; a second with classified documents; another with emails returned by Clinton; and three others containing materials from other individuals retrieved by the FBI.

Judicial Watch president Tom Fitton tweeted Monday morning that…

is-deciderHtmlWhitespace" cite="https://twitter.com/TomFitton/status/767698374124572672">

Tom Fitton @TomFitton

FBI found almost 15,000 new Clinton documents. When will State release them? Court hearing today.

8:22 AM – 22 Aug 2016

Adding in an interview that “it looks like the State Department is trying to slow roll the release of the records. They’ve had them for at least a month, and we still don’t know when we’re going to get them.”

The roughly 15,000 documents at issue now come from the first disc, Fitton said.

Lawyers for the State Department and Judicial Watch, the legal group, said in an Aug. 12 court filingthat they intended to negotiate a plan for the release, part of a civil public records lawsuit before U.S. District Judge James E. Boasberg of Washington.

The pre-emptive excuse already being pitched by FBI Director Comey is just as disgusting as his previous statement that  investigators found no evidence that the emails it found “were intentionally deleted in an effort to conceal them.”

Clinton’s lawyers also may have deleted some of the emails as “personal,” Comey said, noting their review relied on header information and search terms, not a line-by-line reading as the FBI conducted.

We are sure this is “probably nothing” – just another factual falsehood from the Clintons and their establishment cronies.

Of course, as Bill Clinton has stated, this will all change

If [Hillary] is elected, we will immediately implement the following changes:

 

The Foundation will accept contributions only from U.S. citizens, permanent residents, and U.S.-based independent foundations, whose names we will continue to make public on a quarterly basis.

 

And we will change the official name from the Bill, Hillary & Chelsea Clinton Foundation to the Clinton Foundation.

 

While I will continue to support the work of the Foundation, I will step down from the Board and will no longer raise funds for it.

But – we presume – if she is not elected then the foreign bribes will continue?

 

end

Let us close with this must see video and discussion on the fraudulent comex courtesy of Craig Hemke and Greg Hunter

 

Fed Goons Will Not Raise Rates Until 2017-Craig HemkeBy Greg Hunter On August 21, 2016

By Greg Hunter’s USAWatchdog.com (Early Sunday Release)

Financial writer and precious metals expert Craig Hemke says forget about new threats that the Federal Reserve is raising interest rates in September. Hemke explains, “They are trying to move things by talking, which is their primary policy. That’s why so many of these Fed goons, not Fed Governors, as we like to say, that’s why they seem to have conflicting messages all the time. They are always trying to get the markets to do what they want them to do. Rational human beings are telling you that they are not going to raise rates in September. Not only are they going to do it right before an election, that never happens, if you look at FOMC minutes, the expectations actually went down. . . . People see through the nonsense, and actually you’ve got to go all the way out to March of next year, seven months from now, before you at least have a 50/50 likelihood of a an interest rate hike.”

On gold, Hemke contends, “What people have to understand here is what you think of as a market, two rational people exchanging goods at a certain price that works for both of them, is not what happens here. The price is discovered for the paper derivative itself, and it is determined by electronic high-frequency trading. All this is machines taking ques from other things that seem totally unrelated. So, it sounds like these are markets that are broken. I think that is a safe assumption to make. . . . The speculators trading the paper derivative is what is allowed to set price, and that is absolutely breaking everything. For my specific purposes, it is going to break the derivative paper pricing scheme, as well. We can’t wait for that to come because the price is not going to be discovered to be $1,360 per ounce at that point. . . . I know how this is going to end. Tolstoy in ‘War and Peace’ said ‘time and patience are the greatest warriors,’ and that’s exactly right. I have time and patience on my side because I know how this ends.”

Hemke goes on to say, “One day, this unallocated, super-hypothecated system, where one ounce of gold is pledged to 100 different owners, that is going to stop when a couple of those owners show up at once wanting their ounce, and they are told they can’t have it. . . . They all tell you we’ve got your gold and as long as only one person shows up at a time wanting to make a withdrawal then everything is hunky-dory. But when everybody shows up at the Bailey Savings and Loan on George Bailey’s wedding day wanting their gold all at once, the thing just crumbles. It’s a confidence game. Negative interest rates are the greatest fundamental we have ever seen. This is physical demand that extracts gold from the banker’s system that will eventually lead to shortages, and lead to lack of confidence, lead to delivery failure, and finally, the paper derivative pricing scheme will fail.”

 

Join Greg Hunter as he goes One-on-One with Craig Hemke of TFMetalsReport.com.

(There is much more in the video interview.)

After the Interview:

(There is much more in the video interview.)

http://usawatchdog.com/fed-goons-will-not-raise-rates- until-2017-craig-hemke/#more-17743

-END-

well that is all for today

I will see you tomorrow night harvey

August 19/No change in GLD/SLV/August gold standing; 42.815 tonnes/Big news of the day: England to invoke article 50 by April 2017 and leave the EU/two more banks charge clients due to negative interest rates: Ulster and Bank of Ireland/Real estate...

Fri, 08/19/2016 - 14:49

Gold:1340.40 down $10.80

Silver 19.30  down 42 cents

In the access market 5:15 pm

Gold: 1342.00

Silver: 19.31

.

For the August gold contract month,  we had a good sized 157 notices served upon for 15,700 ounces. The total number of notices filed so far for delivery:  13080 for 1,308,000 oz or  tonnes or 40.684 tonnes.  The total amount of gold standing for August is 42.815 tonnes.

In silver we had 78 notices served upon for 390,000 oz. The total number of notices filed so far this month:  471 for 2,355,000 oz.

The crooks love to raid on Friday’s especially after the Shanghai Fix and London fixes because there is no risk on paper turning into real metal for the rest of the day.  However come Monday, it will become a problem.

Thus it is becoming the norm for them to raid on Friday’s

 

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY A SMALLISH  647 contracts DOWN to 206,078 AND MOVING AWAY FROM ITS AN ALL TIME RECORD DESPITE THE FACT THAT  THE  PRICE OF SILVER ROSE  BY 9 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.030 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold ROSE 9,616 contracts as the price of gold ADVANCED BY $8.50 yesterday . The total gold OI stands at 579,821 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had no changes at the GLD/

 

Total gold inventory rest tonight at: 955.99 tonnes of gold

SLV

we had no changes  into the SLV, /   THE SLV/Inventory rests at: 355.469 million oz.

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

1. Today, we had the open interest in silver FELL by 647 contracts DOWN to 206,078 despite the fact that the price of silver ROSE BY 9 cents with YESTERDAY’S trading.The gold open interest ROSE 9616 contracts UP to 579,821 as the price of gold ROSE by $8.50 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

2c) COT report

(Harvey)

3. ASIAN AFFAIRS

 i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 3.99 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.36% Australia’s all ordinaires  CLOSED UP 0.34% Chinese yuan (ONSHORE) closed DOWN at 6.6547/Oil FELL to 48.10 dollars per barrel for WTI and 50.67 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6619 yuan to the dollar vs 6.6547 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

none today

4 EUROPEAN AFFAIRS

i)England: this is a biggy!

Cable (Great Britain Pound/USA dollar) tumbles as May confirms article 50 trigger by April 2017:

( zero hedge)

ii) Germany/Deutsche bank

Wow!! we do not see the following quite often.  This Deutsche bank whistleblower turned down 8.25 million reward because he correctly stated that it was not “Deutsche bank’s”  fault but the leaders of the bank who should be punished and it is they who should pay and not the shareholders.  I wish we had more people like  Ben Artzi..

a must read…

( zero hedge)

iii)France

Another attack by a Muslim radical: (courtesy zero hedge)

iv/We now have two more banks in Germany charging clients for holding cash: Bank of Ireland and Ulster bank! Negative rates is having a devastating effect on the financial scene.( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

i)Canada/Vancouver

Boy!! that did not take long.  In one month after the Province of British Columbia initiated a property tax on foreigners, the Vancouver housing market implodes.

(courtesy zero hedge)

 

ii)APPLE/Global orders plummet by 30%

A good Bellwether on the global economy:  Apple demands cuts form suppliers after their orders are plunging by 30%

(courtesy zero hedge)

 

7.OIL ISSUES

i)Record levels of oil, record levels of gasoline and distillates. And yet the price of oil is back to 50$ for Brent and 48 dollars for WTI. EconMatters explains that this will not last

( EconMatters)

 

ii)This is how you know we have a huge glut of gas on the markets:

(courtesy Bloomberg)

iii) We had another rig count rise (for 8 straight weeks) and yet crude rises again:( zero hedge)

8.EMERGING MARKETS

BRAZIL

Brazilian police are recommending charging the swimmers with false testimony.

Is this payback time for the USA’s involvement in the ousting of Roussef?

(courtesy zero hedge)

9.PHYSICAL STORIES

i)Interesting, the Wall Street Journal shows tremendous interest in the rigging of cattle futures and shows no interest in gold/silver comex?

( Gee/Wall Street Journal/GATA)

ii)“Money is gold, and nothing else.”

A great history lesson for us

a must read…

(COURTESY  JAMES TURK/GOLDMONEY)

iii)Gold and silver trading early this morning.  Gold is steadier as the bankers seem to have control of the price of paper silver.

( zero hedge)

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

i)After suffering a huge 15% redemption of funds, Jones is imposing minimum risk levels has he now demands that his traders take on more risk in this zero interest rate environment.

( zero hedge)

ii)You could certainly guess that something like the following will happen when pension funds try for yield in a zero rate environment:

The Dallas Police and Fireman Pension fund is near insolvent in the wake of shady real estate deals and thus the reason for the FBI raid we commented on back in April.

(courtesy zero hedge)

iii)No comment necessary; even the Wall Street Journal thinks the market is a scam:

( WallStreet Journal/zero hedge)

Let us head over to the comex: The total gold comex open interest ROSE TO AN OI level of 579,821 for a GAIN of 9616 contracts AS THE PRICE OF GOLD ROSE BY $8.50 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed in May,  June and July  whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FALL by 70 contracts DOWN to 838,  We had 66 notices filed upon yesterday so we  lost 4 gold contracts OR AN ADDITIONAL 400 oz that will not stand for delivery in August. The next contract month of Sept saw it’s OI fall by 72 contracts down to 4450.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI ROSE by 345 contracts UP to 47,952. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was GOOD at 223,658.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 178,230 contracts.The comex is not in backwardation. Today, we had  157 notices filed for 15,700 oz in gold xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results. Total silver OI FELL by 647 contracts from 206,725 DOWN TO 206,725 despite the RISE in price of silver to the tune of 9 cents.  We are moving away from the all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The non active month of August saw it’s OI ROSE BY 10 CONTRACTS UP TO 94. We had 0 notices served yesterday so we  gained 10 silver CONTRACTS  or an additional 50,000 ounces  will stand for silver in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 7310 contracts down to 92,936 . The volume on the comex today (just comex) came in at 107,452 which is HUGE BUT MANY rollovers..The confirmed volume yesterday (comex + globex) was HUMONGOUS at 94,536 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months. We had 78 notices filed for today for 390,000 oz INITIAL standings for AUGUST  August 19. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 20,666.859 oz SCOTIA MANFRA INCL 1 KILOBAR Deposits to the Dealer Inventory in oz nil Deposits to the Customer Inventory, in oz  nil  48,226.500 oz HSBC 15,000.04 KILOBARS ?? No of oz served (contracts) today 157 notices  15,700 oz No of oz to be served (notices) 681 contracts (68,100 oz) Total monthly oz gold served (contracts) so far this month 13,080 contracts (1,308,000 oz) (40.684 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    462,709.4 OZ Today:  HUGE activity at the gold comex AND 1 KILOBAR ENTRY Today we had 0 dealer DEPOSITS total dealer deposit: NIL    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 1 customer deposit:  i) Into HSBC:  48,226.500 OZ 1500.04 KILOBARS!!??? Total customer deposits: 48,226.500 OZ Today we had 2 CUSTOMER withdrawals  i) Out of SCOTIA:  20,634.709 OZ ii) OUT OF MANFRA  32.15 OZ (1 KILOBAR) Total customer withdrawals  20,666.859 OZ Today we had 1 adjustment:  i) Out of BRINKS:  771.600 oz (24 KILOBARS) was adjusted out of the dealer and this landed into the customer account of BRINKS:  (0.024 tonnes) Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 157 contracts of which 1 notices was stopped (received) by JPMorgan dealer and 113 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (13,080) x 100 oz  or 1,308,000 oz , to which we  add the difference between the open interest for the front month of AUGUST  (838 CONTRACTS) minus the number of notices served upon today (157) x 100 oz   x 100 oz per contract equals 1,376,100 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (13,080) x 100 oz  or ounces + {OI for the front month (838) minus the number of  notices served upon today (137) x 100 oz which equals 1,376,100 oz standing in this non  active delivery month of AUGUST  (42.802 tonnes). We lost 4 contracts or an additional 400 oz will not stand for delivery in this  active delivery month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.802 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418 tonnes/THEREFORE 91.889 tonnes still standing against 72.753 tonnes available.  Total dealer inventor 2,339,026.509 oz or 72.753 tonnes Total gold inventory (dealer and customer) =11,026,917.458 or 342.98 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.98 tonnes for a  gain of 40  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

     end And now for silver   AUGUST INITIAL standings  august 19.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory 600,017.700 OZ JPM Deposits to the Dealer Inventory  392,343.55 OZ CNT Deposits to the Customer Inventory 208,371.700 OZ CNT No of oz served today (contracts) 78 CONTRACTS (390,000 OZ) No of oz to be served (notices) 16 contracts 80,000 oz) Total monthly oz silver served (contracts) 471 contracts (2,355,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  9,024,984.3 oz today we had 1 deposit into the dealer account: i) Into CNT:  392,343.55 oz  Total dealer deposits;  393,343.55 oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 1 customer withdrawal: i) Out of CNT:  208,371.700 oz Total customer withdrawals: 208,371.700 oz We had 1 customer deposit: i) Into JPMorgan;  60,o17.700 oz total customer deposits:  600,017.700  oz        we had 0 adjustments The total number of notices filed today for the AUGUST contract month is represented by 78 contracts for 390,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (471) x 5,000 oz  = 2,355,000 oz to which we add the difference between the open interest for the front month of AUGUST (94) and the number of notices served upon today (78) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the AUGUST contract month:  471(notices served so far)x 5000 oz +(94 OI for front month of AUGUST ) -number of notices served upon today (78)x 5000 oz  equals  2,435,000 oz  of silver standing for the AUGUST contract month. we gained 10 contracts or an additional 50,000 oz will stand for silver metal in this non active delivery month of August.   Total dealer silver:  27.453 million (close to record low inventory   Total number of dealer and customer silver:   157.460 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END At 3:30 pm we receive the COT report which gives us position levels of our major players: Let us head over and look at what the Gold COT brings our way: Gold COT COT Gold,Report – August 19, 2016  — Published: Friday, 19 August 2016 | Print  | Disqus

Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 351,535 67,684 52,308 116,128 427,121 519,971 547,113 Change from Prior Reporting Period -4,936 -2,340 2,288 -123 -2,071 -2,771 -2,123 Traders 196 80 80 55 59 290 186   Small Speculators   Long Short Open Interest   52,525 25,383 572,496   -132 -780 -2,903   non reportable positions Change from the previous reporting period COT Gold Report – Positions as of Tuesday, August 16, 2016 Our large specs; Those large specs that have been long in gold pitched 4936 contracts from their long side Those large specs that have been short in gold covered 2340 contracts from their short side. Our commercials: Those commercials that have been long in gold pitched a tiny 123 contracts Those commercials that have been short in gold covered a tiny 2071 contracts from their short side. Our small specs: Those small specs that have been long in gold pitched a tiny 132 contracts from their long side Those small specs that have been short in gold covered 780 contracts from their short side. Conclusion: commercials go net long by 1,948 contracts and normally this would be bullish. And now for our silver COT Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 118,988 33,999 8,836 49,176 149,770 -3,177 2,898 -5,701 2,156 -561 Traders 115 59 50 34 41 Small Speculators Open Interest Total Long Short 205,905 Long Short 28,905 13,300 177,000 192,605 1,980 -1,378 -4,742 -6,722 -3,364 non reportable positions Positions as of: 173 134 Tuesday, August 16, 2016   © SilverSeek.co Our large specs: Those large specs that have been long in silver pitched 3177 contracts from their long side Those large specs that have been short in silver added 2898 contracts to their short side Our commercials; Those commercials that have been long in silver added 2156 contracts to their long side Those commercials that have been short in silver could only cover 561 contracts from their short side. Our small specs: Those small specs that have been long in silver added 1980 contracts to their long side Those small specs that have been short in silver pitched 1378 contracts from their short side. Conclusions: very bullish on silver as commercials go net long by 1600 contracts.  It sure looks that they have difficulty in covering their massive shortfall. end And now the Gold inventory at the GLD August 19/no changes at the GLD/inventory resets at 955.99 tonnes August 18/a withdrawla of 6.24 tonnes of gold from the gLD/Inventory rests at 955.99 tonness August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 19/ Inventory rests tonight at 955.99 tonnes

end

Now the SLV Inventory August 19/no change in silver SLV/Inventory rests at 355.469 million oz/ August 18/ a massive paper deposit of 2.185 million oz into the SLV/Inventory rests at 355.469 million oz August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/ August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 19.2016: Inventory 355.469 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.8% Percentage of fund in silver:39.0% cash .+1.2%( August 19/2016). 2. Sprott silver fund (PSLV): Premium falls to +0.59%!!!! NAV (august 19/2016)  3. Sprott gold fund (PHYS): premium to NAV  rises TO  0.34% to NAV  ( august 19/2016) Note: Sprott silver trust back  into POSITIVE territory at +0.59% /Sprott physical gold trust is back into positive territory at 0.34%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,FRIDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Rothchilds Buying Gold On “Greatest Experiment” With Money In “History of the World” By Mark O’ByrneAugust 19, 20160 Comments

The Rothschilds are buying gold through their investment house RIT Capital Partners and Lord Jacob Rothchild is warning about the results of “the greatest experiment in monetary policy in the history of the world”.


British investment banker Lord Jacob Rothschild is buying gold. Pictured with Joanna Lumley. (Source: Getty)

The Rothchild’s investment house has increased its allocation to gold by 8% and aggressively sold quoted equities and sterling to navigate choppy “uncharted waters” post-Brexit. Sale of shares have been used to buy gold and other non-disclosed precious metals, which, at the end of June accounted for 8 per cent of the £2.8 billion portfolio according to the trust’s half-year results, released on Tuesday.

“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.”

Rothschild said to date quantitative easing has successfully driven stock markets higher, but he rightfully fears this will not go on forever. He adds that a number of headwinds could also derail markets – including the very uncertain geopolitical risk.

Geopolitical Risks

“Many of the risks which I underlined in my 2015 statement remain; indeed the geopolitical situation has deteriorated with the UK having voted to leave the European Union; the presidential election in the US in November is likely to be unusually fraught; while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems,” said Rothschild.

“Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the US in terrorist attacks.”

As we have covered in recent months, the smart and prudent retail, company, family office, HNW, UHNW, pension and institutional money is aware of the real risks of a new global financial crisis and continues to diversify into gold.


Recent Market Updates

– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”

Gold and Silver Bullion – News and Commentary

Buying picks up ahead of festive season in India, China (Reuters)

Texas State Gold Depository Another Step Closer To Reality (TenthAmendmentCenter)

Gold slips on U.S. Fed rate views (Reuters)

Gold Drops as Fed’s Williams Says He’s for Increasing Rates Soon (Bloomberg)

Gold up as Fed minutes cool rate hike prospects, weigh on dollar (Reuters)

Major gold rush since the Bank of England’s interest rate cut (CityAM)

Why Investors Should Consider a Gold Position (Nasdaq)

Britain faces a nasty shock when the global energy cycle turns  (Telegraph)

What will you do when banking dies? (MoneyWeek)

Market ‘breakdown’ to be ‘sudden, intense, and large’ – Paul Singer (CNBC)

Gold Prices (LBMA AM)

19Aug: USD 1,346.85, GBP 1,026.30 & EUR 1,189.67 per ounce
18Aug: USD 1,347.10, GBP 1,023.93 & EUR 1,190.84 per ounce
17Aug: USD 1,342.75, GBP 1,031.23 & EUR 1,191.96 per ounce
16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce

Silver Prices (LBMA)

19Aug: USD 19.42, GBP 14.80 & EUR 17.14 per ounce
18Aug: USD 19.78, GBP 15.04 & EUR 17.47 per ounce
17Aug: USD 19.57, GBP 15.04 & EUR 17.37 per ounce
16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce


Recent Market Updates

– Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich
– 45th Anniversary Of Nixon Ending The Gold Standard
– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion

Mark O’Byrne Executive Director

end

Interesting, the Wall Street Journal shows tremendous interest in the rigging of cattle futures and shows no interest in gold/silver comex?

(courtesy Gee/Wall Street Journal/GATA)

If only the Wall Street Journal showed such interest in gold futures

Submitted by cpowell on Thu, 2016-08-18 15:30. Section:

Maybe the cattle futures market doesn’t really WANT any ‘signals’ from the physical market. But at least ‘Trader Dan’ Norcini may be getting a good taste of market rigging.

* * *

Welcome to the ‘Meat Casino’ — The Cattle Futures Market Descends Into Chaos

Trading of Physical Cattle Has Become So Scant that the Futures Market Can’t Get the Signals it Needs to Set Prices

By Kelsey Gee
The Wall Street Journal
Wednesday, August 17, 2016

CHICAGO — Wild swings in the cattle futures market have prompted some traders to call it “the meat casino.”

In response, the world’s largest futures exchange has refused to list new contracts, leaving ranchers with fewer tools to hedge the $10.9 billion market. CME Group Inc. said that is because trading of physical cattle has become so scant that the futures market can’t get the signals it needs to set prices.

“It’s madness. The market makes major moves for no reason,” said Blake Albers, a cattle feeder in Wisner, Neb.

The decision to delay new contract listings is the culmination of alarms raised by the exchange and industry groups this year that problems in the physical marketplace have affected futures — a highly unusual meltdown in a market that has attracted more speculators. …

“Guys like me who have been around a long time aren’t putting as many positions on,” said Dan Norcini, an independent livestock-futures trader in Coeur d’Alene, Idaho. “It’s just not worth the risk anymore, when there’s no rhyme or reason to these price swings.” …

… For the remainder of the report:

http://www.wsj.com/articles/welcome-to-the-meat-casino-the-cattle-future…

END

“Money is gold, and nothing else.”

A great history lesson for us

a must read…

(COURTESY  JAMES TURK/GOLDMONEY)

What Did J.P. Morgan Mean? by Gold Money

By James Turk of Goldmoney.com

The following exchange occurred on December 18, 1912 when J.P. Morgan – the most influential American financier and banker of his time – was called to testify before Congress.

Mr Untermyer:

I want to ask you a few questions bearing on the subject that you have touched upon this morning, as to the control of money. The control of credit involves a control of money, does it not?

Mr Morgan:

A control of credit? No.

Mr Untermyer:

But the basis of banking is credit, is it not?

Mr Morgan:

Not always. That [credit] is an evidence of banking, but it [credit] is not the money itself. Money is gold, and nothing else.

Samuel Untermeyer was chief counsel of the Pujo Sub-Committee of the House Committee on Banking and Currency, which was formed to investigate the influence of Wall Street bankers and financiers over the nation’s money and credit. He was attempting to determine whether a “money trust” that controlled American business and finance existed and if Mr Morgan was part of it.

The above exchange is just a small part of more than three hours of testimony by Mr Morgan, but it is the most revealing part of their discussion about money. It hits upon a point not often understood today that, as Mr Morgan put it so precisely and succinctly: “Money is gold, and nothing else”.

It is noteworthy that he is often misquoted to have said ‘gold is money, and nothing else’, which is also true but misses the important point. It is clear that Mr Morgan was defining money in a way that is unfamiliar and therefore baffling to the modern mind, so the quote is frequently altered, whether wittingly or not, to make it understandable today. No doubt further confusing and perhaps somewhat shocking to the modern mind, Mr Morgan – who a century later remains a pre-eminent historical figure in American finance – did not say that ‘money is the dollar’; it is only gold and nothing else.

Nor was Mr Morgan defining gold. His statement simply highlighted how gold is used, not what it is, which can be defined as a natural element ranking number 79 on the periodic table.

Yet there is much more to Mr Morgan’s words, and indeed, both replies to Mr Untermyer’s questions. A deeper analysis will reveal what Mr Morgan and everyone else listening to his testimony obviously understood about money and credit. If they didn’t have this clear understanding, Mr Morgan would have been asked to explain his definition of money. No such questions were asked.

So what did Mr Untermyer and others in that Congressional hearing know then that many do not understand now? What did Mr Morgan mean? And what was it that they intuitively recognised about money and credit that is not widely realised today?

Mr Morgan was defining more than just money. He was revealing the essential nature of the process by which people are paid for their labour, which in turn is the backbone of our capitalist society. Money comes from the market process, not government.

Money comes into existence like every other good and service. They all are a result of labour diligently applied to a task completed over time to produce a useful outcome. A farmer produces food, a builder a house, a manufacturer a car, and so forth. All of these items are useful products. Similarly, useful services are provided by a barber cutting hair, a waiter serving food, etc. And to address Mr Morgan’s point, a gold miner expends labour and time to produce a useful good we call money.

Bankers in stark contrast spawn money-substitutes called dollars, euros, francs, pounds, etc., but just like artificial sweeteners are not sugar, money-substitutes are not money. These currencies are forced into circulation by legal tender laws, which perforce have largely displaced the circulation of gold as currency. The unfortunate result is that gold’s inherent features and attributes have become unfamiliar to many who then fail to recognise gold’s true nature and usefulness.

National currencies like the dollar, euro, franc, pound and all the rest are based on credit, and not expended labour. Consequently, they can be best described as ‘debt-currency’, a befitting term purposefully chosen to express their true nature by revealing their complete and total reliance upon credit.

A talented, hard-working and honest individual will have more ability to borrow on credit than one without these qualities, and credit can be useful. With credit one can obtain goods and services today based on the trust that payment for them will be made in the future by the labour of the individual using credit.

Similarly, banks grant loans on the expectation – and hope – that labour will be expended in the future to repay the loan. So one can borrow a debt-currency from a bank on the trust that it will be repaid. But sometimes that trust is broken. Not all promises are kept, so credit involves the uncertainty of repayment and clearly establishes a fundamental difference in risk between money and debt-currency.

All debt-currencies have counterparty risk, but gold does not. The reason is simple. Debt-currencies are a financial asset. They are not tangible, nor is their value derived from expended labour. More precisely, they are liabilities of banks, and as any accountant knows, it is a bank’s assets – and not its liabilities – that have value.

Debt-currency is backed by credit, specifically the loans on bank balance sheets. If these loans are not repaid, the bank’s ability to honour its liabilities – the bank’s debt-currency – is impeded, adversely impacting that bank’s debt-currency. If the loan defaults are sufficiently large, it can lead to bank runs and ultimately, bank failures.

As Mr Morgan explained to Mr Untermyer, credit is not money. Therefore, dollars are not money, and just circulate as debt-currency in place of money. This reality – that national currencies are liabilities of banks – explains why they have counterparty risk, and more to the point, makes it clear why money is gold.

When you pay for some good or service with a gold coin, a tangible asset that is the product of expended labour – gold – is being exchanged for something else of substance and value that is also the product of expended labour, namely, the good or service being purchased. With gold, the exchange is extinguished the moment the good and gold change hands, but contrast this result with the dollar or any other debt-currency.

When dollars are used to purchase some good or service, the exchange is not extinguished. An item of substance – the good or service – is being exchanged for credit in the form of a money-substitute circulating as debt-currency. The good has not been paid for because the seller receiving the dollars now has counterparty risk. The exchange won’t be extinguished until the seller off-loads those dollars on to someone else in some other exchange to purchase a good or service, which is the hidden meaning of Mr Morgan’s testimony that was widely understood in 1912, but less so today.

Only money can pay for the purchase of a good or service; only a tangible asset extinguishes an exchange. Gold has been money for 5,000 years, though other tangible assets have been used from time to time, generally as a matter of expediency in extraordinary or emergency circumstances, or in the case of silver, to provide coin in small denominations for low-value exchanges.

So what would have been the result if the earth had been formed without any gold? It seems logical to conclude that money would never have emerged from pre-history, meaning the market economy would never have emerged from pre-history either.

So gold is special. It has been central to the development of civilisation. And gold is unique. Other tangible assets deteriorate, tarnish, rot, get used up, depleted or worn out and sooner or later disappear, while gold gets accumulated and does not disappear. Except for the inconsequential amount of gold lost from abrasion of coins or from shipwrecks and buried hoards yet to be located and recovered, all the gold mined throughout history still exists, whether fabricated into bars, coins or other forms.

Throughout history gold has been mined because it is used as money. Even though gold today does not circulate as currency as widely as it did in 1912, it still is money.

Mr Morgan’s testimony occurred just several years after the Panic of 1907 and the collapse of Knickerbocker Trust Company, one of the larger banks in New York City at the time. We’ve seen bank runs in recent decades, but these have happened within a debt-currency world. Historically, bank runs were driven by the need for safety, or in other words, to preserve one’s wealth by avoiding counter-party risk. Safety was achieved by converting the fleeting and impermanent promises of debt-currency into gold, the ultimate safe-haven. A bank owes you your debt currency, whereas gold is money you own.

The last real bank run into gold occurred during the Great Depression, which is out of nearly everyone’s living memory. That explains why so few people are paying attention to the risk of using debt-currency; they have not had the opportunity to learn from experience.

There is an ancient saying that wisdom begins by calling things by their right name. Mr Morgan chose his words in that Congressional hearing accurately and wisely.

“Money is gold, and nothing else.”

 

 

end

 

 

Gold and silver trading early this morning.  Gold is steadier as the bankers seem to have control of the price of paper silver.

(courtesy zero hedge)

Silver Slumps To 6-Week Lows, Gold Ratio Surges

Silver is slumping this morning, back below $19.50 at its lowest level in 6 weeks. Gold is fading also but remains coiled around the $1350 level for now. While both well above pre-Brexit levels, we note that the Gold-to-Silver ratio is recovering after slumping post-Brexit…

Silver is suffering…

Gold is more stable for now…

A triangle-shaped formation has kept prices in check since early July, when the metal traded between $1,310 and $1,370 an ounce. Now, gold is likely to move out of the triangle and start rallying, said Andy Pfaff, chief investment officer for commodities at MitonOptimal Group in Cape Town.

As the gold/Silver ratio jumps back to pre-Brexit ‘norms’

As Bloomberg notes, Gold is poised to continue outperforming silver in the near-term after XAU/XAG broke out bullishly from a one-month triangle pattern this week, Bloomberg technical analyst Sejul Gokal writes, with a ratio of 72/73 as a short-term target (100-day moving average).

 

end

 

Funding complete in 24 hrs

(courtesy Koos Jansen)

The Power Of The Gold Community: Crowdfunding For FOIA Request Fort Knox Audit Documents CompleteWithin 24 Hours

Published: Friday, 19 August 2016

By Koos Jansen

https://www.bullionstar.com/

Since 2014 I’ve been investigating the alleged audits of the US official gold reserves. Of course my goal is to figure out if these audits are credible, or if they’re invented by the US government to silence the people that think gold has any value and forms the very material basis for a well-functioning monetary system.

My first post on this subject, A First Glance At US Official Gold Reserves Audits, published on March 27, 2014, was purely based on publicly available reports. Not surprisingly, all those reports together compounded to a logical story. The US government wouldn’t present anything that’s implausible at the surface. That first post was more or less a summary of the official narrative. After that post I decided to dig a little deeper.

According to the Department of the Treasury’s Office of Inspector General (OIG), which is responsible for the audits, the vast majority of the US monetary stock stored at the US Mint had been audited by 1986, 241,247,820.61 fine troy ounces to be precise, as was said by Inspector General Eric M. Thorsonduring his Statement to the House Financial Services Committee on June 23, 2011:

… the Committee for Continuing Audit of the U.S. Government-owned Gold performed annual audits of Treasury’s gold reserves from 1975 to 1986. … by 1986, 97 percent of the Government-owned gold held by the Mint had been audited and placed under joint seal.

If this is true I would like to see those audit reports, I thought one day. My first Freedom Of Information Act ( FOIA) request submitted in 2015 at the US government asked for delivery of all audit reports drafted by the Committee for Continuing Audit of the U.S. Government-owned Gold from 1975 until 1986. Stunningly, the OIG couldn’t find all the documents – nor did the National Archives, the Government Accountability Office or the Treasury. The OIG only had three of the audit reports in question archived. Something was awfully wrong here.

The essence of auditing the US gold stock is to reassure the global economy that in any extreme scenario all dollars in circulation are supported by gold providing essential confidence and credibility.Once it’s proven the gold is there, why throw away the evidence? I wrote about this in my postUS Government Lost 7 Fort Knox Gold Audit Reports published on June 2, 2015.

In my post from June 2015 I announced I would submit new FOIAs at several US government departments to get to the bottom of this. And I did, I’ve submitted countless of FOIAs at the US Treasury, US Mint and the OIG, next to asking for information through conventional channels like email and phone calls. Sometimes the FOIAs were not honored, sometimes I received very intriguing bits of information. What I found out, inter alia, was that in between 1993 and 2008, 84,671,927 ounces were re-audited. Meaning, several compartments that were sealed in between 1975 and 1986 had been re-opened to access the bars inside. And strangely, the OIG cannot give me a proper explanation for these re-audits. Believe me, I’ve tried to ask numerous times.

Why was this gold re-audited? Why were sealed vault compartments re-opened and re-audited? These are just examples of questions my research is focussed on.

My interest in the subject did not pass unnoticed at the US government. In recent months I could clearly sense a strong defense by all departments in concert. Emails are not being answered, phone calls are not being returned, questions in my FOIAs are dodged, and in my most recent FOIA an unreasonable amount of money was asked for reports the Mint Director’s Representative writes every year for “notifying the CFO of the completion of the verification” of the Deep Storage gold audits.

Through a FOIA submitted at the OIG late 2015 I obtained the Management Letter for the Fiscal Year 2004 Audit of the United States Mint’s Schedule of Custodial Gold and Silver Reserves March 10, 2005. I the management letter we can read:

5. Policy FIN-09, Deep Storage Asset verifications, paragraph 2v, and MD 8H-3 paragraph 6a, both include the requirement that the Director’s Representative submit a written report to the Chief Financial Officer (CFO) notifying the CFO of the completion of the verification.

After reading this paragraph I thought maybe these reports by the Mint Director’s Representative would disclose valuable information. As the US government was barely talking to me anymore, I submitted a new FOIA request at the Mint in 2016 that stated:…

https://www.bullionstar.com/

-END-

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

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6547( BIG DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6619) / Shanghai bourse  UP 3.99 OR 0.13%   / HANG SANG CLOSED DOWN 85.94 or 0.37%

2 Nikkei closed /USA: YEN RISES TO 100.21

3. Europe stocks opened  IN THE RED,     /USA dollar index UP to 94.43/Euro DOWN to 1.1325

3b Japan 10 year bond yield: RISES TO  -.078%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.21

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  48.10  and Brent: 50.67

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” ON THE TABLE 

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.081%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 6.89%/: 

3j Greek 10 year bond yield FALL to  : 8.04%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1345.00-/silver $19.45(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 28/100 in  roubles/dollar) 64.04-

3m oil into the 48 dollar handle for WTI and 50 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.21 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9571 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0844 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -0.081%

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

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

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

4. USA 10 year treasury bond at 1.549% early this morning. Thirty year rate  at 2.269% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS Global Stocks Drop, US Futures Down As Dollar Rebound Halts Longest Oil Rally In Years

European, Asian stocks and S&P futures all fell in another quiet, low-volume early session. With oil entering a bull market yesterday (after sliding into a bear market just weeks ago), and set for its longest run of gains in 4 years after, overnight crude stumbled, and reversed early gains, falling for the first time in seven days driven by rebound in the dollar which gained versus all G-10 currencies with commodity currencies underperforming.

“I think it’s the case that we’ve run up pretty hard in the past six weeks or so and that slightly caught investors unawares,” James Buckley at Baring Investment told Bloomberg. “That’s probably going to mean that to push on further from here we would need some further affirmative data. I wouldn’t be surprised to see a pause around these levels, I don’t necessarily think it will be up or down, but certainly a pause, perhaps with a downward drift.”

The Bloomberg Dollar Spot Index was +0.5% at 1,167.08, set for the biggest one-day gain since July 19 and trimming this week’s loss to 1 percent. While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.”

Financial markets were confused this week by more hawkish comments from regional Federal Reserve chiefs including New York’s William Dudley, while minutes of the last policy meeting struck a dovish tone seeing little prospect of a sharp increase in price pressure. The events set the stage for Fed Chair Janet Yellen, who speaks at a meeting of global policy makers in Jackson Hole, Wyoming, next week. December rate hike odds stand at 47%, fed fund futures show. That compares with 36% at the start of the month.

“The Fed, at least in speeches this week, has been trying to get markets more in line with what they expect from monetary tightening this year,” said Richard Falkenhall, a strategist at SEB AB in Stockholm. “But the market is still not convinced.”

Europe’s Stoxx 600 Index is heading for a 1.4% weekly decline, the largest weekly drop since mid-June. Trading volumes were about a third lower than the 30-day average. Italy’s FTSE MIB, the worst performing index in the world this year, tumbled 1.9 percent.

Intesa Sanpaolo SpA weighed heaviest on the index with a 3.1 percent drop. Italy’s shares led declines on Friday and its government bonds yielded the most relative to Spain’s in more than 18 months as concern over the health of the country’s banking industry and political risks weighed on the nation’s assets. Equities in emerging markets erased a sixth week of gains. Gold lost ground for the first time this week as Bloomberg’s dollar index rose from a three-month low. Oil was headed for its biggest weekly jump since March amid speculation major producers will act to freeze output. Insurers were the biggest decliners on Friday, while BMW AG led automakers lower. BHP Billiton Ltd. and Glencore Plc dragged a gauge of miners down as commodity prices slipped. Royal Vopak NV tumbled 6.9 percent after the storage-tank operator reported lower revenue and cashflow.

S&P 500 Index futures were down 0.3% in premarket trading. Applied Materials Inc. advanced 6.5 percent in European trading after the biggest maker of machinery used to manufacture semiconductors predicted revenue and profit that may surpass estimates.

The MSCI Emerging Markets Index slid 0.8 percent, leaving it down 0.1 percent in the week. The measure is up 15 percent this year compared with a 4.4 percent increase in the MSCI World Index of developed-nation stocks.

10Y Treasuries yielded 1.54%, little changed on the day and up three basis points for the week. The two-year note yield, among the maturities most sensitive to the outlook for Fed policy, was little changed this week at 0.71 percent.

Market Snapshot

  • S&P 500 futures down 0.3% to 2177
  • Stoxx 600 down 0.6% to 341
  • FTSE 100 down 0.1% to 6860
  • DAX down 0.8% to 10517
  • German 10Yr yield down less than 1bp to -0.09%
  • Italian 10Yr yield up 3bps to 1.11%
  • Spanish 10Yr yield up 3bps to 0.94%
  • S&P GSCI Index down 0.6% to 368.7
  • MSCI Asia Pacific down 0.3% to 139
  • Nikkei 225 up 0.4% to 16546
  • Hang Seng down 0.4% to 22937
  • Shanghai Composite up 0.1% to 3108
  • S&P/ASX 200 up 0.3% to 5527
  • US 10-yr yield up less than 1bp to 1.54%
  • Dollar Index up 0.4% to 94.53
  • WTI Crude futures down 0.5% to $47.98
  • Brent Futures down 0.8% to $50.46
  • Gold spot down 0.4% to $1,347
  • Silver spot down 0.9% to $19.57

Global Headline News

  • Viacom Board Said to OK Settlement; Dauman Steps Down as CEO: COO Tom Dooley to take over as interim chief executive officer. Settlement marks near-total victory for Sumner, Shari Redstone
  • Exxon, Chevron, Hess Said to Be in Joint Bid for Mexican Oil: Mexico to auction rights to 10 deepwater oil fields on Dec. 5. Companies have until Nov. 18 to report bid groups to regulator
  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Chipotle Is Still in a Funk and Wall Street’s Getting Impatient: Sales haven’t recovered as marketing spending gets a boost; “they’re going to have to find a different way to operate.”
  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • Katsuyama Shakes Up Industry Even Before His IEX Exchange Opens: Nasdaq, NYSE want new kinds of orders in response to upstart. IEX begins trading as 13th U.S. stock exchange on Friday
  • NBC’s $12b Olympics Bet Stumbles, Thanks to Millennials: Prime-time broadcast viewership has been down ~17% compared to the London games four years ago
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown:
    Shortened work hours at Emden plant may widen to more sites. Cutbacks
    compound woes as VW seeks to resolve diesel scandal

* * *

Looking at regional markets, we find that Asia failed to sustain the early widespread energy-inspired gains in which oil rallied 3% and officially entered bull market territory, with the regional stock markets mixed. Nikkei 225 (+0.4%) initially outperformed on JPY weakness but then pared some gains as China bourses entered the fray and dragged sentiment lower. ASX 200 (+0.3%) also saw choppy trade amid weakness in financials after Moody’s downgraded its outlook on the big 4 banks and Australia’s banking system to negative. Chinese markets were initially lower with the Hang Seng (-0.4%) and Shanghai Comp (+0.1%) weighed on following reports of possible curbs on the financial and property sectors, while the PBoC also reduced its net weekly liquidity injection. However, the Shanghai Comp managed to pare losses heading in to the close. 10yr JGBs traded flat amid indecisiveness seen across riskier Japanese assets, while the BoJ were present in the market to acquire JPY 1.25tr1 in government debt.

Top Asia News

  • China Sovereign Fund Said to Seek $9 Billion Vale Streaming Deal: Miner also talking to other Asian cos. on stake sale
  • Singapore Defaults Boost Calls for Aid as Oil Firms Falter: More bonds may default without further bank help, UBS analysts say
  • Idle Credit Cards in Asians’ Wallets Prompt Citi, HSBC Overhaul: Banks are eyeing rapid growth of payment transactions in Asia
  • The Gold Medal for Buying Up Brazilian Assets Goes to China Inc.:China surpasses U.S., U.K. as top buyer of Brazilian assets
  • Citic Unit Plans Japan Private Equity Fund as China Buying Jumps: 30b yen fund has invested in Akakura, Mark Styler
  • Bank of East Asia Profit Drops 38% as China Drags on Lending: Weaker China economy causes loan impairments to surge 60%

European equities are softer this morning (Euro Stoma -0.9%) with notable weakness in telecom and health care names, allied with the moves lower in oil prices which have seen a pull-back as Brent crude futures fall below USD 51. Additionally, downside in equities has been somewhat exacerbated by the thin market conditions with newsflow relatively light as has been the case over the past week. In credit markets, Bunds are relatively flat despite the downside in equities, while there has been some notable outperformance in the long end of the curve. In terms of peripheral bonds, Portuguese yields are firmer this morning ahead of Fitch’s sovereign announcement with risks concerning over the potential moves to their outlook.

Top European News

  • Monte Paschi Says It Acted Properly as CEO Viola Investigated: Bank says operations were carried out by previous management. Reuters reported that Viola, Profumo being investigated
  • U.K. Posts Surplus as Bank Surcharge Boosts Corp. Taxes: U.K. posted surplus in July as govt’s tax take was boosted by first payments under a surcharge on banks introduced last year.
  • VW’s German Production at Risk as Supplier Spat Sparks Slowdown: Shortened work hours at Emden plant may widen to more sites. Cutbacks compound woes as VW seeks to resolve diesel scandal
  • Brunel Drops; 2Q Numbers Beat, But FY Guidance Weak, Kepler Says: Brunel International falls as much as 7.6% in early trading, vol. 85% of 3-mo. daily avg. at 9:09am CET; 2Q figures beat ests, but FY Ebit guidance of EU30m-EU35m is “clearly” lower than consensus, Kepler Cheuvreux says in note.
  • Deutsche Bank Whistle-Blower Spurns $8 Million SEC Reward: Eric Ben-Artzi complains that top executives went unpunished. Former Deutsche Bank risk officer writes opinion piece in FT

In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, trimming this week’s loss to 1 percent.While the U.S. central bank’s minutes showed Wednesday that officials were split in July on the need for an interest-rate hike, New York Fed chief Dudley said the previous day that the market was underestimating the likelihood of an increase. “The Fed’s apparent lack of urgency to raise rates is encouraging expectations of further dollar declines,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Today is probably just a blip in the dollar’s lousy August so far.” The yen weakened 0.2 percent to 100.13 per dollar, paring its weekly gain to 1.2 percent. The currency has strengthened 20 percent this year and Japan’s Vice Finance Minister Masatsugu Asakawa said on Thursday that policy makers are prepared to take action if speculative trading is evident. The MSCI Emerging Markets Currency Index declined 0.5%, set for its first weekly loss in four weeks. Mexico’s peso and South Africa’s rand led losses on Friday, both sliding more than 1 percent.

In commodities, oil headed for its strongest weekly increase in four months after entering a bull market amid speculation that major producers may act to freeze output at the same time U.S. crude and fuel stockpiles decline. West Texas Intermediate crude fell 0.4 percent to $48.01 a barrel, paring its weekly gain to 7.9 percent. Brent lost 0.8 percent to $50.48. Prices have risen steadily since Saudi Arabian Energy Minister Khalid Al-Falih said Aug. 11 that informal talks in September may lead to action to stabilize the market. Most metals declined as a rebounding dollar made commodities more expensive to investors in other currencies. Gold dropped 0.4 percent to $1,346.85 an ounce, snapping a four-day advance as the dollar rebounded. Zinc dropped 0.8 percent, paring a weekly gain and retreating from the highest level in 15 months. Copper fell 0.4 percent.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade lower as markets take an opportunity to pare some of the week’s gains
  • This has also been triggered by softness in commodities with analysts cynical about the potential efficacy of an oil production freeze
  • Looking ahead, highlights include Canadian CPI
  • Treasuries mostly steady in overnight trading, global equities higher in Asia, drop in Europe; WTI crude has closed over $45/barrel each day this week, now trading at just over $48.
  • Even if OPEC strikes a deal with Russia next month to freeze oil production, success will mean a lot less than when they tried and failed four months ago. Oil has rallied more than 10% since OPEC said that it will hold an informal meeting
  • Federal Reserve officials have gone out of their way this week to stress the market is underestimating the odds of an interest-rate increase this year — and yet the probability of such a move has fallen back below 50%
  • U.S. regulators looking to avoid bailouts of too-big-to-fail banks have passed so many rules that regional and local lenders are combining to stomach the costs. Mergers and acquisitions by U.S. banks surged last year to about $18 billion, the highest level since 2009
  • Billionaire Paul Tudor Jones, who’s facing his worst performance since the global financial crisis, wants to show investors he hasn’t lost his mojo. He’s also demanding that all his managers take more risk in their bets
  • Will the Socialists dare to steal Christmas? That’s the question that Spaniards are asking after caretaker Prime Minister Mariano Rajoy agreed to face a confidence vote in parliament at the end of this month
  • Ukraine’s president Petro Poroshenko warned of a possible invasion by Russia and said the military may consider imposing a draft if hostilities worsen

DB’s Jim Reid concludes the overnight event wrap

Markets don’t appear to be in much of a race to get anywhere at the moment with the last 24 hours or so consolidating further the post-FOMC minutes price action reversal of NY Fed President Dudley’s more hawkish comments from earlier in the week. We did actually hear from Dudley again yesterday when he spoke to a press briefing. Much of his commentary pointed towards the recent strength in the labour market which has ‘helped allay concerns that arose earlier this year that job growth was beginning to stall and reinforced my view that labour market conditions continue to improve’. Dudley also said that he expects growth in the second half of this year to be ‘quite a bit stronger’ than in the first half but that the labour market data will get greater weight given that the labour market is part of the Fed’s dual mandate and that the Fed is not targeting GDP growth.

The San Francisco Fed President John Williams (seen as relatively centrist) also spoke shortly after although he didn’t offer much in the way of new views. Williams said that ‘I think every one of our meetings should be in play in principle’ including September and that this ‘makes sense given where the economy is’. Williams also said that ‘I don’t think I’m in a hurry to raise rates’ but ‘I don’t think that it would be helpful to allow this economy to overheat’.

Treasuries continued to firm up again yesterday with 2y and 10y yields down 2.4bps and 1.4bps respectively to 0.703% and 1.536%. The latter is now within half a basis point of doing a full circle from the pre-Dudley levels on Tuesday. Meanwhile the US Dollar came under renewed pressure again yesterday, with the Dollar index closing -0.59%. Risk assets eked out modest gains with the S&P 500 and Dow closing +0.22% and +0.13% respectively. The odds of a September rate rise have held steady at 20% (versus 22% on Tuesday) while December odds are down to 47% from 49% on Wednesday and 51% on Tuesday.

Elsewhere European equity markets also finally snapped out of a four-day slump (Stoxx 600 closed +0.72%) with the better tone for risk yesterday also given a boost by another sharp leg higher for Oil. WTI rallied +3.06% yesterday to a close a shade above $48/bbl, while Brent climbed +2.09% to finish above $50/bbl for the first time since July 4th. In fact that’s the sixth successive daily gain for Brent and it has now risen over 22% from the intraday lows on August 2nd and so taking it back into a bull market. Yesterday’s gains came despite there being little new news, instead just seemingly an extension of the positive momentum we’ve seen this month as hopes have risen around a potential OPEC production freeze next month.

Oil is little changed this morning but despite the move yesterday, most major bourses in Asia this morning are trading in the red, albeit modestly. The Hang Seng (-0.50%), Shanghai Comp (-0.36%) and Kospi (-0.22%) are all currently lower although the Nikkei (+0.39%) has bounced back this morning with the Yen (-0.48%) having a rare weaker day after trading back up above 100. In fact it looks set to end five prior consecutive days of gains.

The main economic data of note yesterday was again focused on the UK where the July retail sales data came in much better than expected, adding to the reasonably solid post Brexit data that we’ve seen this week. Excluding fuel, sales rose a bumper +1.5% mom last month (vs. +0.3% expected) which helped to lift the YoY rate to +5.4% from +3.9%. Including fuel, sales were also up an impressive +1.4% mom (vs. +0.1% expected). The YoY rate including fuel is now +5.9% (from +4.3%) which is the highest since September last year. Much of the commentary suggested that the warm weather was a big contributor and it’ll be interesting to see what the August numbers look like. Sterling rallied +0.97% yesterday post the data and is now back above $1.31.

Elsewhere, in the US the main data of note was a pickup in the headline Philadelphia Fed manufacturing index of 4.9pts to +2.0, which was in line with the market. It was some weakness in the details which caught our attention though. The new orders index tumbled to -7.2 from +11.8 in the prior month, while the number of employees weakened further to -20.0 from -1.6. The average workweek was also lower although we did see a pickup in the six-month ahead business conditions reading to the best level since January 2015. Elsewhere, initial jobless claims declined 4k last week to 262k and the Conference Board’s leading index (+0.4% mom vs. +0.3% expected) was up a little more than expected.

The only other data yesterday came in Europe where the July CPI reading for the Euro area came in a smidgen lower than expected (-0.6% mom vs. -0.5% expected) and the unemployment rate in France ticked down three-tenths to 9.9% in Q2.

It looks set to be a fairly quiet day ahead and finish to the week. This morning in Europe we’ll get the latest Germany PPI data (covering July) along with more data out of the UK, this time in the form of public sector net borrowing data for July. There’s nothing due out in the US this afternoon and just 3 corporate earnings reports from the S&P 500 are due out from the retail sector.

end

ASIA MARKETS

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed UP 3.99 POINTS OR 0.13%/ /Hang Sang closed DOWN 85.94 points or 0.37%. The Nikkei closed UP 59.81 POINTS OR 0.36% Australia’s all ordinaires  CLOSED UP 0.34% Chinese yuan (ONSHORE) closed DOWN at 6.6547/Oil FELL to 48.10 dollars per barrel for WTI and 50.67 for Brent. Stocks in Europe: in the RED . Offshore yuan trades  6.6619 yuan to the dollar vs 6.6547 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

none today

EUROPEAN AFFAIRS

England: this is a biggy!

Cable (Great Britain Pound/USA dollar) tumbles as May confirms article 50 trigger by April 2017:

(courtesy zero hedge)

Cable Tumbles After British PM Confirms Article 50 Trigger By April 2017

Just when the world thought Theresa May would let that whole ‘Brexit’ thing slide, hoping everyone would forget about, the new British PM has confirmed that “article 50” – the legal execution of Brexit – will most likely be triggered by April 2017 (wanting to get this done before the crucial French and German elections). Cable is sliding notably on the news…

It’s not over…

  • *U.K. SAID TO SEE BREXIT MOST LIKELY TRIGGERED BY APRIL 2017
  • *MAY SAID TO WANT TO TRIGGER ART. 50 BEFORE FRENCH, GERMAN VOTES

And cable is fading…

As Bloomberg details, Prime Minister Theresa May’s team is still leaning toward the first part of 2017 as the best moment to trigger the start of formal talks over the U.K.’s withdrawal from the European Union, according to two British officials.

While reports in the U.K. media recently suggested May could wait until the end of 2017 before opening two years of negotiations, she is sympathetic to the case for acting by April at the latest as Germany and France prepare for elections and pro-Brexit campaigners at home warn against delay, said the officials, who asked not to be named discussing private conversations.

A March summit of European leaders could provide the right setting for invoking Article 50 of the Lisbon Treaty, which lays out how a country quits the EU, one of the officials said.

May has held off starting the clock on Britain’s exit from the EU to allow her government time to form a team and to prepare positions for what are likely to be marathon negotiations. That’s led her to rule out any move before the end of this year.

The timing is ironic as USD Index has retraced nearly all its safe haven gains post-Brexit…

end

Germany/Deutsche bank

Wow!! we do not see the following quite often.  This Deutsche bank whistleblower turned down 8.25 million reward because he correctly stated that it was not “Deutsche bank’s”  fault but the leaders of the bank who should be punished and it is they who should pay and not the shareholders.  I wish we had more people like  Ben Artzi..

a must read…

(courtesy zero hedge)

Why A Deutsche Bank Whistleblower Turned Down A $8.25 Million Reward: In His Own Words

At the height of the financial crisis, when risk assets were imploding and counterparties were in danger of overnight collapse, Deutsche Bank avoided failure and nationalization by fabricating the value of its $130 billion derivative portfolio of “leveraged super senior” trades.

Some history: back in 2005, these trades were seen as “the next big thing” in the world of credit derivatives, something which DB at the time was building a massive position in. They were designed to behave like the most senior tranche of a typical collateralised debt obligation, where assets such as mortgages or credit default swaps are pooled to give investors varying degrees of risk exposure. Deutsche became the biggest operator in this market, which involved banks buying insurance against the possibility of default by some of the safest companies, the FT writes.

There was just one problem: when it was building up its portfolio, Deutsche never accounted for the possibility of the financial world nearly collapsing. Which is why as the illiquid portfolio was careening, instead marking it to market – an act that would have resulted in the bank’s insolvency – DB’s risk managers misstated the value of the positions by anywhere from $1.5bn to $3.3bn.

Several years later, in 2012, the SEC found out about this, and in 2015 slapped a $55 million fine on Deutsche Bank for this criminal fabrication (nobody went to jail). “At the height of the financial crisis, Deutsche Bank’s financial statements did not reflect the significant risk in these large, complex illiquid positions,” said Andrew Ceresney, director of the SEC’s enforcement division. “Deutsche Bank failed to make reasonable judgments when valuing its positions and lacked robust internal controls over financial reporting.”

The reason why the SEC learned about DB’s massive mismarked derivative exposure, is because two former employee whistleblowers, Matthew Simpson and Eric Ben-Artzi, told it: the duo alleged that if Deutsche had accounted properly for its positions, its capital would have fallen to dangerous levels during the financial crisis and it might have required a government bailout to survive. The highest estimate for the unaccounted loss was $12bn. Which explains why Deutsche Bank was desperate to manipulated the numbers.

End result: DB got its wristslap with a token fine, the SEC came out looking like it knew what it was doing, and – as we learned today – the two whistleblowers got major awards for helping the SEC collected the $55MM fine, amounting to 15% each.

Only, something unexpected happened: as the FT writes, one of the whistleblowers who helped expose the false accounting at Deutsche Bank turned down a multimillion-dollar award from the Securities and Exchange Commission in protest against the agency’s failure to punish executives at the bank.

Eric Ben-Artzi, the former Deutsche risk officer, told the SEC he is declining his share of a $16.5 million payout — the third largest in the whistleblower program’s history — which represents 30% of the $55 million Deutsche Bank fine.

But why turn down enough money that most people, even ex-Wall Streeters, could comfortably retire on?  Ben-Artzi said the fine should be paid by individual executives, not shareholders, and suggested the “revolving door” of senior personnel between the SEC and Germany’s largest bank had played a role in executives going unpunished (understandably he had no comment about the spike in Deutsche Bank suicides in 2013-2014, particularly those emanating from its legal department).

“This goes beyond the typical revolving-door story,” Mr Ben-Artzi wrote in an opinion article for the Financial Times. “In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the SEC even as the investigations into malfeasance at Deutsche Bank were ongoing,”

Which, incidentally, reminds us of a post we wrote back in May 2010, explaining why former Deutsche Bank General Councel, and then-SEC Director of Enforcement, “Robert Khuzami Stands To Lose Up To $250,000 If He Pursues Action Against Deutsche Bank.” We were right: neither Khuzami, nor the SEC, nor anyone else, pursued any charges against Deutsche Bank in the early years after the financial crisis. In retrospect, now that the German bank has been revealed to have manipulated literally everything, such oversight on behalf of the SEC was even more criminal than what DB did over the years.

Six years later, the FT comments on this too:

“Robert Khuzami, director of enforcement at the SEC between 2009 and 2013, was Deutsche’s former general counsel for the Americas. Between 2004 and 2013 Robert Rice was a senior lawyer at Deutsche Bank, where he led an internal investigation into the valuation claims; he then went to the SEC as chief counsel.  Both Mr Khuzami and Mr Rice were recused from the investigation. Dick Walker was enforcement director at the SEC between 1998 and 2001 and then joined Deutsche, later becoming general counsel; he left the bank this year. All three declined to comment. “

Needless to say, there is zero risk to Khuzami’s current job as partner in Kirkland’s Government & Internal Investigations Practice Group, which he joined in 2013. But hopefully, one day there will be, and if so it will be partially thanks to op-eds such as the one – written by Eric Ben-Artzi, who is currently a vice-president of risk analytics at BondIT – published in today’s FT and republished below.

For all those wondering why someone would turn down a $8.25 million whistleblower award, here is the explanation, straight from the source.

* * *

We must protect shareholders from executive wrongdoing 

Eric Ben-Artzi 

I turned down a whistleblower award, writes former Deutsche Bank employee Eric Ben-Artzi

I just got word from the Securities and Exchange Commission that I am to receive half of a $16.5m whistleblower award. But I refuse to take my share. My award, which comes from a fund allocated by Congress, amounts to 15 per cent of the $55m fine the SEC imposed on Deutsche Bank in May 2015 after I informed regulators that my colleagues at the bank had been inflating the value of its massive portfolio of credit derivatives.

I was a risk officer at the bank, and one of the three whistleblowers who in 2010-11 reported the improper accounting internally and to regulators around the globe.

The SEC attorney who oversaw the investigation told the New York Times: “It’s the only enforcement action where we allege that a major financial institution failed to properly value a significant portion of its portfolio of complex securities.”

But Deutsche did not commit this wrongdoing. Deutsche was the victim. To be precise, the bank’s shareholders and its rank­-and­-file employees who are now losing their jobs in droves are the primary victims.

Meanwhile, top executives retired with multimillion­-dollar bonuses based on the misrepresentation of the bank’s balance sheet. It is therefore especially disappointing that in 2015, after a lengthy investigation helped by multiple whistleblowers, the SEC imposed a fine on Deutsche’s shareholders instead of the managers responsible.

Compare this outcome with a contemporaneous SEC enforcement action against the less connected executives of a smaller firm, Trinity Capital, and its subsidiary Los Alamos National Bank. The violations at Trinity seem similar to Deutsche, but orders of magnitude smaller. Five executives at Trinity were charged, the chief executive settled and paid a fine, and litigation continued against two senior officers.

“We will hold senior executives liable when they misstate the company’s performance and fail to come clean with shareholders,” explained Andrew Ceresney, director of the SEC’s Division of Enforcement.

So why did the SEC not go after Deutsche’s executives? The most obvious concern is that Deutsche’s top lawyers “revolved” in and out of the SEC before, during and after the illegal activity at the bank. Robert Rice, the chief lawyer in charge of the internal investigation at Deutsche in 2011, became the SEC’s chief counsel in 2013. Robert Khuzami, Deutsche’s top lawyer in North America, became head of the SEC’s enforcement division after the financial crisis. Their boss, Richard Walker, the bank’s longtime general counsel (he left the bank this year) was once head of enforcement at the SEC.

This goes beyond the typical revolving door story. In this case, top SEC lawyers had held senior posts at the bank, moving in and out of top positions at the regulator even as the investigations into malfeasance at Deutsche were ongoing.

This took place on the watch of Mary Jo White, the current chair of the SEC, whose relationship with Mr Khuzami and Mr Rice dates back 20 years. She bears ultimate responsibility for the Deutsche fine. In 2010 I joined Deutsche from Goldman Sachs as a vice­-president in the market­-risk department. I am a mathematician and had worked in risk­-modelling at other banks. When I joined Deutsche I was not made aware that an internal “investigation” was already under way into the inflated valuation of the bank’s $120bn portfolio of exotic credit derivatives.

Within a few months, though, I realised something was very wrong, and I called the internal hotline. That is when I met Mr Rice. He was then Deutsche’s top lawyer for compliance and regulatory affairs, and asserted that our conversations were subject to “attorney-client” privilege and could not be disclosed. I did not agree and was fired. My Wall Street career was ruined.

When I first helped the SEC investigation, the whistleblower award was a powerful incentive. My lawyers and ex-wife have a claim on a portion of my award, which I am not at liberty to reject.

Although I need the money now more than ever, I will not join the looting of the very people I was hired to protect. I never intended to turn a job in risk management into a crusade, but after suffering at the hands of the Deutsche executives I will not join them simply because I cannot beat them.

I request that my share of the award be given to Deutsche and its stakeholders, and the award money clawed back from the bonuses paid to the Deutsche executives, especially the former top SEC attorneys.

I would then be happy to collect any award for which I am eligible.

 end France Another attack by a Muslim radical: (courtesy zero hedge) French Rabbi Stabbed By Muslim Assailant, Screaming “Allah Akbar”

In the latest knife attack in Europe, earlier this morning ago a Jewish man, described as a Rabbi, was stabbed by a Muslim attacker in the French city of Strasbourg, according to local media sources. He is has been taken to hospital and is in a stable condition, while the perpetrator has been arrested and is being questioned by police.

jaazee @jaazee1

FRANCE: Jewish man stabbed & moderately wounded by a Muslim in Strasbourg, attacker arrested.pic.twitter.com/GfZnSVfQMe

7:02 AM – 19 Aug 2016

The victim, who has been named as Mr. Levy, is reported by a colleague to be a rabbi. He was stabbed by a man who shouted “Allah Akhbar”, according to the 20minutes news platform.

According to RT, the attack took place at around 11:00am local time (09:00 GMT). Mr. Levi, who has been described as an Orthodox Jew, was sitting at a café on the sidewalk, reports Le Parisien.

Mendel Samama @EURORabbi

Je viens de voir M. Levy, victime d’une attaque au couteau. Sa situation est stable. Prions pour son établissement rapide.

7:24 AM – 19 Aug 2016 · Strasbourg, France, France

“I just spoke to Mr. Levy, who was the victim of a knife attack and is condition is stable,” said Mendel Samama, who is rabbi based in Strasbourg, Le Soir reported. “We pray that he makes a quick recovery.” Reports say he suffered superficial stab wounds to the chest.

View image on Twitter

La Plume Libre @lplweb

> L’attaque a eu lieu en pleine rue. L’agresseur a été stoppé grâce à des passants. (@StanRacineOff)

7:07 AM – 19 Aug 2016

The perpetrator was detained by police and taken into custody for questioning. Witnesses say that the attacker was between 30 and 40 years old. According to the Journal du Dimanche publication, the attacker had a history of psychiatric problems. So far, the prosecutor has only confirmed that a man has been arrested, without releasing further details regarding the case.

As RT notes, Strasbourg has one of the largest Jewish populations in France, with around 15,000 members of the faith living in the city, which sits on the German border. In total, Jews make up about 5 percent of the city’s population. This attack comes after two men who pledged allegiance to ISIS slit the throat of a Catholic priest in a church near Rouen in July. An elderly parishioner was also injured in the attack. Both assailants were killed by French police as they tried to flee the 17th century church in the town of Saint-Etienne-du-Rouvray.

 

end

 

We now have two more banks in Germany charging clients for holding cash: Bank of Ireland and Ulster bank! Negative rates is having a devastating effect on the financial scene.

(courtesy zero hedge)

 

Two More Banks Start Charging Select Clients For Holding Cash

Last weekend, when we reported that Germany’s Raiffeisenbank Gmund am Tegernsee – a community bank in southern Germany – said it would start charging retail clients a fee of 0.4% on deposits of more than €100,000 we said that “now that a German banks has finally breached the retail depositor NIRP barrier, expect many more banks to follow.”

Not even a week later, not one but two large banks have done just that.

Overnight, the Irish Times reported that Bank of Ireland is set to become the first domestic financial institution to pass on the ECB’s negative rates to customers for placing their money on deposit with the bank. The newspaper has learned that Bank of Ireland, which is 14% owned by the State, has informed its large corporate and institutional customers that it plans to charge them a negative rate of -0.1% for deposits of €10 million or more starting in October.

As with all other banks, initially only a small group of customers will be affected by the charge and while the bank has indicated that it has no plans to levy a negative interest rate on either personal or SME customers, increasingly more banks are lowering the threshold of eligibility (for example, the German community bank is now charging those with only €100,000 in the bank: low long until the minimum required balance is €10,000 or lower). However, as the Irish Times notes, this will be the first time an Irish-owned institution has applied a negative interest rate on deposits, breaking the long-held tradition of a bank paying customers to hold their money. A spokesman for Bank of Ireland said its policy was not to comment on its pricing but “we keep all our rates under review”.

Ulster Bank, which is owned by UK lender Royal Bank of Scotland, has already quietly introduced negative interest rates for a small number of large corporate clients. Ulster Bank has products priced off the back of Euribor, a European interbank lending rate, which is at an all-time low and turned negative last year. This charge by the bank does not apply to SMEs or personal customers.

Additionally, as Bloomberg reports, Royal Bank of Scotland, Britain’s largest taxpayer-owned lender, said some of its biggest trading clients must pay interest on collateral as a consequence of low central bank interest rates. Some of the bank’s institutional clients will need to pay interest on funds pledged as collateral when trading futures contracts, the bank said in an e-mailed statement on Friday. The changes for sterling and euro futures and options trading will probably affect about 60 large clients, a person with knowledge of the matter said earlier Friday.

“Due to the sustained low interest rate environment, RBS will now be passing the cost of holding such deposits onto a limited number of our institutional clients,” the bank said in the statement. RBS said it had previously applied a zero percent floor to the overnight rate charged for collateral required by clearinghouses for future traders.

As the FT adds, this is the first sign the Bank of England’s decision to cut rates to historic lows is forcing lenders to collect negative interest from deposit holders.

Ironically, unlike Europe, the UK’s rates are (still) positive, even though the BOE recently cut the interest rate to an all time low of 0.25%, as it unveiled it would resume monetizing government and corporate bonds. It may soon cut rates to negative.

And while the RBS move affects only a subset of business customers, some lenders in Europe, where both the European Central Bank and the Swiss National Bank have kept interest rates below zero for months, have been charging a wider array of customers to hold their deposits.

“What you’re seeing is there have been a few banks in Germany and a couple in Switzerland which have started to charge for deposits; importantly, it’s to corporate customers, or very wealthy people,” said Andrew Lowe, an analyst at Berenberg, quoted by the FT. “You are likely to see the UK banks follow suit, in particular if rates fall further,” he added. “Everything that applies to Europe applies to UK banks as well.”

And, after a certain period of time passes, it will also apply to less than “very wealthy people.”

The RBS charges would apply to clients who trade futures and options, and therefore hold cash on deposit as collateral. He said customers were being encouraged to put their cash into bonds instead to avoid the cost. “As you will be aware, there are a number of currencies which now attract negative overnight rates for deposits,” the letter from the bank said.

HSBC said last year it would start charging other banks for deposits held in currencies where negative interest rates apply. It confirmed on Friday that the policy would not change. Barclays also said it had no plans to apply negative rates.

As negative rates become increasingly part of the new normal, and as more depositors are swept up by the creeping confiscation of savings, we expect that the other part of the “cash trap” endgame, the actual elimination of large currency bills, will also soon accelerate, first in Europe where the ECB recently put an end to the printing of €500 bills, and soon after everywhere else.

RUSSIAN AND MIDDLE EASTERN AFFAIRS

This looks ominous: Putin flies into the Crimea as the Ukraine “prepares for an invasion”

Putin Flies Into Crimea As Ukraine “Prepares For An Invasion”

At the same time that Russia is conducting its latest massive military drill on the border with Ukraine, and one day after the latest stark warning by Ukraine’ president Poroshenko that the simmering conflict with Russia may be set to explode again when he said on national TV that “the probability of escalation and conflict remains very significant” adding that “we don’t rule out full-scale Russian invasion”, Russian president Putin made a not so subtle point that Crimea will not be relinquished when he flew into contested territory on Friday, one day after staging war games there, and said he hoped Ukraine would see “common sense” when it came to resolving a diplomatic crisis over the peninsula.

Officially, Putin arrived on a working visit in Crimea, where he held a briefing with members of the Russian Security Council and visited the Tavrida international youth forum, a RIA Novosti correspondent reported Friday. The schedule of Putin’s visit to Crimea, at least his fifth in the past two years, also involves meetings with local officials, according to local media reports that broke news of the visit this week.


Putin chairs a meeting with permanent members of the Russian Security Council
at the Belbek airport near the Black sea port of Sevastopol, Crimea.

Crimea, which has been the topic of contention since early 2014, became a part of Russia after almost 97 percent of those who voted in a local referendum on the issue in 2014 supported the move. Ukraine did not recognize the outcomes of the referendum in Crimea and accused Russia of annexation; while many European nations have likewise not recognized the new territory, they have avoided escalating the debate with Russia.

In any case, two years after Russia and Ukraine came close to a state of war over the territory, it is again the focus of international tension, after the Russian president accused Kiev last week of sending saboteurs who clashed with Russian troops. Kiev, which has also fought a two year war against pro-Russian separatists in two eastern provinces, denies the border incident ever took place and calls it a fabrication that could be used as a pretext for a new Russian invasion.

As Reuters reports, the Russian leader has used threatening rhetoric, promising unspecified “counter-measures”, and has built up troops ahead of a big military exercise next month. He addressed the crisis again on Friday, opening a meeting of his Security Council at an air base near the naval port of Sevastopol on his first visit to Crimea since he made the initial accusations.

“It is clear that we have gathered for a well known reason after the infamous incident, after we thwarted attempts by groups of Ukrainian army saboteurs to break into (our) territory,” he said.

Judging by all accounts, our partners in Kiev have decided to escalate the situation. We are all familiar with this method of escalation. It goes back a long way and has sometimes been used successfully but not always.

“I hope that this won’t be a final choice … and that common sense will prevail,” he added.

Just to underscore that point, on Thursday Russian naval and land forces practiced swiftly moving military hardware and troops to Crimea, already one of the world’s most militarised areas, in a logistics exercise that foreshadows larger war games planned for next month. Russia’s Black Sea Fleet, around 2,500 troops and up to 350 armored vehicles were involved in the exercise, which unfolded as tensions have also flared in eastern Ukraine, where a truce that curbed fighting is looking increasingly shaky.

Meanwhile, as noted above, in the latest sharp escalation in rhetoric, Ukrainian President Petro Poroshenko said on Thursday he did not rule out introducing martial law and a new wave of military mobilization if the east Ukraine conflict worsened.

Putin on Friday accused the Ukrainian government of trying to destabilize Crimea to distract attention from its failure to implement a peace deal covering the conflict in eastern Ukraine, a region known as the Donbass.

While fighting that killed thousands of people in the Donbass has ebbed since early 2015, pro-Russian separatists there regularly exchange fire with Ukrainian government forces, and both sides accuse each other of failing to implement terms of the truce, known as the Minsk peace process.

And while Kiev believes Putin is preparing for more fighting, most rational experts believe he is simple interested in gaining diplomatic leverage, seeking to use the latest crisis to prod the West to press Ukraine into doing more to uphold the accords.

That is indeed the case; in fact, over the past week all of Putin’s attention has been focused not on Ukraine, which is seen as the latest attempt by NATO to provoke the Kremlin, but on Turkey which as we reported yesterday, is “considering military cooperation” with Russia, in a pivot that if executed, could be NATO’s biggest strategic loss in history, as Ankara exits the Western sphere of influence and enters The Russian one.

That, however, will not come without a fight, both literally and figuratively, and that is what the current distraction with Ukraine may be all about.

end

GLOBAL AFFAIRS

CANADA/Vancouver

Boy!! that did not take long.  In one month after the Province of British Columbia initiated a property tax on foreigners, the Vancouver housing market implodes.

(courtesy zero hedge)

Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month – “The Market Is Devastated”

Three weeks ago, when we looked at the long-overdue sudden change in the Vancouver housing market, long a receptacle for Chinese hot and laundered money, we found that as a result of the implementation of the 15% property tax implemented by British Columbia (something we recommended over a month earlier), that the Vancouver housing bubble has burst.

We concluded this based on anecdotal evidence by local real estate professionals: “As a new dawn breaks in Metro Vancouver’s real estate market, realty companies and real estate boards are reporting the first anecdotes of deals falling through as foreign buyers forfeited deposits on binding deals rather than pay the new tax. Worse, if only for the unprecedented local housing bubble, and certainly better for potential local homeowners who were locked out from the massively overpriced market, they report evidence of local buyers withdrawing offers in expectation that the market will soften.”

Less than a month later, there is also hard evidence to confirm this assessment. According to Global News, evidence from realtors and MLS data is showing the Vancouver real estate market is in the midst of a major slow down, with prices dropping and sales plummeting. 

While August is typically one of the slowest months for real estate transactions, MLS sales data from the first two weeks of the month shows what many have been hoping for during the last few years of escalating prices. According to realtor Brent Eilers, using MLS listing data, there were only three home sales in West Vancouver between Aug. 1 and 14 this year, compared to 52 during the same period last year. That’s a decrease of 94%.

Global News obtained MLS sales data from several key Metro Vancouver markets and found the number of homes sold during the first two weeks of August in Greater Vancouver dropped by 85% on average. Richmond experienced a 96% drop in the number of sales and Burnaby North fell by 95%. Vancouver’s West Side, West Vancouver, and Coquitlam also took major hits.

It appears that the Vancouver housing market has slammed shut.

Which is hardly a surprise: virtually everyone saw it coming, the only question was when. Eilers says he’s been warning of a real estate slow-down for at least a year due to the region’s unsustainable and unsupportable prices. West Vancouver, where he does a large part of his business, had a benchmark detached home price of almost $3.4 million in July according to the Real Estate Board of Greater Vancouver.

The market in West Van is up 450 per cent since 2001. So is everyone making 600 per cent more income than they were so they can pay their taxes and buy their houses? Of course not. So how is this inflation been financed? By off-shore money and record debt.” Precisely what we said at the start of the year when we first heard horror stories about Chinese buyers paying cash, sight unseen, for any and every local luxury, and not so luxury home.

It appears that it is not just the 15% luxury tax implemented on on July 25 that has burst the bubble: according to Eilers sales were dropping even before the tax. According to the data, July was another slow month in West Vancouver with only 44 sales, down from 80 in 2015. June saw 74 sales, also down from 102 the year before.

The pattern has left the market “devastated”, Eilers adds.

While it may be too early to make a definitive conclusion, after all while earlier this month, the REBGV released its statistics for the month of July, saying the data showed the market had slowed down to “normal levels”, there was still no official August data available, and thus no actual indication of the slowdown. Fortunately for buyers, real-time data proves otherwise.

Zolo, a Canadian real estate brokerage, keeps track of MLS home sales in real-time and reports prices as an average rather than the “benchmark price” used by the REBGV. It currently shows a major correction underway in most Metro Vancouver markets. According to the website, the City of Vancouver currently has an average home price of $1.1 million, down 20.7% over the last 28 days and down 24.5% over the last three months. The average detached home is $2.6 million, down 7% compared to three months ago.

Still, it may be too early to call the time of death of the market. “It’s only slowing down at the top where there is uncertainty,” Zolo CEO Barry Allen said. And that uncertainty is “diabolically dangerous”, according to Eilers, who has sold real estate during four different correction periods in Vancouver. “When the market changes, it typically changes over night or within a couple of weeks, but it often takes two to three months for everybody to figure it out. That’s why it can be so scary,” he said.

According to the realtor, often sellers have their houses appraised months before they put them on the market, meaning in the climate we are currently witnessing, sellers are expecting to list their homes at record-high prices, even though the number of sales and listings indicate prices should be lowering.

“Typically what happens when the market starts to flip is all the buyers go into hibernation and all the listings come on. What are the odds on getting that seller to price his home at a fraction of where the market is now? It’s zero,” Eilers said.

What causes prices to lower is “urgency, anxiety, and fear,” according Eilers. He says a climate of financial overexposure, a treadmill of buying and selling and flipping homes, owning multiple properties, and buying before selling will test how long sellers can hold on without selling in desperation.

If the bubble has indeed burst, things are about to get very ugly. Eilers says that in the 1980 housing crash, prices dropped by 40 to 60% within a year and took six years to recover. “So your $2 million house became $800,000 in five months. There’s a lot of economists and a lot of wise people that believe that our financial structure is much closer to that structure from a corrections’ point of view,” Eilers explained.

One thing, however, appears certain: the foreign money influx has stopped. Zolo’s CEO says the foreign buyer tax has certainly stopped speculative buyers. This has caused many other buyers to take on a “wait and see” approach, which has essentially frozen the market.

News of the foreign buyer tax has spread to China, where Chinese real estate website Juwai now promotes other Canadian cities as foreign capital destinations. The website used to promote Vancouver as one of the best places for wealthy Chinese to invest, but has now switched to publicizing Calgary and Alberta due to the tax.

Which means that while one bubble is bursting, another is about to start, even if it is smack in the middle of Canada’s bleeding oil patch.

That said, this is good news for ordinary Vancouver residents. NDP MLA David Eby says the tax has caused a lot of people to hit the pause button on buying homes, but all those people might come back into the market in September. Despite his reservations on how the tax was implemented – he would have preferred an incrementally-increasing tax – he says a market slow down is good news.  

“A lot of people have said to me quietly that they hope there is a substantial housing crash.”

Well, it appears they got what they wanted. Now the only question is what happens once Vancouver “corrects” by 30%, 40% or more – will the Chinese buyers stay away permanently or, like a good S&P500 algos, simply BTFD. We will have the answer in a few months.

END

APPLE/Global orders plummet by 30%

A good Bellwether on the global economy:  Apple demands cuts form suppliers after their orders are plunging by 30%

(courtesy zero hedge)

Apple Demanding Cost Cuts From Suppliers After 30% Plunge In Orders: Digitimes

Apple stock is sliding very modestly for now as Digitimes reports Tim Cook has asked downstream part and component suppliers in Taiwan to reduce quotes for iPhone 7 devices by as much as 20%…even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

Via Digitimes.com,

Apple has met resistance from makers in Taiwan’s supply chain to lower their quotes for parts and components for iPhone 7 devices, a move which aims to force Apple to discontinue its established policy of constantly squeezing profits from Taiwan suppliers.

Apple is said to have asked downstream part and component suppliers, excluding Taiwan Semiconductor Manufacturing Company (TSMC) and Largan Precision, to reduce their quotes for iPhone 7 devices by as much as 20% even though order volumes for new phones are reportedly 30% lower than those placed a year earlier.

Major downstream suppliers, notably Advanced Semiconductor Engineering (ASE) and associated companies under the Foxconn Group, have replied Apple that they could not be able to accept orders without reasonable profits at this time.

Apple is leveraging the rising handset supply chain in China to force Taiwan-based companies to reduce their quotes comparable to those offered by China-based suppliers. But it makes no sense for such a requirment since the quality of products rolled out by Taiwan- and China-based suppliers is standing at different levels.

For now, it appears none of this matters…

end

Sweden:

 

Well this did not take long! Sweden is running out of bonds to purchase.  They seek other forms of credit to purchase.

(courtesy Bloomberg)

Riksbanker Signals QE May Reach Other Bond Types Amid Scarcity

The Swedish central bank’s second in command signaled that policy makers may need to expand beyond government bonds should they be forced to continue their quantitative easing program into next year.

The central bank could be nearing the limit on how much of the government bond market it can buy and is monitoring the situation, First Deputy Governor Kerstin af Jochnick said in Stockholm Friday. The bank will by year-end own 40 percent of nominal government bonds and 9 percent of Sweden’s inflation-linked debt, and that’s a large share, she said.

“So far, the view is that it’s functioning well but we are well aware that we are approaching some kind of limit where we probably can’t purchase that much more,” she said. The bank could “technically” buy covered bonds, corporates or municipal bonds if more stimulus is needed, she said .

Swedish municipal bonds gained. The spread between the Kommuninvest 1 percent 2021 note and the benchmark Swedish government note narrowed about 4 basis points to 51 basis points.

Nordea analyst Martin Enlund said the market may be overreacting to the comments as there would be obstacles to any plan to buy other types of debt.

The Riksbank buying Kommuninvest bonds is something that has been discussed on and off for quite some time and policy makers can still implement more government QE to cover the first half of 2017, he said.

Policy makers, recognizing new risks from the Brexit vote, in July delayed a planned rate increase to the second half of next year and predicted rates will remain below zero until mid-2018. The bank, which meets next month, held the repo rate at a record low of minus 0.5 percent and stuck to a prediction that its QE program will end in December.

EMERGING MARKETS

BRAZIL

Brazilian police are recommending charging the swimmers with false testimony.

Is this payback time for the USA’s involvement in the ousting of Roussef?

(courtesy zero hedge)

Brazilian Police Recommends Charging US Swimmers With Vandalism, False Testimony

Earlier today we finally got the answer to precisely what took place with Ryan Lochte and members of the US mens’ swimming team on Sunday morning in Rio, and as it turned out instead of being robbed at gunpoint as the platinum blonde swimmer claimed in a NBC interview, the group was merely vandalizing a local gas station. However, one outstanding question is what would happen next to the three swimmers still stuck in Brazil.

As it turns out, according to Brazil’s GloboNews, the Brazilian police has recommended charging the group of four US swimmers with vandalism and giving false testimony, Rio’s police chief said on Thursday according to brazil’s GloboNews, accusing them of lying about an incident that has marred South America’s first Games.

View image on Twitter

Reuters Top News @Reuters

UPDATE: U.S. Olympic swimmers Bentz, Conger leave Rio police station after giving testimony. http://reut.rs/2b7vHmN 

5:10 PM – 18 Aug 2016

Three of the four swimmers involved in the incident at a Rio gas station are being prevented from leaving the country pending the outcome of the police investigation. The fourth, gold medalist Ryan Lochte, returned to the United States on Monday.

“In theory, they could be held responsible – by they, I mean one or two or all four of them – with falsely reporting a crime and vandalism,” civil police chief Fernando Veloso told a news conference. He said neither offense was punishable by prison. “There was no robbery as the swimmers described it.”

As we noted over the weekend, the local police began investigating the incident after Lochte told U.S. television they had been robbed by gunmen impersonating police officers who pulled over their taxi in the early hours of Sunday, as they returned to the Athletes’ Village from a party, just after the swimming competition finished on Saturday evening.  Veloso said investigations had revealed that the swimmers’ taxi had pulled into the station where they behaved in a hot-tempered way and damaged the station’s bathroom.

They broke a mirror and a soap-holder, he said, adding that they then handed over a total of 100 reais ($31) and $20 in U.S. currency as compensation. According to Lochte’s account, $400 was stolen from them.

As Reuters reports, at one point a security guard pulled a firearm after one swimmer behaved erratically, Veloso said, adding that the guard had not over-reacted: “From the moment the gun was pulled out, they calmed down. Once they were calm, the gun was lowered.”

Earlier, Brazilian TV aired a video that showed the swimmers did not tell the whole truth in their original accounts.  The security-camera images broadcast on Globo TV appeared to show the swimmers – who also included another gold medalist, Jimmy Feigen, as well as Gunnar Bentz and Jack Conger – in a dispute with staff at the gas station, a fact police say they did not mention in their accounts.

The video does not show them causing any breakage, but only being hustled out of the bathroom by uniformed employees. Security guards then prevented the swimmers from leaving in a taxi and the Americans appear to offer them money from their wallets. Three of the swimmers are made to sit on the ground with their hands in the air. At one point, Lochte stands and appears to argue with the guards but is made to sit down again.

On Sunday, Lochte had told NBC that the taxi he was traveling in with his three team mates was flagged down by robbers posing as police and they held a gun to his head during a robbery. He made no mention of stopping at a gas station. NBC host Matt Lauer said late on Wednesday that Lochte repeated a slightly modified version to NBC in an interview not yet aired, saying the swimmers had stopped at a gas station and that a gun was pointed in his direction during the robbery.

Staff at the Shell gas station where the incident occured, said on Thursday that the U.S. swimmers ripped an advertising plaque off a wall while they urinated on a wall. Security was called and an argument ensued, said one employee who declined to give his name.  A sign on one of the bathrooms read: “Please Do Not Enter”. A spokesperson for the U.S. Olympic Committee (USOC) declined to comment on the video footage.

The USOC said on Thursday that the three swimmers who remain in Brazil would be helping police with their investigation, after authorities had stopped Bentz and Conger from leaving the country the previous day and seized their passports. Bentz and Conger arrived at a police station in downtown Rio on Thursday to speak with investigators.

Rio Games organizers on Thursday defended the four swimmers, saying they were just kids who made a mistake.

“These kids tried to have fun, they tried to represent their country to the best of their abilities,” Rio 2016 spokesman Mario Andrada told reporters, without elaborating. “They competed under gigantic pressure. Let’s give these kids a break. Sometime you take actions that you later regret. They had fun, they made a mistake, life goes on.”

Meanwhile, if charges are indeed filed and the US swimmers are forced to do community service or some other sentence (they can not be put in prison but they will hardly be allowed to leave the country) what would have been a simple incident where just an excuse would be sufficient, may now escalate into a full blown diplomatic scandal.

As for Lochte, who is safe, back in the US, this is what he will have to look forward to tomorrow.

END OIL ISSUES

Record levels of oil, record levels of gasoline and distillates. And yet the price of oil is back to 50$ for Brent and 48 dollars for WTI. EconMatters explains that this will not last

(courtesy EconMatters)

Total Commercial Oil and Petroleum Inventories at Record Highs (Video) by EconMatters Aug 18, 2016 5:18 PM

Refiners are playing games with refinery runs to make gasoline appear in less of a glut situation year over year. Gasoline inventories are still up 20 Million Barrels versus this time last year. So Oil is much higher than this time last year with 65 Million more Barrels of Oil in storage year over year, 20 million more in gasoline inventories, 5 Million more in Distillate stocks, and overall Petroleum and Oil Inventories not only at record highs but increasing each of the last three weeks.

Furthermore, we have about 10 more days of the Summer Driving Season, and demand for Petroleum products is going to weaken during the soft part of the season as well as refiners going into maintenance mode. Lots of games being played in the refinery space to move gasoline prices up 32 cents in a couple of weeks when inventories are as dismal as ever all over the globe.

Throw in a potential rate hike announcement by Janet Yellen next week and the U.S. Dollar looks like an undervalued currency relative to its peers. I think the market is far too dovish on the Fed, market complacency regarding the lessening chance of rate hikes after the Fed minutes on Wednesday seems highly displaced in my opinion.

END This is how you know we have a huge glut of gas on the markets: (courtesy Bloomberg) Even Warning of Full-Out War in Ukraine Can’t Faze Gas Traders KellyGilblom

How can you tell there’s a gas glut in Europe? When even the threat of a full-scale invasion into the continent’s largest gas transit country by its largest outside supplier can’t raise prices.

After Ukrainian President Petro Poroshenko warned on Thursday its conflict with Russia could escalate further amid building violence in Crimea, saying he didn’t rule out a complete war, European natural gas prices continued their weekly decline without interruption. As much as 40 percent of Europe’s supplies flow from Russia via Ukraine.

Gas in storage is less than 5 percent below the five-year average for this time of year, according to data from Gas Infrastructure Europe. Flows from Russia and Norway, Europe’s two biggest gas suppliers, are set to reach record levels. Liquefied natural gas export projects that have started in Australia and the U.S., have added to security of supply.

“It’s rather simple — the storage situation in Europe is extremely comfortable and the amount of gas that is currently landing in Europe is surely at all time high,” said Daniele Corti, a Zurich-based senior gas trader at Axpo Trading AG. “Hence the gas market is not pricing any kind of risk due to Russia.”

Front-month gas in the U.K. is headed for its third straight weekly decline. Prices fell 1.8 percent yesterday to 30.84 pence a therm and moved downward almost all day, including before and after Poroshenko’s comments. Gas for winter delivery declined 0.8 percent yesterday to 42.4 pence a therm, according to broker data. They continued their slide on Friday.

Past Spikes

The conflict between the two countries has caused price spikes in the past. Europe has experienced shortages twice in the last decade during freezing temperatures because of disputes between Ukraine and Russia. The relative calm following the latest warnings of invasions and worsening violence show traders have become accustomed to the tough talk.

“The markets are looking at what’s happening in Ukraine as mostly political posturing, not believing any flows will be affected,” said Pierluigi Frison, a gas trader at Green Network U.K. “Considering that Russia hasn’t started direct confrontation yet, even though the Crimea incident and Donbass escalation has been on the news since early last week, means to me that nothing physical will happen.”

 

end

 

We had another rig count rise (for 8 straight weeks) and yet crude rises again:

(courtesy zero hedge)

 

Crude Shrugs As US Oil Rig Count Rises For 8th Straight Week

Crude prices had slipped back into the red ahead of Baker Hughes rig count data (after topping $48.50 Sept 16 overnight). For the 8th straight week (and 11 of last 12) the US oil rig count rose (up 10 to 406), tracking the lagged recovery of WTI Crude prices and up 28% from cycle lows.

The us oil rig count is now up 90 from the late-May lows at 316 (and based on the lagged oil price, is set to keep rising for another month)

 

The reaction… NOTHING

 

Charts: Bloomberg

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

Euro/USA   1.1325 DOWN .0022 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.21  UP .086(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3119 DOWN .0043 

USA/CAN 1.2822 UP .0045

Early THIS FRIDAY morning in Europe, the Euro FELL by 22 basis points, trading now well above the important 1.08 level FALLING to 1.1325; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED UP 3.99 POINTS OR 0.13%    / Hang Sang CLOSED DOWN 85.94 POINTS OR 0.37%     /AUSTRALIA IS HIGHER BY .34% / 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 FRIDAY morning CLOSED UP 59.81 POINTS OR 0.36%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 85.94 POINTS OR 0.37%  ,Shanghai CLOSED UP 3.99  POINTS OR 0.13%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1345.50

silver:$19.46

Early FRIDAY morning USA 10 year bond yield: 1.549% !!! UP 1  in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.269 UP 1 in basis points from THURSDAY night. 

USA dollar index early FRIDAY morning: 94.43 UP 28 CENTS from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

END

 

And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.00% UP 9 in basis points from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.78% UP 1/4 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:0.955% up 4 IN basis points from THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.134 up 5 in basis points from THURSDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 18 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.032% up  5 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

 

Euro/USA 1.1321 DOWN .0026 (Euro DOWN 26 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.23 UP .103(Yen DOWN 10 basis points/

Great Britain/USA 1 .3075 UP 0.0104 ( Pound UP 104 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2866 UP 0.0089 (Canadian dollar DOWN 89 basis points AS OIL FELL(WTI AT $48.08). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 26 basis points to trade at 1.1321

The Yen FELL to 100.23 for a LOSS of 10 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was DOWN 87 basis points, trading at 1.3075 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar FELL by 89 basis points to 1.2866, WITH WTI OIL AT:  $48.08

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6515

the 10 yr Japanese bond yield closed at -.078% UP 1/4 IN  points / yield/

Your closing 10 yr USA bond yield:UP 5 IN basis points from THURSDAY at 1.582% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.289 UP 3 in basis points on the day /

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

Your closing USA dollar index, 94.53  UP 37 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 10.01 OR 0.15%
German Dax :CLOSED DOWN 58.67 OR  0.55%
Paris Cac  CLOSED DOWN 36.54  OR 0.82%
Spain IBEX CLOSED DOWN 99.50 OR 1.16%
Italian MIB: CLOSED DOWN  363.52 POINTS OR 2.18%

The Dow was DOWN 45.13 points or 0.24%

NASDAQ DOWN  1.77 points or 0.03%
WTI Oil price; 48.08 at 4:30 pm;

Brent Oil: 50.78

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.80 (ROUBLE down  18/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.032%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:48.47

BRENT: 50.85

USA 10 YR BOND YIELD: 1.579% 

USA DOLLAR INDEX: 94.50 UP 34 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30779 DOWN .0086 or 86 basis pts.

German 10 yr bond yield at 5 pm: -0.032%

END

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

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

VIXtermination Saves Nasdaq’s Longest Winning Streak In 6 Years

Don’t celebrate too early… the year’s a long way from over…

The Rick Astley Market Rolls On for the week…

NASDAQ battled with 5233 all day – desperately trying to keep the winning streak alive…

 

Trannies managed to outperform on the day…but everything else ended red – with a big trend change at the EU close…

 

On the week, Trannies also outperformed and The Dow lagged and while the NASDAQ managed to eke out a gain, S&P failed by 0.01%

 

Notably FANG stocks had their worst week since June…

 

All of which happened as US Macro data suffered its worse 4-week streak in 6 months…

 

And earnings expectations for 2015 plumb news lows…

 

And this definitely doesn’t matter…

 

 

Treasury yields rose on the week – thanks mainly to a surge in yields today as the USD gained (though we note they did rally into the close)…

 

But we note that the 10Y yield remains incredibly range-bound…

 

The USD Index fell for the 3rd week of the last 4 (but bounced back today off the week’s lows)…

 

The USD Index bounce seemed to coincide with the Brexit/Jo-Cole-Dead lows…

 

While crude soared ridonculously (best week in a year)

 

Gold managed a small gain and silver losses…

 

In fact this was the biggest Gold outperformance of Silver in 6 months…

 

But of course, oil was all that mattered…

 

Charts: Bloomberg

end

 

After suffering a huge 15% redemption of funds, Jones is imposing minimum risk levels has he now demands that his traders take on more risk in this zero interest rate environment.

(courtesy zero hedge0

Paul Tudor Jones, Facing Redemption Flood, Imposes Minimum Risk Levels, Demands His Traders Take More Risk

Some would call it a classic Martingale laced death spiral.

Just days after it was revealed that as a result of a $2.1 billion surge in redemption requests, would terminate some 15% of his workforce, Bloomberg reports that the legendary macro trader has boosted the amount of money he’s managing, including borrowed capital, to more than 50 percent of his main hedge fund’s net assets, and is also demanding that all his managers take more risk in their bets, according to an August 16 investor letter.

“We have to think outside the box,” Jones, 61, said in the letter. “I firmly believe the changes we have made put us in a position to be successful even in this desultory macro environment.”

Confirming just how difficult it is for conventional strategies to generate profits in this environment, in the letter PTJ also says that his remaining managers will be given more money to run, and that some have been paired with scientists and mathematicians to bring new analytical rigor to their trading as part of a quantitative revamp of the firm.

Jones, who started out as a cotton trader before founding his firm, said his firm must have money managers who can adapt to today’s zero-interest rate environment, which he expects to continue. The firm is imposing minimum levels of risk that its traders must take to remain in its manager lineup. 

Tudor, which Jones founded in 1980, has joined the recent funk that all other comparable macro hedge funds find themselves in, courtesy of central planning and central bank intervention across all asset classes. One of Tudor’s biggest competitors, Brevan Howard, has had an even more difficult time in recent years, with the firm’s assets cut by more than half in the past two years, from around $42 billion to $19.4 billion, as its underperformance has likewise spurred a flood of redemptions.

Tudor’s main, BVI, fund produced an average annual gain of about 26 percent from 1987 through 2007, which dropped to about 5.3% from 2008 through last year. Its main fund lost 2.3% this year through mid-August, according to the letter.

On Tuesday, Tudor dismissed employees ranging from money managers to support staff. Jones said in the letter that the cuts reflected Tudor’s priority to focus on macro and equity-trading.

Jones said the firm implemented a new process, which it described as a chief investment officer tool, to replicate trades of its best managers by using futures contracts and foreign-exchange securities. He expects to scale up the allocation over the next six months. As Bloomberg adds, Tudor also created a role for one of its partner-level money managers in London as head of discretionary trading technology. He and his team will seek to develop a better set of quantitative analytical tools to help money managers.

Will the scramble to boost returns work? Who knows: after all, one can argue that the only reason PMs do not allocate more funds to trades is lack of confidence (whether general, or due to lack of “expert networks” is up to debate). That won’t change, the only thing that will is the amount of capital at risk, which all else equal, virtually assures greater losses. Then again this is the PTJ, the man who inspired countless hedge fund managers to do what they do.

It would be a sad ending to a legendary career if Jones comes out fighting (or not as the case may be) the central banks, and lost.

end

You could certainly guess that something like the following will happen when pension funds try for yield in a zero rate environment:

The Dallas Police and Fireman Pension fund is near insolvent in the wake of shady real estate deals and thus the reason for the FBI raid we commented on back in April.

(courtesy zero hedge)

Dallas Cops’ Pension Fund Nears Insolvency In Wake Of Shady Real Estate Deals, FBI Raid

The Dallas Police & Fire Pension (DPFP), which covers nearly 10,000 police and firefighters, is on the verge of collapse as its board and the City of Dallas struggle to pitch benefit cuts to save the plan from complete failure.  According the the National Real Estate Investor, DPFP was once applauded for it’s “diverse investment portfolio”but turns out it may have all been a fraud as the pension’s former real estate investment manager, CDK Realy Advisors, was raided by the FBI in April 2016 and the fund was subsequently forced to mark down their entire real estate book by 32%Guess it’s pretty easy to generate good returns if you manage a book of illiquid assets that can be marked at your “discretion”.

To provide a little background, per the Dallas Morning News, Richard Tettamant served as the DPFP’s administrator for a couple of decades right up until he was forced out in June 2014.  Starting in 2005, Tettamant oversaw a plan to “diversify” the pension into “hard assets” and away from the “risky” stock market…because there’s no risk if you don’t have to mark your book every day.  By the time the “diversification” was complete, Tettamant had invested half of the DPFP’s assets in, effectively, the housing bubble.  Investments included a $200mm luxury apartment building in Dallas, luxury Hawaiian homes, a tract of undeveloped land in the Arizona desert, Uruguayan timber, the American Idol production company and a resort in Napa. 

Despite huge exposure to bubbly 2005/2006 vintage real estate investments, DPFP assets “performed” remarkably well throughout the “great recession.”  But as it turns out, Tettamant’s “performance” was only as good as the illiquidity of his investments.  We guess returns are easier to come by when you invest your whole book in illiquid, private assets and have “discretion” over how they’re valued.

In 2015, after Tettamant’s ouster, $600mm of DPFP real estate assets were transferred to new managers away from the fund’s prior real estate manager, CDK Realty Advisors.  Turns out the new managers were not “comfortable” with CDK’s asset valuations and the mark downs started.  According to the Dallas Morning News,
one such questionable real estate investment involved a piece of undeveloped land in the Arizona desert near Tucson which was purchased for $27mm in 2006 and subsequently sold in 2014 for $7.5mm.  Per the DPFP 2015 Annual Report:

In August 2014, the Board initiated a real estate portfolio reallocation process with goals of more broadly diversifying the investment manager base and adding third party fiduciary management of separate account and direct investment real estate assets where an investment manager was previously not in place. The reallocation process resulted in the transfer of approximately $600 million in DPFP real estate investments to four new investment managers during 2015. The newly appointed managers conducted detailed asset-level reviews of their takeover portfolios and reported their findings and strategic recommendations to the Board over the course of 2015 and into 2016. A significant portion of the real estate losses in 2015 were a direct result of the new managers’ evaluations of the assets.

Then the plot thickened when, in April 2016, according the Dallas Morning News, FBI raided the offices of the pension’s former investment manager, CDK Realty Advisors.  There has been little disclosure on the reason for the FBI raid but one could speculate that it might have something to do with all the markdowns the pension was forced to take in 2015 on its real estate book.  At it’s peak, CDK managed $750mm if assets for the DPFP.

With that background, it’s not that difficult to believe that DPFP’s actuary recently found the plan to be in serious trouble with a funding level of only 45.1%.  At that level the actuary figures DPFP will be completely insolvent within the next 15 years.  Plan actuaries estimate that in order to make the plan whole participants and/or the City of Dallas would need to contribute 73% of workers’ total comp for the next 40 years into the plan…seems reasonable.

According to an article published by Bloomberg, a subcommittee of the pension’s board recently submitted a proposal that would at least help prolong the life of the fund.  The subcommittee proposal calls for cost of living adjustments to be reduced from 4% to 2% while participants would be expected to increase their contributions to the plan.  Of course, taxpayers were asked to also provide “their fair share” equal to roughly $4mm in extra plan contributions per year, a request that would likely require the approval of the Texas legislature.  If approved, the proposal is anticipated to keep the plan solvent through 2046…at which point we assume they’ll go back to taxpayers for more money?

A quick look at the plan’s 2015 financial reports paints a pretty clear picture of the plan’s issues.

Starting on the asset side of the balance sheet, and per our discussion above, DPFP was forced to mark down it’s entire real estate book by 32% in 2015. Private Equity investments were also marked down over 20%.

This came as over 50% of the assets were diverted into illiquid real estate and private equity investments back in 2006. 

But asset devaluations aren’t the only problem plaguing the DPFP.  As we recently discussed at great length in a post entitled “Pension Duration Dilemma – Why Pension Funds Are Driving The Biggest Bond Bubble In History,” another issue is DPFP’s exposure to declining interest rates.  Per the table below, a 1% reduction in the rate used to discount future liabilities would result in the net funded position of the plan increasing by $1.7BN. 

And of course the typical pension ponzi, whereby in order to stay afloat the plan is paying out $2.11 for every $1.00 it collects from members and the City of Dallas effectively borrowing from assets reserved to cover future liabilities (which are likely impaired) to cover current claims in full.  This “kick the can down the road” strategy typically ends badly for someone…like most public pension ponzis we suspect this one will be most detrimental to Dallas taxpayers. 

All of which leaves the DPFP massively underfunded…an “infinite” funding period seems like a really long time, right?

 

end

 

No comment necessary; even the Wall Street Journal thinks the market is a scam:

 

(courtesy WallStreet Journal/zero hedge)

 

Even The Wall Street Journal Thinks The Market’s A Scam

The Wall Street Journal this morning echoed many of the questions we’ve raised over the past several years about the sanctity of global markets.  How are equity markets signaling economic strength while bond markets trade at the tightest levels ever?  Why do gold prices soar while inflation remains “stubbornly” low?  The answer, of course, lies in the Central Banking grand experiment that has distorted almost every corner of global markets.  Per the WSJ:

What exactly is the market trying to say about the state of the global economy? Do the recent record highs in U.S. stock markets signal growing confidence in the recovery, or do soaring government borrowing prices and flattening yield curves as borrowing costs tumble at even long maturities signal market fears that the global recovery is a distant dream?

 

How does one reconcile this year’s 30% rise in the price of gold—usually considered a hedge against inflation—with long-term swap rates suggesting inflation will remain low
for years? And how does one explain the strength of European markets as many banking shares are trading at more distressed levels than at the height of the global financial crisis?

 

One answer to these disparities is that the markets have become so distorted by central bank activity that they are no longer transmitting very useful information about the economy at all.

As we’ve discussed on several occasions, low interest rates have created a number of distorted incentive structures that render typical market signals useless.  Perpetually declining interest rates have forced pensions to indiscriminately buy the long end of the the government bond curve in a desperate attempt to match asset duration with their liabilities (see our post “Pension Duration Dilemma – Why Pension Funds Are Driving The Biggest Bond Bubble In History“).  Meanwhile equity markets continue to soar to all-time highs, despite lackluster or declining earnings (see “The S&P Is Now Set To Report Its Second Consecutive Annual Earnings Drop Since The Financial Crisis“), on the premise that low-single-digit earnings yields are somehow adequate compensation for equity risk…an assumption they base on the low yields of the completely manipulated long-end of the curve.  The circularity of the many arguments is truly mind numbing.

And meanwhile, proving the pure lunacy of global equity flows, Chris Chapman of Manulife Asset Management recently pointed out that equity prices are blatantly being determined by the market’s interpretation of what Central Banks may or may not do.  Per a recent Bloomberginterview, Chapman pointed out:

“The message from the Fed has been conflicting and often not very clear.  So, it seemswhen the hawks talk up the possibility of a hike, the market discounts it as just trying to get more priced in to give themselves the option to hike rather than actually being interested in hiking.

But, at some point, of course, the madness will all end.  As the WSJ points out, Central Banks around the world have made just about every accommodation they can make (we tend to agree given the staggering $13 trillion of negative-yielding debt around the world, see our post “With Over $13 Trillion In Negative-Yielding Debt, This Is The Pain A 1% Spike In Rates Would Inflict“) yet there is no end to the number of pending crises that can bring it all crashing down.

The prognosis is therefore likely to be more of the same: a lackluster recovery, kept alive by increasingly extravagant central bank action—but with one proviso: The biggest risk to the markets is political.

 

This has been true for several years, of course, but the difference now is that withmonetary policy approaching its limits, there is little central banks may be able to do to offset future shocks.

 

With a packed political agenda—including referendums this year in Hungary and Italy and elections next year in the Netherlands, France and Germany, all of which could raise fresh questions about Europe’s cohesion—there is no shortage of events that could throw the recovery off track. Perhaps that is why the price of gold, the ultimate safe haven, has been rising.

At some point we’ll revert to a world where good news is good and bad news is bad but we suspect that a lot of pain will have to be endured to get form here to there.

 

end

 

Economic Update, Russian Bombers Fly Out of Iran, MSM Can’t Stop Trump By Greg Hunter On August 19, 2016 In Weekly News Wrap-Ups 59 Comments

By Greg Hunter’s USAWatchdog.com (WNW 251 8.19.16)

So much for the so-called “recovery,” there’s not going to be one. Retail and tech are the latest to signal the economy is tanking. Retail is warning sales are bad. Macy’s is closing 100 stores nationwide. On top of that, tech giant Cisco just fired 20% of its workforce, or about 5,500 employees. Can you believe the Fed is still talking about raising interest rates in September? Fat chance.

Russian bombers got clearance to take off from an Iranian airbase to fly missions to attack ISIS in Iraq and Syria. This is a disturbing development because when ISIS is defeated, there is going to be a huge vacuum that Iran will surely fill. Meanwhile, Turkey is warming up to Russia. Things have gotten so bad the U.S. has removed its 50 nuclear weapons from Turkey and repositioned them in Romania. It seems reports show the Middle East is becoming more unstable every week.

The mainstream media (MSM) continues to hammer Donald Trump, but they are not having that much luck. The MSM is now exposed for being the political hack organizations that they are. They just cannot stop the Trump train to the White House.

 

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

After the Wrap-Up:

After the Wrap-Up:

end

 

Well that is all for this week folks

I will see you on Monday

Harvey


August 18/August gold ounces standing:42.815 tonnes/GLD loses a massive 6.24 tonnes of gold yet SLV gains a massive 2.185 million oz/Japan reports a terrible trade report of lower exports and lower imports/Ukraine President Poroshenko warns of a full...

Thu, 08/18/2016 - 18:46

Gold:1351.20 up $8.50

Silver 19.72  up  9 cents

In the access market 5:15 pm

Gold: 1352.00

Silver: 19.76

.

For the August gold contract month,  we had a small sized 66 notices served upon for 6600 ounces. The total number of notices filed so far for delivery:  12,923 for 1,292,300 oz or  tonnes or 40.195 tonnes.  The total amount of gold standing for August is 42.82 tonnes.

In silver we had 0 notices served upon for NIL oz. The total number of notices filed so far this month:  393 for 1,965,000 oz.

Let us have a look at the data for today

.

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In silver, the total open interest ROSE BY A SMALLISH  820 contracts UP to 206,725 AND MOVING AWAY FROM ITS AN ALL TIME RECORD AS  THE  PRICE OF SILVER FELL  BY 22 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.033 BILLION TO BE EXACT or 148% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold FELL 2,292 contracts as the price of gold FELL BY   $7.80 yesterday . The total gold OI stands at 570,205 contracts.

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

GLD

we had a huge change at the GLD/a massive withdrawal of 6.24 tonnes

*if this is real physical gold and then it is off to Shanghai

Total gold inventory rest tonight at: 955.99 tonnes of gold

SLV

we had a huge addition of 2.185 million oz  into the SLV, /   THE SLV/Inventory rests at: 355.469 million oz.

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

1. Today, we had the open interest in silver ROSE by 802 contracts UP to 206,725 despite the fact that the price of silver FELL BY 22 cents with YESTERDAY’S trading.The gold open interest FELL 2,291 contracts DOWN to 570,205 as the price of gold FELL by $7.80 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 5.41 POINTS OR 0.17%/ /Hang Sang closed UP 223.38 points or 0.98%. The Nikkei closed DOWN 259.63 POINTS OR 1.55% Australia’s all ordinaires  CLOSED DOWN 0.49% Chinese yuan (ONSHORE) closed UP at 6.63270/Oil FELL to 46.92 dollars per barrel for WTI and 49.67 for Brent. Stocks in Europe:  in the GREEN . Offshore yuan trades  6.6381 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

Quite a disaster for this exporting nation.  Exports and imports plunge as the higher yen is playing havoc to this nation

( zero hedge)

b) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

none today

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)RUSSIA/UKRAINE

Ukraine President warns of a full scale Russian invasion of the Don Bass

( zero hedge)

ii)TURKEY

Leaked documents show Erdogan supporting and financing terrorist groups like ISIS and Hamas:

( zero hedge)

iii)As Turkey moves closer and closer to Russia, the USA quietly remove their nukes to Romania.  The big question of course, is what will Turkey do with all of those migrant. It sue looks like they will flood Europe with them

( zero hedge)

6.GLOBAL ISSUES none today 7.OIL ISSUES

i)Nothing will stop these crooks:  oil rises despite record Saudi output and no output freeze and rig increases

( zero hedge)

8.EMERGING MARKETS

BRAZIL

i)Bizarre events in Brazil as two swimmers are pulled from their return trip back to the States.  It seems that Brazil wants a little revenge from the Americans for their support in bringing down Roussef

( zero hedge)

 

ib) late morning;

Mystery solved:  it was not a robbery as the story was fabricated.  However things got a little rowdy inside a gas station where Lochte tried to unlock a bathroom  lock and broke the door.  The owner demanded that the swimmers pay for the door.  Lochte then went to police and fabricated the story of being robbed at gunpoint.

( zero hedge)

 

ii)Then last night, a British Olympic athlete was robbed at gunpoint. Rio is not a safe environment warns their officials:

( zero hedge)

9.PHYSICAL STORIES

i)This was put to your attention yesterday but it is worth repeating because of the nonsense that GFMS puts out

( Koos Jansen/GATA)

ii)A very worthy cause as Koos Jansen tries to obtain Fort Knox audit information from the USA treasury:

( GATA/Chris Powell)

iiii)John Embry talks about the misinformation emanating from Washington as to the true state of their economy.  He expects the dollar to collapse.  Gold is to go to investment:

(courtesy John Embry/Kingworldnews)

 

iv)Three major reasons why negative interest rates are not working and it is a boon for gold

( Lawrie Williams/Lawrieon gold/Sharp’sPixley)

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

i)Obamacare is in such a mess.  Insurers are now down 2 billion USA dollars.  There are 3 major steps outlined by the insurers as to how they are going to fix their problem:

  1. get out of Obamacare altogether
  2. those that remain will hike premiums by 24%
  3. mergers and the resulting entity will raise rates

( ZERO HEDGE)

 

ii)The hope part of the Philly index rises but the other components such as new orders and employment crashes to 7 yr lows.  The overall index rises to 45.8 from 33.7.

( zero hedge)

iii)One of my favourite Bellwether indicators on global health is Caterpillar.  Today it is retail orders that have suffered their second biggest plunge in 7 years and it has now posted 44 consecutive declines in retail sales:

( zero hedge)

iv)With the markets threatening for a rout, it breaks again:

( zero hedge)

v)The truth behind the real earnings from Wall Street.  The current P>E for the S & P is 25.1

( David Stockman/)

vi)Dr. Pinsky states that there is something wrong with Hillary’s health

( Jankowski/zero hedge)

vii)The USA is going after Harley Davidson for evading emission requirements.  So we now have Chrysler under criminal investigation and now Harley Davidson:

( zerohedge)

.

Let us head over to the comex: The total gold comex open interest FELL TO AN OI level of 570,205 for a LOSS of 2291 contracts AS THE PRICE OF GOLD FELL BY $7.80 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed in May,  June and July  whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FALL by 14 contracts DOWN to 908,  We had 11 notices filed upon yesterday so we LOST A TINY 3 contracts or an additional 300 oz will not stand for delivery in August AND THESE GUYS WERE WITHOUT A DOUBT CASH SETTLED FOR A FIAT BONUS. The next contract month of Sept saw it’s OI fall by 59 contracts down to 4522.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI ROSE by 1069 contracts UP to 47,607. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 205,203.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was FAIR at 185,887 contracts.The comex is not in backwardation. Today, we had  66 notices filed for 6600 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 820 contracts from 205,905 UP TO 206,725 despite the FALL in price of silver to the tune of 22 cents.  We are moving away from the all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The non active month of August saw it’s OI FELL BY 119 CONTRACTS DOWN TO 84. We had 119 notices served yesterday so we neither gained nor lost any silver ounces that will  stand in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 3812 contracts down to 100,246  and that would alarm our bankers to no end. The volume on the comex today (just comex) came in at 97,745 which is HUGE and small rollovers..The confirmed volume yesterday (comex + globex) was HUMONGOUS at 96,985 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months. We had 0 notices filed for today for NIL oz INITIAL standings for AUGUST  August 18. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 8,198.25 oz SCOTIA MANFRA 255 KILOBARS Deposits to the Dealer Inventory in oz nil Deposits to the Customer Inventory, in oz  nil  3,864.382 oz DELAWARE No of oz served (contracts) today 66 notices  6600 oz No of oz to be served (notices) 842 contracts (84,200 oz) Total monthly oz gold served (contracts) so far this month 12,923 contracts (1,292,300 oz) (40.195 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    441,969.7 OZ Today:  TINY activity at the gold comex AND 1 KILOBAR ENTRY Today we had 0 dealer DEPOSITS total dealer deposit: NIL    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 1 customer deposit:  i) Into DELAWARE:  3,864.382 OZ Total customer deposits: 3,864.382 OZ Today we had 2 CUSTOMER withdrawals  i) Out of SCOTIA:  8,037.500 OZ  250 KILOBARS ii) OUT OF MANFRA  160.75 OZ (5 KILOBARS) Total customer withdrawals  8,198.25 OZ  255 KILOBARS Today we had 2 adjustments:  i) Out of BRINKS:  868.05 oz (27 KILOBARS) was adjusted out of the dealer and this landed into the customer account of Scotia:  (0.027 tonnes) ii) Out of Delaware: 488.635 oz was adjusted out of the customer and this landed into the dealer account of Delaware Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 66 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 48 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (12,923) x 100 oz  or 1,292,300 oz , to which we  add the difference between the open interest for the front month of AUGUST  (908 CONTRACTS) minus the number of notices served upon today (66) x 100 oz   x 100 oz per contract equals 1,376,500 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (12,923) x 100 oz  or ounces + {OI for the front month (908) minus the number of  notices served upon today (66) x 100 oz which equals 1,376,500 oz standing in this non  active delivery month of AUGUST  (42.815 tonnes). We lost 3 contracts or additional 300 oz will not stand for metal in this active month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.815 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418 tonnes/THEREFORE 91.926 tonnes still standing against 72.789 tonnes available.  Total dealer inventor 2,339,798.107 oz or 72.777 tonnes Total gold inventory (dealer and customer) =10,999,357.817 or 342.126 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.126 tonnes for a  gain of 39  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

     end And now for silver   AUGUST INITIAL standings  august 18.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory nil oz Deposits to the Dealer Inventory nil Deposits to the Customer Inventory nil oz No of oz served today (contracts) 0 CONTRACTS (NIL OZ) No of oz to be served (notices) 84 contracts 420,000 oz) Total monthly oz silver served (contracts) 393 contracts (1,965,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  8,424,966.0 oz today we had 0 deposit into the dealer account:  Total dealer deposits;  NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 0 customer withdrawals: Total customer withdrawals: nil oz total customer deposits:  nil  oz        we had 1 adjustments ii) Out of CNT: we had a transfer of 596,827.980 oz from the customer to the dealer account of CNT The total number of notices filed today for the AUGUST contract month is represented by 0 contracts for NIL oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (393) x 5,000 oz  = 1,965,000 oz to which we add the difference between the open interest for the front month of AUGUST (84) 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 AUGUST contract month:  393(notices served so far)x 5000 oz +(84 OI for front month of AUGUST ) -number of notices served upon today (0)x 5000 oz  equals  2,385,000 oz  of silver standing for the AUGUST contract month. we neither gained nor lost any silver ounces that will stand for delivery in this non active month of August.   Total dealer silver:  27.042 million (close to record low inventory   Total number of dealer and customer silver:   157.459 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD August 18/a withdrawla of 6.24 tonnes of gold from the gLD/Inventory rests at 955.99 tonness August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 18/ Inventory rests tonight at 955.99 tonnes

end

Now the SLV Inventory August 18/ a massive paper deposit of 2.185 million oz into the SLV/Inventory rests at 355.469 million oz August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/ August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 18.2016: Inventory 355.469 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.7 percent to NAV usa funds and Negative 4.8% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.4% Percentage of fund in silver:39.4% cash .+1.2%( August 18/2016). 2. Sprott silver fund (PSLV): Premium falls to +1.11%!!!! NAV (august 18/2016)  3. Sprott gold fund (PHYS): premium to NAV  rises TO  0.16% to NAV  ( august 18/2016) Note: Sprott silver trust back  into POSITIVE territory at +1.11% /Sprott physical gold trust is back into positive territory at 0.16%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,THURSDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Gold – “Mother of All Bull Markets Has Only Just Begun” – Grandich By abidpashaAugust 18, 2016No Comments

There are many reasons to believe that “the mother of all bull markets has only just begun” for gold.

So believes Peter Grandich, the market analyst dubbed the “Wall Street Whiz Kid” whose track record speaks for itself. He called the Wall Street Crash in 1987 and subsequent sharp stock market recovery, the end of the bull market in stocks in 2000 and the global financial crisis in 2008.


Gold in USD – 1971 to Today

On his website this week he entertainingly and insightfully outlined why he is so positive on gold:

I’m not going to write some long dissertation but rather just highlight some of the reasons I personally believe gold is in the earliest stages of what can turn out to be its biggest bull market ever.

The bullish fundamentals for gold ownership grow almost daily. Again, I could write pages of why, but I will just point out a few key ones:

1 – The severe gold correction literally wiped away every ounce of bullishness. It had come to last one out of the bullish camp, please turn off the lights. While bullishness is off the canvas now, we still see little or no interest in gold overall while its main rival, financial assets, are now in a full bullish blow-off mode. Being a supporter of gold is like being the “Maytag Repairman” when compared to what most investors and professional are loaded to the gills with (financial assets).

2 – We’re now just about 180 degrees where we were in 1980. Back then, financial assets were called “dead” and investment “war rooms” preaching gold ownership were widespread. Gold is the ultimate contrarian play and on a valuation basis compared to stocks and bonds, relatively cheap.

3 – Whether its debt bombs all around the world, paper currencies being debased faster than “Grant took Richmond”, or Central Banks getting ready to launch funny money from helicopters in a last futile attempt to correct their quantitative easing failures, take your pick on the inevitable ignitor that will lead to a blow up of financial systems. It’s not if, but when!

I can go on and on why this former “soothsayer” believes gold is going much, much higher. I would suggest if you’re serious and want to consider it as part of your portfolio, we’re coming close to a break out point where if and when it occurs, I suspect an acceleration to the upside will take place.
See full article here

Peter Grandich was the author of The Grandich Letter for a quarter century and had a wide audience with his subscriber base and in the financial media, such as The Wall Street Journal, MarketWatch and CNN. Peter was dubbed “the Wall Street Whiz Kid” after he forecast the 1987 stock market crash weeks before it happened. He then predicted that the market would reach a new all-time high within two years. It did. He said that 2000 would see the end of the great bull market of the 1980s and 1990s. It was. Early in the new millennium, he thought U.S. banks had gone “overboard in making loans that required near-perfect economic conditions in order to avoid substantial bankruptcies.” Another spot-on prediction. In October 2007, he warned investors to “man your battle stations” and prepare for the “unprecedented economic tsunami” that would hit America beginning in 2008.

Gold and Silver Bullion – News and Commentary

Gold treads water on U.S. Fed rate views; awaits July minutes (Reuters)

Gold Holds Advance Even as Fed Officials Flag Possible Rate Rise (Reuters)

Gold’s Popularity Dims In Short Term as ETFs Shrink by Most This Year (Bloomberg)

Gold cuts gains after mixed U.S. economic data (Reuters)

Banks to keep piles of cash in high security vaults (FT)


Billionaire Crispin Odey “Is Betting Everything On Gold” (Zerohedge)

Odey Still Bearish, Explains Massive Long Gold Bull Position (ValueWalk.com)

DB discloses $2 billion mining share portfolio (Smaulgd)

Labour opposition wants to increase the national debt by £270 billion (Telegraph)

Gold: Fresh Upside Breakout Is Imminent (Goldseek)

Gold Prices (LBMA AM)

18Aug: USD 1,347.10, GBP 1,023.93 & EUR 1,190.84 per ounce
17Aug: USD 1,342.75, GBP 1,031.23 & EUR 1,191.96 per ounce
16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce
10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce

Silver Prices (LBMA)

18Aug: USD 19.78, GBP 15.04 & EUR 17.47 per ounce
17Aug: USD 19.57, GBP 15.04 & EUR 17.37 per ounce
16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce
10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce


Recent Market Updates

– Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date
– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money

abidpasha Published in Daily Market Update

END

 

This was put to your attention yesterday but it is worth repeating because of the nonsense that GFMS puts out

(courtesy Koos Jansen/GATA)

Koos Jansen: GFMS keeps wildly underestimating Chinese gold demand

Submitted by cpowell on Wed, 2016-08-17 17:27. Section:

1:25p ET Wednesday, August 17, 2016

Dear Friend of GATA and Gold:

Metals consultancy GFMS and other establishment organs keep wildly underestimating Chinese gold demand and changing their rationalizations for doing so, gold researcher Koos Jansen charges today. Jansen calculates that Chinese demand in 2015 was at least 2,250 tonnes. His analysis is headlined “Spectacular Chinese Gold Demand in 2015 Fully Denied by GFMS and Mainstream Media” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/spectacular-chinese-gold-d…

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

END

A very worthy cause as Koos Jansen tries to obtain Fort Knox audit information from the USA treasury:

(courtesy GATA/Chris Powell)

Help Koos Jansen pry Fort Knox audit info from Treasury Department

Submitted by cpowell on Thu, 2016-08-18 01:47. Section:

9:40p ET Wednesday, August 17, 2016

Dear Friend of GATA and Gold:

Our friend gold researcher Koos Jansen needs to raise $3,145 to cover the costs being charged to him by the U.S. Treasury Department for copies of documents involving audits of the gold at Fort Knox. As of this hour a Go Fund Me page on the Internet is about $500 short of raising the money for him. Jansen’s work has been of the greatest importance to the cause of transparency in the gold market, so please consider helping him by visiting the Go Fund Me page and making a contribution here:

https://www.gofundme.com/2k82ef38?rcid=585dcdd664a911e6bab8bc764e065bc4

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

 

END

 

John Embry talks about the misinformation emanating from Washington as to the true state of their economy.  He expects the dollar to collapse.  Gold is to go to investment:

(courtesy John Embry/Kingworldnews)

‘Chaotic fall’ in dollar is likely, Embry tells King World News

Submitted by cpowell on Thu, 2016-08-18 01:21. Section:

9:20p ET Wednesday, August 17, 2016

Dear Friend of GATA and Gold:

Economic data in the United States doesn’t match the spin being offered by the political authorities, Sprott Asset Management’s John Embry tells King World News today. “At any sign of emerging weakness,” Embry says, “they trot out some Fed official to talk about an imminent rate increase and then aggressively manipulate the currency and precious metals markets to give credence to the statement.” He expects “a chaotic fall” for the dollar, which he considers “over-owned.” An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/john-embry-the-deep-state-is-desperate-right-no…

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

end

 

Three major reasons why negative interest rates are not working and it is a boon for gold

(courtesy Lawrie Williams/Lawrieon gold/Sharp’sPixley)

 

Negative interest rates:  Great for gold but are they any good for the economy? August 17, 2016lawrieongold

Central Banks have been viewing ultra-low, or in many cases directly, or effectively, negative, interest rates as being the panacea for all economic ills.  Deprive savers of interest, so the theory goes, and they will opt to spend their savings instead, thereby generating a boost for the economy.  Low interest rates also make borrowing costs lower for industry and, with supposedly additional availability of capital through quantitative easing programmes should thereby boost investment in necessary plant and equipment.

It is becoming more and more apparent that neither of these strategies are working, or at least not to the extent anticipated by the economists promoting this policy which is, unfortunately, being followed by many of the world’s major central banks.

From the savings angle, what the policy is really doing is driving savers away from traditional income generating securities and into assets like gold which may pay no interest – no interest is better than negative interest – but offers the possibility of capital accumulation.  Those in countries like the UK, where the currency first weakened against the US dollar post the Brexit vote, and then again when the Bank of England cut the base rate and re-introduced monetary stimulation, will have seen some substantial gains through moving into gold.  We advised, (See:UPDATE: Brexit in the balance.  Gold surges.  Silver may begin to fly where I commented “UK investors in particular should look to investing in gold as a wealth protector given that if the UK referendum, now only a week away, should result in a Leave vote – the Brexit option – there would be a knee-jerk reaction knocking the pound sterling down sharply against the dollar, while the gold price would likely rise on fears of considerable further economic disruption within the Eurozone ahead of the Brexit vote”) for UK investors to at least put some of their investments into gold for example as insurance against a ‘Leave the EU’ decision, and those who did benefited very nicely indeed, thank you, at least in terms of the pound sterling. The combination of the rising gold price in US dollars and the fall in sterling against the dollar had a multiplying impact on an investment in gold or in silver.

On the business front there’s little evidence that the huge move towards zero, or negative, interest rates has done much to stimulate activity.   Businesses are seen as reluctant to borrow, even when the cost of borrowing is so low, to put money into new plant and equipment, or services, when demand for their products is not seen as being positive in any case.  For many the imposition of such low interest rates is seen as yet another indication of a sick economy and an ultra low-growth environment.

Among the nations which have moved to the imposition of negative interest rates are, most significantly, the European Central Bank (ECB) and the Japanese Central Bank (BoJ), while Denmark, Sweden and Switzerland have also followed suit.  The Bank of England (BoE) is almost there too and with the prospect of another rate cut should the post-Brexit economy not pick up, could be in zero, or negative, territory by the year end.  And with inflation probably running higher than most governments will admit, all these, and more including the USA, are effectively in a below zero environment as far as bond investment returns are concerned.  All this is positive for gold, but of increasing worry for the Central Banking system which seems to have little more ammunition left with which to try and stimulate flagging global economies.

Just to emphasise the problem a recent survey, published in the UK’s highly respectedFinancial Times newspaper suggested that the universe of sub-zero-yielding debt – primarily government bonds in Europe and Japan but also a mounting number of highly-rated corporate bonds – has reached the enormous total of $13.4 TRILLION.

Another factor which is indeed worrying for businesses and which could see them look to deposit any spare cash in alternative investments is the looming possibility of bank bail-ins, whereby large holders of money in the banking system see some of their hard-earned cash effectively confiscated to help rescue an ailing bank.  This was brought to the fore a couple of years ago in Cyprus when a bail-in was imposed for major clients of the Bank of Cyprus which was close to failure because of its large holdings of Greek debt.  As the UK’s Daily Telegraph reported at the time: The imposed bail-in forced big savers to foot the bill for the recapitalisation of the nation’s biggest bank.  The bank said that it converted 37.5% of deposits exceeding €100,000 into “class A” shares, with an additional 22.5% held as a buffer for possible conversion in the future. Another 30pc was temporarily frozen and held as deposits.

Legislation was subsequently changed to permit bail-ins of this nature across the EU and now the spectre of something similar occurring in Ireland has been reported with one of the country’s biggest insurers said to have been moving its cash holdings out of the banking system into government bonds for fear of another property price crash putting the Irish banking system in peril.

There is thus something of a confluence in factors which would seem to be gold supportive in the medium term, while the increase in geopolitical tensions between the Ukraine and Russia, and China’s belligerent rhetoric over its de facto annexation of large sections of the South China Sea, and the uncertainties engendered by perhaps the most politically divisive US presidential election ever, is further adding to the positive environment for the gold price.  Whether the markets will recognise this after the Labor Day holiday, when the US traders, bankers, fund managers et al are back from their holidays, which has seen something of a volatile marketplace for precious metals over the past month, remains to be seen as there are a lot of big vested interests at play here, but we do see the overall pricing environment as distinctly positive.

 

end

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

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6327( SMALL REVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6381) / Shanghai bourse  DOWN 5.41 OR 0.17%   / HANG SANG CLOSED UP 223.38 or 0.98%

2 Nikkei closed /USA: YEN RISES TO 100.30

3. Europe stocks opened  IN THE GREEN,     /USA dollar index DOWN to 94.43/Euro UP to 1.1320

3b Japan 10 year bond yield: FALLS TO  -.082%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.30

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.95  and Brent: 49.67

3f Gold UP  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to -.074%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 6.88%/: 

3j Greek 10 year bond yield FALL to  : 8.11%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1350.40-/silver $19.77(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 45/100 in  roubles/dollar) 63.71-

3m oil into the 46 dollar handle for WTI and 49 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.30 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9585 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0849 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year FALLS to  -0.074%

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

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

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

4. USA 10 year treasury bond at 1.549% early this morning. Thirty year rate  at 2.260% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS S&P Futures Unchanged As Europe Rises; Dollar Slide Sends Oil Above $47

In the latest quiet trading session, European shares rose while Asian stocks fell and S&P futures were little changed. Minutes of the Fed’s last meeting damped prospects for a U.S. interest-rate hike, sending the  Bloomberg Dollar Spot Index doen 0.3%, approaching a three-month low. Dollar weakness continues to buoy commodities, with the Bloomberg Commodity Index set for the most enduring rally in more than two months, as WTI flirted with $47 and Brent briefly rising above $50. 

Dollar weakness also pushed the MSCI emerging market  index to a fresh one year high. The latest leg lower in the dollar was the result of yesterday’s Fed minutes, which showed officials saw little risk of a sharp uptick in inflation and pushed odds of a rate increase this year back below 50 percent. “The message appears to be that as much as a September hike is a possibility, the Fed is unlikely to move until there is a consensus on the outlook for growth, hiring and inflation,” said Rodrigo Catril, a currency strategist at National Australia Bank Ltd. in Sydney. “Recent data would therefore suggest a hike is not imminent.”

Here is Jim Reid’s take on yesterday’s FOMC minutes:

The reaction in markets suggested that the minutes were on the dovish side, certainly relative to what we’d heard from Dudley although it still felt like investors were left fairly confused. The question is probably what is the more up to date view and should we place higher value on Dudley’s comments as a barometer of the overall leaning at the Fed? Dudley is due to speak again this afternoon on regional economic conditions at a press briefing however Q&A is expected after so that will be interesting to watch. A reminder than next week on Friday we’ll also hear from Fed Chair Yellen at Jackson Hole.

In terms of the minutes the most notable takeaway was the mention that ‘members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labour market and economic activity’. This was followed with ‘a couple of members preferred also to wait for more evidence that inflation would rise to 2% on a sustained basis’ and also that ‘some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation’.

The text also revealed that ‘several suggested that the committee would have ample time to react if inflation rose more quickly’ while others were of the view that ‘labour market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the Committee’s inflation objective would continue, even with further steps to gradually remove monetary policy accommodation’. The minutes also suggested that the committee was encouraged by the post-Brexit reaction in markets. The text showed that ‘participants generally agreed that the prompt recovery of financial markets following the Brexit vote and the pickup in job gains in June had alleviated two key uncertainties about the outlook’.

Speculation that central banks in the world’s biggest economies will remain accommodative propelled global equities to a one-year high this month. “Today is a breather after yesterday’s declines,” said Benno Galliker, a trader at Switzerland’s Luzerner Kantonalbank AG. “I am optimistic about the market overall – there is no other option but equities at the moment, as rates are going down and down and down. Central banks are going to remain quite accommodating, now politics have to come in to improve the mood.”

The Fed minutes struck a more dovish tone when compared with comments this week from New York Fed chief William Dudley, who flagged the prospect of a rate hike as soon as next month. Dudley will hold a press briefing on Thursday in New York and his San Francisco counterpart, John Williams, is also due to speak.

Britain’s pound was the biggest winner against its U.S. counterpart, surging after a report showed U.K. retail sales jumped more than economists forecast in the month after Britain voted to quit the European Union. Following last night’s devastating Japan trade data, which showed imports and exports crashing the most since the crisis...

…  economic data out of the UK showed retail sales unexpectedly surged in the month after Britain voted to quit the European Union, as hot weather bolstered sales of clothing and footwear and a drop in the pound encouraged tourists to snap up watches and jewelry.

The volume of goods sold in stores and online jumped 1.4 percent, after dropping 0.9 percent in June, figures from the Office for National Statistics showed on Thursday, exceeding a prediction of 0.1 percent in a Bloomberg survey. Sales excluding auto fuel advanced 1.5 percent. As a result, sterling strengthened 0.9 percent to $1.3160.

In Japan, the Nikkei 225 tumbled -1.6%, pressured by a sliding USD/JPY which fell below 100.00 early in the session, as well as July trade figures which showed both exports and imports declined by the most since 2009, while ASX 200 (-0.5%) was weighed ON by disappointing earnings. Chinese markets are positive with the Hang Seng (+1.0%) underpinned by strong results from the likes of Tencent and Lenovo, while the Shanghai Comp (-0.2%) saw indecisive trade after firm Chinese Property Prices which could spur outflows from stocks into the rampant sector.

In Europe, the Stoxx 600 added 0.5% with all industry groups rising. Nestle SA, which has the highest weighting in the Stoxx 600, advanced 1.2 percent as Chief Executive Officer Paul Bulcke forecast pricing will rebound in the coming months, after the world’s biggest food company reported the slowest first-half sales growth since 2009.

The MSCI Emerging Markets Index rose 0.7 percent, led by technology stocks. Tencent Holdings Ltd. jumped to an all-time high after a 47 percent surge in profit beat analysts’ estimates. Samsung Electronics Co. also climbed to a record. The two stocks have the biggest weightings in the MSCI equity benchmark.

S&P 500 futures were little changed, after shares eked out gains on Wednesday following the release of the Fed minutes. Cisco Systems Inc. fell 1.6 percent in German trading after the biggest maker of equipment that runs the Internet announced plans to cut about 7 percent of its workforce.

In addition to the weekly jobless claims data, investors will focus on earnings from retail giant Wal-Mart for indications of the state of the U.S. economy. Fewer than 30 of the S&P 500’s companies have yet to report.

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2180
  • Stoxx 600 up 0.5% to 342
  • FTSE 100 up 0.2% to 6876
  • DAX up 0.6% to 10597
  • German 10Yr yield down 1bp to -0.06%
  • Italian 10Yr yield down 2bps to 1.1%
  • Spanish 10Yr yield down 2bps to 0.95%
  • S&P GSCI Index up 0.1% to 365.5
  • MSCI Asia Pacific down 0.4% to 139
  • Nikkei 225 down 1.6% to 16486
  • Hang Seng up 1% to 23023
  • Shanghai Composite down 0.2% to 3104
  • S&P/ASX 200 down 0.5% to 5508
  • US 10-yr yield up less than 1bp to 1.56%
  • Dollar Index down 0.23% to 94.5
  • WTI Crude futures up 0.3% to $46.94
  • Brent Futures down 0.4% to $49.63
  • Gold spot down 0.1% to $1,347
  • Silver spot up less than 0.1% to $19.70

Top Global News

  • Cisco Cuts Workforce by 7% to Speed Transition to Software: CEO Robbins moving company away from traditional hardware. Any savings from job reductions to go toward growth areas
  • Nestle Revenue Grows at Weakest Pace Since 2009 on Deflation: KitKat maker increasing prices in U.K., Brazil, Russia. Sales growth needs to accelerate to reach full-year target
  • Blackstone Said Nearing $620 Million New York Apartment Purchase: Kips Bay Court on east side of Manhattan has 894 rental units. Deal would follow $5.3 billion Stuyvesant Town purchase
  • American Apparel Said to Hire Bank to Explore Sale: Hires Houlihan Lokey to explore sale, Reuters reports, citing unidentified people familiar.
  • Redstone Granddaughter Said Pursuing Trial Even If Others Settle: Case in Massachusetts is scheduled to go to trial on Sept. 19. Suit claims media mogul is unduly influenced by daughter Shari
  • Retrophin Said to Consider Bid for Raptor Pharmaceutical: Raptor has also attracted interest from other drugmakers. No agreement has been reached, firms could decide against deal
  • Widening Fed Consensus on Inflation Overshadows Rate-Hike Debate
  • Caesars Suing Apollo to Stop Creditors From Suing Apollo
  • Bosch’s VW Diesel Cheating Role Called Key by Car Owners
  • American Apparel Said to Hire Bank to Explore Sale: Reuters
  • Tronc Said to Respond to Gannett’s Bid by End of the Week: WSJ
  • Clinton Foundation Said to Hire FireEye on Suspected Hack: Reuters
  • Gawker CEO Denton to Exit After Univision Sale Closes: Politico
  • Mondelez to Invest >$100m in China Over 3 Yrs: China Daily

Looking at regional markets, we start as usual in Asia where equities traded mixed following the mild gains seen in the US after dovish FOMC minutes, although Japanese sentiment was dampened on JPY strength and poor trade data. Nikkei 225 (-1.6%) was pressured after USD/JPY fell below 100.00 and July trade figures showed both exports and imports declined by the most since 2009, while ASX 200 (-0.5%) was weighed ON by disappointing earnings. Chinese markets are positive with the Hang Seng (+1.0%) underpinned by strong results from the likes of Tencent and Lenovo, while the Shanghai Comp (-0.2%) saw indecisive trade after firm Chinese Property Prices which could spur outflows from stocks into the rampant sector. 10yr JGBs traded higher amid the lack of risk appetite seen in Japanese equities, whilst today’s 5yr JGB auction was also supportive with the bid/cover increasing from prior.

Top Asia News

  • China Bailout Fund Said to Sell Bank Stocks as Rally Extends: Selling seen after benchmark index climbs to 7-mo. high
  • Hong Kong Stocks Rally to Nine-Month High on Earnings Optimism: Tencent, Lenovo jump after profit beats analyst estimates
  • BOJ Cornered as Japanese Banks Running Out of Bonds to Sell: Banks cut almost half of holdings since Kuroda began easing
  • China July New Home Prices Rise M/m in Fewer Cities: New home prices, excluding subsidized housing, rises m/m in in 51 out of 70 cities tracked by China’s statistics bureau, vs 55 in June
  • Swire Properties Says 2H H.K. Office Demand Likely Subdued: 1H underlying profit HK$3.56b vs HK$3.94b y/y
  • Arsenal of Smartphone Apps Seeking Reliable Power Grows in India: Tarang phone app to track electricity transmission projects

In Europe, the upside in oil has seen energy names lead the way higher in terms of European equities, with major indices all trading in modest positive territory (Euro Stoxx: +0.5%). Elsewhere, basic material names are the laggard of the session so far, while on a stock specific basis, earnings continue to dictate play as we come to the back end of earning season, with Vestas Wind Systems and NN Group the top performers after their update, while Boskalis are the worst performer. Fixed income markets have seen a continuation of the post FOMC minutes fallout, with Bunds playing catch up to trade higher this morning amid dissipating expectations of a near term rate hike form the Fed, while the German curve has flattened this morning, also in line with its US counterpart.

Top European News

  • Bosch’s VW Diesel Cheating Role Called Key by Car Owners: Supplier accused of participating in ‘decade-long conspiracy’. Car owners’ lawyers expand on allegations in U.S. court filing
  • Casino Quietly Buying Back its own Shares: Casino has begun to buy back its own shares, bought back 0.7% of total equity or 1.4% of the free float for EU35m so far, Bernstein says in note
  • U.K. Retail Sales Surge as Sunshine Overpowers Brexit Concern: Volumes increased 1.4% on month in July, 5.9% on year. Slide in sterling after Brexit prompted watch, jewelry spree
  • Brexit-Bashed Banks Can’t Escape From London’s Canary Wharf: U.K. commercial property market fell into recession in July. Canary Wharf pivots to residential and retail construction
  • Argos to Buy U.S. Plants From HeidelbergCement for $660 Million: German company says disposal proceeds ahead of target. Argos to add one plant and eight related terminals in U.S.

In FX, the Bloomberg Dollar Spot Index fell 0.3 percent, approaching a three-month low. It posted a 0.2 percent gain on Wednesday, having been up as much as 0.5 percent ahead of the Fed minutes’ publication. Britain’s pound was the biggest winner against its U.S. counterpart, climbing after a report showed U.K. retail sales jumped more than economists forecast in the month after Britain voted to quit the European Union. Sterling strengthened 0.9 percent to $1.3160. The Aussie climbed 0.4 percent after a report showed Australia’s unemployment rate unexpectedly fell to 5.7 percent in July. The MSCI Emerging Markets Currency Index added 0.2 percent, after falling 0.5 percent on Wednesday. South Africa’s rand was among the biggest gainers, rising 0.4 percent, while Mexico’s peso and Malaysia’s ringgit both appreciated a similar amount.

In commodities, the Bloomberg Commodity Index was set for the most enduring rally in more than two months as the dollar weakened. West Texas Intermediate crude rose for a sixth day, the longest advance in more than a year, as U.S. crude and gasoline stockpiles dropped from the highest seasonal level in at least two decades. Oil added 0.4 percent to $46.96 a barrel after gaining more than 12 percent over the previous five sessions. Brent added as much as 0.4 percent to trade above $50 for the first time in more than a month. Industrial metals also rose, with copper gaining 1.4 percent to $4,839 a metric ton and nickel adding 1.5 percent.

* * *

Bulletin Headline Summary From RanSquawk and Bloomberg

  • European equities trade modestly higher with energy names leading the way in what has once again been a relatively quiet session
  • GBP/USD has been dealt further support by another batch of positive post-referendum data with retail sales exceeding market consensus
  • Looking ahead, highlights include ECB Minutes, Philadelphia Fed Manufacturing Index and earnings from Wal-Mart
  • Treasuries mostly steady in overnight trading, global equities mixed and commodities rise as USD drops for fifth day in a row.
  • For all of their differences, one thing most Federal Reserve officials seem to agree on is that there’s not much risk of inflation running away from them anytime soon, regardless of what they do with interest rates
  • U.K. retail sales unexpectedly surged in the month after Britain voted to quit the European Union, as hot weather bolstered sales of clothing and footwear and a drop in the pound encouraged tourists to snap up watches and jewelry
  • France’s unemployment rate dropped to 9.9% in the second quarter from 10.2% in the first quarter, its lowest level in almost four years, helping President Francois Hollande fulfill a promise to cut joblessness before the next election
  • Japan’s biggest banks are running out of room to sell their government bond holdings, pushing the central bank closer to the limits of its record monetary easing; Etsuro Honda, an adviser to Japanese Prime Minister Abe, tells WSJ in interview he sees “more than a 50% possibility” of the Bank of Japan taking “bold” easing measures next month
  • Chinese state-backed funds sale of bank shares may signal confidence among Chinese policy makers that the $6.5 trillion market is growing strong enough to stand on its own
  • Steve Eisman made his name and fortune by foreseeing the collapse of subprime mortgage securities. Now he’s betting against a different kind of Wall Street money machine. He thinks hedge fund fees are going to tumble
  • JPMorgan Chase, Citigroup and Morgan Stanley are among 16 banks being sued by funds in the U.S. for allegedly manipulating a key Australian interest rate benchmark to generate hundreds of millions of dollars in illicit profits
  • Fannie Mae and its cousin, Freddie Mac, are once again headed for trouble. On Jan. 1, 2018, the two government- sponsored enterprises will officially run out of capital under the current terms of their bailout. After that, any losses would be shouldered by taxpayers

DB’s Jim Reid concludes the overnight wrap

Markets have spent the last 48 hours up and down like a BMX rider as they try to come to terms with the Fed’s latest thinking after a relatively hawkish set of comments from the NY Fed’s Dudley on Tuesday was then followed up yesterday by FOMC minutes which suggested a much more divided committee. The reaction in markets suggested that the minutes were on the dovish side, certainly relative to what we’d heard from Dudley although it still felt like investors were left fairly confused. The question is probably what is the more up to date view and should we place higher value on Dudley’s comments as a barometer of the overall leaning at the Fed? Dudley is due to speak again this afternoon on regional economic conditions at a press briefing however Q&A is expected after so that will be interesting to watch. A reminder than next week on Friday we’ll also hear from Fed Chair Yellen at Jackson Hole.

In terms of the minutes the most notable takeaway was the mention that ‘members generally agreed that, before taking another step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labour market and economic activity’. This was followed with ‘a couple of members preferred also to wait for more evidence that inflation would rise to 2% on a sustained basis’ and also that ‘some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation’.

The text also revealed that ‘several suggested that the committee would have ample time to react if inflation rose more quickly’ while others were of the view that ‘labour market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the Committee’s inflation objective would continue, even with further steps to gradually remove monetary policy accommodation’. The minutes also suggested that the committee was encouraged by the post-Brexit reaction in markets. The text showed that ‘participants generally agreed that the prompt recovery of financial markets following the Brexit vote and the pickup in job gains in June had alleviated two key uncertainties about the outlook’.

Treasuries were bid up following the minutes. 10y yields ended the day 2.5bps lower at 1.550% although remain a couple of basis points above where they were immediately prior to the Dudley comments. 2y yields have gone from 0.694% pre-Dudley to a high of 0.767% and are now back down 0.726%. The USD was pretty choppy following the minutes but finished little changed. US equities had traded in the red for much of the session (quarterly results from Target and Lowes in the retail sector weighing) before firming slightly following the minutes. Indeed having been down as much -0.45% intraday the S&P 500 closed +0.12% although is still a shade below pre-Dudley levels. Meanwhile September rate hike expectations are unchanged at 22% (18% pre-Dudley) while December expectations continue to be a coin flip (49% from 51% on Tuesday and 45% on Monday)

This morning in Asia has seen another relatively mixed start in markets. The Hang Seng (+1.60%) has rallied on the back of a number of earnings reports, while the Shanghai Comp (+0.41%) and Kospi (+0.48%) are up more modestly. The Nikkei (-0.89%) is in the red with the Yen breaking through 100 again early this morning (its hovering around that level as we go to print). The ASX (-0.57%) is also lower.
There’s also been a bit of data released overnight. In Japan exports weakened to -14.0% yoy (vs. -13.7% expected) in July from -7.4% the month prior, while imports (-24.7% yoy vs. -20.0% expected; -18.8% previously) were also lower despite the strengthening Yen. The decline in exports is now the most since October 2009. Meanwhile in China the latest property prices data for July showed that prices increased in 51 cities last month (excluding government-subsidized housing) from 55 in June. This is out of 70 cities signalling a slight cooling off in property prices gains. Lastly a decline in the unemployment rate in Australia following the latest data this morning has seen the Aussie Dollar rise half a percent.

Away from the Fed yesterday, the only real economic data to note came again from the UK where the latest employment numbers were released, some of which covered the post-Brexit period. In the three months to June 172k jobs were added which was a bit more than expected (150k expected). The ILO unemployment rate held steady in the same period at 4.9% as expected while average weekly earnings including bonuses (+2.4% yoy) and excluding bonuses (+2.3% yoy) both rose one-tenth which was in-line. Meanwhile, in terms of the July data jobless claims actually declined unexpectedly (-8.6k vs. +9.0k expected) – this was also the first monthly decline in claims since February although it’s worth noting that the data tends to be a bit volatile.

Sterling was little changed by the end of play and Gilt yields were lower (10y Gilts -2.2bps) which was in line with the wider market generally. The FTSE 100 was -0.50% although this outperformed most other European bourses which were down 1-1.5% generally, seemingly still reacting to Dudley’s more hawkish comments the day prior.

Meanwhile, Portugal has been focus for sovereign bond markets over the past couple of days. Indeed 10y Portugal yields had been up as much as 31bps from Tuesday’s intraday lows at one stage over concerns that Portugal may lose its BBB rating from rating agency DBRS – the only rating agency to still rate Portugal investment grade and so making Portugal still eligible for ECB bond purchases. Yesterday late afternoon however the Chief Economist at DBRS said that the agency is ‘comfortable’ with its rating for Portugal which helped to alleviate some concerns for now. Portugal’s bonds rallied 8bps or into the close following those comments.

In terms of the day ahead, shortly after we go to print this morning we’ll get the Q2 employment numbers out of France. It’s all eyes on the UK after that where the July retail sales data is set to be released and should be another important post-Brexit indicator. Current market consensus is for +0.3% mom excluding fuel and +0.1% mom including fuel. Also out this morning will be the final revisions to July CPI for the Euro area along with the minutes from the last ECB Council Meeting. Across the pond this afternoon we’ll get the latest initial jobless claims reading, Philly Fed survey for August and also the Conference Board’s leading index for July. Away from the data and as noted at the top we’re due to hear from the Fed’s Dudley this afternoon (at 3pm BST) and also Williams (at 9pm BST) later this evening.

ASIA MARKETS

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 5.41 POINTS OR 0.17%/ /Hang Sang closed UP 223.38 points or 0.98%. The Nikkei closed DOWN 259.63 POINTS OR 1.55% Australia’s all ordinaires  CLOSED DOWN 0.49% Chinese yuan (ONSHORE) closed UP at 6.63270/Oil FELL to 46.92 dollars per barrel for WTI and 49.67 for Brent. Stocks in Europe:  in the GREEN . Offshore yuan trades  6.6381 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS SLIGHTLY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

Quite a disaster for this exporting nation.  Exports and imports plunge as the higher yen is playing havoc to this nation

(courtesy zero hedge)

Japanese Imports, Exports Crash At Worst Rate Since 2009

For the 19th month in a row, Japanese Imports plunged – dropping 24.7% YoY (worse than expected), the biggest drop since Oct 2009. Exports were just as dismal, also missing expectations, plunging 14.1% YoY – worst since Oct 2009. The biggest driver of the collapse of Japanese trade was a 44% crash in the Chinese trade balance.

There’s no lipstick to put on this pig… it’s a disaster.. and worse still Yen is strengthening back below 100 against the USD.

Charts: Bloomberg

end

b) REPORT ON CHINA

none today

EUROPEAN AFFAIRS

none today

RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA/UKRAINE

Ukraine President warns of a full scale Russian invasion of the Don Bass

(courtesy zero hedge)

Following “Deadliest Month” In A Year, Ukraine President Warns Of “Full-Scale Russian Invasion”

The last month has seen Russia pull out of peace talks (citing attacks in Crimea and detention of key individuals) and an increasing mobilization of Ukraine troops near the Russian border, and now, after the deadliest month since last August, Ukraine president Poroshenko has warned he isn’t ruling out a full-scale Russian invasion and may institute a military draft if the situation with its neighbor worsens.

As Bloomberg reports, the confrontation between Ukrainian forces and the rebels in Ukraine’s eastern Donbas region has worsened, Poroshenko said in the western city of Brody on Thursday.

His comments come a week after Russian President Vladimir Putin accused the government in Kiev of engaging in “terror” tactics in Crimea, which Ukraine’s fellow former Soviet republic annexed in 2014. Putin vowed to respond with “serious measures.”

“The probability of escalation and conflict remains very significant,” Poroshenko said in a televised speech. “We don’t rule out full-scale Russian invasion.”

The Ukrainian government, which says Russia is funneling troops, cash and weapons to the separatists, has rejected Putin’s accusations over Crimea and said its neighbor may use them as a pretext to mass more troops in the disputed Black Sea peninsula. Ukraine has enough forces along its eastern front line and near the border with the territory to resist a possible offensive, military spokesman Oleksandr Motuzyanyk said Thursday.

Rebels fired more than 800 artillery and mortar rounds at government positions during the past 24 hours, the most since last August, Motuzyanyk said. He added that Ukrainian positions along the front line stretching from near the rebel-held city of Luhansk to the government-controlled port Mariupol on the Azov Sea came under attack. July was the deadliest month since last August in the conflict, which the United Nations estimates has killed at least 9,500 people since 2014.

Putin may travel to Crimea on Friday to talk with local officials and visit a summer camp for children, Russian media group RBC reported on its website on Tuesday, citing three people it didn’t identify.

Of course, all western officials are calling for a resumption of talks but as we noted previously the so-called Minsk II agreement was set up to fail…

“Minsk II is set up in a way that Russia can blame Ukraine for not meeting the political targets, and then you lose the perspective that Russia is still fueling this conflict,” said a European diplomat in Moscow.

The preceding paragraph is precisely what one would expect from mainstream media. Here’s a short translation: “It’s all Russia’s fault”

In reality, it’s clear both sides have violated aspects of the Minsk II agreement.

However, Ukraine has taken none of the key steps on constitutional reforms and local autonomy laws for Donetsk and Luhansk as promised.

Deadlock

Tomorrow’s Ukraine discusses the reasons for a “deadlock” in Minsk II: A Trap, or an Escape?

“France is calling for the full implementation of the Minsk agreements by all parties.”
—French President Francois Hollande.

“We are confident that only through full and faithful implementation of the Minsk agreements of February 12, 2015 can we put an end to the bloodshed and find a way out of the deadlock.”
—Russian President Vladimir Putin.

“We are here to implement the Minsk deal, not to call it into question.”
—German Chancellor Angela Merkel.

Many leaders in the East and West find the Minsk II Agreement indispensable. But is this truly the case?

Why Isn’t Minsk II a Slam-Dunk?

Point 9 says that control of the border between Russia and Ukraine should be restored to Ukrainian control IF Ukraine successfully implements Point 11; which, in turn, requires Ukraine to enact constitutional amendments permanently decentralizing power and to pass laws permanently granting special status to separatist territory, which would entail local self-government, the right to form “people’s militias,” and more. And then there’s Point 10, which mandates the “pullout of all foreign armed formations” and the “disarmament of all illegal groups.”

But here’s the rub: popular opinion in Ukraine makes it impossible to discuss a special status for the breakaway territories until free and fair local elections are held there, and “free and fair” effectively means that illegal armed groups and foreign armies need to pull out. But Minsk II says that border control doesn’t need to be restored to Ukraine until after it decentralizes, while also requiring that local elections be held in accordance with Ukrainian law.

This is the definition of “deadlock.” Elections that prop up what Kyiv calls “terrorist regimes” would be difficult for Ukraine’s elite to sell to the people, regardless of the merits of such a plan. The general fear on Ukraine’s side is that if Kyiv approves of the elections in rebel-held territory, the separatist leaders—who would likely win any election held at their guns’ points—would claim some degree of legitimacy. Public opposition to granting even the slightest concessions to the separatists, much less elections that could possibly lead to “special status,” is driven by populists like Oleh Lyashko and his Radical Party, as well as by Yulia Tymoshenko and the Fatherland Party, both of whom stand to gain many seats in Parliament if MPs are unable to form a government and new elections are held.

The “Prisoners’ Dilemma” from game theory describes this situation exactly. The game illustrates why two rational actors might not cooperate, even though cooperation is in both their best interests.

The second main reason why Minsk II is seen as controversial is that it requires Ukraine to enact constitutional amendments that devolve some powers to local and regional governments. In the fall of 2015, it became clear that Ukraine was not going to be able to enact the constitutional amendments required. The German, French, Ukrainian, and Russian heads of state, meeting in Paris on October 2, 2015, informally decided to postpone the deadline into 2016.

Minsk II Designed to Fail

With so many obvious complications, Minsk II was setup to fail right from the start.

By accident or design, the setup is precisely what warmongers like.

end

TURKEY

 

Leaked documents show Erdogan supporting and financing terrorist groups like ISIS and Hamas:

(courtesy zero hedge)

In Leaked Doc, Germany Accuses Erdogan Of Supporting And Financing Terrorist Groups

While it will come as no surprise to readers of this site, which last year first revealed that Turkey was a key financial backer of the Islamic State, exchanging ISIS oil for cold, hard (USD) cash, it now appears that the Germans have finally caught up, after a leaked internal government document accused the Turkish government of supporting terrorist organizations such as Hamas, public broadcaster ARD reported yesterday. The leaked report, which just a year ago would have been called, what else – a tinfoil conspiracy theory – states the German government’s belief that Ankara has been deliberately financing Islamist and terror organizations with the direct consent of President Recep Erdogan.

The document written by the Interior Ministry was a confidential answer to a question posed by Die Linke (the Left Party) in the German parliament (Bundestag). “The numerous affirmations of solidarity and support for the Muslim Brotherhood in Egypt, for Hamas and for armed Islamist opposition groups in Syria by the ruling AKP party and president Erdogan underscore their ideological affinity to their Muslim brothers,” the document states, cited by The Local.

Ankara has repeatedly denied it delivers weapons to Islamist militants in Syria, even though we have shown on various occasions that weapons and supplies destined for ISIS do cross Turkey. But it has a very different attitude to Hamas as that of western states, viewing the group as a legitimate representative of the Palestinian people.

According to Spiegel this is the first time the German government has publicly accused Turkey of having links to Hamas and other Islamist militant groups. The document also reportedly claims that Ankara has recently deepened its links with these groups.

As a result of the step-by-step Islamization of its foreign and domestic policy since 2011, Turkey has become the central platform for action by Islamist groups in the Middle East,” the document states, according to ARD.

Relations between Germany and Turkey have soured markedly in recent months after the Bundestag ratified a proposal to recognize the massacres of Armenians by Turkish Ottoman troops in 1915-16 as genocide. German authorities also recently barred Erdogan from talking via video link to supporters at a rally in Cologne where thousands took to the streets to support the Turkish president after a failed coup in July.

At first sight, it does not appear that the German government intended to use this classified document as a means of embarrassing Ankara. The document stated that a public response to Die Linke’s question was not possible “for the welfare of the state.” It is also not clear to what extent the response had been agreed with the Foreign Ministry.

Germany views Turkey as an “important partner” in fighting terrorism, including by Islamic State, and the refugee accord remains valid and “sensible,” Steffen Seibert, Merkel’s chief spokesman, told reporters in Berlin. He declined to comment on the substance of the leaked report.

However, by then the damage had been done, and with the leaking of this critical report, Ankara has been badly “embarrassed.”  As a result, overnight Turkey’s government slammed the leaked report, increasing the risk of renewed tension between Turkish President Recep Tayyip Erdogan and Chancellor Angela Merkel.

In a statement on Wednesday, the Turkish Foreign Ministry – which so far had mostly lashed out against the US for harboring alleged coup mastermind Fethulah Gullen – said that the German government’s internal assessment is a “new indication of a twisted mentality that attempts to wear out our country by targeting our president and the government.” It blamed unnamed politicians in Germany for applying “double standards” on countries’ commitment to fighting terrorism.

Needless to say, engaging in a war of words with both the US and Germany at the same time, is extremely foolhardy for even the most hardened dictator, unless they truly do have all the leverage, or some trump card up their sleeve the general public is unaware of.

This leak is the the latest scandal between the two countries after Turkey pledged in March to halt the flow of refugees from the Middle East to Europe under an accord with the EU that was championed by Merkel. Turkey, now grappling with upheaval after an attempted military coup against Erdogan in July, has said it will scrap the deal if isn’t granted visa waivers for its citizens traveling to the EU, Bloomberg adds.

German Finance Minister Wolfgang Schaeuble defended the refugee accord at an election rally late Tuesday. “I don’t like at all what Mr. Erdogan is doing, but I’m not in favor” of ending EU-Turkish cooperation on refugees, Schaeuble said in the port city of Rostock. Foreign Minister Frank-Walter Steinmeier has been cautious in his criticism of Turkey ever since the EU signed a refugee deal with Turkey in March, which has contributed to massively reducing the number of asylum seekers arriving in Germany since a high point at the end of last year.

Which is also why we find it so odd that Germany would “leak” a report whose potential destructive power on such a critical diplomatic issue, is so vast. Unless, of course, the leak was premeditated, and designed to force Erdogan to do something “irrational”, like for example unleashing another 1-2 million refugees in Germany’s general direction, which would have a far more destabilizing effect on German society than Grexit and Brexit combined. And with Putin now at his back, Erdogan just may do that.

The only question we have: why is Germany implicitly encouraging this and, of course, what doesGeorge Soros stand to gain from all of this?

 

END

As Turkey moves closer and closer to Russia, the USA quietly remove their nukes to Romania.  The big question of course, is what will Turkey do with all of those migrant. It sue looks like they will flood Europe with them

 

(courtesy zero hedge)

As Turkey “Considers Military Cooperation” With Russia, US Said To Move Nukes Out Of Turkey

Over the past month, ever since the “failed” Turkish coup, there has been a dramatic, and surprising, deterioration in the of Turkey with various European states, most notably Austria and Germany, as well as with the US, and NATO in general. This was confirmed once again earlier today when Turkish Foreign Minister Mevlut Cavusoglu lashed out at NATO, in an interview with Russian Sputnik, saying the alliance is not fully cooperating with Ankara. More importantly, he hinted that Turkey would consider military cooperation with Russia.

In the interview, Cavusoglu said that Ankara has become alarmed at the lack of willingness shown by NATO to cooperate with Turkey, which is a member of the alliance. “It seems to us that NATO members behave in an evasive fashion on issues such as the exchange of technology and joint investments. Turkey intends to develop its own defense industry and strengthen its defense system,” he said.

Turkish Foreign Minister Mevlut Cavusoglu

And, as a result of Turkey’s rising animosity toward NATO, it appears to have handed yet another olive branch to the Kremlin: “In this sense, if Russia were to treat this with interest, we are ready to consider the possibility of cooperation in this sector,” Cavusoglu said when asked about the possibility of working with Russia in the defense sphere.

It was Cavusoglu’s strongest rebuke of NATO to date. In an interview with the Anadolu news agency on August 10, he said that Turkey and Russia would look to establish a joint military, intelligence, and diplomatic mechanism, while adding that relations with NATO were not as satisfactory as he would have wished. He also proposed to bypass the dollar in bilateral trade between Turkey and Russia.

“Turkey wanted to cooperate with NATO members up to this point,” he said. “But the results we got did not satisfy us. Therefore, it is natural to look for other options. But we don’t see this as a move against NATO,” he told Anadolu.

Cavusoglu accused the West of treating Turkey and Russia like “second class countries” simply because they did not see eye-to-eye. “They consider Russia and Turkey to be second class countries, and they are outraged that these second class countries dare to criticize them… Therefore, faced with the straightforwardness and resilience of Erdogan and [President Vladimir] Putin, they feel very worried and anxious,” Cavusoglu said.

Cavusoglu’s criticism was not restricted to NATO, as he launched a broadside towards the West, saying it was largely responsible for the crisis in Ukraine. “Look at what has happened in Ukraine,” he told Sputnik. “They were always threatening the country and forcing it to make a choice between them and Russia. They were saying, ‘you will either be with us or with Russia.’ This course of action is futile. What is happening in Ukraine is a reflection of the main problems in the region.”

* * *

To be sure, Russia has promptly taken advantage of these Turkish overtures, and in addition to the recent meeting between Putin and Erdogan where the two leaders vowed to boost economic and diplomatic ties, a member of Russia’s upper house of parliament has suggested that Turkey could provide its Incirlik air base for Russian Air Forces jets in their campaign across the border in Syria, Turkish daily Hurriyet reported.

“Turkey could provide the Incirlik base to the Russian Aerospace Forces for its use in counterterrorism operations [in Syria]. This could become a logical continuation of Turkish President [Recep Tayyip] Erdogan’s step toward Russia,” Senator Viktor Ozerov, member of the Russian Federation Council Defense and Security Committee, was quoted as saying by RIA Novosti on Aug. 16.

According to Russian news agencies, Ozerov did not rule out that Ankara could offer the use of its air base after Erdogan’s reconciliatory visit to St. Petersburg last week, where he affirmed support for Russia’s anti-terrorist mission in Syria. “It is not guaranteed that Russia needs Incirlik, but such a decision could be regarded as Turkey’s real readiness to cooperate with Russia in the fight against terrorism in Syria, and not just pay lip service,” Ozerov was also quoted as saying.

Ozerov also clarified that the decision could be taken based on similar agreements made with Syria on the use of the Hmeymim facility and the latest use of the Hamadan airfield in western Iran to carry out airstrikes in Syria, the Russian news website Sputnik reported on Aug. 16.

Turkey opened its Incirlik base to the U.S.-led anti-ISIL coalition in July 2015 after a bilateral agreement was signed among both parties.

Notably, Incirlik airbase is where the US has stationed over 50 B61 nuclear bombs, as reported before. Which may explain why according to EurActiv, which cites two independent sources the US has “started transferring nuclear weapons stationed in Turkey to Romania, against the background of worsening relations between Washington and Ankara.”

According to one of the sources, the transfer has been very challenging in technical and political terms. “It’s not easy to move 20+ nukes,” said the source, on conditions of anonymity.

Another source told EurActiv.com that the US-Turkey relations had deteriorated so much following the coup that Washington no longer trusted Ankara to host the weapons. The American weapons are being moved to the Deveselu air base in Romania, the source said. Deveselu, near the city of Caracal, is the new home of the US missile shield, which has infuriated Russia.

EurActiv has asked the US State Department, and the Turkish and the Romanian foreign ministries, to comment. American and Turkish officials both promised to answer. After several hours, the State Department said the issue should be referred to the Department of Defense. EurActiv will publish the DoD reaction as soon as it is received.

 

The Romanian foreign ministry strongly denied the information that the country has become home of US nukes. “In response to your request, Romanian MFA firmly dismisses the information you referred to,”  a spokesperson wrote.

 

According to practice dating from the Cold War, leaked information regarding the presence of US nuclear weapons on European soil has never been officially confirmed. It is, however, public knowledge that Belgium, the Netherlands, Germany and Italy host US nuclear weapons.

Recall that earlier this week, a US-based Think Tank, The Stimson Center, warned that US nuclear bombs In Turkey are at risk of “Seizure By Terrorists Or Other Hostile Forces.”

As such, while unconfirmed, EuroActiv’s report does make strategic sense for the US and Romania, which is emerging as the new Eastern European focal point in the Cold War 2.0, even as NATO, and the US, quietly vacate Turkey. However, if even tangentially confirmed, it will merely accelerate NATO member Turkey’s recent, and abrupt, shift away from the US sphere of influence and into that of Russia, a move which would have the biggest geopolitical consequences for the global balance of power since the end of the Cold War.

EMERGING MARKETS

BRAZIL

Bizarre events in Brazil as two swimmers are pulled from their return trip back to the States.  It seems that Brazil wants a little revenge from the Americans for their support in bringing down Roussef

(courtesy zero hedge(

Brazil Escalates: Authorities Pull 2 US Olympic Swimmers From Rio Flight

It appears Brazilian officials are not simply going to let this one go. With Ryan Lochte reportedly back in the US (and teammate James Feigen unaccounted for) following the Brazilain judge’s search-and-seizure warrant, CNN reports that two fellow swimmers involved in the alleged robbery – Jack Conger and Gunnar Bentz – were removed by Brazilian authorities on Wednesday night from their flight before it departed Rio de Janeiro to the United States, according to US Olympic Committee spokesman Patrick Sandusky.

As a reminder, Lochte, a gold-medal winner, said his wallet was stolen as he and three of his American teammates — Bentz, Conger and James Feigen — were returning to Rio’s Olympic Village in a taxi. They said they were robbed by men posing as police officers, adding that the group initially didn’t contact the U.S. Olympic Committee because they were “afraid (they’d) get in trouble.” The story made quick waves Sunday, especially after Lochte, 32, detailed the alleged encounter on the “Today” show. Lochte’s account has come under increased scrutiny since then. Embarrassed Rio police said they have found little evidence to support the accounts, and a police source said they are unable to find the taxi driver or witnesses.

And now as NBC reports,

Multiple sources told NBC Sports that Conger and Bentz cleared security and were in their seats on the plane when authorities came on to the aircraft shortly before takeoff and removed the swimmers.

They are being held at the airport but are being treated well and cordially, the sources said.

Authorities have indicated they don’t want to hold the swimmers long, but do want to know what happened during the early morning robbery, the sources said.

“We can confirm that Jack Conger and Gunnar Bentz were removed from their flight to the United States by Brazilian authorities,” U.S. Olympic Committee spokesman Patrick Sandusky said. “We are gathering further information.”

Lochte’s lawyer Ostrow said Lochte gave police a statement as representatives from the U.S. State Department, United States Olympic Committee and the FBI observed. Lochte signed the statement to attest to its truthfulness, Ostrow said.

Police have not asked Lochte for more information, and they did not ask him to remain in Brazil, Ostrow said.

“They never said, ‘Stay around,'” Ostrow said. “Otherwise, I would have advised Ryan to stay.”

He accused Brazilian authorities of trying to “save face” after allowing the incident to become “a circus.”

*  *  *

Of course, if one were truly wearing their tin foil hat, one might wonder if this is somehow retribution for Washington’s alleged hand in Rousseff’s downfall…

 

end

 

Then last night, a British Olympic athlete was robbed at gunpoint. Rio is not a safe environment warns their officials:

(courtesy zero hedge)

British Olympic Athlete ‘Robbed At Gunpoint’; Officials Warn Of Curfew, Say “Rio Is Not A Safe Environment”

As Brazilian officials crack down on the four US swimmers allegedly robbed at gunpoint, The Daily Mail reports, aTeam GB athlete has also been robbed at gunpoint in Rio while on a night out. The unnamed athlete is in shock but was uninjured after a similar m.o. is being reported of a taxi-based confrontation. British Team officials have warned they are considering imposing a curfew on athletes, banning partying in the city ‘after dark’, warnings that “Rio is NOT a safe environment, and the level of crime has spiked in the last few days.”

As The Daily Mail details, The incident, which happened in the early hours of Tuesday morning, has led to a warning that it is ‘not worth the risk’ to leave the athletes village, or wander around in their Team GB branded kit.

The athlete, who has not yet been named, is believed to be in shock but was uninjured after being robbed by the gunman.

Details of the attack are still emerging but it is likely the robber held up the star in a taxi or as they entered the Olympic village.

A British Olympic Association spokesperson said:

‘We can confirm there has been an incident of theft involving a Team GB athlete returning to their accommodation. All members of our delegation, including the individual concerned, are accounted for, and are safe and well’.

As a Team GB member was threatened athletes and staff were warned to stay in the Olympic Village – orensure they do not wear team clothing in Rio.

Our biggest Olympic stars, including Mo Farah, Laura Trott and Sir Bradley Wiggins, who enjoyed a night out in the city on Sunday, have received the official warning.

It included the warning that if there are any more robberies a ban on leaving the Olympic Village ‘after dark’ could be introduced. The email said:

‘Avoid leaving the village after dark in anything other than British Olympic Association/Local Organising Committee/UK Athletics transport – taxis cannot be considered safe late at night.

‘If you are planning on going out after dark and have no way of returning other than via taxi, do not go out.

‘You MUST inform a member of team management if you are leaving the village and planning on staying out overnight – please do this BEFORE you leave.

‘Rio is NOT a safe environment, and the level of crime has spiked in the last few days.

‘Think very carefully about whether it is worth the risk of leaving the village to celebrate after you have finished competing – BOA/UKA staff cannot guarantee your safety when away from the village/British School/British House.

‘Our strong advice is that it is simply not worth the risk given the current climate in Rio.’

Other countries have banned athletes from leaving and Team GB’s email said: ‘If further safety/security issues arise it is likely that an outright ban on leaving the village after dark will be introduced’.

We have one piece of advice to the athlete who was robbed – grab your passport and get out of Rio now.

 

end

 

Mystery solved:  it was not a robbery as the story was fabricated.  However things got a little rowdy inside a gas station where Lochte tried to unlock a bathroom  lock and broke the door.  The owner demanded that the swimmers pay for the door.  Lochte then went to police and fabricated the story of being robbed at gunpoint.

 

(courtesy zero hedge)

Mystery Solved: Brazilian Police Say Lochte Fabricated Robbery; Got Rowdy In Gas Station Instead

The strange story involving US Olympic Swimmer Ryan Lochte may just have been resolved moments ago when a Brazilian police official told The Associated Press that American swimmer Ryan Lochte fabricated a story about being robbed at gunpoint in Rio de Janeiro.

The Associated Press

@AP

BREAKING: Brazil police official: Lochte fabricated robbery claim; US Olympic swimmers were in rowdy gas station confrontation.

11:21 AM – 18 Aug 2016

The official said that around 6 a.m. on Sunday, Lochte, along with fellow swimmers Jack Conger, Gunnar Bentz and Jimmy Feigen, stopped at a gas station in Barra da Tijuca, a suburb of Rio where many Olympic venues are located. One of the swimmers tried to open the door of an outside bathroom. It was locked.

A few of the swimmers then pushed on the door and broke it. A security guard appeared and confronted them, the official said.

The official says the guard was armed with a pistol, but he never took it out or pointed it at the swimmers.

According to the official, the gas station manager then arrived. Using a customer to translate, the manager asked the swimmers to pay for the broken door. After a discussion, they did pay him an unknown amount of money and then left.

The official says that swimmers Conger and Bentz, who were pulled off a plane going back to the United States late Wednesday, told police that the robbery story had been fabricated.

A spokesperson for the U.S. Olympic Committee declined to comment. The USOC said earlier on Thursday that three of the swimmers who remain in Brazil would be helping police with their investigation, after authorities stopped two of them leaving the country the previous day. The fourth swimmer, gold medallist Ryan Lochte, returned to the United States on Monday.

And so the mystery appears to be finally over.

OIL ISSUES

Nothing will stop these crooks:  oil rises despite record Saudi output and no output freeze.

(courtesy zero hedge)

Oil Panic-Buying Continues

Record Saudi output; multiple nations proclaiming no output freeze; US production up most in 15 months; rig counts rising…global GDP growth plunging, China demand tumbling… Brent near $50 and WTI soaring to 6-week highs…

Sept 2016 contract continues to soar as the roll hits…

As the short squeeze continues…

As the USDollar slides.

end

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

Euro/USA   1.1320 UP .0022 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.30  UP .396(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3146 UP .01035 

USA/CAN 1.2832 DOWN .0012

Early THIS THURSDAY morning in Europe, the Euro ROSE by 22 basis points, trading now well above the important 1.08 level FALLING to 1.1320; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED down 5.41 POINTS OR 0.19%    / Hang Sang CLOSED UP 223.38 POINTS OR 0.98%     /AUSTRALIA IS LOWER BY .49% / EUROPEAN BOURSES ALL  IN THE GREEN

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 259.63 POINTS OR 1.55%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE GREEN

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 223.38 POINTS OR 0.98%  ,Shanghai CLOSED DOWN 5.41  POINTS OR 0.17%    / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE RED   /INDIA’S SENSEX IN THE GREEN 

Gold very early morning trading: $1350.80

silver:$19.78

Early THURSDAY morning USA 10 year bond yield: 1.549% !!! DOWN 2  in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.2601 DOWN 3   in basis points from WEDNESDAY night. 

USA dollar index early THURSDAY morning: 94.43 DOWN 30 CENTS from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

END

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  2.91% UP 4 in basis points from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.082% UP 1 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:0.916% DOWN 6 IN basis points from WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.075 DOWN 4 in basis points from WEDNESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 16 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.082% up  3 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

 

Euro/USA 1.1353 UP .0056 (Euro UP 56 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 99.92 UP .0240(Yen DOWN 2 basis points/

Great Britain/USA 1 .3147 UP 0.0104 ( Pound UP 104 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2775-DOWN 0.0070 (Canadian dollar UP 70 basis points AS OIL FELL(WTI AT $48.15). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 56 basis points to trade at 1.1353

The Yen FELL to  99.92 for a LOSS of 2 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 104 basis points, trading at 1.1476 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 70 basis points to 1.2847, WITH WTI OIL AT:  $48.15

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6299

the 10 yr Japanese bond yield closed at -.082% DOWN 1 IN  points / yield/

Your closing 10 yr USA bond yield:DOWN 3 IN basis points from WEDNESDAY at 1.537% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.259 DOWN 2 in basis points on the day /

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

Your closing USA dollar index, 94.17  DOWN 55 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED UP 9.81 OR 0.14%
German Dax :CLOSED UP 65.36 OR  0.62%
Paris Cac  CLOSED UP 19.38  OR 0.44%
Spain IBEX CLOSED UP 63.10 OR 0.74%
Italian MIB: CLOSED UP  145.22 POINTS OR 0.88%

The Dow was UP 23.76 points or 0.13%

NASDAQ UP  11.49 points or 0.22%
WTI Oil price; 48.20 at 4:30 pm;

Brent Oil: 50.72

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.67 (ROUBLE UP  46/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.082%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:48.28

BRENT: 50.92

USA 10 YR BOND YIELD: 1.533% 

USA DOLLAR INDEX: 94.16 down 57 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.31639 up .0119 or 119 basis pts.

German 10 yr bond yield at 5 pm: -0.082%

END

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

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

Crude ‘Crashes’ Up To Bull Market, Dollar Dumps To Brexit Lows

You have to laugh sometimes…

 

US Macro data continues to disappoint after its record run…

 

Post-payrolls gold is the winner (usd the loser)…

 

Stocks ended higher on the day with Small Caps best – all melting up into the close…

 

S&P and Dow hovered around unch on the week…

 

It seems VIX 12 was as ‘extreme’ as the market was willing to go today before panic struck… (must close green above 2182) – total panic bid into close as VIX was clubbed

 

As an aside, stocks remain ‘safer’ than bonds on an implied vol basis… (in fact S&P (SPY) vol is just 75% of bond (TLT) vol – the lowest on record) – it did not end well last time…

 

The USD Index kept sliding today led by cable and swissy strength…

 

Smashing USD Index to Brexit lows…

 

Treasury yields fell across the complex with the longest-end modestly under-performing…

 

Spot the odd commodity out… gold and copper mirroring USD weakness but crude in a world of its own…

 

Oil closed up 23% from its Aug 2nd lows – swinging from bear to bull market in just 2 weeks…

 

The last 6 days in crude oil…

 

Notably it is the front-end that is surging…

 

Finally, oil appears to continue tracking last year’s maniacal analog with its stunning sudden meltup…

To explain…

View image on Twitter

Mark Constantine @vexmark

Step 1: OPEC jawboning
Step 2: Short-covering rally
Step 3: Oil back in bull market
Step 4: No need for OPEC action

3:41 PM – 18 Aug 2016

But be careful… today saw major hedging in Crude vol…

 

 

Charts: Bloomberg

Bonus Chart: A Gentle Reminder Of What Really Matters…

end

 

Obamacare is in such a mess.  Insurers are now down 2 billion USA dollars.  There are 3 major steps outlined by the insurers as to how they are going to fix their problem:

  1. get out of Obamacare altogether
  2. those that remain will hike premiums by 24%
  3. mergers and the resulting entity will raise rates

(COURTESY ZERO HEDGE)

Obamacare Doomed As Insurers Lose $2 Billion On Plans In 2016 (Prompting 2017 Rates To Soar)

The typical rosy Democrat narrative on Obamacare highlights the decline in uninsured Americans as evidence of its great “success” while conveniently ignoring the fact that most of the “newly insured” are actually coming from the expansion of Medicaid.  The fact is that Obamacare is a debacle and is on the verge of collapse (see our previous post “Obamacare On “Verge Of Collapse” As Premiums Set To Soar Again In 2017“).

Our reasoning is quite simple and is the same reason Obamacare was doomed from the start.  As we’ve pointed out numerous times in the past, the true downfall of Obamacare will be in its inherent “adverse selection bias.“  “Sicker/older” people have every incentive to enroll while “younger/healthier” people, the ones that were supposed to subsidize everyone else by buying policies they didn’t need, are choosing to simply pay their penalties instead.  So what you’re left with is a pool of “sicker/older” people who consume a massive amount of healthcare but whom don’t pay “their fair share” because Obamacare specifically caps the rates that can be charged to the “sicker/older” people at 3x the rates charged to “younger/healthier” people (who cares if they consume 20x more healthcare…3x just sounded about right). 

And as a recent article from Bloomberg confirms, the negative impacts of “adverse selection bias” are playing out in insurers’ financials.  Per Bloomberg, the major U.S. insurers are set to lose roughly $2BN on Obamacare in 2016.  UnitedHealth has announced they lost $850mm on Obamacare in 2016 while Aetna, Anthem and Humana are expected to lose about $300mm each.

Obamacare advocates had hoped that big government subsidies to consumers would persuade healthy people to sign up for the ACA plans. But the policies have largely been taken out by older, less healthy people who are more expensive to insure.What we are left with … is a highly subsidized program for relatively low-income people,” says Dan Mendelson, the CEO of consulting firm Avalere Health. “We’re not getting to the broader vision of a robust private market structure that enables a broad swath of Americans to purchase their insurance.

In the end, the fate of Obamacare boils down to simple math.  Each person that signs up for insurance has some expected present value of future healthcare consumption…believe it or not the insurers are pretty good at calculating these values.  Insurers agree to post significant sums of capital to underwrite those future healthcare costs but expect a return on that capital.  Now, in theory, the insurers don’t really care whether premium dollars come from the “sicker/older” people or the “younger/healthier” people so long as the aggregate dollars collected meet their minimum return on invested capital thresholds.  That said, with rates capped on “sicker/older” people and the absence of “younger/healthier” people signing up, there simply aren’t enough dollars in aggregate being collected to provide that return to insurers.

So, insurers are left with 2 options: (1) pull out of Obamacare or (2) implement massive premium hikes.  Well, turns out they’re actually doing both.

Per Bloomberg, UnitedHealth has announced plans to exit 31 of the 34 states where it currently offers ACA policies, Aetna is dropping 11 out of 15 states and Humana is reducing it’s offerings to just 156 counties down from 1,351 a year ago.  Meanwhile, insurers are also hiking premiums by 24%, on average, for the remaining states in 2017 (see our previous post: “Obamacare Sticker Shock: Average 2017 Premium Surges 24%“).   Despite Obama’s promise that Obamacare would increase options and lower costs, it is, in practice, doing the exact opposite as Cynthia Cox of the Kaiser Family Foundation points out that “as many as a quarter of all U.S. counties, mainly in rural areas, are at risk of having just a single insurer for next year.

On Aug. 15, Aetna said it will stop selling Obamacare plans in 11 of the 15 states where it had participated in the program, reversing its plan to expand into five new state exchanges in 2017. “The exchanges are a mess as they exist today,” says Aetna Chief Executive Officer Mark Bertolini. “They’re losing a lot of money for a lot of people.

Actually, there was also a 3rd option proposed by insurers to cut ACA losses.  Insurers also attempted mergers as a way to reduce costs and alleviate some of the profitability pressures inflicted by Obamacare but Obama’s Justice Department isn’t too keen on the idea.  Per Bloomberg:

Insurance companies were hoping that a wave of mergers would help them cope with ACA-related red ink. In July 2015, Aetna struck a deal to buy Humana and Anthem agreed to buy Cigna. But the U.S. Department of Justice sued to block both transactions, saying they’d harm competition. “The synergies from the two mergers would have subsidized a lot of losses,” says Ana Gupte, an analyst at Leerink Partners. “That could have helped them manage some of the pressure they’re seeing on the exchanges.”

Meanwhile, the media is now starting to spin a narrative that Aetna CEO,  Mark Bertolini, effectively attempted to blackmail antitrust officials over the approval of his proposed merger with Humana.  Per another report from Bloomberg:

Aetna Inc. warned antitrust officials more than a month ago that it would pull out of Obamacare’s government-run markets for health insurance if the U.S. attempted to block its $37 billion merger with Humana Inc.

In a July 5 letter to the Justice Department from Chief Executive Officer Mark Bertolini, Aetna said that challenging the merger “would have a negative financial impact on Aetna and would impair Aetna’s ability to continue its support” of plans sold under the Affordable Care Act. That would leave the insurer “with no choice but to take actions to steward its financial health.

“If the DOJ sues to enjoin the transaction, we will immediately take action to reduce our 2017 exchange footprint,” Bertolini wrote. He said that the cost of litigation and debt taken on by Aetna, the need to plan for a breakup fee it would owe Humana, as well as cost savings from a successful deal, would all factor into Aetna’s need to pull back.

“By contrast, if the deal proceeds without the diverted time and energy associated with litigation, we would explore how to devote a portion of the additional synergies (which are larger than we had planned for when announcing the deal) to supporting even more public exchange coverage,” Bertolini said in the letter.

Since when did corporations taking actions to make money for shareholders become a crime in this country?

 

END

 

The hope part of the Philly index rises but the other components such as new orders and employment crashes to 7 yr lows.  The overall index rises to 45.8 from 33.7.

(courtesy zero hedge)

Philly Fed ‘Hope’ Jumps As New Orders Plunge, Employment Crashes To 7 Year Lows

Despite a modest bounce in Philly Fed headline data – thanks purely to a jump in ‘hope’ from 33.7 to 45.8 (the highest in 18 months) – the underlying components of the Philly fed survey are a disaster. New orders collapsed, employment crashed to 7 year lows, Average workweek plunged, prices paid soared, and inventories fell.

6 of the 9 indicators fell…

But hope soared to 18 month highs…

Optimism is all they have left…

The August Manufacturing Business Outlook Survey indicated, on balance, that growth in the region’s manufacturing sector is currently weak. The survey’s indicators for current general activity and shipments were positive, while the indicators for new orders and employment were negative. The indicators for future conditions rose sharply from last month’s readings, however…

The current new orders index dropped significantly from a reading of 11.8 in July to -7.2 in August. The percentage of firms reporting an increase in new orders (27 percent) was less than 1 point lower than last month; however, the percentage of firms reporting a decrease (34 percent) was 18 points higher than last month. The current shipments index rose slightly, from 6.3 to 8.4. The percentage of firms reporting an increase in shipments (35 percent) was 6 points higher than last month. The indexes for unfilled orders and delivery times fell into negative territory, recording values of -15.0 and -3.8, respectively. The index for inventories dropped from -4.3 to -9.2. The indicators for unfilled orders, delivery times, and inventories have been negative for most of this year.

The survey’s indicators of employment weakened considerably. The employment index fell 18 points to -20.0, which is its largest negative reading for the current year. Although 67 percent of the firms reported no change in employment this month, the percentage reporting decreases (25 percent) significantly exceeded the percentage reporting increases (5 percent). The workweek index also fell, from -3.6 to -11.5. Twenty-five percent of the firms reported a decrease in average work hours, and only 13 percent reported an increase.

Charts: Bloomberg

end

 

 

One of my favourite Bellwether indicators on global health is Caterpillar.  Today it is retail orders that have suffered their second biggest plunge in 7 years and it has now posted 44 consecutive declines in retail sales:

(courtesy zero hedge)

Caterpillar Retail Orders Suffer Second Biggest Plunge Since Financial Crisis

While the relentless decline in Caterpillar retail sales has been duly noted here every month for nearly 4 years, now posting 44 consecutive declines, the latest, July data was downright depressionary.

According to the company, in the latest month – just when China was supposed to be rebounding and the US recovery getting “stronger” – demand took another sharp leg lower, as follows:

  • North America machine sales down 20% after falling 12% in June
  • Asia/Pacific sales July down 7% after falling 7% in June
  • Latam sales July down 43% after falling 38%
  • EAME (Europe, Africa, Middle East) sales July down 13% after falling 4%

This means that Caterpillar’s rolling 3-month retail machine sales dropped by 19% in July vs the more modest 12% fall in June and May. It also means that, as shown in the chart below, in the past month CAT retail sales just posed the second largest monthly drop since the financial crisis.

And the breakdown by segment.

end

 

With the markets threatening for a rout, it breaks again:

(courtesy zero hedge)

And The Market Breaks (Again)

Despite a positive open, stocks startd to slide rapidly on heavy volume with VIX suddenly surging… so what was to be done!! Break The Market…

  • *BATS BYX EXCHANGE HAS DECLARED SELF-HELP VS NYSE ARCA

Source: BATS

And it worked…

And having stalled the plunge, it’s fixed:

0949ET BATS EDGX EXCHANGE HAS REVOKED SELF-HELP VS NYSE ARCA

end

The truth behind the real earnings from Wall Street.  The current P>E for the S & P is 25.1

(courtesy David Stockman/)

On The Impossibility Of Helicopter Money And Why The Casino Will Crash by  • August 17, 2016

NOTE TO READERS

I am in the throes of finishing a book on the upheaval represented by the Trump candidacy and movement. It is an exploration of how 30 years of Bubble Finance policies at the Fed, feckless interventions abroad and mushrooming Big government and debt at home have brought America to its current ruinous condition.

It also delves into the good and bad of the Trump campaign and platform and outlines a more consistent way forward based on free markets, fiscal rectitude, sound money, constitutional liberty, non-intervention abroad, minimalist government at home and decentralized political rule.

In order to complete the manuscript on a timely basis, I will not be doing daily posts for the next week or two. Instead, I will post excerpts from the book that crystalize its key themes and which also relate to the on-going gong show in the presidential campaigns and in the financial and economic arenas. Another of these is included below.

I am also working with my partners at Agora Financial on a new version of Contra Corner. More information on that will be coming later this month.

……..As the stock market reached its lunatic peak near 2200 in August, the certainty that the Fed is out of dry powder and that the so-called economic recovery is out of runway gave rise to one more desperate pulse of hopium.

Namely, that the central banks of the world were about to embark on outright ‘helicopter money’, thereby jolting back to life domestic economies that are sliding into deflation and recession virtually everywhere—– from Japan to South Korea, China, Italy, France, England, Brazil, Canada and most places in-between.

That latter area especially includes the United States. Despite Wall Street’s hoary tale that the domestic economy has “decoupled” from the rest of the world, the evidence that the so-called recovery is grinding to a halt is overwhelming.

After all, the real GDP growth rate during the year ending in June was a miniscule 1.2%. It reflected the weakest 4-quarter rate since the Great Recession.

And even that was made possible only by an unsustainable build-up in business inventories and the shortchanging of inflation by the Washington statistical mills. Had even a semi-honest GDP deflator been used, the US economy would have posted real GDP on the zero-line, at best.

So the stock market’s 19% melt-up from the February 11 interim low of 1829 on the S&P 500 was positively surreal. There was not an iota of sustainability to it. In fact, “interim” was exactly the right word for a low that is going a lot lower, and soon.

Indeed, the spring-summer rebound was the work of eyes-wide-shut day traders and robo-machines surfing on a thinner and thinner cushion of momentum. What must come next, in fact, is exactly what happens when you stop peddling your bicycle. To wit, momentum gets exhausted, gravity takes over and the illusion of stability is painfully shattered.

But these revelers are going to need something stronger than the hope for “helicopter money” to avoid annihilation when the long-running central bank con job finally collapses. Indeed, that denouement lies directly ahead because helicopter money is a bridge too far and valuations are literally perched in the nosebleed section of history.

As to the latter point, the S&P 500 companies posted Q2 2016 earnings for the latest 12 month period at $86.66 per share. So at the August bubble high the market was being valued at a lunatic 25.1X.

Even in a healthy, growing economy that valuation level is on the extreme end of sanity. But actual circumstances are currently more nearly the opposite. That is, earnings have now been falling for six straight quarters in line with GDP growth that has slumped to what amounts to stall speed.

In fact, reported earnings for the S&P 500 peaked at $106 per share in the 12 months ended in September 2014. That means that earnings had fallen by 19% since then, even as the stock market moved from 1950 to nearly 2200 or 13% higher.

This is called multiple expansion in the parlance of Wall Street, but it’s hard to find a more bubblicious example. Two years ago the market was trading at just 18.4X, meaning that on the back of sharply falling earnings the PE multiple had risen by 36%!

Valuation multiples are supposed to go up only when the economic and profits outlook is improving, not when it’s unmistakably deteriorating as at present. But during the spring-summer melt-up these faltering fundamentals were blithely ignored on the hopes of a second half growth spurt and, failing the latter, that the Fed would again pull the market’s chestnuts out of the fire.

The growth spurt absolutely has not happened, and the recent sharp decline in in-bound containers at the West Coast ports means that the US retail sector is not provisioning for any rebound in sales during the coming fall and holiday seasons.

And that is why the Wall Street gamblers are so desperately hoping for helicopter money. The fact is, the Fed is out of dry powder via the “extraordinary” measures it has employed since the financial crisis.

To wit, in the event the economy is visibly drifting into recession, it cannot go to sub-zero interest rates without triggering a Donald Trump led domestic political conflagration. Nor can it abruptly shift to a huge new round of QE without confessing that $3.5 trillion of the same has been for naught.

Yet “helicopter money” isn’t some kind of new wrinkle in monetary policy, at all. It’s an old as the hills rationalization for monetization of the public debt—–that is, purchase of government bonds with central bank credit conjured from thin air.

It’s the ultimate in “something for nothing” economics. That’s because most assuredly those government bonds originally funded the purchase of real labor hours, contract services or dams and aircraft carriers.

As a technical matter, helicopter money is exactly the same thing as QE. Nor does the journalistic confusion that it involves “direct” central bank funding of public debt make a bit of difference.

Suppose Washington issues treasury bonds to the 23 primary dealers on Wall Street in the regular manner. Further, assume that some or all of these dealers stick the bonds in inventory for 3 days, 3 months or even 3 years, and then sell them back to the Fed under QE (and most likely at a higher price).

So what!

The only thing different technically about “helicopter money” policy is the suggestion by Bernanke and others that the treasury bonds could be issued directly to the Fed. That would just circumvent the dwell time in dealer (or “investor”) inventories but result in exactly the same end state. In that event, of course, Wall Street wouldn’t get the skim.

Why Helicopter Money Is The Ultimate Beltway Scam

But that’s not the real reason why helicopter money policy is so loathsome. The unstated essence of it is that our monetary politburo would overtly conspire and coordinate with the White House and Capitol Hill to bury future generations in crushing public debts.

They would do this by agreeing to generate incremental fiscal deficits—-as if Uncle Sam’s current $19 trillion isn’t enough debt—–which would be matched dollar for dollar by an increase in the Fed’s bond-buying or monetization rate. That amounts not only to teaching children how to play with matches; it’s tantamount to setting fiscal forest fires across the land……

END

Dr. Pinsky states that there is something wrong with Hillary’s health

(courtesy Jankowski/zero hedge)

.

Dr. Drew Pinsky Says He Is “Gravely Concerned” About Hillary Clinton’s Health

Submitted by Joseph Jankowski of PlanetFreeWill

Board-certified medicine specialist and TV personality Dr. Drew Pinsky has come out and said that he is “gravely concerned” about presidential candidate Hillary Clinton’s health, pointing out that treatment she is receiving could be the result of her bizarre behaviors.

Appearing on KABC’s McIntyre in the Morning, Pinsky said he and his colleague Dr. Robert Huizenga became “gravely concerned….not just about her health but her health care,” after analyzing what medical records on Hillary had been released.

Pinsky pointed out that after Clinton fainted and fell in late 2012, she suffered from a “transverse sinus thrombosis,” an “exceedingly rare clot” that “virtually guarantees somebody has something wrong with their coagulation system.”

“What’s wrong with her coagulation system, has that been evaluated?” asked Dr. Drew.

Dr. Drew, known as “America’s most trusted physician,” added that the “weird” medication Clinton has been receiving could be exacerbating her health problems.

“So the very medicine doctors are using may be causing this problem and they’re using an old fashioned medicine to treat it – what is going on with her health care?” asked Pinsky.

Pinsky described the situation as “bizarre,” and said that Hillary’s medical condition was “dangerous” and “concerning”.

Dr. Drew also went on to add that it was a sign of “brain damage” when Hillary had to wear prism glasses after her fall.

Although the Clinton Campaign has said that the controversy over Hillary’s health has been debunked and while the media feverishly attempts to paint any questioning of the medical condition of the Democratic party’s nominee as a “conspiracy theory,” it certainly says something when “America’s most trusted physician,” who regularly appears on mainline television, comes out and says he is deeply concerned about Hillary.

 END New details have come forth confirming the 400 million dollars given to Iran was indeed a ransom! (courtesy zero hedge) Obama Lied: New Details Confirm $400 Million Given To Iran Was Indeed “Hostage Ransom”

If you define “ransom” as “a payment exchanged contingent on the release of a hostage” then you find yourself forced to admit that President Obama lied last week when he aggressively denied (and was irked at the question) that he paid Iran a $400 million ransom for the return of 4 hostages.  Today, The State Department’s spokesperson John Kirby told the truth that the Iran payment was contingent on the prisoner release… but of course spun this ‘ransom’ payment as masterful diplomacy “deliberately leveraging the moment.”

As Bloomberg reports,

The U.S. withheld a $400 million cash payment to Iran earlier this year as leverage to ensure that American prisoners would be released as the country had promised, State Department spokesman John Kirby said.

 

“We were able to conclude multiple strands of diplomacy within a 24-hour period,” Kirby told reporters in Washington on Thursday. “We deliberately leveraged that moment.”

 

Kirby was responding to a report in the Wall Street Journal that the U.S. wouldn’t let Iran take control of the money — which the country was owed as part of a $1.7 billion settlement over a long-running dispute — until a plane carrying the American prisoners had left Iran in January.

 

Disputes over the timing of the payment have fueled criticism of the administration’s nuclear deal with the Islamic Republic. While the U.S. has said talks over the release of the prisoners were held separately from last year’s negotiations on the payment and the nuclear deal, Kirby’s comments represented an acknowledgment that those two matters eventually converged.

Previously, US official stated on the record that the $400 million payment to Iran was separate from the hostages. This is what State Dept. spokesman John Kirby told the WSJ two weeks ago:

“As we’ve made clear, the negotiations over the settlement of an outstanding claim… were completely separate from the discussions about returning our American citizens home,” State Department spokesman John Kirby had told the Wall Street Journal.

Which should serve as a reminder: if lying, especially as a president, don’t leave a trail, and definitely don’t get caught.

*  *  *

Simply put – The Administration just could not keep track of the lies and the facts leaked out. And now the fact is – The US President lied directly to the American people… no matter how much lipstick is applied to this disgusting pig.

And finally, why should anyone cast aspersions at Ryan Lochte (who will likely be ruined by his l’ies’) when the nation’s Commander-in-chief has trouble keeping the truth straight (and will likely suffer no consequences whatsoever)?

*  *  *

As a reminder of how we got here, The Hill reported last week that,President Obama chastised the press for their coverage of the payment, noting that the deal with Iran was announced months ago as part of a larger diplomatic settlement.

“This wasn’t some nefarious deal,” Obama said.

 

“It’s been interesting to watch this story surface,” the president said. “Some of you may recall, we announced these payments in January. Many months ago. There wasn’t a secret, we announced them to all of you.”

 

“What we have is the manufacturing of outrage on a story that we disclosed in January,” he added later.

 

“The notion that we would somehow start now in this high-profile way, and announce it to the world, even as we’re looking in the faces of other families whose loved ones are being held hostage and say to them, ‘we don’t pay ransom,’ defies logic,” Obama said.

Defies logic indeed – because having slammed the press for suggesting this was a “ransom payment,” we discovered that is exactly what The Justice Department warned

In his remarks, the president didn’t mention the objections raised by his own appointees within the Justice Department, where, according to people familiar with the discussions, many officials raised alarms that the timing of the cash payment would look like ransom. (via WSJ)

The head of the national security division at the Justice Department was among the agency’ssenior officials who objected to paying Iran hundreds of millions of dollars in cash at the same time that Tehran was releasing American prisoners, according to people familiar with the discussions.

 

John Carlin, a Senate-confirmed administration appointee, raised concerns when the State Department notified Justice officials of its plan to deliver to Iran a planeful of cash, saying it would be viewed as a ransom payment, these people said. A number of other high-ranking Justice officials voiced similar concerns as the negotiations proceeded, they said.

 

The U.S. paid Iran $400 million in cash on Jan. 17 as part of a larger $1.7 billion settlement of a failed 1979 arms deal between the U.S. and Iran that was announced that day. Also on that day, Iran released four detained Americans in exchange for the U.S.’s releasing from prison—or dropping charges against—Iranians charged with violating sanctions laws. U.S. officials have said the swap was agreed upon in separate talks.

 

The objection of senior Justice Department officials was that Iranian officials were likely to view the $400 million payment as ransom, thereby undercutting a longstanding U.S. policy that the government doesn’t pay ransom for American hostages, these people said. The policy is based on a concern that paying ransom could encourage more Americans to become targets for hostage-takers.

Of course, the denials kept on coming from The White House.

However, just this week, as The Wall Street Journal now reports, new details of the $400 million U.S. payment to Iran earlier this year depict a tightly scripted exchange specifically timed to the release of several American prisoners held in Iran, based on accounts from U.S. officials and others briefed on the operation

U.S. officials wouldn’t let Iranians take control of the money until a Swiss Air Force plane carrying three freed Americans departed from Tehran on Jan. 17, the officials said.

 

Once that happened, an Iranian cargo plane was allowed to bring the cash back from a Geneva airport that day, according to the accounts.

 

President Barack Obama and other U.S. officials have said the payment didn’t amount to ransom, because the money was owed by the U.S. to Iran as part of a longstanding dispute linked to a failed arms deal from the 1970s. U.S. officials have said that the prisoner release and cash transfer took place through two separate diplomatic channels.

 

But the handling of the payment and its connection to the release of the Americans have raised questions among lawmakers and administration critics.

 

 

One of the Americans released in January as part of the prisoner exchange, a Catholic pastor named Saeed Abedini, said he and other American prisoners were kept waiting at Mehrabad airport for more than 20 hours from Jan. 16 to the morning of Jan. 17.

 

He said in an interview that he was told by a senior Iranian intelligence official at the time that their departure was contingent upon the movements of a second airplane.

Just as Trump had suggested (before oddly retracting his suggestion), the exchange did take place and as the BBC reported. a video did indeed exist of the events, referring to a documentary called “The Rules of the Game” which was broadcast on Iranian state TV in February. In the clip, one can see shots of an airport are accompanied by commentary which references 17 January in Tehran’s Mehrabad Airport.

Specifically, the video shows a loaded crate, partially blurred out, which allegedly shows the money in question.

 

And another version:

A translation of the commentary with the pictures, per BBC, reads as follows.

“Early hours of 17 January 2016, Mehrabad Airport (Tehran), $400m cash was transported to Iran by an airplane.

 

“A little bit later, part of the interest money was also paid to Iran, and the US government made a commitment to pay the rest of Iran’s money.”

While it is not clear if this is intended to be a literal description or whether the shots are just general views of the airport.

The video is shown below, and the pettets of cash appear at the 11:00 mark.

The video It can also be found on YouTube, and was also hosted and discussed by MEMRI tv at one point, and was also in a BBC Journalist twitter feed.  Here are the links to the short and the full versionof the Iranian Documentary. Finally here is another version.

It is unclear where Donald Trump might have caught the clip of the video, and whether or not the cash disclosed is what Iran claims it is (in light of the WSJ revelations it is very likely that this is indeed the alleged payment in question) but the footage was widely discussed several months ago when the hostages were released.  The Iranian TV ran it with a title “The Rules of The Game.” It was released on BBC TV during a segment discussing the release of the prisoners.

In other words, it did exist.  

*  *  *

So to summarize – Obama lied; the administration did indeed make a $400 million in exchange for the release of four hostages (if it walks like a ransom, and talks like a ransom, it is a ransom), and Trump was right.

Finally, this is far from over, as The Wall Street Journal concludes, Republican lawmakers have charged that the $400 million payment equated to a ransom paid by the White House to gain the release of the Americans.

Republican leaders said they are preparing to hold hearings on the $400 million transfer once Congress returns from its summer break in September. Rep. Sean Duffy (R., Wis.), chairman of a House investigative body, sent letters to the Justice and Treasury Departments, as well as the Federal Reserve, on Aug. 10 requesting all records related to the Iran exchange.

 

Mr. Duffy asked Attorney General Loretta Lynch to identify all “persons within the Department authorizing or otherwise taking steps to carry out the payment.”

Obama administration officials have confirmed that they have paid the remaining $1.3 billion to Iranas part of the settlement reached in January on the failed arms deal. This marked the interest accrued over the past 37 years on the original $400 million paid by Iran. U.S. officials, however, have refused to disclose how the Obama administration made this additional payment. Lawmakers are seeking to determine whether this money was also paid in cash or if the Treasury Department was able to wire it electronically.

 

end

The USA is going after Harley Davidson for evading emission requirements.  So we now have Chrysler under criminal investigation and now Harley Davidson: (courtesy zerohedge) HOG Slaughtered: Harley Davidson Tumbles After US Accuses It Of Evading Emissions Requirements

Until now, the emissions scandal revealed one year ago involving first Volkswagen and then countless other companies using “defeat devices” to evade emissions requirements, was contained to the car space. That changed moments ago when the U.S. government alleged in a lawsuit that Harley-Davidson “Screamin’ Eagle” after-market engine tuners are emissions-control defeat devices, and accused the motorcycle maker of violating federal air pollution laws.

  • U.S. ACCUSES HARLEY-DAVIDSON OF SELLING MOTORCYCLES WITH “DEFEAT DEVICES” DESIGNED TO EVADE EMISSIONS REQUIREMENTS
  • U.S. FILES CLEAN AIR ACT LAWSUIT AGAINST HARLEY-DAVIDSON INC HOG.N — COURT FILING
  • LAWSUIT FILED IN FEDERAL COURT IN WASHINGTON, D.C.
  • U.S. ACCUSES HARLEY-DAVIDSON OF VIOLATING CLEAN AIR ACT AND ON-HIGHWAY MOTORCYCLE REGULATIONS
  • U.S. ACCUSES HARLEY-DAVIDSON OF SELLING MOTORCYCLES WITH “DEFEAT DEVICES” DESIGNED TO EVADE EMISSIONS REQUIREMENTS

The Milwaukee-based company sold more than 339,000 of those devices from 2008 to 2015, according to a complaint filed Thursday at a U.S. court in Washington. The government seeks a court order barring the company from making, selling or installing the tuners on bikes certified as emissions compliant, plus financial penalties.

The stock is tumbling.

 

 

end

 

Your humour for the day:

Caption of the day

 

Did Biden find the on/off switch?

 

Well that is all for today:

I will see you tomorrow night

h


August 17/FOMC in a slight hawkish mood yet market interprets as dovish/China has massive amount of ships into disputed waters/Russia engages in armoured war games/Dund and Bradstreet may lower the boom on Portugal’s sovereign debt : if they downgrade...

Wed, 08/17/2016 - 19:05

Gold:1342.70 down $7.80

Silver 19.63  DOWN 22  cents

In the access market 5:15 pm

Gold: 1349.00 post FOMC

Silver: 19.70

.

For the August gold contract month,  we had a small sized 11 notices served upon for 1100 ounces. The total number of notices filed so far for delivery:  12,857 for 1,285,700 oz or  tonnes or 39.999 tonnes.  The total amount of gold standing for August is 42.82tonnes.

In silver we had 119 notices served upon for 595,000 oz. The total number of notices filed so far this month:  393 for 1,965,000 oz.

 

 

Let us have a look at the data for today

.

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In silver, the total open interest ROSE BY A TINY 5 contracts UP to 205,905 AND  MOVING AWAY FROM ITS AN ALL TIME RECORD AS  THE  PRICE OF SILVER ROSE  BY 3 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.029 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold FELL 7,819 contracts despite the fact that the price of gold ADVANCED YESTERDAY by $10.20 . The total gold OI stands at 572,496 contracts.

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

GLD

we had no change the GLD/

Total gold inventory rest tonight at: 962.23

SLV

we had a huge addition of 1.519 million oz  into the SLV, /   THE SLV/Inventory rests at: 353.284 million oz.

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

1. Today, we had the open interest in silver ROSE by 5 contracts UP to 205,905 as price of silver ROSE BY 3 cents with YESTERDAY’S trading.The gold open interest FELL 7,819 contracts DOWN to 572,496 as the price of gold ROSE by $10.20 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

 i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 0.48 POINTS OR 0.02%/ /Hang Sang closed DOWN 111.06 points or 0.48%. The Nikkei closed UP 149.13 POINTS OR 0.90% Australia’s all ordinaires  CLOSED UP 0.06% Chinese yuan (ONSHORE) closed DOWN at 6.63445/Oil FELL to 46.35 dollars per barrel for WTI and 48.90 for Brent. Stocks in Europe:  in the RED . Offshore yuan trades  6.6392 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES

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

Interesting!  The Nikkei 225 is now higher than the Topix due to Bank of Japan purchases of stocks and ETF’s

( zero hedge)

b) REPORT ON CHINA

Is this the reason why China is standing for a huge amount of silver contracts at the comex:  Are they willing to take on the west? China has massive ships in the disputed South China seas.

( zero hedge)

4 EUROPEAN AFFAIRS

GERMANY

i)Deutsche bank not doing too good;  One of its executives is suggesting that the company scrap its top level bonuses  on top of the scrapping of the dividends to its shareholders.

Interestingly, he claims that the bank is better than what it seems as the bank past its ECB stress test. He ignores the German ZEW stress test of which the bank failed and needs 19 billion in capital

( zero hedge)

ii)PORTUGAL

You will recall that Dun and Bradstreet is the only rating agency that gave Portugal the minimum BBB grade such that the ECB could still continue to buy their junk sovereign bonds.

Well it looks like D & B might lower the boom on Portugal setting the stage for some fireworks;

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)TURKEY

A terrific commentary on what is happening behind the scenes in Turkey.  At first many thought that Erdogan was behind his own plot  to “remove” him, but on closer examination it seems that it may have been a poor execution of the west.  This is why he is seeking a partnership with Putin of Russia. Putin will win as he gets back the Turkish stream pipeline and he will still control much of the happenings in Turkey much to the chagrin of the west.

a must read…

( Bohm Bawerk/Bawerk.net)

ii)RUSSIA

The following does not look good as Russia conducts armoured train drills for the first time in 15 years:

(courtesy MacSlavo/SHTFPlan.com)

6.GLOBAL ISSUES

The Rothschilds join the bearish crowd as they increase their gold holdings up to 8%

( zero hedge)

7.OIL ISSUES

i)The Saudis are now set to increase their output to record levels. Qatar is angry!(courtesy (zero hedge)

ii)Then at 11:25 am oil jumps on an inventory decline.  However the industry has experienced its biggest production increase in 15 months;

( zero hedge)

8.EMERGING MARKETS BRAZIL

In the surreal category, police have seized Ryan Lochte’s passport stating he cannot leave the country because they state that he lied about being robbed

(courtesy zero hedge)

9.PHYSICAL STORIES

i)Peter Grandich, former mining company adviser states that we are in the beginning of a huge gold bull market:

( Peter Grandich/)

ii)Jim Richards tells of the “paper gold” fraud game and how this will end badly for our bankers:( Jim Rickards)

 

iii)Koos Jansen is the only one you should follow with respect to demand of gold from China:

( Koos Jansen)

iv)Good question:  find out what Eric thinks on whether the current gold price justifies the big gains in all gold/silver stocks(courtesy Eric Sprott/Sprott Asset Management)

 

v) Dave Kranzler discusses the gold/silver trading at the comex:

 

(Dave Kranzler IRD)

vi)Just look what insurance companies and banks are doing to store cash in vaults to avoid negative interest rates

( Clair Jones/London’s Financial times)

 

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

i) aThis is a huge Bellwether:  the giant Cisco is reportedly firing 20% of its workforce: 14,000 workers

( zero hedge)

1b)Then with the announcement of only 5500 being fired, the market is very disappointed and Cisco falls even more

( zero hedge)

ii)The gloves come off as Trump hires Breitbart Chairman: expect fireworks on Hillary

( zero hedge)

iii)Then early this morning, the street did not like this:  Target slashes earnings estimates for the second half of 2016:

( zero hedge)

iv)Last month we highlighted to you 3 ref flags which show that the USA housing sector is in a massive slowdown. Today those red flags are flashing an even brighter red:

( zero hedge)

 

Let us head over to the comex: The total gold comex open interest FELL TO AN OI level of 572,496 for a LOSS of 7,819 contracts DESPITE THE FACT THAT THE PRICE OF GOLD ROSE BY $10.30 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed in May,  June and July  whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FALL by 283 contracts DOWN to 922,  We had 22 notices filed upon yesterday so we LOST A HUGE 261 contracts or an additional 26,100 oz will not stand for delivery in August AND THESE GUYS WERE WITHOUT A DOUBT CASH SETTLED FOR A FIAT BONUS. The next contract month of Sept saw it’s OI fall by 372 contracts down to 4581.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI ROSE by 156 contracts UP to 46,538. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 153,489.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 235,749 contracts.The comex is not in backwardation. Today, we had  11 notices filed for 1100 oz in gold And now for the wild silver comex results. Total silver OI ROSE by 5 contracts from 205,900 UP TO 205,905 with the RISE in price of silver to the tune of 3 cents.  We are moving away from the all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The non active month of August saw it’s OI RISE BY 5 CONTRACTS UP TO 203. We had 0 notices served yesterday so we GAINED 5 contracts or an additional 30,000 oz will  stand in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 2253 contracts down to 104,058  and that would alarm our bankers to no end. The volume on the comex today (just comex) came in at 78,603 which is HUGE and small rollovers..The confirmed volume yesterday (comex + globex) was HUGE at 79,106 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months. We had 119 notices filed for today for 595,000 oz INITIAL standings for AUGUST  August 17. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 1890.27 oz  SCOTIA Deposits to the Dealer Inventory in oz nil

  Deposits to the Customer Inventory, in oz  nil  2893.500 oz Scotia 90 kilobars No of oz served (contracts) today 11 notices  1100 oz No of oz to be served (notices) 911 contracts (91,100 oz) Total monthly oz gold served (contracts) so far this month 12,857 contracts (1,285,700 oz) (39.999 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    433,771.4 OZ Today:  TINY activity at the gold comex AND 1 KILOBAR ENTRY Today we had 0 dealer DEPOSITS total dealer deposit: NIL    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 1 customer deposit:  i) Into Scotia:  2893.500 oz (90 kilobars) Total customer deposits: 2893.500 oz (90 kilobars) Today we had 1 CUSTOMER withdrawals  i) Out of SCOTIA:  1,890.27 OZ Total customer withdrawals  1,890.27 OZ Today we had 1 adjustment:  i) Out of Scotia:  20,634.709 oz was adjusted out of the dealer and this landed into the customer account of Scotia:  (.6418 tonnes) Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 11 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 8 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (12,857) x 100 oz  or 1,285,700 oz , to which we  add the difference between the open interest for the front month of AUGUST  (922 CONTRACTS) minus the number of notices served upon today (11) x 100 oz   x 100 oz per contract equals 1,376,000 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (12,857) x 100 oz  or ounces + {OI for the front month (922) minus the number of  notices served upon today (11) x 100 oz which equals 1,406,200 oz standing in this non  active delivery month of AUGUST  (42.820 tonnes). We lost 261 contracts or additional 26,100 oz will not stand for metal in this active month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 42.82 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/ aug 17. 6418 tonnes/THEREFORE 91.956 tonnes still standing against 72.789 tonnes available.  Total dealer inventor 2,340,177.522 oz or 72.789 tonnes Total gold inventory (dealer and customer) =11,003,691.685 or 342.26 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.26 tonnes for a  gain of 39  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

     end And now for silver   AUGUST INITIAL standings  august 17.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory 74,733.97 oz SCOTIA BRINKS Deposits to the Dealer Inventory nil Deposits to the Customer Inventory 1,184,572.694 oz CNT,Delaware No of oz served today (contracts) 119 CONTRACTS (595,000 OZ) No of oz to be served (notices) 84 contracts 420,000 oz) Total monthly oz silver served (contracts) 393 contracts (1,965,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  8,424,966.0 oz today we had 0 deposit into the dealer account:  Total dealer deposits;  NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 2 customer withdrawals: i) Out of SCOTIA:  70,532.800 oz ii) Out of BRINKS: 4201.17 OZ Total customer withdrawals: 74,733.97 oz We had 2 customer deposits: i) Into CNT: 599,848.48 oz ii) Into Delaware: 584,674.214 oz total customer deposits:  1,1184,572.694  oz        we had 1 adjustments ii) Out of CNT: we had a transfer of 4,906.900 oz from the dealer to the customer account of CNT The total number of notices filed today for the AUGUST contract month is represented by 119 contract for 595,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (393) x 5,000 oz  = 1,965,000 oz to which we add the difference between the open interest for the front month of AUGUST (203) and the number of notices served upon today (119) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the AUGUST contract month:  393(notices served so far)x 5000 oz +(203 OI for front month of AUGUST ) -number of notices served upon today (119)x 5000 oz  equals  2,385,000 oz  of silver standing for the AUGUST contract month. we gained 5 contracts or an additional 25,000 oz will stand for delivery in this non active month of August.   Total dealer silver:  26.446 million (close to record low inventory   Total number of dealer and customer silver:   157.459 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD August 17/no change in gold inventory at the GLD/inventory rests at 962.23 tonnes August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 16/ Inventory rests tonight at 962.23 tonnes

end

Now the SLV Inventory August 17/ we had a huge deposit of 1.519 million oz into the SLV/Inventory rests at 353.284 million oz/ August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 17.2016: Inventory 353.284 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 4.9 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.6% Percentage of fund in silver:39.2% cash .+1.2%( August 17/2016). 2. Sprott silver fund (PSLV): Premium falls to +1.15%!!!! NAV (august 17/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.05% to NAV  ( august 17/2016) Note: Sprott silver trust back  into POSITIVE territory at +1.15% /Sprott physical gold trust is back into positive territory at 0.05%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,WEDNESDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell 45th Anniversary Of Nixon Ending The Gold Standard By Mark O’ByrneAugust 17, 2016No Comments

This week 45 years ago, August 15th 1971 to be exact, President Nixon suddenly declared the end of the Gold Standard. He ushered in the modern monetary system based on fiat paper and digital currency that works so poorly for us today and led to the global financial crisis.

The dramatic announcement by ‘Tricky Dicky’ is a must watch and you can see it here:

“Your dollar will be worth tomorrow what it is today… ”  

This was one of the most important events in modern financial, economic and monetary history and is a seminal moment in the creation of the global debt crisis which has confronted the U.S., Europe and the world in recent years and continues to this day.

Nixon ushered in an era of floating fiat currencies not backed by gold or silver but rather deriving value through government “fiat,” diktat or order of the government.

While Nixon justified the “technical” and “temporary” move as necessary to combat malign “international money speculators” who were “waging an all out war on the American dollar.” The George Soros’ of their day.

The real reason for the move was that the U.S. , then as today, was living way beyond its means with the Vietnam war and rapidly escalating military spending leading to large budget deficits and inflation.

Imperial overstretch had begun…

Governments internationally including the French and their President Charles de Gaulle were concerned about the debasement of the dollar and began to exchange their dollar reserves for gold bullion bars.

Nixon tried to reassure the American public about the value of their currency by declaring incorrectly that

“Your dollar will be worth tomorrow what it is today… ”  

Subsequent to Nixon’s decision 45 years ago, the U.S. dollar fell very sharply. Gold surged in the coming 9 years and rose from $35/oz to $850/oz by January 1980. Since 1971, gold has fallen from 1/35th of an ounce of gold to 1/1350th of an ounce of gold today.

This is not the fault of “speculators”, rather it is the fault of irresponsible governments and central bankers debasing the U.S. dollar since 1913 and indeed since 1971. With the notable exception of Federal Reserve Chairman Paul Volcker.

Today, U.S. dollars and all paper and digital money is declared by governments to be legal tender, despite the fact that neither paper nor digital currency has any intrinsic value and is not backed by gold reserves.

Historically, currencies were based on precious metals such as gold or silver, but fiat money is based on faith and on the performance of politicians, bankers and central bankers.

Because today’s fiat money is not linked to physical reserves of gold and silver, it is becoming worth less with each passing month and risks becoming worthless should hyperinflation take hold as has been seen in many nations in recent years including Zimbabwe and as being seen in Venezuela today. Indeed, Nigeria appears to be in the early stages of an inflationary spiral.

If people lose faith in a nation’s paper currency, they exchange it rapidly for real things and hard assets. Their ‘money’ no longer holds value. People who own real assets are protected. Those who are dependent solely on income and wages see their income and their standard of living fall. We appear to be in the end phase of this cycle:


Source Source: VisualizingEconomics.com via ZeroHedge.com

Throughout history most fiat currencies have not survived more than a few decades and have succumbed to hyperinflation.

The fiat currency or paper and digital based international monetary system has survived 45 years but is in terminal decline with many astute commentators now questioning whether it will survive the coming global financial crisis.

Gold’s role as a store of value and important monetary asset is being increasingly appreciated. Although some less informed commentators still view gold as a “barbaric relic,” the biggest market participants are again using gold as an alternative monetary asset today.

These include the largest central banks in the world, the largest banks in the world, the largest insurance companies in the world, the largest hedge funds in the world, the largest pension funds in the world and indeed the wealthiest investors in the world.

Currency debasement has without fail ended in disaster throughout history and in recent years. As faith is lost in the debased currency, inflation surges and the economy collapses.

We have been warning of the real risk of an international monetary crisis and a currency reset which sees all fiat currencies devalued against gold. While hyperinflation remains a worst case scenario, stagflation and a virulent bout of inflation looks almost certain in the coming months in debt laden economies globally.

Gold and silver will protect against currency devaluations as is being seen in the UK since Brexit.

Gold and Silver Bullion – News and Commentary

Gold up as U.S. rate hike expectations cool (Reuters)

Japanese Shares Drop as Yen Surges Amid Dollar Slump; Gold Gains (Bloomberg)

Dollar Slumps on Fed Rates Bets as European Equities Retreat (Bloomberg)

Paulson Maintains SPDR Gold ETP Stake as Metals Prices Rally (Bloomberg)

Soros Fund Management slashes gold shares in second quarter (Reuters)

London new-build sales plunge thanks to sky-high prices (City AM)

Buy physical gold; central banks are on its side, Jim Rickards says (CNBC)

Time to Buy Gold, Silver and Mining Stocks (TheStreet.com)

U.S. Dollar Hasn’t Been Linked to Gold for 45 Years. Here’s Why (Time )

Go Gold! To Preserve Value In Turmoil (Goldseek)

Gold Prices (LBMA AM)

16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce
10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce
09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce

Silver Prices (LBMA)

16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce
10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce
09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce


Recent Market Updates

– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money
– Is Gold Set To Hit $1,500 Per Ounce?

Mark O’Byrne Executive Director Published in Daily Market Update END Koos Jansen is the only one you should follow with respect to demand of gold from China: (courtesy Koos Jansen)

Posted on 17 Aug 2016 by Koos Jansen

Spectacular Chinese Gold Demand 2015 Fully Denied By GFMS And Mainstream Media

Debunking the Thomson Reuters GFMS Gold Survey 2016 report. New information provides a more detailed perspective on the Chinese domestic gold market.

In the Gold Survey 2016 report by GFMS that covers the global gold market for calendar year 2015 Chinese gold consumption was assessed at 867 tonnes. As Chinese wholesale demand, measured by withdrawals from Shanghai Gold Exchange designated vaults, accounted for 2,596 tonnes in 2015 the difference reached an extraordinary peak for the year. In an attempt to explain the 1,729 tonne gap GFMS presents three brand new (misleading) arguments in the Gold Survey 2016 and reused one old argument, while it abandoned five arguments previously put forward in Gold Survey reports and by GFMS employees at forums. Very few of all these arguments have ever proven to be valid, illustrated by the fact that GFMS perpetually keeps making up new ones, and thus gold investors around the world continue to be fooled about Chinese gold demand. For some reason GFMS is restrained in disclosing that any individual or institution in China can directly buy and withdraw gold at the Shanghai Gold Exchange, which is the most significant reason for the discrepancy in question.

According to my estimates true Chinese gold demand in 2015 must have been north of 2,250 tonnes…

https://www.bullionstar.com/blogs/koos- jansen/

-END-

 

SPROTT’S THOUGHTS

 

Good question:  find out what Eric thinks on whether the current gold price justifies the big gains in all gold/silver stocks

 

(courtesy Eric Sprott/Sprott Asset Management)

 

Does the Current Gold Price Justify the Big Gains in Gold Stocks?

What a difference 7 months can make for the gold and silver industry. In early January, precious metals were unloved and showing no signs of snapping their multi-year bear market. Very few believed they still provided valuable diversification within a portfolio. At the time, gold was hovering around $1,050 an ounce and some companies were mining gold at a loss.

Back in June 2013, the World Gold Council introduced a measure called “all-in sustaining cost” (AISC for short) to provide a standardized metric to calculate the overall costs of producing gold. AISC captures cash costs, corporate costs, reclamation and sustaining capital expenditure. This new metric was intended to provide investors with greater transparency and more common measurement for all companies.

In the second quarter of 2013, AISC peaked for the industry at $1,151 per ounce – at this time gold was trading for about $1,400 per ounce, so the net margin amounted to approximately $250 per ounce for the industry. Keep in mind that within the industry there are low and high cost producers – so the individual companies vary.

In January 2016, with a gold price of $1,050, the average producer margin slumped to $220 per ounce. Despite the 25% decline in the gold price since 2013, profit margins only fell by 12% as the industry responded by cutting costs and restructuring their operations. They were also assisted by lower fuel costs and some companies were helped with weaker local currencies versus the U.S. dollar.

With gold now trading at $1,350 per ounce and AISC holding steady, net profit margins for the industry have increased from $220 to over $500 per ounce – an increase of 127% in just 7 months. The industry hasn’t enjoyed similar profit margins since 2012, when the price of gold exceeded $1,600 per ounce.

During the first 7 months of 2016, the Sprott Gold Miners ETF (NYSE Arca: SGDM) increased by 126.34%. Past performance does not guarantee future results.

While there isn’t a perfect correlation between profit margin growth and stock appreciation, you can clearly see there is a strong link. So while the year-to-date stock gains for gold stocks look astronomical, they really reflect the significant improvement in profit margins that the industry could benefit from.

Are the recent gains in the gold mining stocks sustainable? If the price of gold holds at current levels, then we believe that current valuations will hold. No doubt, the sector is volatile but the macro drivers supporting gold right now are powerful.

We have never witnessed a period where trillions of dollars of government bonds have negative yields and interest rates for some countries stand at their lowest levels in centuries. In this unprecedented investment environment, gold has become a compelling alternative currency and store of value. If gold prices continue to move higher, we anticipate the gold miners to benefit on an exponential basis.

Peter Grandich, former mining company adviser states that we are in the beginning of a huge gold bull market: (courtesy Peter Grandich/) Peter Grandich: Why the mother of all gold bull markets has begun

Submitted by cpowell on Tue, 2016-08-16 14:37. Section:

10:36a ET Tuesday, August 16, 2016

Dear Friend of GATA and Gold:

Market analyst and former mining company adviser Peter Grandich can’t quite stay out of the business, writing today that while the financial industry and mainstream news media will always be hostile to gold, there are many reasons to think that “the mother of all bull markets” for gold has begun. Grandich’s commentary is posted at his Internet site here:

http://www.petergrandich.com/gold-the-mother-of-all-bull-markets-has-onl…

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

END

 

Jim Richards tells of the “paper gold” fraud game and how this will end badly for our bankers:

(courtesy Jim Rickards)

Rickards details the ‘paper gold’ fraud and speculates on its demise

Submitted by cpowell on Tue, 2016-08-16 23:35. Section:

7:39p ET Tuesday, August 16, 2016

Dear Friend of GATA and Gold:

In a new promotional video for his financial letter Strategic Intelligence, fund manager and geopolitical strategist James G. Rickards wonderfully exposes the fraud of “paper gold” and “paper silver” and speculates on the circumstances that will cause their demise and the explosion in the price of real metal.

More than 90 percent of gold and silver investments are not backed by real metal, Rickards says, and their owners won’t have metal when they most want it.

In the video Rickards interviews someone he says is an expert in the Swiss gold refinery business who concurs about the paper gold hoax and whose identity is withheld and whose face is obscured by fuzzing of the video. What the supposed expert asserts is only what GATA has been telling people for years, but the effect is theatrical and dramatic.

While GATA has followed a policy of strict attribution and has abjured anonymous sources in the belief that this is necessary for credibility, a high principle of honest journalism, maybe GATA Chairman Bill Murphy and your secretary/treasurer would have been more persuasive all this time if we had put paper bags over our heads. (We’d probably have had more luck in dating anyway.)

But anything that truthfully impugns what Rickards calls the great gold hoax is perfectly jake, so while it’s a commercial promotion, his video is still a great service. It’s about a half hour long and can be watched at the Agora Financial Internet site here:

http://pro.agorafinancial.com/AWN_goldhoax_0816/EAWNS8CK

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

 

END

 

Just look what insurance companies and banks are doing to store cash in vaults to avoid negative interest rates

(courtesy Clair Jones/London’s Financial times)

Banks look for cheap way to store cash piles as rates go negative

Submitted by cpowell on Wed, 2016-08-17 00:45. Section:

By Claire Jones and James Shotter
Financial Times, London
Tuesday, August 16, 2016

FRANKFURT, Germany — The idea of keeping piles of cash in high security vaults may sound like something from an old movie plot, but some banks and insurers have recently started considering the idea as interest rates sink below zero across much of Europe.

Europe’s highways are not yet jammed with heavily guarded trucks transporting money to top-secret locations, but if it becomes financially sensible for banks to hoard cash as rates are cut even further, the practice could undermine central banks’ ability to use negative rates to boost growth.

After the European Central Bank’s most recent rate cut in March, private-sector banks are paying what amounts to an annual levy of 0.4 percent on most of the funds they keep at the eurozone’s 19 national central banks. This policy, which has cost banks around E2.64 billion since ECB rates became negative in 2014, is intended to spark economic growth by giving banks the incentive to lend money to businesses instead of holding on to it.

European central bankers say they could cut rates again should economic conditions worsen, but private bankers and insurers are already thinking of creative ways to avoid those charges altogether.

One way is by turning the electronic money they keep at central banks into cold, hard cash. Munich Re has experimented successfully with storing a double-digit million sum of euros in cash at what the insurer describes as a manageable cost. A few other German banks, including Commerzbank, the country’s second-biggest lender, have also considered taking the step. But when a Swiss pension fund attempted to withdraw a large sum of money from its bank in order to store it in a vault, the bank refused to provide the cash, according to local media reports. …

… For the remainder of the report:

http://www.ft.com/cms/s/0/e979d096-5fe3-11e6-b38c-7b39cbb1138a.html

 

END

v) Dave Kranzler discusses the gold/silver trading at the comex:

(Dave Kranzler IRD)

 

Gold And Silver: Patience Required August 17, 2016Financial Markets, Gold, Market Manipulation, Precious Metals, , , ,

I wanted to share a discussion on the metals that I had with GATA’s Bill “Midas” Murphy this morning.  I had emailed him to ask him if he knew of any reasons the metals were getting slammed today because the dollar was down a bit, the economic reports were poor  and the stock market was selling off –  all three occurrences of which are precious metals-friendly.

As Bill suggested, silver is under more pressure today than gold, with JPM going all out to get the speculative traders to sell, which helps JPM push the price down.  If you look at short term chart, it would appear that silver is forming a head and shoulders “top” formation, something which JPM is trying achieve, as Bill correctly pointed out.

However, technical formations almost NEVER work in the metals. Typically doing the opposite of the what the  formation is indicating works the best over the last 15 years. That would imply a big upleg coming, which supports my view based on the fundamentals, which would support the view of another big move higher on the horizon.

I think JPM is doing whatever it can to minimize the damage from the inevitable. The biggest seasonal physical buying period starts in another couple weeks. Next week is options expiry for Sept silver. They probably want to push silver below $19.50 if they can because the Sept silver put/call structure currently is favorable to the call-writers (i.e. JPM) is silver closes below $19.50 on the 25th. The problem is, the way the economy and the political system is melting down, they can’t control the possibility of a random news event hitting the tape that would send the metals soaring. I believe there’s high probability a news event like that could happen at any time.

Interestingly, the o/i for gold is coming down a bit earlier than usual for the typical contract “roll” period (for Aug) and the Sept silver o/i is coming down. They are covering for a reason, I believe.  (click image to enlarge)

Silver is up 42.4 % since Dec 14, 2016. That is a HUGE run.  If you look at a 1-yr graph, silver is trending sideways consolidating that gargantuan move it made in just 7 months.  JPM and all of the other technical analysis cretins out there want us to believe that silver is forming a head n shoulders top formation. But it’s not.  It was in danger of going parabolic, something we DON’T want to have happen. Yes, silver could go parabolic up to $50 and still be insanely undervalued relative to the supporting fundamentals, but the huge hedge fund trading algos would not treat it that way.

Silver looks like it will pullback to its 50 dma, which is around $19.15 right now. As long as it holds that level – and they may crush it below that level with A LOT of paper for a few days, it will be ready for the next upleg. Since mid-Dec, we have been in an uptrend that is bouncing off of the 50 dma and moving higher.  The RSI and MACD momentum indicators are signalling the probability that the current move is becoming “exhausted,” with probability weighted toward a move higher soon.

At some point we might see a 200 dma correction. But silver could correct to its “chart” uptrend line around the $17 and still be up 24% since Dec 14.  Anyone who would sneer at that ROR belongs in an asylum or is an internet blog terrorist.

Both gold and silver are in the process of making an eventual move that will shock and awe.  We’re now aware that some of the biggest, most influential money manipulators in the world are shoveling fiat currency confetti into big positions in gold and silver – including the nefarious Rothschild clan:  LINK.  These guys are not buying gold for just a double or triple. They’re buying it because they know that the global fiat paper currency experiment is coming to an end.  And along with it so is the debt-fueled lifestyle America has enjoyed since 1971…

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  DOWN to 6.6344( HUGE DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS TO 6.6392) / Shanghai bourse  DOWN 0.48 OR 0.02%   / HANG SANG CLOSED DOWN 111.06 or 0.48%

2 Nikkei closed /USA: YEN RISES TO 100.65

3. Europe stocks opened  IN THE RED,     /USA dollar index UP to 94.95/Euro DOWN to 1.1270

3b Japan 10 year bond yield: RISES TO  -.07%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 100.65

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.40  and Brent: 48.90

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” ON THE TABLE 

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.033%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate RISE to 7/09%/: 

3j Greek 10 year bond yield RISE to  : 8.12%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1342.85/silver $19.64(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble DOWN 25/100 in  roubles/dollar) 64.09-

3m oil into the 46 dollar handle for WTI and 48 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 100.65 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9605 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0849 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.07%

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

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

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

4. USA 10 year treasury bond at 1.578% early this morning. Thirty year rate  at 2.296% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS European Stocks Drop, Futures Flat As Rising Dollar Pressures Oil, EMs: All Eyes On The Fed Minutes

European stocks are down led by tech, chemicals, alongside EM stocks which retreated from near a one-year high and oil fell for the first time in a week after hawkish comments from Federal Reserve officials revived bets on U.S. interest rate rises this year, and pushed the dollar higher from 7 week lows ahead of today’s Fed Minutes. S&P 500 futures were little changed following yesterday’s drop from record highs.

The Stoxx Europe 600 Index fell for a fourth day, while MSCI’s gauge of developing-nation shares also declined, having halted an eight-day winning streak on Tuesday.

Crude pulled back from a five-week high as the Bloomberg Dollar Spot Index rebounded from near a three-month low after two regional Fed chiefs indicated interest rates could be increased at least once this year. South Korea’s won tumbled by the most since Britain voted to leave the European Union and gold declined. After sliding as low as 99.50 yesterday, a rebound in the USDJPY to 101 overnight pushed the Nikkei higher by 0.9%, closing at 16,746.

The rebound in the dollar was catalyzed by comments from Fed President William Dudley and Dennis Lockhart who jolted markets yesterday by indicating a rate hike in 2016 remained possible despite uneven growth in the world’s largest economy. Their comments helped push the probability of a Fed move above 50 percent in the futures market for the first time since the June 23 Brexit vote. Before their comments, global equities had climbed to a one-year high and the dollar index sank to levels last seen in May amid conflicting signals over the U.S. labor market and growth.

“A pull-back is following through in European stocks today after the Fed raised the possibility of a September rate hike,” said William Hobbs of Barclays in London. “It seems like expectations had become too muted.”

Today it will be all abaout the Fed again: Group head of multi-asset portfolios at GAM, Larry Hatheway, said attention was firmly on the Fed minutes and particularly why the bank’s last meeting ended with a notably cautious statement. “It wasn’t really about Brexit. It is not even about the world economy which isn’t in great shape but is somewhat improved from the first quarter fears and its surely not about the cost of capital,” Hatheway said. “So one presumes the caution reflects a thought process about a much lower equilibrium real interest rate …or possibly the fact that inflation is just not accelerating, which was corroborated to a degree by CPI data yesterday.”

But before the Fed we will get another dovish blast as St. Louis Fed chief James Bullard – the Fed’s latest uberdove – is due to speak Wednesday at 1pm, one hour ahead of the Minutes release which are scheduled for release at 2 p.m. in Washington.

In Asia overnight, the MSCI’ Asia-Pacific index ex-Japan dipped 0.3% while Japan’s Nikkei closed 0.9 percent higher, paring some of Tuesday’s sharp losses thanks to a weaker yen as it dropped back below the 100 yen per dollar level. China’s CSI 300 index and the Shanghai Composite both erased earlier losses to end the day flat after authorities approved the launch of a long-awaited scheme to allow stock trading between Shenzhen and Hong Kong.

European yields nudged 2-4 basis point lower with Spanish bonds boosted ahead of a meeting later that could pave the way for a new government in Madrid after eight months of limbo. Interim prime minister Mariano Rajoy is to hold a meeting of his Conservative People’s Party (PP) to consider a reforms-for-support offer from centrist rivals Ciudadanos. “I still have doubts about political progress in Spain and negotiations could still go on for weeks,” said DZ Bank strategist Christian Lenk. “But markets do seem to like what’s coming out of Madrid.

It has been a quiet session in European equities where the Stoxx 600 slipped 0.3% for a fourth day without gains. The volume of Stoxx 600 shares traded was 27% lower than the 30-day average. S&P 500 Index futures were little changed, after U.S. equities fell on Tuesday. ASML Holding NV dragged technology shares to the biggest decline on the equity benchmark, dropping 5 percent after Intel surprised the market when it said it won’t use the semiconductor-equipment maker’s lithography technology to make some of its chips. Carlsberg A/S slid 4.6% after the Danish brewer reported first-half profit that missed analysts’ estimates as the weakness of Russia’s ruble eroded earnings.

The MSCI Emerging Markets Index was down 0.9 percent, trimming this
quarter’s advance to less than 9 percent. In Hong Kong, small-cap shares
were the brightest
part of China’s stock markets after an exchange trading link between
the city and Shenzhen was unveiled. The Hang Seng Composite Small Cap
Index climbed 0.5 percent to four-month high.

Tyco International Plc and Johnson Controls Inc. have shareholder meetings lined up to vote on their proposed $16 billion merger, while Target Corp. and Cisco Systems Inc. are among U.S. companies reporting results.

Market Snapshot

S&P 500 futures down less than 0.1% to 2176
Stoxx 600 down 0.3% to 342
FTSE 100 down 0.1% to 6887
DAX down 0.8% to 10592
German 10Yr yield down less than 1bp to -0.04%
Italian 10Yr yield up 2bps to 1.13%
Spanish 10Yr yield up 2bps to 1%
S&P GSCI Index down 0.6% to 360.9
MSCI Asia Pacific down less than 0.1% to 139
Nikkei 225 up 0.9% to 16746
Hang Seng down 0.5% to 22800
Shanghai Composite down less than 0.1% to 3110
S&P/ASX 200 up less than 0.1% to 5535
US 10-yr yield up less than 1bp to 1.58%
Dollar Index up 0.19% to 94.97
WTI Crude futures down 0.9% to $46.14
Brent Futures down 1% to $48.75
Gold spot down 0.2% to $1,343
Silver spot down 0.9% to $19.61
Top Global News

Och-Ziff Bribery Settlement Said to Spare Firm as Unit Convicted: Hedge fund is in talks to resolve probe of dealings in Africa. Gabonese ‘fixer’ with links to firm arrested on Tuesday
Cisco Plans to Cut Up to 14,000 Jobs Within Weeks, CRN Says: CEO Robbins is shifting to emphasize software as growth slows. Cuts could account for up to 20 percent of 73,000 employees
JPMorgan Hires Sakagami as Chief Japan Equity Strategist: Fills position left vacant since Jesper Koll left last year. Top-ranked Japan equity strategist according to Nikkei Veritas
Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
Barnes & Noble Ousts Its CEO After Less Than a Year on the Job
FOMC releases minutes from July 26-27 meeting; follow TOPLive for blog coverage at 2pm
Hyundai Motor Says It’s Discussing Partnerships With Google
Citadel to KCG Tell SEC New Treasuries Rules Don’t Go Far Enough
Univision Said to Buy Gawker Media for $135m: Recode
U.S. Senator Seeks Multiple Reviews for Major Chem Mergers: FuW
Madison Square Garden Said to Take 12% Stake in Townsquare: WSJ
* * *

Looking at regional markets, Asia equity markets slightly shrugged off the weak lead from US markets where hawkish Fed comments weighed on risk-appetite, with Asia mixed and Japan leading as JPY pared some of its recent considerable gains. Energy names were among the outperformers in Nikkei 225 (+0.9%) on the continued advances in oil prices, with the materials sector also reflecting the strength seen across its global counterparts. Conversely, ASX 200 (flat) was initially weighed by some lacklustre earnings reports before paring loses to close flat. Chinese markets were mixed with the Shanghai Comp (flat) indecisive and Hang Seng (-0.4%) pared gains after initially being bolstered after China approved the Shenzhen¬HK stock connect which would provide wider investment options and allow foreign investors access to the world’s 7th largest stock exchange via Hong Kong. 10yr JGBs traded marginally lower amid increased demand for riskier assets in Japan, while today’s BoJ market operations were for a relatively reserved JPY 750b1n in government debt. PBoC set CNY mid-point at 6.6056 (Prey. 6.6305); strongest fix by the PBoC since June 24th. PBoC injected CNY 100bIn via 7-day reverse repos.

Top Asia News

BOJ Firepower Falls Short as Yen Climb to 100 Dares Japan to Act: Bank of Tokyo-Mitsubishi, Morgan Stanley see further gains
Hong Kong Exchange Sees Second Link Cementing China Gateway Role: Shenzhen link expands Chinese investor access to Hong Kong
Hong Kong Small Caps Rise, Brokerages Fall on Shenzhen Link News: There’s profit-taking in main beneficiaries, CMB analyst says
Aussie Rides Out RBA Cuts as World-Beating Yields Lure Funds: Options traders become least bearish on currency since 2014
Cathay Shares Drop as Profit Slumps 82% on Fuel Hedge Losses: Co.’s yields under pressure as Chinese carriers expand
Modi Sends Warning Shot to China, Pakistan on Territory Spat: Comments come after weeks of violence and tension in Kashmir
European equities extend on yesterday’s losses following hawkish comments from Fed’s Dudley and Lockhart while newsflow has been relatively light as participants await the FOMC minutes release. In terms of a sector breakdown, financial and IT names have been the notable drags, with chip maker ASML (-4.8%) one of the laggards following a negative broker move. However, equities saw a minor bounce after the UK Jobs report, in particular the Jobless Claims which showed little signs of Brexit jitters. Elsewhere, in credit markets, Portuguese bonds yet again decline amid the recent commentary from the DBRS stating that they may consider downgrading the countries rating, which could have serious implications as the ECB uses the DBRS to decides if countries are eligible for QE.

Top European News

Carlsberg 1H Organic Rev. Beats Ests., Keeps 2016 Outlook
Admiral Group Biggest SXXP Decliner As Solvency Ratio Drops
ABN Amro Says 2Q Net Profit Impacted by Derivatives Provision
Deutsche Bank Must Consider Scrapping Bonuses, Sewing Tells Bild: Lender scrapped 2015 management bonuses following annual loss. No dividend means bonuses should be up for debate, Sewing says
U.K. Dividends at Risk as BOE Action Swells Pension Hole: Rate cut lowers yields, piling pressure on retirement plans. Some investors dump shares as dividend reductions loom
Credit Suisse Joins War for Quants, Hiring Rothman to Build Team: He’ll assemble equity researchers to hone strategies, products. Banks and fund managers are snapping up quants to sift data
In FX, the Bloomberg Dollar Spot Index rose 0.4 percent, after sliding 1 percent over the past three days. “While Dudley was at least able to stem the bleeding for the dollar index, price action is not encouraging for the dollar near term,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Still, so long as a rate hike seems more likely than not as the Fed’s next move, we wouldn’t get super bearish on the dollar.” The yen was down 0.5 percent at 100.76 per dollar, after strengthening beyond 100 on Tuesday for only the second time this year. The currency is still up 19 percent for the year and Japanese Vice Finance Minister Masatsugu Asakawa said policy makers are prepared to intervene if exchange-rate moves are extreme. South Korea’s won slumped 1.5 percent, its steepest slide since June 24. The currency climbed to its strongest level in more than a year last week and its 14-day relative strength index ended the last session below 30, a sign to some investors that a retreat was likely. The MSCI Emerging Markets Currency Index lost 0.6 percent, headed for the biggest drop in seven weeks on a closing basis.

In commodities, oil halted its advance after the biggest four-day gain since April as weekly industry data showed U.S. gasoline stockpiles expanded, keeping supplies at the highest seasonal level in more than two decades. West Texas Intermediate crude slipped 0.9 percent to $46.15 a barrel, ending a 12 percent rally over the preceding four days after Saudi Arabia said it is prepared to act to stabilize markets. U.S. inventories of motor fuel increased by 2.18 million barrels last week while crude stockpiles dropped by 1 million barrels last week, the American Petroleum Institute was said to report Tuesday. Government data Wednesday is forecast to show a drop in gasoline supplies and an increase for crude. Gold’s two-day gain stalled on the Fed rates speculation. Bullion for immediate delivery slipped 0.3 percent to $1,342.63 an ounce. Silver lost 1 percent. U.S. natural gas futures rose 1.1 percent to $2.645 per million British thermal units, a fourth day of gains and the longest rally since the start of June. Temperatures may be above average in the East and Northwest, boosting demand for electricity for cooling.

It’s quiet on the US calendar today where the focus will be on the FOMC minutes tonight, while the DOE will release the official weekly inventory data at 10:30am ET.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

European equities enter the North American crossover lower amid yesterday’s hawkish Fed rhetoric with newsflow otherwise light
GBP/USD was lent some support by the latest jobs report, although gains have now been pared with the data not providing too much insight into the post-Brexit fallout
Looking ahead, highlights include FOMC Meeting Minutes, DoE crude oil inventories and comments from Fed’s Bullard
Treasuries lower in overnight trading with global equities, oil and gold; FOMC minutes at 2pm ET may “reflect greater confidence in labor mkt and domestic economic growth than in June.”
The U.K. labor market showed signs of continued resilience after the country’s referendum on EU membership, as jobless claims unexpectedly fell 8,600 in July after increasing 900 in June
Norway’s $890 billion sovereign wealth fund, the world’s biggest, took the step of independently cutting the value of its massive U.K. real estate portfolio by 5% after Britain voted to leave the European Union
Russia is delaying what would have been its biggest asset sale in a decade after renewed weakness in global oil markets and tensions among potential buyers upended plans to offer a stake in Bashneft PJSC
ABN Amro jumped the most in almost six months after second- quarter profit beat estimates and Chief Executive Officer Gerrit Zalm announced plans to cut costs by about 200 million euros ($225 million)
Chinese authorities said 450 suspects have been arrested this year in a crackdown on using offshore companies and “underground banks” to transfer money illegally
Cisco Systems, the largest maker of networking equipment, will cut as many as 14,000 employees worldwide, or 20% of its workforce, CRN reported, citing people close to the company
US Event Calendar

7am: MBA Mortgage Applications, Aug. 12 (prior 7.1%)
10:30am: DOE Energy Inventories
1pm: Fed’s Bullard speaks in St. Louis
2pm: FOMC Minutes
DB’s Jim Reid concludes the overnight wrap

The FOMC minutes (from the July 26-27 meeting) will be a little more interesting than previously thought after the influential and usually relatively dovish NY Fed President Dudley’s unscheduled comments yesterday. He suggested that a September hike was “possible” and that “we’re edging closer towards the point in time where it will be appropriate to raise rates further.” He added that 10y Treasuries were “pretty low given the circumstances” and that the Fed funds futures market was underpricing rate hikes. We’ve heard this sort of thing a lot in recent years from FOMC members without much eventual action so we shouldn’t over interpret but it was inevitable that it would impact rates pricing yesterday.

Indeed while 10y Treasury yields only ended up climbing 1.7bps yesterday to close at 1.575% they were up some 6bps from the intraday lows just prior to Dudley’s comments. The same can be said for 2y yields which were at 0.681% prior to the comments and 0.746% by the end of the session (+2.0bps on the day and +6.4bps from the session low). September rate hike expectations edged up to 22% from 18% the day prior while December expectations rose from 45% to 51%. European government bond markets also followed the lead. 10y Bund yields ended up climbing 4.4bps to -0.031% which is the highest yield since August 4th, while the peripherals were up anywhere from 5bps to 15bps in yield. We’ve seen a similar move in Asia this morning where 10y JGB’s are +3.0bps and similar benchmark bonds in the Australian, NZ and China are 2-4bps higher.

Staying with bonds, yesterday we saw the latest long-dated reverse Gilt auction which was hotly anticipated after last week’s failure from the BoE to buy the desired amount. With a week of press and publicity it was expected that they would have more success this week and indeed they did. However the £3.12bn tendered vs. the £1.17bn desired (2.67 covered) was still less than for any of the other non long-end auctions so far (3.54 times being the lowest cover). We also have a 2055 Gilt auction today which may have encouraged more sellers than last week. 30 year gilts sold off 5.6bps yesterday but this was in line with international equivalents. Given the BoE will be buying these bonds every week this story will continue to be a big theme for many months and we’d expect the supply/demand dynamics at the long end to continue to be tough for the Bank.

Meanwhile, there was little evidence that the big post-referendum decline for Sterling has fed through to headline consumer prices yet as the July headline CPI reading came in as expected at -0.1% mom. The YoY rate did however nudge up one-tenth to +0.6% while the core reading was down one-tenth to +1.3%. That said the more interesting read-through was in producer prices where PPI input rose a significant and more than expected +3.3% in July (vs. +1.0% expected). That was most since 2011 while the YoY rate is now up to +4.3% from -0.5% and so ends 32 consecutive months of deflation in input costs.

Risk assets ended up spluttering yesterday following Dudley’s comments with US equity markets in particular retreating from Monday’s record high marks. The S&P 500 (-0.55%), Dow (-0.45%) and Nasdaq (-0.66%) all closed lower while in Europe the Stoxx 600 (-0.79%) also ended up weakening as automakers in particular came under pressure. The rally for emerging markets also finally came to a halt with the MSCI emerging markets index (-0.03%) just about closing in the red following eight consecutive daily gains which had seen it surge over 5%. Notably the weaker performance for equity markets also came despite another +1.84% rally for WTI where some pre-Dudley weakness for the USD (-0.88%) supported gains.

This morning in Asia it’s been another relatively mixed start. Currently in the red is the Shanghai Comp (-0.52%), Kospi (-0.66%) and ASX (-0.08%), however the Nikkei (+0.50%) and Hang Seng (+0.21%) are both up in early trading. The Shenzhen is also a touch higher after Beijing yesterday approved the long awaited Shenzhen and Hong Kong trading link. Meanwhile gains for Japanese equities this morning have come about following a slightly weaker morning for the Yen which has been a big focus in the last couple of days. After breaking below 100 yesterday, the Yen is -0.32% weaker this morning at 100.62. Japan’s Vice Financial Minister said earlier that he is watching with ‘a strong sense of concern’ about moves in the currency and would look to act if needed.

Moving on. Despite playing second fiddle to Dudley yesterday, the Atlanta Fed’s Lockhart also attracted a bit of attention when he said that ‘I’m not locked in to any policy position at this stage, but if my confidence in the economy proves to be justified, I think at least one increase of the policy rate could be appropriate later this year’.

The hawkish Fedspeak largely overshadowed what was a mixed batch of economic data in the US yesterday. Of most focus was the July CPI report where headline inflation printed at 0.0% mom as expected although the YoY rate rounded down to a slightly lower than expected +0.8% from +1.0% in June. The core (+0.1% mom vs. +0.2% expected) also rose less than the market had forecasted resulting in the YoY rate dipping one-tenth to +2.2%, driven primarily by an unusual plunge in airfares.

There was better news in the latest activity indicators however where industrial production rose a bumper +0.7% mom last month (vs. +0.3% expected). Capacity utilization was up half a percent to 75.9% (vs. 75.6% expected) while manufacturing production also rose a robust +0.5% mom (vs. +0.3% expected). Finally the latest housing starts data covering July revealed starts rose +2.1% mom in July (vs. -0.8% expected) leaving the annualised level of starts at the highest since February. Building permits (-0.1% mom vs. +0.6% expected) were a bit weaker than expected however. The only other data to note came in Germany where the August ZEW current situations index bounced back from its post-Brexit decline to rise nearly 8pts to 57.6 (vs. 50.2 expected). That actually left the index at the highest level since January while the expectations component rose over 7pts to +0.5.

Looking at the day ahead, this morning in the UK we’ll get the next slug of data with the latest employment numbers. We’ll get the claimant count and jobless claims change data for July (i.e. post referendum) along with the ILO unemployment rate and average weekly earnings data in the three months to June. It’s quiet in the US this afternoon where the focus will be on the FOMC minutes tonight. Away from the data we’ll also hear from the Fed’s Bullard again this evening at 6pm BST where he’s due to speak on the US economy and monetary policy\

END ASIA MARKETS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 0.48 POINTS OR 0.02%/ /Hang Sang closed DOWN 111.06 points or 0.48%. The Nikkei closed UP 149.13 POINTS OR 0.90% Australia’s all ordinaires  CLOSED UP 0.06% Chinese yuan (ONSHORE) closed DOWN at 6.63445/Oil FELL to 46.35 dollars per barrel for WTI and 48.90 for Brent. Stocks in Europe:  in the RED . Offshore yuan trades  6.6392 yuan to the dollar vs 6.63445 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS HUGELY AS  MORE USA DOLLARS  LEAVE CHINA’S SHORES  

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

Interesting!  The Nikkei 225 is now higher than the Topix due to Bank of Japan purchases of stocks and ETF’s

(courtesy zero hedge)

Bank Of Japan Buying Sends Nikkei 225 To Richest Since Dot-Com Crash

Having noted the farcical share ownership of The Bank of Japan (biggest shareholder in 55 companies) as Kuroda’s ETF-buying goes to ’11’, we thought it interesting that the distortion caused by these “pick a winner” purchases has sent Japan’s Nikkei 225 to its richest relative to Japan’s Topix index in 17 years.

As Bloomberg notes, Japan’s two major equity benchmarks have moved mostly together over the years. That changed this month following the latest meeting by the Bank of Japan, which boosted its purchases of exchange-traded funds as part of its easing program.

The BOJ’s heavier allocation to ETFs tracking the Nikkei 225 has helped push the gauge to its highest level versus the Topix index in 18 years.

Which – as we noted previously – leaves one big question… just how will the BOJ ever unwind its unprecedented holdings of not only bonds, which are now roughly 100% of Japan’s GDP, but also of stocks, without crashing both the bond and the stock market. And then we remember, that the BOJ will simply never unwind any of its “emergency” opertions just because nobody actually thought that far, plus the whole point of the exercise is hyperinflation or bust, as the sheer lunacy of Japan’s authorities is exposed for the entire world to see, leading to the terminal collapse of faith in the local currency. With every passing day, we get that much closer to said terminal moment.

“probably nothing”

end

b) REPORT ON CHINA

Is this the reason why China is standing for a huge amount of silver contracts at the comex:  Are they willing to take on the west?

(courtesy zero hedge)

Japanese Coast Guard Releases Video Showing Hundreds Of Chinese Ships Near Disputed Islands

One week after Japan vocally complained to China over what it alleged was a fleet of 300 Chinese vessels spotted near the disputed territory of the Senkaku Islands in the East China Sea, with Vice Foreign Minister Shinsuke Sugiyama summoning and complaining to China’s Ambassador Cheng Yonghua that the incident had infringed on Japan’s sovereignty, the Japanese coast guard released a video showing hundreds of Chinese vessels sailing in the contentious territory. The aerial footage indicates the high level of tension in the area.

The video, which was shot from inside a low-flying patrol aircraft, has been released online by the Japanese Coast Guard, the Japan Times reported on Tuesday.  The footage shows 200 to 300 Chinese fishing boats accompanied by 28 Chinese patrol ships spotted in areas just outside Japanese territorial waters around the Senkakus, as well as Japanese patrol ships trying to prevent the Chinese ships from advancing into the disputed area.

Toward the end of the video, the 1,500-ton Japanese patrol ship Aguni, armed with 20mm cannon, approaches a Chinese Coast Guard vessel and a fishing boat. The Aguni then flashes a warning: “Your ship has intruded into the territorial waters of our country …  passage in Japanese waters is not allowed. Get out of this area immediately,” according to Japanese captions to the video cited by the newspaper.

As RT reports, the Japanese Coast Guard later claimed that seven out of 18 Chinese patrol vessels spotted around the Senkakus were equipped with what “looked like machine guns,” according to the Japan Times. “Actions by the Chinese side like this, which will escalate the situation, are not tolerable,” the Japanese Coast Guard said in a statement.

The Senkaku Islands are administered by Japan but are claimed by China. The incident added fuel to tensions between Tokyo and Beijing.

The heated dispute between Beijing and Tokyo over the national affiliation of the Senkaku/Diaoyu Islands dates back to 2012, when the Japanese government nationalized the islands’ ownership. Beijing has never recognized the move, claiming Chinese authority over the islands. Chinese ships, mostly fishing boats, have frequently sailed in the disputed area since the islands came under Japanese-claimed authority.

In another notable escalation, over the weekend, the Japanese government announced it would develop land-to-sea missiles with a range of 300 kilometers (186 miles) to protect the nation’s isolated islands, including the Senkaku, the Yomiuri newspaper reported, without saying where it got the information. Costs for development will be part of the defense ministry’s budgetary request for the fiscal year ending March 2018, according to the Yomiuri. The government will aim for deployment around the year ending March 2024, it said.

China’s nationalist Global Times paper immediately responded, saying :”Japan’s decision to develop surface-to-sea missiles with a range of 300 kilometers to cover the disputed islands shows the country may be eyeing a shift to an offensive posture, analysts said.

“Japan is trying to use the missile system to lock down the Miyako Strait and prevent Chinese forces from entering the Western Pacific Ocean,” Zhou Yongsheng, a professor at the Institute of International Relations of China Foreign Affairs University, told the Global Times.

Da Zhigang, director of the Institute of Northeast Asian studies at the Heilongjiang Academy of Social Sciences, said the 300-kilometer range missiles could target China’s coastal areas. He said if the reported 300-kilometer range is true, it would mean Japan is ready for a hard fight. “The range is higher than that of Russia’s S-300 surface-to-air missile system, and better than China’s current surface-to-air missile system.”

As a reminder, in the latest military development, yesterday China disclosed it had sent a military liaison to Syria where he announced China would provide Syria with military training and supplies, effectively siding with Russia in the ongoing Syrian conflict.

end

EUROPEAN AFFAIRS

Deutsche bank not doing too good;  One of its executives is suggesting that the company scrap its top level bonuses  on top of the scrapping of the dividends to its shareholders.

Interestingly, he claims that the bank is better than what it seems as the bank past its ECB stress test. He ignores the German ZEW stress test of which the bank failed and needs 19 billion in capital

(courtesy zero hedge)

Deutsche Bank Exec Suggests Scrapping Top Bonuses; Vows Bank Is “Better Than It Seems”

In another reminder that the turmoil shaking up Deutsche Bank is not limited to its stock price, but stretches as far as its top decisionmakers, overnight the bank’s consumer banking chief and member of its 10-member management board, Christian Sewing, told Bild that the German bank’s board should discuss scrapping bonuses for top executives for a second year after Germany’s largest bank put dividend payments on hold.

“It’s clear that if we don’t pay our shareholders a dividend, then our own bonus needs to be up for debate as well,” Sewing told Bild-Zeitung in an interview.

Sewing, who leads the private, wealth and commercial clients unit, stood to earn a 2.4 million-euro ($2.7 million) salary and as much as 5.9 million euros in bonuses for this year, the company said in March.  While CEO Cryan’s theoretical “maximum” compensation under the bank’s formula is 12.5 million euros, he can’t actually receive that amount, as pay for management board members was capped to 9.85 million euros for 2016. According to Bloomberg, a spokeswoman for the Frankfurt-based bank said the comments were reported accurately.

In an aggressive attempt to delever Europe’s biggest, and the world’s most systemically risky bank, Deutsche Bank CEO John Cryan has been selling risky assets, unwinding trillions in CDS and eliminating thousands of jobs to bolster capital buffers and boost profitability, hurt by mounting legal costs and tougher regulation. The CEO scrapped bonus awards for top management and suspended dividends after the lender posted its first annual loss since 2008 last year.

However, while earnings have been crashing, and the company has lost about 44 percent of its market value this year, Cryan has signaled that there’s no immediate need to raise capital. “The question of a capital increase isn’t an issue at the moment,” Sewing, 45, told Bild-Zeitung. “The share price is very low but our aim is to return the bank to profitability in the long term. That would also boost the share price.”

Because Deutsche Bank has cut assets, built up equity and liquidity since the financial crisis, “regulators don’t see any immediate need for us to raise our capital,” he said. Shareholders continue to disagree.

And since slashing bonuses tends to leave a bitter taste in the mouths of shareholders, Sewing tried to spin recent speculation about the bank, telling Bild its “condition is significantly better than it seems.”

Sewing also defended the closure of 188 of 723 Deutsche Bank branches in Germany, and said that the bank has to adapt offer to customer behavior and reduce costs at the same time; almost half of customers come into branch only once a year. The good news is that he vowed the bank won’t impose negative interest rates on private customers, though zero interest rates may force many German banks to raise fees.

Finally, he commented on the recent stress test, saying “we don’t want to rank 43rd in long term, but the stress test can’t be read as a Bundesliga table; regulators saw no acute need for more capital.” It was unclear if he was referring to the ECB’s stress test which the bank passed, or the subsequent ZEW test which found that DB has a €19 billion capital shortfall, largeer than its entire market cap.

end

You will recall that Dun and Bradstreet is the only rating agency that gave Portugal the minimum BBB grade such that the ECB could still continue to buy their junk sovereign bonds.

Well it looks like D & B might lower the boom on Portugal setting the stage for some fireworks;

(courtesy zero hedge)

 

  Portuguese Bonds Slump As Last-Investment-Grade-Standing Falters

The only thing standing between Portugal’s insanely decoupled low bond yields and the ugly fundamental reality is a BBB rating from DBRS which enables The ECB to keep buying the nation’s bonds. The problem is, pressure is mounting on DBRS (the only 1 of 4 raters to maintain Portugal as investment grade) to drop the hammer… and Portuguese risk is rising.

And in response to these concerns, the last 2 days have seen the biggest surge in Portugal sovereign credit risk in 2 months…

As Reuters reports, pressures are building on Portugal’s creditworthiness as its low-growth economy battles to contain high levels of government and corporate debt and amid banking sector strains, the head of sovereign ratings at credit agency DBRS said.

DBRS’s BBB (low) rating has been a vital prop for Portugal, allowing its bonds to remain part of the European Central Bank’s 1.7 trillion euro buying program and as eligible collateral for the Bank’s unlimited and now free bank funding.

The rating, next due for review on October 21, carries a ‘stable’ outlook, giving Lisbon some breathing space, but Fergus McCormick told Reuters that the picture was deteriorating.

“Friday’s Q2 GDP release (which showed growth at just 0.2 percent) raised our concerns about growth prospects, which appear to be slowing into the third quarter,” he told Reuters in an interview.

“Therefore, the outlook remains stable, but pressures appear to be mounting from these various fronts,” he added, also citing European Commission demands that an unwilling Lisbon implement more spending cuts.

DBRS’s October review will come just a week after Portugal is scheduled to provide the Commission with a list of those new cuts to get its budget deficit back under 3 percent of GDP. Uncertainties over the make-up of those measures and their impact on the delicate political balance were a concern McCormick said, as was the possibility that more taxpayer money may be needed to prop up banks including Caixa Geral de Depositos and BCP.

“Will the far-left parties support these two initiatives? This is unclear.”

DBRS’s view is closely watched because it is the only one of the four ratings agencies recognized by the ECB to have an investment grade rank for Portugal.

It needs a rating of that category to qualify for the central bank’s quantitative easing program and for the ECB to accept Portugal’s bonds as loan collateral.

A downgrade could therefore cause havoc for Portugal’s borrowing costs and its banks which rely heavily on the ECB’s funding, and analysts warn it would almost inevitably trigger a significant market selloff.

As an interesting sidenote, we add that DBRS, whose grades are currently crucial for Portugal and Italy getting a range of support from the European Central Bank, said on Wednesday it had appointed a new head of its European sovereign ratings team.

Nichola James has been appointed co-head of sovereign ratings, alongside Fergus McCormick who also takes the role as chief economist.

James will be based in London and will manage DBRS’s growing European team while New-York based McCormick, who has been head of sovereign ratings since 2010, will oversee countries outside Europe.

James joins DBRS from MUFG Group, where she spent the past six years as director, country risk team, EMEA. Prior to that, she was a senior manager/economist, for foreign exchange and fixed income sales and trading at Lloyds Bank. James holds BA and MA degrees from University College London and an MBA from Warwick Business School.

Question is – was this move a response to a tap on the shoulder from Draghi et al. that the ratings should not be cut? If they do cut, of course, it will be time for a rule change at The ECB… or crisis looms…

RUSSIAN AND MIDDLE EASTERN AFFAIRS

RUSSIA

The following does not look good as Russia conducts armoured train drills for the first time in 15 years:

(courtesy MacSlavo/SHTFPlan.com)

 

Expecting War? Russia Conducts Armored Train Drills For First Time In 15 Years

Submitted by Mac Slavo via SHTFPlan.com,

One could only conclude that Putin is not playing around anymore.

Instead, Russia is out and out prepared for war. It is likely enough that we should expect it, too. Can you feel things heating up?

These drills appear to be very serious training for the mobilization of a major force that intends to bring in vast numbers and superior equipment under cover from fire.

Watch carefully as this force readies to protect Putin’s army during transport to the point of conflict:

The Russians have been flaunting their latest equipment for communications jamming, which allows them to literally dominate and control an area; they have been flexing their ICBM mobile trucks and they have been giving every sign that they will not be pushed around by NATO, rightly or wrongly.

They will be rolling out their carefully regulated, exercised and trained 21st century army ready to engage in electronic warfare.

Ukraine and Syria are both still open proxies, and attempts to bring Ukraine into NATO could provoke open war:

Much of this comes as NATO and the IMF continue to attempt to garner Ukraine into the EU and make the country a full-fledged NATO member.  Such an action will not come without a price, however, and an excellent example of this can be found in an article entitled“Ukraine joining NATO would be trigger for war with Russia,” by Debra Killalea ofnews.com.au.

 

The red line in the sand is if NATO makes Ukraine a member.  That will be seen as a call for war.”

Dibbs also added that a nuclear war with Russia was “not an impossibility.”

Perhaps these world events coincide with clear signals from the American election cycle that Hillary will be inserted as president whether the public likes it or not, and whether or not her corruption and dirty laundry have been hung out in full display to all passersby.

The establishment has chosen Hillary, and Hillary has signaled for war with Iran. Russia and Syria have also been named as enemies on the new, updated ‘axis of evil.’ Basically the worst parts of the Bush regime and the Old Testament have been mixed together in a blender from hell and put into Hillary’s group of advisors and cabinet-members-to-be.

George Schultz and Henry Kissinger are almost certain both lucky just to be alive at their advanced ages, and both are pissed off at the possibility that they might die before they get to see war in Iran, or even conflict with the queen piece in Russia.

Regardless, the forecast has darkened significantly. Tensions in the middle east are being stoked once again for a new season, and old flames of war will be started up again.

 

TURKEY

A terrific commentary on what is happening behind the scenes in Turkey.  At first many thought that Erdogan was behind his own plot  to “remove” him, but on closer examination it seems that it may have been a poor execution of the west.  This is why he is seeking a partnership with Putin of Russia. Putin will win as he gets back the Turkish stream pipeline and he will still control much of the happenings in Turkey much to the chagrin of the west.

a must read…

(courtesy Bohm Bawerk/Bawerk.net)

Turkish Turmoil: Let The Politics Begin

Submitted by Eugen von Bohm-Bawerk via Bawerk.net,

A month on from Turkey’s failed coup attempt, and you’ll find endless op-eds opining the supposed strategic implications of Erdogan’s rear-guard offensives. In a nutshell, it breaks down into four key arguments

  • The first is that Erdogan will oversee a ‘brutal crackdown’ to consolidate power wherever and whenever possible out to 2019 against any form of political opposition (Gulenist or not). The net result supposedly secures Erdogan’s tenure towards 2023 ‘Ataturk’ landmarks, and beyond.
  • The second facet is that Mr. Erdogan will continue to inflict collateral Kurdish damage to secure internal gains along the way. PKK-Ankara relations basically go back to square one, while the slightly more politically savvy HDP gets caught in Erdogan’s crossfire, undermining consistent Kurdish supplies through Turkey.
  • The third factor is Ankara turning towards Russia as a new ‘strategic’ axis against NATO interests, and indeed Turkey’s vexed relations with the transatlantic military body. A relationship that’s likely to go from bad to worse given Mr. Erdogan’s underlying belief that ISIS gains remain the lesser of two evils compared to Kurdish consolidation on his Southern border. Not to mention the minor fact that most AKP members think the US was all in on the ‘Gulenist’ plot to oust the sitting President.
  • Beyond other blindingly obvious points that Turkey’s now subject to far more terror attacks by failing to ride two competing ‘ISIS / Kurdish camels’, that doesn’t really leave us much beyond point four: The failed Turkish mutiny still supposedly portends a major trigger point for another ‘Arab Autumn’, where MENA states are susceptible to enhanced political risk on the back of depressed benchmark prices. While all these arguments have elements of truth, our position is they don’t constitute a serious discussion of the Turkish question, at least without significant caveats raised across all four points. Those same caveats also happen to have sharp resonance for how tangible any KSA-Turkish relations are in future.

But enough with all the pre-amble stuff, what about the political facts here? The first point to raise on ‘internal political consolidation’, is although Erdogan will continue to wield heavy sticks – probably with fresh elections in 2017 to ram through a two-thirds AKP parliamentary majority to pave the way for a strong arm executive branch on the back of Constitutional reforms – Mr. Erdogan’s not in a credible position to oversee ‘total crackdowns’ across the board. This is still a political game he has to play in a politically sensitive manner to get the consolidation he wants. Part of that’s to prevent another ‘coup 2.0 scenario’ that remains a real concern in Turkey. Hence, while the AKP has locked up vast numbers of military staff and public servants (50,000 and counting), the President wasn’t allowed to resurrect military barracks in Gezi park despite declaring ‘emergency rule’ to do so. Erdogan’s also been forced to play nicer with opposition MHP and CHP factions to present a united ‘anti-Gulenist’ front. The longer Erdogan keeps opposition consent in play, the further anti-Gulenist purges can go, in what’s basically going to be a long term cycle of ‘part of reconciliation, part crackdown’ for secular (long term) consolidation. Ultimately Mr. Erdogan will get his way, creating a strong executive to dominate all branches of government into 2017-18. But that’s not driven by crude ‘crackdowns’, but far more politically intricate games the President will play. Presidential apotheosis yes, but secured through politically nuanced means.

Unsurprisingly, the same nuances play into Kurdish questions, and especially with the PKK. Recent attacks in the South East were probably inspired by Ocalan to highlight just how weak a post-purge Turkish army has become. Yet that’s not necessarily with a ‘hard-baked’ view of returning to violence for violence sake, but purely to start playing the political game with Erdogan instead. Although very poorly understood by Western analysts, the PKK remains sharply opposed to Gulenist nationalist trappings, and actually holds them responsible for some of the blunter military tactics deployed in South East Turkey last year. To be clear, we’re not saying that anti-Gulenist positions are anywhere enough to consistently bring Ankara and Ocalan to the table for long term accommodation, but it’s probably still sufficient for both sides to play the political game of tactical ‘on-off’ discussions to secure proximate political aims. The PKK wants to remain the ‘go to’ Kurdish group to eclipse growing HDP influence, and more importantly, keep one step ahead of intra-Kurdish contests between the KRG (KDP, Goran and PUK), and YPG / PYD (Rojava) in Syria for regional leadership. Speaking to Erdogan helps secure that status on ‘diplomatic paper’, with ongoing attacks on the Iraq-Turkey (Kirkuk-Ceyhan) the parallel ‘physical insurance policy’ to remind Ankara’s who’s ultimately calling the transit shots, not to mention keeping the KDP in a very difficult spot trying to monetise Kurdish crude. Exactly like our internal crackdown commentary, expect Ankara-PKK relations to keep shifting between ‘jaw-jaw’ and ‘war-war’ calculations on this, purely depending on where the political points can be scored.  Even though the long term ‘Presidential’ prognosis is anything but good for the PKK.

Turn to Russia and that’s where the entire ‘Turkish thesis’ becomes far more tenuous. Despite the clear political aesthetics of Erdogan’s first ‘post-coup’ trip to St Petersburg, this is ultimately a relationship that both Presidents’ want to dominate on key strategic issues, not share. Don’t forget, from President Putin’s perspective, Turkey was always ear marked as a ‘Eurasian Union’ state that basically relegates Ankara to a Russian satellite interest, while Mr. Erdogan clearly thinks Turkey has far more regional clout in the Levant when it comes to shaping Middle East results. With that said, both sides understand that Russia is increasingly well placed to prevent the emergence of a Kurdish state in Norther Syria, given Washington doesn’t have any other anti-Assad cards to play. But whether Russia and Turkey ever truly see eye to eye on Damascus is a less certain prospect. Erdogan won’t like it, but if he genuinely wants Russia on-board as a consistent ‘partner’, that probably means toning down the anti-Assad rhetoric in Syria; it certainly means being more ‘flexible’ over Russian naval presence in the Black Sea. It means scaling down residual support for Crimean Tatars; but most of all, it means increasing Turkish import dependence on Russian energy supplies, where gas is the most politically tradable commodity in play. Putting Turk Stream back on the table with Ankara (as a footnote for our readers, it’s basically a modest version of previous South Stream designs) tries to kill two birds with one pipeline for President Putin.

a) It regains the political initiative over Ukraine, where Mr. Putin’s long lost the Donetsk war, but could still win the political peace ahead of 2018 Presidential polls in Russia, provided he can cut Kiev out of Wester European transit routes.

b) It makes life far harder for President Aliyev to bring competing Azeri gas to European markets, reducing Baku to its historical status of a Russian outpost. BP merely raises the ‘red flag’ over SOCAR HQ on a daily basis by Caspian / Rosneft proxy.

But unfortunately for Ankara, that rather reinforces the fundamental problem they have with Russia here. This is all one-way political traffic for President Putin to gain the upper hand over Mr. Erdogan, where Moscow rightly sees that a post-coup Turkey is absolutely prime for ‘political plucking’. Whether Erdogan is willing to be stripped to the ‘bare bones’ remains highly unlikely. At best, Turkey and Russia make for politically promiscuous ‘frenemies’. At worst, they’re at strategic cross-purposes on all points of the map, with mismatching vectors inexorably starting to show. In a truly worst case scenario, Mr. Erdogan might even find himself caught in collateral NATO-Russia crossfire, where everyone decides if Turkey can’t be part of a regional ‘solution’, it’s much easier to make them part of the ‘problem’.

On that final note, nobody’s quite said it yet, but that’s precisely what’s already on Erdogan’s mind.Behind all the ‘CIA’ coup bluster, the President’s real concern is how many regional players might have played a part in the coup antics. GCC states are undoubtedly on his ‘list’ of suspects, where Turkish realignment hasn’t exactly played through the way major Sunni states hoped over the past few months. Whatever your particular take on that one, the fourth (and final) analytical point to register over any supposed ‘Arab Autumn’ ideas here, isn’t so much that military leaders start getting nervous to make internal MENA moves in a low price environment, but whether regional power grabs start destabilising internal political interests as a new trend. Admittedly, that’s normally the stuff off Iranian intrigues, but in the current political environment, any wrong moves – or perceived wrong moves – will assuredly come with very high political costs.

Bottom line, Mr. Erdogan will be around for a long time to come in Turkey. But his interim answers don’t look particularly convincing right now. If anything, they’re merely laying the ground for more costly mistakes in future. Probably circa 2023, when Turkey celebrates 100 years from its modern incarnation, but before Erdogan gets ‘quite that far’, he has the minor issue of growing external debt problem to deal with.

As everyone knows, Turkey has relied on FX denominated debt, a large tranche of which happens to be short term to fund its persistent current account deficit.

While the debt load may seem sustainable in ‘boom times’, calculations from the IMF shows that a 30 per cent depreciation of the lira would push Turkey’s external debt stock to more than 80 per cent of GDP by 2020. In 2016 Turkey’s gross financing need is likely to exceed 25 per cent of GDP and could quickly spiral out of control if the FX mismatch carried by Turkey’s banks becomes acute. Right on cue, with tanks rolling down the streets of Istanbul, who in their right mind would willingly fund Mr. Erdogan’s adventure toward more red ink and inexorable Turkish turmoil.

END

GLOBAL ISSUES

The Rothschilds join the bearish crowd as they increase their gold holdings up to 8%

(courtesy zero hedge)

Lord Rothschild: “This Is The Greatest Experiment In Monetary Policy In The History Of The World”

Two months ago, the bond manager of what was once the world’s biggest bond fund had a dire prediction about how “all of this” will end (spoiler: not well).

Janus Capital @JanusCapital

Gross: Global yields lowest in 500 years of recorded history. $10 trillion of neg. rate bonds. This is a supernova that will explode one day

10:05 AM – 9 Jun 2016

Now, it is the turn of another financial icon, if from a vastly different legacy –  and pedigree – that of Rothschild Investment Trust Chairman himself, Lord Jacob Rothschild, who appears to be the latest entrant to the bearish billionaire club.

We were surprised to find his summary of recent events downright gloomy, and certainly non-conforming with a stock “market”, manipulated by central banks as it may be, trading at all time highs. Here are the key excerpts:

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% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world.

Many of the risks which I underlined in my 2015 statement remain; indeed the geo-political situation has deteriorated with the UK having voted to leave the European Union, the presidential election in the US  in November is likely to be unusually fraught, while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems. Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the USA in terrorist attacks.

As a result, Rothschild has put his money where his mouth is: “we have reduced our exposure from 55% to 44%. Our Sterling exposure was significantly reduced over the period to 34%, and currently stands at approximately 25%. We increased gold and precious metals to 8% by the end of June.

* * *

Not surprising, RIT’s investment portfolio continues do quite well, and has now returned roughly 2,000% since inception

Here is the full section from the RIT Capital Partners’ latest half-year financial report.

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% of global government debt at negative yields, combined with quantitative easing on a massive scale.

To date, at least in stock market terms, the policy has been successful with markets near their highs, while volatility on the whole has remained low. Nearly all classes of investment have been boosted by the rising monetary tide. Meanwhile, growth remains anaemic, with weak demand and deflation in many parts of the developed world.

Many of the risks which I underlined in my 2015 statement remain; indeed the geo-political situation has deteriorated with the UK having voted to leave the European Union, the presidential election in the US  in November is likely to be unusually fraught, while the situation in China remains opaque and the slowing down of economic growth will surely lead to problems. Conflict in the Middle East continues and is unlikely to be resolved for many years. We have already felt the consequences of this in France, Germany and the USA in terrorist attacks.

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. In respect of your Company’s asset allocation, on quoted equities we have reduced our exposure from 55% to 44%. Our Sterling exposure was significantly reduced over the period to 34%, and currently stands at approximately 25%. We increased gold and precious metals to 8% by the end of June. We also increased our allocation to absolute return and credit, which delivered positive returns over the period, benefiting from a number of special situations. Within this category our new association with Eisler Capital had an encouraging start. We expect this part of the portfolio to be an increasingly important contributor to overall returns.

On currencies, we reduced our exposure to Sterling in anticipation of Brexit and the generally unsettled UK political environment. Our significant US Dollar position has now been somewhat reduced as, following the Dollar’s rise, we saw interesting opportunities in other currencies as well as gold, the latter reflecting our concerns about monetary policy and ever declining real yields

Below is a snapshot of where every hedge fund wants to end up: the Rothschild investment portfolio.

Finally, for all those wondering where the Rothschild family fortune is hiding, here is the answer.

 END EMERGING MARKETS BRAZIL

In the surreal category, police have seized Ryan Lochte’s passport stating he cannot leave the country because they state that he lied about being robbed

(courtesy zero hedge)

 

 

Over the weekend, a surprising – and confusing – story emerged out of the Rio Olympics, when US olympic gold medal winner Ryan Lochte said he had been robbed at gunpoint by Brazilian police, something the International Olympic Committee fervently denied.

As Lochte said in an NBC interview, “We got pulled over, in the taxi, and these guys came out with a badge, a police badge, no lights, no nothing just a police badge and they pulled us over,” Lochte said. “They pulled out their guns, they told the other swimmers to get down on the ground — they got down on the ground. I refused, I was like we didn’t do anything wrong, so — I’m not getting down on the ground. And then the guy pulled out his gun, he cocked it, put it to my forehead and he said, “Get down,” and I put my hands up, I was like ‘whatever.’ He took our money, he took my wallet — he left my cell phone, he left my credentials.”

The confusing situation left us wondering “who is lying here – Lochte’s mother or the IOC… and why.”

While we still don’t know the answer, the latest bizarre development in this saga took place moments ago when an order was made to seize American swimmer Ryan Lochte’s passport by Brazilian authorities after claims he “lied about being robbed” according to the Mirror.

Rádio BandNews FM @radiobandnewsfm

Brazilian Justice seized Ryan Lochte’s passport saying that he lied about robbery at

9:34 AM – 17 Aug 2016

Below is the official statement issued from the Rio court ordering the seizure of Lochte’s passport:

View image on Twitter

Peter Alexander @PeterAlexander

: Official statement from the Rio court re: order Lochte/Feigen passports be seized.

11:20 AM – 17 Aug 2016

Earlier, the local police had further questions for the swimmer – a 12-time Olympic medallist – about the supposed robbery and found ‘little evidence’ that it had taken place. Lochte claims that he and three of his team-mates were robbed at gunpoint in a taxi, but police say the swimmers were unable to provide key details in police interviews.

Lochte’s attorney, Jeff Ostrow, said there was no question the robbery happened and that the swimmer had 24-hour security hired after the incident.

Simon Clancy @SiClancy

Apparently Brazilian judges have seized the passports of American swimmers who they claim “lied” about the theft, including Ryan Lochte.

9:13 AM – 17 Aug 2016

He had been staying in his hotel room and intended to go back to the US soon. “This happened the way he described it,” Ostrow told the NY Post.

Pictures and CCTV have emerged of the swimmer returning to the Olympic complex and passing security on the night of the alleged robbery – with the wallets and watches the men claim were stolen. Protocol requires that athletes go through a metal detector before entering the village, with athletes putting their belongings in plastic trays.

But images contradict the version of the swimmers and because of this Judge Keyla Blank, the Special Court of the Fan and Major Events banned the athletes from leaving the country.

The Mirror also adds that there was also a warrant issued for search and seizure to the Olympic Village, where passports would be seized. However it is thought that the swimmers have already have left the country.

“There was no effort to detain anyone, but police did have further questions this a.m. It is a matter for our consulate and U.S. citizen services and we will continue to cooperate with all involved,” USOC spokesman Patrick Sandusky said in a statement amid reports Wednesday that arrest warrants were issued for the swimmers.

It appears that, unless Lochte is egregiously lying for reasons unknown about the robbery, Brazil is now in meltdown mode, desperate to prove that it is a “safe” country for olympics, and in order to prove it, it is willing to go as far as to arrest a US national icon, an arrest however which may not happen.

 

END

OIL ISSUES

The Saudis are now set to increase their output to record levels. Qatar is angry!

(courtesy zero hedge)

Oil Slides To $45 Handle After Saudis Set To Increase Output To Record High: Qatar Warns OPEC “Do Something”

Following last night’s major build in gasoline inventories, the bullish exuberance in crude took another spill this morning as sources say Saudi Arabia is set to increase output yet again to a new record high. Furthermore, Qatar’s energy minister urged OPEC and NOPEC to “do something” warnings that another failed meeting would “cause more damage than good.”

Saudi Arabia was “quietly telling” the market output could rise in Aug. to as high as 10.8m-10.9m b/d, Reuters reports, citing one unidentified person from outside OPEC familiar with the matter.

Qatar’s Al-Attiyah Says OPEC and Non-OPEC ‘Need to Do Something’

It’s “hard to say” whether OPEC will reach freeze deal w/ non-OPEC producers, Qatar’s former energy minister Abdullah Bin Hamad Al Attiyah says in phone interview.

Another failed meeting would “cause more damage than good”

“OPEC and non-OPEC should be very careful on holding a new meeting without proper consent and preparation”

Freeze deal wouldn’t have huge impact on fundamentals but would boost mkt sentiment

Mkt still oversupplied by ~1.2m b/d-1.5m b/d, may need until end-2017 to fully rebalance

And now all eyes will be on DOE data at 1030ET

end

Then at 11:25 am oil jumps on an inventory decline.  However the industry has experienced its biggest production increase in 15 months;

(courtesy zero hedge)

Oil Jumps On Inventories Despite Biggest Production Increase In 15 Months

With oil sliding after last night’s surprise gasoline build from API (and headlines from the middle east), all eyes are on today’s DOE data. As opposed to API, DOE reported a major drawdown in gasoline (-2.7mm) and along with draws in Crude and Cushing, oil prices jumped (despite a big build in distillates). Oil held gains despitye the biggest surge in US crude production since May 2015.

API

  • Crude -1.007m (+950k exp)
  • Cushing -680k (+100k exp)
  • Gasoline +2.167m (biggest in six months)
  • Distillates +2.406m

DOE

  • Crude  -2.508m (+950k exp)
  • Cushing -724k (+500k exp)
  • Gasoline -2.724m (-1.7m exp)
  • Distillates +1.939m (-600k exp)

After 3 weeks of builds, crude inventories fell this week:

US Crude production rose by the most since May 2015…Lower 48 production up 100,000 BOE, Alaska up 52,000 BOE . TOTAL: +152,000 BOE

As has been the case recently, investors were looking at gasoline stocks, which declined by 2.7MM, more than the 1.638MM expected, and in linewith last week’s -2.8MM draw.

The gasoline stocks breakdown by region:

  • PADD1 70.125mb -0.790
  • PADD2 48.618mb -2.351
  • PADD3 76.595mb -0.672
  • PADD4 7.105mb -0.376
  • PADD5 30.215mb +1.464

Curiously, gasoline stocks now appear to be declining faster than normal, suggesting excess supply is being exported as gasoline demand actually fell by -0.007mbpd to 9.762.

* * *

The also reaction in crude makes little sense as the production surge is trumped by a drop in gasoline inventories, and as algos trip stops on the upside.

Charts: Bloomberg

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

Euro/USA   1.1270 DOWN .0005 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 100.65  UP .493(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.3005 DOWN .0020(CARNEY CUTS BR. INTEREST RATES TO .25%)

USA/CAN 1.2883 UP .0018

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 5 basis points, trading now well above the important 1.08 level FALLING to 1.1270; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED down 0.482 POINTS OR 0.02%    / Hang Sang CLOSED DOWN 111.06 POINTS OR 0.48%     /AUSTRALIA IS HIGHER BY .06% / 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 WEDNESDAY morning CLOSED UP 149.13 POINTS OR 0.90%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 111.06 POINTS OR 0.48%  ,Shanghai CLOSED DOWN 0.48  POINTS OR 0.02%    / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED IN THE GREEN   /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1342.70

silver:$19.60

Early WEDNESDAY morning USA 10 year bond yield: 1.578% !!! PAR  in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES SLIGHTLY to 2.96 UP 1/10   in basis points from TUESDAY night. 

USA dollar index early WEDNESDAY morning: 94.96 UP 18 CENTS from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

END

And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield:  2.873% UP 3 in basis points from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.07% UP 2 in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:0.973% DOWN 1 IN basis points from TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.116 DOWN 1 in basis points from TUESDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 14 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.05% DOWN  2 IN  BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

 

Euro/USA 1.1290 UP .0015 (Euro UP 15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.23 UP .0640(Yen DOWN 6 basis points/

Great Britain/USA 1 .3053 UP 0.0026 ( Pound UP 26 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2847-DOWN 0.0017 (Canadian dollar UP 17 basis points AS OIL FELL(WTI AT $46.83). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 15 basis points to trade at 1.1290

The Yen FELL to 100.22 for a LOSS of 6 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 26 basis points, trading at 1.3053 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 17 basis points to 1.2847, WITH WTI OIL AT:  $46.82

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6328

the 10 yr Japanese bond yield closed at -.07% UP 2 IN  points / yield/

Your closing 10 yr USA bond yield:DOWN 1 IN basis points from TUESDAY at 1.561% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.274 DOWN 2 in basis points on the day /

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

Your closing USA dollar index, 94.67  DOWN 11 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 34.77 OR 0.50%
German Dax :CLOSED DOWN 138.98 OR  1.30%
Paris Cac  CLOSED DOWN 42.76  OR 0.96%
Spain IBEX CLOSED DOWN 134.30 OR 1.56%
Italian MIB: CLOSED DOWN  264.60 POINTS OR 1.58%

The Dow was UP 21.92 points or 0.12%

NASDAQ UP  1.55 points or 0.02%
WTI Oil price; 46.82 at 4:30 pm;

Brent Oil: 49.79

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.94 (ROUBLE DOWN  10/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.05%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:46.87

BRENT: 49.82

USA 10 YR BOND YIELD: 1.5552% 

USA DOLLAR INDEX: 94.75 down 4 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.30384 up .0009 or 9 basis pts.

German 10 yr bond yield at 5 pm: -0.05%

END

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

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

Bonds & Stocks Surge After Fed’s Equity Valuation Warning

As J-Hole looms and Fed minutes fade, this is all we had…

 

Post-Fed Minutes, Rate Hike Odds plunged…

 

And traders bought everything from bonds to stocks and gold to crude… (oil ramped into NYMEX close) as USD dumped

 

Buy Bonds, Buy Gold, Buy Stocks, Sell USDs… and down the drain goes Fed Cred…

 

Stocks initially dumped after the Minutes before all ripping higher… despite this…. “during the discussion, several participants commented on a few developments, including potential overvaluation in the market for CRE, the elevated level of equity values relative to expected earnings, and the incentives for investors to reach for yield in an environment of continued low interest rates. “

 

To ensure The Dow was green for the week…but reality bit into the close and The Dow ended red on the week…

 

The Market broke shortly after the minutes were unleashed – as VIX was crushed – but VIX was not done with yet as desperation struck into the close to get S&P green above 2178 (we highlighted the BROKEN MARKET segment o fthe day for your entertainment)

 

But some have blamed today’s price action Dennis Gartman – who went short bonds and short oil this morning…

 

Treasury yields tumbled after Fed Minutes, flattening 5s30s to cycle lows…

 

But the flatness of the curve didn’t worry financials…

 

The USD Index dumped on Fed Minutes before starting to bounce back…erasing yesterday’s Dudley-driven bounce…

 

Notice the kneejerk run higher in USD Index as the minutes hit (which fits with the seemingly hawkish narrative)…

 

Commodities were mixed with Gold unch today but silver and copper lower – despite the weak USD – crude ripped…

 

Notably, Gold ETFs have seen their largest withdrawals this year in the last week…

 

Charts: Bloomberg

end

 

The official FOMC minutes from two weeks ago:

Highlights! in plain English: they were hawkish!

(courtesy zero hedge)

 

FOMC Minutes Show Fed Members Split Over July Rate-Hike, Fear Financial Risks From Low Rates

With Fed speakers attempting to jawbone the current narrative back from the uber-dovish record-high-creating Fed statement, all eyes today were glued on how hawkish the statement would be with regard 2016 hikes – few, some, or many? Since The Fed statement, GDP expectations have crashed to cycle lows but that has not seemed to stop The Fed:

  • *FED OFFICIALS SPLIT IN JULY ON WHETHER RATE HIKE NEEDED SOON
  • *A COUPLE FED OFFICIALS BACKED JULY RATE HIKE
  • *FOMC VOTERS AGREED TO WAIT FOR MORE DATA TO GAUGE ECONOMY

But perhaps most notably, several Fed officials are concerned of financial risks from too low rates.

*  *  *

Pre-FOMC Minutes: Sept Odds 28%, Dec Odds 55%, S&P Futs 2173, 10Y 1.56%

Rate hike odds have risen again as the stock market rallied…

 

And since The fed meeting, stock-strength-driven rate-hike odds have mirrored the collapse of economic growth expectations…

 

But we note that despite a 14bps range, Treasury yields – across the entire complex – are practically unchanged from The Fed statement…

 

Some additional headlines from the minutes:

  • *SEVERAL FED OFFICIALS CONCERNED OF FIN. RISKS FROM LOW RATES
  • *SEVERAL FED OFFICIALS SAW AMPLE TIME TO ACT IF INFLATION RISES
  • *SEVERAL FED OFFICIALS WANTED TO WAIT FOR MORE INFL. CONFIDENCE
  • *FOMC VOTERS DIVIDED ON WHETHER JOB-GAIN PACE WORRISOME

And finally, Jim Bullard dropped this…

  • *BULLARD: CENTRAL BANKS GLOBALLY ARE RETHINKING MONETARY POLICY

All it took was 667 rate cuts and printing $10 trillion…? But we presume will keep doing the same stuff expecting a different result?

* * *

Here are the key sections breaking down the Fed’s intentions:

On the “prudent” to wait front:

Members generally agreed that, before taking an-other step in removing monetary accommodation, it was prudent to accumulate more data in order to gauge the underlying momentum in the labor market and economic activity.

“Couple” wanted more evidence for 2% inflation, but “Some” anticipated a sooner rate hike:

A couple of members preferred also to wait for more evidence that inflation would rise to 2 per-cent on a sustained basis. Some other members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.

And the dissenter, Esther George:

One member preferred to raise the target range for the federal funds rate at the current meeting, citing the easing of financial conditions since the U.K. referendum, the return to trend economic growth, solid job growth, and inflation moving toward 2 percent.

A notable tangent on upcoming money market reform (rising Libor rates):

Although upcoming regulatory changes were expected to improve the stability of money market funds in the longer run, the staff noted the potential for large withdrawals by investors in anticipation of those changes to lead to some disruptions in the short run.

On asset valuations:

Vulnerabilities emanating from leverage in the nonfinancial private sector remained moderate: While business debt ratios stayed elevated, household debt-to-income ratios continued to inch down. Valuation pressures also remained at a moderate level. Although term premiums on Treasury securities became more deeply negative and CRE valuation pressures remained appreciable, corporate bond and equity risk premiums were unchanged on net.

On Brexit:

“Some noted that the Brexit vote had created uncertainty about the medium- to longer-run outlook for foreign economies that could af-fect economic and financial conditions in the United States. Participants generally agreed that the Committee should continue to closely monitor inflation indicators and global economic and financial developments.”

* * *

Another key observation: the Fed is starting to be concerned about tight lending conditions, because while the word SLOOS (aka Senior Loan Officer Opinion Survey on Bank Lending Practices) was mentioned precisely zero times in June, it saw a substantial 7 mentions in the July minutes.

Finally, the number of times “global” was mentioned in the minutes: 14x, one less than in June.

 

Full FOMC Minutes below:

(see zero hedge if you want to see the FOMC garbage)

 

end

 

Immediate reaction: Markets break:

 

And The Market Breaks…

Bond yields are plunging, the USD is tumbling, and precious metals are surging after the unquestionably hawkish fed minutes… and so, how do you stop the market melting down? Break The Market…

  • *BATS BZX EXCHANGE HAS DECLARED SELF-HELP VS NASDAQ

Source: BATS

And miraculously, stocks soar…

 

And having got the S&P green, the market unbreask…

 

end

 

And when the dust settled, here is where everything stands:

 

Traders Buy Everything After Fed Minutes Send USD Lower

Despite what seemed somewhat more hawkish than the July Statement, Fed Minutes sparked a dovish reaction sending the USDollar reeling, rate hike odds falling, and in turn bonds, gold, oil, and stocks higher…

The initial reaction seemed hawkish… (Oil helped by the ubiquitous NYMEX close ramp)

 

But rate-hike odds crashed…

 

As The Dollar dropped so the entire yields curve also fell..

 

end

 

This is a huge Bellwether:  the giant Cisco is reportedly firing 20% of its workforce: 14,000 workers

(courtesy zero hedge)

Global Economic Bellwether Cisco Reportedly Fires 20% Of Workforce

It’s easy to shrug off the sharpest productivity decline in 40 years and the worst non-recessionary industrial production contraction in US history because… well it’s the new economy, stupid and you just don’t get it. But when ‘new economy’ networking giant Cisco is reportedly set to announce it is laying off a record number of employees – 14,000 representing 20% of its global workforce – surely it is time to question the “everything is awesome” narrative.

As CRN reports,

Cisco Systems is laying off upward of 14,000 employees, representing nearly 20 percent of the networking giant’s global workforce, according to multiple sources close to the company.

San Jose, Calif.-based Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources.

The excuse for the heavy cuts, which sources said will range between 9,000 and 14,000 employees worldwide, is that they stem from Cisco’s transition from its hardware roots into a software-centric organization…

“They need different skill sets for the software-defined future than they used to have,” said one source familiar with the situation, who declined to be identified.

“In theory the addressable market could be higher and margins richer, but it will take some time to make this transition.”

Cisco declined to comment, and is set to announce its fourth fiscal quarter results after the market closes tomorrow.

The networking leader has a history of announcing layoffs at the end of its fiscal year each summer. In August 2014, Cisco revealed plans to cut 6,000 jobs, roughly 8 percent of its total workforce at the time. In August 2013, the company cut 4,000 employees, about 5 percent of its global workforce at the time. Cisco also cut 1,300 positions in July 2012. One of Cisco’s largest layoffs came in July 2011, when the company cut 6,500 employees, representing about 9 percent its global workforce. Cisco had no layoffs in the summer of 2015, coinciding with Chuck Robbins’ ascension to CEO that July.

But this massive layoff is the company’s largest ever…

And, as everyone who has traded markets and followed global economic trends knows, Cisco is among the clearest global economic recession indicators (combining the real economy and imaginary-tech economy) there is… and this is the biggest collapse in Cisco’s headcount… ever.

Cisco is trading back at its highest since Nov 2007…

Charts: Bloomberg

 

end

 

Then with the announcement of only 5500 being fired, the market is very disappointed and Cisco falls even more

(courtesy zero hedge)

 

Cisco Fires 5,500; Market Disappointed It Wasn’t More – Shares Fall

After yesterday’s leak by CRN that Cisco would terminate some 14,000 workers, or about 20% of its 73,000 workforce, investors were looking forward to today’s earnings announcement by the tech giant not so much for whether it would beat expectations (it did not on a GAAP basis, with $0.56 in GAAP EPS, however it did beat on a non-GAAP basis, reporting $0.63, above the $0.60 expected), but whether it would indeed reduce its workforce to a level not seen in a decade.

 

 

We got the answer moments ago, when Cisco indeed announced the latest mass layoff, which however was “only” 5,500 people, a mere 7% of its workforce.

Today’s market requires Cisco and our customers to be decisive, move with greater speed and drive more innovation than we’ve seen in our history. Today, we announced a restructuring enabling us to optimize our cost base in lower growth areas of our portfolio and further invest in key priority areas such as security, IoT, collaboration, next generation data center and cloud. We expect to reinvest substantially all of the cost savings from these actions back into these businesses and will continue to aggressively invest to focus on our areas of future growth. The restructuring will eliminate up to 5,500 positions, representing approximately 7 percent of our global workforce, and we will take action under this plan beginning in the first quarter of fiscal 2017.

And, with the market hoping to see nearly three times more workers fired, despite the top and bottom line beat by CSCO, the stock is no lower in the after market, as algos punish management for not being a bunch of inconsiderate monsters.

However, don’t despair CSCO longs: as CRN reported, “Cisco is expected to announce the cuts within the next few weeks, as many early retirement package plans have already been offered to employees, said sources.” This likely means that once the initial shock of the first round of layoffs passes, the company will proceed with rounds 2 and 3, sending the stock right back up.

Then early this morning, the street did not like this:  Target slashes earnings estimates for the second half of 2016:

 

(courtesy zero hedge)

Retail Giant Target Slashes Earnings Estimates For 2H16 Citing “Challenging Environment”

After reports yesterday that Tech Bellwether Cisco plans to layoff up to 20,000 people (see “Global Economic Bellwether Cisco Reportedly Fires 20% Of Workforce“) this morning retail giant Target also guided lower for 2H 2016 on the back of a “challenging environment in the back half of the year.”

And the market is not happy…

Target beat earnings for 2Q 2016 at $1.23 adjusted EPS vs. consensus $1.13 but slashed guidance for 3Q and the 2nd half of the year with CEO, Brian Cornell, saying the company is facing a “difficult retail environment.”  Comp store sales for 2Q 2016 declined 1.1% on a 2.2% decline in volume and offset by a 2.6% price increase per unit.  The company noted on it’s earnings call that sales of Apple products were down 20% in 2Q.

The company called for comp store sales in 2H 2016 of -2% – 0%.  Full year 2016 guidance was slashed $0.30 to $4.80 – $5.20 vs. prior guidance of $5.20 – $5.40.  That said, the company beat their 2Q 2016 forecast which called for a midpoint adjusted EPS of $1.10 so when you factor in the beat this quarter the guide down is really more equivalent to about $0.43 or about 8%.

“While we recognize there are opportunities in the business, and are addressing the challenges we are facing in a difficult retail environment, we are pleased that our team delivered second quarter profitability above our expectations,” said Brian Cornell, chairman and CEO of Target. “Looking ahead, we remain focused on our enterprise priorities as we continue to see the benefits of investing in Signature Categories, store experience, new flex-format stores and digital capabilities. Although we are planning for a challenging environment in the back half of the year, we believe we have the right strategy to restore traffic and sales growth over time.”

While Target has plans in place to strengthen results over time, based on the current retail environment the Company believes it is prudent to lower its expectations for comparable sales in the second half of the year. In both the third and fourth quarters of 2016, Target now expects comparable sales growth in the range of (2.0) percent to flat.

In third quarter 2016, Target expects both GAAP EPS from continuing operations and Adjusted EPS of $0.75 to $0.95.  For full-year 2016, Target now expects GAAP EPS from continuing operations of $4.36 to $4.76, compared with prior guidance of $4.76 to $4.96. The Company expects full-year 2016 Adjusted EPS of $4.80 to $5.20, compared with prior guidance of $5.20 to $5.40. The 44-cent difference between the guidance ranges for GAAP EPS from continuing operations and Adjusted EPS primarily reflects early debt retirement losses already reported in 2016.

Guess it’s time to put that rate hike on hold again.

end

 

Last month we highlighted to you 3 ref flags which show that the USA housing sector is in a massive slowdown. Today those red flags are flashing an even brighter red:

(courtesy zero hedge)

 

Three “Red Flags” That The US Housing Slowdown Is Accelerating

One month ago, we showed three prominent “red flags” that the US housing market was starting to roll over.

Among these were a report by real-estate advisory RealtyTrac, which cited by Bloomberg, said that “almost nine years after the housing-market bust helped trigger the most recent recession, RealtyTrac senior vice president Daren Blomquist sees the industry waving a red flag.” He was referring to house flipping by third party investors at auction which was back with a vengeance, and what’s worse, the share of foreclosures snapped up by inexperienced mom-and-pop buyers at auction had hit a record 31% in June. As he said, “this a redux of the same fervent speculation that pushed the housing bubble.”

The second warning came as a result of the latest sharp decline in spending on furniture and home goods stores, which according to Bank of America credit and debit card spending data, showed that the yoy drop had reached the lowest since the recession period. As BofA said then, “this shows that consumers have delayed spending on housing-related items, which could be a sign of weakness for the housing market.”

The third red flag was revealed in the then-latest Credit Suisse survey of real estate agents: “Our Buyer Traffic Index took a sizeable step back in June, slipping to 41 from 52 in May, indicating traffic levels decidedly below agents’ expectations…. Prospective buyers also continue to be deterred by a persistent shortage of affordable inventory across markets, with agents frequently highlighting buyer pushback to rising home prices. On the other hand, agents repeatedly mentioned that low mortgage rates were crucial to supporting demand.”

* * *

Fast forward one month and we find that the adverse trends observed in early July have gotten progressively worse, and we can now add one more.

First, as we showed last week – and correctly warned that last Friday’s retail sales report would disappoint – the latest “BofA Internal Card Data Shows Significant July Spending Slowdown” showed in addition to another broadly week month of consumer spending, that “we are seeing a continuation of the theme that we flagged in last months’ report – sales at home improvement and home goods stores are weakening based on the BAC card data. After a brief gain last month, sales at home improvement stores tumbled in July, leaving sales down 3.4% yoy.Sales at home goods stores continue to weaken as the yoy rate reached a new cyclical low in July. We see a similar weak trend with sales at furniture stores.”  As BofA said last week, this would be a key advance indicator that the US housing recovery has stalled.

* * *

Second, following up to last month’s disappointing Credit Suisse survey of Real Estate Agents, for July the Swiss bank found even more of the same disappointing trends, noting that there has been “No bounce after last month’s pullback as buyers remain hesitant.

This is what survey author Michael Dahl wrote:

Traffic Down Slightly: Our Buyer Traffic Index edged down 1 pt to 40 in July (vs. 41 in June), indicating traffic levels remaining below agents’ expectations following the June pullback. Our Weighted Traffic Index was also down 1 pt m/m. Agents broadly cited a lack of inventory in many markets, particularly at affordable levels. Incrementally, buyers seemed more resistant to higher home prices with some willing to move to the sidelines. Consistent with last month, many buyers also remain hesitant and cautious due to broad economic concerns. Quite a few agents were surprised how quickly demand faded through the Summer, suggesting some payback following stronger Spring trends. On the other hand, many agents noted that favorable mortgage rates continue to support demand, though still not much of an urgency factor. In many markets, comments still pointed to sluggish high-end trends vs. healthy demand at lower price points. Regionally, the Pacific Northwest slowed and now sits in-line with national averages. Parts of Texas and the Southwest improved, while the Northeast, Midwest and California all worsened.

More Markets Fall Below Expectations: In July, 7 of the 40 markets we survey saw higher than expected traffic (8 in June), 4 saw traffic in-line (7 in June), and 29 saw lower than expected traffic (25 in June). Portland, Seattle and New York experienced sharp declines. In TX, Austin deteriorated and Houston remained challenged, offset by improvement in San Antonio and Dallas. FL markets remain depressed, led by weakness in Miami, Fort Meyers and Sarasota. California was dragged down by lower readings in Los Angeles and San Diego, while San Francisco ticked higher. Las Vegas and Minneapolis were both strong.

Prices Move Higher, but Less Broadly than in Recent Months: Our Price Index slipped 5 pts in July to 66 from 71 June, indicating broad price appreciation. Despite the choppy traffic and growing buyer price sensitivity, tight supply has thus far continued to favor sellers. Of the 40 markets we survey, 28 saw higher prices in July (34 in June), 10 were flat (3 in June) and 2 declined (3 in June). Strongest readings were seen in Dallas, Raleigh, Seattle, Austin, Kansas City, Los Angeles and Charlotte. Houston prices continue to face pressure, declining for the third consecutive month.

Summary: if the real estate agents, those who are most familiar with the nuances of the housing market, are this gloomy,

* * *

Finally, the third red flag was revealed today when the Mortgage Bankers Association reported that mortgage demand to buy homes just hit a new 6-month low, despite mortgage rates hovering near all time lows.  

The Mortgage Bankers Association said its seasonally adjusted index of mortgage activity for home purchases, a leading indicator of housing sales, fell 4% in the week ended Aug. 12, according to Reuters.  This took places despite the average rate on “conforming” 30-year home mortgages, dipped to 3.64% last week from 3.65%, the Washington-based group said.

The average 30-year rate touched 3.60 percent in the week ended July 8, which was the lowest since May 2013 and not far from the historic low of 3.47 percent struck in December 2012, according to MBA data. Weekly mortgage activity on home purchases reached an eight-month peak in early June before a decline since even as 30-year mortgage rates hovered near their lowest in over three years.

This suggests that even with near-record low mortgage yields, demand for new home purchases is simply not materializing, and indicates that in addition to a potential lack of supply problem (as per the Credit Suisse report), there is also not enough demand.

* * *

Ironically, as the Fed remains desperate to push rates higher (but not too high) to signal a recovery, the direct impact would be to make housing even more unaffordable for most buyers who, if CS is correct, are increasingly on the fence about jumping into a purchase; it would also result in an even faster drop in demand for mortgage purchase applications, leaving on “all cash” buyers on the margin of housing demand.

Which, as we asked one month ago, begs the (repeat) question: has the Fed thrown in the towel on reflating US housing – the one asset in which the US middle class has historically invested the bulk of its net worth – and is now focusing solely on the S&P which remains the playground of the 1%? If so, the surge in populist anger witnessed around the globe in the past year is certain to get even worse in the US, just as racial and class tensions in the country have never been worse, as the Fed gives up on America’s middle class

The gloves come off as Trump hires Breitbart Chairman: expect fireworks on Hillary

(courtesy zero hedge)

Trump Hires Breitbart Chairman As Campaign CEO In Latest Shake Up To “Boost Sagging Polls”

In the latest surprise move involving his key political advisors, overnight Donald Trump revealed the latest shake up to his presidential campaign, the second in two months, hiring a top executive from Breitbart News and promoting a senior adviser in an effort to “right his faltering campaign” according to the NYT.

Stephen Bannon, the executive chairman of Breitbart News will become the Republican campaign’s chief executive, and Kellyanne Conway, a senior adviser and pollster for Trump and his running mate, Gov. Mike Pence of Indiana, will become the campaign manager. Paul Manafort, the campaign chairman, will retain his title. But the staffing change, hammered out on Sunday and set to be formally announced Wednesday morning, was seen by some as a demotion for Mr. Manafort. The Washington Post cited campaign aides as saying that while Trump respected Manafort, he felt “‘boxed in’ and ‘controlled’ by people “who barely knew him”.

Why Bannon? Robert Costa provides one clue:

Robert Costa @costareports

Huge rallies. Gloves off. Brutal fights with Clinton. Heavy emphasis on nationalism and populism. That’s the Bannon strategy.

6:01 AM – 17 Aug 2016

The news, first reported by The Wall Street Journal, was confirmed early Wednesday by Ms. Conway in a brief interview, but she rejected the idea that the changes amounted to a shake-up and said that Mr. Manafort was not being diminished. Manafort was forced to deny any impropriety this week after the New York Times reported his name was on secret ledgers showing cash payments designated to him of more than $12 million from a Ukrainian political party with close ties to Russia. Manafort has denied impropriety. Manafort took on the role in March after Trump fired his predecessor Corey Lewandowski.

“It’s an expansion at a busy time in the final stretch of the campaign,” she said, adding that Mr. Manafort and his deputy, Rick Gates, would remain in their roles. “We met as the ‘core four’ today,” Ms. Conway added, referring to herself, Mr. Bannon, Mr. Manafort and Mr. Gates.

Why the change? People briefed on the move said that it “reflected Mr. Trump’s realization that his campaign was at a crisis point, as opinion polls show Trump falling behind Hillary Clinton in the race for the Nov. 8 election. It also indicates that Trump — who has chafed at making the types of changes his current aides have asked for, even though he had acknowledged they would need to occur — has decided to embrace his aggressive style for the duration of the race.”  Conway and Bannon, whose news organization has been favorable to Trump since he entered the primaries, are close with Robert and Rebekah Mercer, the father-and-daughter conservative donors who have become allies of the candidate and are funding a “super PAC” that is working against Hillary Clinton.

Conway has past presidential experience in primary races, but the role in a general election represents a new one for her. She is well liked by Mr. Trump’s daughter Ivanka and her husband, Jared Kushner, who had been serving as the de facto campaign manager. Bannon has no experience with political campaigns, but he represents the type of bare-knuckled fighter that the candidate had in Corey Lewandowski, his combative former campaign manager, who was fired on June 20.

Bannon has been a supporter of Mr. Trump’s pugilistic instincts, which the candidate has made clear in interviews he is uncertain about suppressing. He is also deeply mistrustful of the political establishment, and his website has often been critical of Speaker Paul D. Ryan and Senator Mitch McConnell, the majority leader.

Meanwhile, Trump is hinting he may be willing to accept some criticism to his campaigning style: on Monday, he delivered a speech on terrorism using a teleprompter rather than the off-the-cuff style he prefers. And on Tuesday, he offered yet another scripted address, this time on law and order. Republican VP candidate Pence, too, has privately worked to quell the growing concerns surrounding the Republican ticket. At the annual meeting of the Republican Governors Association in Colorado on Tuesday, Mr. Pence used his keynote speech to offer “encouragement” — a word he used several times — and reassurance to the crowd.

“We’re still winning hearts and minds every day despite an avalanche of negative media coverage,” Mr. Pence said during the closed-door session, according to audio provided to The Times. Time, Mr. Pence added, was on their side. “It’s preseason, for heaven’s sake,” he said. “The gun starts on Labor Day.”

 

end

Well that about does it for tonight

I will see you tomorrow night

h.


August 16/ GLD gains 1.78 tonnes into inventory/no change in silver/no change in gold standing at the August gold comex month/Great Britain continues to import massive amounts of gold!!/Silver open interest remains stubbornly high/This morning the...

Tue, 08/16/2016 - 18:58

Gold:1350.50 UP $10.20

Silver 19.85  UP  3  cents

In the access market 5:15 pm

 

Gold: 1346.95

Silver: 19.82

.

For the August gold contract month,  we had a small sized 22 notices served upon for 2200 ounces. The total number of notices filed so far for delivery:  12,846 for 1,284,600 oz or  tonnes or 39.956 tonnes.  The total amount of gold standing for August is 43.64 tonnes.

In silver we had 0 notices served upon for nil oz. The total number of notices filed so far this month:  274 for 1,370,000 oz.

 

As I pointed out to you yesterday, the price of gold will always rise into the physical time zones:  i) London  ii) Shanghai and to a lesser extent iii) comex

As soon as London is put to bed, the crooks whack as they only have to deal with paper.However it increasingly looks like China is demanding a huge say in the price of gold as they are now part of the fixing of the gold price in London as well as their own fixing in Shanghai.  They will not stand for the crooked behaviour of the Western banks.

 

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL BY A LARGE 916 contracts DOWN to 205,900 AND  MOVING AWAY FROM ITS AN ALL TIME RECORD AS  THE  PRICE OF SILVER ROSE  BY 15 CENTS WITH YESTERDAY’S TRADING.In ounces, the OI is still represented by just over 1 BILLION oz i.e. 1.029 BILLION TO BE EXACT or 147% of annual global silver production (ex Russia &ex China).

In silver we had 0 notices served upon for nil oz

In gold, the total comex gold ROSE 10,214 contracts as the price of gold ADVANCED YESTERDAY by $4.30 . The total gold OI stands at 580,315 contracts.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD

we had a good sized deposit into the GLD/ 1.78  tonnes of gold was deposited today

Total gold inventory rest tonight at: 962.23

SLV

we had no changes in the SLV, /   THE SLV/Inventory rests at: 351.765 million oz.

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

1. Today, we had the open interest in silver FELL by 916 contracts DOWN to 205,900 as price of silver ROSE BY 15 cents with YESTERDAY’S trading.The gold open interest ROSE 10,214 contracts UP to 580,315 as the price of gold ROSE by $4.30 WITH YESTERDAY’S TRADING.

(report Harvey).

 

2 a) Gold/silver trading overnight Europe, Goldcore

(Mark OByrne/zerohedge

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 74.53 POINTS OR 2.44%/ /Hang Sang closed UP 165.60 points or 0.73%. The Nikkei closed DOWN 50.36 POINTS OR 0.30% Australia’s all ordinaires  CLOSED UP 0.16% Chinese yuan (ONSHORE) closed DOWN at 6.6498/Oil rose to 44.69 dollars per barrel for WTI and 47.52 for Brent. Stocks in Europe:  in the GREEN . Offshore yuan trades  6.64831 yuan to the dollar vs 6.6498 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY AS  MORE USA DOLLARS ATTEMPTS TO LEAVE CHINA’S SHORES  

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

The yen rose overnight breaking the 100 barrier as investors were disappointed at the GDP figures released yesterday.  This sent the Nikkei down very hard:

( zero hedge)

b) REPORT ON CHINA

China now opening supports Russia and Assad in Syria.  They said that they wil provide aid and military training to this powder keg nation.  Russia is becoming less alienated by the day:

( zero hedge)

4 EUROPEAN AFFAIRS

none today

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Russia is expanding its presence in the middle east while the USA dilly dallies.

For the first time Russian strategic bombers strike ISIS from Iran’s base.  Also Iran and Iraq is to give permission to Russia to strike ISIS with cruise missiles form the Caspian and Mediterranean sea.

( zero hedge)

6.GLOBAL ISSUES

none today

7.OIL ISSUES

i)Oil shoots higher despite the bearish fundamentals

(courtesy zero hedge)

then:

ii) Late in the day:

Crude then tumbles on another surprise gasoline build (courtesy zero hedge) 8.EMERGING MARKETS

none today

9.PHYSICAL STORIES

i)This huge derivative player,Noble Industries, has now been downgraded by Moody’s. As most base metals are extremely low, this is presented itself with problems for this Hong Kong based company;

( zero hedge)

ii)The big story of the day:  Great Britain continues to hoard gold  (imports gold).  Over 6 months they net imported 583 tonnes with last month coming in at a huge 154 tonnes. It sure looks like England’s gold float is next to nothing and that should cause a further rise in gold.  Also of note is the 3.2 tonnes of gold China exported to England last month.  This was no doubt supplied to one of its banks which are now part of the LBMA fix.  China is now trying to become the dominant player in gold.

a very important read..

( Ronan Manly.Bullion star)

 

iii)Another extremely important commentary from Alasdair Macleod.

First he states correctly that the motive force for owing gold is the negative interest rates in Europe, as well as zero rates in the USA and systemic risk in Italy, Portugal and Germany:

 

“All I know is the motive force for owning gold is negative interest rates in Europe, zero rates in the US, and systemic risk in Italy, Portugal, and even Germany and Switzerland, with Deutsche Bank and Credit Suisse respectively”

 

However he now is stated that the USA banks are loaning money like crazy which is causing the Libor rates to rise. The central banks must now raise rates but cannot as the derivatives will blow up.  Alasdair states that we will shortly be in the beginning stages of hyperinflation;

( Alasdair Macleod/Kingworldnews)

 

iv)Credit Suisse very bullish on gold.  As for gold mining companies they concur with me on Agnico Eagle. I disagree with them on Barrick Gold

(24/7WallStreet)

 

v)Dave Kranzler discusses the IMF gold’s inventory.

( Dave Kranzler/IRD)

 

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

i)First early trading

trading early this morning:  USA dollar dives to a 3 month low:

(courtesy zero hedge)

ii) Second:

Then:

Then Dudley went to town by describing that a Sept rate hike is in the cards and then up went the dollar: Dudley Doolittle to the rescue!!

( zero hedge)

iii)The so called core CPI remains stubbornly above the Fed mandated 2% for the past 9 months.  This is despite the huge increase in energy prices in the last few weeks

( zero hedge)

iv)Single family housing stagnation continues but multi family or rental housing starts and permits jump in July

( zero hedge)

v)In what has to be the longest non recessionary period of contraction in USA history, the Industrial production fell .53% in July.

( zero hedge)

vi)Negative/and low interest rates are playing havoc to pension funds.  In order to match assets with liabilities pension funds are now seeking yield by going further out n the yield curve.  As everybody else is seeking yield this forces the long bond rates down and thus it drives the biggest bond bubble in history:

( BIS/zero hedge)

 

vii)This is interesting!! After a surge in withdrawals the big brokerage firm Paul Tudor Jones terminates 15% of its workforce.  The economy must be rosy!

( zero hedge)

 

viii)A good picture as to what is going on in the global economy: Long Beach shipping in a big slump as traffic in and traffic out is the worst in almost 6 years:

( Mish Shedlock)

Let us head over to the comex: The total gold comex open interest ROSE TO AN OI level of 580,315 for a GAIN of 10,214 contracts AS THE PRICE OF GOLD ROSE BY $4.30 with YESTERDAY’S TRADING..   We are now in the active month of AUGUST. As I stated this month : “Somebody big is continually standing for the gold metal and continues to do so in August in the same manner as we witnessed in May,  June and July  whereby the front delivery month increases in OI standing for metal or a slight contraction We will no doubt see increases in amount standing in August and probably we will surpass the amount standing on first day notice.  The  big active contract month of August saw it’s OI FALL by 51 contracts DOWN to 1205,  We had 44 notices filed upon yesterday so we LOST A TINY 7 contracts or an additional 700 oz will not stand for delivery in August AND THESE GUYS WERE PROBABLY CASH SETTLED FOR A FIAT BONUS. The next contract month of Sept saw it’s OI fall by 119 contracts down to 4933.The September contract STILL remains extremely elevated and we may have another of those high deliveries rare for a non active month.The next active delivery month is October and here the OI fell by 184 contracts down to 46,382. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was GOOD at 216,011.  The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was POOR at 133,225 contracts.The comex is not in backwardation. Today, we had  22 notices filed for 2200 oz in gold And now for the wild silver comex results. Total silver OI FELL by 916 contracts from 206,816 DOWN TO 205,900 with the RISE in price of silver to the tune of 15 cents.  We are moving away from the all time record high for silver open interest set ON Wednesday AUGUST 3: (224,540). The non active month of August saw it’s OI FALL BY 1 CONTRACT DOWN TO 198. We had 0 notices served yesterday so we LOST 1 contract or an additional 5,000 oz will NOT stand in this non active delivery month of August. The next big active month is September and here the OI fell by ONLY 2628 contracts down to 106,311  and that would alarm our bankers to no end. The volume on the comex today (just comex) came in at 84,891 which is HUGE and small rollovers..The confirmed volume yesterday (comex + globex) was HUGE at 52,556 with tiny rollovers.. Silver is not in backwardation. London is in backwardation for several months. We had 0 notices filed for today for nil oz INITIAL standings for AUGUST  August 16. Gold Ounces Withdrawals from Dealers Inventory in oz   nil OZ Withdrawals from Customer Inventory in oz  nil 3,864.382 oz  SCOTIA Deposits to the Dealer Inventory in oz 396.68 OZ

BRINKS Deposits to the Customer Inventory, in oz  nil No of oz served (contracts) today 22 notices  2200 oz No of oz to be served (notices) 1183 contracts (118,300 oz) Total monthly oz gold served (contracts) so far this month 12,846 contracts (1,284,600 oz) (39.956 tonnes) Total accumulative withdrawals  of gold from the Dealers inventory this month   NIL Total accumulative withdrawal of gold from the Customer inventory this month    431,881.1 OZ Today:  TINY activity at the gold comex AND 1 KILOBAR ENTRY Today we had 1 dealer DEPOSIT  I)INTO BRINKS:  396.68 OZ total dealer deposit: 396.68    0z Today we had  0 dealer withdrawals: total dealer withdrawals:  nil oz We had 0 customer deposit: Total customer deposits: nil oz Today we had 1 CUSTOMER withdrawals  i) Out of SCOTIA:  3,864.382 OZ Total customer withdrawals  3,864.382 OZ Today we had 0 adjustment: Note: If anybody is holding any gold at the comex, you must be out of your mind!!! since comex gold storage is unallocated , rest assured any gold stored will be compromised! Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 44 contracts of which 0 notices was stopped (received) by JPMorgan dealer and 35 notices was stopped (received)  by JPMorgan customer account.  To calculate the initial total number of gold ounces standing for the AUGUST  contract month, we take the total number of notices filed so far for the month (12,846) x 100 oz  or 1,284,600 oz , to which we  add the difference between the open interest for the front month of AUGUST  (1205 CONTRACTS) minus the number of notices served upon today (22) x 100 oz   x 100 oz per contract equals 1,402,900 oz, the number of ounces standing in this active month.    Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (12846) x 100 oz  or ounces + {OI for the front month (1205) minus the number of  notices served upon today (22) x 100 oz which equals 1,406,200 oz standing in this non  active delivery month of AUGUST  (43.6360 tonnes). We lost 7 contracts or additional 700 oz will not stand for metal in this active month of August. Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you.    We now have partial evidence of gold settling for last months deliveries We now have  +  6.889 TONNES FOR MAY + 49.09 TONNES FOR JUNE +  21.452 TONNES FOR JULY + 12.3917 + 43.64 tonnes Aug +  tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes  and last week April 16.3203 and April 22 .(0009 tonnes) + april 29  .205 tonnes + May 5:  3.799 and May 6: 1.607 tonnes –MAY 12  .0003- May 18: 1.5635 tonnes-May 19/   2.535 tonnes-May 27 .0185 – .024 TONNES MAY 31 -jUNE 4: .5044 ; june 10 -.0008 / June 22:0.48 tonnes /June 23: 0489 tonnes, June 24..018; june 29 .036 tonnes; JUNE 30 2.49 /july 1 1778 tonnes, JULY 28 .089 TONNES / JULY 29 .128 TONNES/ aUG 10// 0.219 TONNES/August 11: .3619 TONNES/ AUG 12/.05878/THEREFORE 93.4392 tonnes still standing against 73.427 tonnes available.  Total dealer inventor 2,360,335.461 oz or 73.427 tonnes Total gold inventory (dealer and customer) =11,002,668.455 or 342.22 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 342.22 tonnes for a  gain of 39  tonnes over that period.    THE GOLD COMEX IS AN ABSOLUTE FRAUD. THE USE OF KILOBARS AND EXACT WEIGHTS MAKES THE DATA TOTALLY ABSURD AND FRAUDULENT!!

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

     end And now for silver   AUGUST INITIAL standings  august 16.2016 Silver Ounces Withdrawals from Dealers Inventory NIL Withdrawals from Customer Inventory 85,417.23 oz SCOTIA CNT HSBC Deposits to the Dealer Inventory nil Deposits to the Customer Inventory NIL oz No of oz served today (contracts) 0 CONTRACTS (nil OZ) No of oz to be served (notices) 198 contracts 990,000 oz) Total monthly oz silver served (contracts) 274 contracts (1,370,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  8,350,232.2 oz today we had 0 deposit into the dealer account:  Total dealer deposits;  NIL oz we had 0 dealer withdrawal: : total dealer withdrawals:  NIL oz we had 2 customer withdrawals: i) Out of SCOTIA:  60,039.200 oz ii) Out of HSBC: 20,039.200 oz iii) out of CNT:  5m065.710 oz Total customer withdrawals: 85,417.23 oz We had 0 customer deposits: total customer deposits:  nil  oz        we had 2 adjustments i) Out of Brinks:  we had a transfer of 40,399.570 oz from the customer to the dealer account of Brinks ii) Out of CNT: we had a transfer of 1,074,893.410 oz from the dealer to the customer account of CNT The total number of notices filed today for the AUGUST contract month is represented by 0 contract for nil  oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at (274) x 5,000 oz  = 1,370,000 oz to which we add the difference between the open interest for the front month of AUGUST (198) 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 AUGUST contract month:  274(notices served so far)x 5000 oz +(198 OI for front month of AUGUST ) -number of notices served upon today (0)x 5000 oz  equals  2,360,000 oz  of silver standing for the AUGUST contract month. we LOST 1 contract or an additional 5,000 oz will NOT  stand for delivery in this non active month of August.   Total dealer silver:  26.451 million (close to record low inventory   Total number of dealer and customer silver:   156.349 million oz (close to a record low) The total open interest on silver is NOW close to its all time high with the record of 224,540 being set AUGUST 3.2016.  The registered silver (dealer silver) is NOW NEAR  multi year lows as silver is being drawn out at both dealer and customer levels and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver. END And now the Gold inventory at the GLD August 16/ a deposit of 1.78 tonnes of “paper gold” into the GLD/Inventory rests at 962.23 tonnes August 15/what a farce!! a huge “paper gold’ withdrawal of 12.17 tonnes/inventory rests at 960.45 tonnes August 12/no change in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 11/no changes in gold inventory at the GLD/Inventory rests at 972.62 tonnes August 10/no changes in GLD/Inventory rests at 972.62 tonnes August 9/we had a withdrawal of 1.18 tonnes of gold from the GLD inventory/inventory rests at 972.62 tonnes August 8/a huge changes in the GLD/Inventory, a withdrawal of 6.54 tonnes of paper gold/ rests at 973.80 tonnes of gold/ August 5/ a huge deposit of 10.69 tonnes of gold (with gold down $22.40??)/GLD inventory rests at 980.34 tonnes August 4/no change in inventory at the GLD/Inventory rests at 969.65 tonnes August 3/a big deposit of 5.62 tonnes of paper gold/Inventory rests at 969.65 tonnes August 2/no change in gold inventory at the GLD/Inventory rests at 964.03 tonnes August 1/we had a huge paper deposit of 5.94 tonnes of gold into the GLD/Inventory rests at 964.03 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 16/ Inventory rests tonight at 962.23 tonnes

end

Now the SLV Inventory August 16/no change in inventory/rests tonight at 351.765 million oz August 15./amazing, we have a huge withdrawal in gold and yet nothing moves out of silver: no change in silver inventory at the SLV/Inventory rests at 351.765 million oz. August 12/no change in silver inventory at the SLV/Inventory rests at 351.765 million oz August 11/no change in silver inventory at the SLV/Inventory rests at 351.765 oz August 10/no changes in silver inventory at the SLV/Inventory rests at 351.765 oz August 9/a deposit of 950,000 oz into the SLV/Inventory rests at 351.765 oz August 8/no change in silver inventory at the SLV/Inventory rests at 350.815 million oz. August 4/no change in silver inventory at the SLV/inventory rests at 350.815 million oz August 3/no change in silver inventory/inventory rests at 350.815 million oz August 2/ we had a tiny withdrawal of 40,000 oz of silver/Inventory rests at 350.815 million oz August 1/we had a huge paper deposit of 1.235 million oz into the SLV/Inventory rests at 350.955 million oz . August 16.2016: Inventory 351.765 million oz NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.1% to NAV for Cdn funds!!!!  (the discount is starting to disappear) Percentage of fund in gold 59.0% Percentage of fund in silver:39.8% cash .+1.2%( August 16/2016). 2. Sprott silver fund (PSLV): Premium rises to +1.59%!!!! NAV (august 16/2016)  3. Sprott gold fund (PHYS): premium to NAV  falls TO  0.53% to NAV  ( august 16/2016) Note: Sprott silver trust back  into POSITIVE territory at +1.59% /Sprott physical gold trust is back into positive territory at 0.53%/Central fund of Canada’s is still in jail.      

end

And now your overnight trading in gold,TUESDAY MORNING and also physical stories that may interest you: Trading in gold and silver overnight in Asia and Europe Mark O’Byrne/David Russell Gold In UK Pounds Collapses 38% Versus Gold and 56% Versus Silver Year To Date By abidpashaAugust 16, 20160 Comments

Gold in UK pounds neared its post-Brexit high overnight as sterling fell sharply on currency markets due to concerns about rising inflation as shown in data today and the outlook for the UK economy.

Gold is up nearly 4% in sterling terms in August and by a whopping 38% year to date.  ‘Sterling silver’ has surged by even more this year and is now 56% higher in sterling terms year to date.

Gold in UK pounds – 10 Year (GoldCore.com)

‘Sterling gold’ rose or to put it more accurately, sterling fell to £1,045/oz in gold terms –  not far from its post-Brexit low of £1,057/oz. The currency has lost more than 2 percent this month versus the dollar, the worst performance among major currencies and nearly 4% against gold.

Sterling hit a 6-1/2-year low against a basket of currencies and Monday’s close against the dollar of $1.2880 was the weakest since June 1985.

Gold in UK pounds surged 20% in the immediate aftermath of Brexit and after a needed correction, has consolidated and is moving higher again. ‘Sterling silver’ surged by even more and is now 56% higher in sterling terms this year showing silver’s currency hedging properties.

UK inflation data showed that the weaker currency led to higher domestic prices after June’s shock vote to leave the European Union.

(Finviz.com)

Rising prices, especially of fuel, helped to push the UK’s inflation rate higher last month, according to official UK figures released this morning. The Consumer Prices Index (CPI) rose to 0.6% in July from 0.5% in June, the Office for National Statistics (ONS) said.

UK economists, most of whom did not expect or predict Brexit in the first place, were as complacent as ever and had not expected any increase in inflation.

More expensive alcoholic drinks and hotel rooms also helped to increase the CPI rate, the ONS said. The Retail Prices Index (RPI) measure of inflation rose to 1.9% in July from 1.6% in June. July’s RPI inflation rate sets the cap for how much regulated rail fares in England, Scotland and Wales can rise by next year.

Market participants and speculators are the most bearish on the pound since records have began. This suggests that sterling could bounce in the short term and indeed there was a small bounce in sterling after the worse than expected higher inflation figures today. However, the outlook for sterling is poor at best.

UK employers have turned more cautious about hiring and the price of homes for sale fell in August, according to surveys that added to signs the economy has stumbled since the Brexit referendum.

Property website Rightmove said asking prices of homes for sale in England and Wales fell in August by the most since November, as post-Brexit uncertainty added to the usual summer lull. The biggest drop was in London property prices, where asking prices fell by 2.6 percent from July.

A UK recession looks almost certain now. The primary question is how deep is the recession and whether stagflation will rear its ugly head which seems increasingly likely.

Gold is acting as a hedge again for UK savers and investors and will protect against falls in stock and property markets and of course the ongoing devaluation of all currencies including sterling.

Gold and Silver Bullion – News and Commentary

Gold up as U.S. rate hike expectations cool (Reuters)

Japanese Shares Drop as Yen Surges Amid Dollar Slump; Gold Gains (Bloomberg)

Dollar Slumps on Fed Rates Bets as European Equities Retreat (Bloomberg)

Paulson Maintains SPDR Gold ETP Stake as Metals Prices Rally (Bloomberg)

Soros Fund Management slashes gold shares in second quarter (Reuters)

London new-build sales plunge thanks to sky-high prices (City AM)

Buy physical gold; central banks are on its side, Jim Rickards says (CNBC)

Time to Buy Gold, Silver and Mining Stocks (TheStreet.com)

U.S. Dollar Hasn’t Been Linked to Gold for 45 Years. Here’s Why (Time )

Go Gold! To Preserve Value In Turmoil (Goldseek)

Gold Prices (LBMA AM)

16Aug: USD 1,349.10, GBP 1,039.89 & EUR 1,197.33 per ounce
15Aug: USD 1,339.20, GBP 1,037.21 & EUR 1,198.85 per ounce
12Aug: USD 1,336.70, GBP 1,032.60 & EUR 1,199.02 per ounce
11Aug: USD 1,344.55, GBP 1,037.05 & EUR 1,206.06 per ounce
10Aug: USD 1,351.85, GBP 1,035.11 & EUR 1,209.23 per ounce
09Aug: USD 1,332.90, GBP 1,025.80 & EUR 1,201.74 per ounce
08Aug: USD 1,330.00, GBP 1,019.84 & EUR 1,198.86 per ounce

Silver Prices (LBMA)

16Aug: USD 20.04, GBP 15.43 & EUR 17.77 per ounce
15Aug: USD 19.90, GBP 15.40 & EUR 17.81 per ounce
12Aug: USD 19.87, GBP 15.33 & EUR 17.81 per ounce
11Aug: USD 20.21, GBP 15.56 & EUR 18.13 per ounce
10Aug: USD 20.34, GBP 15.55 & EUR 18.19 per ounce
09Aug: USD 19.70, GBP 15.18 & EUR 17.77 per ounce
08Aug: USD 19.66, GBP 15.04 & EUR 17.74 per ounce


Recent Market Updates

– Will Ireland Be First Country In World To See Bail-in Regime?
– Money “Madness” Negative Interest Rates Sees Gold Buying Surge
– Gold Investment Demand Reaches Record In First Half 2016 On “Perfect Storm”
– Peak Gold – Did Gold Production Peak in 2015?
– Financial Times: “Victory For Gold Bulls Is Only Just Beginning”
– Irish Banks Most Vulnerable In Stress Tests – Banking Contagion In EU Cometh
– Gold In Sterling 2.2% Higher After Bank Of England Cuts To 0.25% and Expands QE
– Silver Kangaroo Coins – Sales Surge To Over 10 Million
– Trump, Clinton, “Ugliest” Election Coming – Gold’s “Summer Doldrums” Prior To Resumption of Bull Market
– Marc Faber: Invest 25% Of Investment Portfolios In Gold Bullion
– “Could Not Invent A More Bullish Story For Gold Bullion”
– Gold In Bull Market – “Every Reason For It To Continue” – Frisby In Money
– Is Gold Set To Hit $1,500 Per Ounce?

 

end

 

This huge derivative player has now been downgraded by Moody’s. As most base metals are extremely low, this is presented itself with problems for this Hong Kong based company;

(courtesy zero hedge)

.

Noble Group Downgraded by Moody’s as Liquidity Seen Pressured megandurisin
  • Company’s credit rating cut two notches to B2 from Ba3
  • Commodity trader’s cash flow also seen to be squeezed

Noble Group Ltd. was downgraded two levels by Moody’s Investors Service, as the ratings agency said the Singapore-listed commodity trader’s liquidity “could come under further pressure over the next 12 months” amid weaker-than-expected profitability.

The company’s cash flow will also remain under pressure over the next year, Moody’s said in a statement as it downgraded Noble Group to B2 from Ba3. That along with pressure on profits “could further weaken liquidity and hinder its ability to maintain compliance with financial covenants in its credit agreements,” the agency said.

Noble posted a second-quarter net loss of $54.9 million and an increase in net debt. Its shares have dropped 53 percent this year.

In a tumultuous 18 months, Noble Group has lost its blue chip status and investment-grade rating amid sliding commodity prices and attacks on its accounting. Former Chief Executive Officer Yusuf Alireza quit in May and days later the company announced an emergency rights issue and said founder and chairman Richard Elman would step down within 12 months. It’s cutting jobs, selling assets and exiting some markets as it seeks to prop up its finances.

To read more about the company’s turmoil, click here.

The move by Moody’s stands in contrast to Fitch Ratings Ltd., which said in a statement on Monday that Noble’s liquidity crunch may prove temporary as it will probably generate about $900 million in the coming months including proceeds from the recent rights issue.

 

END

 

The big story of the day:  Great Britain continues to hoard gold  (imports gold).  Over 6 months they net imported 583 tonnes with last month coming in at a huge 154 tonnes. It sure looks like England’s gold float is next to nothing and that should cause a further rise in gold.  Also of note is the 3.2 tonnes of gold China exported to England last month.  This was no doubt supplied to one of its banks which are now part of the LBMA fix.  China is now trying to become the dominant player in gold.

a very important read..

(courtesy Ronan Manly.Bullion star)

The Gold Price And Global Flows. The UK Net Imported 152 tonnes In June. by BullionStar

On a firmly rising gold price the UK is one of the largest net importers of gold in 2016. The gold price went up 25 % from $1,061.5 dollars per troy ounce on January 1 to $1,325.8 on June 30. Over this period the UK net imported 583 tonnes and GLD inventory mushroomed by 308 tonnes.

In the month of June the UK gross imported 154.2 tonnes, up 22 % from May, and gross export was 1.9 tonnes, down 37 % from the previous month. Net import into the UK resulted in a robust 152.3 tonnes, up 23 % month on month.

Gross import by the UK from Switzerland remained resilient at 68.5 tonnes, up 11 % from May, while gross export to Switzerland was nix.

The most noteworthy gold exporters to the UK in June 2016 were:

Notable, the UK net imported a record amount from China mainland at 3.2 tonnes.  (Harvey:  ??)This is very exceptional and has never happened in recent history, as far as I know.

In general gold export from the Chinese domestic gold market is prohibited – unless the Peoples Bank Of China would make an exception. Therefor, the export of gold from China to the UK was possibly sourced from theShanghai International Gold Exchange (SGEI) in the Shanghai Free Trade Zone (SFTZ) that technically/physically is separated from the Chinese domestic gold market.

Although the tonnage isn’t staggering, the transfer becomes newsworthy when viewed in perspective. The Chinese have an interest in becoming a dominant player in the international gold market. To strengthen their economy they wish not only for more physical (private and official) gold reserves, another objective is a broad development of gold market infrastructure and integration with the international market. Read what PBOC governor Zhou Xiaochuanhad to say in 2004 at the London Bullion Market Association (LBMA) conference:

The establishment and development of China’s gold market marks the basic completion of the construction of a market for major financial products in China, which will provide better micro grounds for China’s macro economic adjustment. For further development, China’s gold market should gradually realize three transformations: from commodity trade to financial product trade, from spot transactions to futures transactions, and from a domestic market to integration with the international market.

…. gold still has a strong financial nature and remains an indispensable investment tool. In major financial centers in the world, the gold market – together with the money, securities and FX market – constitutes the main part of the financial market.

China’s gold market must integrate into the global market. …. China should actively create conditions for its gold market to become an important part of the international gold market.

… gold still bears the marked nature of money under the modern financial system.

In September 2014 the Shanghai International Gold Exchange (SGEI) was erected in the SFTZ, followed by the launch of the Shanghai Gold Fix in April 2016, but up until now both events did not elevate China’s share in the international gold market as the Chinese had hoped for. But the Chinese always set out multiple strategies at once to reach their objectives.

Meanwhile, in the past 14 months four Chinese banks have penetrated the LBMA Gold Price auction. Namely, Bank of China, Bank Of Communications, China Construction Bank and Industrial and Commercial Bank of China (ICBC). In addition, ICBC Standard Bank has become an LBMA market maker for spot trading and a clearing member of “the not-for-profit company London Precious Metal Clearing Limited (LPMCL)” for which it has bought the 2,000 tonnes gold vault from Barclays in May. The vault is located in London.

ICBC Standard Bank on the latest developments:

This enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market.

Is it a coincidence that China is suddenly exporting gold to the UK while ICBC Standard Bank was recently accepted as clearing member of the LPMCL and utilizes a gold vault in London? Likely the gold export to the UK is connected to the new clearing and vaulting activities by ICBC Standard Bank. Next to China’s strategy to develop the SGEI for gold trading in renminbi along the Silk Road, they’re actively increasing presence in the London Bullion Market.

However, I don’t think the majority of gold imports into the UK this year – aside from the import from China – are connected to ICBC Standard Bank, the imports mainly reflect Western institutional demand.Net gold flows through London have been correlated to the price of gold long before the Chinese entered the international precious metals construction.

So, although the 3.2 tonnes exported from China to the UK are exceptional, the UK manifesting itself as a net importer while the price is rising is quite normal.

The Gold Price And Global Flows

Here’s a theory hopefully sparking fruitful debate: the gold price is set by physical supply and demand in the West.

Since 2013 when the price of gold declined significantly in all major currencies, we’ve witnessed a massive exodus of physical gold from West to East. In 2013 the UK, housing the London Bullion market, net exported 1,424 tonnes, the highest amount since 1997 when 2,473 tonnes were net exported (source James Turk).

In the 2014 and 2015 the UK continued to be a net exporter. Large wholesale 400-ounce London Good Delivery bars were mainly transported to Switzerland, where being recast into 1 Kg 9999 fine bars for the Asian market. Frominternational merchandise trade statistics we could clearly track the gold flowing from the UK, to Switzerland, to Hong Kong, finally reaching China mainland. We could even see a correlation between UK net export and SGE withdrawals from early 2013 up until December 2015.

Currently China is still buying gold, albeit less than in recent years, but the West has turned into a net buyer as well, pressuring supply and forcefully driving up the price.

Some commentators in the gold space deemed it impossible China was importing 1,400 tonnes on average in the past three years while the price was going down. The price was set purely in the paper markets, so they concluded.According to my analysis China was able to buy the tonnages they did by the willingness of the West to supply the metal – exactly who in the West was so eager to supply is another story.

The falling gold price from 2013 until 2015 and the exceptional tonnages China was importing were caused by strong physical supply from the West. Simplified, if 1,400 tonnes are imported into China, one can observe strong demand, but the corresponding supply had to be at least equally strong (or stronger) on a declining price. The nominal volumes of supply and demand are always equal, the difference in strength between both is what sets the price. In my logic, that is. What happened in the past years was that the Chinese were merely buying the physical supply coming from the West, buying as much as they could. A once in a lifetime opportunity.

Remember, if you see 1,400 tonnes being moved into China, that’s a lot of demand, but it’s a lot of supply as well

— BullionStar.com (@KoosJansen) June 10, 2016

As stated in a previous post I think the price of gold can be, and is, easily manipulated through derivatives in the short term. Through leveraged futures contracts or derivatives in the highly opaque OTC market the price of gold can be efficiently managed for short periods. But in the long term the price can only be decided by physical supply and demand. If any entity for example desires to suppress the gold price in the long term then physical metal has to be supplied into the open market or an undeniably vivacious spread will appear between the paper and physical price.

What I’m seeing is that physical gold flows across the globe are highly correlated with the gold price. Have a look at the chart below showing the gold price versus the net flow through the UK (and GLD inventory change). There’s a clear correlation.

GLD inventory change makes up about one third of the total UK net flow.

The same correlation can be seen in net gold flows through Switzerland – which can be considered as a proxy for Western demand just like net flows through the UK.

In general, every time the West starts hoarding in the UK and Switzerland the price goes up, and when they sell the price declines. I think these charts show that there is more correlation between physical supply and demand than is widely assumed in the gold space.

Take this last chart for example. The UK net importing huge amounts of physical gold coincides with the price going up, and exactly when they turn to net exporting the price goes down. So then how can the price have nothing to do physical supply and demand?

On a small side note. I find it remarkable that research (by Ronan Manly, BullionStar, and Nick Laird, Goldchartsrus.com) pointed out that the physical float in London was nearly running out in late 2015 and shortly after the UK starts net importing and the price goes up. When in December 2015 the UK net exported 184 tonnes of gold, which was the third highest amount on record, I wrote In February 2016 [brackets added by me]:

When there is no more gold left in London to export, the gold price is likely to go higher on strong global demand induced by economic headwind.

How much gold is left in London? We can make a rough estimate, ….Research by Ronan Manly… and Nick Laird … pointed out there were roughly 6,256 tonnes of gold in London in June 2015. However, of this total at least 3,779 tonnes was monetary gold owned by central banks around the world stored at the Bank Of England (BOE), which is [presumably] not for sale. The remaining 2,477 tonnes in non-monetary gold were potentially for sale. [Note, this number included 1,116 tonnes in ETF gold outside BOE vaults and 1,355 tonnes stored within BOE vaults, leaving 6 tonnes in the LBMA system outside the BOE] 

Courtesy Jesse’s Café Américain.

In any case, we know now that from June until December the UK net exported 390 tonnes of non-monetary gold, which leaves approximately 2,087 tonnes in non-monetary gold in the UK as of 31 December 2015. Assuming the People’s Bank Of China hasn’t purchased some of this gold and covertly exported it to Beijing in the past months.

As long as London is selling gold and China is buying the price can go down. However, if London stops selling (or becomes a buyer) the price can make a reversal.

 

 

end

 

Another extremely important commentary from Alasdair Macleod.

First he states correctly that the motive force for owing gold is the negative interest rates in Europe, as well as zero rates in the USA and systemic risk in Italy, Portugal and Germany:

“All I know is the motive force for owning gold is negative interest rates in Europe, zero rates in the US, and systemic risk in Italy, Portugal, and even Germany and Switzerland, with Deutsche Bank and Credit Suisse respectively”

However he now is stated that the USA banks are loaning money like crazy which is causing the Libor rates to rise. The central banks must now raise rates but cannot as the derivatives will blow up.  Alasdair states that we will shortly be in the beginning stages of hyperinflation;

 

(courtesy Alasdair Macleod/Kingworldnews)

Bank lending explodes and inflation will be next, Macleod tells KWN

Submitted by cpowell on Mon, 2016-08-15 22:32. Section:

6:30p ET Monday, August 15, 2016

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod tells King World News today that bank lending is exploding in the United States and that it soon will lead to inflation. An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/alasdair-mcleod-just-issued-an-ominous-warning/

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

 

END

 

Credit Suisse very bullish on gold.  As for gold mining companies they concur with me on Agnico Eagle. I disagree with them on Barrick Gold

(courtesy 24.7WallStreet)

 

Credit Suisse: Bullish on Gold

Monday 15 August 2016 16:53

The analysts of precious metals at Credit Suisse are among the most bullish on gold. How they are keeping the fire going.

Gold has appreciated about a third so far this year – forcing a great many research units of banks to reevaluate their recommendations for the precious metal.

The analysts at Credit Suisse (CS) have done so with great enthusiasm. The raised their target pricefor an ounce of gold for the coming two years.

Bold Recommendations

The bank’s analysts expect the ounce to costs $1,500 by the spring of 2017. In April, their estimate still was $150 lower. Gold currently costs $1,350 per ounce. CS precious metals experts were already bullish – and now they are upping the stakes further.

Their newest recommendations seems particularly bold: the bank made buy recommendations for various gold mine shares. These securities not only are notoriously volatile. They also have increased substantially over the past months, some of them by more than 200 percent.

This suggests that they are already overbought.

Cost Cuts, New Reserves

But CS still sees potential for the shares of Barrick Gold, Newmont Mining, Yamana Gold, Agnico-Eagle Mines and Alamos Gold.

CS expects for the mentioned companies either a round of cost cuts or the exploitation of new reserves of the precious metal, according to a report on «24/7 Wall Street».

-END-

 

Dave Kranzler discusses the IMF gold’s inventory.

(courtesy Dave Kranzler/IRD)

 

Where Is The IMF’s Gold? August 16, 2016Financial Markets, Gold, Market Manipulation, Precious Metals, U.S. Economy, , , , ,

In mid-2009, the IMF announced that it was going to sell a portion of its gold.  It ended up selling 403 tonnes of its then-reported 3218 tonnes of gold.  Back then the original announcement made it sound like the IMF was trying to push down the price of gold with a big sale announcement, as the price of gold went parabolic after the 2008 de facto collapse of the financial system.   The excuse for the gold sale was to “shore up” IMF finances.  However, historically, the IMF has sold off portions of its gold holdings as a policy to reduce gold’s role in the global fiat currency system.

At the time, India and China jointly delivered a research paper which suggested that, if the IMF were interested, the two countries would be interested in buying all of the IMF’s gold. The IMF limited its sale to the 403 tonnes:   200 tonnes to India, 2 tonnes to Mauritius and 10 tonnes to Sri Lanka.  By  December 2010 the IMF concluded the sale of the balance of the gold without ever disclosing the buyers.

The IMF’s gold comes primarily from the member countries, who pledge gold to the IMF as part of the cost of their “quota” assigned to become a member country.  25% of a country’s “quota” were to be paid in gold.  The IMF states that its gold is held in various depositories, like the NY Fed, around the world.  The truth is that most of the gold “pledged” to the IMF has likely been leased out by the custodial Central Banks.

Curiously, over the IMF’s 71 year history, it sold its gold intermittently.  Each time the demand by Central Banks to buy that gold has far exceeded the amount of gold offered.  This is an important point to note because it drives home the point that gold is significantly undervalued and that real Central Bank demand emerges when large quantities (100’s of tonnes) of gold are offered for sale.

In the latest episode of the Shadow of Truth, we discuss the interesting shift occurring in the IMF’s SDR structure and what it means for the U.S. dollar as a reserve currency.  We also discuss why the price of gold will likely begin to move much higher as we move from summer into autumn – we also discuss why GLD is a total fraud:

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

:

1 Chinese yuan vs USA dollar/yuan  UP to 6.6185 ( HUGE REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS TO 6.6262) / Shanghai bourse  DOWN 15.15 OR 0.49%   / HANG SANG CLOSED DOWN 21.67 or 0.09%

2 Nikkei closed /USA: YEN FALLS TO 99.89

3. Europe stocks opened  IN THE RED,     /USA dollar index DOWN to 94.68/Euro UP to 1.1294

3b Japan 10 year bond yield: RISES TO  -.085%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 99.89

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  46.01  and Brent: 48.50

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” ON THE TABLE 

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to -.084%   German bunds BASICALLY negative yields from  10+ years out

 Greece  sees its 2 year rate FALL to 6.85%/: 

3j Greek 10 year bond yield FALL to  : 8.11%   (YIELD CURVE NOW  UPWARD SLOPING)

3k Gold at $1352.30/silver $19.99(7:45 am est)   SILVER FINAL RESISTANCE AT $18.50 BROKEN 

3l USA vs Russian rouble; (Russian rouble UP 31/100 in  roubles/dollar) 63.73-

3m oil into the 45 dollar handle for WTI and 48 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 99.89 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9605 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0849 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now NEGATIVE territory with the 10 year RISES to  -0.084%

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

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

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

4. USA 10 year treasury bond at 1.530% early this morning. Thirty year rate  at 2.2580% /POLICY ERROR)

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

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

HELICOPTER MONEY STILL ON THE TABLE/JAPANESE STIMULUS PLAN DISAPPOINTS Tumbling Dollar Sends USDJPY Under 100, Oil Over $46 As Gold Spikes; Futures Flat

Overnight, John Williams’ latest uberdovish paper “Monetary Policy in a Low R-star World”, which we profiled yesterday, and which suggests lower rates for far longer, made the rounds and has led to a steep 0.8% drop in the Bloomberg Dollar spot Index, which sank to its weakest since June while the yen strengthened 1.2 percent, slipping briefly below 100 against the greenback, dropping as low as 99.95 for the first time since June 24, pushing oil and gold higher, and Asian shares lower.

The dollar is losing ground as lackluster data in the world’s biggest economies fuel speculation the Fed will refrain from raising interest rates. The Citigroup Inc. U.S. Economic Surprise Index, which measures whether data beat or miss analyst forecasts, reached the lowest in more than a month.  As a result, the latest surge in the Yen, noted overnight when various stops were tripped, sent the Nikkei sharply lower by 1.6%, and has put further pressure on the BOJ to come devalue its currency. “The yen is being driven by the dollar’s weakness, spurred by increasing expectations the Federal Reserve won’t raise rates this year,” said Nicholas Teo, a strategist at KGI Fraser Securities in Singapore. “This complicates things for Japanese policy makers seeking to stimulate Japan’s economy. If the Fed doesn’t move this year, there’s a risk of steeper moves next year. That’s very dangerous.”

“The unevenness seen over the last couple of weeks in U.S. data has diminished the relative appeal of pursuing dollar strength,” said Ned Rumpeltin, the European head of foreign-exchange strategy at Toronto Dominion Bank in London. Minutes of the last Fed meeting due this week “will be an important platform to signal whether they hope to keep the potential for a 2016 rate hike on their agenda, although markets think that chance is fairly remote right now.”

The pound jumped as U.K. inflation accelerated in July more than economists predicted. Precious metals advanced while European stocks slipped.

Global stocks were modestly lower pressured by rising local currencies, and edged away from one-year peaks on Tuesday as a stellar rally stalled, while the dollar hit a one-month low against the yen as recent weak U.S. economic data was seen limiting the scope for a near-term rate hike. Asian shares rose to a one-year peak, lifted by a rise in U.S. stocks to record highs a day earlier and expectations that monetary policy around the world will remain lower for longer than anticipated to support growth. But, in a sign that the rally in world shares may be losing momentum, Chinese stocks pulled back from seven-month highs following a sharp correction in bank shares and Japan’s Nikkei fell more than 1.5 percent to its lowest level in just over a week as the yen firmed.

Meanwhile, the skepticism over the low-volume levitation remains: “If you look at the previous days, we had upturns every couple of days, but not based on healthy volumes — that’s very often a sign that the reaction in the other direction could follow,” said Soeren Steinert, an associate director for equities trading at Quoniam Asset Management, which oversees the equivalent of $29 billion. “There’s an increasingly lower probability of a Fed rate hike this year, and that’s priced in. Brexit you don’t hear about any more. And the earnings season is over, so what’s the trigger for the upside?”

Quoted by Reuters, Michael Hewson, chief market analyst at CMC Markets said that “Equity markets are looking a bit frothy and what’s dragging them down is a bit of softness in the oil price and yen strength.  Investors are a bit nervous but ultimately in a low-yield world, stocks remain a decent bet for yield.” That’s ok, that’s what central banks are there for: to ease investor nerves.

While European shares opened broadly lower, edging away from Monday’s seven-week highs as markets in London, Paris and Frankfurt slipped 0.4-0.9 percent in early trade, they have since rebounded somewhat and the the Stoxx Europe 600 Index was trading about 0.1% lower.  Schindler Holding AG led industrial-goods companies lower, sliding 3.6 percent after forecasting a decline in the global elevator and escalator market. Electrolux AB, which gets more than a third of its revenue from North America, lost 2.1 percent after a report showed U.S. shipments of major home appliances fell in July. Antofagasta Plc helped push a measure of commodity producers to the best performance of the 19 industry groups on the Stoxx 600, climbing 3.4 percent. The company said first-half earnings rose and announcing an interim dividend of 3.1 cents a share. Linde AG jumped 5.8 percent, propelling a gauge of chemical stocks higher, after people familiar with the matter said Praxair Inc. has held merger talks with the German industrial-gas company.

S&P 500 Index futures were little changed, with the index having risen to fresh highs on Monday.

In the commodity complex, oil gained, after erasing an earlier loss as the weakness in the dollar overtook speculation that the Organization of Petroleum Exporting Countries will struggle to agree any kind of limit on production next month. West Texas Intermediate crude advanced 0.7 percent to $46.04 a barrel and Brent gained 0.5 percent to $48.58. And speaking of OPEC, after Nigeria overnight expressed doubt any supply cut would take place, when Nigerian petroleum minister Emmanuel Kachikwu said that “on oil production cuts by OPEC, optimism on my part is quite sparse but I believe engagement with the 70% oil producers might have impact,” earlier today Iran also poured cold water over expectations of a September production freeze:

  • IRAN HAS YET TO DECIDE ON JOINING OPEC’S INFORMAL TALKS IN SEPTEMBER – OIL MINISTRY SPOKESWOMAN
  • IRAN DOESN’T EXPECT TO REACH PRESANCTIONS PRODUCTION LEVEL BY END OF SEPTEMBER — SPOKESWOMAN

In bonds, the U.K.’s 10-year gilt yield declined one basis point to 0.52 percent, near a record low, before the Bank of England seeks to buy 1.17 billion pounds ($1.5 billion) of debt due in more than 15 years as part of its expanded quantitative-easing program. The central bank fell short of achieving a similar target at last week’s bond-buying auction, spurring gains in longer-dated gilts. The yield on U.S. Treasuries due in a decade fell three basis points to 1.53 percent. Rates on similar-maturity debt in Germany and Japan decreased by about one basis point to minus 0.08 percent and minus 0.10 percent, respectively.

Market Wrap

  • S&P 500 futures down less than 0.1% to 2185
  • Stoxx 600 down 0.2% to 345
  • FTSE 100 down less than 0.1% to 6936
  • DAX down 0.1% to 10725
  • German 10Yr yield down less than 1bp to -0.08%
  • Italian 10Yr yield up 1bp to 1.07%
  • Spanish 10Yr yield up less than 1bp to 0.94%
  • S&P GSCI Index up 0.5% to 361.3
  • MSCI Asia Pacific down 0.1% to 140
  • Nikkei 225 down 1.6% to 16597
  • Hang Seng down less than 0.1% to 22911
  • Shanghai Composite down 0.5% to 3110
  • S&P/ASX 200 down 0.1% to 5532
  • US 10-yr yield down 3bps to 1.53%
  • Dollar Index down 0.75% to 94.92
  • WTI Crude futures up 0.7% to $46.04
  • Brent Futures up 0.6% to $48.62
  • Gold spot up 0.7% to $1,349
  • Silver spot up 1% to $20.02

Top Global News

  • Dovish comments from Fed’s Williams point to signs the Fed is seriously contemplating a change in its current policy mix; Lockhart speaks today, while Bullard and Dudley are due later this week; Any similar comments from them may spur a meaningful repricing of Fed rate hike expectations, particularly further out the curve, before Yellen’s Aug. 26 Jackson Hole speech
  • Praxair, Linde Said to Be in Talks to Merge, WSJ Reports
  • Morgan Stanley Targeted by ValueAct as Core Activist Stake: Activist fund owns 2% of New York-based investment bank. Jeff Ubben’s fund disclosed stake in filing on Monday
  • Huntington’s FirstMerit Purchase Signals Faster Deals, CEO Says: Huntington closed on its biggest deal ever in 204 days. Steinour: Approval could spur more regional lenders to combine
  • Vivint Focusing on Sustainable Growth, Not Growth at All Costs: Blackstone-backed company canceled deal with SunEdison. Installer focused on being ‘best and the most disciplined’
  • Google Debuts New Chat App to Rival Skype, FaceTime: Introducing Duo. Google is trying to simplify a tangle of communication apps.
  • Cargill, Louis Dreyfus Halt Brazil Soy Plants as Margins Vanish: Too few soybeans to meet export commitments, needs of crushers. Profit also hurt as chicken producers buy less soy-based feed

Looking at regional markets, Asia failed to take the impetus from the latest US record close trifecta with the major regional indices in negative territory. Nikkei 225 (-1.3%) underperformed as a firmer JPY dampened investor sentiment, while ASX 200 (-0.1%) traded in a subdued fashion with participants cautious ahead of the expected release of the worst ever financial report from index heavyweight BHP Billiton after market. Chinese markets conformed to the lacklustre tone with choppy trade seen in the Hang Seng (-0.1%), while investors booked profits in the Shanghai Comp (-0.5%) after yesterday’s stock connect-inspired outperformance. 10yr JGBs are higher as the lack of appetite for riskier assets spurred safe-haven flows into the paper, while today’s JPY 400bIn enhanced liquidity auction was slightly disappointing with a lower than prior b/c. Chinese state council has approved the Shenzhen – Hong Kong stock connect. Note that this was widely in-fitting with weekend reports. RBA minutes from August 2nd meeting stated most recent data on prices and labour costs confirmed that domestic cost pressures had been subdued. The central bank reiterated that a rising AUD complicates an economic transition and sees inflation remaining around 1.5% over this year, before increasing to between 1.5%-2.0% by the end of its forecast period.

Top Asian News

  • Yen Rises Toward 100 as Dollar’s Funk Deepens on Fading Fed Bets: U.S. December rate rise odds falls to 45% from 49% on Thursday
  • Yuan’s Volatility Slides to 10-Month Low as Currency Steadies: Weekly ETF inflows to China, Hong Kong surge $605 million
  • China Plans Targeted Measures to Lift Hard-Hit Northeast Economy: NDRC plans 137 projects
  • RBA: On Balance, Prospects Would Be Improved by Aug. 2 Cut: There was room for stronger growth, which could be assisted by lower interest rates
  • BHP Reports Full-Year Profit Tumbles 81% on Prices Collapse: Biggest miner booked charges on shale unit, Brazil iron ore
  • Noble Group Gets Downgraded by Moody’s on Liquidity Outlook: Moody’s two-level cut contrasts with assessment from Fitch
  • Mizuho Said to Form Alliance With Maybank’s Kim Eng on Equities: Will provide research and execution for Southeast Asian stocks

In Europe, stocks have been subdued this morning, this comes German exporters are feeling the effects of a stronger EUR (+0.7%). The FTSE is currently the outperformer in terms of the European bourses, as mining names outperform with Antofagasta and BHP Billiton both reporting earnings. BHP Billiton posted a bigger than expected net loss but the underlying profit beat expectations and came in at USD 1.22bIn vs. Exp. USD 1.04bIn. The FTSE MIB underperforms after yesterday’s break, but another reason for this may be due to PM Renzi asking Brussels asking for more time and more flexibility in regards to its banking reforms. In terms of fixed income markets Bunds are performing well up 24 ticks on session as fixed income is benefiting from risk off sentiment with no major supply from the Eurozone today.

Top European News

  • Offshore Wind Could Replace Hinkley Nuclear in U.K. at Same Cost: Britain would need 830 turbines to replace atomic plant. U.K. could install 5.7 gigawatts offshore for Hinkley costs
  • BHP Flags Price Freefall Over After Reporting Record Net Loss: BHP Billiton Ltd., the world’s biggest mining company, flagged it’s emerging from the worst commodities price collapse in a generation with renewed impetus after reporting a record full-year loss

In FX, the Bloomberg’s dollar index sank 0.8% while the yen strengthened 1.2 percent to 100.10 versus the greenback. The MSCI Emerging Markets Currency Index added 0.3 percent and has risen 1.9 percent this month. South Korea’s won led gains, appreciating 1 percent, its first increase in three trading sessions. Malaysia’s ringgit advanced 0.4 percent and South Africa’s rand strengthened 0.3 percent. The pound rose 0.9 percent to $1.2989, after a Monday close of $1.2880 that was the weakest since June 1985. Tuesday’s gain cut its loss this month to less than 2 percent.

In commodities, gold advanced 0.9 percent to $1,351.28 an ounce amid a decline in the dollar.Silver and platinum both added more than 1 percent. Oil gained, after erasing an earlier loss as the weakness in the dollar overtook speculation that the Organization of Petroleum Exporting Countries will struggle to agree any kind of limit on production next month. West Texas Intermediate crude advanced 0.7 percent to $46.04 a barrel and Brent gained 0.5 percent to $48.58. Nickel dropped 1.3 percent to $10,370 a metric ton after posting the biggest advance in more than two weeks on Monday. Copper advanced 1.2 percent.

There’s a fair bit of data to get through in the US this afternoon with the main event being the July CPI report. Market expectations there are for no change in the mom headline reading and a +0.2% mom pickup for the core. Also due out will be industrial and manufacturing production for July along with the latest capacity utilization reading, as well as last month’s housing starts and building permits data.

* * *

Bulletin Headline Summary From RanSquawk and Bloomberg

  • European equities trade lower (albeit off worst levels) with a stronger EUR and downbeat session overnight weighing on price action
  • The USD-index remains soft today after breaking below 95.00 with GBP lent some support by slightly better than expected CPI data
  • Looking ahead, highlights include US CPI, US Industrial Production, API Crude Oil Inventory Report and NZ Employment Change
  • Treasuries higher in overnight trading while global equities selloff, WTI crude and gold rise; U.S. dollar index drops to lowest since June 23.
  • Central banks in developing economies are taking advantage of the biggest rally in their currencies since 2010, using stronger exchange rates to build up foreign reserves for the first time in two years
  • Japanese investors are paying the highest hedging costs since 2008 on foreign bond purchases, thwarting efforts by the central bank to spur overseas investment by boosting dollar supplies
  • The Bank of Japan, already a top-five owner of 81 companies in Japan’s Nikkei 225 Stock Average, is on course to become the No. 1 shareholder in 55 of those firms by the end of next year
  • A gauge of swings in China’s yuan fell to a 10-month low amid receding expectations of a central bank interest-rate cut, increased emerging-market inflows and bets policy makers will limit depreciation pressures
  • German investor confidence rebounded in August after the initial shock of Britain’s decision to leave the European Union
  • U.K. consumer-price growth picked up to 0.6% in July from 0.5% in June and there were signs of further price pressures with the weak pound leading to the biggest jump in import costs in more than four years
  • Big investment banks with their European headquarters in London will start the process of moving jobs from the U.K. within weeks of the government triggering Brexit, according to people briefed on the plans being drawn up by four of the biggest firms
  • Fed President John Williams argues that the level of interest rates that neither stimulates nor slows the economy has fallen. In the new low-natural rate environment, the Fed’s policy of targeting low inflation will no longer make sense

* * *

DB’s Jim Reid concludes the overnight wrap

Yesterday was all about Oil really where more jawboning from OPEC members about potential output freezes helped to send WTI and Brent up +2.81% and +2.94% respectively. In fact that was the third consecutive daily gain of at least 2% for WTI and it means Oil is now up over 16% from the early August lows. After Saudi Arabia’s energy minister signalled that the country was open to measures to stabilize the market last week, yesterday Russia’s Energy Minister Alexander Novak said that Russia is also open to such talks with the WSJ also suggesting that the country is already consulting with Saudi Arabia and other countries. OPEC is scheduled to meet for an informal gathering late next month on the sidelines of an energy conference and at the moment the incentive appears to be there for producers to talk up some sort of potential action. Remember though that the market was left disappointed back in spring after similar jawboning.

A slightly softer US Dollar also helped Oil at the margin while gains for energy and financials stocks helped lead US equities to fresh all time highs again. Indeed the S&P 500 (+0.28%), Dow (+0.32%) and Nasdaq (+0.56%) all closed at record highs while markets in Europe finished little changed (Stoxx 600 -0.01%) with volumes a lot lower than usual given the public holiday impact. Credit markets were a touch stronger although the primary market in the US slowed down considerably following a strong past three weeks.

This morning in Asia bourses are generally struggling for any sort of traction, as Oil (-0.66%) pares some of yesterday’s and news flow continues to remain relatively light. Markets in Japan and China in particular are underperforming with the Nikkei and Shanghai Comp currently -1.15% and -0.52% respectively. The Hang Seng is little changed while the ASX is also -0.11%. Only the Kospi (+0.04%) is showing a gain this morning.

Moving on. Yesterday there was a bit of focus over at the Fed and specifically the San Francisco Fed President Williams. Seen as something of a centrist, he argued that central banks need to reassess prevailing policy frameworks and specifically those related to a low natural real rate of interest. Williams noted that ‘there is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low’. He went on to say that a higher inflation target ‘would imply a higher average level of interest rates and thereby give monetary policy more room to manoeuvre’. Williams also called for changes to fiscal policy saying that such would allow ‘predictable, systematic adjustments of fiscal policy that support the economy during recessions and recoveries’. A reminder that next week we’ve got the Jackson Hole policy symposium.

Staying on the central bank theme, yesterday we got the latest corporate bond holdings data out of the ECB. The bank disclosed that it held €16.23bn of corporate bonds as of August 12th which implies net purchases settled last week of €1.25bn. That means the average daily run rate last week was €250m which is lower than the €353m average daily run rate since the program started. It’s the lowest weekly run rate so far but that shouldn’t be all that unsurprising given the current quiet time of year.

There wasn’t too much to report datawise yesterday with the only economic reports coming out from the other side of the pond. The headline August Empire Manufacturing reading was disappointing after printing at -4.2 (vs. +2.0 expected). That represented a fall of nearly 5pts from July and is the first negative reading since May. That said we did see some improvement in key sub-indices including new orders and the number of employees. The only other data out yesterday was the NAHB housing market index for this month which rose 2pts to 60 as expected.

Looking at today’s calendar, as we noted at the top the significant data out this morning is from the UK with the July inflation docket, while the latest Gilt reverse auction will also attract attention. Also due out will be the be the Euro area trade balance reading for June and the Germany ZEW survey reading for this month where expectations are for a modest pickup in both the current situations and expectations readings. There’s a fair bit of data to get through in the US this afternoon with the main event being the July CPI report. Market expectations there are for no change in the mom headline reading and a +0.2% mom pickup for the core. Also due out will be industrial and manufacturing production for July along with the latest capacity utilization reading, as well as last month’s housing starts and building permits data.

ASIA MARKETS

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 15.15 POINTS OR 0.49%/ /Hang Sang closed DOWN 21.67 points or 0.09%. The Nikkei closed DOWN 273.05 POINTS OR 1.62% Australia’s all ordinaires  CLOSED DOWN 0.14% Chinese yuan (ONSHORE) closed UP at 6.6185/Oil rose to 46.02 dollars per barrel for WTI and 48.50 for Brent. Stocks in Europe:  in the RED . Offshore yuan trades  6.6262 yuan to the dollar vs 6.6185 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS HUGELY AS IT STOPS MORE USA DOLLARS ATTEMPTING TO LEAVE CHINA’S SHORES  

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

The yen rose overnight breaking the 100 barrier as investors were disappointed at the GDP figures released yesterday.  This sent the Nikkei down very hard:

(courtesy zero hedge)

Japanese Stocks Tumble As USDJPY Plunges To Post-Brexit Lows

Following last night’s disappointing GDP data and amid an illiquid summer holiday in Japan, USDJPY is extending its losses nearing 100.00 once again following weaker than expected US macro data (and a weaker USD)…

Yen is the strongest in 6 weeks – with USDJPY getting close to post-Brexit lows…

Nikkei 225 is getting slammed tick for tick…

Luckily, the US equity market is in a world of its own… for now…

Maybe this week’s minutes will change that?

end

b) REPORT ON CHINA

China now opening supports Russia and Assad in Syria.  They said that they wil provide aid and military training to this powder keg nation.  Russia is becoming less alienated by the day:

(courtesy zero hedge)

China Sides With Russia In Syrian War, Will Provide “Aid And Military Training” To Assad

Ever since the return of the Syrian war in 2015, which has seen both US alliance forces and as – of last – September, Russian forces too, jousting for political influence in the region under the guise of fighting ISIS while in reality either seeking to oust or preserve the Assad regime, one major player was missing: China.

That is about to change as the last major superpower enters the world’s most volatile – and dangerous – region.

Beijing and Damascus have agreed that the Chinese military will have closer ties with Syria, and provide humanitarian aid to the civil war torn nation, a high-ranking People’s Liberation Army officer said, adding that the training of Syrian personnel by Chinese instructors has also been discussed, according to Xinhua.

As has been historically the case, China tends to leave Middle Eastern diplomacy to the other permanent members of the U.N. Security Council, namely the United States, Britain, France and Russia, while relying on the region for oil supplies. But lately, for unknown reasons, China has been trying to get more involved, including sending envoys to help push for a diplomatic resolution to the violence there and hosting Syrian government and opposition figures according to Reuters.

The Director of the Office for International Military Cooperation of China’s Central Military Commission, Guan Youfei,arrived in Damascus on Tuesday for talks with Syrian Defense Minister Fahad Jassim al-Freij, Xinhua added.

Guan said China had consistently played a positive role in pushing for a political resolution in Syria.

“China and Syria’s militaries have a traditionally friendly relationship, and China’s military is willing to keep strengthening exchanges and cooperation with Syria’s military,” the news agency paraphrased Guan as saying.


Rear Admiral Guan Youfei

Guan and al-Freij discussed the enhancement of training and “reached a consensus” on the Chinese military providing humanitarian aid to Syria, Xinhua reported, without providing further details.

As to who China will side with, it should come as little surprise that the answer is “not the US.”

Last year, there were media reports that China had sent dozens of
military advisers to Syria to help the country fight terrorists, however these were never confirmed.

This time, however, we have confirmation. Guan met a Russian general in Damascus, Xinhua reported without giving details.

While China has shown no interest in getting involved militarily in Syria, China’s special envoy for the crisis there in April praised Russia’s military role in the war as the Kremlin staged a bombing campaign there in September 2015 to March 2016. Russia still has some of its forces in the country to provide humanitarian and military assistance to Syrian President Bashar Assad’s government.

Which means that as of this moment, every major  world superpower is officially involved in the Syrian war, which has on various occasions been aptly called a powderkeg for what may be the next global military conflict – to be sure, all required players are now officially involved.

 end EUROPEAN AFFAIRS  RUSSIAN AND MIDDLE EASTERN AFFAIRS

Russia is expanding its presence in the middle east while the USA dilly dallies.

For the first time Russian strategic bombers strike ISIS from Iran’s base.  Also Iran and Iraq is to give permission to Russia to strike ISIS with cruise missiles form the Caspian and Mediterranean sea.

(courtesy zero hedge)

For The First Time, Russian Strategic Bombers Strike ISIS From Iran’s Hamadan Air Base

While Obama is campaigning on behalf of Hillary Clinton, Vladimir Putin is making friends.

Russian strategic bombers with full payloads delivered their first airstrikes on terrorist targets in Syria operating from an Iranian airbase, the Russian Defence Ministry said, after Moscow deployed Russian aircraft to an Iranian air force base to widen its campaign in Syria. The ministry said the strikes, by Tupolev-22M3 long-range bombers and Sukhoi-34 fighter bombers, were launched from Iran’s Hamadan air base.

Russia’s state-backed Rossiya 24 channel earlier on Tuesday broadcast uncaptioned images of at least three bombers and a Russian military transport plane apparently inside Iran, but said it was unclear how many Russian bombers had arrived there.

This was the first time that Russia has struck targets inside Syria from Iran since it launched a bombing campaign to support Syrian President Bashar al-Assad in September last year.

Moscow and Tehran signed a military agreement allowing Russian aircraft to station at Hamadan Airport in western Iran, and according to Iran’s Natioanl Security Council the cooperation between the two countries in Syria is “strategic.”

Tehran has agreed to share its military facilities and capacities with Moscow, confirming dedication to strategic cooperation in fighting against terrorism in Syria, Iran’s Secretary of Supreme National Security Council Ali Shamkhani told Islamic Republic News Agency (IRNA) in an interview on Tuesday.

Russian media said the Tupolev-22M3 bombers, which had already conducted many strikes on militants in Syria from their home bases in southern Russia, were too large to be accommodated at Russia’s air base inside Syria.

According to RT, the main benefit for the Russian Air Force is a drastic reduction in flying time to terrorist targets in Syria. Russian long-range bombers delivered airstrikes in Syria from a base in Mozdok, Russia, and had to cover a distance of about 2,000km to get to Syrian airspace. Now that distance is reduced to some 700km, so time-sensitive airstrikes can be delivered immediately and more cheaply.

The Al-Masdar website was the first to publish photos of at least three Tu-22M3 bombers and Il-76 military transport jets in Iran.

Warfare Worldwide @WarfareWW

Exclusive: AF deployed to Hamedan airbase in being prepared for airstrikes on terrorists in

2:06 PM – 15 Aug 2016

As Reuters notes, the move shows Russia is expanding its role and presence in the Middle East and comes amid Russian media reports Moscow has asked Iran and Iraq for permission to fire cruise missiles at Syrian targets across their territory from the Caspian Sea. The ministry said Tuesday’s strikes had targeted Islamic State and militants previously known as the Nusra Front in the Aleppo, Idlib and Deir al Zour provinces.

The bombers had been protected by fighters based at Russia’s Hmeymim air base in Syria’s Latakia Province, it said.

Meanwhile, military cooperation between Iran and Russia is developing rapidly. In January this year, Moscow and Tehran signed military cooperation deal that implies wider collaboration in personnel training and counter-terrorism activities. Russia’s Defense Minister Sergey Shoigu and his Iranian counterpart Brigadier General Hossein Dehghan signed the document during a visit by Russia’s top brass to the Iranian capital.

The Kremlin won’t stop there: on Monday, Interfax reported that Moscow has once again requested Iran and Iraq to allow cruise missiles to fly through their respective airspace to deliver strikes on terrorist targets in Syria. Also on Monday, Russia launched tactical naval drills in the Mediterranean and Caspian Seas. The warships taking part in the exercise are to engage in live artillery and missile fire “under simulated battlefield conditions.” The Mediterranean force includes two fast attack guided missile craft, both armed with Kalibr-NK cruise missile complexes equipped with eight missiles each.

Simultaneously, a group of four attack guided missile craft (each armed with 8 Kalibr-NK cruise missiles) has been deployed in the southwestern part of the Caspian Sea, also to perform live artillery and missile strikes. On October 7, 2015, four Russian Navy warships in the Caspian Sea fired a total of 26 missiles at positions in Syria held by IS, Shoigu announced. The missiles traveled some 1,500km, changing route several times, and eliminating 11 targets.

So as the US is boosting its campaign in Libya “to fight ISIS”, Russia is likewise expanding its geopolitical presence, and in the process making a deeper strategic relationship with Iran, which contrary to the Obama administration’s repeated overtures, appears to be gravitating progressively closer to America’s cold war nemesis.

END

 

Oil shoots higher despite the bearish fundamentals

(courtesy zero hedge)

Oil Panic-Buyers Ignore US Dollar Bounce

The market remains glommed onto Saudi comments from a few days ago, choosing to ignore the real bearish fundamentals which are getting worse. This morning’s USD weakness sparked some oil momentum… but once the USD started to bounce higher so oil ignored it and melted up…

Oil is ignoring the usd now that the usd is rising again…

As Oil surges above $46.50 ahead of tonight’s API data… despite Russia denial of talks, and Nigeria and Iran saying “no deal”

As Bloomberg notes, Saudi energy minister’s recent comments regarding possible action to stabilize market helped to push price “a little higher, but the reality of what they promise is a bit more unconvincing,” Harry Tchilinguirian, head of commodities strategy at BNP Paribas, says by phone,

“Oil inventories remain just as high, the U.S. active rig count continues to rise. It’s quite interesting that the market chooses to ignore these more bearish fundamental developments to latch on to the potential promise of producer cooperation”

 end Crude then tumbles on another surprise gasoline build (courtesy zero hedge) Crude Tumbles After Surprise Gasoline Inventory Build (Biggest In 6 Months)

With oil largely tracking the dollar as opposed to actual fundamentals – ignoring 3 weeks of crude builds at an odd seasonal time – the surprising build in gasoline inventories (after 2 big draws) seems to have woken some traders up. While crude and Cushing inventories fell, the combination of gasoline (biggest in 6 months) and distillates builds were significant. Oil prices had surged to one-month highs ahead of the API data but quickly dropped after the print.

 

API

  • Crude -1.007m (+950k exp)
  • Cushing -680k (+100k exp)
  • Gasoline +2.167m
  • Distillates +2.406m

After 2 big draws, gaosline had an unexpected build this week – the biggest in 6 months…

 

Cruide inventories fell following last week’s 3rd build in a row – quite unprecedented for this time of year…

 

 

Oil had pushed on to th ehighs of the day before the API data – near one-month highs.

Of course – all that matters is ridiculous headlines like this… *VENEZUELA FOREIGN MINISTER SAYS TO MEET WITH SAUDI COUNTERPART… that the machines will trade.

 

Charts: Bloomberg

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

Euro/USA   1.1294 UP .01122 (STILL  REACTING TO BREXIT/REACTING TO BRITISH CUT IN INTEREST RATE TO .25%

USA/JAPAN YEN 99.89  DOWN 1.370(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 BUT DISAPPOINTS WITH STIMULUS

GBP/USA 1.2987 UP .01073(CARNEY CUTS BR. INTEREST RATES TO .25%)

USA/CAN 1.2822 DOWN .01059

Early THIS MONDAY morning in Europe, the Euro ROSE by 112 basis points, trading now well above the important 1.08 level RISING to 1.1294; Europe is still reacting to Gr Britain BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite CLOSED down 15.15 POINTS OR 0.49%    / Hang Sang CLOSED DOWN 21.67 POINTS OR 0.09%     /AUSTRALIA IS LOWER BY .14% / 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 TUESDAY morning CLOSED DOWN 273.85 POINTS OR 1.62%  

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 21.67 POINTS OR 0.09%  ,Shanghai CLOSED DOWN 15.15  POINTS OR 0.49%    / Australia BOURSE IN THE RED: /Nikkei (Japan)CLOSED IN THE RED   /INDIA’S SENSEX IN THE RED 

Gold very early morning trading: $1353.50

silver:$20.60

Early TUESDAY morning USA 10 year bond yield: 1.530% !!! DOWN 2  in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.258 DOWN  2 in basis points from MONDAY night. (SPREAD GOES AGAINST THE BANKS)

USA dollar index early TUESDAY morning: 94.68 DOWN 92 CENTS from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

END

And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  2.84% UP 15 in basis points from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: -0.085% PAR in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:0.981% UP 4 IN basis points from MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.12 UP 7 in basis points from MONDAY (again totally nuts/)

the Italian 10 yr bond yield is trading 14 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: -0.03% UP  4 IN  BASIS POINTS ON THE DAY

END

IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

 

Euro/USA 1.1276 UP .0094 (Euro UP 94 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 100.26 DOWN 1.0080(Yen UP 101 basis points/

Great Britain/USA 1 .3037 UP 0.0157 ( Pound UP 157 basis points/BREXIT DECISION AFFIRMATIVE/QE TO START AGAIN/UK DOWNGRADED/NEW PRIME MINISTER T. MAY/GR BRITAIN LOWERS INTEREST RATES/

USA/Canada 1.2843-DOWN 0.0109 (Canadian dollar UP 109 basis points AS OIL FELL(WTI AT $46.68). Canada keeps rate at 0.5% and does not cut!

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 94 basis points to trade at 1.1276

The Yen ROSE to 100.26 for a GAIN of 101 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED 

The POUND was UP 157 basis points, trading at 1.3037 AS PRIME MINISTER THERESA MAY TAKES OFFICE/CARNEY CUTS INTEREST RATE TO ONLY  .25%

The Canadian dollar ROSE by 109 basis points to 1.2843, WITH WTI OIL AT:  $46.65

CANADIAN RATES WERE NOT CUT

The USA/Yuan closed at 6.6240

the 10 yr Japanese bond yield closed at -.085% PAR IN  points / yield/

Your closing 10 yr USA bond yield:UP 2 IN basis points from MONDAY at 1.575% //trading well below the resistance level of 2.27-2.32%)

USA 30 yr bond yield: 2.294 UP 1 in basis points on the day /

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

Your closing USA dollar index, 94.80  DOWN 81 CENTS  ON THE DAY/4 PM 

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

London:  CLOSED DOWN 47.07 OR 0.68%
German Dax :CLOSED DOWN 62.56 OR  0.58%
Paris Cac  CLOSED DOWN 37.42  OR 0.83%
Spain IBEX CLOSED DOWN 98.90 OR 1.13%
Italian MIB: CLOSED DOWN  204.87 POINTS OR 1.21%

The Dow was DOWN 84.03 points or 0.45%

NASDAQ DOWN  34.90 points or 0.96%
WTI Oil price; 46.66 at 4:30 pm;

Brent Oil: 49.27

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  63.69 (ROUBLE UP  35/100 ROUBLES PER DOLLAR FROM FRIDAY) 

TODAY THE GERMAN YIELD FALLS TO -0.3%  FOR THE 10 YR BOND

END

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

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

WTI CRUDE OIL PRICE 5 PM:46.41

BRENT: 48.82

USA 10 YR BOND YIELD: 1.574% 

USA DOLLAR INDEX: 94.79 down 81 cents

The British pound at 5 pm: Great Britain Pound/USA: 1.3039 up .0159 or 159 basis pts.

German 10 yr bond yield at 5 pm: -0.3%

END

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

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

Crude Cruises To 1-Month Highs But Dudley Damages Stocks & Bonds

 

 

This seemed appropriate for today… (you’re welcome)

 

 

Before we start – today’s big moves were driven by Fed’s Dudley spewing some shit about time to hike rates this year soon.. everything is awesome… etc… So explain this idiocy Dudley!!

 

Ok, having got that off our chest, stocks shockingly did not end higher… and puked into the close…

 

S&P and VIX danced their odd jig once again today – noticed the compression in S&P and VIX around 1200ET and the tiny downtick in VIX that snapped the ‘pennant’ pattern creating a false breakout which rapidly got sold…

 

S&P managed to stay out of the twilight zone for now…

 

Dudley sparked the initial bond/stock dump, dollar jump but weak data left everyone wondering what to do…

 

Every small ramp in stocks was sold at VWAP (suggesting institutional sell orders in the market…and volume was above average

 

Treasury yields spiked after Dudley’s comments…

 

Financials continue to ignore the curve flattening…

 

The USD Index was weak overnight as Yen strengthened, then jumped on Dudley then faded on crap data…

 

As Dudley spoke and the USD ramped so commodities were clubbed like baby seals…

 

but oil was having none of that malarkey…

 

Finally, crude just keeps on going… despite Russia, Nigeria, and now Iran confirming no output freeze is coming…

 

Charts: Bloomberg

END

First early trading

trading early this morning:  USA dollar dives to a 3 month low:

(courtesy zero hedge0

US Dollar Dives To 3-Month Lows As Rate-Hike Odds Slide

Bloomberg’s US Dollar index has tumbled most in a month to 3-month lows overnight – led by Yen and Swissy strength – as it appears the sudden realization that The Fed is on hold no matter what ripples across FX markets. Sept rate hike odds are back below 10% and even Dec odds are below 30% as a series of weaker than expected US macro data blows the recovery narrative…

The Dollar is getting dumped…

Across all the majors (led by Yen and Swissy strength)….

And since the productivity data hit, rate hike odds have tumbled…

as macro data deteriorates rapidly…

With FOMC Minutes due tomorrow, we wonder whether this is front-running that or J-Hole?

END

Then Dudley went to town by describing that a Sept rate hike is in the cards and then up went the dollar: Dudley Doolittle to the rescue!!

(courtesy zero hedge)

US Dollar Jumps As Hawkish Dudley Says “September Is Possible.. Market Underpricing Rate Hikes”

With the US Dollar and rate-hike odds tumbling, Fed’s Dudley was sent into the arena to rescue the sentiment: Opining that “The Fed only raises rates when the economy is doing well,” (apart from in Dec 2015?) Dudley exclaimed that “10Y yields are pretty low given the circumstances” (so sell bonds), and that “the market is complacent about the need to gradually hike rates and the time for a rate hike is edging closer.” The reaction is obvious – ahead of tomorrow’s Minutes – USD Index jumps, rates rise, but stocks also fell disappointedly on his relative hawkishness.

  • *DUDLEY: 10-YR TREASURY YIELD IS PRETTY LOW GIVEN CIRCUMSTANCES
  • *DUDLEY: BOND MARKET LOOKS A BIT STRETCHED TO ME
  • *DUDLEY: SEPTEMBER RATE HIKE IS POSSIBLE
  • *DUDLEY: MARKET IS COMPLACENT ABOUT NEED TO GRADUALLY HIKE RATES
  • *DUDLEY: WE’RE GETTING CLOSER TO TIME WHERE WE SHOULD RAISE RATE
  • *DUDLEY: U.S. ELECTION WON’T WEIGH ON FED RATE DECISIONS
  • *DUDLEY: IF FED HIKES RATES, IT’S BECAUSE ECONOMY DOING WELL
  • *DUDLEY: MARKET RESPONSE TO BREXIT WAS VERY SHORT-LIVED

And the Dollar reacts..

And rescued USDJPY from below 100…

And across asset classes, stocks, bonds, commodities are down…

And finally:

  • *DUDLEY: WE’VE BEEN RELYING TOO MUCH ON MONETARY POLICY

Seemingly falling back on what Deutsche bank said recently that we need CBs to stop, to create a market crash that forces governments to step in with their next folly.

end

The so called core CPI remains stubbornly above the Fed mandated 2% for the past 9 months.  This is despite the huge increase in energy prices in the last few weeks

(courtesy zero hedge)

Core CPI Remains Above Fed Mandated 2% For 9th Straight Month

Core CPI (ex food and energy) rose 2.2% YoY (below the 2.3% expectations) but remains above The Fed’s 2%-mandate for the 9th straight month. The modest disappointments across the board in CPI data were led by a drop in energy-related prices (down 1.6%) with food prices unchanged. The headline CPI data was unchanged month-over-month, the weakest price change since Feb 2016.

*U.S. JULY ENERGY PRICES DECREASE 1.6%, FOOD LITTLE CHANGED

While not the inflation that The Fed cares about, Core CPI remains above 2% for the 9th straight month…

Energy-related weakness in CPI…

  • CPI for energy commodities fell 4.4% m/m last month.
  • CPI for fuel oil and other fuels rose 0.1% m/m last month.
  • CPI for fuel oil fell 1.3% m/m last month.
  • CPI for propane, kerosene, and firewood rose 1.4% m/m last month.
  • CPI for motor fuel fell 4.6% m/m last month.
  • CPI for gasoline (all types) fell 4.7% m/m last month.
  • CPI for gasoline, unleaded regular, fell 5% m/m last month.
  • CPI for gasoline, unleaded midgrade, fell 4.3% m/m last month.
  • CPI for gasoline, unleaded premium, fell 2.6% m/m last month.

Which is ironic given the recent surge in oil prices.

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Single family housing stagnation continues but multi family or rental housing starts and permits jump in July

(courtesy zero hedge)

Housing Starts Jump On Spike In Rental Units As Permits Decline

While the single-family housing stagnation continues, multi-family, or rental, housing starts and permits jumped in the month of July according to the latest Census data.

In the latest month, housing starts rose by 2.1% from June, and were higher by 5.6% from a year ago, rising to 1.211MM, above the 1.180MM expected, driven by a 33K jump in rental unit starts, which rose to 433K, while single-family units remained largely unchanged at 770K, up 0.5% from last month’s 766K. As the chart below shows, single-family start have barely budged in the past year even as rental units appear to once again be growing at a solid pace.

On an annual basis, the rate of change continues to hug the flatline, and after last month’s modest decling, starts rose by 5.6% in the latest month.

Meanwhile, the more importantl building permits data series, fell modestly to 1.152MM in July from 1.160MM in June, on top of the 1.153MM expected.

While these series are notoriously volatile, if indeed multi-family housing is picking up it could provide a modest ray of hope for America’s renters who continue to suffer under record high asking rents, in part due to a lack of supply. Then again, it depends who ends up being the ultimate owner of these buildings, and if the units end up controlled by Wall Street it is likely that there will be no respite from record high rates any time soon as the “cartelling” of supply is set to continue for the indefinite future.

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In what has to be the longest non recessionary period of contraction in USA history, the Industrial production fell .53% in July.

(courtesy zero hedge)

US Industrial Production Slumps To Longest Non-Recessionary Contraction Is History

For the 11th month in a row, US Industrial Production fell YoY (down 0.53%) in July – the longest non-recessionary period of contraction in US history. Month-over-month, IP rose 0.7% (beating an 0.3% expected rise) – the best since Nov 2014 – but June was revised notably lower. Overall, all confirming the plunge in productivity seen last week. The decline since its peak in Nov 2014 (ironically the month after The Fed’s QE3 ended) is the biggest drop since September 2008.

While the YoY losing streak continues…

MoM IP rose by most since Nov 2014…

Thanks to a surge in AC usage by the look of it…

Industrial production rose 0.7 percent in July after moving up 0.4 percent in June. The advance in July was the largest for the index since November 2014. Manufacturing output increased 0.5 percent in July for its largest gain since July 2015. The index for utilities rose 2.1 percent as a result of warmer-than-usual weather in July boosting demand for air conditioning. The output of mining moved up 0.7 percent; the index has increased modestly, on net, over the past three months after having fallen about 17 percent between December 2014 and April 2016.

Of course, it’s lucky that we are a services economy and that eyeballs matter more than effort…

We are sure that industrial production will soar back higher to confirm US equity market expectations – any month now…

Charts: Bloomberg

end

Negative/and low interest rates are playing havoc to pension funds.  In order to match assets with liabilities pension funds are now seeking yield by going further out n the yield curve.  As everybody else is seeking yield this forces the long bond rates down and thus it drives the biggest bond bubble in history:

(courtesy BIS/zero hedge)

Pension Duration Dilemma – Why Pension Funds Are Driving The Biggest Bond Bubble In History

We’ve frequently discussed the many problems faced by pension funds.  Public and private pension funds around the globe are massively underfunded yet they continu