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Updated: 8 hours 19 min ago

Jan 12 Gold rises during Asian/European and comex time zones but then pushed back in access time zone (non physical)/silver unchanged/Obama escalates war with China as they initiate an aluminium complaint/Tillerson states that he will block China’s...

Thu, 01/12/2017 - 18:57

Gold at (1:30 am est) $1198.90 UP $3.30

silver  at $16.78:  unchanged

Access market prices:

Gold: $1195.70

Silver: $16.83

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai FIRST morning fix Jan 12/17 (10:15 pm est last night): $  1211.01

NY ACCESS PRICE: $1197.00 (AT THE EXACT SAME TIME)/premium $14.01

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1216.25

NY ACCESS PRICE: $1200.50 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $15.75

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 12/2017: 5:30 am est:  $1206.25   (NY: same time:  $1204.60   (5:30AM)

??????

London Second fix Jan 12.2017: 10 am est:  $1205.05 (NY same time: $1204.80  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  0 NOTICE(S) FOR nil OZ.  TOTAL NOTICES SO FAR: 1046 FOR 104,600 OZ    (3.2534 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 0 NOTICE(s) FOR nil  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 432 FOR 2,160,000 OZ

Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 3,491  contracts UP to 168,531 with respect to YESTERDAY’S TRADING.    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .842 BILLION TO BE EXACT or 120% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  0 NOTICES FILED FOR nil  OZ.

In gold, the total comex gold ROSE BY ONLY 1,589 contracts WITH THE RISE IN  THE PRICE GOLD (11.40 with YESTERDAY’S trading ). I would have expected a higher OI so we must have had some short covering. The total gold OI stands at 445,590 contracts.

we had 0 notice(s) filed upon for nil oz of gold.

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

GLD:

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

Inventory rests tonight: 805.00 tonnes

.

SLV

we had no changes in silver into the SLV:

THE SLV Inventory rests at: 338.356 million oz

.

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

1. Today, we had the open interest in silver ROSE by 3,491 contracts UP to 168,531 AS SILVER FELL by  $0.02 with YESTERDAY’S trading. The gold open interest ROSE by 1,589 contracts UP to 445.590 AS THE  PRICE OF GOLD ROSE BY $11.40 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 17.46 POINTS OR 0.56%/ /Hang Sang closed DOWN 106.33 OR 0.46%. The Nikkei closed DOWN 229.97 POINTS OR 1.19% /Australia’s all ordinaires  CLOSED DOWN 0.04%/Chinese yuan (ONSHORE) closed WELL UP at 6.8940/Oil ROSE to 52.90 dollars per barrel for WTI and 55.91 for Brent. Stocks in Europe: MOSTLY IN THE RED. Offshore yuan trades  6.8420 yuan to the dollar vs 6.8940  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES / REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN  none today c) REPORT ON CHINA

i)The POBC orders banks to keep capital controls a secret..we are not supposed to know (but we do)

( zero hedge)

ii) Beijing is not amused after Sec. of State hopeful Tillerson says the USA will block Chinese access to the South China sea islands:

( zero hedge)

iii)My goodness:  Free trader Obama just escalated the war with China as it issues an aluminium complaint:

( zero hedge)

4 EUROPEAN AFFAIRS

i)Oh no!! not again?  After Volkswagen got tagged with a 4.3 billion USA criminal fine the EPA accuses Fiat Chrysler of using software to defeat diesel emission laws;

down goes Fiat Chrysler shares:

( zerohedge)

 

ii)Greece

Let’s get this straight:  Greece is totally broke and cannot even pay interest on what it owes.  So what do the doorknobs at the EU do:  they borrow money that they do not have to loan it to Greece who have no chance whatsoever to repay it..great deal..

(courtesy London’s Express) and special thanks to Robert H for sending this down to us>

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)This ought to be good for gold.  USA troops march into Poland landing right next door to Russia.  I am glad that Trump will take off a week from tomorrow

(courtesy zero hedge)

ii) In the confirmation hearings General Mattis describes Russia as our principal threat. The cold war is officially back.

( zero hedge)

6.GLOBAL ISSUES

none today

7. OIL ISSUES

none today

8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

none today

10.USA STORIES

i)Continuing jobless claims are now over 100,000 higher since Nov 8 2016, the night of the election.  They stand at 4 month highs:

( zero hedge)

ii)The Bank of America consumer reports are pretty good.  Last night they found that consumer spending tumbled in December and thus they have given us an initial warning that retail sales for the last month of year (and Christmas sales) will be dismal

( zero hedge/Bank of America)

iii)Interesting:  Trulia comments on a very disturbing increase in home sales failures and this is no doubt due to the higher interest rates.  Starter homes are most affected

(courtesy Trulia/zero hedge)

iv)The all important USA consumer confidence report appears to show that  confidence is waning

( zero hedge)

v)The fun begins:  The senate passes the repeal of Obamacare. It now goes to the House which is expected to pass the bill. They will wait until Trump is inaugurated before it is sent to him for final signing.

(courtesy zero hedge)

vi)My goodness!! the FBI sought to launch a surveillance operation against an active USA presidential campaign under FISA  (Foreign Intelligence Surveillance Act).  The rarely used FISA was targeted against 4 of Trump’s high ranking officials of his campaign:

“including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.”

(courtesy Ditz/AntiWar.com)

 

vii)The following is another biggy!! Today we got two trial balloons by Fed officials, Harker and Bullard.  The Fed has always realized that it must unwind its balance sheet if it is to have any credibility in the future.  Today we got word that the Fed is contemplating such a move.  Except one major problem:  who on earth is going to buy this stuff and not only that but interest rates will skyrocket which will drown the entire globe/  Please note that the Fed is doing this as the Donald is to spend 10 trillion extra dollars on infrastructure.  The two acts are totally incompatible

(courtesy zero hedge)

viii) Morgan Stanley is leading off the earning seasons with this bad news:

  1. Cutting Investment banking bonuses by 15%
  2.  Firing 5 % of senior managing directors.

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 1,589 CONTRACTS UP to an OI level of 445,590 AS THE  PRICE OF GOLD ROSE $11.40 with YESTERDAY’S trading. We must have had some short covering as I would have expected that the OI would have been much higher. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 1 contract(s) DOWN to 135.  We had 9 notices filed yesterday. so we LOST 1 contract(s) or AN ADDITIONAL 100 oz WILL NOT STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 12,135 contracts DOWN to 241,061. March had a gain of 67 contracts as it’s OI is now 528. We are on a par with respect to OI when we compare data for open interest Feb 2016.

We had 0 notice(s) filed upon today for nil oz

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And now for the wild silver comex results.  Total silver OI ROSE by 3,491 contracts FROM 165,040 UP TO 168,531 AS the price of silver FELL BY $0.02 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 4 contracts falling TO  230. We had 0 notice(s) filed on yesterday so we lost 4 silver contracts  or an additional 20,000 oz will not stand for metal in this non active month. The next non active month of February saw the OI rise by 5 contract(s) RISING TO  207.

The next big active delivery month is March and here the OI ROSE by 1774 contracts UP to 133,405 contracts.

We had 0 notice(s) filed for nil oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 289,361  contracts which is excellent.

Yesterday’s confirmed volume was 383,083 contracts  which is excellent

Initial standings for january  Jan 12/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    128,002.673 SCOTIA BRINKS HSBC Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz   nil No of oz served (contracts) today   0 notice(s) nil oz No of oz to be served (notices) 135 contracts 13,500 oz Total monthly oz gold served (contracts) so far this month 1046 notices 104,600 oz 3.2534 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,705,430.2 oz Today we HAD 0 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 3 customer withdrawal(s) i) Out of Scotia: 62,597.863 oz ii) out of Brinks; 96.22 oz iii) Out of HSBC: 65,308.59 oz total customer withdrawal: 128,002.673 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1046) x 100 oz or 104,600 oz, to which we add the difference between the open interest for the front month of JANUARY (135 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 118,100 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1046) x 100 oz  or ounces + {OI for the front month (135) minus the number of  notices served upon today (0) x 100 oz which equals 118,100 oz standing in this non active delivery month of JANUARY  (3.6734 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.6702 tonnes total for the 13 months;  226.061 tonnes average 17.389 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,455,213.516 or 45.263 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 8,958,378.300 or 278.64 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 278.64 tonnes for a  loss of 24  tonnes over that period.  Since August 8/2016 we have lost 75 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 5 MONTHS  75 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 12. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  1,159,753.990 0z CNT SCOTIA Deposits to the Dealer Inventory NIL oz Deposits to the Customer Inventory  1,287,675.723 oz JPM Scotia No of oz served today (contracts) 0 CONTRACT(S) (nil OZ) No of oz to be served (notices) 230 contracts (1,150,000  oz) Total monthly oz silver served (contracts) 432 contracts (2,160,000 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  13,489,962.3 oz  END today, we had 0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 2 customer withdrawal(s): i) Out of CBT: 608,201.510 oz ii) Out of Scotia: 551,552.480 oz TOTAL CUSTOMER WITHDRAWALS: 1,159,753.990 oz  we had 2 customer deposit(s): i) Into JPMorgan:  607,847.343 oz** ** JPMorgan has deposited a huge amount of silver on each and every day starting in 2017: ii) Into Scotia; 679,828.340 oz total customer deposits;  1,287,675.723   oz TED BUTLER IS CORRECT:  JPMORGAN IS MASSIVELY ACQUIRING SILVER.      we had 0  adjustment(s) The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) for nil oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  432 x 5,000 oz  = 2,160,000 oz to which we add the difference between the open interest for the front month of JAN (230) 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 JANUARY contract month:  432(notices served so far)x 5000 oz +(230) OI for front month of JAN. ) -number of notices served upon today (0)x 5000 oz  equals  3,310,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We  lost 4 contracts or an additional 20,000 oz will not stand. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 65,393 which is excellent YESTERDAY’S  confirmed volume was 93,642 contracts  which is huge.   Total dealer silver:  29.202 million (close to record low inventory   Total number of dealer and customer silver:   180.785 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

Jan 12/2017/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 12/2017/ Inventory rests tonight at 805.00 tonnes *IN LAST 68 TRADING DAYS: 144.81 TONNES REMOVED FROM THE GLD *LAST 15 TRADING DAYS: 19.54 TONNES HAVE LEFT

end

Now the SLV Inventory Jan 12.2017/ no changes in the SLV Inventory/ rests at 338.356 million oz Jan 11/ A HUGE WITHDRAWAL F 2.843 MILLION OZ/INVENTORY RESTS AT 338.356 MILLION OZ/ JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ . Jan 12.2017: Inventory 338.356  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 7.5 percent to NAV usa funds and Negative 7.5% to NAV for Cdn funds!!!!  Percentage of fund in gold 61.0% Percentage of fund in silver:38.7% cash .+0.3%( jan 12/2017)  . 2. Sprott silver fund (PSLV): Premium RISES to +.25%!!!! NAV (Jan 12/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.26% to NAV  ( Jan 12/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.25% /Sprott physical gold trust is back into NEGATIVE territory at -0.26%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

Gold Rallies To $1,207 After Trump Press Conference Shambles By Mark O’ByrneJanuary 12, 20170 Comments

Gold has rallied to $1,207/oz today as stocks globally have weakened after the first press conference of incoming President Trump turned into a bit of a debacle.


Gold prices made further gains today amid reduced focus on the Fed and speculation regarding their potential rate hikes and more focus on the next four years of the Trump Presidency.

The dollar declined alongside US Treasury bond yields, although U.S. stock indices were supported yesterday and remained buoyant. Declines in Asian and European bourses today have seen U.S. futures decline this morning and the dollar has seen further losses pushing gold higher in all currencies.

Gold is likely to be supported and should rise due to the ongoing Trump versus the U.S. intelligence agencies saga which worsened yesterday amid vicious claim and counter claim. These included salacious allegations of lewd sexual acts by Trump while in Moscow and the allegation that the incoming President is being blackmailed and controlled by Russia.

There would appear to be a tussle for power and supremacy between more hawkish elements in the intelligence agencies and the incoming President. The extremely adversarial public disagreement between an incoming President with senior members of the FBI and the CIA is absolutely unprecedented.

As we told Dow Jones Marketwatch yesterday:

“Whether you like Trump or not, whether you are a Republican or a Democrat or neither, one has to acknowledge that the situation is a mess and is impacting America’s standing on the world stage.

It highlights the continuing political uncertainty in the U.S. and does not bode well for the next four years as it will likely contribute to heightened geopolitical uncertainty.”

There are also concerns about the increasing likelihood of trade wars, currency wars and even the potential for “hot” wars. Tensions with Russia and indeed China will not have been calmed by the Trump press conference yesterday.

Trump has angered Beijing since his election by reaching out to Taiwan, appointing China skeptics to his team, accusing China of stealing a drone and threatening punitive tariffs on the country’s exports.

The revelations and tensions between the incoming U.S. President and his intelligence agencies and indeed the media first began to affect markets yesterday and again today. If this continues we may see a more meaningful impact and risk assets such as stocks and bonds will be vulnerable.

The U.S. stock markets in particular look vulnerable, as they are near record highs and looking increasingly overvalued with the Dow near 20,000. As does the dollar which is near multi year highs against many fiat currencies.

A new safe haven bid in the gold market is being seen and looks like it will continue in the coming weeks and in 2017. Indeed, in terms of the gold market, there is a good possibility that the four years of the Trump Presidency may be the “gift that keeps on giving.”

The Trump press conference yesterday and its impact on markets, highlights the importance of real diversification and having an allocation to physical gold in a diversified portfolio. This will be more important than ever in the coming years.

http://www.goldcore.com/us/gold-blog/

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 6.8940(HUGE REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY   TO 6.8440 / Shanghai bourse CLOSED DOWN 17.46 POINTS OR 0.56%   / HANG SANG CLOSED DOWN 106.33 OR 0.46% 

2. Nikkei closed DOWN 229.97 POINTS OR 1.13%   /USA: YEN FALLS TO 114.00

3. Europe stocks opened ALL IN THE RED EXCEPT SPAIN       ( /USA dollar index FALLS TO  100.79/Euro UP to 1.0683

3b Japan 10 year bond yield: FALLS TO    +.04%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.00/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.90  and Brent: 55.91

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO  +.323%/Italian 10 yr bond yield DOWN  to 1.897%    

3j Greek 10 year bond yield FALLS to  : 6.88%   

3k Gold at $1204.40/silver $16.91(8:15 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP  46/100 in  roubles/dollar) 59.30-

3m oil into the 52 dollar handle for WTI and 55 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT 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 114.00 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0060 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0746 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.323%

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

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

4. USA 10 year treasury bond at 2.334% early this morning. Thirty year rate  at 2.926% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Dollar, Futures Slump; Gold Spikes Over $1,200 After Trump Disappoints Markets

Risk assets declined across the globe, with European, Asian shares and S&P 500 futures all falling, while the dollar slumped against most currencies after a news conference by President-elect Donald Trump disappointed investors with limited details of his economic-stimulus plans, and the Trumpflation/reflation trade was said to be unwinding.

“The risk was always that a president like Trump would end up upsetting that consensus (of faster U.S. growth, stronger dollar) view by introducing more political uncertainty,” said asset manager GAM’s head of multi-asset portfolios Larry Hatheway.

The biggest mover, and perhaps the key driver of risk since the election, was the dollar which tumbled as much as 0.8%, falling below its 50DMA for the first time since the election, and back to where it was during the December 14 Fed rate hike announcement, while Treasuries gained alongside commodities, as Donald Trump’s press conference sent a wake-up call to the market about exalted expectations for fiscal stimulus in the U.S.

“Overall, investors are wary ahead of Trump’s inauguration – a case of buy the talk (Trumpflation), but sell the news,” analysts at Societe Generale said in a note.

However while negative for the US, that Trump did not mention possible tariffs against Chinese exports, was a relief for Asian share markets that have feared the outbreak of a global trade war.

The lack of detail about a potential stimulus also put safety plays such as bonds and gold back in favor, cooling bets that have built in recent months on significantly higher global inflation and series of U.S. interest rate hikes. It was enough to send the dollar tumbling back below 114 yen for the first time in five weeks and brought some welcome relief to Brexit-bruised sterling and Turkey’s lira, which has been badly beaten up this year. The USD/JPY broke below the prior session low of 114.25 to reach its weakest level in a month as broad assets position adjustments after recent rally continues to lower the pair’s range, said Satoshi Okagawa, senior global market analyst at Sumitomo Mitsui Banking Corp. in Singapore. Eventually the pair slid as low as 113.77 shortly after the European open before rebounding to just above 114.

The euro was back at $1.0650 for the first time in a month, shaky sterling climbed above $1.22 and Sweden’s crown hit a four-month high and cracked its 200-day moving average against the euro after pacy inflation data. It was also bliss for bond markets that have been in reverse since Trump’s election fuel led bets on higher U.S. interest rates that tend to set the bar for global borrowing costs.

Gold spiked on the weak dollar, rising above $1,200 since November 23, and at the 38.2% Fibonacci of the Trump-Led slide.

With all eyes on the dollar, the U.S. currency slumped against most major and the 10-year Treasury yield touched the lowest since November as Trump’s first press conference since his election victory gave no details on policy.

European stocks headed for their lowest close since the end of 2016 and drugmakers across the globe sold off. Turkey’s currency climbed for the first time in six days as the nation’s central bank tightened lira liquidity. Gold advanced to a seven-week high and industrial metals rallied.  The Stoxx Europe 600 Index lost 0.5 percent and the FTSE 100 fell 0.2 percent, halting a record streak of gains.     Health-care shares headed for their biggest drop since November, deepening losses that began late yesterday.

As Bloomberg, and virtually everyone else has pointed out many times already, Trump’s press conference left investors with few specifics on the timing and scope of planned policies from infrastructure spending to trade pacts. Since his victory, the dollar and global equities have rallied, while bonds sold off, on bets inflation would pick up with growth. Health-care stocks were pressured Thursday as Trump said he’d force the pharmaceutical industry to bid for government business in the world’s largest drug market.

“Markets are disappointed by a lack of detail around the much touted stimulus plans,” said Michael McCarthy, Sydney-based chief market strategist at CMC Markets Plc. “There is a growing fear that recent positive moves are based on bombast, and could unravel very quickly.”

“The news conference was a far cry from the market friendly, pro-growth “presidential” comments that Trump delivered at his acceptance speech,” wrote analysts at Westpac, adding it left a “veritable laundry list” of questions unanswered.

Futures on the S&P 500 Index fell 0.3 percent. The underlying gauge increased 0.3 percent on Wednesday, staging an afternoon rally and recouping losses of as much as 0.4 percent.

In rates, the benchmark 10-year Treasury yield fell five basis points to 2.32 percent, touching the lowest level since Nov. 30. German 10-year yields dropped three basis points to 0.29 percent, while those in the U.K. slid five basis points to 1.29 percent.

Bulletin Headline Summary from RanSquawk

  • European equities trade in the red, albeit modestly so as Europe continues to digest the fallout from Trump’s press conference
  • Some sweeping moves in the USD this morning, and all spurred by the lack of substance in yesterday’s press conference by president elect Trump
  • Looking ahead, highlights include ECB meeting minutes, US import and export prices, Fed’s Yellen, Bullard and Kaplan

Market Snapshot

  • S&P 500 futures down 0.3% to 2264
  • Stoxx 600 down 0.2% to 364
  • FTSE 100 down 0.2% to 7273
  • DAX down 0.5% to 11582
  • German 10Yr yield down 1bp to 0.32%
  • Italian 10Yr yield up 1bp to 1.88%
  • Spanish 10Yr yield up less than 1bp to 1.42%
  • S&P GSCI Index up 0.8% to 398
  • Nikkei 225 down 1.2% to 19135
  • Hang Seng down 0.5% to 22829
  • Shanghai Composite down 0.6% to 3119
  • S&P/ASX 200 down less than 0.1% to 5767
  • US 10-yr yield down 5bps to 2.32%
  • Dollar Index down 0.62% to 101.15
  • WTI Crude futures up 0.6% to $52.55
  • Brent Futures up 0.9% to $55.58
  • Gold spot up 1% to $1,204
  • Silver spot up 1.2% to $16.93

Top News

  • Obamacare Repeal Effort Clears First Big Hurdle in U.S. Senate: the U.S. Senate took the first step toward repealing Obamacare in a razor-thin vote early Thursday
  • U.S. Said to Prepare WTO Complaint Against China on Aluminum: case focusing on loans said to be unveiled as soon as Thursday; global glut of aluminum threatening remaining U.S. capacity
  • Alphabet Says It Shut Down Titan Drone Internet Project: similar project pursued by Facebook has also faced setback
  • Blackstone Said to Vie With Warburg, Chinese Group for GLP: Blackstone considering offer for GLP, potentially pitting it against Warburg Pincus and a separate Chinese group
  • J&J, Actelion Said to Reach Tentative Agreement on Price: discussions now said to focus on valuing separated R&D unit; companies could reach a final deal as soon as this month
  • VW Officials Destroyed Files, E-Mails as Diesel Scheme Unraveled: co. pleads guilty, 5 more charged in emissions cheat
  • Tillerson Says China Can’t Have Access to South China Sea Isles: U.S. Secretary of State nominee says China must be denied access to artificial islands built in disputed water
  • U.S. Intelligence Chief Tells Trump He’s Dismayed by Leaks: Clapper said leak likely didn’t originate from spy agencies
  • HSBC to Pay $45 Million to Settle Euribor Price-Fixing Case
  • Floor & Decor Said to Revive IPO With >$1b Valuation: Reuters
  • Jawbone Said to Be Looking for Funds After Fitbit Approach: FT
  • CVC Capital Said in Advanced Talks to Buy MSC Software: Reuters
  • Apax Partners Sells 48% Stake in GlobalLogic For $1.5b: ET

Looking at regional markets, we start in Asia where stock markets traded lower across the board to shrug off the positive lead from Wall Street as Trump’s press conference led USD lower and as the surge in oil markets lifted the energy names. Nikkei 225 (-1.2%) underperformed on a firmer JPY as USD/JPY broke below 115.00, while comments in the US session from Trump criticising the healthcare sector led the pharmaceutical sector lower by around 3%. ASX 200 (-0.1%) pared early gains despite higher commodity prices, as a second day of double digit loss for Bellamy’s and near 2% declined in the health care sector weighed the index. In China, Shanghai Comp (-0.6%) and Hang Seng (-0.4%) were lower amid a lack of news-flow and yet another reserved liquidity operation by the PBoC. 10yr JGBs traded marginally higher amid the risk averse tone in the region, while the curve flattened amid outperformance in the long end.

Top Asian NEws

  • China Credit Growth Exceeds Estimates as Lending Remains Robust: aggregate financing was 1.63 trillion yuan in December; Broad M2 money supply increased by 11.3% percent, PBOC says
  • Macau Casinos Lead Declines in Hong Kong Amid Revenue Concerns: Casino stocks dragged Hong Kong’s benchmark equity index lower by the most in three weeks
  • Pimco Says China’s Next Big Shock May Be a Yuan Free Float: It would lead to a knee-jerk tumble, exacerbating capital outflows and sending shockwaves through global markets

All of the major European bourses trade in the red this morning with many analysts stating that President elect Trumps failure to mention any fiscal spending plans could be the main reason for the subdued sentiment. In company specific news, Tesco (-2.3%) shares are trading soft after broad sector strength earlier in the week. Elsewhere, Healthcare shares have been hit this morning after Trump stated that healthcare companies should be allowed to get away with charging extortionate prices. Luxury names have been trading well with Burberry (+1.3%) trading higher in sympathy with Richemont (7.6%) who reported a strong set of earnings pre-market. In Fixed income markets, Bunds opened higher in tandem with their US counterparts performance overnight, although prices have pulled away from best levels as markets take the opportunity to book profits. Elsewhere, supply from Europe has come in the form of Italian BTPs and a UK 2025 Gilt auction with UK paper relatively unfazed by a firm b/c of 2.52 and small yield tail.

Top European News

  • German Economic Growth Accelerated in 2016 on Domestic Spending: German economic growth accelerated more than analysts forecast in 2016 to its fastest pace in 5 years
  • Richemont Reports Unexpected Sales Gain as Watches Improve: 3Q sales +5% after falling 12% in 1H; better own-store watch sales good sign for wholesale: analysts
  • Swatch Gains; Positive Read-Across from Richemont, Short Squeeze
  • European Broadcasters Hook Up in Web Push as Viewers Move Online: Mediaset, TF1 invest in ProSiebenSat.1’s Studio71 unit
  • UBI Climbs After Offering 1 Euro to Buy 3 Rescued Small Banks; UBI plans to raise as much as EU400m through a rights offer to purchase three “good banks” at a symbolic price
  • Tesco Falls as Sales Growth Fails to Satisfy Investors; investor hopes had been raised by Wm Morrison Supermarkets’ results earlier in week

In currencies, there have been some sweeping moves in the USD this morning, and all spurred by the lack of substance in yesterday’s press conference by president elect Trump. This is all the talk at the moment, so there is everything to suggest that this may continue to a modest degree, with USD dip buyers likely to limit and significant moves from current pullback levels. USD/JPY has taken out 114.00, but still looks vulnerable to a deeper correction which sees the potential for 113.00 base on the charts. Support from here stretches down to 111.45-50 before we can start talking of a reversal. This is very much the case in EUR/USD, where sellers have come in around 1.0650-60, but the risk for a move to 1.0700-1.0800 remains as rising EU inflation raises the prospect on greater consideration of (ECB) tapering. GBP has also benefitted from the turn in the USD as we have seen 1.2300 tipped in Cable this morning. Brexit related fears will keep a lid on any major recoveries — especially against the USD — as yield differentials also dictate. EUR/GBP price action will also reflect a clearer picture, but sentiment USD based for now. USD/CAD is now threatening a move on 1.3000 on the downside, with Oil prices having held up well over the last 24 hours. The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, fell 0.8 percent at 10:01 a.m. London time. It’s flat since the Fed’s rate decision on Dec. 14. 

In commodities, the big mover in the commodity complex is Gold, taking out USD 1,200 as the USD was hit hard during president elect Trump’s ineffective press conference yesterday. Resistance levels here into the mid USD1200’s worth noting as USD dip buyers likely. Oil prices have performed well in the last 24 hours, and indeed over last night’s key events. WTI above USD50.00 looks comfortable for now. Base metals mixed, but stable despite the lack of focus on infrastructure spending in the US. Anticipated China demand supports Copper which added 2.2% to $5,842 a metric ton, the highest in a month after Indonesia confirmed a halt to concentrate exports. Zinc rose 2.1 percent and nickel gained 1.5 percent.  U.S. natural gas rose 3% to $3.32 per million British thermal units as a Bloomberg survey showed inventories probably fell by 141 billion cubic feet last week. U.K. natural gas rose 1.3 percent to 56.70 pence a therm, a fourth day of gains amid forecasts for cold weather.

US Event Calendar

  • 8:30am: Import Price Index MoM, Dec., est. 0.7% (prior -0.3%)
  • 8:30am: Initial Jobless Claims, Jan. 7, est. 255k (prior 235k)
  • 8:30am: Fed’s Harker Speaks in Malvern, Pennsylvania
  • 8:30am: Fed’s Evans and Lockhart Take Part in Panel in Naples, Florida
  • 9:45am: Bloomberg Consumer Comfort, Jan. 8 (prior 45.5)
  • 10am: Freddie Mac mortgage rates
  • 10:30am: EIA natural-gas storage change
  • 12pm: Monthly World Agriculture Supply and Demand Estimates
  • 1:15pm: Fed’s Bullard Speaks in New York on U.S. Outlook
  • 1:45pm: Fed’s Kaplan Speaks at Dallas Regional Chamber Event
  • 2pm: Monthly Budget Statement, Dec., est. -$26.0b (prior – $136.7b)

DB’s Jim Reid concludes the overnight wrap

Morning from Zurich. I listened to President-elect Trump’s press conference on Bloomberg radio yesterday while on the tarmac waiting to take off from Oslo to Copenhagen. I must admit that whilst there was nothing much of substance for financial markets to take from it there’s no doubting it was compelling stuff and it was one of the rare times I really didn’t want a flight to take off and lose signal. I’ve never known anything like it from an incoming or sitting leader anywhere in the world. For a start you don’t often have cheering and clapping at a press conference which came from a contingent of Mr Trump’s  supporters at the event. We also had a fierce exchange between the future President and a CNN reporter who was refused a question due to his organisation’s reporting of Trump’s alleged relationship with Russia.

We also learnt that Mr Trump turned down $2 billion last week from a Dubai developer and also a discussion over his trip to Russia to work on Miss Universe. Not the everyday stuff of governmental press conferences but when you see some of the bland stage managed versions around the world who is to say it’s the wrong approach.

There was also a very brief mention of a “major border tax on companies leaving the US” and that Obamacare will be repealed and replaced “almost simultaneously” but overall markets were disappointed at the lack of substance around policy in particular. This was most apparent in FX where the US Dollar index finished the day -0.23% (and is down another -0.22% this morning) but was actually down as much as -1.62% from the intraday high at one stage. Over in rates 10y Treasury yields were down close to 5bps at one point, touching an intraday low in yield of 2.327%, before paring that move late into the close to finish more or less unchanged around 2.373%. Meanwhile equity markets posted modest gains but in reality were propped up by the +2.81% rebound for WTI Oil – despite some bearish inventory data – which helped the energy sector to outperform. Indeed the S&P 500 closed +0.28% and the Dow +0.50% but healthcare names took a bit of hit with Trump critical of drug pricing and saying that the industry needs “more competitive drug bidding” and that its currently “getting away with murder”. The Nasdaq Biotech index tumbled -2.96% as a result and had its worst day since October 11th.

Elsewhere Gold (+0.31%) notched up yet another gain however base metals generally eased off following the recent strong run. The European session had been a bit of a sideshow prior to Trump but markets still generally closed a touch firmer with the Stoxx 600 finishing +0.23%. The FTSE 100 (+0.21%) also notched up another gain and in doing so marked the first time the index has ever closed higher for 12 days in a row. That also coincided with Sterling at one stage touching a new 3-month low of $1.2039, before bouncing back into the close. The latest leg lower came as Governor Carney spoke and warned that Brexit could “amplify” four other dangers to the UK economy including the current account deficit, further weakness in Sterling, mounting consumer credit and a weaker commercial property market. On a related note, Scotland’s Nicola Sturgeon was dealt a bit of a blow yesterday after senior Norwegian politicians argued that it would be impossible for Scotland to move to a ‘Norway-style’ model for staying in the single market while also remaining part of the UK.

This morning in Asia it’s been another mixed start for markets. Most notable has been the decline for Japanese equities with the Nikkei (-1.26%) and Topix (-1.22%) tumbling with the healthcare sector and particularly those names with revenue exposure in the US notably underperforming following Trump’s comments about the sector. The Yen has also rallied about 2% since Trump spoke, which is also weighing. Meanwhile the Hang Seng (-0.33%) is also weaker, while the Shanghai Comp (+0.20%) and Kospi (+0.12%) are posting modest gains. The ASX is little changed.

Moving on. Yesterday we published our first Euro HY strategy monthly of the year. Since we published our 2017 Credit Outlook in late November we have seen some fairly impressive moves for EUR HY credit  spreads. At this time we have no intention of changing our FY spread forecasts but given the strength of these moves we assess the implications for potential returns in 2017. At the time of the outlook our spread and default rate forecasts indicated that, whilst low, both excess and total returns should still be positive for 2017. Unsurprisingly given the positive performance in December and at the start of January we are now at a starting point where returns are likely to be negative for the coming year. Around -0.4% in terms of excess returns and -1.3% in total returns. We continue to think the intra-year range could be large for spreads and think there will be a better entry point into EUR HY than current levels even if this is not immediate. Please email Nick.Burns@db.com if you haven’t received it.

Also yesterday we published a Credit Bite “Moody’s Default Rates Tracker” (https://goo.gl/gCc5pU) detailing the agencies’ latest 12-month-trailing high-yield default rates and their forecasts for the next 12 months. The default rate was 2.08% in Europe, 5.65% in the US and 4.41% globally. The baseline forecast for the next 12 months is 2.1% for Europe, 3.8% for the US and 3% globally

In our 2017 Outlook, we forecast 2.5% for Europe (https://goo.gl/BkHYrJ) and our US colleagues predict 5% for the US having revised down their earlier 7.25% forecast (https://goo.gl/3tWmf4). This is broadly in line with Moody’s view of a continued benign default environment in Europe and peaking of US defaults in the course of the year, although our US colleagues remain more cautious. Before we wrap up, in terms of the economic data yesterday the only releases of note came from the UK. Both industrial production (+2.1% mom vs. +1.0% expected) and manufacturing production (+1.3% mom vs. +0.5% expected) surprised to the upside, while the November trade deficit was reported as widening a little bit more than expected (to £12.2bn vs. £11.1bn expected). Carney also acknowledged yesterday that “the recent data would be consistent with a further upgrade of the forecasts” of the Bank.

Meanwhile over in Italy the Italian Constitutional Court rejected a request by the largest Italian union to force a referendum to overturn the core of the labour reform introduced by Renzi’s government in 2015, including the rejecting of the easing of redundancy rules for new hires. The ruling should come as some relief to new PM Gentiloni.

Looking at today’s calendar the only notable data due out in Europe this morning is the final revision to the December CPI report in France, Euro area industrial production in November and Germany’s first  estimate of calendar year 2016 GDP growth. Over in the US the data docket contains the import price index reading for last month, last week’s initial jobless claims and the December monthly budget statement. Away from the data we’ll get the latest ECB minutes from last month’s policy meeting as well as a number of Fed speakers including Harker, Evans and Lockhart at 1.30pm GMT, Bullard at 6.15pm GMT and Kaplan at 6.45pm GMT.

END

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed DOWN 17.46 POINTS OR 0.56%/ /Hang Sang closed DOWN 106.33 OR 0.46%. The Nikkei closed DOWN 229.97 POINTS OR 1.19% /Australia’s all ordinaires  CLOSED DOWN 0.04%/Chinese yuan (ONSHORE) closed WELL UP at 6.8940/Oil ROSE to 52.90 dollars per barrel for WTI and 55.91 for Brent. Stocks in Europe: MOSTLY IN THE RED. Offshore yuan trades  6.8420 yuan to the dollar vs 6.8940  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE COMPLETELY NARROWS AGAIN AS  DOLLARS STOP LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

The POBC orders banks to keep capital controls a secret..we are not supposed to know (but we do)

(courtesy zero hedge)

To “Prevent Public Panic”, Beijing Orders Banks To Keep Capital Controls Secret

China is so concerned about the ongoing surge in capital outflows that its forex regulator, SAFE, has taken the unprecedented step of ordering banks to keep its instructions about curbing capital outflows secret and also to ensure that research analysts do not publish any negative views about the yuan according to Reuters.  According to bankers from local and foreign banks, both demands are seen as an attempt by the authorities to prevent alarm that could trigger further declines in the yuan.

With the yuan losing 6% of its value against the dollar last year as a result of hundreds of billions in official outflows (and as much as $1.1 trillion in unofficial since August 2015 according to Goldman calculations), Beijing has unleashed a flurry of restrictive measures on capital outflows from the State Administration of Foreign Exchange (SAFE), including setting limits on banks’ currency volumes in some cities or provinces and requiring approval for ever smaller transactions. Overnight, the PBOC even unveiled probed into bitcoin exchanges, sending the digital currency plunging over 20%.

Reuters reports that SAFE, which is part of the People’s Bank of China, is insisting, orally, that dozens of bank don’t reveal its role in such restrictions, which was damaging their relationships with clients since they were unable to explain why they were turning away business. SAFE’s reticence began at least as far back as August, when its Shanghai branch called at least 20 of the major foreign and domestic banks operating in the city to a meeting with the regional heads of several SAFE departments.

A representative from an international bank attending the meeting said there were no written instructions, but a high-ranking SAFE official told them explicitly what was expected of them.

“You must control your forex deficit, but you can’t say that SAFE is controlling capital outflows,” the official told the bankers. The banks were told to “manage sentiment” to prevent public panic, the banker said, and the banks’ research analysts should not broadcast any negative views on the yuan.

As a reminder, while in the US, the real  Fake News is anything having to do with relations between Trump and Russia; in China fake news mostly focus on the economy and the currency (as well as virtually everything else).

“They told us not to publish bad house views – analyst house views – on the yuan”, the person said. A second banker on the forex team of an international bank said his bank had received the same instructions.

Where a bank has exceeded the SAFE-set limits for forex transactions in a month, they have to turn business away, but are unable to explain the real reason why, several bankers complained. “We’re not going to tell our customers that (our forex business) has stopped; we just have to find ways to turn down the business we’re not allowed to do,” said a banker at Chinese Commercial Bank Ping An who had received SAFE instructions from seniors.

“It’s not good for client relationships,” he added, explaining that he had told his clients to go to other banks.

Additionally, SAFE had told banks to interview clients to make sure the forex deals were not for fake transactions, or else face punishment, according to two bankers at separate listed banks. In response to those orders, one of the banks sent an internal notice to employees, seen by Reuters, to alert them to SAFE’s requirements, explaining that the regulator’s penalties could include “cancelling business qualifications” needed for the lender to conduct forex business.

The notice passed on SAFE’s instructions that staff should not mention the regulator, i.e., it was to be kept secret.

“Please do not reply to clients using wording such as SAFE controls, or SAFE doesn’t allow or strictly controls FX purchases,” it read. Instead, they should adhere to the line provided by SAFE, that the purpose of the changes was to “promote healthy development of outbound direct investment” and “crack down on fake deals”, the notice added.

* * *

While China’s foreign exchange reserves fell to $3.05 trillion in November from $3.3 trillion in the first 11 months of 2016, and many traders are betting there will be further outflows as U.S. interest rates rises make dollar assets more attractive, SAFE wants banks to advise clients to buy yuan and sell dollars, the international bank representative said, a play that is likely to lose clients money. “If a person doesn’t ave this need, how am I supposed to encourage it?” the banker said.

At the same time, SAFE is quietly choking programmes designed to open overseas markets to Chinese investors. Even where institutional investors have been granted quotas to invest overseas, they are finding it increasingly difficult to exchange yuan into another currency.

“SAFE would tell you that you still need to stand in the queue, and the waiting period is ‘uncertain’,” said an executive at Shanghai-based China equity fund house Greenwoods. An investment program set up so global funds can raise Chinese cash to invest overseas has ground to a halt without explanation. “The application process seems to be in a state of suspension,” Michael Lu, managing director of Greater China Business Development of Dutch money manager Robeco told reporters in November.

* * *

In short, China has implemented full blown capital controls, without wanting its population to know it has done so, which is understandable: fear of the unknown would lead to panic, would lead to more selling, and more panic and so on. But what we find delightfully ironic is that China is cracking down on the internationalization of its currency, just months after the IMF made the Yuan a fully “respected” member of the SDR – a token of how “liberalized” the currency is. As usual, trust Christine Lagarde to get it dead wrong.

 

 

end

 

Beijing is not amused after Sec. of State hopeful Tillerson says the USA will block Chinese access to the South China sea islands:

(courtesy zero hedge)

Beijing Not Amused After Tillerson Says US Will Block Chinese Access To South China Sea Islands

While Rex Tillerson’s confirmation hearing as Trump’s Secretary of State was for the most part uneventful, several hours into his back and forth with the Senate Foreign Relations Committee, Tillerson compared China’s actions to those of Russia in Crimea, saying a failure to respond had allowed it to “keep pushing the envelope” in the South China Sea. “We’re going to have to send China a clear signal that first the island-building stops and second your access to those islands is also not going to be allowed” and that putting military assets on those islands was “akin to Russia’s taking Crimea” from Ukraine.

With that statement, America’s likely next secretary of state “has set a course for a potentially serious confrontation with Beijing” according to Reuters, which added that his comments are “expected to enrage Beijing.”

Tillerson, the former Exxon chairman and CEO, did not elaborate on what might be done to deny China access to the islands it has built up from South China Sea reefs, equipped with military-length airstrips and fortified with weapons. Trump’s transition team did not immediately respond to a request for specifics on how China might be blocked from the artificial islands.

Tillerson said he considered China’s South China Sea activity “extremely worrisome” and that it would be a threat to the “entire global economy” if Beijing were able to dictate access to the waterway.

“This is the sort of off-the-cuff remark akin to a tweet that pours fuel on the fire and maybe makes things worse,” Malcolm Davis, a senior analyst at the Australian Strategic Policy Institute in Canberra told Bloomberg. “Short of going to war with China, there is nothing the Americans can do.”

He blamed the current situation on what he termed an inadequate U.S. response. “The failure of a response has allowed them just to keep pushing the envelope on this,” Tillerson said.

China responded when its Foreign Ministry spokesman Lu Kand said China has been acting within the limits of its sovereignty. “Like the U.S., China has the right within its own territory to carry out normal activities,” he said at a regular briefing in Beijing. When asked repeatedly about Tillerson’s comments on blocking access to islands, China’s foreign ministry spokesman said he couldn’t make any guesses as to what Tillerson was referring to and would not answer hypothetical questions, Reuters reported.

China’s right to carry out ‘normal activities’ in its sovereign territory in the South China Sea is ‘indisputable’, Lu said, speaking at a daily briefing on Thursday. He did not elaborate.

Tillerson also said he would stand by U.S. defense treaties with Japan and South Korea. These had been in doubt after Trump said in an interview last March that he would consider withdrawing U.S. troops if allies didn’t pay more for their upkeep. Asked whether he agreed with Trump’s assertion that it wouldn’t be a bad thing for the U.S. if Japan and South Korea acquired nuclear weapons, Tillerson said he “did not agree.”

“We have long-standing ally commitments with Japan and South Korea in the area and I think we would respond in accordance with those accords,” he said. “Certainly we have made commitments to Japan in terms of a guarantee of their defense.”

Pouring more gasoline on US-Sino relations, Tillerson called China’s South China Sea island-building and declaration of an air defense zone in the East China Sea it contests with Japan “illegal actions.” “They’re taking territory or control, or declaring control of territories that are not rightfully China’s.”

Tillerson also said Washington needed to reaffirm its commitment to Taiwan, which Beijing regards as a renegade province, however he stopped short of Trump’s questioning of Washington’s long-standing policy on the issue.  “I don’t know of any plans to alter the ‘one China’ position,” Tillerson said.

Curiously, Tillerson’s words went beyond Trump’s own tough rhetoric on China. Regional military sources said while the U.S. navy had extensive capabilities in Asia to stage blocking operations with ships, submarines and planes, any such move against China’s growing naval fleets would risk dangerous escalations.

Tillerson’s criticism of China was not confined solely to geopolitics: he accused China of failing to live up to global agreements on trade and intellectual property, echoing past remarks by Trump, who has threatened to impose high, retaliatory tariffs on China.

But Tillerson also stressed the “deeply intertwined” nature of the world’s two biggest economies. “We should not let disagreements over other issues exclude areas for productive partnership.”

 

 

end

 

My goodness:  Free trade Obama just escalated the war with China as it issues an aluminium complaint:

(courtesy zero hedge)

‘Protectionist’ Obama Escalates Trade War, Slams China With Subsidized Aluminum Complaint

With all the partisan narrative defining Trump as a tariff-setting, anti-trade, economy-buster, we thought it ironic that free-trade-wunderkid Obama just escalated trade wars by bringing his administration’s 16th trade-enforcement complaint against China with WTO, urging tariffs on subsidised Chinese aluminum, after accusing them of funneling artificially cheap loans from state-run banks to producers.

Despite declining global aluminum prices, China has increased production 154% over the past eight years while upping capacity by 243%, according to the U.S. government.

As Bloomberg reports, the complaint says China has harmed U.S. interests by artificially expanding Chinese capacity, production and market share, resulting in a significant lowering of the global price for primary aluminum. It is the 16th trade enforcement challenge President Barack Obama’s administration has launched at the WTO against China.

“This latest challenge once again demonstrates the Obama administration’s unwavering commitment to ensuring a fair and level playing field for American workers and businesses,” U.S. Trade Representative Michael Froman said in a written statement. “Artificially cheap loans from banks and low-priced inputs for Chinese aluminum are contributing to excess capacity and undercutting American workers and businesses.”

In a statement very reminiscent of Trump’s rhetoric on ‘fair’ not ‘free’ trade, President Obama noted he U.S. under his tenure has filed more enforcement complaints in the WTO than any other country and has won every one that’s been decided…

America succeeds when our workers and businesses have a fair shot to compete in the global economy. That’s why when other countries cut corners and break the rules on trade, my Administration stands up for strong trade enforcement,” Obama said.

“China gives its aluminum industry an unfair advantage through underpriced loans and other illegal government subsidies. These kinds of policies have disadvantaged American manufacturers and contributed to the global glut in aluminum, steel, and other sectors.”

As The Wall Street Journal reports, the complaint would represent an escalation of trade disputes between countries with the world’s two largest economies almost a week before Donald Trump assumes the U.S. presidency. Mr. Trump suggested again Wednesday in a news conference that trade relations with Beijing would be a top priority, saying the U.S. trade imbalance with China was too large.

The complaint accuses China of funneling artificially cheap loans from state-run banks to Chinese aluminum producers, helping the companies upgrade their facilities and expand production, the people said. China also subsidizes aluminum production by providing producers with cut-rate coal and electricity, the complaint says, according to people familiar with it.

Donald Trump, who will be sworn in as the president’s successor next Friday, has vowed to pull out of or renegotiate free trade deals he argues allow Chinese market manipulations. During a press conference Wednesday in New York, Trump said China had “taken total advantage of us economically” and vowed the leadership in Beijing “will respect us far more” under his presidency.

So the timing of this escalation of trade disputes appears to be just another example of the Obama administration’s “smooth transition” efforts to leave behind chaos for the Trump administration (even if this effort seems to fit with Trump’s “fair” trade rhetoric).

end 4 EUROPEAN AFFAIRS

FIAT CHRYSLER/GERMANY

Oh no!! not again?  After Volkswagen got tagged with a 4.3 billion USA criminal fine the EPA accuses Fiat Chrysler of using software to defeat diesel emission laws;

down goes Fiat Chrysler shares:

(courtesy zerohedge)

Fiat Chrysler Shares Crash After EPA Accuses Automaker Of Using Software To Cheat Diesel Emissions Laws:  the company was “Skirting Rules & Got Caught”

It appears they were all doing it. Fiat Chrysler shares are collapsing following EPA accusations that the automaker engaged in a similar scheme as Volkswagen, and used cheating software to beat diesel emissions tests, and this violated pollution laws.

The U.S. Environmental Protection Authority will accuse Fiat Chrysler of using software that allowed excess diesel emissions in about 100k U.S. vehicles, Reuters reports in tweet, citing people familiar.

Reuters U.S. News @ReutersUS

BREAKING: EPA to accuse Fiat Chrysler of using software that allowed excess diesel emissions in about 100,000 U.S. vehicles – sources

10:22 AM – 12 Jan 2017

Why? Maybe it has something to do with Fiat’s appeasement of the Trump administration, when last Sunday it announced a plan to Invest $1 Billion in the U.S. It forgot, however, that for the next 8 days, it is still Obama’s country.

The stock is down over 10%.

The supply chain is also being hit.

As AP reports,

Two people briefed on the matter say that the U.S. government is accusing Fiat Chrysler of violating the Clean Air Act on some of its diesel engines.

The Environmental Protection Agency has scheduled a news conference for Thursday morning to release details of the matter. The people briefed on the matter didn’t want to be identified because the formal announcement hasn’t been made.

The move comes one day after federal prosecutors announced that Volkswagen would plead guilty to criminal charges and pay a record $4.3 billion penalty for cheating on emissions tests.

The Environmental Protection Agency has scheduled a call with reporters at 11 a.m. in Washington to “take questions on a recent development regarding a major automaker.” Representatives for Fiat Chrysler didn’t immediately respond to requests for comment.

 

end

Let’s get this straight:  Greece is totally broke and cannot even pay interest on what it owes.  So what do the doorknobs at the EU do:  they borrow money that they do not have to loan it to Greece who have no chance whatsoever to repay it..great deal..

 

(courtesy London’s Express) and special thanks to Robert H for sending this down to us>

 

 

GREECE

Desperate Eurozone to borrow BILLIONS to fund Greece rescue amid fears of crash THE eurozone’s bailout fund is borrowing tens of billions so it can fund a rescue plan for Greece, amid fears the country’s debt crisis could once again send shockwaves through the bloc. By LANA CLEMENTS PUBLISHED: 13:53, Tue, Jan 10, 2017 | UPDATED: 17:48, Tue, Jan 10, 2017 The Luxembourg agency responsible for doling out rescue money – the European Stability Mechanism (ESM) – is turning to markets to raise the extra cash needed for the Greek debt relief programme.

The ESM is now issuing €57billion (£49.5bn) in long-term bonds – up 14 per cent from original plans – to cover the bail-out programme.

However, Athens remains at loggerheads with creditors over the long term measures of the deal for fresh cash and debt relief – and the stand-off could last for weeks, as the two sides refuse to back down over controversial austerity measures.

The European Union is borrowing billions to fund Greece’s debt relief

Last month, the ESM froze short-term debt relief for the country, after prime minister Alexis Tsipras announced a one-off Christmas bonus for low-income pensioners.

The move is thought to have angered eurozone officials who are pressing the government to cut pension welfare spending.

It came as eurozone finance ministers approved the debt-relief measures proposed by the ESM.

In a further sign that tensions between the two sides are increasing Athens this week described proposals by the creditors as “irrational”.

The International Monetary Fund (IMF) has also spoken out against demands from the European Commission and said they are not “credible” and will hamper prospects of growth for Greece.

Only through a “Herculean effort” would Athens be able to meet the demands of its creditors under the ESM programme, and through slashing spending in vital services that will derail Greece’s long-term prospects, said the Washington-based fund.

However, the IMF said Athens is still spending far too much on pensions and not asking enough people to pay tax.

END

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

This ought to be good for gold.  USA troops march into Poland landing right next door to Russia.  I am glad that Trump will take off a week from tomorrow

(courtesy zero hedge)

American Troops “Roll Into Poland” In Largest Deployment Since The Cold War

“American soldiers rolled into Poland on Thursday, fulfilling a dream Poles have had since the fall of communism in 1989 to have U.S. troops on their soil as a deterrent against Russia.”

That’s how the AP begins its report on the first deployment of US soldiers into the central European country, previewed here earlier in the week as “One Of Largest Deployments Since The Cold War“, even as Russia warned that the move represented a threat to its national security, and the Kremlin said “Russia regarded the move as an aggressive step along its borders.”


Two convoys of have been photographed heading to Poland from Germany today


40 vehicles across two separate convoys are on their way to Poland

NATO, however, has ignored Russian concerns and threats of retaliation and as a result soldiers in camouflage with tanks and other vehicles crossed into southwestern Poland on Thursday morning from Germany and headed for Zagan, where they will be based.


The largest US military brigade since the end of the Cold War arrived in
Bremerhaven in northern Germany on Saturday

While in the past the US and other Western nations have carried out exercises on NATO’s eastern flank, this deployment, which includes around 3,500 U.S. troops and 2,800 tanks, trucks and other military equipment, marks the first-ever continuous deployment to the region by a NATO ally. It also represents a commitment by outgoing President Obama to “protect” a region that became deeply nervous over Russia’s response to the CIA-orchestrated presidential coup in Ukraine, the annexation of Crimea, and the resulting proxy war in east Ukraine.

Two convoys of 20 vehicles were pictured leaving Brueck near Lehnin in Germany today heading to Poland. They spent the night 80km from Berlin. Troops will also deployed to Romania, Bulgaria and across the Baltics.

The Pentagon now plans to keep the full deployment in Europe and immediately replace those returning after their 9-month stays. The US troops will carry out training exercises with NATO forces once there.

* * *

As AP adds, the arrival of the US troops will be feted on Saturday in official ceremonies attended by Poland’s prime minister and defense minister.

Despite the Polish celebrations, clouds hung over the historic moment. As the AP puts it, “there are anxieties that the enhanced security could eventually be undermined by the pro-Kremlin views of President-elect Donald Trump. Meanwhile, Russia appears provoked by the deployment of American troops on its doorstep.”

“We perceive it as a threat,” President Vladimir Putin’s spokesman Dmitry Peskov said. “These actions threaten our interests, our security. Especially as it concerns a third party building up its military presence near our borders,” Peskov said in a conference call with reporters. “It’s not even a European state.”

Worries about the permanence of the new U.S. security commitments are rooted in a tragic national history in which Poland has often lost out in deals made over its head by the great powers.

 

 

end

 

In the confirmation hearings General Mattis describes Russia as our principal threat. The cold war is officially back.

(courtesy zero hedge)

Gen. Mattis: “Russia Is The Principal Threat To US Security”

The cold war is officially back.

The Senate Armed Services Committee is currently hearing the testimony of retired Marine General James Mattis, picked by Donald Trump to take over the Department of Defense.

Mattis retired from the US Marine Corps in 2013 after serving as the 11th commander of US Central Command, replacing General David Petraeus as the overseer of US operations in the Middle East and Afghanistan. His appointment requires a congressional waiver because federal law states that service members must wait seven years after retiring from active duty before they can hold senior civilian defense positions.

As the WSJ notes, “so far, there is no sign that he will face any resistance on for his Senate confirmation. He’s winning a fair amount of praise from Democrats. It this continues to hold, he could have one of the smoothest confirmation votes of any Trump administration nominee.”

“Our Armed Forces must remain the best led, best equipped, and most ready force in the world,” Mattis told the Senate.  “We must also embrace our international alliances and security partnerships. History is clear: nations with strong allies thrive and those without them wither.”

“My watchwords will be solvency and security in providing for the protection of our people and the survival of our freedoms,” Mattis said. “America has two fundamental powers. One is intimidation,” Mattis told Senator Gary Peters (D-Michigan). “The other power, which we’ve used less in the last 20 years, is the power of inspiration.” The US should not be turning to military power as the answer to all of its concerns around the world, the retired Marine general added.

Here are some of the key highlights so far:

Russia Is “Principal Threat” To US Security

While much of the hearing has so far been without controveries, in the most striking moment so far, Mattis told the Senate Armed Services Committee that Russia stands as the “principal threat” to the United States’s security. He said this is because of its actions and efforts to “intimidate” other countries.

Senator John McCain questioned Mattis to get his opinion on how much of a threat Russia represents. Mattis response was that “the world order is “under biggest attacks since WW2, from Russia, terrorist groups, and China’s actions in the South China Sea,”, agreeing with the neocon senator that Russia is trying to break up NATO.

“I’m all for engagement” with Russia, “but we also have to recognize the reality of what Russia is up to,” Mattis told Senator Jack Reed (D-Rhode Island).

Senator Martin Heinrich (D-New Mexico) questioned if Mattis would stand up to generals, citing the Cuban missile crisis and bringing up the general’s moniker of ‘Mad Dog.’ “That nickname was given to me by the press,” Mattis said, adding his approach would be “Peace through strength” established by the first US president, George Washington – and often invoked by Trump.

Asked by Heinrich to list the principal threats to the US, Mattis said he “would start with Russia,” and continue with aggressive states and terrorist groups.

* * *

Defense Spending And the F-35

Mattis was probed on issues of defense budget cuts due to the legislation introduced by President Barack Obama in 2011. “I don’t have a solution for… the self-inflicted wound of the Budget Control Act,” Mattis told Sen. Claire McCaskill (D-Missouri), but promised he would spend the Pentagon’s budget on what it should be spent on.

“If I can’t make an argument to you for why we need a military program, I am willing to lose it,” Mattis told Senator Mike Rounds (R-South Dakota), explaining that the sequester takes away that decision from the Congress and mandates across-the-board cuts.

Mattis also defended the construction of F-35 fighter jet that Trump criticized as expensive and ineffective.“Many of our allies have bet their air superiority on the F-35 program,” Mattis acknowledged to Senator Richard Blumenthal (D-Connecticut).

Trump’s tweets about military acquisitions “show he’s serious” about getting the best value for the defense dollars spent, Mattis said, disagreeing with Hirono that such actions were inappropriate. He also backed the president-elect’s position about US allies needing to contribute their fair share. Senator Joni Ernst (R-Iowa) brought up her prior military service to criticize “outdated small arms and ammunition,” singling out the M9 pistol and the M-16 assault rifle.

As the WSJ adds, Mattis throws his support behind President-elect Donald Trump’s approach to chastising defense contractors about their costs. Gen. Mattis says this shows Mr. Trump is “serious about getting the best bang for the dollar when it comes to defense dollars.”

* * *

US Friends and Allies

First and foremost, Mattis listed Israel as one of US’ top allies:  “Israel is a fellow democracy and I think Israel’s security is very important to the US,” Mattis told Sen. Roger Wicker (R-Mississippi).

“Are there any other democracies in the Middle East?” Wicker asked. “No,” Mattis said.

Senator Jeanne Shaheen (D-New Hampshire) asked about the US troops in Poland in the context of US “reassuring” NATO allies. “NATO is the most successful military alliance probably in modern world history, maybe ever,” Mattis said, but mistakenly argued that “the first time NATO went into combat” was after the 9/11 terrorist attacks.

“The Pacific theatre remains a priority in my mind,” the retired Marine general reassured Senator Mazie Hirono (D-Hawaii). “We have worldwide responsibilities and certainly the Pacific looms large in that.”

* * *

On the US National Debt

In one of the more notable exchanges, Sen. David Perdue asked Mattis to weigh in on the national debt, and Gen. Mattis says the debt is the primary challenge facing the United States. “We cannot solve this debt problems on the backs of our military alone,” Gen. Mattis said. He said Congress must “prioritize where this money is being spent.” He said there should not be a transfer “of a debt of this size to our children.”

 

end

6.GLOBAL ISSUES

none today

7. OIL ISSUES

none today

8. EMERGING MARKETS

none today

end

Your humour story for the day:

Peso Traders Have An Unusual Solution To Halting The Collapse Of Mexico’s Currency

Following central bank governor Agustin Castens’ comments earlier in the day that intervention is a tool to smooth changes in currency value,” and “Trump’s win has created uncertainty on Mexico’s growth model,” Mexican Peso traders have come up with unusual solution: instead of dumping billions in intervention with no effect, buy Twitter and shut it down.

As Bloomberg reports, the strange idea has a certain logic to it…

It goes like this: Instead of spending its precious reserves to defend the peso, Mexico should just buy Twitter Inc. — at a cost of about $12 billion — and immediately shut it down.

 

The notion made the rounds this week after the central bank revealed it had already blown through $2 billion of reserves in a largely futile effort to shield the peso from a steady stream of anti-Mexico Tweets from Donald Trump.

 

 

“I would suggest they do it fast,” joked Juan Carlos Alderete, a foreign-exchange strategist at Banorte-Ixe in Mexico City. “Because we can barely afford it now.”

Of course this is unlikely to happen, but, quite frankly, it has more chance of success than the vicious circle Mexico is about to find itself in.

 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   1.0683 UP .0089/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA FALLING RATE

USA/JAPAN YEN 114.00 DOWN 1.084(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2300 UP .0093 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3051 DOWN .0113 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 89 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0683; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 17.46 or 0.56%     / Hang Sang  CLOSED DOWN 106.83 POINTS OR 0.46%  /AUSTRALIA  CLOSED DOWN 0.04%  / EUROPEAN BOURSES MOSTLY IN THE RED EXCEPT SPAIN 

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 229.97 OR 1.19% 

Trading from Europe and Asia:
1. Europe stocks ALL IN THE RED EXCEPT SPAIN 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 106.33 OR 0.46%  Shanghai CLOSED DOWN 17.46 POINTS OR 0.56%   / Australia BOURSE CLOSED DOWN 0.04% /Nikkei (Japan)CLOSED DOWN 229.97 OR .1.19%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1204.50

silver:$16.89

Early THURSDAY morning USA 10 year bond yield: 2.334% !!! DOWN 2 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.926, DOWN 3 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 100.79 DOWN 94 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 3.91% DOWN 6  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.04% DOWN 2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.403%  DOWN 1  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.893  UP  3  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 49 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.316% DOWN 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.0643 UP .0051 (Euro UP 51 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 114.15 DOWN: 0.938(Yen UP 94 basis points/ 

Great Britain/USA 1.2179 DOWN 0.0029( POUND DOWN 29 basis points)

USA/Canada 1.3127 DOWN 0.0035(Canadian dollar  UP 35 basis points AS OIL ROSE TO $52.94

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 51 basis points to trade at 1.0643

The Yen ROSE to 114.15 for a GAIN of 94 Basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 29  basis points, trading at 1.2179/

The Canadian dollar ROSE by 35 basis points to 1.3127,  WITH WTI OIL RISING TO :  $52.94

The USA/Yuan closed at 6.8889 the 10 yr Japanese bond yield closed at +.04% DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 1 IN basis points from WEDNESDAY at 2.33% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.920 DOWN 3  in basis points on the day /

Your closing USA dollar index, 101.13 DOWN 60 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 1.88 OR .03% 
German Dax :CLOSED DOWN 125.13 POINTS OR 1.07%
Paris Cac  CLOSED DOWN 24.74 OR 0.51%
Spain IBEX CLOSED DOWN 1.20 POINTS OR 0.01%
Italian MIB: CLOSED DOWN 330.29 POINTS OR 1.69%

The Dow was DOWN 63.28 POINTS OR .32% 4 PM EST

NASDAQ WAS UP 16.16 POINTS OR .29%  4.00 PM EST
WTI Oil price;  52.94 at 1:00 pm; 

Brent Oil: 56.04  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.38 (ROUBLE UP 39/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.316%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.05

BRENT: $56.11

USA 10 YR BOND YIELD: 2.363%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.961%

EURO/USA DOLLAR CROSS:  1.0611 UP .0018

USA/JAPANESE YEN:114.75  down 0.343

USA DOLLAR INDEX: 101.42  DOWN 31  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.21611 : DOWN 47  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.316%

 

 

END

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

TRADING IN GRAPH FORM

VIX-Crushing, Panic-Buying Bounce Saves Stocks From Worse Day In 3 Months

For Nasdaq traders today…

 

Small Caps (and briefly The Dow) sunk into the red for 2017… (NOTE: the moment Trannies and The Dow tagged unchanged for 2017 a miracle bid appeared)…

 

Second day in a row if VIX-smashing, panic-V-shaped-recovery-stock-buying…

 

Though we note it seems all about the European close once again…

 

They were desperate to get Nasdaq green into the close…

 

In fact everything jumped after Europe closed…

 

Nasdaq broke it’s winning streak…

 

While everything bounced, financials were the day’s laggards while Utes and Healthcare managed to get green by the close…

 

Treasury yields rose and steepened notably after the 30Y auction…(same as yesterday) but remain lower on the week…

 

Not helped by clear pressure for steeper curves from The Fed…

  • HARKER: WHEN RATES AT 1%, NEED TO LOOK AT UNWINDING BAL SHEET
  • BULLARD: BAL SHEET ROLLOFF MAY BE BETTER THAN AGGRESSIVE HIKING

 

The USD Index plunged to its 50-day-moving-average…almost erasing all the post-FOMC gains…

 

And bounced…

 

The USD bounce back was led by GBP and JPY weakness…

 

Gold is having a great week while crude remains red…

 

But as the dollar, bond yields, and stocks ramped hard in the afternoon, gold limped back below $1200…

end

Continuing jobless claims are now over 100,000 higher since Nov 8 2016, the night of the election.  They stand at 4 month highs:

(courtesy zero hedge)

Over 100,000 More Americans Are On Jobless Benefits Now Than Before Trump’s Election

Continuing jobless claims are up over 100,000 since Donald Trump’s election victory and stand at 4-month highs.

This is the biggest percentage rise in claims since May 2009, all happening as small business optimism, consumer confidence, and stocks soar to cyclical highs.

 

 

end

 

The Bank of America consumer reports are pretty good.  Last night they found that consumer spending tumbled in December and thus they have given us an initial warning that retail sales for the last month of year (and Christmas sales) will be dismal

(courtesy zero hedge/Bank of America)

BofA Finds Consumer Spending Tumbled In December, Warns Of Disappointing Retail Sales

With this week’s most important economic data point – this Friday’s retail sales – fast approaching, economists are keen for clues if this key datapoint giving insight into the health of the US consumer will maintain the recent outsized spike in favorable and better than expected economic data, or if adversely, it may be a downward inflection point which could have significant implications on the dollar trade as RBC explained earlier. And according to BofA’s internal debit and credit card data, always released just ahead of the retail sales report, it looks like it will be the latter.

As Bank of America’s chief US economist Michelle Meyer reports, the aggregated BAC credit and debit card data showed that retail sales ex-autos declined 1.0% mom seasonally adjusted in December. “This contrasts with other indicators of consumer strength including reports of a robust holiday shopping season, a rebound in consumer confidence and strong autos sales” according to Meyer.

Actually, based on earnings reports of those companies who have recently closed their quarter, a weak December is precisely what one should expect, further corroborated by JPM’s satellite imagery at early December showing empty parking lots (recall: “Satellite Imagery Reveals Sharp Retail Spending Slowdown After The Election“) and a plunge in brick and mortar sales, which has been greater than the offsetting pick up in online sales.

This is how the bank’s adjusted retail spending data looks when charted.

As BofA notes, “the BAC aggregated card data showed that retail sales exautos declined 1.0% mom SA in December. This reversed the strong gains over the prior few months, leaving the 3- month average growth rate to slow.

Amusingly, while in the past everyone ignored seasonal adjustments when it comes to retail sales (a reconciliation which as we have shown on various occasions, would always undermine the adjusted data), this time it is BofA which tries to justify the weakness with seasonal adjustments. This is how it “justifies” the sharp drop in data:

We think the explanation is that our BAC aggregated card data is biased lower due to our seasonal adjustment process. Note that the Census Bureau uses a similar approach, and therefore, we expect their data to be subject to a similar downward bias.

The two major holidays in December — Christmas and the New Year — are fixed in terms of the date but not in terms of the day of the week. This year, Christmas Eve and New Year’s Eve both fell on Saturdays. Spending on those dates was much weaker than on a typical Saturday, presumably since people were enjoying the holidays. However, the seasonal adjustment process treated these days like any other Saturday. This suggests that the adjustment process “over-fits” the data and biases the seasonally adjusted figures lower.

We think the bias in December should correct in January, translating to strong growth in January. A strong gain in January would support our view that the weakness we are seeing in the data is simply “noise”. However, that means waiting until February 15th for the January data to provide confirmation.

Unless, of course, January data does not rebound, in which case that bank’s economists can simply blame the “abnormally cold weather” for the lack of spending, as they have every time over the past three years.  Even so, with that caveat in mind, BofA warns, “since the Census Bureau uses a comparable approach, we think it is prudent to prepare for a similarly negative number in Friday’s report.”

And while the December, or even January, data may surprise to the up, or downside, due to quirks in seasonal adjustments, reporting, one thing is undisputable: long-term spending trends, especially when it comes to goods and products, continue to deteriorate. Here’s BofA:

  • The sector data suggests that consumers continue to spend on experiences, with airlines and lodging spending up impressively over the prior three months. Presumably, consumers are taking trips around the holidays.
  • On the flipside, consumers appear to be spending less on goods, with particular weakness in electronics spending, home goods, and clothing. As we also show in Chart 6, spending at restaurants continues to weaken.

Also, as a result of surging gasoline prices, spending at gasoline stations is rebounding but only due to nominal spending increases. Which means less disposable income available to be spent on other potential purchases.

And here is the evidence:

Restaurant spending is tumbling

Furniture and home improvement spending has flatlined

Spending on young adult clothing has tumbled.

Spending at food and beverage stores is growing at the lowest rate in 5 years.

And finally, luxury spending – that traditionally reserves to the upper middle and higher classes- continues to crash.

So aside from all that, the consumer is doing great.

 

 

end

 

Interesting:  Trulia comments on a very disturbing increase in home sales failures and this is no doubt due to the higher interest rates.  Starter homes are most affected

(courtesy Trulia/zero hedge)

American Home Sale Failures Suddenly Double In Q4 2016 – Signed, Sealed, No Deal

A stunning new analysis from Trulia suggests that rising interest rates in 4Q 2016 may actually be having the desired effect of cooling home sales, despite the best efforts of Obama to keep the party rolling at the expense of American taxpayers.  Looking at homes that go from “pending” status back to “for sale”, Trulia found that the number of home “sale failures” spiked in Q4 2016, to nearly nearly double the 2015 rate, with “starter homes” being most at risk.  

Nationally, sales have been failing at an increasing rate, rising to 4.3% in Q4 2016 from 1.4% of all listed properties during Q4 2014. On an annual basis, the failure rate has nearly doubled to 3.9% in 2016, up from 2.1% in 2015.

New homes and very old homes are least likely to see deals fail. As of Q4 2016, homes built in 2016 have among the lowest proportion of failed sales at 2.6%. That proportion increases steadily as age increases to an average of 5.2% in homes built from 1959 through 1969, then falls steadily to an average of 3.5% for homes built from 1900 through 1920.

Of all listings in the largest 100 metros, 7.1% of starter home listings failed in the most recent quarter, compared with 6.7% of trade-up homes and 3.8% of premium homes. For all of 2016, the failure rate was 6.3% for both starter and trade-up homes and 3.6% for premium homes.

During the last two years, the places with the most failed sales are predominantly in the West with Las Vegas leading the pack at 7.6% of all unique listings reverting back to “for sale” at least once.

During the most recent quarter, Tucson, Ariz., saw the highest rate of failed deals with 13.9% of all unique listings retrogressing. For all of 2016, Ventura County, Calif., had the highest fail rate at 11.6%, up from 3.1% in 2015.

Considering both the last two years and just the most recent quarter, Madison, Wis., has had the fewest listings fall back to a “for sale” status at 0.1% of all listings.

Not surprisingly, per Bloomberg, the highest rates of failure occurred in the subprime mecca of the American Southwest.

Meanwhile, starter homes performed the worst…

And while any number of things can cause a home sale to fall through, including lower than expected appraisals and bad home inspections, we suspect that rising mortgage rates are more likely the cause of the sudden surge in “failed sales” rather than a national outbreak of termites.  With Americans managing their monthly budgets down to the last penny, because you can “afford it” as long as you can cover the monthly payment, we suspect the 60bps rise in the average 30-year fixed mortgage rate during 4Q was just more than the fragile American budgets could bear.

end

 

The all important USA consumer confidence report appears to show that  confidence is waning

(courtesy zero hedge)

Trump Bump Dumps – Confidence Collapses As Inauguration Looms

Despite the latest Small Business Optimism explosion of confidence (in December), the most up-to-date surveys of US consumer confidence appear to be crumbling after the ‘Trump Bump’…

The headline confidence index has erased all its post-Trump gains…

“Buying Climate” has plunged…

And ‘Personal Finances’ are tumbling…

It appears the rose-colored glasses of hope are starting to turn grey.

 

 

end

The fun begins:  The senate passes the repeal of Obamacare. It now goes to the House which is expected to pass the bill. They will wait until Trump is inaugurated before it is sent to him for final signing.

(courtesy zero hedge)

Senate Takes First Step To Repeal Obamacare With 51-48 Vote

Early on Thursday morning, in a 51-48 vote, the Senate took the first concrete step toward dismantling Obamacare, when it voted to instruct key committees to draft legislation repealing Barack Obama’s signature health insurance program. Republicans needed a simple majority to clear the repeal rules, instructing committees to begin drafting repeal legislation, through the upper chamber, with the vote falling largely along party lines.

Rand Paul was the lone Republican to vote against the budget resolution because it didn’t balance. Paul said in a statement after the vote that while he supports nixing ObamaCare “putting nearly $10 trillion more in debt on the American people’s backs through a budget that never balances is not the way to get there.”

Meanwhile, no Democrat supported the repeal rules. Instead, Democrats rose one by one from their seats on the Senate floor in protest to state why they were voting against the resolution. In dramatic fashion, Bernie Sanders warned that if the GOP resolution moved forward Americans would die.

“Up to 30 million Americans will lose their health care with many thousands dying as a result,” he said. “Because when you have no health insurance and you can’t go to a doctor or a hospital, you die.”

Sanders also mocked the Republican effort saying the GOP have never united around an alternative to Obamacare. “They want to kill ACA but they have no idea how they are going to bring forth a substitute proposal,” declared Senator Bernie Sanders of Vermont.

Dianne Feinstein who had surgery to install a pacemaker, missed the hours-long “vote-a-rama” session that began Wednesday evening. Lawmakers were able to use the hours-long voting block to force a vote on any amendment to the budget resolution. Some 180 amendments were filed.

As the Hill adds, the late-night passage of the budget resolution comes despite deep divisions on when and how to replace ObamaCare, which were on full display. Lawmakers spent more than six hours on the Senate floor and voted on more than 19 amendments, none of which were successfully added to the resolution.

But Republicans managed to avoid what was expected to be the top fight of the night, when a group of five GOP senators dropped their push to delay the ObamaCare repeal legislation. Lawmakers had wanted to push the deadline for committee repeal proposals from Jan. 27 to March, which they argued was needed to give lawmakers extra time to lock down details on a replacement bill and work with the incoming Trump administration about next steps.

Sen. Bob Corker (R-Tenn.), one of the Republicans backing the amendment, said the decision was a result of a “very thoughtful discussions” within Republicans and recognizing that the Jan. 27 date is a “placeholder.”

Sen. Rob Portman (R-Ohio) added that “we have assurances from leadership that this date is not a date that is set in stone.”

But Sen. John Cornyn (R-Texas), McConnell’s deputy, had warned that pushing back the date could create a “jam” on the Senate floor with GOP lawmakers wanting to tackle an ambitious agenda with President-elect Donald Trump’s first 100 days.

The resolution now goes to the House of Representatives, which is expected to vote on it this week. Scrapping Obamacare, albeit without a ready replacement, has become a top priority for most Republican majorities in both chambers and Republican President-elect Donald Trump. Republicans have said that the process of repealing Obamacare could take months, while developing a replacement plan could take far longer, according to Goldman as much as two years. However, they are under pressure from Trump to act fast; he said on Wednesday that the repeal and replacement should happen “essentially simultaneously.” It remains unclear just how that will happen.

Trump said during a press conference on Wednesday that repeal and replace legislation would occur near simultaneously if not at the same time. “It’ll be repeal and replace. It will be essentially, simultaneously. It will be various segments, you understand, but will most likely be on the same day or the same week, but probably, the same day, could be the same hour,” he said.

At the same time, Democrats continued to warn that if Republicans break ObamaCare they will own any political backlash and roil the insurance market. Minority Leader Chuck Schumer (D-N.Y.) appealed to Republicans earlier Wednesday, urging them to back down from the healthcare fight. “If Republicans go forward with this plan, they may mollify their base, but they will ostracize and hurt the American people, and ultimately lose in the court of public opinion,” he said.

Democrats forced votes on a myriad of amendments aimed at blocking legislation that would  “make America sick again,” a new Democratic slogan on the GOP plan to repeal ObamaCare without a replacement.

Some 20 million previously uninsured Americans gained health coverage through the Affordable Care Act, as Obamacare is officially called. Coverage was extended by expanding Medicaid and through online exchanges where consumers can receive income-based subsidies. On the other hand, premiums for Obamacare members have exploded in recent year, leading to widespread anger among middle-class Americans.

* * *

The resolution approved Thursday instructs committees of the House and Senate to draft repeal legislation by a target date of January 27. Both chambers will then need to approve the resulting legislation before any repeal goes into effect. Senate Republicans are using special budget procedures that allow them to repeal Obamacare by a simple majority; this way they don’t need Democratic votes. Republicans have a majority of 52 votes in the 100-seat Senate; one Republican, Senator Rand Paul, voted no on Thursday.

Democrats passed the Affordable Care Act in 2010 over united Republican opposition. Democrats say the act is insuring more Americans and helping to slow the growth in healthcare spending. But Republicans say the system is not working. The average Obamacare premium is set to rise 25 percent in 2017.

 

 

end

 

My goodness!! the FBI sought to launch a surveillance operation against an active USA presidential campaign under FISA  (Foreign Intelligence Surveillance Act).  The rarely used FISA was targeted against 4 of Trump’s high ranking officials of his campaign:

“including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.”

(courtesy Ditz/AntiWar.com)

FBI Reportedly Sought FISA Court Warrant To Spy On Trump Campaign Officials

Submitted by Jason Ditz via AntiWar.com,

A new report released today features both the FBI seeking to launch a surveillance operation against an active US presidential campaign, and the ultra-rare case of the FISA courts actually turning down an FBI request to conduct surveillance against somebody.

The report, originating at the Guardian, claims that the FBI had sought broad surveillance powers over four high-ranking members of President-elect Donald Trump’s campaign during the election, claiming them to have had contact with Russian officials.

The FISA court turned the request down, telling investigators they needed to narrow the request.

Though the four are not directly named in the report, it is related to claims in a dossier of Russia having substantial blackmail dirt on Trump, and that dossier centered heavily around accusations against a handful of Trump campaign personnel, including Carter Page, Paul Manafort, and Lt. Gen. Michael Flynn, along with Trump’s personal lawyer Michael Cohen, meaning some of them may well be among the targets.

Secondary reports speculated that the FBI may well have sought a more narrow application for surveillance, though details on that are even less clear than the previous reports.

Though a lot of these reports don’t end up substantiated, if true this could well add to the expected acrimony between the incoming administration and the intelligence community.

 

end

 

The following is another biggy!! Today we got two trial balloons by Fed officials, Harker and Bullard.  The Fed has always realized that it must unwind its balance sheet if it is to have any credibility in the future.  Today we got word that the Fed is contemplating such a move.  Except one major problem:  who on earth is going to buy this stuff and not only that but interest rates will skyrocket which will drown the entire globe/  Please note that the Fed is doing this as the Donald is to spend 10 trillion extra dollars on infrastructure.  The two acts are totally incompatible

 

(courtesy zero hedge)

Chatter Of Fed Balance Sheet Unwind Spikes Yield Curve

While the Fed watchers have been obsessing in recent weeks about the pace and size of any upcoming Fed rate hikes, summarized best by Dallas Fed president Robert Kaplan who earlier today said:

  • KAPLAN: AMONG BIGGEST DISAGREEMENTS AT FED IS ON HOW QUICKLY TO RAISE RATES

… and unexpected new buzzword emerged today, namely Fed balance sheet unwind when first Philly Fed’s Steve Harker noted it in his speech earlier this morning…

  • HARKER: WHEN RATES AT 1%, NEED TO LOOK AT UNWINDING BAL SHEET

followed later in the day by St. Louis Fed’s James Bullard who, likewise, hinted that selling Fed assets may be coming soon:

  • BULLARD: BAL SHEET ROLLOFF MAY BE BETTER THAN AGGRESSIVE HIKING

Of course, how credible it is that the the Fed may actually engage in this is anyone’s guess: should the Fed “unexpectedly” start to reduce its balance sheet, the impact on global yields would be devastating, and make the Taper Tantrum and the TanTrump seems like child’s play in comparison. Which, perhaps, is why today for the first time we got not one but two such “trial balloons” from two separate Fed presidents, just to gradually acclimate the market with the concept of upcoming balance sheet normalization.

The mechanics of such a process are rather mindboggling, especially coming at a time when even the Republicans are pushing to layer on an addition $9 trillion in US government debt over the next decade, which – all else equal – would mean require more QE to monetize the deficit, precisely the opposite of selling Fed-owned Treasuries.

Then again, the Fed has been known to make major, and quite public, mistakes. Whether this is one of them, and whether it is intentional remains to be seen, however the sharp steepening in the curve that has taken place today amid the sudden Fed talk of Fed balance sheet unwinding, is very much unmistakable.

The only (perhaps rhetorical) question is how such an unwind won’t impact stocks far more than bonds. And then we remember that nothing can possibly ever have an adverse impact on stocks, and all is again well with the world.

 

 

end

 

Morgan Stanley is leading off the earning seasons with this bad news:

  1. Cutting Investment banking bonuses by 15%
  2.  Firing 5 % of senior managing directors.

(courtesy zero hedge)

Morgan Stanley Cuts Investment Banking Bonuses By 15%, Fires 5% Of Managing Directors

Ahead of a deluge of bank earnings reports starting tomorrow morning, which include JPMorgan, Wells Fargo and Bank of America, and all of which are “whispered” to come in above expectations, an ominous harbinger hit the newswires this afternoon when Reuters reported that Morgan Stanley not only laid off various senior investment bankers last week, just ahead of bonuses season, but also slashed investment banking bonuses by roughly 15% as a result of “a decline in revenue from dealmaking and capital raising across Wall Street.”

While individual bankers bonuses fluctuated depending on performance and geographic region, many are said to have received a smaller paycheck for 2016. Furthermore Morgan Stanley, which remains a bulge bracket investment bank and ranked fourth in IB fees last year, also cut more than 20 MDs from its global investment banking division, roughly 5% of total.

While Morgan Stanley, like other major banks, typically lets go of the bottom 5% of its workforce at year-end to get rid of underperformers, the cuts to senior bankers were deeper than in years past, according to Reuters sources. Morgan Stanley also announced the promotion of managing directors on Thursday.

The layoffs will hardly come as a surprise as Wall Street banks have been shedding staff and curbing compensation for years to cut costs. They have also been losing top talent to boutique firms, which can pay a greater portion of compensation in cash. Further pressuring Wall Street’s animal spirits, global investment banking fees across Wall Street declined 7% in 2016 to a three-year low, according to Thomson Reuters data.

While drops were recorded in most IB vertical, equity capital market fees, which declined 23 percent, were hit the most as a result of a drop off in initial public offerings. IPO activity in 2016 occurred at the lowest levels since 2009. M&A also slowed from record levels in 2015, with global deal volume falling 17%.

Ironically, despite being largely shunned by Wall Street ahead of the election, there is hope that banker compensation will rebound in 2017 thanks to Donald Trump, as a result of more active trading by retail investors, as well as a rebound in bond issuance (with the first 10 days of January already above $100 billion in IG issuance, an all time record) and other M&A and advisory activity.

Well that is all for today

I will see you tomorrow night

H


Jan 11/JPMorgan continues to acquire silver inventory/gold and silver advance on lacklustre Trump press conference with a lack of detail/Volkswagen hit with 4.3 billion dollar USA fine and must face criminal charges/Mexican peso breaks 22: 1 as the...

Wed, 01/11/2017 - 18:41

Gold at (1:30 am est) $1195.60 UP $11.40

silver  at $16.78:  DOWN 2 cents

Access market prices:

Gold: $1192.00

Silver: $16.75

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

TUESDAY gold fix Shanghai

Shanghai FIRST morning fix Jan 11/17 (10:15 pm est last night): $  1207.31

NY ACCESS PRICE: $1187.50 (AT THE EXACT SAME TIME)/premium $19.80

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai SECOND afternoon fix:  2: 15 am est (second fix/early  morning):$   1205.91

NY ACCESS PRICE: $1189.40 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $16.01

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 11/2017: 5:30 am est:  $1187.55   (NY: same time:  $1187.70    5:30AM)

London Second fix Jan 11.2017: 10 am est:  $1178.55 (NY same time: $1180.10  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  0 NOTICE(S) FOR nil OZ.  TOTAL NOTICES SO FAR: 1046 FOR 104,600 OZ    (3.2534 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 0 NOTICE(s) FOR nil  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 432 FOR 2,160,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 307  contracts DOWN to 165,040 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .825 BILLION TO BE EXACT or 118% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  0 NOTICES FILED FOR nil  OZ.

In gold, the total comex gold ROSE BY 3,603 contracts WITH THE RISE IN  THE PRICE GOLD ($0.70 with YESTERDAY’S trading ). The total gold OI stands at 444,001 contracts.

we had 0 notice(s) filed upon for nil oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

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

Inventory rests tonight: 805.00 tonnes

.

SLV

we had A HUGE change in silver into the SLV: A WITHDRAWAL OF 2.843 MILLION OZ

THE SLV Inventory rests at: 338.356 million oz

.

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

1. Today, we had the open interest in silver FELL by 307 contracts DOWN to 165,040 AS SILVER ROSE by  $0.17 with YESTERDAY’S trading. The gold open interest ROSE by 3,603 contracts UP to 444,001 AS THE  PRICE OF GOLD ROSE BY $0.70 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS  i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 24.92 POINTS OR 0.79%/ /Hang Sang closed UP 190.56 OR 0.84%. The Nikkei closed UP 66.23 POINTS OR .33% /Australia’s all ordinaires  CLOSED UP 0.18%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9341/Oil FELL to 51.00 dollars per barrel for WTI and 53.82 for Brent. Stocks in Europe: ALL MIXED. Offshore yuan trades  6.9130 yuan to the dollar vs 6.9341  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS A BIT AGAIN AS  DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES / REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN  none today c) REPORT ON CHINA

i)This ought to scare a few people:  Taiwan scrambles jets and their navy as a Chinese aircraft carrier group enters the Taiwan strait and in Taiwan territorial waters:

( zero hedge)

 

ii)China, as promised to you, launches investigations into “market manipulation” of bitcoin. This caused bitcoin to fall to 800 dollars per coin and the beneficiary is gold

( zero hedge)

4 EUROPEAN AFFAIRS

i)Volkswagen/Germany

As we indicated to you yesterday, Volkswagen is to pay $4.3 billion in fines in the diesel emissions scandal and will plead guilty to criminal charges.  The floodgates will open with respect to lawsuits

( zero hedge)

ii)The new Italian government avoids early elections after a constitutional court decision;

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Last night, CNN reported that it has a compromising  dossier on Trump as well as evidence of Russian support for his USA presidency.  The Russian called this a complete hoax

( zero hedge)

 

ii)The Donald lashes out at “fake news” again with respect to the above hoax:

( zero hedge)

6.GLOBAL ISSUES

i)The Mexican Peso breaks above 22 pesos to the dollar as Mexico is concerned with Trump protectionism  (huge import tariffs loom)

( zero hedge)

ii)A good commentary on the troubles that Mexico are facing

( Nick Bernabe/The AntiMedia.org)

7. OIL ISSUES

Oil initially plummets on huge inventory builds with API, DOE and Cushing OK increases.  Also huge increase in USA production levels:

( zero hedge)

8. EMERGING MARKETS

i)the most volatile (and unstable) currency in 2016 is the Turkish Lira

( zerohedge)

ii)Wednesday morning;

The Turkish lira continues to plummet to 3.87 to the dollar as its current account deficit skyrockets Not even a rise in rates is helping stem the currency debasement.

( zero hedge)

9.   PHYSICAL MARKETS

i)Hugo Salinas Price offers a new way for official reserves to be obtained which will help foster growth in the world’s economy:

( Hugo Salinas Price.)

ii)Bill Murphy, chairman of GATA will speak at the Acapulco conference Feb 24.2917

( GATA)

10.USA STORIES

i)Details missing from the Trump press conference which sends the Dow lower including pharmaceutical stocks, gold higher

( zero hedge/2 commentaries)

ii)Due to higher rates and also the fact that the central banks are paying banks to hold reserves, the Fed only remitted 92 billion back to the treasury in 2016, its lowest level in 3 yrs.

(courtesy zero hedge) Let us head over to the comex:

The total gold comex open interest ROSE BY 3,603 CONTRACTS UP to an OI level of 444,001 AS THE  PRICE OF GOLD ROSE $0.70 with YESTERDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 25 contracts DOWN to 136.  We had 23 notices filed so we LOST 2 contracts or AN ADDITIONAL 200 oz WILL NOT STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 10,543 contracts DOWN to 253,196. March had a gain of 112 contracts as it’s OI is now 461.

We had 0 notice(s) filed upon today for nil oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 307 contracts FROM 165,347 DOWN to 165,040 AS the price of silver ROSE BY $0.17 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 124 contracts falling TO  234. We had 124 notice(s) filed on yesterday so we neither gained nor lost any silver contracts (oz) standing for metal in this non active month. The next non active month of February saw the OI FALL by 1 contract(s) FALLING TO  202.

The next big active delivery month is March and here the OI FELL by 1607 contracts DOWN to 131,631 contracts.

We had 0 notice(s) filed for nil oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 349,339  contracts which is excellent.

Yesterday’s confirmed volume was 265,573 contracts  which is very good

Initial standings for january  Jan 11/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    3215.000 SCOTIA  100 kilobars Deposits to the Dealer Inventory in oz nil oz

  Deposits to the Customer Inventory, in oz   nil No of oz served (contracts) today   0 notice(s) nil oz No of oz to be served (notices) 136 contracts 13,600 oz Total monthly oz gold served (contracts) so far this month 1046 notices 104,600 oz 3.2534 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,577,427.5 oz Today we HAD 1 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 1 customer withdrawal(s) i) Out of Scotia: 3215.000 oz (100 kilobars) total customer withdrawal: 3215.000 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1046) x 100 oz or 104,600 oz, to which we add the difference between the open interest for the front month of JANUARY (136 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 118,200 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1046) x 100 oz  or ounces + {OI for the front month (136) minus the number of  notices served upon today (0) x 100 oz which equals 118,200 oz standing in this non active delivery month of JANUARY  (3.6702 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.6702 tonnes total for the 13 months;  226.058 tonnes average 17.389 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,455,213.516 or 45.263 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,086,380.973 or 282.624 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 282.624 tonnes for a  loss of 20  tonnes over that period.  Since August 8/2016 we have lost 71 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 5 MONTHS  71 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 11. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  1,850,199.851 0z CNT Deposits to the Dealer Inventory 574,474.570 oz CNT Deposits to the Customer Inventory  1,261,277.240 oz JPM CNT Scotia No of oz served today (contracts) 0 CONTRACT(S) (nil OZ) No of oz to be served (notices) 234 contracts (1,170,000  oz) Total monthly oz silver served (contracts) 432 contracts (2,160,000 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  12,330,209.9 oz  END today, we had 0 deposit(s) into the dealer account: total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 1 customer withdrawal(s): i) Out of CNT: 1,850,199.851 oz TOTAL CUSTOMER WITHDRAWALS: 1,850,199.851 oz  we had 1 customer deposit(s): i) Into JPMorgan:  613,167.710 oz total customer deposits;  613,167.710   oz TED BUTLER IS CORRECT:  JPMORGAN IS MASSIVELY ACQUIRING SILVER.      we had 0  adjustment(s) The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) for nil oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  432 x 5,000 oz  = 2,160,000 oz to which we add the difference between the open interest for the front month of JAN (234) 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 JANUARY contract month:  432(notices served so far)x 5000 oz +(234) OI for front month of JAN. ) -number of notices served upon today (0)x 5000 oz  equals  3,330,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We neither gained nor lost any silver oz standing in this non active month of January.  At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 84,747 which is huge YESTERDAY’S  confirmed volume was 81,497 contracts  which is also huge.   Total dealer silver:  29.202 million (close to record low inventory   Total number of dealer and customer silver:   180.657 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

Jan 11/no change in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 11/2017/ Inventory rests tonight at 805.00 tonnes *IN LAST 67 TRADING DAYS: 144.81 TONNES REMOVED FROM THE GLD *LAST 14 TRADING DAYS: 19.54 TONNES HAVE LEFT

end

Now the SLV Inventory Jan 11A HUGE WITHDRAWAL F 2.843 MILLION OZ/INVENTORY RESTS AT 338.339 MILLION OZ/ JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ . Jan 11.2017: Inventory 338.339  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 6.3 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.7% Percentage of fund in silver:39.1% cash .+0.2%( jan 11/2017)  . 2. Sprott silver fund (PSLV): Premium RISES to +.19%!!!! NAV (Jan 11/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.45% to NAV  ( Jan 11/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.19% /Sprott physical gold trust is back into NEGATIVE territory at -0.45%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Prince Owned Land and Gold Bars Worth $800,000 By Mark O’ByrneJanuary 11, 20170 Comments

Gold Bars Worth $800,000 Owned By Prince

Prince, RIP, owned gold bars worth just over $800,000 according to the statement filed in a Minnesota court last Friday.

Source: Amazon.com

At the time of his death, Prince had taken delivery of and had in his possession 67 gold bars, 10 ounce gold bars, valued at $836,166.70. That’s according to an asset inventory compiled by Bremer Trust released by the Carver County District Court, as first reported by the Minneapolis Star Tribune.

The release inventory showed that the “Purple Rain” singer had no stocks, bonds, or other financial assets, but did have a substantial amount of land, property, cash and gold bars.

Besides the gold bars, Prince also had “about $110,000 in four bank accounts, unclaimed property, capital credits and cash” according to the Minneapolis Star Tribune.

He also had a dozen tracts of land in Carver and Hennepin, Minnesota that have an estimated total value of $25.4 million.

His estate has been valued between $100 million and $300 million before taxes, which are expected to claim roughly half.

Among the items that have not yet been assigned a specific value are the ‘When Doves Cry’ singer’s musical instruments, household furnishings, jewellery and his famous ‘Purple Rain’ and ‘Graffiti Bridge’ motorcycles.

In addition, the value of Prince’s copyrights and trademarks are still unclear.

Prince’s companies, Paisley Park Enterprises Inc., NPG Records Inc., NPG Music Publishing and LotusFlow3r had more than $6 million in cash.

It seems likely that the land Prince owned was agricultural land as Minnesota is still a largely agricultural state.

From Wikipedia on Minnesota:

Although less than one percent of the population is now employed in the agricultural sector, it remains a major part of the state’s economy, ranking sixth in the nation in the value of products sold.[81] The state is the U.S.’s largest producer of sugar beets, sweet corn, and green peas for processing, and farm-raised turkeys. Minnesota is also a large producer of corn and soybeans

Prince, like many artists, preferred hard, tangible assets to paper assets such as bonds and stocks. It seems that he also understood the value of diversification and owning physical gold as financial insurance.

Possession is 9/10s of the law – especially in a financial crisis. He had worked hard all his life and did not want to be a “slave” to the banks, corporations and the financial system.

Contrary to some media, Prince was no crazy “gold bug” or “Scrooge McDuck” who was “hoarding” gold for Armageddon.

Prince’s hard asset portfolio had an allocation to gold of about 2% of his overall portfolio. We would advise higher allocations of 10% plus for investors and savers. However, for high net worth individuals that allocate to physical gold, 2% is a healthy allocation if taking possession of gold coins and bars.

 

END-

 

Hugo Salinas Price offers a new way for official reserves to be obtained which will help foster growth in the world’s economy:

(courtesy Hugo Salinas Price.)

Hugo Salinas Price: Dollar’s reserve currency status destroys U.S. manufacturing

Submitted by cpowell on Wed, 2017-01-11 00:04. Section:

7:02p ET January 10, 2017

Dear Friend of GATA and Gold:

Hugo Salinas Price, president of the Mexican Civic Association for Silver, explains tonight how the U.S. dollar’s role as the world reserve currency has destroyed so much manufacturing in the United States. The only way countries can obtain dollars, Salinas Price writes, is to export to the United States, and they can do that only if they price their products below the prices charged by U.S. manufacturers. An alternative system, Salinas Price writes, would require a different reserve currency, the contrivance created by the International Monetary Fund — Special Drawing Rights — or a certain rather scarce yellow metal that used to do the job well and impartially. Salinas Price’s commentary is headlined “Trump’s Ignorance” and it’s posted at the Mexican Civic Association for Silver’s internet site, Plata.com.mx, here:

http://www.plata.com.mx/mplata/articulos/articlesFilt.asp?offset=140&fii…

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

 

 

END

 

Bill Murphy, chairman of GATA will speak at the Acapulco conference Feb 24.2917

(courtesy GATA)

GATA Chairman Murphy to speak at Dollar Vigilante conference in Acapulco

Submitted by cpowell on Wed, 2017-01-11 01:33. Section:

8:38p ET Tuesday, January 10, 2017

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy will speak at The Dollar Vigilante’s second annual internationalization and investment summit in sunny Acapulco, Mexico, on Friday, February 24, a day ahead of the four-day “anarcho-capitalist” Anarchapulco conference there.

Also speaking at the Dollar Vigilante conference will be the financial letter’s co-founders, Jeff Berwick and Ed Bugos; David Morgan of The Morgan Report and Silver-Investor.com; Bix Weir of the Road to Roota letter; and mining industry broker Ben Johnson.

Speakers at the Anarchapulco conference will include G. Edward Griffin, author of the classic polemical history of the Federal Reserve System, “The Creature from Jekyll Island”; bitcoin proponent Trace Mayer; and a dozen even freer spirits.

Topics at the conferences will include:

— The world’s economic and financial outlook.

— Monetary metals investing and strategies.

— Investing in gold and silver mining stocks.

— Cryptocurrency storage, trading, and investing.

— Austrian School economics.

— “Perpetual traveler/prior taxpayer” theory.

— Expatriation and international opportunities.

The conferences will be held at the conference center at the spectacular Resort Mundo Imperial.

Admission to the TDV conference alone costs $395 and you’ll get a $10 discount if you use “GATA” as a coupon code.

Admission to the Anarchapulco conference costs $245 for the first 300 registrants. A student discount is available.

To learn more about the conferences and hotel options as well as to register, please visit:

http://tdvinvestmentsummit.com

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust ActioN

 

END

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

1 Chinese yuan vs USA dollar/yuan DOWN to 6.9340(SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS   TO 6.9130 / Shanghai bourse CLOSED DOWN 24.92 POINTS OR 0.79%   / HANG SANG CLOSED UP 190.56 OR 0.84% 

2. Nikkei closed UP 63.23 POINTS OR .33%   /USA: YEN RISES TO 116.38

3. Europe stocks opened ALL MIXED       ( /USA dollar index RISES TO  102.43/Euro DOWN to 1.0503

3b Japan 10 year bond yield: RISES TO    +.065%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.28/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.10  and Brent: 55.01

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” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO  +.333%/Italian 10 yr bond yield DOWN  to 1.897%    

3j Greek 10 year bond yield FALLS to  : 6.88%   

3k Gold at $1188.90/silver $16.75(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN   3/100 in  roubles/dollar) 60.18-

3m oil into the 51 dollar handle for WTI and 53 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   DEVALUATION DOWNWARD from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 116.28 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0208 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0725 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.333%

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

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

4. USA 10 year treasury bond at 2.376% early this morning. Thirty year rate  at 2.965% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Dollar Rises Before Trump Press Conference; Futures Flat, Turkish Lira Plunges

European and Asian shares, the dollar and crude all rose before President-elect Donald Trump’s first press conference since July at 11am on Wednesday, while S&P futures are little changed. Surging raw-materials stocks sent Asian stocks higher. Oil rebounds from the lowest level in a month.

In a session light on economic news, all eyes will be on Trump’s press conference scheduled for 11 am: while Trump’s election campaign calls for tax cuts and more infrastructure spending have boosted U.S. shares and the dollar, his protectionist statements and a flurry of off-the-cuff Tweets have kept many investors from adding to risky positions. Trump has vowed to label China a currency manipulator on his first day in office on Jan. 20 and has threatened to slap huge tariffs on imports from China.  Paul Ryan and top members of Trump’s transition team are discussing a controversial plan to tax imports. Economists have warned that protectionist measures could stifle international trade and hurt global growth. That brings Trump’s press conference into sharp focus.

Ahead of this markets have been fairly reluctant to lay on any big bets this week heading into today’s main event. Indeed it’s been another fairly quiet 24 hours on the whole. Look no further than the S&P 500 which closed completely unchanged last night after wiping out some early modest gains. Sector wise gains for financials and health care stocks were balanced out by losses across energy stocks and real estate

So with that out of the way, here are the session highlights so far:

  1. Dollar pushes higher ahead of Trump press conference
  2. Oil prices edge higher ahead of U.S. inventory data
  3. U.S. stock futures point to flat open on Wall Street
  4. Turkish lira hits fresh record lows
  5. Gold hits fresh 6-week high before Trump appearance

“From a currency perspective, markets will aim to get a clearer picture on trade, fiscal stimulus and the new administration’s relationship to the Fed,” Morgan Stanley strategists wrote in a note to clients.

“There’s quite a lot of positioning that Trump delivers at least part of the stimulus he promises,” said Christopher Jeffery, asset allocation strategist at Legal & General Investment Management in London, who has recently adopted neutral weighting on the dollar from a more-bullish stance. “We worry that positioning has become stretched and that he doesn’t deliver.”

In early trading, Europe opened lower only to post a modest rebound, as the Stoxx Europe 600 Index added 0.2% while after sliding -0.3%, while the U.K.’s FTSE 100 Index rose 0.1 percent as a result of the latest drop in sterling, climbing for a 12th day. If the move holds, it would be the gauge’s longest rising streak on record. The pound briefly dropped below $1.21 for the first time since October, even as reports show industrial and manufacturing production grew at a faster pace than analysts forecasts.

As sterling fell, the dollar rose, and the Bloomberg Dollar Spot Index gained 0.2 percent as of 11:00 a.m. in London.

In other notable currency moves, the plunge in Turkey’s lira continued again this morning, tumbling nearly 2% against the dollar to new all time lows after data showed a worsening in the country’s current account deficit and investors took no comfort in the central bank’s latest move to shore up the currency. The lira traded at an all-time low of TRY3.8925 against the dollar after November’s current account figures showed a $590m deterioration in the deficit as the FT notes, heaping further pressure on a slowing economy suffering from sharp drops in tourist revenue. Today’s renewed lira selling follows the central bank’s attempt to put a floor on the currency by freeing up liquidity in the foreign exchange market. However, as we expected, yesterday’s announcement to tweak banks’ FX reserve requirements has done nothing stop investors dumping the currency.

S&P 500 Index futures edged higher, reversing declines over the week’s first two days.

Commodities rebounded despite the dollar strength, with West Texas Intermediate rebounding from its lowest level in a month, up 0.9% to $52.16 a barrel. Iron ore futures jumped 3 percent in China after a 5.5 percent rally on Tuesday. Gold was little changed. Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut. Copper held near the highest closing price in nearly a month on the outlook for tighter supply following Indonesia’s signing of new mineral export regulations and miners’ wage negotiations in Chile.  U.S. natural gas fell 1.8 percent, paring its biggest gain in three weeks following forecasts of below-average temperatures.

* * *

Bulletin headline summary from RanSquawk

  •  European equities trade modestly higher with participants very much awaiting today’s press conference from President-elect Trump
  • Once again we are left watching GBP taking another beating, with the Cable rate pushed down to 1.2100
  • Highlights include DoE crude oil inventories, comments from BoE’s Carney and press conference from President-Elect Trump

Market Snapshot

  • S&P 500 futures up less than 0.1% to 2265
  • Stoxx 600 up 0.2% to 365
  • FTSE 100 up 0.2% to 7289
  • DAX up 0.2% to 11609
  • German 10Yr yield up 8bps to 0.36%
  • Italian 10Yr yield up less than 1bp to 1.92%
  • Spanish 10Yr yield down 2bps to 1.46%
  • S&P GSCI Index up 0.6% to 391.2
  • MSCI Asia Pacific up 0.2% to 140
  • Nikkei 225 up 0.3% to 19365
  • Hang Seng up 0.8% to 22935
  • Shanghai Composite down 0.8% to 3137
  • S&P/ASX 200 up 0.2% to 5771
  • US 10-yr yield up 1bp to 2.39%
  • Dollar Index up 0.27% to 102.29
  • WTI Crude futures up 0.7% to $51.20
  • Brent Futures up 0.9% to $54.11
  • Gold spot up less than 0.1% to $1,189
  • Silver spot up 0.1% to $16.81

Top Global News

  • Trump Said to Be Told of Unverified Russian Intelligence Plot: U.S. spy agencies told Obama and president-elect about scheme
  • Ex-Head of Russia’s FSB Says No Dirt Collected on Trump: IFX
  • Tillerson to Call Russia ‘a Danger’ in Confirmation Testimony
  • President-Elect Trump to hold news conference to discuss business ventures, potential conflicts of interest
  • Ford to Pay $200 Million Cash on Top of Regular Dividend: payment a show of confidence even as co. enters a year planning expensive investments in electric and autonomous vehicles
  • Tesla’s Autopilot Head Said to Depart as Apple Engineer Hired: Sterling Anderson leaves car company’s autonomous driving post, Chris Lattner, who led Apple’s Swift development, joins Tesla
  • VW Board Set to Sign Off on $4.3 Billion U.S. Diesel Penalty: settlement sends crisis cost above $19.2 billion set aside; U.S. Justice Department deal includes VW guilty plea
  • Warburg Said to Be Forming Consortium to Bid for Singapore’s GLP: Warburg Pincus talking to banks, potential bidding partners
  • U.S. May Be Probing Other Targets in Former Autonomy CFO’s Case: former Autonomy CFO Hussain set to appear in U.S. court for first time
  • Airbus Retains Order Lead Over Boeing Over Late Sales Windfall: European co. booked 320 aircraft puchases in Dec.; delivery tally beat target by 18 planes as A350 pinch eased

Looking at regional markets, Asian stocks traded mostly higher to shake off a mixed US close where the energy sector dragged the DJIA lower. ASX 200 (+0.2%) traded in the green and was boosted by the materials and mining sector after Dalian iron ore rose 8% yesterday. Nikkei 225 (+0.3%) was positive as exporters benefited from recent JPY weakness as USD/JPY reclaimed the 116.00 handle, while Sony (+3.5%) shares post over 3% gains for the second consecutive day. In China, markets were mixed as Shanghai Comp (-0.6%) suffered amid the PBoC conducting yet another weak liquidity operation, while Hang Seng (+0.7%) outperformed and was lifted by positive earnings from a number of properties names. Finally, 10yr JGBs traded marginally higher after the 30yr auction showed a better than prior bid-to-cover, while there was some underperformance seen in the long end of the curve.

Top Asian News

  • Singapore’s Garena Said to Pick Goldman for $1 Billion IPO: Most valuable Southeast Asian startup considering U.S. listing
  • Samsung’s Lee Summoned in Bribery Probe, Prosecutors Say: Appearance set for 9:30 a.m. local time Thursday
  • Indonesia Orders Bond Dealers to Uphold Country’s Interest: Bond dealers asked to maintain professionalism, integrity
  • Analyst Who Foresaw Yen Fall Sees More Pain as 125 in Sight: Expects the Federal Reserve to raise rates three times

European equities trade modestly higher so far this morning, with slight outperformance seen in the FTSE 100 (+0.2%). UK indices were supported by the latest earnings update from Sainsbury’s, which followed the trend set by Morrison’s earlier in the week with their impressive report. Elsewhere, focus will remain on the UK housing sector after Foxtons trade lower by around 6% in the wake of their pre-market update. Elsewhere, on a sector specific basis energy and material names are among the laggards, with pharmaceuticals also seeing softness. Fixed income markets continue to see Bunds trade in a relatively tight range, as has been the case throughout the week so far. As such, the German benchmark trades marginally above the 163 level, at the upper end of the aforementioned range.

Top European News

  • U.K. Industrial Output Rises More Than Forecast on Oil, Gas: gause rose more than forecast in November, led by a surge in oil and gas as a major North Sea field resumed operations
  • Sainsbury’s Sales Beat Estimates as Grocers Get Christmas Boost: holiday sales growth at Argos chain confounds skeptics; shares advance as much as 7.1%, most since January last year
  • Bouygues Gets $1.8 Billion Hinkley Nuclear Plant Contract: French contractor to work with U.K. builder Laing O’Rourke
  • Defense Supplier Cobham Drops as Profit Falls Short, Debt Rises: U.K. aerospace parts maker cites delays in Boeing KC-46 tanker; shares fall 21% after Cobham cancels final dividend

In currencies, the Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.2 percent as of 10:58 a.m. in London. Turkey’s lira slumped 1.7 percent, retreating for a fifth day as investors awaited signs the central bank will support the currency. Once again we are left watching GBP taking another beating, with the Cable rate pushed down to 1.2100 to record new cycle lows in the wake of the production and trade data this morning. Both the Nov manufacturing and industrial numbers beat on expectations, but the trade deficit widened on all counts to give GBP bears the ammunition to spark off another sell off. The USD rate is particularly vulnerable going forward, as ahead of the Trump press conference this evening, we are seeing the greenback gaining some traction again, just as many were expecting a little caution/moderation ahead of this, and indeed the inauguration next week. USD/JPY is again leading the way as dip buyers ahead of 115.00 have been plenty this week, but plenty more wood to chop on the upside before we can get comfortable again, as EUR/USD sales continue to run into demand on the way down. Support seen ahead of 1.0500 but stronger levels seen into the mid 1.0400’s. USD/CHF is testing 1.0200 again, but the commodity currencies are giving up little ground as AUD stays in touch with .7400 up top.

In commodities, West Texas Intermediate crude advanced 0.9 percent to $52.16 a barrel. Iron ore futures jumped 3 percent in China after a 5.5 percent rally on Tuesday. Gold was little changed. Uranium surged the most in more than three weeks as Kazakhstan said it will reduce production by 10 percent this year after prices slumped in 2016 amid a global inventory glut. Copper held near the highest closing price in nearly a month on the outlook for tighter supply following Indonesia’s signing of new mineral export regulations and miners’ wage negotiations in Chile.  U.S. natural gas fell 1.8 percent, paring its biggest gain in three weeks following forecasts of below-average temperatures.

In terms of the day ahead, clearly all eyes will be on President-elect Trump’s news conference this afternoon. In fairness the calendar is fairly light anyway with just UK trade data and the industrial and manufacturing production reports for November due out this morning. BoE Governor Carney is also scheduled to speak this afternoon at 2.15pm GMT when he is set to testify before the UK parliament’s Treasury Select Committee while the NY Fed’s Dudley is due to speak at 6.20pm GMT.

* * *

US Government agenda

  • 9am: U.S. Chamber of Commerce CEO Thomas Donohue and group’s chief policy officer, Neil Bradley, deliver annual “State of American Business” address
  • 9:15am: Senate Foreign Relations hearing on nomination of former Exxon Mobil CEO Rex Tillerson for sec. of state
  • 9:30am: Senate Judiciary Cmte second hearing on Sen. Jeff Sessions’ nomination for attorney general
  • 10:15am: Senate Commerce, Science and Transportation Cmte hearing on nomination of Elaine Chao for transportation secretary
  • 11am: President-Elect Trump to hold news conference to discuss business ventures, potential conflicts of interest

DB’s Jim Reid concludes the overnight wrap

President-elect Trump’s first news conference since the summer kicks off at 11am ET time/4pm GMT and if his recent tweets are anything to go by it promises to be a lively affair.

Mr Trump passed the acceptance speech test with flying colours back on election day with a gracious rehearsed speech. This is likely to be a more confrontational event and much of the world will be keen to see a) how he handles it and b) whether he fleshes out the desired direction of policy. I really can’t see it being a non-event even if I’ve no idea what he’ll say. In fact everything appears to be open for discussion but markets will likely be most interested in what he says about the comprehensive tax reform, foreign policy and border taxes in particular. In addition, after Trump urged congressional Republicans to repeal Obamacare immediately yesterday and vote on a replacement bill within weeks, expect that to also be a topical subject. On top of this the overnight press is dominated by a CNN report which suggests that US intelligence officers presented Trump with classified documents last week including allegations that operatives in Russia claim to have unverified compromising financial and personal information about Trump. So it should be interesting.

Ahead of this markets have been fairly reluctant to lay on any big bets this week heading into today’s main event. Indeed it’s been another fairly quiet 24 hours on the whole. Look no further than the S&P 500 which closed completely unchanged last night after wiping out some early modest gains. Sector wise gains for financials and health care stocks were balanced out by losses across energy stocks and real estate. Prior to this in Europe the Stoxx 600 (+0.11%) closed a touch firmer but again it wasn’t anything to get too excited about. One market which continues to surge on though is the FTSE 100 which yesterday closed up another +0.52%. In doing so it not only notched up its 9th consecutive fresh record high – the longest such run – but also took its run of consecutive daily gains to 11 which is a feat matched on only three other occasions, those coming in 2009, 2004 and 1997. In total return terms over those 11 days the FTSE 100 has notched +3.37% with the latest leg lower for Sterling (-1.48% in the same period) a big driving force. Indeed in US Dollar terms the return over that time is a more modest +1.83%. Refreshing our performance charts quickly, with the Pound now down -18.20% since the Brexit vote the FTSE 100 has now delivered a +16.80% total return in Sterling terms but a -4.45% total return in US Dollar terms.

Meanwhile commodity markets continue to pull in different directions. WTI Oil dipped another -2.19% yesterday and finished below $51/bbl having closed at $54/bbl on Friday. That’s despite there not really being any new news with the market still seemingly focused on the supply story in the US. On the other hand Gold was up another +0.72% yesterday along with decent gains for other precious metals, while iron ore (+2.19%), copper (+2.99%) and zinc (+1.99%) also continue to hover around recent highs after getting a boost from the huge increase in China producer price inflation yesterday. Rates markets, meanwhile, were a touch weaker if anything with 10y Treasury yields edging up 1.1bps to 2.377%. The Greenback (+0.10%) ended a touch firmer.

This morning in Asia, with the exception of China the mood is generally positive. The Nikkei (+0.36%), Hang Seng (+0.66%), Kospi (+1.45%) and ASX (+0.23%) are all up, largely led by anything commodity linked, while the Shanghai Comp (-0.53%) is currently in the red. US equity index futures are little changed while bond markets have been quiet.

Moving on. While markets weren’t particularly thrilling yesterday there was at least some interest in the data. Specifically it was the NFIB small business optimism survey in the US which turned a few heads after the index surged 7.4pts in December to 105.8 (vs. 99.5 expected). That is actually the largest one-month gain ever for the index and puts the index at the highest level since December 2004. The gain  was mostly reflected in the economic outlook index which rose a whopping 38pts. Our US economists noted that the since the NFIB data are highly correlated with the broader economy, which makes sense given that small and medium sized business account for nearly 80% of the labour market, the recent upshift in the NFIB strongly suggests that 2017 real GDP growth may be even better than their well-above consensus 3% forecast. In terms of the other data, JOLTS job openings pointed to a steady hiring and quits rate in November (3.6% and 2.1% respectively while wholesale inventories were revised up one-tenth to +1.0% mom in November versus the initial estimate. In Europe the only data came from France where industrial production was reported as jumping a much better than expected +2.2% mom in November (vs. +0.6% expected). Finally before we wrap up, yesterday we also got the announcement that Richmond Fed President, Jeffrey Lacker, is to retire on October 1st and so step down from his role at the Fed. The news is notable given that Lacker has been one of the more, if not the most, hawkish Fed officials in recent years.

In terms of the day ahead, clearly all eyes will be on President-elect Trump’s news conference this afternoon. In fairness the calendar is fairly light anyway with just UK trade data and the industrial and manufacturing production reports for November due out this morning. BoE Governor Carney is also scheduled to speak this afternoon at 2.15pm GMT when he is set to testify before the UK parliament’s Treasury Select Committee while the NY Fed’s Dudley is due to speak at 6.20pm GMT.

 

 

END

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 24.92 POINTS OR 0.79%/ /Hang Sang closed UP 190.56 OR 0.84%. The Nikkei closed UP 66.23 POINTS OR .33% /Australia’s all ordinaires  CLOSED UP 0.18%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9341/Oil FELL to 51.00 dollars per barrel for WTI and 53.82 for Brent. Stocks in Europe: ALL MIXED. Offshore yuan trades  6.9130 yuan to the dollar vs 6.9341  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS A BIT AGAIN AS  DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

This ought to scare a few people:  Taiwan scrambles jets and their navy as a Chinese aircraft carrier group enters the Taiwan strait and in Taiwan territorial waters:

(courtesy zero hedge)

Taiwan Scrambles Jets, Navy After Chinese Aircraft Carrier Group Enters Taiwan Strait

While much of America was preparing to listen to Obama speak one final time, the Chinese had far less lofty ambitions, and on Wednesday morning Beijing sent a group of Chinese warships led by China’s sole aircraft carrier north through the Taiwan Strait, resulting in Taiwan scrambling jets and navy ships in the latest sign of heightened tensions between China and the self-ruled Taiwan.

According to Reuters, The Soviet-built Liaoning aircraft carrier, returning from exercises in the South China Sea, was not trespassing in Taiwan’s territorial waters but entered its air defense identification zone (ADIZ) in the southwest, Taiwan’s defense ministry said.


China’s Liaoning aircraft carrier conducts a drill in an area of South China Sea,

in this undated photo taken December, 2016

As a result Taiwan scrambled jets and navy ships to “surveil and control” the passage of the Chinese ships through the narrow body of water separating Taiwan and China. “We have full grasp of its movements,” Taiwan defense ministry spokesman Chen Chung-chi said.

The defense ministry spokesman added that the Taiwanese military aircraft and ships have been deployed to follow the carrier group, which is sailing up the west side of the median line of the strait.

Previously, China has said the Liaoning aircraft carrier was on drills to test weapons and equipment in the disputed South China Sea and its movements comply with international law.

As Reuters adds, the latest Chinese naval exercises have unnerved Beijing’s neighbors, especially Taiwan which Beijing claims as its own, given long-running territorial disputes in the South China Sea. China claims most of the energy-rich waters of the South China Sea, through which about $5 trillion in ship-borne trade passes every year. Neighbors Brunei, Malaysia, the Philippines, Taiwan and Vietnam also have claims.

While China traditionally distrusts Taiwan, and especially the new President Tsai Ing-wen, it has has stepped up pressure on her following a protocol-breaking, congratulatory telephone call between her and U.S. President-elect Donald Trump last month.

END

China, as promised to you, launches investigations into “market manipulation” of bitcoin. This caused bitcoin to fall to 800 dollars per coin and the beneficiary is gold

(courtesy zero hedge)

Bitcoin Plummets After China Launches “Market Manipulation” Investigations Of Bitcoin Exchanges

The price of bitcoin slid over 1,200 Yuan in heavy trading in China, crashing nearly 20%, and down more than $100 under $800 on comparable US markets Wednesday, after China’s central bank said it had launched “spot investigations” on bitcoin exchanges in Beijing and Shanghai in order to fend off market risks.

The investigation of exchanges, including BTCC, Huobi and OKCoin, was to look into “possible market manipulation, money laundering, unauthorized financing and other issues”, according to the statements posted on the People’s Bank of China’s website.

To regular readers this should come as no surprise: precisely one week ago, when Bitcoin hit record highs in China, we explicitly warned:

for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

Well, Beijing noticed, and the “dramatic, sharp” drop in price has taken place as expected; worse with China now openly aggressive against bitcoin “manipulation” it is difficult to see where the next burst of buying momentum will come from, if only in the near term. However, one possibility is that Chinese capital control-evaders will now gravitate to other alternative digital currencies, such as Ethereum, which have so far been far less prominent among Chinese bubble chasers.

zerohedge @zerohedge

ETH up as BTC down. How soon until Chinese bubble shifts to Ethereum

9:13 PM – 8 Jan 2017

As Reuters further adds on the Chinese crackdown, authorities have been ratcheting up efforts to stop capital outflows and relieve pressure on the yuan to depreciate. The currency lost more than 6.5 percent against the U.S. dollar last year.

With bitcoin’s soaring price and the relative anonymity it affords, some believe the digital currency has become an attractive option for tech-savvy Chinese to hedge against the yuan and circumvent rules that limit the amount of foreign exchange individuals can buy each year.

“Some”… such as this site, which said to buy bitcoin precisely on that catalyst back in September 2015 when it was $230. However, after surging five-fold it was inevitable that China would notice, and the time to take profit had come.

More:

The Shanghai arm of the PBOC said it visited BTCC on Wednesday.

“The checks focused on whether the firm was operating out of its business scope, whether it was launching unauthorized financing, payment, forex business or other related businesses, whether it was involved in market manipulation, anti-money laundering or (carried) fund security risks,” it said.

In a separate statement, the PBOC in Beijing, where officers visited the offices of OKCoin and Huobi, said “the spot checks were focused on how the exchanges implement policies including forex management and anti-money laundering”.

A Huobi executive who declined to be named confirmed the PBOC visited their office on Wednesday, but declined to provide details. A spokeswoman for OKCoin told Reuters its platform was operating normally, and it was working with the authorities. Last week, PBOC officials meet with the three exchanges, and the central bank publicly urged investors to take a rational and cautious approach to investing in bitcoin.

Shanghai-based BTCC’s CEO Bobby Lee confirmed the visit, but said he believed the company was not out of line. “We’re definitely vigilant. We think we are in compliance with all the current rules and regulations of running a bitcoin exchange in China,” he told Reuters by phone.

“I wouldn’t call it an investigation. I think they are working closely with us to learn more about our business model and the bitcoin exchange industry. We had a very fruitful meeting today,” Lee said.

Judging by today’s plunge in the price of bitcoin, which has taken it back to levels just before last December’s blast off, the market disagrees.

END 4 EUROPEAN AFFAIRS

Volkswagen/Germany

As we indicated to you yesterday, Volkswagen is to pay $4.3 billion in fines in the diesel emissions scandal and will plead guilty to criminal charges.  The floodgates will open with respect to lawsuits

(courtesy zero hedge)

Volkswagen To Pay $4.3 Billion To Settle Diesel Scandal, Will Plead Guilty To Criminal Charges

Confirming recent leaks, Volkswagen – whose former head of US regulatory compliance was arrested on Saturday – said it was in “advanced discussions”  with US authorities to resolve charges related to its diesel emissions scandal, and has negotiated a “concrete draft of a settlement” that would see it pay $4.3 billion in criminal and civil penalties, and would require the German carmaker to enter a guilty plea to various criminal charges, strengthen compliance systems and install an independent monitor for three years.

The agreement, which has yet to be finalized, would lead to an expense that exceeds current provisions, the German automaker said. It also includes a guilty plea to some criminal charges, the Wolfsburg, Germany-based automaker said:

In case of a settlement agreement, the payment obligations are expected to lead to a financial expense that exceeds the current provisions. The concrete impact regarding the annual result 2016 cannot be defined at present due to its dependency on various further factors.

According to Bloomberg, VW’s management and supervisory boards are scheduled to review the settlement today or Wednesday and may raise provisions related to the scandal, which currently total €18.2 billion ($19.2 billion). A final agreement also needs to be approved by U.S. courts. The U.S. Justice Department declined to comment on Volkswagen’s statement.

VW, which admitted in September 2015 to installing software in its diesel cars to cheat emissions tests, is eager to resolve potential criminal charges before federal prosecutors overseeing the settlement talks leave with the Obama administration later this month the FT added.

Porsche, which owns 30.8% of Volkswagen, said its financial performance will be hurt by the settlement:

The concrete implications on the result of the Porsche SE group for the fiscal year 2016 can only be reliably assessed once Volkswagen group has conclusively evaluated the financial liabilities resulting from this settlement. At this point in time it cannot be ruled out that the Porsche SE group result after tax may fall below the previously communicated corridor between Euro 1.4 bn. and Euro 2.4 bn.

Finalizing the settlement would mark a key milestone in Volkswagen’s effort to emerge from the scandal that erupted in September 2015 after U.S. authorities uncovered the carmaker’s efforts to deliberately cheat on emissions tests on diesel vehicles. The rigged engines were ultimately installed in 11 million vehicles worldwide, and cost former Chief Executive Officer Martin Winterkorn his job.

 

 

end

 

The new Italian government avoids early elections after a constitutional court decision;

(courtesy zero hedge)

Italian Bond Yields Slide After Constitutional Court Decision Avoids Early Elections

There was some modest concern early this morning that the tenure of the new Italian cabinet of Paolo Gentiloni could be short lived, following a decision by Italy’s constitutional court this morning, which might have approved a referendum on worker reinstatement rights. However, those fears receded when early moments ago Italy’s Constitutional Court rejected a request by the country’s top union to hold a referendum on a key provision of the 2015 labor market reform which makes it easier for companies to fire workers and believe are victims of “unfair dismissals”, handing a belated, if pyrrhic, victory to Matteo Renzi, the former prime minister who engineered the overhaul.

According to the FT, the firing provision preserved by the ruling involved the elimination of “article 18? of the Italian labor law which forced companies to rehire workers who had been unfairly sacked instead of simply compensating them. It is seen by Mr Renzi and many Italian businesses as a key structural reform in the country whose labor market is often viewed as sclerotic and unfriendly to companies looking to boost employment.

In its ruling the constitutional court said that the request for a referendum to abolish provisions on the firing measure was “inadmissible”, according to Bloomberg.

However, the court did approve a referendum on two other less important measures, including one on vouchers for short-term work, and one on employment in public contracts, which had also been pushed by Italy’s largest trade union, the CGIL.

Renzi’s 2015 labour reform is often considered the cornerstone of his economic agenda, even if in the end it proved largely irrelevant and had a limited impact on the Italian jobs market in the short term. While employment has grown modestly it was introduced, unemployment has remained high as many Italians re-entered the work force but failed to find jobs. On Monday, Italy reported that its unemployment unexpectedly rose to 11.9%, the highest since early 2015, while youth Unemployment jumped to 39.4%.

The good news, if only for markets, is that since the court declined on all three referenda, that Gentiloni’s cabinet will not have to face early elections, Italian BTP yields promptly dropped to the lowest level in a week.

The less pleasant news, however, for Gentiloni, is that overnight the 62 year old Italian Prime Minister Paolo Gentiloni had an angioplasty—an emergency surgical procedure to clear an obstructed coronary artery—his spokeswoman said. Mr. Gentiloni, 62 years old, felt ill late Tuesday, after returning from an official visit to France, the WSJ reported.

His spokeswoman said the operation went well and he was now awake in intensive care in Rome’s Gemelli hospital. She said it was unclear how long he would remain in hospital, but he may need to stay there for at least another couple of days, the spokeswoman said. Mr. Gentiloni, who took office in December following Matteo Renzi’s resignation, has canceled his visit to London on Thursday, when he was meant to meet British Prime Minister Theresa May.

We wish the new PM a speedy recovery, although we wonder if governing Italy is what a man in his condition needs.

 

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

Last night, CNN reported that it has a compromising  dossier on Trump as well as evidence of Russian support for his USA presidency.  The Russian called this a complete hoax

(courtesy zero hedge)

Kremlin Denies It Has “Compromising” Dossier On Trump, Calls Intel Report “Complete Fabrication”

Responding to the latest report accusing Trump of being a Russian pawn (which may at least partially have been the spawn of a 4Chan hoax), the Kremlin said on Wednesday it was “total nonsense” that Russian officials had assembled a file of compromising information on Donald Trump.  Speaking to reporters on a conference call today, Kremlin spokesman Dmitry Peskov said the dossier containing the claims was a hoax which had been dreamt up to further harm U.S.-Russia relations, which are already at their lowest level since the Cold War.

Peskov told reporters that Russia had no “kompromat” – a term for ‘compromising material’ – on Trump, as claimed in an unsourced report widely shared among the highest levels of US government, and which had been distributed months ago, and also available to the Clinton campaign.

The information is not true and is nothing other than a total fabrication,” Peskov said, according to Interfax. “It’s a complete fake, it’s a complete fabrication, it’s total nonsense.”


Kremlin spokesman Dmitry Peskov

“It is an attempt to damage our bilateral relations. It is pulp fiction,” said Peskov, who according to Reuters also roundly dismissed as false assertions in the dossier that he himself was heavily involved in running a Russian campaign to undermine defeated presidential candidate Hillary Clinton. “You have to react to this with a certain humor, but there’s also a sad side to this. Hysteria is being whipped up to maintain a political witch hunt.”

Peskov added that the Kremlin does not engage in compiling compromising dossiers on anyone and was focused on building relations with Russia’s foreign partners instead.  Putin’s spokesman also said the Kremlin also did not have a dossier on Hillary Clinton.

“The Kremlin does not collect kompromat. The Kremlin and the president of [Russia] establish relations with our foreign partners: first of all, in the interests of the Russian Federation and the Russian people, and secondly, in the interests of global peace, stability, and security,” he said.

“It’s an obvious attempt to harm our bilateral relations,” he added. “Fabricating these ‘fakes’ and the quality of the declassified part of the previous report [on alleged Russian meddling in the US election] and this ‘fake’ – when put together, they’re pulp fiction. Of course, you also need to react to this with a certain amount of humor, although there’s a sad side to it.”

Russia’s response conforms with Trump’s angry outburst on Twitter last night, when in a tweet on Tuesday evening, the president-elect likewise dismissed the reports that Russia had compromising information on him. “FAKE NEWS – A TOTAL POLITICAL WITCH HUNT!” he wrote on Twitter.

Peskov echoed Trump’s response. “There are definitely people who incite this hysteria, who go out of their way to support this witch hunt. That’s how president-elect Trump defined this latest fake – as the continuation of a witch hunt.”

On a separate matter, asked to respond to the prospect of new U.S. sanctions affecting Russia’s oil and gas sector, Peskov said such measures, if they happened, would damage Russia, bilateral ties, and the global economy. The Russian energy sector would definitely get compensation if such sanctions were imposed, he added.

Peskov also said Putin was unfazed by reports that Trump’s pick for secretary of state, Rex Tillerson, would say at his confirmation hearing on Wednesday that Russia posed a danger, which previously was praised Tillerson, who has experience of working with top Russian officials in the oil sector. Peskov said the Kremlin stood by its assessment of Tillerson as someone who was willing to listen and was constructive, but was aware he was likely to be a tough operator too.

“We understand that Tillerson will continue to be quite tough in pursuing his line,” said Peskov, saying the Kremlin was not wearing rose-tinted glasses when it came to the former U.S. oilman.

 

end

 

The Donald lashes out at “fake news” again with respect to the above hoax:

(courtesy zero hedge)

Furious Trump Lashes Out At “Fake News” Leak: “Are We Living In Nazi Germany?”

If there was any doubt as to whether the relationship between the President-elect and certain members of the “intelligence community” had fallen on rough times, an angry Tweetstorm from Trump this morning pretty much clears up all the confusion.  After the CIA included what is looking increasingly like fabricated nonsense in their official classified intelligence report (something we noted earlier here), Trump took to Twitter to confirm that it is “A COMPLETE AND TOTAL FABRICATION, UTTER NONSENSE” and questioned whether we’re “living in Nazi Germany.”

Donald J. Trump @realDonaldTrump

Russia just said the unverified report paid for by political opponents is “A COMPLETE AND TOTAL FABRICATION, UTTER NONSENSE.” Very unfair!

7:13 AM – 11 Jan 2017 Donald J. Trump @realDonaldTrump

Russia has never tried to use leverage over me. I HAVE NOTHING TO DO WITH RUSSIA – NO DEALS, NO LOANS, NO NOTHING!

7:31 AM – 11 Jan 2017 Donald J. Trump @realDonaldTrump

I win an election easily, a great “movement” is verified, and crooked opponents try to belittle our victory with FAKE NEWS. A sorry state!

7:44 AM – 11 Jan 2017 Donald J. Trump @realDonaldTrump

Intelligence agencies should never have allowed this fake news to “leak” into the public. One last shot at me.Are we living in Nazi Germany?

7:48 AM – 11 Jan 2017

Russian officials early Wednesday said that news it had “compromising personal and financial information” on Trump was “absolute fabrication.” The Kremlin has no compromising dossier on Mr. Trump, such information is not consistent with reality and is nothing but an absolute fantasy,” said Kremlin spokesman Dmitri Peskov.

“There are people who foment this hysteria, who move heaven and earth to keep up this ‘witch hunt,’ ” he added. “By the way, this is how Mr. Trump characterized this fabrication.”

Late Tuesday night, Trump called the report a “political witch hunt.”

In light of Trump’s adversarial tone, futures are easing lower, concerned what Trump will say at today’s 11AM EST press conference, where the topic of Russia is sure to be top billing.

 

 

end

6.GLOBAL ISSUES

The Mexican Peso breaks above 22 pesos to the dollar as Mexico is concerned with Trump protectionism  (huge import tariffs loom)

(courtesy zero hedge)

Peso Pounded To New Record Lows As Trump Presser Looms

The Mexican Peso has plunged to fresh record lows this morning on mounting concerns that Donald Trump’s trade policy could end the country’s privileged status among developing countries.

Looks like Banxico is going to need a bigger intervention…

As The Wall Street Journal reports, the selloff underscores gathering fears that the economic gains Mexico has made over the past two decades could reverse, as the incoming Trump administration takes a confrontational stance that could bring tariffs and border-control measures that until recently appeared unthinkable.

The North American Free Trade Agreement, which in 1994 created a free-trade zone among Mexico, the U.S. and Canada, cracked open the giant American consumer market to Mexican businesses in a way no other emerging market has ever enjoyed. Nafta has also brought relative stability to the peso after a series of currency crises, a crucial factor in reassuring foreign buyers of Mexican bonds and other assets.

Now that advantage could be in jeopardy if Mr. Trump follows through on pledges to renegotiate the agreement.

Luis de la Calle, a former top Mexican trade official, said Mr. Trump’s statements and policies that have caused the peso to decline could backfire. They would dent Mexicans’ ability to buy U.S. goods, which could expand the U.S. trade deficit. A weaker peso is also likely to spur more illegal immigration if Mexico’s economy falters.

“Trump is manipulating Mexico’s currency through his tweets—against the U.S. interest,” Mr. de la Calle said.

We suspect one mention on NAFTA in today’s Trump press conference and the peso breaks above 22/$.

 

end

 

A good commentary on the troubles that Mexico are facing

(courtesy Nick Bernabe/The AntiMedia.org)

Protests In Mexico Push Country To Brink Of Revolution And Nobody’s Talking About It

Submitted by Nick Bernabe via TheAntiMedia.org,

Long-simmering social tensions in Mexico are threatening to boil over as failing neoliberal reforms to the country’s formerly nationalized gas sector are compounded by open corruption, stagnant standards of living, and rampant inflation.

The U.S. media has remained mostly mute on the situation in Mexico, even as the unfolding civil unrest has closed the U.S.-Mexico border in San Diego, California, several times in the past week. Ongoing “gasolinazo” protests in Mexico over a 20 percent rise is gas prices have led to over 400 arrests, 250 looted stores, and six deaths. Roads are being blockaded, borders closed, and government buildings are being sacked. Protests have remained relatively peaceful overall, except for several isolated violent acts, which activists have blamed on government infiltrators.

 

 

The few mainstream news reports that have covered the situation blame rising gas prices but fail to examine several other factors that are pushing Mexico to the brink of revolution.

‘Narco-state’ corruption

The narco-state, or as Mexican activists say, “elnarco-gobiero,” is a term used to describe the open corruption between the Mexican government and drug cartels. The narco-state has been in the headlines lately over the kidnapping and presumed murder of 43 Ayotzinapa students in Iguala, Guerrero, in 2014. This has been a source of continuous anti-government protests ever since.

Though the kidnappings remain officially unsolved, members of the Guerrero Unidos drug cartel have admitted to colluding with local police forces to silence the student activists. Twenty police officers have been arrested in association with the kidnapping. Former Iguala police chief Felipe Flores has been arrested and “accused of offenses including organized crime and kidnapping the students,” the AP reports. The corruption apparently goes all the way to the top, as federal authorities say former Iguala mayor José Luis Abarca personally ordered the kidnappings.

One Mexican activist who wished to remain anonymous told Anti-Media that a lot of people think it’s only the gasoline prices, but the price of gas is just the straw that broke the camel’s back. It all started with Ayotzinapa.

Much like the U.S., the Mexican government is susceptible to corporate influence. It just so happens that the most influential corporate entities in Mexico are drug cartels — and it’s hard for the government to reign in entities that fund and infiltrate it. Similar to the phenomenon of “regulatory capture,” the Mexican government is at least partially funded and co-opted by drug cartels. This festering problem is an underlying factor in the current civil unrest in Mexico.

Neoliberal policies left the working class behind

NAFTA was a contentious issue in the 2016 U.S. presidential election, but it’s just as controversial in Mexico, if not more so. The grand 1994 “free trade” scheme, signed into law by Bill Clinton, saw a dramatic redesign of both the U.S. and Mexican economic landscapes. Corn farmers, long a vital factor in Mexico’s peasant farming economy, were wiped out by low-priced corn subsidized by the U.S. government, which immediately flooded Mexican markets after NAFTA was passed. The Mexican immigration crisis at the U.S.’ southern border soon followed.

Meanwhile, manufacturing plants soon began moving into Mexico from the U.S. to take advantage of extremely cheap labor — leaving many workers in the U.S. out of a job. American agricultural corporations like Driscoll’s have recently come under fire for employing slave-like labor conditions to produce boutique organic fruit for U.S. consumers. Protests for workers rights in Mexico, which recently raised its minimum wage to 80 pesos (~$4) per day, are often met with heavy-handed police crackdowns.

Incoming President Trump has capitalized on two issues caused by NAFTA — the immigration crisis and outsourcing of U.S. jobs — and his reactionary protectionist economic policies will undoubtedly make Mexico’s predicament even worse.

Mexico’s nationalized oil conglomerate, Pemex, has been plagued by falling production for years. Corruption, which is inherent to state-run institutions, has condemned Mexico’s gas industry to inefficiency and stalled innovation. Theft has become a widespread issue, and oil workers were recently caught red-handed siphoning gas directly out of pipelines.

Supposedly to ramp up production and lower prices, the Mexican government pushed through neoliberal privatization schemes in 2013 and 2014, which were backed by U.S. oil interests and incubated by the Hillary Clinton-run State Department. President Enrique Peña Nieto promised the reforms would result in increased production and lower fuel prices, though production has fallen and prices spiked 20 percent on January 1st. Prices are expected to rise even further, as fuel subsidies will be completely phased out by March 2017. Peña Nieto claims the prices must go up to match international prices, though consumers in the U.S. currently pay less for gas than Mexicans.

Peña Nieto’s neoliberal reforms have fallen flat as economic growth has been anemic for years and wealth inequality has grown out of control.

Rampant inflation in Mexico

Perhaps the biggest driver of the current civil upheaval in Mexico is out of control inflation coupled with the value of the peso reaching record lows. Mexican workers are already stretched thin financially as minimum wage hovers at four U.S. dollars per day. Food prices, which were on the rise before the gas price increases, are set to climb 20 percent or more as they correlate closely with prices at the pump.

According to Zero Hedge, in Mexico, it currently takes “the equivalent of 12 days of a minimum wage to fill a tank of gas — compared to the U.S.’ seven hours.” People who don’t drive will also feel the pain, as public transportation costs are likely to rise with fuel prices. Rising gas prices also put downward pressure on the rest of the Mexican economy as workers spend more money on gas and less on consumer goods.

The Mexican government’s deficit spending and Trump’s tough talk on trade have been factors in devaluing the peso, making everything in Mexico more expensive for the working class and driving the general discontent that makes the country a hotbed of unrest.

***

Overall, no one factor can be blamed for causing extreme levels of unrest in Mexico. Before the Ayotzinapa student kidnappings, Mexico was already seeing widespread protests, marches, and strikes. The last several presidential elections have been contested, and the current administration of Enrique Peña Nieto has only a 22 percent approval rating. The general feeling of helplessness in the face of narco-state corruption and economic insecurity is not going away with the next election or protest, and wealth inequality in the country is beyond remedy. Mexico is ripe for revolution. Whether it’s triggered now by the gas gouging and subsequent inflation or in the near future, it’s coming — and we should be talking about it.

7. OIL ISSUES

Oil initially plummets on huge inventory builds with API, DOE and Cushing OK increases.  Also huge increase in USA production levels:

(courtesy zero hedge)

Crude Plunges On Massive Inventory Builds, Biggest Jump In Production In 20 Months

After last week’s massive product builds (and crude draw), API suggested additional builds ahead of DOE data which confirmed even bigger than expected builds in Crude, Gasoline, and Distillates. WTI gapped lower on the print then accelerated lower as US crude production rose by the most since May 2015.

API

  • Crude +1.53mm (+1.5mm exp)
  • Cushing -187k
  • Gasoline +1.69mm
  • Distillates +5.48mm

DOE

  • Crude +4.097mm (+1.5mm exp)
  • Cushing -579k (+100k exp)
  • Gasoline +5.023mm (+2.75mm exp)
  • Distillates +8.356mm

Biggest crude build since November and another week of massive builds in gasoline and distillates…The 13.4 million barrel increase in total U.S. crude and refined products stocks last week is the biggest weekly gain since April 2015.

Notably:

  • U.S. CRUDE WEEKLY CRUDE IMPORTS RISE TO HIGHEST SINCE 2012: EIA U.S.
  • DISTILLATE STOCKS REACH HIGHEST WEEKLY LEVELS SINCE OCTOBER 2010: EIA

Crude prices have slipped this week on, among other things, concerns of rising US crude production which exploded higher in the last week…The biggest surge since May 2015

The overall reaction was a huge gap lower in crude…

Saudi output curbs create “situation where good news fails to halt profit-taking,” says Ole Hansen, head of commodity strategy at Saxo Bank. “In the short-term I maintain the view that the downside risk is the greatest due to the threat of long liquidation”

8. EMERGING MARKETS

the most volatile (and unstable) currency in 2016 is the Turkish Lira

(courtesy zerohedge)

And The World’s Most Volatile Currency Is…

A year ago it was the Ruble, but for much of the last year it is the South African Rand that has been the most volatile currency in the world. That is until the last week, as Turkey deals with rising domestic instability (and Erdogan’s push for total rule), the Lira has become the world’s most unstable currency

As we noted earlier,market focus has turned on the lira as a result of Turkey’s large external borrowing requirement which makes its currency one of the most vulnerable currencies to tightening by the Fed.

Not helping matters is that Turkish residents have been flocking to the stability of hard currencies, the opposite of what President Recep Tayyip Erdogan has been urging. As the following Bloomberg chart shows, deposits in foreign exchange for individuals and companies excluding banks rose for a third week, signaling a lack of confidence in the lira. It’s the biggest loser among world currencies so far in 2017.

Additionally, Turkish economic growth has remained sluggish and inflation is rising, yet the central bank has been under pressure from President Tayyip Erdogan not to hike interest rates. A series of gun and bomb attacks have heightened security concerns. On Tuesday the Turkish parliament voted to press on with a debate about constitutional reform to strengthen the powers of President Tayyip Erdogan.

“Nobody wants to be the last one in there and everyone is running for the door. There are no signs from the authorities that they are taking it seriously,” said Jakob Christensen, head of EM research at Danske Bank. Christensen said the risk of further attacks was undermining the tourist sector, which is vital for the economy and balance of payments.

Making matters worse, and confirming the currency crisis is becoming one of credit, Turkish five-year credit default swaps rose four bps to 288 bps according to Markit data, a one-month high, and the yield premium paid by Turkish sovereign bonds over U.S. Treasuries on the JPMorgan EMBI Global Diversified widened out 4 bps to 377 bps.

Of course, some might suggest there is an ‘alternative’ currency that is more volatile than the Lira…

end

 

Wednesday morning;

The Turkish lira continues to plummet to 3.87 to the dollar as its current account deficit skyrockets Not even a rise in rates is helping stem the currency debasement.

(courtesy zero hedge)

Turkish Lira Carnage Continues – World’s Most Volatile Currency Crashes Most Since Lehman

The Lira – officially the world’s most volatile currency – has lost 11% of its value since the start of 2017 (down 8 of the last 9 days against the USD).

In fact, the lira headed for its biggest five-day loss since Lehman (Oct 2008) after a pledge by Turkey’s central bank to support the currency failed to convince investors.

As we noted previously, as Turkey deals with rising domestic instability (and Erdogan’s push for total rule), the Lira has become the world’s most unstable currency...

As we noted earlier,market focus has turned on the lira as a result of Turkey’s large external borrowing requirement which makes its currency one of the most vulnerable currencies to tightening by the Fed.

Not helping matters is that Turkish residents have been flocking to the stability of hard currencies, the opposite of what President Recep Tayyip Erdogan has been urging. As the following Bloomberg chart shows, deposits in foreign exchange for individuals and companies excluding banks rose for a third week, signaling a lack of confidence in the lira. It’s the biggest loser among world currencies so far in 2017.

Additionally, Turkish economic growth has remained sluggish and inflation is rising, yet the central bank has been under pressure from President Tayyip Erdogan not to hike interest rates. A series of gun and bomb attacks have heightened security concerns. On Tuesday the Turkish parliament voted to press on with a debate about constitutional reform to strengthen the powers of President Tayyip Erdogan.

“Nobody wants to be the last one in there and everyone is running for the door. There are no signs from the authorities that they are taking it seriously,” said Jakob Christensen, head of EM research at Danske Bank. Christensen said the risk of further attacks was undermining the tourist sector, which is vital for the economy and balance of payments.

It;s not just the currency that is in trouble though. The yield on the nation’s 10-year debt surged 45 basis points. The monetary authority said yesterday that it is monitoring “excessive volatility” in the markets and pledged to tackle “unhealthy price formations inconsistent with economic fundamentals.”

 

end

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

Euro/USA   1.0503 DOWN .0083/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATE

USA/JAPAN YEN 116.38 UP 0.299(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2116 DOWN .0052 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3250 UP .0035 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 83 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0531; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 24.92 or 0.79%     / Hang Sang  CLOSED UP 190.50 POINTS OR 0.84%  /AUSTRALIA  CLOSED UP 0.18%  / EUROPEAN BOURSES ALL MIXED 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED UP 63.23 OR .33% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 190.50 OR 0.84%  Shanghai CLOSED DOWN 24.92 POINTS OR 0.79%   / Australia BOURSE CLOSED UP 0.18% /Nikkei (Japan)CLOSED UP 63.23 OR .33%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1187.75

silver:$16.71

Early WEDNESDAY morning USA 10 year bond yield: 2.376% !!! PAR IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.965, DOWN 1 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 102.43 UP 39 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.97% DOWN 8  in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.058% DOWN 6/10  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.414%  DOWN 6  IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.866  DOWN 3  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 46 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.328% UP 4 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

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

Euro/USA 1.0559 DOWN .0025 (Euro DOWN 25 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 115.33 DOWN: 0.659(Yen UP 66 basis points/ 

Great Britain/USA 1.2160 DOWN 0.0009( POUND DOWN 9 basis points)

USA/Canada 1.3186 DOWN 0.0029(Canadian dollar  UP 29 basis points AS OIL ROSE TO $52.43

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 25 basis points to trade at 1.0559

The Yen ROSE to 115.33 for a GAIN of 66 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 9  basis points, trading at 1.2160/

The Canadian dollar ROSE by 5 basis points to 1.3186,  WITH WTI OIL RISING TO :  $52.43

The USA/Yuan closed at 6.9364 the 10 yr Japanese bond yield closed at +.058% DOWN 3/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from TUESDAY at 2.359% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.950 DOWN 3  in basis points on the day /

Your closing USA dollar index, 102.17 UP 13 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 15.02 OR .21% 
German Dax :CLOSED UP 62.87 POINTS OR 0.54%
Paris Cac  CLOSED up 0.48 OR 0.01%
Spain IBEX CLOSED DOWN 43.40 POINTS OR 0.46%
Italian MIB: CLOSED up 62.69 POINTS OR 0.32%

The Dow was UP 95.47 POINTS OR .48% 4 PM EST

NASDAQ WAS UP 11.83 POINTS OR .21%  4.00 PM EST
WTI Oil price;  52.43 at 1:00 pm; 

Brent Oil: 55.37  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.97 (ROUBLE UP 18/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.328%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$52.41

BRENT: $55.24

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

USA 30 YR BOND YIELD: 2.956%

EURO/USA DOLLAR CROSS:  1.0582 down .0004

USA/JAPANESE YEN:115.36  down 0.620

USA DOLLAR INDEX: 101.71  DOWN 33  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2211 : UP 42  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.328%

 

END

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

TRADING IN GRAPH FORM

Dollar Dumped, Stocks Trump’d, Gold Jumped  

Today in the dollar…

 

It’s not the economy, stupid…

 

It’s Trump!

 

Biotechs/Pharma was slapped lower…ending the record win streak…

 

Algos desperately ripped The Dow to run yesterday’s high stops in an effort to crack 20k… but failed.. then as the day ended VIX was monkey-hammered lower in desperation…

 

Stocks scrambled back to green after the Trumpnado struck… Nasdaq record high again, Trannies rallied over 1%! – NOTE the rally startd right after Europe closed… AGAIN!

 

7th day in a row of positive closes for Nasdaq, 4th day of record highs…

 

Utilities outperformed post-Trump, healthcare lagged…

 

Brazil cut rates by 75bps and sent Brazil ETF higher (filling the gap from the election)

 

Yields tumbled as Trump spoke and were pushed lower on a very strong 10Y auction but everything bounced back in the late afternoon…but bonds ended the day unchanged.

 

The Dollar was clubbed like a baby seal as Trump disappointed those looking for details… hit 2017 lows then bounced to unch for 2017 before fading…

 

All the majors surged against the greenback as Trump spoke (and said nothing) but we note USDJPY was really moving…

 

The Mexican Peso was the poster-child of Trumpian chaos as it crashed to record lows, ripped on Dollar’s drop, then collapsed back down on trade comments, then rallied again… – still closed at record lows…

 

As the dollar plunged, crude ripped higher – totally ignoring the spike in production and inventories…

 

Gold spiked towards $1200 as the dollar faded…

end

 

Details missing from the Trump press conference which sends the Dow lower including pharmaceutical stocks, gold higher

(courtesy zero hedge)

Trump Presser Ends, Details Underwhelm: Gold Gains As Dollar, Dow, & Drug Stocks Drop

The USD Index whipsawed higher and lower as Trump teased and un-teased comments on trade policies, only to tumble to the day’s lows by the end as details were missing and thus disappointed…

This rippled through risk assets, leaving gold higher, stocks lower, peso higher (after initial crashing), but idiocyncratic issues slammed drug stocks, and aircraft makers.

 

The Biotech battering is most notable so far… after Trump accused them of “getting away with murder” on pricing…

 

Bloomberg notes a few additional key takeaways from today’s news conference:

  • President-elect Donald Trump for the first time conceded Russia was responsible for the hacking of the Democratic National Committee and Clinton aide Jon Podesta
  • Trump categorically denies allegations included in an unsubstantiated report released by BuzzFeed detailing compromising material allegedly gathered by Russian intelligence
  • Trump announces that his sons will run his businesses during his time in the White House, that the organization will not conduct new business abroad, and the appointment of an ethics review officer to prevent conflicts
  • bill to repeal and replace Obamacare simultaneously will be introduced by the White House once HHS Secretary nominee Tom Price is confirmed, Trump says.
  • Supreme Court nomination will come within two weeks of Trump taking office.
end The press conference caused gold to skyrocket and the dollar to tumble: (courtesy zero hedge) Gold Nears $1200 As The Dollar Tumbles To 2017 Lows

Gold is now up almost 4% year-to-date, approaching $1200 – 8 week-highs…

As the USD Index plunges to 2017 lows after Trump’s disappointing press conference…

 end Due to higher rates and also the fact that the central banks are paying banks to hold reserves, the Fed only remitted 92 billion back to the treasury in 2016, its lowest level in 3 yrs. (courtesy zero hedge) Fed Remits Only $92 Billion To Treasury In 2016, Lowest Since 2013

The world was reminded of the cozy relationship between The Fed and The Treasury again today as Janet sent Jack $92.0 billion of freshly ponzi’d net income for 2016 providing the federal government with an important source of funding. This, however, is down almost 6% from 2015 and despite a considerably larger balance sheet is the lowest remittance since 2013 due to doubling the handouts to the major banks to $12 billion last year.

As Reuters reports, part of the decline is due to a drop of about $2.6 billion in what the Fed earns on its holdings of U.S. Treasury bonds and mortgage-backed securities accumulated in fighting the 2007 to 2009 financial crisis.

But most of it is a result of the interest paid on excess reserves held by commercial banks at the 12 regional Federal Reserve institutions. Banks are required to hold some reserves, but are allowed to deposit more if they choose.

Between more cautious lending and weak economic growth, total reserves have been at historically high levels since the financial crisis — roughly $2 trillion as of the end of the last year compared with a few billions of dollars in more typical times.

When the Fed increased its target interest rate in Dec. 2015 by a quarter of a percentage point, to a range of between 0.25 and 0.5, it increased the rate paid to banks as well – and pushed its overall reserve interest costs from $6.9 billion in 2015 to $12 billion last year.

The increase may draw attention from lawmakers who have been critical of the Fed paying money to large commercial institutions. The central bank argues that the payments are its most effective way to push rates higher: by offering interest on excess reserves, the Fed forces banks to raise the rate at which they are willing to lend to each other.

In the last 15 years, The Fed has handed over $880 billion to The Treasury…

Source: The Fed

As is clear in the chart above, a decade ago, back when the Fed was a smaller size, Fed remittances were fairly steady, in the neighborhood of $20 billion a year. This all changed after 2008 as the Fed’s Quantitative Easing programs increased the amount of interest-earning assets that would generate funds to transfer back to the Treasury.

Big Bucks for the US Treasury

For the US Treasury, Fed remittances are something of a free lunch. When someone buys a Treasury bond, the government must pay them interest. This applies to the Fed as well, but then at year-end the Fed remits the interest back to the Treasury.

As we noted previously, in more “normal” times (i.e., prior to 2008) around 7 percent of the Treasury’s interest payments were paid back to it by the Fed. This figure has grown to over three times that amount over the past few years…

Implications for Fed “Independence”

As much as economists talk about the independence that the Fed holds from Congress, these remittances represent a strong link. In fact, since they enable federal spending they create a form of quasi-fiscal policy for the Fed to use, in addition to its more common monetary policy options.

Consider that since Treasury debt is almost never repaid in net terms (old issues are retired but replaced with new debt issuances), the true cost of financing the US government’s borrowing is not the gross amount of debt outstanding but the annual interest expense it faces. Viewed this way, nearly half of the Treasury’s borrowing was financed by the Fed last year. Absent these Fed remittances, Congress would need to look at either an alternative funding source (though I am not sure how many takers there are for the Fed’s $2.5 trillion Treasury holdings) or make some serious cuts.

How serious? NASA’s operating budget was roughly $18 billion last year, so a lack of Fed remittances would cause the Treasury to cut around five NASA-sized programs. Alternatively, the governments Supplemental Nutrition Assistance Program (previously known as “food stamps”) cost $70 billion in 2014. Without the Fed’s remittances, Congress would have to stop paying out all food stamp recipients plus it would be forced to defund almost two NASAs.

More important in many Americans’ hearts is their monthly social security check. In 2014, $830 billion of social security checks were mailed out. Without Fed remittances, retirees might see their monthly check cut by about 12 percent.

For those concerned with the burgeoning size of the federal government, putting a stop to Fed remittances would put a serious dent in public finances and force some serious thought as to what programs need to be cut.

 

end

 

Well that is all for today

I will see you tomorrow night

Harvey


Jan 10/Gold rises a bit but silver shines, up 17 cents/Both of Turkish lira and the Mexican peso plummet/Russ and Pam Martens explains why Trump is picking Goldman Sachs alumni to help him run the country/the repeal of Obamacare is now back on!!!/

Tue, 01/10/2017 - 18:46

Gold at (1:30 am est) $1184.20 UP $0.70

silver  at $16.80:  UP 17 cents

Access market prices:

Gold: $1188.00

Silver: $16.84

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

TUESDAY gold fix Shanghai

Shanghai morning fix Jan 10/17 (10:15 pm est last night): $  1203.90

NY ACCESS PRICE: $1185.20 (AT THE EXACT SAME TIME)/premium $18.70

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1205.96

NY ACCESS PRICE: $1186.60 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $19.36

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 10/2017: 5:30 am est:  $.1183.20   (NY: same time:  $1183.90    5:30AM)

London Second fix Jan 10.2017: 10 am est:  $1189.50 (NY same time: $1188.90  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  23 NOTICE(S) FOR 2300 OZ.  TOTAL NOTICES SO FAR: 1046 FOR 104,600 OZ    (3.2534 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 124 NOTICE(s) FOR 620,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 432 FOR 2,160,000 OZ

Let us have a look at the data for today

.

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In silver, the total open interest ROSE by 410  contracts UP to 165,347 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .828 BILLION TO BE EXACT or 118% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  124 NOTICES FILED FOR 620,000  OZ.

In gold, the total comex gold ROSE BY 11,098 contracts WITH THE RISE IN  THE PRICE GOLD ($11.60 with YESTERDAY’S trading ). The total gold OI stands at 440,398 contracts.

we had 23 notice(s) filed upon for 2300 oz of gold.

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

GLD:

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

Inventory rests tonight: 805.00 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver ROSE by 410 contracts UP to 165,347 AS SILVER ROSE by  $0.17 with YESTERDAY’S trading. The gold open interest ROSE by 11,098 contracts UP to 440,398 AS THE  PRICE OF GOLD ROSE BY $11.60 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS  i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 9.57 POINTS OR 0.30%/ /Hang Sang closed UP 186.16 OR 0.83%. The Nikkei closed DOWN 152.89 POINTS OR .79% /Australia’s all ordinaires  CLOSED DOWN 0.76%/Chinese yuan (ONSHORE) closed WELL UP at 6.9255/Oil FELL to 52.10 dollars per barrel for WTI and 55.01 for Brent. Stocks in Europe: ALL MIXED. Offshore yuan trades  6.90200 yuan to the dollar vs 6.9255  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS  DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES / REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN  none today c) REPORT ON CHINA

none today

4 EUROPEAN AFFAIRS

none today

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

The Turkish lira falters to 3.78 to the dollar.  It even touched 4 to one yesterday. This nation is in trouble financially due to its huge external debts in dollars and the constant militant attacks on its soil by ISIS and/or PKK

( zero hedge)

6.GLOBAL ISSUES

After spending 4 billion USA defending the Peso, it is crashing again to record lows:

( zero hedge)

7. OIL ISSUES

i)Iraq is becoming very aggressive in its production output.  It was suppose to cut not increase its production:

( zero hedge)

ii)More inventory builds in crude:

( zero hedge)

8. EMERGING MARKETS

Venezuela hikes the minimum wage by 50% equivalent to 12 dollars USA per month. This nation is in serious trouble despite having the greatest amount of oil reserves in the ground

( zero hedge)

9.   PHYSICAL MARKETS

i)John Embry correctly states that the big problem facing the world is the huge overhanging debt.  Globally total debt is 225 trillion dollars and this can never be repaid.

( John Embry/Kingworldnews)

ii)A terrific commentary from Ronan Manly.  He explains that most sovereign gold is not owned by central banks but by governments which hold the gold for its citizens.  Yet the central banks  do not disclose what is happening to citizens gold through swaps, hypothecation etc.

( Ronan Manly/Bullionstar)

iii)This is just the beginning as we see foreign exchange cartel members face USA rigging charges.  Trust me on this:  it will morph into charges of collusion etc with respect to silver and gold manipulation

( Bloomberg/GATA)

10.USA STORIES

i)The following is a biggy:  we all wondered why Trump hired a huge number of Goldman Sachs former alumni and/or current members of the firm.  Now you will find out why!!!

( Russ and Pam Martens/WallStreet on Parade)

ii)November inventories rise more than expected at 1.00% month over month while sales disappointed at .4%.  Thus the inventories to sales ratio climbed back up again ( 3.38 to one) and we are still stubbornly stuck in recessionary territory

( zero hedge)

iii)Janet’s favourite indicator, the JOLTS, seems to be going in the wrong direction for her:

( zero hedge)

iv)Good news at GM which jumped 5% today on higher 2017 profits and strong China sales.  They announced another 5 billion dollar buyback.  Remember that they laid off huge amount of people in 2016.  Also remember that they count sales the moment if leaves GM and not when it is sold to the consumer;

( zero hedge)

v)This does not look good for the uSA economy:  Wal-Mart to cut hundreds of jobs before the end of January:

( zero hedge)

vi)Activists are planning to turn the Trump inauguration into one of the biggest riots in USA history; ( Michael Snyder/EconomicCollapseBlog) vii) Chaos runs supreme as now Trump has completed backtracked again as the repeal of the Obamacare is on!! ( zero hedge)

viii)The following is an accident waiting to happen:( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY 11,098 CONTRACTS UP to an OI level of 440,398 AS THE  PRICE OF GOLD ROSE $11.60 with YESTERDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 4 contracts DOWN to 161.  We had 0 notices filed so we LOST 4 contracts or AN ADDITIONAL 400 oz WILL NOT STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 2,967 contracts DOWN to 263,739. March had a gain of 64 contracts as it’s OI is now 349.

We had 23 notice(s) filed upon today for 2300 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 410 contracts FROM 164,937 UP TO 165,347 AS the price of silver ROSE BY $0.17 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI ROSE by 3 contracts RISING TO  358. We had 0 notice(s) filed on yesterday so we  GAINED 3   SILVER CONTRACTS or an additional 15,000 oz will stand for delivery.  The next non active month of February saw the OI rise by 4 contract(s) up to 203.

The next big active delivery month is March and here the OI FELL by 321 contracts DOWN to 133,238 contracts.

We had 124 notice(s) filed for 620,000 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 243,104  contracts which is good.

Yesterday’s confirmed volume was 213,837 contracts  which is good

Initial standings for january  Jan 10/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    18,533.36 SCOTIA DELAWARE BRINKS INCL 375 kilobars Deposits to the Dealer Inventory in oz 2300.01 oz

Brinks Deposits to the Customer Inventory, in oz   1607.500 oz Brinks 50 kilobars No of oz served (contracts) today   23 notice(s) 2300 oz No of oz to be served (notices) 138 contracts 13,800 oz Total monthly oz gold served (contracts) so far this month 1046 notices 104,600 oz 3.2534 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,574,212.5 oz Today we HAD 2 kilobar transaction(s)/ Today we had 1 deposit(s) into the dealer: i) into Brinks:  2300.01 oz   (the xxx.01 oz is to appease me) total dealer deposits:  2300.01  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1  customer deposit(s):  i) Into Brinks:  1607.500 oz (50 kilobars) total customer deposits; 1607.500 oz We had 3 customer withdrawal(s) i) Out of Scotia: 12056.25 oz (375 kilobars) ii) Out of Delaware:  100.45 oz iii) Out of Brinks; 6376.660 oz total customer withdrawal: 18,533.36 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 23 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1046) x 100 oz or 104,600 oz, to which we add the difference between the open interest for the front month of JANUARY (161 contracts) minus the number of notices served upon today (23) x 100 oz per contract equals 118,400 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1046) x 100 oz  or ounces + {OI for the front month (161) minus the number of  notices served upon today (23) x 100 oz which equals 118,400 oz standing in this non active delivery month of JANUARY  (3.6827 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.6851 tonnes total for the 13 months;  226.073 tonnes average 17.390 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,455,213.516 or 45.263 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,089,595.973 or 282.72 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 282.72 tonnes for a  loss of 20  tonnes over that period.  Since August 8/2016 we have lost 71 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 4 1/2 MONTHS  71 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 10. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  624,100.900 0z DELAWARE CNT Deposits to the Dealer Inventory 574,474.570 oz CNT Deposits to the Customer Inventory  1,261,277.240 oz JPM CNT Scotia No of oz served today (contracts) 124 CONTRACT(S) (620,000 OZ) No of oz to be served (notices) 234 contracts (1,170,000  oz) Total monthly oz silver served (contracts) 432 contracts (2,160,000 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  10,480,010.1 oz  END today, we had 1 deposit(s) into the dealer account:  i) Into CNT:  575,474.570 oz total dealer deposit: 575.474.57 oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 2 customer withdrawal(s): i) Out of CNT:  613,167.710 oz ii) Out of DELAWARE:  10,933.200 oz TOTAL CUSTOMER WITHDRAWALS: 624,100.90 oz  we had 3 customer deposit(s): i) Into JPMorgan:  602,006.34 oz ii) into CNT:  25,979.39 oz iii) Into Scotia:  633,291.510 total customer deposits;  1,261,277.240   oz TED BUTLER IS CORRECT:  JPMORGAN IS MASSIVELY ACQUIRING SILVER.      we had 2  adjustment(s) i) out of the CNT vault:  45,581.650 oz was adjusted out of the customer and this landed into the dealer account of CNY ii) 1909.600 oz was removed from JPMorgan customer account as an error. The total number of notices filed today for the JANUARY. contract month is represented by 124 contract(s) for 620,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  432 x 5,000 oz  = 2,160,000 oz to which we add the difference between the open interest for the front month of JAN (358) and the number of notices served upon today (124) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JANUARY contract month:  432(notices served so far)x 5000 oz +(358) OI for front month of JAN. ) -number of notices served upon today (124)x 5000 oz  equals  3,330,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We  gained 3 silver contracts OR AN ADDITIONAL 15,000 OZ WILL stand for January. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 73,193 which is huge YESTERDAY’S  confirmed volume was 53,877 contracts  which is very good.   Total dealer silver:  29.202 million (close to record low inventory   Total number of dealer and customer silver:   181/894 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

JAN 10/no changes in gold inventory at the GLD/Inventory rests at 805.00 tonnes

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 10/2017/ Inventory rests tonight at 805.00 tonnes *IN LAST 66 TRADING DAYS: 144.81 TONNES REMOVED FROM THE GLD *LAST 13 TRADING DAYS: 19.54 TONNES HAVE LEFT

end

Now the SLV Inventory JAN 10/no changes in inventory at the SLV/Inventory rests at 341.199 million oz JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ . Jan 10.2017: Inventory 341.199  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 7.4 percent to NAV usa funds and Negative 7.2% to NAV for Cdn funds!!!!  Percentage of fund in gold 61.1% Percentage of fund in silver:38.7% cash .+0.2%( jan 10/2017)  . 2. Sprott silver fund (PSLV): Premium FALLS to +.12%!!!! NAV (Jan 10/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.54% to NAV  ( Jan 10/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.12% /Sprott physical gold trust is back into NEGATIVE territory at -0.54%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Gold Price In GBP Up 4% On Brexit and UK Risks By Mark O’ByrneJanuary 10, 20170 Comments

Gold Price In GBP Rises 4% On Brexit and UK Economy Risks

– Pound fell 2% against gold yesterday after Theresa May created Brexit concerns 

– May’s ‘Hard Brexit’ denial does not calm markets growing fears

– Investors concerned about lack of government strategy and uncertainty

– UK Prime Minister bizarrely blames media and “those who print things” for sterling depreciation

– GBP gold builds on 31% gain in 2016 with 4% gain so far in 2017

Gold in GBP – 1 Year and Timeline (GoldCore)

1. June 24:Brexit: Gold surged 20% in sterling to £1,015/oz in two days after UK votes to leave EU
2. August 4:Bank of England expands QE – launches latest massive money printing experiment
3. October 6:“Flash crash” — pound collapses 5% against gold in just over a minute
4. January 9: Pound falls another 2% against gold as UK PM fails to reassure markets

Gold rose to its highest in over one a month today as fears that the UK will have a ‘Hard Brexit’ with the EU led to safe-haven buying.

The pound fell sharply yesterday and gold in sterling terms rose from £954/oz to £973/oz after weekend comments from British Prime Minister Theresa May sparked concerns that Britain would drastically change trade, immigration and other relations with the EU after Brexit.

Gold has consoidated on those gains today and is over 4% higher in sterling terms so far in 2017 – building on the 31% gains seen in 2016.

The gains being seen are not simply related to Brexit. There are also substantial risks facing the UK economy in terms of the London property bubble (which shows signs of bursting), the very large UK current account deficit and the massive UK national debt.

Spot gold in dollar terms rose another 0.5% today to $1,187.60 an ounce, its highest since Dec. 5 at $1,187.61

There is also strong physical  gold buying in China ahead of the Lunar New Year later in January.

Gold looks set to test $1,200 in the short term. In the coming days, attention will turn to U.S. President-elect Donald Trump’s inauguration and the geo-political and economic uncertainty regarding the next four years of his Presidency. This will likely further boost safe haven demand.

http://www.goldcore.com/us/gold-blog/gold-price-gbp-4-brexit-uk-risks/

-END-

John Embry correctly states that the big problem facing the world is the huge overhanging debt.  Globally total debt is 225 trillion dollars and this can never be repaid.

(courtesy John Embry/Kingworldnews)

Debt is the problem and rising rates will be ruinous, Embry tells KWN

Submitted by cpowell on Mon, 2017-01-09 22:47. Section:

5:45p ET Monday, January 9, 2017

Dear Friend of GATA and Gold:

The huge increase of debt in recent decades is the world’s overwhelming financial problem, Sprott Asset Management’s John Embry tells King World News today, adding that rising interest rates will crash both stocks and bonds. Meanwhile, Embry adds, the monetary metals are cheaper than ever relative to the volumes of money and credit in the world. An excerpt from Embry’s interview is posted at KWN here:

http://kingworldnews.com/the-world-has-never-been-in-a-crisis-like-this-…

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

 

 

END

 

A terrific commentary from Ronan Manly.  He explains that most sovereign gold is not owned by central banks but by governments which hold the gold for its citizens.  Yet the central banks  do not disclose what is happening to citizens gold through swaps, hypothecation etc.

(courtesy Ronan Manly/Bullionstar)

Ronan Manly: Who owns the world’s largest gold hoards? Not central banks

Submitted by cpowell on Tue, 2017-01-10 00:23. Section:

7:23p ET Monday, January 9, 2017

Dear Friend of GATA and Gold:

The largest gold reserves around the world, gold researcher Ronan Manley writes today, are for the most part not owned by central banks but rather by national governments that happen to vault them with central banks. So, Manley adds, the secrecy woven around the reserves by central banks is arrogant and inappropriate and all data about them should be made public as a matter of form. Manly’s commentary is headlined “Who Owns the World’s Largest Gold Hoards? Not the Central Banks” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/who-owns-the-worlds-larges…

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

 

 

END

 

This is just the beginning as we see foreign exchange cartel members face USA rigging charges.  Trust me on this:  it will morph into charges of collusion etc with respect to silver and gold manipulation

(courtesy Bloomberg/GATA)

FX ‘cartel’ traders said to face U.S. rigging charges

Submitted by cpowell on Tue, 2017-01-10 12:52. Section:

By David McLaughlin, Suzi Ring, and Tom Schoenberg
Bloomberg News
Tuesday, January 10, 2017

Prosecutors are poised to charge the currency traders at the heart of one of the biggest U.S. market-rigging investigations, according to people familiar with the matter.

The imminent criminal charges are against members of “The Cartel” chat group, the people said. These traders used instant messages to coordinate the rigging of foreign-exchange benchmarks by sharing confidential customer information, prosecutors have said in antitrust cases that led to guilty pleas by five banks in 2015.

The senior dealers who participated in The Cartel were Richard Usher, formerly of JPMorgan Chase & Co.; Rohan Ramchandani, formerly of Citigroup Inc.; and Chris Ashton, formerly global head of spot trading at Barclays Plc. Another member, Matt Gardiner, formerly of UBS Group AG, has been helping prosecutors build cases against the traders, people familiar with the matter have told Bloomberg News. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-01-10/-cartel-currency-trad.

 

 

END

 

The Attorney generals office officially charged our illustrious three but all three leave outside the USA and only extradition can bring them to face USA charges:

(courtesy zero hedge)

Three “Cartel” FX Traders Criminally Charged With Currency Rigging

Moments ago, U.S. prosecutors charged three traders who made up the infamous “Cartel” currency rigging chat room, and who were at the heart of a criminal investigation that has ensnared the world’s biggest banks over the rigging of currency rates. Richard Usher, formerly head of G10 spot trading at JPMorgan, Rohan Ramchandani, formerly of Citigroup and Chris Ashton, formerly of Barclays, were indicted Tuesday for conspiring to fix prices. They’re all outside the U.S. and will have to be extradited unless they surrender voluntarily.


Richard Usher

As first reported back in 2013 when the FX rigging scandal broke out, the three used an online chatroom they dubbed ‘The Cartel’ to coordinate the rigging of foreign-exchange benchmarks by sharing confidential customer information, according to the U.S. charge. Another member, Matt Gardiner, formerly of UBS Group AG, has been helping prosecutors build cases against the traders, Bloomberg reported earlier.

Citigroup, Barclays, JPMorgan and Royal Bank of Scotland Group Plc pleaded guilty in May 2015 to conspiring to rig currency rates. UBS Group AG received immunity from prosecution, but its conduct breached an earlier agreement over its role in manipulating benchmark interest rates.

The Cartel chatroom ran from at least December 2007 until January 2013, prosecutors have said in court papers. It was limited to specific euro/dollar traders, they said. Many conversations took place just before daily fixes, the brief windows of time when data providers take a snapshot of trading so they can set daily rates.

As Bloomberg noted previously, the charges make good on the government’s long-running promise it would hold individuals to account in the case. As far back as September 2014, then-Attorney General Eric Holder said charges against traders were imminent.

Those efforts were hampered by issues of evidence and lack of cooperators, people familiar with the matter told Bloomberg last year. Bloomberg published a series of articles in 2013 exposing how the world’s biggest banks were colluding to rig foreign exchange rates.

 

Some prosecutions are moving forward. Over the past six months, two currency traders were charged and a third pleaded guilty to rigging allegations. This summer, Gardiner and Ashton were banned from the U.S. banking industry for life by the Federal Reserve, which also imposed a $1.2 million fine on Ashton.

Unlike the US, the U.K. Serious Fraud Office dropped its investigation into currency rigging last year citing insufficient evidence for a realistic prospect of conviction. The agency interviewed 19 individuals as part of its probe, according to a freedom-of-information request by Bloomberg in August, including four under caution. Interviews under caution generally mean the person is being treated as a suspect.

Some more details from Bloomberg for those unfamiliar with the story:

Citigroup, Barclays, JPMorgan and Royal Bank of Scotland Group Plc pleaded guilty in the U.S. in May 2015 to conspiring to rig currency rates. UBS received immunity from prosecution in the currency case, but its conduct breached an earlier agreement over its role in manipulating benchmark interest rates.

 

During the banks’ Jan. 5 sentencing, a federal judge in Connecticut urged the Justice Department to pursue individuals in the cases.

 

“Mischief will be best deterred if the people responsible are not only fired but that any compensation made to them that was triggered by the wrongful conduct, for example bonuses, are clawed back or disgorged,” U.S. District Judge Stefan R. Underhill said. “Frankly I would encourage the government to consider prosecution of individuals.”

 

This is a strange one:  China announces a drop in reserves of 20 tonnes from 1841 down to 1821 tonnes:

What one earth are the Chinese doing with their “official” gold

(courtesy Lawrie Williams/Sharp’s Pixley)

 

LAWRIE WILLIAMS: Is China falling out of love with gold? Does it make any difference? JAN
10

According to the latest data we have received, the Chinese central bank, The People’s Bank of China, REDUCED its gold holdings in December by a quite substantial 20.98 tonnes – the first time it has reported a reduction in its gold reserves certainly for at least 16 years – probably more.  Over this period it has been adding to its reserves, although sometimes only reporting its rises at five or six year intervals, but the obvious conclusion has been that within these long intervals it has been building its reserves on a month-by-month basis but not reporting this.  Since mid 2015 it has been reporting its gold reserve purchases on a month by month basis, although recently these have fallen to a relative trickle – and the PBoC now appears to have reported a substantial sale – see chart below courtesy of Nick Laird’s www.goldchartsrus.com website:

China’s REPORTED monthly gold reserves since 2000

 

China has been known to play reporting games with its announced gold reserve levels, with gold volumes held in ‘non-reportable’ accounts which have then subsequently been moved into its Forex holdings as reported to the IMF.  The latest PBoC announcement puts the nation’s gold reserve at 1.821 tonnes – down from 1,842.6 tonnes as reported to the IMF for November (there is a marginal disparity here between the two reports, but of less than one tonne).

Now this may be a blip, an accounting correction, or a change in tack by the central bank – we probably won’t know without official comment from the Chinese, or until we see the January 2017 figure in a month’s time – if then – but we do know that Chinese Forex reserves have been under pressure, despite their apparently huge US$3 trillion plus size.  In part, apparently, the strain on Forex reserves has been in an attempt to prevent the yuan falling further against the US dollar and giving more ammunition for President Trump, when he takes office in 10 days time, for branding China as a currency manipulator and taking retaliatory measures accordingly.  Contrary to the Trump stated viewpoint, though,  most economists seem to believe that the yuan is actually overvalued but, as is almost always the case in economics there will also be respected economists with the opposite opinion.

China’s Forex reserves did indeed fall in December, but by a smaller than expected, by $41 billion to remain at $3.01 trillion.  If the yuan remains under pressure, we could well see further sales in the months ahead.

This, of course, drives a coach and horses through the mainstream analysts’ early year estimates of central bank buying during 2016, and only leaves Russia and Kazakhstan as continuing regular gold buyers of any significance.  With reported Indian demand being heavily down this year – although the volume of smuggled gold into that nation makes the true figures difficult to ascertain –  and the fall in SGE withdrawals in China, the projected gold supply/demand balance will have been upset quite considerably during the year.  Thus month by month demand figures from China, India and countries like Turkey, and whether new mined gold output has indeed peaked as some analysts have been predicting, could make 2017 a pretty uncertain year for gold fundamentals.

But overall it appears to be investor sentiment, rather than strict supply/demand fundamentals, which drives the gold price, and enough geopolitical and economic uncertainty ahead may well make true fundamentals relatively irrelevant, at least in the short to medium term.  Gold can, and does, ignore commodity-type fundamentals given its parallel monetary and safe haven insurance role.  It could, therefore, still have a very positive year ahead whether the Chinese are looking at gold from a more pragmatic viewpoint in terms of its utilisation in balancing the books and thus reducing its offtake, or not.  And with China, who knows?  The nation has had years of practice in obscuring its real gold buying – could this just be another case of announcing a fall in its official gold statistics in an attempt to muddy the waters further?

 

end

 

Yet the mint records a huge 15% increase on the first day sales in 2017

(courtesy Kitco)

U.S. Mint: 15% Increase In First-Day 2017 Gold Bullion Coin Sales

By Kitco News
Tuesday January 10, 2017 08:26

(Kitco News) – Along with the paper precious metals market, the physical market is off to a good start as the U.S. Mint said it saw strong demand for gold and silver bullion coins on the first day of sales in the new year.

The U.S. Mint started selling 2017-minted gold and silver coins Monday and reported strong demand compared to last year’s first-day sales. According to a press release, the mint sold 68,000 ounces of gold in various denominations of American Eagle gold bullion coins.

The Mint said that first-day sales increased 15% compared to 2016. One-ounce Buffalo bullion coins was slightly weaker, with first-day sales of 20,500 coins, down by 500 coins compared to last year.

Silver was even in stronger demand. On the first day of the new year, the Mint said it sold more than 3.7 million one-ounce coins, an increase of 35% compared to last year’s initial sales.

The coin sales come as gold and silver has seen a strong start to the year. Tuesday, on increased safe-haven demand, February Comex gold futures rose to their highest level in over a month. The market is holding onto most of its gains, last trading at $1,183.50 an ounce, up 2.7% since the start of the year. At the same time, March Comex silver futures last traded at $16.64 an ounce, up more than 4%.

By Neils Christensen of Kitco News; nchristensen@kitco.com

-END-

 

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

1 Chinese yuan vs USA dollar/yuan DOWN to 6.9255(SMALL REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS   TO 6.90200 / Shanghai bourse CLOSED DOWN 9.57 POINTS OR 0.30%   / HANG SANG CLOSED UP 186.16 OR 0.83% 

2. Nikkei closed DOWN 152.89 POINTS OR .79%   /USA: YEN FALLS TO 116.23

3. Europe stocks opened ALL MIXED       ( /USA dollar index RISES TO  102.03/Euro DOWN to 1.0561

3b Japan 10 year bond yield: RISES TO    +.064%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.23/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.10  and Brent: 55.01

3f Gold DOWN/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund REMAINS AT  +.281%/Italian 10 yr bond yield UP  to 1.900%    

3j Greek 10 year bond yield FALLS to  : 6.895%   

3k Gold at $1181.60/silver $16.58(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   6/100 in  roubles/dollar) 60.08-

3m oil into the 52 dollar handle for WTI and 55 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT 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 116.23 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0161 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0731 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.281%

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

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

4. USA 10 year treasury bond at 2.390% early this morning. Thirty year rate  at 2.984% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Dollar Falls On Fading Trump Euphoria; Sterling Slide Spikes UK Stocks; US Futures Flat

Global stocks were fractionally lower in early European trading, closed Asia mixed, while S&P futures were unchanged, as the dollar fell for a second day on concerns ahead of Trump’s press conference on Wednesday. Oil rebounded after its Monday plunge, while commodity metals like iron ore rose limit up in Chinese trading. Top overnight stories include Valeant announcing the sale of $2.1 billion in assets to pay down debt; VW managers warned to stay in Germany as U.S. charges near; Yahoo! plans to shrink board, get rid of Marissa Meyer and change its name after Verizon deal.

On Monday, declines in energy and financial stocks weighed on the S&P 500 and helped stall the Dow’s pursuit of the 20,000 milestone ahead of earnings season and expected U.S. policy changes under Trump. Weakness spread to the the dollar, which has dipped against the euro and yen as euphoria over Trump policies is now fading, and was 0.15% lower against a basket of six major peers, at 101.62 slipping further from last week’s high of 103.82, its highest level since 2002.

The Bloomberg Dollar Spot Index weakened for the fourth time in five days ahead of the U.S. president-elect’s first news conference since July on Wednesday, and has now lost all YTD gains.

“The market has high expectations for Trump’s economic policy; perhaps they are booking profits just in case he throws in a curve-ball at tomorrow’s much anticipated press conference,” said City Index research director Kathleen Brooks.

Speaking of Trump’s upcoming statement, “the market is increasingly nervous about Donald Trump’s press conference on Wednesday. For FX markets, what will be particularly important will be what his plans are for the trade policy, for the relationship with China,” said Commerzbank currency strategist Esther Reichelt, in Frankfurt.

The pound touched its lowest level since Oct. 25 after U.K. Prime Minister Theresa May said over the weekend that negotiations on Brexit will be about “getting the right relationship, not about keeping bits of membership.”  A so-called hard Brexit may push the Bank of England to keep rates lower for longer, while weakening the pound and supporting foreign-focused companies in the main stock index. The currency was down 0.2 percent at 1.2153 per dollar Tuesday. As a result of the ongoing plunge in sterling, the FTSE not only hit a new record high, but continued its unbroken pattern of gains, rising for the 11th consecutive session, the longest winning streak in 33 years.

Oil prices were a touch firmer at $55.11 LCOc1, a day after suffering their biggest one-day loss in six weeks. They fell nearly 4 percent on Monday on fears that record Iraqi crude exports in December, increased supplies from Iran and rising U.S. output would undermine an agreement by exporters to curb production.

Looking at Asian markets, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS advanced just 0.5 percent, while Chinese stocks .CSI300 were little changed, largely shrugging off further signs of improvement in the industrial sector. Data showed producer inflation surged to a more-than-five-year high in December as raw materials prices soared.

This morning in Asian economics, the focus has turned over to the latest inflation report in China. The data has made for slightly mixed reading with CPI printing at +2.1% yoy in December which is down from +2.3% in November and also slightly lower than expected (+2.2% expected) following a slowdown in food price inflation. However, PPI has surged to +5.5% yoy (vs. +4.6% expected) from +3.3% and in doing so has reached the highest level since September 2011.

“Reflation continues in the factory sector,” said Julia Wang, an economist at HSBC Holdings Plc in Hong Kong. “The stable CPI suggests that the reflation is confined mostly in the industrial sector and hasn’t filtered into the real economy. So the PBOC would possibly not respond to it until inflation expands to the real economy.”

“Factory reflation is a positive for China’s economy – real borrowing costs are now negative,” Bloomberg Intelligence Chief Asia Economist Tom Orlik wrote in a note. “Rate hikes are part of the policy debate again, especially given the need to support a weak yuan.”

“The risk is to the upside for inflation and removes the possibility for near-term policy easing,” said Li Wei, the China and Asia economist for Commonwealth Bank of Australia in Sydney.Only four months out of a multi-year factory deflation, the world’s second-largest economy is poised to export inflation around the globe through its supply chains as manufacturers squeezed by higher input costs raise asking prices. Whether that rebound will be sustained hinges on how the global economy fares under a Donald Trump presidency and whether trade tensions flare between the U.S. and China.

In Europe, the Stoxx Europe 600 Index was little changed in London.  Miners led European gains after China’s producer price index rose at the fastest pace in more than five years in December. Wm Morrison Supermarkets Plc climbed 4.2 percent in the U.K. after reporting better-than-forecast holiday sales.

In the US, S&P 500 futures were likewise little changed after closing Friday at an all-time high.

In rates, Yields on Treasury notes were little changed at 2.37 percent.  Mozambique’s dollar bonds due January 2023 plunged to 54.83 cents on the dollar, an all-time low, on bets the nation won’t settle a coupon payment next week. Bonds in core European countries are little changed, while Italy, Spain and Portugal extended gains.

* * *

Market Snapshot

  • S&P 500 futures down less than 0.1% to 2264
  • Stoxx 600 down 0.2% to 363
  • FTSE 100 up less than 0.1% to 7245
  • DAX down less than 0.1% to 11559
  • German 10Yr yield up less than 1bp to 0.28%
  • Italian 10Yr yield down 1bp to 1.88%
  • Spanish 10Yr yield down 2bps to 1.45%
  • S&P GSCI Index up 0.6% to 392.7
  • MSCI Asia Pacific up 0.1% to 139
  • Nikkei 225 down 0.8% to 19301
  • Hang Seng up 0.8% to 22745
  • Shanghai Composite down 0.3% to 3162
  • S&P/ASX 200 down 0.8% to 5761
  • US 10-yr yield up less than 1bp to 2.37%
  • Dollar Index down 0.15% to 101.78
  • WTI Crude futures up 0.5% to $52.23
  • Brent Futures up 0.4% to $55.18
  • Gold spot up 0.3% to $1,184
  • Silver spot up 0.3% to $16.61

Global Headline News

  • Valeant to Sell $2.1 Billion in Assets to Pay Down Debt: L’Oreal to pay $1.3b for skincare three brands; China’s Sanpower to buy Dendreon cancer unit for $820m
  • Alibaba Takes Big Step Offline With $2.6 Billion Intime Deal: Alibaba prices Intime at HK$10/share in take-private deal; deal expands e-commerce giant’s growing physical footprint
  • VW Managers Warned to Stay in Germany as U.S. Charges Near: filing against arrested VW executive points toward superiors
  • Alphabet Said in Talks to Sell Skybox Satellite Business: Planet Labs may buy Skybox and gain new employees from deal
  • Google May Pay EU280m to Settle Tax Probe in Italy: Repubblica
  • Yahoo Plans to Shrink Board, Change Name After Verizon Deal: Marissa Mayer is among six directors who plan to leave board of investment co. that will be left after closing of proposed sale of Yahoo’s main internet properties to Verizon
  • Snapchat Owner Makes U.K. Tax Hub in International Expansion: messaging app maker is adding staff and office space in London
  • Trump’s Son-in-Law Kushner to Take Unpaid White House Role
  • President Obama delivers “farewell address to nation”

Asian equity markets traded mostly lower following a similar lead from Wall St. where the S&P 500 and DJIA were dragged lower by the energy sector, with the NASDAQ 100 outperforming on Apple’s 1% gains. Japanese participants returned from public holiday with a firmer JPY dampening sentiment and leading Nikkei 225 (-0.8%) lower, while losses of over 3.5% in Fast Retailing shares further added to the slump. ASX 200 (-0.8%) snapped its 5-day winning streak and was pulled down by the energy sector after Brent crude futures declined below the 56.00 and 57.00 handles yesterday, however losses have been capped by mining names amid the near 1% rise seen is gold on Monday. In China, markets were mixed as reports that China regulators are looking to loosen restrictions on index futures trading boosted Hang Seng (+0.4%), while Shanghai Comp (-0.3%) took a hit after mostly worse-than-expected Chinese data. 10yr JGBs traded higher on return from Coming of Age holiday amid the risk averse tone in the region, with the yield curve steepening slightly amid outperformance in the super-short end.

Top Asian News

  • China Factory Prices Rising Fastest in 5 Years: From being a drag on global inflation, China is potential force pushing prices higher
  • India Auto Sales Plunge Most in 16 Years on Modi’s Note Ban:

European equities are somewhat softer this morning albeit modestly so, with the exception of the FTSE 100 which continues to print fresh record highs amid the persistent fall in GBP. On a sector specific basis, UK grocery names are tracking higher with Morrison’s outperforming after reporting their best Christmas sales performance in 7-years, alongside the latest Kantar market share update. Elsewhere, WTI and Brent crude futures are a touch firmer today as oil nations begin to implement their production cuts, with Iraq cutting 160k bbls of the agreed 210k bbls.
In fixed income markets, this has been a quieter affair with yields largely unchanged while bunds hold above the
163.00 level. Elsewhere, the German-Spanish 10yr spread has noticeably tightened with the spread now sitting at 117bps.

Top European News

  • Metro Holiday Sales a ‘Cold Shower’ for Retailer Chasing Growth: co. cites ‘challenging’ market in December quarter; sales at Media-Saturn electronics stores were flat on year
  • Morrison Holiday Sales Beat Ests., Sees FY Pretax Above Ests.: holiday LFL sales ex-fuel up 2.9%, est. up 1.1%
  • Retailers Gain After Better-Than-Expected Morrison Results
  • Europe Left in Cold as Frost Triggers Global LNG Hunt: temperatures in southeast Europe may fall to -12C Tuesday; France, Greece are seeking extra gas supplies to meet demand
  • German Utilities Face Tough Year as Power Rally Set to Stall: companies may be forced to restructure, sell or close units

In currencies, the Bloomberg Dollar Spot Index dropped 0.1% as of 10:44 a.m. London time, leaving the gauge down 1% since touching a 14-year high on Jan. 3. The pound touched its lowest level since Oct. 25 after U.K. Prime Minister Theresa May said over the weekend that negotiations on Brexit will be about “getting the right relationship, not about keeping bits of membership.”  A so-called hard Brexit may push the Bank of England to keep rates lower for longer, while weakening the pound and supporting foreign-focused companies in the main stock index. The currency was down 0.2 percent at 1.2142 per dollar Tuesday. The euro rose 0.1 percent.

In commodities, West Texas Intermediate crude added 0.3 percent to $52.28 a barrel after sinking 3.8 percent last session as an increase in U.S. drilling offset signs that OPEC members are sticking to planned output cuts. Iron ore futures for May delivery rose 5.5 percent to 580 yuan/ton on Dalian Commodity Exchange, the highest since Dec. 16, following a gain in factory prices in China. Gold advanced 0.3 percent to $1,184.00 an ounce, with demand forecast to rise ahead of Chinese New Year. Zinc rose 2.2 percent to a three-week high of $2725.50 a metric ton on signs that demand for the metal used to produce galvanize steel would increase in China.

Looking at the day ahead, this morning in Europe the only data due out comes from France where we’ll receive the November industrial and manufacturing production report. Over in the US the early data due out is the NFIB small business optimism survey which surged to 105.8 in December from 98.4. The final November wholesale trade sales and inventories revisions follow that before we then get the November JOLTS job openings report. Away from the data, President Obama is due to deliver a televised farewell speech from Chicago ahead of Trump’s general news conference tomorrow.

* * *

US Event Calendar:

  • 6am: NFIB Small Business Optimism, Dec. 105.8, est. 99.5 (prior 98.4)
  • 8:55am: Redbook weekly sales
  • 10am: Wholesale Inventories MoM, Nov. F, est. 0.9% (prior 0.9%)
  • 10am: JOLTS Job Openings, Nov., est. 5,500k (prior 5,534k)
  • 4:30pm: API weekly oil inventories

US Government:

  • 9:30am: Senate Judiciary Cmte hearing on nomination of Sen. Jeff Sessions, R-Ala., for attorney general
  • 1pm: Senate Intelligence Cmte hearing on Russian intelligence activities
  • 3:30pm: Senate Homeland Security Cmte hearing on nomination of retired Gen. John Kelly for Homeland Security secretary
  • 9pm: President Obama delivers “farewell address to nation”

* * *

DB’s Jim Reid concludes the overnight wrap

Although quiet, markets reversed much of Friday’s moves yesterday. The S&P 500 closed -0.35% and 10y Treasury yields ended 5.5bps lower at 2.365%. The Dow also finished the day -0.38% with that elusive 20,000 level for the index still proving to be a tough hurdle to clear. Credit markets also softened a touch (CDX IG +1bp wider) although primary markets continue to surge on with another $10bn pricing in US IG yesterday following the bumper issuance week last week. For the most part you can put the slightly softer tone for risk yesterday down to the -3.76% decline for WTI Oil. Natural Gas also tumbled -5.11%  and is down over -16% in 2017 already. Some record export data out of Iraq last month was cited as a trigger for the Oil decline while there was plenty of focus still on the US rig count data with the latest reading revealing that the number of rigs has risen for ten weeks in a row now and to the most since December 2015.

Meanwhile closer to home the Brexit debate has come back to the forefront. Sterling (-1.01%) tumbled to $1.2163 yesterday and in doing so closed at the lowest level since October 11th.Much of that move  occurred early on following PM Theresa May’s interview with Sky News over the weekend in which she highlighted that the UK will not look for piecemeal access to the EU. Chancellor Hammond also spoke yesterday and confirmed that no decision has yet been made on the UK’s trading relationship with the EU and that negotiations may need to include a discussion about what the interim period should look like. On a related topic there’s now the possibility for a snap election in Northern Ireland following the resignation of the deputy first minister yesterday over the handling of a public spending scandal which may well complicate Northern Ireland’s approach to the UK leaving the EU.

This morning in Asia the focus has turned over to the latest inflation report in China. The data has made for slightly mixed reading with CPI printing at +2.1% yoy in December which is down from +2.3% in November and also slightly lower than expected (+2.2% expected) following a slowdown in food price inflation. However, PPI has surged to +5.5% yoy (vs. +4.6% expected) from +3.3% and in doing so has reached the highest level since September 2011. That continues what has been a remarkable swing in momentum for prices at the factory gate, driven primarily by the mining sector, which turned positive last September following 54 consecutive months of deflation. Markets have been fairly directionless in Asia though this morning. Bourses in China are little changed while the Nikkei (-0.59%), Kospi (-0.16%) and ASX (-0.89%) are lower, however the Hang Seng (+0.20%) has edged slightly higher. Oil is little changed while in FX the offshore RMB (-0.12%) has been a lot more orderly this morning following the volatility over the last week or so.

In terms of other markets yesterday, it was a similar story in Europe too where the Stoxx 600 finished -0.49% (where weakness for financials also weighed in conjunction with the decline for energy stocks) and the DAX -0.30%. The FTSE 100 (+0.38%) stood out however, boosted by that weakness for Sterling. In rates we also saw 10y Bund yields edge down 2.2bps to 0.272% while yields in the periphery were 7bps to 8bps lower. Meanwhile Gold (+0.72%) extended its strong start to the year along with other precious metals.

Meanwhile, one interesting story yesterday was the news that Italy’s anti-establishment Five Star Movement had their membership request rebuffed by the pro-business Liberals in the European Parliament. This came after Five Star had voted to break their alliance with the UKIP party in favour of the Alliance of Liberals and Democrats for Europe. The leader of the Alliance of Liberals – former Belgium PM Guy  Verhofstadt – said that there was insufficient common ground to proceed with a tie up which appears unsurprising given the Alliance’s staunch support of the EU and shared currency. While Five Star leader  Beppe Grillo had put down his decision to try to align with the Liberals to practical reasons, there is also some suggestion that Grillo may have been trying to tone down Five Star’s reputation for Euroscepticism according to the FT.

Moving on. With regards to the economic data, there wasn’t a huge amount to report of. In the US the sole release was the November consumer credit print which came in much higher than expected ($24.5bn vs. $18.4bn expected) from $16.1bn in the month prior. Revolving credit was reported as jumping by the second most since February 2001. Over in Europe there was good news with the latest Sentix investor confidence reading for the Euro area, with confidence rising 8.2pts in January to 18.2 (vs. 12.8 expected) and to the highest level since August 2015. In Germany industrial production rose +0.4% mom in  November which was a little bit below consensus (vs. +0.6% expected) but came following an upwardly revised +0.5% mom in October. In addition, the latest trade data in Germany revealed that exports surged +3.9% mom in November and well ahead of expectations (vs. +0.5% expected). Our economists in Europe noted that the hard data right now in Germany would point to slight upside risks to their Q4  GDP forecast of +0.5% qoq although it’s possible that the December production data will reveal a slowdown as a result of weakness in the auto sector.

Meanwhile over at the ECB the latest CSPP holdings data was released yesterday. Unsurprisingly the data is heavily impacted by the holiday period however. As of January 6th, total holdings amounted to  €51.84bn which implies net purchases settled of just €0.77bn in the week. That is less than half the usual weekly pace but as a reminder only includes trades that settled in the first week of January, with the previous week being the holiday season. Elsewhere, there was a bit more Fedspeak to digest yesterday. The Boston Fed’s Rosengren (who in the past has been considered as a more dovish leaner) opined that  “we’re already running the economy a bit hot” and that “we’re at full employment”. As a result he said “a still gradual but somewhat more regular increase in the federal funds rate will be warranted”. Meanwhile the Atlanta Fed’s Lockhart, who is retiring at the end of next month, said that he was more inclined to favour two rate hikes this year, rather than three.

Before we wrap up, a quick mention that yesterday our House View team published their 2017 outlook. The team notes that the outlook has improved for developed economies as growth momentum has picked up in recent months and risk assets across the board have continued the rally sparked by Trump’s unexpected victory. But far more importantly, they believe that the election of Trump will fundamentally re-order the economic, financial and security arrangements of the post-WW2 era, and believe that these changes will have a significant impact on the economic performance of nations, industries and corporates across the globe.

Looking at the day ahead, this morning in Europe the only data due out comes from France where we’ll receive the November industrial and manufacturing production report. Over in the US the early data due out is the NFIB small business optimism survey which is expected to show a small increase in optimism in December. The final November wholesale trade sales and inventories revisions follow that before we then get the November JOLTS job openings report. Away from the data, President Obama is due to deliver a televised farewell speech from Chicago ahead of Trump’s general news conference tomorrow.

end

i)Late  MONDAY night/TUESDAY morning: Shanghai closed DOWN 9.57 POINTS OR 0.30%/ /Hang Sang closed UP 186.16 OR 0.83%. The Nikkei closed DOWN 152.89 POINTS OR .79% /Australia’s all ordinaires  CLOSED DOWN 0.76%/Chinese yuan (ONSHORE) closed WELL UP at 6.9255/Oil FELL to 52.10 dollars per barrel for WTI and 55.01 for Brent. Stocks in Europe: ALL MIXED. Offshore yuan trades  6.90200 yuan to the dollar vs 6.9255  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS AGAIN AS  DOLLARS ATTEMPT TO  LEAVE CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA 4 EUROPEAN AFFAIRS 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

The Turkish lira falters to 3.78 to the dollar.  It even touched 4 to one yesterday. This nation is in trouble financially due to its huge external debts in dollars and the constant militant attacks on its soil by ISIS and/or PKK

(courtesy zero hedge)

Turkish Central Bank Intervenes To Halt Record Plunge In Lira

It was another bad day for the Turkish lira, which after plunging 5.8% in the first days of 2017, fell as much as 1.8% in early trading, dropping to a new all time low of 3.78 against the dollar, down nearly 7% YTD against the USD, pressured by a deteriorating economy, unpredictable terrorist and militant attacks, and a authoritarian president. The lira also passed 4 to the euro for the first time on Tuesday, with a deputy prime minister saying the economy was being targeted by “sabotage and attacks”.

Market focus has turned on the lira as a result of Turkey’s large external borrowing requirement which makes its currency one of the most vulnerable currencies to tightening by the Fed.

Not helping matters is that Turkish residents have been flocking to the stability of hard currencies, the opposite of what President Recep Tayyip Erdogan has been urging. As the following Bloomberg chart shows, deposits in foreign exchange for individuals and companies excluding banks rose for a third week, signaling a lack of confidence in the lira. It’s the biggest loser among world currencies so far in 2017.

Additionally, Turkish economic growth has remained sluggish and inflation is rising, yet the central bank has been under pressure from President Tayyip Erdogan not to hike interest rates. A series of gun and bomb attacks have heightened security concerns. On Tuesday the Turkish parliament voted to press on with a debate about constitutional reform to strengthen the powers of President Tayyip Erdogan.

“Nobody wants to be the last one in there and everyone is running for the door. There are no signs from the authorities that they are taking it seriously,” said Jakob Christensen, head of EM research at Danske Bank. Christensen said the risk of further attacks was undermining the tourist sector, which is vital for the economy and balance of payments.

Making matters worse, and confirming the currency crisis is becoming one of credit, Turkish five-year credit default swaps rose four bps to 288 bps according to Markit data, a one-month high, and the yield premium paid by Turkish sovereign bonds over U.S. Treasuries on the JPMorgan EMBI Global Diversified widened out 4 bps to 377 bps.

And while the central bank’s hand are largely tied as per Erdogan’s decree that no rates are to be hiked, moments ago the monetary authority had no choice but to intervene when it cut FX required reserve amounts by 50 bps, which it said would boost liquidity by around $1.5 billion, citing “unhealthy” price formation. In a statement on its website, the central bank also said the that additional steps might be taken to protect price and financial stability if necessary.  It noted that it monitors “excessive volatility” in markets. The Cenbank also lowered commercial lenders’ total borrowing limits in interbank money markets to 22b liras from Wednesday without saying what the previous limit was.

While the lira spiked modestly higher in kneejerk reaction, if recent similar overtures by its pressured EM peers are any indication, this latest intervention should have a half life of about an hour before the modest gains are all gone.

end

6.GLOBAL ISSUES

After spending 4 billion USA defending the Peso, it is crashing again to record lows:

(courtesy zero hedge)

The Mexican Peso Is Crashing (Again) To Record Lows

Well that was $4 billion well spent…

Following an unexpected plunge in fixed capital investment  (-0.9% YoY vs +0.3% expectations), the peso has crashed to record lows…

end

7. OIL ISSUES

Iraq is becoming very aggressive in its production output.  It was suppose to cut not increase its production:

(courtesy zero hedge)

Despite OPEC Cuts, Iraq To Boost February Oil Exports To Record High

One month ago, we were surprised to report that while oil traders and analysts were expecting OPEC member nations to, at least initially, pretend to comply and affirm their adherence to the production cuts as per the the Vienna meeting (before eventually cheating on their quotas), a very aggressive Iraq was not only not cutting output, but according to Iraq’s national oil company, the State Organization for Marketing of Oil (SOMO), had disclosed plans as of December 8, nine days after agreeing to cut production, to increase deliveries of its Basra oil grades by about 7% to 3.53 million barrels a day compared with October levels. The unexpected news was first reported by the WSJ which obtained a detailed oil-shipment program: such oil shipments represent about 85% of Iraq’s exports.

To be sure, Iraq did come up with a convenient scapegoat when just days later it blamed the autonomous Kurdish region of exporting more than its allocated share of oil. As a reminder, as part of the deal, Iraq, OPEC’s second largest producer, agreed to reduce output by 210,000 bpd to 4.351 million bpd. However, it immediately accused Kurdistan, over whose oil production Iraq’s level of control is limited at best, of producing well more than its quota.

“The region is exporting more than its share, more than the 17 percent stated in the budget,” Iraq oil minister Haider al-Abadi said at the time.

Fast forward to this morning, when Reuters, looking at the same loading schedules, reported that Iraq plans to raise crude exports from its southern port of Basra to an all-time high in February, keeping exports high even as OPEC production cuts take effect this month.

Just like last month, the country’s State Oil Marketing Company (SOMO) announced plans to export 3.641 million barrels per day (bpd) of crude in February, according to trade sources and preliminary loading schedules obtained by Thomson Reuters on Tuesday, beating a record of 3.51 million bpd set in December. The February volume includes 2.748 million bpd of Basra Light and 893,000 bpd of Basra Heavy, the documents showed.

Reuters adds that for January, SOMO had planned to export 2.627 million bpd of Basra Light and 903,000 bpd of Basra Heavy. Basra crude accounts for the bulk of oil exports from Iraq.

Surprisingly, despite the jump in exports, Iraq’s oil ministry said on Tuesday it has cut oil production by 160,000 bpd since the beginning of January in line with the OPEC decision.

While it is unknown if Iraq will again blame the Kurds on its seeming non-compliance, when despite allegedly cutting production it continues to capture market share by expoerting more, oil has slid and at least in early trading was down to session lows, and was approaching a critical support level.

 

 

end

 

More inventory builds in crude:

(courtesy zero hedge)

Oil Holds Losses After Inventory Data Shows More Builds

Having tumbled to a $50 handle during the day session, WTI Crude whipsawed to unchanged after API reported 1.53mm crude build (in line with expectations), a Cushing draw, and builds again (after last week’s massive builds) for gasoline and distillates.

 

API

  • Crude +1.53mm (+1.5mm exp)
  • Cushing -187k
  • Gasoline +1.69mm
  • Distillates +5.48mm

After a big crude draw and massive product inventory builds last week, it appears things have calmed down a little…

 

The reaction was a quick jump higher and fade back to unch…

 

And finally we note that:

  • *GUNDLACH EXPECTS OIL TO VACILITE IN $45-$55 RANGE IN 2017
8. EMERGING MARKETS

Venezuela hikes the minimum wage by 50% equivalent to 12 dollars USA per month. This nation is in serious trouble despite having the greatest amount of oil reserves in the ground

(courtesy zero hedge)

Venezuela Hikes Minimum Wage By 50% “Due To Economic War And Mafia Attacks”

With (hyper)inflation expected to hit 1,660% this year and 2,880% next, Venezuela’s President Maduro hiked the minimum wage another 50% on Sunday, the fifth increase in the past year (for a total annualized increase of 536%), to help shield workers from ‘economic war’.

As Reuters reports, the measure puts the minimum monthly salary at 40,683 bolivars – about $60 at the weakest exchange level under the state’s currency controls, or $12 at the black market rate.

“To start the year, I have decided to raise salaries and pensions,” he said on his weekly TV and radio program.

“In times of economic war and mafia attacks … we must protect employment and workers’ income,” added Maduro, who has now increased the minimum wage by a cumulative 322 percent since February 2016.

The 54-year-old successor to Hugo Chavez attributes Venezuela’s three-year recession, soaring prices and product shortages to a plunge in global oil prices since mid-2014 and an “economic war” by political foes and hostile businessmen.

But critics say his incompetence, and 17 years of failed socialist policies, are behind Venezuela’s economic mess.

They say the constant minimum wage hikes symbolize Maduro’s policy failures and fail to keep pace with real on-the-street price rises.

Fox News also notes that Venezuela’s biggest employer, Fedecamaras, said that the pay increase was announced “without consultation” by the government and could reduce employment and result in the closure of companies that cannot deal with the hike.

And while the black market Bolivar rallied briefly as the bank-note ban debacle was put in place, the currency’s street worth is collapsing once again…

But, as The Washington Post reports, while the government has been able to censor the country’s main newspapers, so you won’t read much about crime in the media, death is one of the few guaranteed things you can find in Venezuela.

There are no official tallies of deaths related to violence, but some NGOs put last year’s national death toll as high as 24,000, which would make a total of 252,000 deaths since the revolution came to power 17 years ago.

There are an estimated 200,000 members of the Venezuelan security forces, but it doesn’t seem like that is enough.

Violence permeates everyday life here. In the streets, gangs clash with one another, with the police and with the army. Sometimes, police even clash among themselves. All of these factions wield power and abuse it. Caught in the middle of all of this, ordinary citizens buy guns to protect themselves. Whether it’s the loss of a friend or a relative, everyone here has been touched by violence. Death is in the air.

Venezuela is a country that seems to be at war with itself. It’s not always clear who is who. It’s hard to know who to trust or who your enemy is, so you’re always looking over your shoulder, waiting for the next blow, unsure of where it will come from. Violence has so saturated life here that people have begun to see it as normal.

Read more here…

end And your humour story for today.  Curling on a grand scale in Canada:

The Joy of Winter Living in Canada

http://newsandbusiness.rogersdigitalmedia.com.edgesuite.net/videos/13639244001/201612/2850/13639244001_5238239279001_5238231028001.mp4

 

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   1.0561 DOWN .0024/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATE

USA/JAPAN YEN 116.23 DOWN 0.242(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2146 DOWN .0023 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3249 UP .0034 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS TUESDAY morning in Europe, the Euro FELL by 24 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0531; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 9.57 or 0.30%     / Hang Sang  CLOSED UP 186.16 POINTS OR 0.23%  /AUSTRALIA  CLOSED DOWN 0.76%  / EUROPEAN BOURSES ALL MIXED 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED DOWN 152.89 OR .79% 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 186.16 OR 0.83%  Shanghai CLOSED DOWN 9.57 POINTS OR 0.30%   / Australia BOURSE CLOSED DOWN 0.76% /Nikkei (Japan)CLOSED DOWN 152.89 OR .79%  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1181.60

silver:$16.57

Early TUESDAY morning USA 10 year bond yield: 2.390% !!! UP 1 IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.984, UP 1 IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 102.03 UP 19 CENT(S) from MONDAY’s close.

This ends early morning numbers TUESDAY MORNING

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And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield: 4.05% UP 7  in basis point yield from MONDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.064% UP 7/10  in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.47%  PAR  IN basis point yield from  MONDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.90  PAR  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 42 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.285% UP 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

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

Euro/USA 1.0561 DOWN .0023 (Euro DOWN 23 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 115.79 DOWN: 0.167(Yen UP 72 basis points/ 

Great Britain/USA 1.2161 DOWN 0.0008( POUND DOWN 8 basis points)

USA/Canada 1.3210 DOWN 0.0005(Canadian dollar  UP 5 basis points AS OIL FELL TO $51.41

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 23 basis points to trade at 1.0561

The Yen ROSE to 115.79 for a GAIN of 17 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 8  basis points, trading at 1.2161/

The Canadian dollar ROSE by 5 basis points to 1.3210,  WITH WTI OIL FALLING TO :  $51.41

The USA/Yuan closed at 6.9179 the 10 yr Japanese bond yield closed at +.064% UP 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield PAR IN basis points from MONDAY at 2.379% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.977 PAR  in basis points on the day /

Your closing USA dollar index, 102.07 UP 23 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 31.70 OR .52% 
German Dax :CLOSED up 19.31 POINTS OR 0.17%
Paris Cac  CLOSED up 0.66 OR 0.01%
Spain IBEX CLOSED DOWN 40.80 POINTS OR 0.43%
Italian MIB: CLOSED up 64.17 POINTS OR 0.33%

The Dow was DOWN 31.85 POINTS OR .16% 4 PM EST

NASDAQ WAS UP 02.00 POINTS OR .36%  4.00 PM EST
WTI Oil price;  51.41 at 1:00 pm; 

Brent Oil: 54.12  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.14 (ROUBLE DOWN 15/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.285%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$50.78

BRENT: $53.59

USA 10 YR BOND YIELD: 2.378%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.968%

EURO/USA DOLLAR CROSS:  1.0557 down .0028

USA/JAPANESE YEN:115.73  down 0.253

USA DOLLAR INDEX: 102.02  up 18  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2159 : DOWN 10  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.285%

END

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

TRADING IN GRAPH FORM

Bullion, Biotechs, & Banks Bid As Bonds & Black Gold Skid

Following this morning’s manic euphoria in small businesses and ahead of tonight’s delusion by Obama, given the market’s performance, this seemed appropriate…

But, it appears the hype of the reflation/growth trade is now well and truly over…

 

Financial conditions don’t seem to matter…

 

For now it’s all about 2018 or 2019 or 2020…?

 

Because trailing earnings are ‘disappointing’ to say the least…

 

And 2017 Earnings still haven’t been notched up by the analysts…

*  *  *

Having got all that off our chests… Nasdaq another record high as The Dow tried but failed again for 20k, clinging to unch as Small Caps and Trannies squeezed higher again…NOTE – once again we rallied into the European close and sold off… and once again a weak close

 

Nasdaq longest streak of gains to start a year since 2006.

 

Financials and Healthcare outperformed…

 

As Biotech stocks continue their charge higher, up 6 days in a row (longest win streak since July 2015) – best start to a year since 2000 (which was followed by complete carnage)…

 

Banks continue to tred water for the last few weeks ahead of this week’s chaos of earnings on Friday…

 

WMT stumbled into the red after announcing more layoffs…

 

VIX ended unchanged aftr the initial slam to send stocks higher…

 

The Dollar Index limped higher…

 

As Yuan weakened all day (back above 6.91/$)…

 

Treasury yields also limped higher today (long-end underperforming the short-end)…

 

WTI Crude front-month tumbled to a $50 handle at the NYMEX close…

 

Gold is up 11 of the last 13 days to 6 week highs…

 

Gold remains 2017’s biggest winner so far… with oil the biggest loser..

end

 

The following is a biggy:  we all wondered why Trump hired a huge number of Goldman Sachs former alumni and/or current members of the firm.  Now you will find out why!!!

(courtesy Russ and Pam Martens/WallStreet on Parade)

Here’s How Goldman Sachs Became the Overlord of the Trump Administration

By Pam Martens and Russ Martens: January 9, 2017

Occupy Wall Street Protesters Outside 15 Central Park West, the Residence of Lloyd Blankfein, CEO of Goldman Sachs

During his political campaign, Donald Trump repeatedly railed against Wall Street with a specific focus on Goldman Sachs. In the final days of his campaign, Trump released an advertisement (see video below) that featured his opponent, Hillary Clinton, shaking hands with Goldman Sachs CEO Lloyd Blankfein. As the image flickers on the screen, Trump does a voice over, stating: “”It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth, and put that money into the pockets of a handful of large corporations and political entities.” As the ad ends, Trump bares his soul: “I’m doing this for the people and for the movement and we will take back this country for you and we will make America great again.”

How did a candidate who repeatedly demonized Goldman Sachs as the poster child for a corrupt establishment that owned Washington end up with Goldman Sachs’ progeny filling every post that even tangentially has the odor of money or global finance? One answer is family ties; another may be something darker.

Trump’s non-stop nominations and appointments of Goldman Sachs alumni have left his supporters stunned. Trump nominated Steven Mnuchin, a 17-year veteran of Goldman Sachs to be his Treasury Secretary. Stephen Bannon, another former Goldman Sachs banker, was named by Trump as his Chief Strategist in the White House. The sitting President of Goldman Sachs, Gary Cohn, has been named by Trump as Director of the National Economic Council, which, according to its website, coordinates “policy-making for domestic and international economic issues.”  Last week, in a move that stunned even Wall Street, Trump nominated a Goldman Sachs outside lawyer, Jay Clayton of Sullivan & Cromwell, to serve as Wall Street’s top cop as Chairman of the Securities and Exchange Commission. Adding to the slap in the face to Trump’s working class supporters, Clayton’s wife currently works as a Vice President at Goldman Sachs.

But the Goldman Sachs’ ties don’t stop there. 

When Alexander Blankfein, the oldest son of Goldman Sachs’ CEO Lloyd Blankfein was married in 2013, Joshua Kushner attended the wedding. Joshua had been Alexander’s roommate at Harvard according to the New York Times. Joshua is the brother-in-law to a woman who will play a major role in the Trump administration – Ivanka Trump, daughter of the President-elect and wife of Joshua’s brother, Jared.

According to Politico, Goldman Sachs partner, Dina Powell, President of the Goldman Sachs Foundation, is Ivanka’s “top adviser on policy and staffing.”

Then there is Erin Walsh who had worked at Goldman Sachs since 2010 as an Executive Director and head of its Office of Corporate Engagement for Asia Pacific. Walsh also previously worked in the Bureau of Near Eastern Affairs at the U.S. Department of State. Walsh is now part of Trump’s transition landing team for the State Department and is engaged in prepping the just retired CEO of ExxonMobil, Rex Tillerson, for his Senate confirmation hearing this week to become the Secretary of the Department of State, according to Politico.

A recent Executive Director of Goldman Sachs preparing the recent titular head of Big Oil to pass muster to run the State Department is the Orwellian version of draining the swamp — and Trump’s pre-election campaign language is proving to have been very Orwellian, as in reverse-speak.

And there is yet another former Goldman Sachs banker, Anthony Scaramucci, who sits on Trump’s transition team.

Since 2010, according to Federal Election Commission records, Gary Cohn, the President of Goldman Sachs and Trump’s designee as Director of the National Economic Council, has given $148,800 to political candidates running for Federal office. No contributions were made to Donald Trump. Despite that, Cohn will sit atop a powerful body and have the President’s ear on both domestic and international economic issues. According to multiple media reports, Jared Kushner, Trump’s son-in-law, is a close friend of Cohn’s and set up the first meeting with Trump.

During the primary campaign, when it emerged that Trump’s opponent Ted Cruz had received a loan from Goldman Sachs, Trump said that Cruz was “owned” by Goldman Sachs. Now the Dow Jones company, MarketWatch, has reported that Trump’s debt is held by more than 150 Wall Street firms. The New York Times has reported that Goldman Sachs Mortgage Company holds a loan on an office tower at 1290 Avenue of the Americas, a building that is 30 percent owned by Donald Trump.

Some of the Trump debt held by Wall Street firms, according to media reports, includes Donald Trump’s personal guarantee in the event of a default. The true owners of other Trump debt are shielded behind secretive Limited Liability Corporations. These serious conflicts of interests together with the unprecedented infusion of Goldman Sachs honchos into his administration, have the potential to set a new low in Washington politics – an outcome that America can ill afford as it struggles to rise above the greatest economic collapse since the Great Depression just eight years ago.

The Senate is set to hold confirmation hearings on nine of Trump’s nominees this week. Call your Senator today and demand that he or she asks the questions that will get to the bottom of these Byzantine conflicts.

 

 

end

 

November inventories rise more than expected at 1.00% month over month while sales disappointed at .4%.  Thus the inventories to sales ratio climbed back up again ( 3.38 to one) and we are still stubbornly stuck in recessionary territory

(courtesy zero hedge)

Wholesale Sales Disappoint Sending Inventories-Ratio Back Into Recession Territory

November saw inventories rise more than expected (+1.0% MoM vs +0.9% exp) and sales disappoint (+0.4% vs +0.5% exp) and were notably revised lower. This sent the inventories-to-sales ratio back up again – stubbornly stuck in recessionary territory.

Both Inventories and sales grew year-over-year…

But the gap between inventories and sales grew in absolute terms for the first time since July…

Sending the inventories-to-sales ratio back up again…

Automotive inventories-to-sales jumped higher once again – back near cycle highs.

end

Janet’s favourite indicator, the JOLTS, seems to be going in the wrong direction for her:

(courtesy zero hedge)

Job Openings, Hires, Quits And Layoffs All Rebounded In November

While too backward looking to be actionable (it reflects the labor situation with a 2 month delay), today’s JOLTs report showed little in terms of changes for “Janet Yellen’s favorite labor market indicator”: the number of job openings was little changed at 5.522 million, below the 5.555 million expectation, but above a downward revised 5.451 million (from 5.534 million).

Hires and separations were also little changed at 5.219 million (up from 5.160 million), and 5.028 million (up from 4.966 million), respectively. Within separations, the quits rate was unchanged at 2.1 percent and the layoffs and discharges rate was unchanged at 1.1%. That said, the pace of hiring appears to have tapered off, after hitting cycle highs in February 2016 at 5.5 million, and remaining at levels largely unchanged over the past 2 years.

As shown in the next chart, while the trailing pace of job additions has been modestly declining in the past two years, net hiring also appears to have plateaued.

Meanwhile, discharges and other layoffs jumped by 68,000 in November rising to 1.637 million after hitting cycle lows of 1.513 million in September.

The offsetting good news, however, is that being “quits”, or the so-called take this job and shove it indicator, also rose, increasing by 41,000 to 3.064 million, just shy of the all time high reported last December when a total of 3.088 million workers quits their jobs on their own terms.

 

 

end

 

Good news at GM which jumped 5% today on higher 2017 profits and strong China sales.  They announced another 5 billion dollar buyback.  Remember that they laid off huge amount of people in 2016.  Also remember that they count sales the moment if leaves GM and not when it is sold to the consumer;

(courtesy zero hedge)

GM Shares Jump 5% After Forecasting Higher 2017 Profits, Strong China Sales, $5 Billion Buyback

So much for fears that a mini feud between the president-elect and General Motors, which was the target of one of Donald Trump’s “make it in the USA or else” tweets, could pressure the stock of the US automaker.

Moments ago, CEO Mary Barra,  who is presenting at the Global Auto Industry Conference hosted by Deutsche Bank, gave some good news to shareholders, when she revealed the company’s 2017 adjusted EPS forecast, which at $6.00-$6.50 was well above the consensus estimate of $5.73, and also substantially above the 2016 year end guidance presented on October 25, which forecast the auto company would make “at the high end” of a $5.50-$6.00 range. The improvement will be partially due to cost-savings, i.e., further layoffs, which are now targeted to contribute another $1 billion to the bottom line.

GM President Dan Ammann said: “It’s too soon to draw any firm conclusions obviously but December was a strong month capping off a pretty strong year, and early data on consumer confidence is favourable, equity markets are favorable, in all it looks like a favorable backdrop.”

Quoted by the FT, he said 2017 had “pretty robust underpinnings for another good year absent some external shock to the system”.

The company also expects to make more money in China, with slowing growth in the market offset by a demand for more expensive cars among increasingly-affluent consumers. “The growth rate is slowing down, pricing pressure is picking up, but much more of a mix in the market, we expect that dynamic to continue into 2017,” said Ammann.

The company also said that crossovers, trucks and SUVs as proportion of GM’s global volume of new or refreshed vehicles is expected to increase significantly to 52% in the 2017-2020 period compared to 38% in prior 6 years.

Finally, for good measure, Barra announced a fresh $5 billion buyback.

The combined effect of the two, has sent the stock surging as much as 5.6% higher, rising to a level not seen since March 2015…

… proppeling shares of Ford in sympathy, and prompting analysts (such as Goldman’s) to ask if the long-anticipated downturn in the auto cycle has once again been delayed.

 

 

end

This does not look good for the uSA economy:  Wal-Mart to cut hundreds of jobs before the end of January:

(courtesy zero hedge)

Wal-Mart To Cut “Hundreds” More Jobs Before End-January

Despite the proclamations from The White House and its lackeys that this is the best jobs recovery ever and we are at full employment, it appears all is not well at the world’s third largest employer.

We’ve discussed many times the fact that Walmart had been overly eager to boost everyone’s wage in order to appease the living wage crowd, and as a result the company had to move forward with massive layoffs and store closings to try and mitigate the impact on profits. Earlier last year we also noted that Walmart is testing out drones that when operational, will be able to carry out what once were human tasks in its large distribution centers. This effort will further position the company to be able to shed more labor and benefit expense in the future. That said, Walmart isn’t waiting for the drone initiative to come online.

After firing 7,000 in September, The Wall Street Journal reports, Wal-Mart is preparing another round of job cuts at its headquarters before the end of the month, according to people familiar with the situation.

The world’s biggest retailer plans to eliminate hundreds of jobs before the end of its fiscal year on Jan. 31, both at headquarters and regional personnel that supports stores, these people said. Many of the eliminations will affect Wal-Mart’s human resources department, a large team that some senior executives believe should be more efficient or whose duties could be handled by outside consultants, said these people. Other departments could be affected as well, say these people.

“We are always looking for ways to operate more efficiently and effectively,” said Wal-Mart spokesman Greg Hitt. “While we continually look at our corporate structure, we have not made any announcements.”

Other retailers have recently moved to slash jobs and close stores as they battle sluggish sales and try to save money to invest in their e-commerce efforts. Last week, Macy’s Inc. said it would close stores, cutting 10,000 jobs and streamlining operations.

Wal-Mart closed more than 150 U.S. stores last January, then in October said new-store openings would slow, but hasn’t announced plans for another round of large-scale closures.

So much for that minimum-wage PR-stunt, but at least the Walmart Greeter has returned

end Chaos runs supreme as now Trump has completed backtracked again as the repeal of the Obamacare is on!! (courtesy zero hedge) Healthcare Chaos Emerges After Trump Backtracks, Demands Immediate Repeal Of “Catastrophic” Obamacare

Perhaps as a result an angry backlash to last night’s report by the WSJ that President-elect Donald Trump had allegedly sided with Rand Paul in pushing to delay the repeal of Obamacare until such time as there is a suitable replacement option, which as we explained are two entirely distinct processes, and that an ACA replacement could take years as it would require bipartisan support, moments ago the the NYT reported that Trump appears to have backtracked on his position as recently as yesterday, and has pressed Republicans to move forward with the “immediate repeal” of the Affordable Care Act and to replace it very quickly thereafter, saying, “We have to get to business. Obamacare has been a catastrophic event.”

Trump’s position undercuts Republicans who want a quick vote to repeal President Obama’s signature domestic achievement but who also want to wait as long as two to three years to come up with an alternative. But more to the point presented last night, Trump’s latest statement also is challenging the resolve of Republicans in Congress who do not want any vote on a repeal until that replacement exists such as Rand Paul, with whom Trump was said to have sided over the weekend.

According to the NYT Trump, “who seemed unclear about the timing of already scheduled votes” in Congress this week, demanded a repeal vote “probably some time next week,” and said “the replace will be very quickly or simultaneously, very shortly thereafter.”

That, however, as the NYT correctly notes, is impossible as republicans in Congress are nowhere close to agreement on a major health bill that would replace President Obama’s signature domestic achievement. A number of Republicans in the House and Senate have said publicly that they wanted to hold off on voting to eviscerate the health law until a replacement measure could be negotiated. Additionally, Democrats and Republicans would have to agree on a replacement to the existing law, which as Goldman explained yesterday afternoon, is likely the bottleneck that could take as much as 2 years.

So what is the current status of this suddenly chaotic process?

For now, the Senate is planning to vote Thursday morning on a budget resolution that would set up parliamentary protections for a health care repeal bill that would have to emerge from House and Senate committees by Jan. 27. The House would vote on Friday if that budget measure clears the Senate.

While that plan is under pressure from Republicans who want to slow the process as they struggle for an agreement on what would follow repeal, Trump is now saying there is no cause for delay, a 180 degree change in the position he reportedly espoused over the past few days. Trump also said he would not accept a delay of “more than a few weeks” before a replacement plan was voted on.

“Long to me would be weeks,” he said. “It won’t be repeal and then two years later go in with another plan.” That directly contradicts House Speaker Paul D. Ryan’s plans.

Furthermore, in his conversation with the NYT, Trump showed no sign of willingness to accept the health law any longer, despite numbers released today according to which some 11.5 million Americans have picked marketplace plans for 2017.

“It’s a catastrophic event,” he said. “I feel that repeal and replace have to be together, for very simply, I think that the Democrats should want to fix Obamacare. They cannot live with it, and they have to go together.”

And that’s where he is wrong, because Democrats would be delighted to not fix Obamacare, leaving over 11 million Americans uninsured, and furious at Trump for removing their insurance protections.

Trump, however, disagrees and has issued a political warning to Democrats who might stand in his way, saying he would campaign against lawmakers, especially in states that he won in November.

“It may not get approved the first time, and it may not get approved the second time, but the Democrats who will try not to approve it” will be at risk, warning that “they have 10 people coming up” for re-election in 2018. That alluded to Democratic senators in states he won.

“I won some of those states by numbers that nobody has seen. I will be out there campaigning,” he said.

To summarize, with Trump suddenly backtracking on a position he allegedly had as recently as yesterday, it appears the repeal of Obamacare will proceed as expected, and quickly, even though as of this moment, there are no concerte plans how to proceed with conceiving and implementing a replacement to the soon to the be repealed ACA. In other words, Chaos.

 

END

 

The following is an accident waiting to happen:

(courtesy zero hedge)

 

Obama Slashes Mortgage Insurance Premiums For Subprime Borrowers With Just 10 Days Left In Office

What do you do when a quick rise in mortgage rates suddenly threatens to tame home buying demand from subprime borrowers who, despite the lessons from the past, are still purchasing homes, en masse, with only 3.5% down payments and just enough monthly cash flow to cover mortgage payments?  Well, if you’re the Obama administration then you simply socialize the problem and force those higher mortgage costs on taxpayers.  Anything less would just be a hateful attempt to deny minority and low-income citizens their “right” to home ownership.

And while the Obama administration isn’t directly passing out tax dollars to subprime borrowers to make their monthly mortgage payments, its recent decision to lower the FHA’s annual mortgage insurance premiums by 0.25% is essentially the same thing since tax payers are still on the hook for the same risk but receiving lower premiums in return.  Per Bloomberg:

The FHA doesn’t make mortgages. It sells insurance, paid by borrowers, on loans protecting investors in case of default. The program allows borrowers to get a mortgage with a down payment of as little as 3.5 percent and a credit score of as low as 580, on a scale of 300 to 850. That makes it one of the most forgiving mortgage programs and popular among first-time home buyers.

 

Some in the real-estate industry have been calling for another fee cut and heralded Monday’s move.

 

“Dropping mortgage insurance premiums today will mean a whole lot more responsible borrowers are suddenly eligible to purchase a home through FHA,” William Brown, president of the National Association of Realtors, said in a statement.

 

The FHA last cut premiums two years ago. That cut, which came as rates dropped and lowered the annual fee for most borrowers to 0.85 percent from 1.35 percent, led to a wave of refinances.

We vaguely remember something like this happening about 8 years ago and, while we’ll have to check our files, our recollection is that it didn’t work out all that nicely.

Of course, the move was intended to offset the recent ~60bps rise in average 30-year mortgage rates…because we simply can’t sit idly by while markets attempt to actually work.

 

The private mortgage insurers, who have to compete with federally subsidized rates, shed about 5% of their market cap on the news.

 

Meanwhile, at least one Congressman, representative Jeb Hensarling of Texas, noted to Bloomberg that the Obama administration’s last minute parting gift to the U.S. taxpayer put them at “greater risk of footing the bill for yet another bailout.”

Representative Jeb Hensarling of Texas, chairman of the House Financial Services Committee, called the fee reduction “irresponsible.”

 

“It seems the Obama administration’s parting gift to hardworking taxpayers is to put them at greater risk of footing the bill for yet another bailout,” Hensarling said.

But we wouldn’t worry too much, the FHA only required a $1.7 billion taxpayer bailout last time around…no big deal really.

 

 

END

Activists are planning to turn the Trump inauguration into one of the biggest riots in USA history; (courtesy Michael Snyder/EconomicCollapseBlog) Activists Are Hoping To Turn Trump’s Inauguration Into One Of The Biggest Riots In U.S. History

ubmitted by Michael Snyder via The Economic Collapse blog,

Radical leftists are planning to make January 20th the most chaotic Inauguration Day in American history.  Their stated goal is to “disrupt” the Inauguration festivities as much as possible, and they are planning a wide range of “actions” to achieve that stated goal.  Some of the more moderate groups are using terms such as “civil resistance” and “civil disobedience”, but others are openly talking about “blockades”, jumping barricades, throwing projectiles and “citywide paralysis”.  My hope is that all of their efforts will turn out to be a big flop, but it is important to understand that these groups are well funded, highly organized and extremely motivated.  The election of Donald Trump has been perhaps the single most galvanizing moment for the radical left in modern American history, and they are working very hard to turn January 20th into a major political statement.

In fact, just recently one activist group took out a full page ad in the New York Times

Thousands of activists, journalists, scientists, entertainers, and other prominent voices took out a full-page call to action in the New York Times on Wednesday making clear their rejection of President-elect Donald Trump and Vice President-elect Mike Pence with the simple message: “No!”

“Stop the Trump/Pence regime before it starts! In the name of humanity we refuse to accept a fascist America!” the ad states, followed by a list of signatories that includes scholar Cornel West; author Alice Walker; Chase Iron Eyes of the Standing Rock Sioux; educator Bill Ayers; poet Saul Williams; CNN‘s Marc Lamont Hill; Carl Dix of the Communist Party USA; and numerous others.

The ad pointed people to refusefascism.org, and it asserted that Trump must be stopped whether he was legitimately elected or not

Trump promises to inflict repression and suffering on people in this country, to deport millions, to increase violence up to the use of nuclear weapons on people across the globe, and to inflict catastrophes upon the planet itself. He has assembled a cabinet of Christian fundamentalist fanatics, war mongers, racists, science deniers. NO! His regime must not be allowed to consolidate. We REFUSE to accept a Fascist America!

If you go to refusefascism.org, you will discover that the protests that they are organizing in Washington D.C. will begin on January 14th.  They say that they want to “stop the Trump-Pence regime before it starts”, and they hope to have protests going “every day and every night” without interruption through at least January 20th.

Another group that plans to kick things off on January 14th is DisruptJ20.  Of course that is short for “Disrupt January 20th”.  If you go to their official website, you will find a long slate of events that have already been scheduled.

According to Legba Carrefour, a spokesperson for DisruptJ20, one of the goals of the group is to block major transportation routes into and throughout our nation’s capital.  And he is not shy about the fact that they literally want to “shut down the Inauguration”

“We are planning to shut down the inauguration, that’s the short of it,” he says. “We’re pretty literal about that, we are trying to create citywide paralysis on a level that I don’t think has been seen in D.C. before. We’re trying to shut down pretty much every ingress into the city as well as every checkpoint around the actual inauguration parade route.”

If Carrefour and his fellow conspirators are able to actually accomplish that, it truly would be unprecedented.

And while DisruptJ20 is not publicly advocating violence, they are not exactly discouraging it either…

Carrefour says DisruptJ20 has no publicly announced plans to jump barricades along the inauguration parade route or throw projectiles at the new president, but that autonomous direct actions are encouraged.

“I can’t comment on specific stuff we’re doing like that, mostly because that would be illegal. But, yeah, it will get pretty crazy, I expect,” he says. “‘Have fun!’ I say.”

After the rioting that we have seen in Baltimore, Ferguson, Charlotte and many other communities around the nation in recent years, I hope that authorities are taking these threats quite seriously.

Once Donald Trump won the election, many conservatives seemed to think that the war was won.  But the truth of the matter is that many on the left were completely blindsided by Trump’s surprise victory, and now that they are fully awake they are gearing up for battle like never before.

And these protests are not going to end on January 20th.  In fact, abortion advocates are hoping to get close to a million women into Washington D.C. on the day following the Inauguration to protest for abortion rights.  Filmmaker Michael Moore is hoping that this march will be the beginning of “100 days of resistance” against Trump’s presidency…

Filmmaker and liberal icon Michael Moore has announced his plans to attend the Women’s March on Washington to protest Donald Trump’s inauguration later this month and has called for sore loser liberals to go further — by staging protests acts of resistance through the first 100 days of Trump’s presidency.

In an appearance, this weekend on MSNBC’s The Last Word, the 62-year-old Trumpland and Fahrenheit 9/11 director made a “call to arms” to those opposed to Trump’s presidency to join the Women’s March on Washington scheduled for January 21, the day after the presidential inauguration.

“It’s important that everybody go there,” Moore told MSNBC’s Ari Melber.

Of course it is easy to imagine how all of this could spiral wildly out of control.  If Trump cracks down on these protests really hard in an attempt to restore law and order, that could end up sparking a dramatic backlash against his “police state tactics”.  And if the protests become even bigger and more violent, Trump could respond by cracking down even more harshly.

Let us hope for some really cold weather in D.C. at the end of January so that as many troublemakers as possible get discouraged and stay home.  Violent protests, blockades and riots aren’t going to solve anything, and they could easily open fresh wounds in a nation that is becoming more divided with each passing day.

Well that about does it for tonight I will see you tomorrow night H.

Jan 9/Gold and silver rise/ Despite the rise in gold: 8.87 tonnes of gold withdrawn from GLD/ No silver leaves SLV/China crackdown on bitcoin/Chinese foreign exchanges reserves fall below $3.0 trillion/Offshore yuan crashes to 6.87/In Italy youth...

Mon, 01/09/2017 - 19:06

Gold at (1:30 am est) $1183.50 UP $11.60

silver  at $16.63:  UP 17 cents

Access market prices:

Gold: $1181.20

Silver: $16.58

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

MONDAY gold fix Shanghai

Shanghai morning fix Jan 9/17 (10:15 pm est last night): $  1193.79

NY ACCESS PRICE: $1174.95 (AT THE EXACT SAME TIME)/premium $18.75

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1192.97

NY ACCESS PRICE: $1174.25 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $18.72

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 9/2017: 5:30 am est:  $.1176.100   (NY: same time:  $1176.10    5:30AM)

London Second fix Jan 9.2017: 10 am est:  $1178.50 (NY same time: $1178.50  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  0 NOTICE(S) FOR nil OZ.  TOTAL NOTICES SO FAR: 1023 FOR 102,300 OZ    (3.1819 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 0 NOTICE(s) FOR 0  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 307 FOR 1,535,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 600  contracts DOWN to 164,937 with respect to FRIDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .825 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  0 NOTICES FILED FOR 0  OZ.

In gold, the total comex gold FELL BY 2523 contracts WITH THE FALL IN  THE PRICE GOLD ($7.80 with FRIDAY’S trading ). The total gold OI stands at 429,300 contracts.

we had 0 notice(s) filed upon for 0 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had A HUGE  change in tonnes of gold at the GLD/  A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/

Inventory rests tonight: 805.00 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver FELL by 600 contracts DOWN to 164,937 AS SILVER FELL by  $0.12 with FRIDAY’S trading. The gold open interest FELL by 2523 contracts DOWN to 429,300 AS THE  PRICE OF GOLD FELL BY $7.80 WITH FRIDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

 

 

3. ASIAN AFFAIRS

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 14.32 POINTS OR 0.54%/ /Hang Sang closed UP 55.68 OR 0.25%. The Nikkei closed /Australia’s all ordinaires  CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9380/Oil FELL to 53.00 dollars per barrel for WTI and 55.96 for Brent. Stocks in Europe: ALL IN THE RED. Offshore yuan trades  6.8740 yuan to the dollar vs 6.9380  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS  DOLLARS  LEAVE CHINA’S SHORES /

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

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

i)China launches a crackdown on Bitcoin with the beneficiary gold:

( zero hedge)

ii)In the latest figures China reports that 41 billion USA left the shores of China. It now looks like their entire foreign reserves are below 3.0 trillion.  The danger point is 2.8 trillion without controls and 1.7 trillion with controls (and China has initiated controls)

( zero hedge)

iii)Last night:  the offshore and onshore yuan crashed. The offshore yuan traveled from 6.8 down to 6.87 to the dollar:

( zero hedge)

iv)China is angry at Trump’s move to closer ties with Taiwan.  Mainland China is threatening to “take revenge” if Trump follows through negating the “one China policy”

( zero hedge)

4 EUROPEAN AFFAIRS

i)ITALY

Not good:  the unemployment rate in Italy rises to 11.9% even though the consensus was 11.6%.  Italy found 19,000 more jobs but the huge influx of migrants caused the rise in joblessness.  The youth unemployment skyrockets to 39.4% .  The youth unemployment is getting to look like Greece!

( zero hedge)

ii)Volkswagen/Germany

It goes from bad to worse for Volkswagen as an executive with the company is charged with conspiracy to defraud the USA over the emissions scandal:

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Turkey

The Turkish lira plummets by over 2% to 3.73 to the dollar as this nation is certainly having its problems. The daily attacks on its country from both ISIS sympathizers or PKK, it is certainly having a devastating effect on their economy

( zero hedge)

ii)USA: Iran

Iranian vessels come within 900 yards of a US destroyer accompanying two ships. The situation with respect to relations with Iran is faltering terribly:

( zero hedge)

iii) Russia consul in Greece

Russian consul in Athens found dead.  They said “abnormal causes”

must be going around..

( zero hedge)

6.GLOBAL ISSUES

Mexico

Mexico spent 4 billion trying to defend the Peso but it did not help.  The Peso remains at its nadir of 21.3 peso to the dollar

( zero hedge)

7. OIL ISSUES

i)The USA is selling 8 million barrels of oil from its strategic reserves and the reason is to pay for maintenance.

( zero hedge)

iiTwo good reasons why oil is slumping today:

Kuwait hints at non compliance and Nigeria’s production jumps

(courtesy zero hedge)

8. EMERGING MARKETS none today 9.   PHYSICAL MARKETS

i)Ed Steer’s gold and silver letter is posted in the clear at Goldseek

( Ed Steer/GATA)

ii)There is no limit as to how much gold Indians can own and it surely beats ownership of rupees

( zero hedge)

iii)It is interesting that new documents proved that bullion dealers colluded with the USA to suppress to price of gold.  However ownership of those dealers have now changed:

( lawrence williams/Sharp’s Pixley)

iv)It is interesting that new documents proved that bullion dealers colluded with the USA to suppress to price of gold.  However ownership of those dealers have now changed:

( lawrence williams/Sharp’s Pixley)

v) Bill Holter interviewed by Greg Hunter of USAWatchdog

10.USA STORIES

i)Trump is on a roll:  He thanks Fiat Chrysler as they are going to invest 1 billion USA in a new plant in Ohio:

( zero hedge)

ib)Both Alibaba and Toyota plan to invest mega dollars to create millions of USA jobs

( zero hedge)
ii)The Fed’s own Labour Market Condition Index drops another .3% and it is now down 5.8% year over year, the biggest plunge in 6 years.  This generally indicates recession

(courtesy zerohedge)

iii) Student and car loans rise by another 11 billion dollars as we are now at a record 2.758 trillion

( zero hedge)

iv)Then late this evening: we hear that Trump is set to label China a currency manipulator.  This will not have an immediate effect but it will certainly strain relations.  Trump want to get China to the negotiating table so more jobs are created in the USA

(courtesy zero hedge)

end

Let us head over to the comex:

The total gold comex open interest FELL BY 2523 CONTRACTS UP to an OI level of 429,300 AS THE  PRICE OF GOLD FELL $7.80 with FRIDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 5 contracts DOWN to 165.  We had 0 notices filed so we LOST 5 contracts or AN ADDITIONAL 500 oz WILL NOT STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 10,561 contracts DOWN to 266,706. March had a gain of 9 contracts as it’s OI is now 285.

We had 0 notice(s) filed upon today for nil oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 600 contracts FROM 165,537 DOWN TO 164,937 AS the price of silver FELL BY $0.12 with FRIDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 0 contracts REMAINING AT  355. We had 0 notice(s) filed on yesterday so we NEITHER GAINED NOR LOST ANY SILVER CONTRACTS standing for delivery.  The next non active month of February saw the OI FALL by 5 contract(s) DOWN to 199.

The next big active delivery month is March and here the OI FELL by 778 contracts DOWN to 133,559 contracts.

We had 0 notice(s) filed for 0 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 197,262  contracts which is fair.

Yesterday’s confirmed volume was 254,516 contracts  which is good

Initial standings for january  Jan 9/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    5626.75 SCOTIA 175 kilobars Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz   nil No of oz served (contracts) today   0 notice(s) nil oz No of oz to be served (notices) 165 contracts 16,500 oz Total monthly oz gold served (contracts) so far this month 1023 notices 102,300 oz 3.1819 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,555,679.2 oz Today we HAD 1 kilobar transaction(s)/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 1 customer withdrawal(s) i) Out of Scotia: 5626.25 oz (175 kilobars) total customer withdrawal: 5626.25 oz We had 2  adjustment(s) i) Out of Brinks; 43,522.800 oz was adjusted from the dealer and this entered into the customer account of Brinks ii) Out of HSBC:  65,308.590 oz was adjusted out of the dealer account and this landed into the customer account of HSBC: total removal from dealer: 108,831.900 oz xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1023) x 100 oz or 101,000 oz, to which we add the difference between the open interest for the front month of JANUARY (165 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 118,800 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1023) x 100 oz  or ounces + {OI for the front month (165) minus the number of  notices served upon today (0) x 100 oz which equals 118,800 oz standing in this non active delivery month of JANUARY  (3.6951 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.6951 tonnes total for the 13 months;  226.086 tonnes average 17.391 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,452,913.516 or 45.191 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,104,221.823 or 283.17 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.17 tonnes for a  loss of 20  tonnes over that period.  Since August 8/2016 we have lost 71 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 4 1/2 MONTHS  71 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 9. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  964,969.431 0z Scotia CNT Deposits to the Dealer Inventory  nil Deposits to the Customer Inventory  964,539.821 oz JPM No of oz served today (contracts) 0 CONTRACT(S) (0 OZ) No of oz to be served (notices) 355 contracts (1,775,000  oz) Total monthly oz silver served (contracts) 307 contracts (1,535,000 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  9,855,909.5 oz  END today, we had 0 deposit(s) into the dealer account: total dealer deposit: NIL oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 2 customer withdrawal(s): i) Out of CNT:  605,000.160 oz ii) Out of Scotia:  359,969.271 oz TOTAL CUSTOMER WITHDRAWALS: 964,969.431 oz  we had 1 customer deposit(s): i) Into JPMorgan:  964,539.821 oz total customer deposits;  964,539.821   oz      we had 0  adjustment(s) The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) for 0 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  307 x 5,000 oz  = 1,535,000 oz to which we add the difference between the open interest for the front month of JAN (355) 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 JANUARY contract month:  307(notices served so far)x 5000 oz +(355) OI for front month of JAN. ) -number of notices served upon today (0)x 5000 oz  equals  3,315,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We neither lost nor gained any silver contracts (oz) standing for January. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 48,981 which is very good YESTERDAY’S  confirmed volume was 70,558 contracts  which is excellent.   Total dealer silver:  28.582 million (close to record low inventory   Total number of dealer and customer silver:   180.684 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD

JAN 9/A WITHDRAWAL OF 8.87 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 805.00 TONNES

Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes Dec 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI) DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes. Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 9/2017/ Inventory rests tonight at 805.00 tonnes *IN LAST 65 TRADING DAYS: 144.81 TONNES REMOVED FROM THE GLD *LAST 12 TRADING DAYS: 19.54 TONNES HAVE LEFT

end

Now the SLV Inventory JAN 9/no changes in inventory at the SLV/Inventory rests at 341.199 million oz/ jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/ Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/ Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/ . Jan 9.2017: Inventory 341.199  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 7.2 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!!  Percentage of fund in gold 61.1% Percentage of fund in silver:38.7% cash .+0.2%( jan 9/2017)  . 2. Sprott silver fund (PSLV): Premium RISES to +.73%!!!! NAV (Jan 9/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.49% to NAV  ( Jan 9/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.73% /Sprott physical gold trust is back into NEGATIVE territory at -0.49%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for MONDAY

GOLDCORE/BLOG/MARK O’BYRNE

2016 Past is 2017 Prologue By Mark O’ByrneJanuary 9, 2017No Comments

With us being just over a week into the New Year, we feel it worthwhile to look back just one last time at 2016. We believe that many of the themes and risks of 2016 continue in 2017 and that they are likely to impact markets in the coming months – especially the precious metal markets.

Malcolm McDowell as Alex in A Clockwork Orange. Source: Wikimedia

We always enjoy new perspectives and every year we enjoy the witty, comprehensive and insightful analysis review of the year past by David Collum. His‘2016 Year In Review’ is in the same vein and was missed by many when it was released over the Christmas period.

Collum is a professor of Chemistry and Chemical Biology at Cornell University. In addition to his academic interests, he authors an annual review of the financial, economic and geopolitical year. The review is a must read and includes interesting information about the astute academic’s views on gold – he is “sanguine as ever holding large precious metal positions.”

He continues:

“Despite weakness of late, the case for gold is now in place: European and Chinese banking risks, negative interest rates, a war on cash, and omnipresent risks of a hot war in the borderlands of the Middle East and Europe. Estimates suggest 0.3% of investors’ assets are in gold.77 Traditional portfolio theory recommends 5%, offering a better than 15-fold relative performance en route. (Recall that discussion of “flow” from above.)

Let’s check in on what some of the wingnuts on the fringe of society are chortling about now:

“The world’s central bankers are completely focused on debasing their currencies. If investor’s confidence in central bankers’ judgment continues to weaken, the effect on gold could be very powerful.”
~Paul Singer, Elliott Management Corp

Gillian Tett: “Do you think that gold is currently a good investment?
Greenspan: “Yes. Economists are good at equivocating, and, in this case, I did not equivocate.”

“I can understand why holding gold would seem to be a sensible part of a national portfolio. Because there is clearly a need to take some precautions against an unknowable future.”
~Mervyn King, former head of the Bank of England

“I am not selling gold.”
~Jeff Gundlach, DoubleLine and the new “Bond King”

“The case for gold is not as a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder.”
~James Grant, Founder of Grant’s Interest Rate Observer

“Everyone should be in gold.”
~Jose Canseco, expert on performance enhancement

James Grant also went on to say that “gold is like a monetary tonsil,” leading some to speculate that his son, Charley (WSJ), slipped him a pot brownie. Let’s see if we can get the goofs too.

We’ll begin by blowing out a few ideas I do not subscribe to. I keep hearing from smart guys that gold is in short supply in the Comex or Shanghai gold exchange, you name it. These stories almost never play out. I am also a huge fan of Rickards and Maloney, but the saying “gold is money” and the notion that its price is actually the movement of the value of the dollar don’t work for me: prices of everything I buy follow the dollar, not gold, on the currency timescales. On long timescales, their assertion may be correct. Someday their assertion may even be correct on short timescales, but that isn’t right now.

What a year: I got as many electoral delegates as the bottom ten republican candidates combined, ate python, and own as much gold as the Central Bank of Canada. Per the Bank of Canada, it finished selling off all of its gold,78 probably to ensure that the U.S. didn’t attack. You think I jest? A WikiLeaked e-mail by Sid Blumenthal to Hillary Clinton revealed that France whacked Libya to make sure North Africa distanced itself from a gold dinar currency.79,80 Germany supposedly has half of its requested gold repatriated from the U.S. and France,81 which could be bullish or bearish on the half-full/half-empty logic. Venezuela repatriated 100 tons of gold a few years ago and was squeezed to sell it all back in the heat of a currency crisis.82 The Dutch depatriated their gold this year after repatriating it not long ago.83 The reasons are unclear. Alexei Ulyukayev, first deputy chairman of Russia’s central bank, assured us Russia will continue to buy gold (Figure 7), presumably as a defense against interventions from inside the beltway. Of course, the Fed is silent on the “metal whose name shall never be spoken.”


Figure 7. Russian gold reserves

In a shockingly quiet year given how much gold moved to the upside before the post-election monkey hammering, we probably should finish with some generic goofiness. On a few occasions, gold took the beatings that are familiar—huge futures dumps in the illiquid wee hours of the morning when no price-sensitive investor would ever consider selling. It dropped $30 in seconds late on the day before Thanksgiving when nobody was paying much attention. Another hammering came from a $2.25 billion sale84 and another $1.5 billion sale,85 both of which occurred in under 1 minute. Nanex concluded that the algo “gold spoofer” was at play,86 but the 2016 poundings were transitory and toothless compared with their brethren in 2011–2015. Trouble in the ETF market was revealed when BlackRock was overwhelmed by GLD buying.87 It was forced to create more shares in February than it had in a decade. I retain previously stated convictions that GLD is a scam—fractional-reserve gold banking. Deutsche Bank was overwhelmed by requests for physical gold.88 It tried to shake the hook by demanding that such a request must be made at a participating bank.89 Deutsche Bank, the location of the request, is not a participating bank? I imagine it doesn’t have the gold, consistent with its troubles outlined below. A Swedish precious metal vault got its payment mechanism terminated without explanation.90

We can’t close without talking about gold’s kissing cousin—silver. The silver market gets its share of muggings and sustained bashings, at times spanning several weeks. The silver sellers didn’t get full traction either, however, bringing silver off a 50% gain but leaving it up 15% year to date. Silver market treachery got some attention. The London Silver Fix—truth in advertising—at times deviated markedly from the spot price,91 causing consternation among those attempting to fix the price. Deutsche Bank agreed to settle litigation over allegations it illegally conspired with Scotiabank and HSBC Holdings to fix silver prices at the expense of investors.92 A class action suit against Scotiabank suggested that the conspiracy spanned 15 years.93JPM was cleared of silver manipulation in three lawsuits—all dismissed with prejudice, an altogether different form of “fix.”94The only remaining question is why they are stockpiling huge stashes of physical silver.95

I’m as sanguine as ever holding large precious metal positions. Gold bugs are reminded, however, of what a big victory will feel like:

“Our winnings will come . . . from the people who wake up one morning to find their savings have been devalued or bailed-in. . . . [I]t’s going to come from the pension funds of teachers and firefighters. The irony is that when gold finally pays off, it will not be a cause for celebration.”
~Brent Johnson, Santiago Capital

‘2016 Year In Review – A Clockwork Orange’ can be accessed in full here

http://www.goldcore.com/us/gold-blog/2016-past-2017-prologue/

end

 

Ed Steer’s gold and silver letter is posted in the clear at Goldseek

(courtesy Ed Steer/GATA)

Ed Steer’s gold and silver letter posted in the clear at GoldSeek

Submitted by cpowell on Sat, 2017-01-07 23:24. Section:

6:25p ET Saturday, January 7, 2017

Dear Friend of GATA and Gold:

Today’s daily gold and silver letter by GATA board member Ed Steer has been posted in the clear at GoldSeek here:

http://news.goldseek.com/GoldSeek/1483891740.php

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

END

 

There is no limit as to how much gold Indians can own and it surely beats ownership of rupees

(courtesy zero hedge)

 

Indians can own as much gold as they want, and it sure beats the rupee

Submitted by cpowell on Sat, 2017-01-07 23:58. Section:

6:58p ET Saturday, January 7, 2017

Dear Friend of GATA and Gold:

India’s weekly news magazine Outlook today offers a fascinating interview with Somasundaram PR, managing director of the World Gold Council’s Indian office, noting that despite recent suggestions to the contrary, there is really no limit in law or regulation on how much gold Indians can own. The interview also details how Indians consider gold just as much a currency as any other and treat it that way in everyday business transactions.

While the Indian government is constantly hectoring its people to bring their gold into the financial system by paperizing it, the interview suggests that much of their gold is already functioning as both currency and savings. With the Indian rupee depreciating against gold over the last 15 years more than any other currency —

http://www.gata.org/node/17089

— it’s hard to imagine any practical measures by which the government will separate people from their gold.

The interview is headlined “There Is No Limit on Holding Gold: Somasundaram” and it’s posted at Outlook’s internet site here:

http://www.outlookindia.com/website/story/there-is-no-limit-on-holding-g…

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

END

 

It is interesting that new documents proved that bullion dealers colluded with the USA to suppress to price of gold.  However ownership of those dealers have now changed:

(courtesy lawrence williams/Sharp’s Pixley)

Lawrie Williams: Bullion dealers that colluded with U.S. in 1974 have changed ownership

Submitted by cpowell on Sun, 2017-01-08 14:48. Section:

9:50a ET Sunday, January 8, 2017

Dear Friend of GATA and Gold:

The London bullion dealers that colluded with the U.S. government in establishing the gold futures market for price suppression in 1974 have changed ownership since then, market analyst Lawrie Williams noted yesterday.

Williams, who does commentary for one of the bullion dealers cited in a cable from the U.S. embassy in London detailing that collusion, writes that the cited dealers no longer “exist in their original form nowadays, and, except perhaps for Mocatta’s successor, can no longer be considered part of any grouping that exerts any significant effect on the gold price today.”

GATA’s dispatch last week about the cable is posted here:

http://www.gata.org/node/17081

Williams’ response is posted at his blog here:

https://lawrieongold.com/2017/01/07/sp-article-link-not-working-gata-poi…

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

 

 

END

December’s SGE withdrawals came in rather light at 196 tonnes.  The total for the year: 1970.00 tonnes

LAWRIE WILLIAMS: 2016 SGE gold withdrawals lowest for four years

JAN
07

The Shanghai Gold Exchange (SGE) has now released its final report for the year on monthly gold withdrawals, with the December figure falling back below 200 tonnes (in comparison withdrawals totalled just short of 215 tonnes in November). This brings the total for the year to 1,970.37 tonnes, the first time the figure has been below 2,000 tonnes since 2012, and a fall of 24.1% on last year’s record total of 2,596.37 tonnes – see table below for detailed month by month withdrawal details for the past three years.

Table: Shanghai Gold Exchange Monthly Gold Withdrawals (Tonnes)

Month 2016 2015 2014 % change 2015-2016 % change 2014-2016 January 225.08 255.42 246.00 – 11.8% -8.5% February* 107.60 156.36 171.67 – 31.2% -37.3% March 183.24 213.35 146.56 -14.1% +25.0% April 171.40 195.45 129.59 -12.3% +32.2% May 147.28 162.15 129.34 -9.2% +13.8% June 138.51 195.67 128.03 – 29.2% +8.2% July 117.58 285.50 137.53 – 58.8% -14.4% August 144.44 265.27 161.95 – 45.6% -10.8% September 170.90 259.98 202.43 -34.3% -15.6% October 153.25 176.29 201.11 -13.1% -23.8% November 214.72 202.71 212.49 +5.9% +1.0% December 196.37 228.21 235.66 -13.9% -16.7% Full Year 1,970.37 2,596.37 2,102.36 -24.1% -6.3%

Source: Shanghai Gold Exchange, Lawrieongold.com

There are, and no doubt always will be, some arguments among analysts as to whether SGE gold withdrawals are an accurate representation of total mainland China gold demand. Some – notably Koos Jansen of www.bullionstar.com, who perhaps follows the Chinese gold sector closer than anyone, avers that they are and supports his argument with pointers to Chinese official statistics which would seem to support his analysis. Meanwhile the big precious metals focused consultancies – Metals Focus (which also supplies the data put out by the World Gold Council), GFMS and CPM Group classify consumption in much narrower terms and come up with various – and often differing – reasons why SGE withdrawals should not be equated to total Chinese gold demand. What puzzles us with regard to the figures put forward by the latter organisations is that their demand estimates always seem to fall hugely short of known Chinese gold import figures as published in official data from principal conduits Hong Kong, Switzerland, the UK and Australia, and not including possible gold imports from other gold producing nations which do not publish the breakdown of their gold exports in country-by-country detail. At one time one could point to Hong Kong exports to the mainland alone as a proxy for total mainland gold imports, but that’s no longer the case as 40% or more now looks to be going into the mainland directly, bypassing Hong Kong altogether.

But whatever one’s views on the accuracy of SGE gold withdrawal figures as a true representation of Chinese gold demand, they obviously at the very least demonstrate the overall trend and this shows that total Chinese gold demand slipped sharply in 2016 compared with the years immediately preceding – but it still remains very substantial keeping China at the head of the list of global gold imports. It is also the world’s top gold producer, with annual new mined gold production nearly 70% higher than that of No. 2 miner, Australia – or it could now be Russia in second place, we won’t know until the latest global gold production totals are available. For the last year for which final figures are available – 2015 – China produced some 260 tonnes of gold, Australia 274 tonnes and Russia 269 tonnes – for a full Top 20 listing click on: World’s Top 20 gold mining nations 2015.

What the SGE withdrawals figure for the year does confirm though, is that however one calculates Chinese gold demand it has very definitely slipped sharply in the past year – but if we do equate the SGE total to the total Chinese gold offtake, China still takes in over 60% of global new mined gold output on it own – an d, as Koos Jansen points out in his most recent article on bullionstar.com How The West Has Been Selling Gold Into A Black Hole, what goes into China doesn’t come out again. It is fully absorbed into the Chinese system. As Jansen points out: “China has imported 5,000 tonnes in the past years, which is not allowed to be exported. My hypothesis is that this 5,000 tonnes decline in above ground gold reserves outside of the Chinese domestic market will make gold rally stronger in a future bull market than it did in previous bull markets. To the extent many investors are uninformed about the shrinking volume of troy ounces available outside of China, their ignorance will boost any price rally coming.”

http://news.sharpspixley.com/article/lawrie- williams-2016-sge-gold-withdrawals-lowest-for-four- years/261416/

 

end

 

2017 Trump will be Presiding Over a Bankruptcy- Bill Holter

By Greg Hunter On January 8, 2017 In Market Analysis

(Early Sunday Release 1.9.17)

Financial writer Bill Holter says 2017 will be “the year of the Truth Bomb.” Holter explains, “I have been talking about ‘Truth Bombs’ for about a year and a half. I think what is going to happen in 2017 is that this hologram we’ve been living in, the curtain is going to be pulled back. . . . I want to see the truth come out, and that’s why we do what we do.”

One of the big truths that will explode is about the economy, and this will be one of Trump’s biggest problems. Holter goes on to say, “Trump is a smart guy, and he understands that really what he’s going to be doing is presiding over a bankruptcy. That’s what his main job is going to be, and that’s reorganizing this country.”

What will the end of 2017 look like? Holter says, “I don’t think it will even resemble what today looks like. I think you may see the financial system come down, and it may be by the end of the year that the system is coming back up or coming back on line. We are going to have a bank holiday. We are going to have to have some sort of reset. The reset will include a bank holiday. Your ATM won’t work. Your credit cards won’t work. Distribution is going to fail. It’s all about credit. Everything financial and everything economic relies on credit. I believe that we are going to have a credit crisis this year where credit becomes very scarce or actually dries up completely. In that scenario, it is not good. You are talking about distribution breaking down and people going hungry, riots, martial law, cross default from country to country to country to country, bank to bank to bank and broker to broker to broker. Everything runs and lives on credit, and without credit, it’s almost like caveman days.”

Will big stock market gains save some people from the coming pain of this economic reset? Holter, who has more than two decades of brokerage and stock market experience, contends, “One man’s debt is another man’s asset. The asset values are going to have to be marked down. . . . The point being, those assets that people hold in their portfolio, the numbers they see on their statements are just numbers. When this comes down, that’s not real value. You are not going to be able to call on those assets to live, to eat or to pay bills. It’s an asset collapse because the debt side collapses.”

Holter also says, “If you ask the question, does the average American believe we’re broke, I think deep down, and in the back of their minds, they think we’re broke. We’re living this lifestyle, and they think this lifestyle is not going to change. When the lifestyle does change, and it’s forced to be changed, that’s a gigantic truth bomb.”

Join Greg Hunter as he goes One-on-One with Bill Holter of JSMineset.com.

(There is much more in the video interview.)

Video Link

http://usawatchdog.com/in-2017-trump-will-be-presiding- over-a-bankruptcy-bill

-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 6.9380(SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN WIDENS HUGELY  TO 6.87401 / Shanghai bourse CLOSED UP 14.32 POINTS OR 0.54%   / HANG SANG CLOSED UP 55.68 OR 0.25% 

2. Nikkei closed   /USA: YEN FALLS TO 116.64

3. Europe stocks opened ALL IN THE RED       ( /USA dollar index RISES TO  102.33/Euro UP to 1.0531`

3b Japan 10 year bond yield: RISES TO    +.059%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.64/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.17  and Brent: 56.77

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.281%/Italian 10 yr bond yield DOWN  to 1.896%    

3j Greek 10 year bond yield FALLS to  : 6.84%   

3k Gold at $1178.40/silver $16.51(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN   7/100 in  roubles/dollar) 59.69-

3m oil into the 53 dollar handle for WTI and 55 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 116.64 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0177 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0717 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.281%

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

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

4. USA 10 year treasury bond at 2.390% early this morning. Thirty year rate  at 2.976% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Party Like The Dow Is 19,999: US Futures Dip As Global Currencies Stumble; Oil Down, Gold Up

European, Asian stocks fall and U.S. equity-index futures traded mixed on Monday with fresh memories of the Dow Jones rising to under 1 point of 20,000 on Friday. The dollar has rebounded on fresh geopolitical concerns, while the pound extends its decline from Friday and has slide to 10 week lows on a Sunday interview from Theresa May which suggested a “Hard Brexit” may be in the cards. Oil dropped below $54 a barrel on Iran supply concerns, while gold rose 0.6% to $1,180.

Top stories include potential candidates to head the Federal Reserve in 2018 suggest they would pursue tighter policy; McDonald’s selling control of China business to Citic, Carlyle; Air Products looking to buy China’s top industrial gas maker.

A key focus for the week will be a news conference on Wednesday at which Donald Trump may give more details of his policies before his Jan. 20 inauguration. Expectations of more economic stimulus from a Trump administration have helped push U.S, stocks and bond yields higher since his victory in the Nov. 8 election.

Political risks have emerged as the week begins, rippling across FX markets with the pound, Turkish lira and South Korean won leading declines, while gold rose on haven demand and Chinese buying.

The dollar edged higher on Monday, boosted by robust U.S. wage growth data strengthening the case for more Federal Reserve interest rate increases, while Britain’s pound fell on Prime Minister Theresa May’s hint at no membership of the EU’s single market. Still, Britain’s blue-chip FTSE 100 index nonetheless hit a record high, continuing its streak of all time highs, as the first full trading week of 2017 on London markets began. The pan-European STOXX 600 index dropped 0.4% in early deals.

Sterling dropped to a 10-week low after the Prime Minister Theresa May indicated she prioritized regaining control of immigration during Brexit negotiations, while tensions between North and South Korea and debates on constitutional changes in Turkey put an index of developing currencies on track for the steepest drop in three weeks. Telecoms and real estate were among the biggest losers in European shares, while oil dropped for the first time in four days. Gold rose as investor holdings posted the first back-to-back increase since the U.S. election.

“The rise in the FTSE is really down to the weakness in sterling, but the Brexit news is not great so I don’t see the FTSE gaining too much,” said Ipek Ozkardeskaya, market strategist at London Capital Group.

The Turkish lira dropped to new record lows after a warning from Moody’s about the country’s bad loan situation, while deputy PM Canikli blamed an “unacceptable campaign” to move interest rates higher.

As Bloomberg notes, currencies, not bonds, have emerged as the preferred way for investors to express displeasure with political developments, because “they are seen as less vulnerable to intervention”, which may be true in most places except China where after this weekend’s report that Chinese reserves dropped by another $41 billion, all eyes are on how Beijing responds to the relentless capital flight. The offshore yuan was down 0.4 percent following Friday’s 0.9 percent retreat. The central bank set the onshore yuan reference rate 0.9 percent weaker against the dollar, though still stronger than some bank models predicted.

Meanwhile, British PM May said Sunday that negotiations on Brexit will be about “getting the right relationship, not about keeping bits of membership.”  A so-called hard Brexit may push the Bank of England to keep rates lower for longer, while weakening the pound and supporting foreign-focused companies in the main stock index, Bloomberg added. As a result, the pound fell to $1.2159, the lowest since Oct. 31, at 11:04 a.m. in London.

“Since October it’s become clear that sterling has a very binary relationship with political news, and anything which suggests a ‘hard Brexit’ sends sterling down, and anything that suggests a ‘soft Brexit’ sends sterling up. That’s been the case since the party conference in October,” said Rabobank currency strategist Jane Foley.

“Politics is a much more important factor these days for currency markets than it used to be,” said Adam Cole, head of global foreign-exchange strategy in London at Royal Bank of Canada. “There is a lot more political uncertainty now.”

In light of the geopolitical uncertainty, after dipping in initial trade, the Bloomberg Dollar Spot Index rebounded from an earlier loss and was up 0.2%.

In Asia, MSCI’s ex-Japan Asia-Pacific shares index was flat on the day, having risen as much as 0.5 percent after posting a rare loss in the previous session. Australia’s S&P/ASX200 rose 0.9 percent while Hong Kong shares rose 0.2%. Trading was light because Japan is shut for a holiday.

In Europe, the Stoxx Europe 600 Index fell 0.5%, on course for its biggest decline in almost four weeks. The main outperformer was the U.K. market, with the FTSE 100 Index heading for a 10th consecutive daily increase, as stronger economic data combined with a declining pound spurred buying.

  • Deutsche Lufthansa AG tumbled as much as 5.6 percent after analysts were underwhelmed by the airline’s guidance update.
  • Swedish bank Svenska Handelsbanken AB dropped after a downgrade at Credit Suisse Group AG.

The S&P 500 futures were little changed. The underlying gauge rose 0.4 percent to a record close of 2,276.98 on Friday in New York.

In rates, German 10-year government bond yields last traded at 0.29%, down 0.5 basis points on the day. It earlier rose close to 0.33 percent, its highest since Dec. 19, after data showed German exports rose 3.9 percent in November, their strongest monthly gain since May 2012 and far ahead of forecast.

* * *

Market Snapshot

  • S&P 500 futures down less than 0.1% to 2271
  • Stoxx 600 down 0.4% to 364
  • FTSE 100 up 0.2% to 7228
  • DAX down 0.4% to 11555
  • German 10Yr yield down less than 1bp to 0.29%
  • Italian 10Yr yield down 6bps to 1.9%
  • Spanish 10Yr yield down 6bps to 1.48%
  • S&P GSCI Index down 0.8% to 395.1
  • MSCI Asia Pacific down 0.2% to 138
  • Hang Seng up 0.2% to 22559
  • Shanghai Composite up 0.5% to 3171
  • S&P/ASX 200 up 0.9% to 5807
  • US 10-yr yield down 2bps to 2.4%
  • Dollar Index up 0.23% to 102.45
  • WTI Crude futures down 1.7% to $53.06
  • Brent Futures down 1.7% to $56.11
  • Gold spot up 0.3% to $1,176
  • Silver spot down less than 0.1% to $16.49

Top Headline News

  • Potential Fed Chairs Suggest They Would Pursue Tighter Policy: potential candidates to head the Fed in 2018 suggested that monetary policy would be tighter if they were in charge
  • McDonald’s Sells Control of China Business to Citic, Carlyle: McDonald’s in agreement to sell 80% of its operations in China and Hong Kong to a consortium including Citic and Carlyle Group
  • Air Products Looks to Buy China’s Top Industrial Gas Maker: target shares jump in Hong Kong trading after intent letter
  • Morgan Stanley, UBS Said to Plan Boosting China JV Stakes: banks plan to boost holdings to regulatory threshold of 49%
  • Frozen in Detroit: Trump Stumps Builders of Cars in Age of SUVs
  • Fiat Chrysler Spends $1 Billion on U.S. Amid Trump Squeeze
  • VW Taps Hippie Heritage With Electric Microbus Amid Revamp
  • Volvo Cars Plans to Export Half of South Carolina Plant’s Output
  • FBI Said to Have Arrested Ex-VW Exec on Conspiracy Charges: NYT
  • ‘Rogue One’ Cruises to Fourth Weekend Atop Box Office

Asian equity markets traded higher after a strong close in the US on Friday, where all 3 major US equities posted gains and DJIA came within 0.37 points of the 20,000 level. ASX 200 (+0.9%) outperformed to trade in the green for the fifth consecutive day, with the IT sector taking the impetus from its US counterparts to lift the index higher after a flat open. However, gains were capped as a slightly stronger AUD, and lower government iron ore demand predictions weighed on mining names. KOSPI (flat) lagged amid uncertainty in the country as the parliamentary committee held its last hearing for the case surrounding impeached President Park, with South Korean heavyweight SK Hynix shares trading higher by over 3% to help keep the index afloat. In China, markets were mixed with Shanghai Comp (+0.5%) boosted by a relatively firmer liquidity operation by the PBoC and Hang Seng (+0.3%) choppy initially as China’s CSRC stated it will increase the importance of risk prevention in the stock market this year, however rallied as the session progressed to conform to the upbeat tone. Nikkei 225 was closed due to the Coming of Age Holiday.

Top Asian News

  • North Korean Nukes Seen Hurting Trump Re-Election Prospects: nation will probably claim with credibility within four years that it can hit U.S. with a nuclear weapon
  • Singapore Demands Hong Kong Return Seized Military Vehicles: City-state yet to open direct dialog with China on carriers
  • Rubber Prices Climb as Deadly Floods Damage Thai Plantations: Inundation set to affect rubber supplies in weeks ahead

European equities (-0.4%) trade broadly lower this morning, with the energy sector the most notable laggard. In terms of a stock specific basis, Volkswagen (+4%) are the best performer in the DAX after reporting FY 2016 brand sales +2.8%. Elsewhere, the FTSE 100 bucks the trend to trade in positive territory (+0.1%), with exporters benefitting from the softness in GBP, with some also talking about whether more monetary easing may be necessary after Theresa May indicated over the weekend that single market membership may not be achievable in Brexit talks.

European Econ data

  • German Nov. Ind. Production Rises 0.4% M/m; Est. +0.6% M/m
  • German November Exports +3.9% M/m; Est. +0.5% M/m
  • Bank of France December Business Sentiment Rises to 102 vs 101
  • Italy Unemployment Rate Rose to 11.9% in November; Est. 11.6%
  • Eurozone January Sentix Investor Confidence 18.2 vs Est. 12.8
  • Eurozone Nov. Unemployment Rate 9.8%; Est. 9.8%

Top European News

  • German Industrial Output Climbs in Sign of Economic Strength: output gained 0.4% in November vs estimated 0.6% increase; Economy Ministry sees solid output growth in winter half
  • May Signals U.K. to Quit Single Market to Curb Immigration: May denies “muddled” thinking, pledges Brexit details in weeks; Pound weakens as May’s comments indicate hard Brexit
  • Christmas Sports Bets Bring Tough End to Year for William Hill: profit will be about 20 million pounds less then expected
  • Euro-Area Unemployment Holds at 7-Year Low as Growth Strengthens: joblessness remains at 9.8%, in line with estimate; unemployment lowest in Germany, highest in Greece and Spain
  • Italian Unemployment Rate Rises to Highest Since June 2015
  • Lufthansa Forecasts ‘Clearly Negative’ Trend in Yields for 2017: shares decline; outlook underwhelming, analysts say
  • Fresenius Medical Care Shares Slump After Patient-Aid Subpoena: shares down the most in almost 2 months
  • Italy Clears Hurdle in Monte Paschi Rescue Without Even Trying: European Commission has to approve application for state aid

In currencies, the pound fell to a 10-week low, or $1.2159, the lowest since Oct. 31, at 11:04 a.m. in London. The Bloomberg Dollar Spot Index rebounded from an earlier loss and was up 0.2 percent. The offshore yuan was down 0.4 percent following Friday’s 0.9 percent retreat. The central bank set the onshore yuan reference rate 0.9 percent weaker against the dollar, though still stronger than some bank models predicted.  The won fell 1.3 percent and the lira 2.2 percent, dragging the MSCI Emerging Markets Currency Index 0.4 percent lower for the biggest drop since Dec. 15. The yen fell 0.2 percent to 117.28 per dollar and the won slid 1.3 percent, the most in two months.

In commodities, West Texas Intermediate crude oil dropped 1.5 percent to $53.16, halting its advance below $54 a barrel as an increase in U.S. drilling offset signs OPEC members are sticking to planned output cuts. Adding to the pressure was the Friday report of a surge in Iranian exports and selling from its offshore inventory, as well as the addition of more rige by US producers.  Gold rose 0.4 percent to $1,176.7 an ounce.

US Government:

  • Senate in session, plans consideration of budget resolution; House in session and could consider bills related to regulations and investing in startups
  • 10am: Supreme Court hears oral arguments
  • 11:30am: HUD Sec. Julian Castro delivers remarks on housing market and protections for HUD-assisted residents

US Event Calendar

  • 9am: Fed’s Rosengren Speaks in Hartford, Connecticut
  • 2pm: Fed’s Lockhart Speaks to the Rotary Club of Atlanta
  • 3pm: Consumer Credit, Nov., est. $18.400b (prior $16.018b)

* * *

DB’s Jim Reid concludes the overnight wrap

As my year starts I wanted to recap for my own benefit the key early moves seen so far in 2017. The most significant have probably been those in rates and FX. 10y Treasury yields are 2.5bps lower compared to where we finished 2016 at 2.420% although that masks what has been an 18.4bps intraday high-to-low range over the week. At 0.294%, 10y Bund yields on the other hand are 9.3bps higher while in the periphery 10y yields in Italy, Spain and Portugal are 14.8bps, 15.7bps and 28.5bps higher respectively. In fact the latter crept over 4% for the first time since last February after the latest ECB PSPP holdings data revealed a much slower than expected rate of purchases in Portugal last month relative to its implied capital key. With the ECB tapering discussion clearly still topical last week’s European data and in particular the inflation numbers were all fairly supportive too. In fact our European economists noted that their SIREN-Momentum and SIREN-Surprise indicators are currently above 85% and 90% of their respective readings over the past decade. Their combined reading stands close to the top two percent of historical observations.

Meanwhile in FX the USD index ended the week pretty much unchanged but again with a notable 2.43% range. Indeed there were fairly sizeable daily moves as investors balanced the FOMC minutes with Trump’s appointments and tweets and also the big move for the Chinese Renminbi which saw the offshore currency rally +1.81% last week. More on that shortly. EM currencies on the whole had a fairly decent week (Russian Ruble and Colombia Peso stand out after rallying nearly 3% each) while the MSCI EM equity index returned +2.18% as commodities – and in particular metals – started the year by building on recent highs. Elsewhere credit markets have started positively. In the US CDX IG is 3bps tighter at 64.7bps and close to the recent tights while in Europe the iTraxx Main is 4bps tighter at 69bps with that index also creeping in on last year’s tights.

Financials have also gotten off to a decent start with the iTraxx senior and sub fins indices 7bps and 23bps tighter respectively. The big news in credit though has been the incredible start for primary markets. Indeed the US IG market stands out in particular with total issuance of over $60bn last week, making it one of the biggest weeks on record. Even more impressive is the fact that there was no one or two bumper offerings, unlike other record weeks. Finally, where it’s been a bit quieter is equity markets. That said it’s still been a decent start with the S&P 500 (+1.70%) and Dow (+1.02%) both up (the latter within a whisker of the 20,000 level) following further gains on Friday while the Stoxx 600 turned in a +1.12% return last week. European Banks also rallied to the tune of +3.79%.

The highlight of the upcoming first full week of 2017 might well be President-elect Trump’s first news conference on Wednesday since his election win. His tweets continue to be market moving events for the stocks and sectors it influences and very soon there will be more and more macro consequences of his musings and actual policy decisions. So watch out for things to hot up after Wednesday. Remember also that the inauguration is a week on Friday and we’ll soon be into the well watched first 100 days.

China won’t be far from Mr Trump’s crosshairs in 2017 and as mentioned earlier the big story here so far this year has been the +1.81% strengthening of the offshore RMB last week. At one stage on Friday the currency was as much as +2.78% stronger in 2017 before it gave back some of those gains on Friday. It’s given back another -0.48% this morning too with offshore lending rates also notably lower (CNH Hibor down to a still elevated 14% from 69% on Friday) and in fact it’s now on course for the biggest two-slide since June last year. So China is ruffling a few feathers again at the start of a New Year. It’s worth also noting that the weekend data showed that China’s foreign reserves fell for a six month in a row in December and to a five-year low of $3.01tn, albeit pretty much bang on consensus.

On a related topic, over the weekend our China economists published a report discussing their view of the Dec-31 Decree issued by the PBoC stipulating new reporting regulations regarding large/suspicious financial transactions. They highlight that the Decree could potentially pose a severe hit to “capital flight without cross-border fund flows”. They also note that the Decree is an “infrastructure building” effort with regulatory implications far beyond capital control. Better tracing of large/suspicious financial transactions will not only serve for anti money laundry, but also help with, for instance, regulation of shadow banking activities.

Elsewhere this morning equity markets in Asia are generally off to a decent start to the week. The Shanghai Comp (+0.56%), ASX (+0.93%), Hang Seng (+0.04%) and Kospi (+0.12%) have all edged higher while markets in Japan are closed for a public holiday. There’s been some interesting corporate news too with the announcement that McDonald’s is to sell 80% of its China franchise for about $2bn with Chinese state-backed conglomerate Citic Group to take a 52% stake. Meanwhile Sterling (-0.38%) has weakened following a Sky News interview yesterday with UK PM Theresa May in which she said the eventual exit of the UK from the EU will be about “getting the right relationship” and “not about keeping bits of membership”. May also played down Ivan Rogers’ comments last week when he criticised the government’s “muddled thinking”, while May added that the government “will be setting out some more details in coming weeks as we look ahead to triggering Article 50”.

Moving on. For those that missed it, Friday was all about the final US employment report of 2016. While headline nonfarm payrolls may have appeared a touch disappointing at first glance having come in slightly below consensus (156k vs. 175k expected), there was also a cumulative 19k of net positive revisions to the prior two months. That was a similar story for private payrolls (144k vs. 170k expected) where the November reading in particular was revised up to 198k from 156k at the first reading. Meanwhile the rest of the report was generally supportive. The U-3 unemployment rate ticked up as expected to 4.7% although the broader U-6 rate dropped one-tenth to 9.2% and in doing so hit a new postfinancial crisis low. The labor force participation rate nudged up one-tenth to 62.7% while average weekly hours held steady at 34.3hrs. The report might however be best remembered for the +0.4% mom gain in average hourly earnings (vs. +0.3% expected) which has helped the YoY rate to accelerate to +2.9%  from +2.5% – the highest since June 2009.

As noted earlier US equities took heart from the report, helping the S&P 500 to rise +0.35% while 10y Treasury yields reversed a decent part of the moves in the previous two days to close 7.5bps higher. The  USD index (+0.69%) also rallied back while Gold (-0.63%) nudged lower. The other data in the US on Friday didn’t offer too much to the debate. The November trade balance revealed a further widening in the deficit to $45.2bn from $42.4bn. Finally factory orders weakened a little bit more than expected in November (-2.4% mom vs. -2.3% expected). Following all that the Atlanta Fed left their Q4 GDP forecast unchanged at 2.9% while the NY Fed raised their growth forecast to 1.9% from 1.8%.

There was also some Fedspeak to take stock of on Friday. The Philadelphia Fed’s Harker said that “I’m pencilled in for 3 rate increases” this year. The Dallas Fed’s Kaplan confirmed that the December SEP, which had a median projection of 3 rate hikes this year “gives you a sense of my views” but that the Fed needs to be nimble to revise forecasts as events unfold. Finally the usually dovish Chicago Fed’s Evans confirmed that 2 hikes this year is “not an unreasonable expectation” and that 3 hikes is “not implausible”.

Before we look at the week ahead, for completeness in Germany on Friday the hard data was a little bit disappointing with both November factory orders (-2.5% mom vs. -2.4% expected) and retail sales (-1.8% mom vs. -0.9% expected) declining more than expected. The European Commission’s index of economic sentiment was however reported as rising 1.2pts in December to 107.8 and more than expected.

Moving now to this week’s calendar. We’re kicking off the week in Europe this morning with Germany where the latest industrial production and trade data is due. Business sentiment data in France follows along with the latest house price data in the UK, before we get then get the Sentix investor confidence reading for the Euro area and also the November unemployment rate reading. Over in the US we’ve got the usual post-payrolls lull but the November consumer credit reading will be out this evening. We’re kicking off Tuesday in China where the December CPI and PPI prints will be due. In Europe the only data due out is the latest industrial production numbers in France while in the US the NFIB small business optimism reading is due for last month, along with the November wholesale inventories and trade sales report and also the November JOLTS job openings report. Wednesday kicks off in the UK with the November trade data and also industrial and manufacturing production prints. There’s no data of note in the US on Wednesday. Japan gets things going on Thursday with November trade data. During the European session we’ve got inflation data in France, GDP in Germany and industrial production data for the Euro area all due. Over in the US the data includes initial jobless claims, import price index and the December monthly budget statement. During the Asia session on Friday the highlight is likely the December trade report in China. It’s a quiet end to the week in Europe with no notable releases due. In the US we finish the week with the December PPI report and retail sales, November business inventories and finally a first look at the January University of Michigan consumer sentiment reading.

Away from the data the Fedspeak this week consists of Rosengren and Lockhart today, Harker, Evans, Bullard and Kaplan on Thursday and Fed Chair Yellen early on Friday morning when she is due to host a town hall meeting with educators from across the country. Q&A is however expected. The ECB will also release the minutes from the December policy meeting on Thursday. Meanwhile, this week earnings season will start to kick into gear with JP Morgan, BofA and Wells Fargo all reporting on Friday. Perhaps the most hotly anticipated event this week however will be President-elect Trump’s aforementioned general news conference on Wednesday, the first since his election victory. That will also come one day after President Obama’s televised farewell speech from Chicago.

end

i)Late  SUNDAY night/MONDAY morning: Shanghai closed UP 14.32 POINTS OR 0.54%/ /Hang Sang closed UP 55.68 OR 0.25%. The Nikkei closed /Australia’s all ordinaires  CLOSED UP 0.84%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9380/Oil FELL to 53.00 dollars per barrel for WTI and 55.96 for Brent. Stocks in Europe: ALL IN THE RED. Offshore yuan trades  6.8740 yuan to the dollar vs 6.9380  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS AS  DOLLARS  LEAVE CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

China launches a crackdown on Bitcoin with the beneficiary gold:

(courtesy zero hedge)

China Launches Bitcoin Crackdown: PBOC Will Probe Abnormal Investor Behavior “And Rectify Misbheavior”

Having long been advocates of Bitcoin (ever since Sept. 2015 when it traded at $230) for the simple reason that we were confident the digital currency would eventually become China’s favorite means of circumventing capital controls – precisely as has transpired – two months ago we warned that the unprecedented surge which made bitcoin the best performing asset in the past year with a 5x return, may be ending as “China Prepares To Impose Curbs, “Capital Controls” On Bitcoin.”

Since then, and especially over the past week, China has launched a series of incremental steps designed to do just that, which culminated on Friday when China’s central bank issued a statement calling the changes in the virtual currency “abnormal”, and said authorities have required the trading platform to operate in compliance. They urged the platform to “probe investors’ behavior and to “rectify misbehavior.”

The statement hit shortly after China FX regulators, SAFE, said it would begin scrutinizing fund outflows via Bitcoin, as China sought to close this final gaping capital outflow pathway.

Furthermore, according to China Daily, China’s financial services authorities required major executives of the Shanghai-based bitcoin trading platform BTCC on Friday to “rectify misbehavior in the trading of the virtual currency”, without clarifying precisely what this means, and to raise awareness of risks as the value of bitcoins experienced wild fluctuations.

China’s mass speculators flocked to the bitcoin market in recent days in a bid to gain from its fast appreciation, which rose 200% in 2016. However, after rising in near-exponential fashion over the past few weeks without any corrections, Bitcoin’s value fluctuated by more than 30 percent within the past two weeks as concerns of Chinese interference first emerged and were then confirmed. .The statement said authorities would like to reaffirm that the bitcoin as a virtual currency which cannot and shall not be regarded as currency in circulation.

* * *

It is unclear if the PBOC has successfully burst China’s latest bubble: According to data from the Shanghai-based bitcoin trading exchange, BTCC, more than 100 new investors started trading the virtual currency in the past three days, a fast growth compared to some 20 new investors before October in 2016.

“This trend shows that the bitcoin market’s appeal has been rising to a new level,” said a market review by BTCC dated Jan 4.

Feng Xin’an, 43-year-old sales manager with Shanghai-based Maoxin Trade Ltd, said he invested some 135,000 yuan ($19,515) in the bitcoin market as he regards bitcoin as a “haven asset”.

“The young generation, like my son and his friends, love to pay with digital currencies. Their demand for bitcoin can grow further, as I observe,” he said.

Meanwhile analysts continue to warn that bitcoin is not a tool that “guarantees” yield, and warn new investors who have limited knowledge, that entering the market blindly could be risky.

“Investors should always remember that bitcoin lost more than 75% of its value in 2013. We do not recommend it as a long-term investment tool, particularly because of compliance concerns,” said Zhang Yufang, investment adviser with Shanghai Shangding Investment Consultancy.

Then again, we are talking about Chinese bubble blowers: a legendary class of momentum chasers who will take any trend far beyond the level of max pain before allowing it to burst in a spectacular supernova of selling, in which the slowest sellers end up suicidal, either literally and metaphorically, before moving on to the next pre-bubble asset.

Following the PBOC statement, Bitcoin tumbled as low at 5,555 Yuan, or just above $800, before rebounding modestly as a new batch of BTFDers emerged.

 

 

end

 

In the latest figures China reports that 41 billion USA left the shores of China. It now looks like their entire foreign reserves are below 3.0 trillion.  The danger point is 2.8 trillion without controls and 1.7 trillion with controls (and China has initiated controls)

(courtesy zero hedge)

China’s $3 Trillion In Reserves Questioned After PBOC Reports $41 BIllion In December Outflows

In late December, ignoring the official Chinese monthly reserve data and instead using a dataset provided by China’s FX regulator SAFE on cross-border RMB flows and on onshore FX settlements, Goldman calculated the true amount of Chinese FX outflows and found that Beijing has continued to mask the full extent of its capital flight, which in November spiked to $69 billion (well above the reported, currency adjusted number of $34 billion). Furthermore, it found that “since June, this data has continued to suggest significantly larger FX sales by the PBOC than is implied by FX reserve data.”

Even more troubling, Goldman calculated that cumulatively since August 2015 through November 2016, FX outflow totaled roughly US$1.1 trillion, while implied FX sales suggested by PBOC’s FX position (headline reserves after adjusted for currency valuation effect) were approximately US$630bn, indicating that the real rate of reserve depletion was nearly double that represented by PBOC reserve data.

Exhibit 1: FX outflow picked up to US$69bn in November

Why would China try to misrepresent the full extent of its currency outflows?

Simple: it is an ongoing attempt by the PBOC to not precipitate the feedback loop of even further panicked selling of Yuan, even greater purchasing of Bitcoin, even more outflows, and thus, even more reserve depletion.

And while we have yet to obtain the December FX data from SAFE, overnight the PBOC reported that in December China’s reserves fell a further $41.1 billion, exactly in line with expectations, reducing China’s total reserves to $3.01 trillion, the lowest number in six years, and just fractionally above the $3 trillion cited by various analysts as the key support level below which any further capital outflow would become self-reinforcing. According to a statement by SAFE on Saturday, the December decline in FX reserves was mainly because the central bank supplied funds to maintain balance in the foreign exchange market and the depreciation of non-U.S. dollar currencies. For the full year of 2016, the SAFE said the central bank’s effort to stabilize the yuan was the key reason for the drop in reserves.

That said, when considering the discrepancy with SAFE data, it is likely that the true level of Chinese reserves is now well below $3 trillion, as a simple correlation with China’s plunging Yuan demonstrates.

To be sure, China will likely take additional measures to keep its foreign-currency stockpile from slipping too far below the key $3 trillion mark – or whatever the real level of reserves is – to avoid further hurting investor confidence and spurring further declines in the yuan, according to economists at major banks cited by Bloomberg. As documented here over the past week, in a desperate last ditch measure to halt further outflows, since the New Year China rolled out draconian new FX capital controls as well as extra requirements for citizens converting yuan into other currencies after the annual $50,000 quota for individuals reset Jan. 1.

As a result, Yuan volatility exploded last week, with the offshore rate notching up its biggest two-day gain on record just days after completing its worst yearly performance against the dollar as a result of an unprecedented spike in overnight offshore Yuan deposit rates, which forced Yuan shorts to cover all exposure.

Still, according to Gao Yuwei, a researcher at the Bank of China’s Institute of International Finance in Beijing, policy makers now may prefer using capital controls instead of burning through foreign exchange reserves to defend the yuan. It remains to be seen how effective such capital controls will be in the long run as every previous iteration has failed to prevent ongoing capital flight.

“China’s government is well positioned to control outflows more effectively if it wants to, though it may not want to be seen as reversing China’s ‘opening’ strategy,” Wang Tao, head of China economic research at UBS, wrote in a recent note. “In the long run, it may not have much choice if FX reserves fall more sharply on the back of intensifying capital outflow pressures.”

A key question facing China now is whether it has enough reserves. In Tao’s note, the UBS analysts said that China does have more than enough FX reserves to cover import bills and foreign debt payment…

As of November 2016, China’s official FX reserves stood at $3.05 trillion, down from $3.84 trillion at end-2014. At this level however, they are still 3.5x China’s total non-RMB foreign debt, 6x its short-term external obligations, and can cover over 20 months of goods and services imports (minimum requirement is 3 months). The official FX reserves do not include the $110 billion “other foreign currency assets” on PBC balance sheets, long-term foreign assets held by China Investment Corporation and State Administration of Foreign Exchange’s corporate subsidiaries, or FX reserves used for recapitalizing policy banks. Don’t forget that China still has an annual current account surplus exceeding $200 billion too.

... but not enough for long-term currency defense, even if its disclosed reserves are accurate, liquid and usable:

Most FX reserves are liquid and useable, but not for defending the currency over a long time. We estimate that about 60% of China’s FX reserves are held in USD assets (Figure 7), of which about $1.1 trillion is directly invested in US treasuries and the rest in corporate bonds, agency debt and equity. Another $500 billion is estimated to be in developed market government bonds.

UBS also notes that the IMF estimated in 2016 that to withstand a currency attack, China would need between $1.75 trillion (with capital controls) and $2.82 trillion (no capital controls), using its composite metric for FX reserve adequacy as of end-2015. Given that China has some capital controls, its “adequate” reserves level may be somewhere in between. However, if the PBC uses FX reserves to defend the exchange rate for too long, the gradual decline of its reserves may erode confidence.

In short: it’s anyone guess i) what the real level of China’s true, usable reserves is currently (most likely well below $3.0 trillion), and ii) whether that will be sufficient to wake a prolonged currency attack, both from outside, speculative sources, and continued outflows predicated by Chinese savers seeking to park their cash offshore.

Aside from its dollar reserve, China also reported that the value of its official gold holdings dropped to $67.9 billion by the end of December, down from $69.8 billion a month earlier, as a result of the drop in the price of gold. The nation kept gold reserves unchanged at 59.24 million troy ounces for a second month in December, the first time it disclosed a halt in gold purchases for two consecutive months since disclosing holdings as of June 2015. Just like with its misrepresentation of its reserve outflows, many analysts are skeptical that China reveals the truth about its gold holdings.

 

 

end

 

Last night:  the offshore and onshore yuan crashed. The offshore yuan traveled from 6.8 down to 6.87 to the dollar:

(courtesy zero hedge)

Yuan Is Crashing (Again)

The volatility in the Chinese currency has gone from the sublime to the ridiculous. After exploding 21 handles stronger in the biggest PBOC-engineered short-squeeze in history – erasing the entire post-election sell-off – offshore Yuan is now collapsing once again, down 350 pips tonight (and over 10 big figures from Thursday’s highs). While interbank rates have calmed down, the rush to exit the currency has not…

The last two days are the biggest drop in offshore Yuan since Aug 2015’s devaluation… as PBOC weakens its fix by the most sine June 2016.

Pushing historical volatility to its highest since the Aug 2015 devaluation…

For some context, this level of volatility is over 10 standard deviations away from the pre-Aug 2015 norms.

Notably the moves accelerate afterPBOC Advisor Fan Gang told Bloomberg TV…

  • *PBOC WANTS TO SEE FX RESERVES REDUCE SMOOTHLY, GRADUALLY: FAN
  • *CHINA POLICY MAKERS NOT LIKELY GO FURTHER ON OUTFLOW CURBS: FAN
  • *YUAN OVERVALUED IN PAST 3-4 YEARS AGAINST DOLLAR: FAN
  • *CHINA POLICY MAKERS NOT LIKELY TO DROP INTERVENTION: FAN
  • *USE OF YUAN HAS INCREASED DESPITE RECENT DEPRECIATION: FAN
  • *CHINA NEEDS LESS FX RESERVE AFTER YUAN’S INCLUSION IN SDR: FAN

Which was followed by the state-run Global Times newspaper says in an English-language editorial, saying that the Chinese people will demand its government to “take revenge” if Donald Trump reneges on the one-China policy after becoming U.S. President.

 

 

end

 

China is angry at Trump’s move to closer ties with Taiwan.  Mainland China is threatening to “take revenge” if Trump follows through negating the “one China policy”

(courtesy zero hedge)

China Threatens To “Take Revenge” If Trump Violates “One-China” Policy As Taiwan President Lands In US

Around the time Taiwan’s president Tsai Ing-wen, who last month infamously spoke to Trump putting the long-standing “One China” policy in jeopardy, made a controversial stopover in Houston, China’s state-run tabloid Global Times warned U.S. President-elect Donald Trump that China would “take revenge” if he reneged on the one-China policy.

The Taiwan president met senior U.S. Republican lawmakers during her stopover in Houston on Sunday en route to Central America, where she will visit Honduras, Nicaragua, Guatemala and El Salvador. Tsai will stop in San Francisco on Jan. 13, her way back to Taiwan.

While Ing-wen did not meet with the president-elect or members of his transition team, that will hardly mollify China which had previously asked the United States not to allow Tsai to enter or have formal government meetings under the one China policy. Beijing considers self-governing Taiwan a renegade province ineligible for state-to-state relations. The subject is a sensitive one for China.

A photograph tweeted by Texas Governor Greg Abbott shows him meeting Tsai, with a small table between them adorned with the U.S., Texas and Taiwanese flags.

View image on Twitter

Greg Abbott @GregAbbott_TX

Today I met with the President of Taiwan to discuss expanding trade and economic opportunities.

1:15 PM – 8 Jan 2017

Reuters reported that Tsai’s office said on Monday she also spoke by telephone with U.S. senator John McCain, head of the powerful Senate Committee on Armed Services. Tsai also met Texas Senator Ted Cruz.

Meanwhile, an angry China lashed out again at the US saying that “sticking to (the one China) principle is not a capricious request by China upon U.S. presidents, but an obligation of U.S. presidents to maintain China-U.S. relations and respect the existing order of the Asia-Pacific,” said the Global Times editorial on Sunday. The influential tabloid is published by the ruling Communist Party’s official People’s Daily. “If Trump reneges on the one-China policy after taking office, the Chinese people will demand the government to take revenge. There is no room for bargaining,” said the Global Times.

Ted Cruz said some members of Congress had received a letter from the Chinese consulate asking them not to meet Tsai during her stopovers, which however was ignored.

“The People’s Republic of China needs to understand that in America we make decisions about meeting with visitors for ourselves,” Cruz said in a statement. “This is not about the PRC. This is about the U.S. relationship with Taiwan, an ally we are legally bound to defend.” Cruz said he and Tsai discussed upgrading bilateral relations and furthering economic cooperation between their countries, including increased access to Taiwan markets that would benefit Texas ranchers, farmers and small businesses.

Taking a more conciliatory tone, Chinese Foreign Ministry spokesman Lu Kang on Monday urged “relevant U.S. officials” to handle the Taiwan issue appropriately to avoid harming China-U.S. ties. “We firmly oppose leaders of the Taiwan region, on the so-called basis of a transit visit, having any form of contact with U.S. officials and engaging in activities that interfere with and damage China-U.S. relations,” Lu said.

In a dinner speech Saturday to hundreds of overseas Taiwanese, Tsai said the United States holds a “special place in the hearts of the people of Taiwan” and that the island via bilateral exchanges has provided more than 320,000 jobs directly and indirectly to the American people, her office said on Monday.  Tsai said Taiwan looked to create more U.S. jobs through deeper investment, trade and procurement. Tsai’s office said James Moriarty, chairman of the American Institute in Taiwan, which handles U.S.-Taiwan affairs in the absence of formal ties, told the Taiwan president in Houston that the United States was continuing efforts to persuade China to resume dialogue with Taiwan.

The Global Times, whose stance does not equate with government policy, also targeted Tsai in the editorial, saying that the mainland would likely impose further diplomatic, economic and military pressure on Taiwan, warning that “Tsai needs to face the consequences for every provocative step she takes”.

“It should also impose military pressure on Taiwan and push it to the edge of being reunified by force, so as to effectively affect the approval rating of the Tsai administration.”

In a separate editorial also in the Global Times, the mouthpiece stated that “In the past, the US has an overwhelming advantage over China in military power, thus it has few worries about China. However, China has become capable of challenging the US within the first island chain. With fewer leverage to balance China’s influence, Washington plays the “Taiwan card” to impose pressure on China. However, the US should know that taking advantage of the Taiwan situation is very dangerous. The Chinese mainland holds a firm stance on the Taiwan question and there is no negotiating space as the issue is related to Chinese sovereignty.”

It concludes with an outright threat: “due to the mainland’s development in recent years, the US military advantages are shrinking. A confrontation between the two will lead to a great loss for the US. Therefore, the US will be hesitant about military confrontations against the mainland.

 

 

END

 

Then late this evening: we hear that Trump is set to label China a currency manipulator.  This will not have an immediate effect but it will certainly strain relations.  Trump want to get China to the negotiating table so more jobs are created in the USA

(courtesy zero hedge)

 

Trump Is Set To Label China A “Currency Manipulator”: What Happens Then?

While China has been banging the nationalist drums in its government-owned tabloids, warning daily of the adverse consequences to the US from either a trade war, or from Trump’s violating the “One China” policy, a more tangible concern for deteriorating relations between China and the US is that Trump could, and most likely will, brand China a currency manipulator shortly after taking over the the Oval Office. Even Bank of America, which two months ago issued a report arguing that it is too early to base concerns of US trade barriers against China on campaign rhetoric, notes “that recent tweeter feeds from Mr. Trump suggests he disapproves the yuan depreciation, implying a higher probability of naming China as a currency manipulator country after his inauguration in January 2017.”

BofA believes that such an action could take place as soon as the spring of 2017, or around the time the the US Treasury Department meet in April to determine which country on the monitoring list will be named.

First, some background: under rules adopted by the Obama Treasury, China is not a currency manipulator. It fails to meet 2 out of the 3 conditions named below, even though it is on the watch list together with 5 other economies (Japan, Germany, South Korea, Taiwan and Switzerland). The criteria include:

  1. Bilateral trade surplus against the US above US$20bn. (Yes, China’s trade surplus against the US was US$366bn in 2015)
  2. Current account surplus exceeds 3% of its GDP. (No, China’s current account surplus is 3.0% of GDP in 2015 and expected to be 2.4% in 2016)
  3. Official FX purchases exceed 2% of its GDP. (No, in the past year, the PBoC actually drew down its reserves to prevent the yuan from falling further) (see chart below)

Nonetheless, despite the last bullet point suggesting the Yuan is rather overvalued at this moment, with PBOC intervention serving to prop it up in order to prevent further capital flight, as BofA’s Helen Qiao admits, these criteria are far from being a fixed standard. Since they are not legally binding, it is not impossible that the future President would ask his Treasury Secretary to revise the criteria, or use his discretion to label China as a manipulator anyway.

If tagged in April 2017, it will be the 2nd time the US Treasury names China as a currency manipulator. The first time was back in 1992 – 1994, after labelling Korea and Taiwan in 1988. Back then the criteria were similar to the current version. Both Korea and Taiwan were struggling to resist the pressures of currency appreciation, which appeared to be in sharp contrast of the PBoC’s efforts to prevent yuan from excessive weakening in the last 1.5 years. The point of naming China as a currency manipulator could have won more sympathy, had it been made 4 years ago (see Chart 1).

What happens when China is labelled a manipulator?

Labeling itself doesn’t lead to an immediate tariff hike. The designation itself won’t enable the President or the Congress to impose an immediate tariff on imports from China. Nor will it bring any severe penalty on China with the measures proposed. After all, the last time this clause was used dated back to 1994.

If China were named a currency manipulator, the law requires the US Treasury to kick off enhanced bilateral engagement. If the assessment of currency manipulation remains unchanged a year after the initial labeling, legislation requires the US president to take one or more of the penalties that include i) denying access to US Overseas Private Investment Corporation (OPIC) financing; ii) exclude China from US government procurement; iii) call for heightened IMF surveillance; and iv) instructing trade representative to assess whether to enter into a trade agreement/negotiations. However, most of these measures do not form any immediate restrictive or binding punishment on China.

So why bother?

The main point of naming China as a currency manipulator would be to bring China back to the negotiation table at the lowest cost. Trump has publicly stated that he supports bilateral vs. multilateral trade agreements (not just for China, but all trading partners). It is possible that the Trump administration will seek to engage China in trade agreement negotiations as soon as possible, even before a manipulation conclusion is drawn. But depending on the terms and conditions attached, China may not be in a hurry to engage.

When they finally sit down, the future US President could raise concerns about selected industries during the trade negotiations, where he sees the potential for reclaiming jobs in the US. Recall that under the International Emergency Economic Power Act of 1977 Congress has delegated “emergency” powers to the President to impose selective tariff and quotas, which are likely to materialize.

The question then becomes how would China respond, as such a risky move could potentially set the US-China trade relationship off on the wrong foot under the new presidency.

BofA thinks China will push back against threatened trade restrictions. Instead of caving in and trying to prepare voluntary export restraints (VER) like Japan did with their auto exports back in the 1980s, China will likely start by strongly protesting against the labelling with the IMF, but not to initiate more aggressive retaliation (such as selling US government bonds from their official reserves) immediately. That said, even a “war of words” could weaken investor confidence not only in the US and China, but globally.

As BofA concludes, in the 15th year after China joined the WTO, it would likely take a lot more patience and perseverance for the largest exporter in the world to maintain a smooth path for its external sector.

To this we can add, that while China may not “immediately” sell US government bonds because it wants to, it may continue selling bonds because it has to: recall that over the past year, China and “Belgium” combined have dumped nearly half a trillion in US Treasury debt which has brought their collective holdings to a decade low of $1.23 trillion. The selling has taken place just as a result of currency defense, without the intention if impairing prices. We can imagine how much more dedicated China would be if it wanted to sell with the specific intention of hurting other holders of US Treasuries.

 

end

4 EUROPEAN AFFAIRS

ITALY

Not good:  the unemployment rate in Italy rises to 11.9% even though the consensus was 11.6%.  Italy found 19,000 more jobs but the huge influx of migrants caused the rise in joblessness.  The youth unemployment skyrockets to 39.4% .  The youth unemployment is getting to look like Greece!

(courtesy zero hedge)

Italy Unemployment Unexpectedly Deteriorates To Highest Since June 2015; Youth Unemployment Jumps To 39.4%

While the rest of Europe’s troubled periphery has been enjoying a slow, if steady, economic improvement in recent years (it is unclear if it would sustain should the ECB’s QE backstop be withdrawn and sovereign interest rates spike), in an unexpected deterioration reported earlier this morning, Italy’s unemployment rate rose to the highest level since June 2015, as the country struggles to regain a solid economic footing.

According to Italy’s statistics agency Istat, the jobless rate jumped to 11.9% in November, up from a revised 11.8% the month before, and well above the 11.6% consensus forecast. Despite the headline deterioration, there were 19,000 more people employed in Italy in November compared with the month before, Bloomberg reports.

Even more troubling, youth unemployment rose to 39.4 percent, up from 37.6% and the highest since October 2015.

The Italian deterioration stood out across a stable European backdrop: the November unemployment rate for broader euro area was 9.8%, the European Union’s statistics office in Luxembourg said later Monday.

While Istat recently said on December 30, that businesses foresee an employment boost for Italy’s manufacturing industry, with a decrease in trade, construction and services, the practical reality is less optimistic especialy after UniCredit SpA, the nation’s largest bank, said last month it plans a 21% reduction of its workforce in Italy by 2019.

The government of new Prime Minister Paolo Gentiloni has been seeking to create more jobs to put the economy on a steady upward path. Growth picked up to 0.3 percent in the three months ended in September from near-stagnation in the previous quarter.

 

 

end

 

Volkswagen/Germany

It goes from bad to worse for Volkswagen as an executive with the company is charged with conspiracy to defraud the USA over the emissions scandal:

(courtesy zero hedge)

FBI Arrests Volkswagen Exec Charged With Conspiracy To Defraud The US

While various other carmakers, such as GM, Ford, Fiat and Toyota, have had their share of headaches in recent weeks worried if and when Trump will tweet about them next, the epicenter of all car scandals over the past two years remains Volkswagen, and sadly for the German carmaker things continue to get worse: according to the NYT, the FBI haed arrested a Volkswagen executive on charges of conspiracy to defraud the United States.

Oliver Schmidt, who headed the company’s regulatory compliance office in the U.S. from 2014 to March 2015, was arrested on Saturday by federal investigators in Florida, the newspaper said, citing people familiar with the matter. Starting in late 2014, Mr. Schmidt and other Volkswagen officials repeatedly cited false technical explanations for the high emissions levels, the state attorneys general said. In 2015, Mr. Schmidt acknowledged the existence of a so-called defeat device that allowed Volkswagen cars to cheat emissions tests.

VW admitted in September 2015 to installing secret software known as “defeat devices” in 475,000 U.S. 2.0-liter diesel cars to cheat exhaust emissions tests and make them appear cleaner in testing. In reality, the vehicles emitted up to 40 times the legally allowable pollution levels.

Schmidt continued to represent Volkswagen after the company admitted in September that cars were programmed to dupe regulators. He appeared before a committee of the British Parliament in January, telling legislators that Volkswagen’s behavior was not illegal in Europe. Schmidt is expected to be brought before court in Detroit on Monday, the NYT said.

“Volkswagen continues to cooperate with the Department of Justice as we work to resolve remaining matters in the United States. It would not be appropriate to comment on any ongoing investigations or to discuss personnel matters,” it said.

Senior VW officials are not attending this year’s Detroit auto show, which is taking place this week.

James Liang, a former Volkswagen engineer who worked for the company in California, pleaded guilty in September to charges that included conspiracy to defraud the federal government and violating the Clean Air Act. But Mr. Schmidt’s arrest brings the investigation into the executive ranks.

The arrest came as Volkswagen and the Justice Department neared a deal to pay more than $2 billion to resolve the criminal investigation into the emissions cheating. The company or one of its corporate entities is expected to plead guilty as part of the deal.

The criminal case against Volkswagen, and the potential guilty plea, set it apart from other recent auto industry investigations. In settlements with General Motors and Toyota over their handling of safety defects, for example, the companies agreed to pay large fines, but did not plead guilty. Volkswagen has already agreed to pay up to nearly $16 billion to resolve civil claims in what has become one of the largest consumer class-action settlements ever in the United States, involving half a million cars.

 

 

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

The Turkish lira plummets by over 2% to 3.73 to the dollar as this nation is certainly having its problems. The daily attacks on its country from both ISIS sympathizers or PKK, it is certainly having a devastating effect on their economy

(courtesy zero hedge)

Turkish Lira Plunges Over 2% To New Record Low, Yields Rise On Moody’s Warning

The collapse in the Turkish Lira, which has been relentless since last summer’s failed coup, has only accelerated in 2017, and especially this morning, when the Turkish currency tumbled more than 2% against the dollar – its single worst day since the July 19 military coup attempt – sliding as low as 3.73, down over 5% so far in 2017, and over 23% in the past 12 months.

While the broader catalyst are familiar, namely a slowing economy, seemignly daily terrorist attacks, a furious crackdown by Erdogan on government dissent and potential rating downgrades, this morning there have been two additional catalysts that have accelerated the selloff.

First Moody’s, which has the country on junk rating as of last September, issued a warning on the country’s banking system saying heightened security risks would weigh down on the economy and heap further pressure on domestic banks. The rating agency warned that Turkish banks’ bad loan ratio was set to rise to 4% this year from 3.24% “driven by the combination of high inflation, lira depreciation and the general worsening of the investment climate because of security issues and geopolitical tensions”. The caution comes as Turkey faces another downgrade to junk from Fitch later in January, which would see its last investment grade rating stripped away, promptly raising its costs of borrowing even more.

Only making matters worse, were comments from Turkey’s deputy PM, Nurettin Canikli, who indicated that Turkey’s head remains stuck deeply in the sand, when he blamed the plunge in the Lira on an unacceptable “campaign” to force interest rates higher.  He also told AHaber TV in an interview that institutions will take whatever measures are needed for economy, that Citizens have no demand for foreign currency (not quite if judging by the plunge in the lira), that the Turkish economy will continue to “resist” such moves as dollarization level very low compared to past, and ultimately blamed the U.S. for its support to Syrian Kurdish PYD/YPG calling it “unacceptable.”

Meanwhile, the market is already pricing in further downgrades, and as of this morning, Turkey’s benchmark 10Y yields jumped another 15 bps near the highest over the past year.

So what is Turkey to do? One suggestion came from ING’s chief EMEA FX and rates strategist Petr Krpata who writes that a “large one-off rate hike could unleash a 10% rally in the lira” adding that “in the absence of capital controls, a large emergency rate hike seems to be the only remedy. If the root cause is domestic, the solution must be domestic too.”

However, he admits that the bar for a large hike is high – especially with Erdogan having made it quite clear such a move is unacceptable – and expects the central bank to continue with its “piecemeal approach and only hike interest rates gradually.”

He concludes that such an approach is unlikely to halt the lira’s slide and suggests further downside; sees 3.90/USD being tested before the case for a large interest increase grows stronger.

At the current rate of collapse, the lira may be there by the end of the week.

 

 

END

 

USA: Iran

Iranian vessels come within 900 yards of a US destroyer accompanying two ships. The situation with respect to relations with Iran is faltering terribly:

(courtesy zero hedge)

US Destroyer Fired Warning Shots At Four Iranian Vessels In Strait Of Hormuz

In the latest dangerously close encounter between US and Iranian navies, Reuters reports that a U.S. Navy destroyer fired three warning shots at four of Iran’s Islamic Revolutionary Guard Corps vessels on Sunday after they closed in at a high rate of speed in the Strait of Hormuz, according to two U.S. defense officials.

The Reuters sources said that the USS Mahan established radio communication with the boats but they did not respond to requests to slow down.

The USS Mahan

The Navy destroyer fired warning flares and a U.S. Navy helicopter also dropped a smoke float.

The Iranian vessels came within 900 yards (800 meters) of the Mahan, which was escorting two other U.S. ships.

The last such encounter in which a US navy ship fired warning shots at Iranian vessels took place last August, when the USS Nitze fired three warning shots after a “harassing” Iranian fast-attack craft approached and circled two U.S. Navy ships and a Kuwaiti vessel in the northern Gulf. The U.S. ship fired the shots into the water after the Iranian ship did not leave after a brief radio conversation.

The Iranian vessels had moved at high speed toward the Nitze, which allegedly was operating in accordance with international law in international waters and ignored maritime “rules of the road” as set out in the 1972 Convention on the International Regulations for Preventing Collisions at Sea. According to the Navy official, the IRGC vessels ignored multiple warnings, creating a dangerous, harassing environment that could have pushed the Nitze to take defensive measures, escalating the situation. At the time, Iran’s defense minister insinuated that the incident occurred inside Iranian territory.

“Naturally these boats constantly monitor the developments and foreign vessels’ movements and naturally this happens in the waters of our own country. If any foreign vessel enters our waters, we will give them a warning and if it is an act of aggression, we will confront them,” he said.

It is unclear if today’s incident took place in international waters.

As a reminder, there are temporarily no US aircraft carriers in the Persian Gulf region at this moment, or anywhere else around the world for that matter.

 

END

 

Russian consul in Athens found dead.  They said “abnormal causes”

must be going around..

(courtesy zero hedge)

 

Russian Consul In Athens Found Dead

According to reports in the Greek press, on Monday the head of the Russian Consular service in Athens was found dead in his apartment in downtown Athens. However, unlike the recent assassination of the Russian ambassador in Ankara, according to preliminary reports the death is not the result of a criminal act.

The 55-year-old Andrei Melanin was found dead on Monday afternoon in his apartment on Herod Atticus Road. Local authorities and a coroner were quickly dispatched to the site.

Russia Zvezda adds that ghe consul did not go to work and did not respond to calls. Alarmed, his colleagues came to his home and with the help of the police opened the door, which was locked from the inside. At the moment, the police is investigating the incident.

A report in Greek To Vima says that the death appears to be the result of “abnormal causes.” However, it adds, the full details of his death will only be known after an autopsy is performed.

6.GLOBAL ISSUES

Mexico spent 4 billion trying to defend the Peso but it did not help.  The Peso remains at its nadir of 21.3 peso to the dollar

(courtesy zero hedge)

Mexico Spent $4 Billion To Defend The Peso Last Week…And This Is What They Got

Mexico’s central bank spent over $4 billion last week in an effort to support the collapsing peso during U.S., Mexico and Asian trading, according to El Economista.

Gabriel Gerzstein, a strategist at BNP Paribas, estimated that opening an episode of dollar sales to “anchor the value of the national currency” could cost about $ 40 billion from the international reserve.

The handling of discretionary dollar auctions, in the context of volatility generated by US protectionist policy, would have to motivate the Exchange Commission to “be much more aggressive and discretionary than in 2015,” he explained.

In August, Banxico used a daily auction mechanism that ended up draining $ 27 billion from the reserve in six months.

So far that $4 billion has not stemmed the tide of selling with the peso down 3%…

We’re gonna need more intervention.

 

 

end

 

If Trump’s tariffs are too high, then Fiat will shut down all of Mexico’s production: this should set off a huge trade war!

( zero hedge)

 

Fiat CEO Warns May Shut All Mexico Production If Trump Tariff Too High

Agree with his proposed policies or not, it’s difficult to argue that Trump is delivering on his promises to the autoworkers of the Midwest who single-handedly voted him into the White House.  Before even taking office, the mere threat of import tariffs has caused Ford to cancel the construction of a $1.6 billion new facility in Mexico, and has automotive CEO’s from Toyota to Chrysler walking on eggshells as they carefully try to flaunt all of the capital investments they’re making in U.S.-based facilities.

While likely secretly hoping for the status quo, Fiat Chrysler’s U.S. CEO, Sergio Marchionne, admitted earlier today that if Trump’s import tariffs are “sufficiently large” he would be forced to shutter all of his manufacturing capacity in Mexico as it would be rendered “uneconomical.”  Per the FT:

Fiat Chrysler may close its Mexican car plants if Donald Trump imposes sufficiently stringent tariffs on vehicles coming into the US, chief executive Sergio Marchionne said on Monday.

 

“It’s possible that if economic tariffs are imposed…and are sufficiently large, it will make production of anything in mexico uneconomical and we would have to withdraw,” he said in Detroit on Monday. “It’s quite possible.”

 

As it turns out, purchasing 18mm cars per year, even if those purchases are fueled by a massive subprime auto lending bubble, affords the U.S. some leverage on where those vehicles are manufactured.  And, as Marchionne points out, the manufacturing capacity in Mexico was specifically designed and tooled to manufacture vehicles for the U.S. market which means that attempts to “re-purpose” the facilities for the export market would almost certainly be uneconomical.

Chrysler produces 503,000 vehicles in Mexico a year at two sites and is heavily dependent on exports to the US, with 86 per cent of its cars sold to US or Canada in 2015.

 

Mexico’s car industry has blossomed under the North American Free Trade Agreement, with the industry making 3.4m cars a year and automakers from Ford and GM to Nissan and Volkswagen producing vehicles in the country.

 

But the industry is heavily reliant on access to the US and Canadian markets, accounting for 82 per cent of the country’s 2.7m exports.

 

“The reality is the Mexican auto industry has been tooled up to try and deal with the US market,” said Mr Marchionne at the Detroit Motor Show. “If the US market were not to be there, then the reasons for its existence are on the line.”

 

Some car makers, such as Nissan and Volkswagen, use Mexico as a base to export to Europe or Latin America. But Mr Marchionne said it would be too expensive to repurpose the company’s existing Mexican site to export all over the world.

 

“That transition would be costly and it would be very very uncertain, there is no easy transition, those plants were designed built and purposed at a time when nafta was alive and well,” he said.

According to the Ann Arbor-based Center for Automotive Research, Mexico accounts for one-fifth of all vehicle production in North America and has attracted more than $24 billion in investment since 2010.  As we noted a few months ago, as of right now, this is where all of that money was spent.

 

 

And with America’s United Auto Workers making just over 7x what comparable workers make to build the same products in Mexico, we suspect car shoppers in the U.S. should get accustomed to pay a little more for their Ford Focus or Chevy Cruze.

The very prestigious Peterson Institute is banging the table that markets are ignoring the risk of devastating trade wars initiated by Trump;

(DaCosta/Peterson Institute)

Pedro Da Costa Warns “Markets Are Ignoring Risk Of Devastating Trump Trade War”

Submitted by Pedro Nicolaci da Costa via The Peterson Institute for International Economics,

Are investors so focused on Dow 20,000 that they’ve become complacent about the true risks of Donald Trump’s vows to tear up trade agreements, erect 17 commercial tariffs, and deport millions of immigrants?

So far, markets have focused on the purportedly bullish portion of his broad-brush economic proposals—corporate tax cuts and loose plans for infrastructure spending. But they have largely neglected Trump’s potentially devastating approach to trade, one which scholars at the Peterson Institute for International Economics found could lead to a damaging, protracted trade war.

The September report identified specific industries and localities that would be most deeply affected by a trade war with major US trading partners. And it’s not a pretty picture.

Source: PIIE Briefing 16-6: Assessing Trade Agendas in the US Presidential Campaign

“Millions of American jobs that appear unconnected to international trade—disproportionately lower-skilled and lower-wage jobs—would be at risk,” according to the PIIE study.

But Wall Street’s base case has been to dismiss the prospect of follow-through.

That negligence received something of a reality check over the holidays. A string of appointments, in particular those of anti-China economist Peter Navarro and steel-magnate-turned-protectionist-billionaire Wilbur Ross, confirms that, in keeping with some of his more outrageous campaign stunts (think pre-debate ‘presser’ with ex-Bill Clinton accusers), the president-elect may actually follow through on a lot of what he said he would do during the campaign.

That could include everything from erecting new tariffs, almost universally derided by economic experts as potentially hurting America’s own firms, to starting trade wars with Mexico and China. It also means taking potentially drastic measures on immigration that could be deeply hurtful (link is external) not only to the economy but to the American identity and social fabric, including potential increasing profiling of poor migrants by police.

Relations with Mexico have already come under strain even before Trump takes office because the peso (link is external) has taken a severe hit in the wake of the surprise Republican victory, forcing the central bank to tighten monetary policy.

7. OIL ISSUES

The USA is selling 8 million barrels of oil from its strategic reserves and the reason is to pay for maintenance.

(courtesy zero hedge)

US To Sell 8 Million Barrels Of Oil From The Strategic Petroleum Reserve

Two weeks ago we previewed that the U.S. Department of Energy could begin to sell off some of its strategic petroleum reserve (SPR) as soon as January, the beginning of a multi-year process to shrink the nation’s stockpile of oil. Congress has authorized DOE to sell off $375.4 million worth of oil in its recent budget resolution. The DOE said that such a sale could be held in January 2017.

Part of the motivation to sell crude is to finance upkeep for the SPR itself. The reserves are held in salt caverns in Louisiana and Texas, setup decades ago in the aftermath of the Arab Oil Embargo in 1973. The SPR system can hold more than 700 million barrels of oil, the largest strategic stockpile in the world. The idea is that the SPR holds 90 days’ worth of oil supplies, which could be released in the event of a global outage. A release has only occurred a handful of times, such as the Persian Gulf War, Hurricane Katrina and the Arab Spring.

Some of the storage systems are rusting and corroding after decades of use. In September, the DOE issued a report to Congress, which came to a dire conclusion about the condition of the reserve. “This equipment today is near, at, or beyond the end of its design life,” the report said. The sale “will allow the Department to take necessary steps to increase the integrity and extend the life” of the reserve, a DOE spokesperson said in December after the budget resolution was passed.

In the past, the SPR has been viewed as a cornerstone of US energy security policy. As long as the U.S. had 3 months’ worth of supply, it could weather unexpected disruptions. The International Energy Agency was setup in the 1970s as well, and participating members – in addition to the U.S., the group includes Europe, Japan, Korea, Australia and New Zealand – also have pledged to hold a 90-day supply. However, U.S. policymakers no longer view the SPR is all that important. Even the more hawkish members of Congress have been lulled into a sense of security from the surge in U.S. oil production and the resulting crash in oil prices. The world is awash in oil, so why does the U.S. need to stockpile such a massive volume of oil at great expense? The ostensible reason of selling off oil from the SPR is to finance its maintenance to ensure its existence over the long-term, but if the Congress still truly believed in the importance of the SPR, they would have found funding elsewhere instead of reducing the stockpile.

In any event, the previously previewed sale is about to take place, and according to an announcement by the DOE, the US will offer to sell some 8 million barrels from the petroleum reserve. According to the notice of sale, the Energy Department is accepting bids on sweet crude oil until 2pm CT Jan. 17. The contracts will then awarded by the end of January, with early deliveries expected in February and other deliveries in March, April.

The sale includes:

  • Up to 3m bbl from Bryan Mound
  • Up to 3m bbl from Big Hill
  • Up to 2m bbl from West Hackberry

It is unclear yet if the upcoming sale will pressure oil prices, or whether China – which unlike the US has been aggressively stockpiling oil for its own strategic petroleum reserve over the past year – will be the ultimate buyer.

 

 

end

 

Two good reasons why oil is slumping today:

Kuwait hints at non compliance and Nigeria’s production jumps

(courtesy zero hedge)

Oil Slumps As Nigeria Production Jumps, Kuwait Hints At OPEC Deal “Non-Compliance”, SPR Sale

Having already traded heavy much of the Monday despite pressure on the dollar index which is trading near session lows, oil took out session lows moments ago on what appear to be three most recent catalysts.

First, Kuwait’s oil minister shook some of the market’s conviction that the Vienna OPEC oil production cut is being adhered to, when we said that the announced cuts so far make up just 60-70% of the total decrease pledged by OPEC and other major producers.

Trying to put a positive spin on the news, Kuwait’s Essam Al-Marzouk told reporters in joint conference with OPEC Secretary General Mohammad Barkindo in Kuwait City, that he is confident the remaining countries will comply with promises to cut oil production, even though as he admitted “not all producers have to cut output from Jan. 1” and that one should look at the cut as a phase in process to “average over 6 months.” We can only assume he was referring (mostly) to Russia, which repeatedly warned it will need months to catch up to its promised quota. It would be troubling if other OPEC nations are having “problems” complying with the cuts. Recall that Iraq has already accused its semi-autonomous Kurdish region of oil production that was roughly double what it was afforded per the Vienna quota.

Al-Marzouk also said, or rather hoped, that rising demand would clear some stored oil, and would help return balance in market although it was questionable just how much marginal demands one would see out of China, which has been filling up its SPR at a rate of roughly 1 mmbpd when oil prices were lower, and has warned buying would taper as prices rose, effectively suggesting precisely the opposite of what the Kuwait suggested.

Complicating matters for the oil bulls, was a a second report according to which Nigeria’s oil production in December rose to 1.9mmbpd, up roughly 100kbpd from the November output of 1.8mmbpd, which in turn was a nearly 30 increase from October. In a video posted on his Facebook account, Nigeria Oil Minister Emmanuel Kachikwu his country plans to sell oil blocks in 2017, adding “we are going to be conducting oil blocks allocation and marginal field awards to try and raise money for the government” in hopes of phasing out term contracts for crude this year.

Kachikwu said that “we are going to firm up long-term markets, we must stop the year-to-year crude term contracts” and also added that “you’ve got to find who are your long-term partners, how do you sign 5-, 6-, 7-year strategic relationships? We are going to be working on those to gravitate away from the year-to-year contracts.”

The Nigerian oil minister also said on the Facebook video that he expects “a bullish re-entry” by oil majors to find reserves. “We are going to be seeking to attract investments and complete all the MoUs that we began – the one in China, the one in India, we are looking to do a roadshow to the U.K. for Europe, we’re looking to do a roadshow to the U.S.”

In short: instead of less supply, we are starting off 2017 with additional output from the deal-exempt OPEC nations, while those who should be complying are in no rush to do so.

Finally, topping off the trifecta of negative crude news was the previously reported announcement from the DOE that the US will soon sell 8 million barrels from the Strategic Petroleum Reserve over the next few weeks.

As a result, oil which was down all day, just hit session lows.

8. EMERGING MARKETS

end

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

Euro/USA   1.0531 UP .0003/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATE

USA/JAPAN YEN 116.64 DOWN 0.254(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2170 DOWN .0095 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3264 UP .0030 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS MONDAY morning in Europe, the Euro ROSE by 3 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0531; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 14.32 or 0.54%     / Hang Sang  CLOSED UP 55.68 POINTS OR 0.25%  /AUSTRALIA  CLOSED UP 0.84%  / 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 

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 55.68 OR 0.25%  Shanghai CLOSED UP 14.32 POINTS OR 0.54%   / Australia BOURSE CLOSED UP 0.84% /Nikkei (Japan)CLOSED  /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1179.20

silver:$16.51

Early MONDAY morning USA 10 year bond yield: 2.390% !!! DOWN 2 IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.976, DOWN 2 IN BASIS POINTS  from FRIDAY night.

USA dollar index early MONDAY morning: 102.33 UP 10 CENT(S) from FRIDAY’s close.

This ends early morning numbers MONDAY MORNING

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And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield: 3.98% down 7  in basis point yield from FRIDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.059% par  in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.47%  DOWN 7  IN basis point yield from  FRIDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.893  DOWN 7  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 42 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.278% DOWN 2 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA 1.0566 UP .0040 (Euro UP 40 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 116.20 DOWN: 0.702(Yen UP 72 basis points/ 

Great Britain/USA 1.2163 UP 0.0101( POUND DOWN 101 basis points)

USA/Canada 1.32310 DOWN 0.0024(Canadian dollar  UP 24 basis points AS OIL FELL TO $52.41

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 40 basis points to trade at 1.0566

The Yen ROSE to 116.20 for a GAIN of 70 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 101  basis points, trading at 1.2163/

The Canadian dollar ROSE by 24 basis points to 1.3210,  WITH WTI OIL FALLING TO :  $52.41

The USA/Yuan closed at 6.9349 the 10 yr Japanese bond yield closed at +.059% PAR IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 5 IN basis points from FRIDAY at 2.385% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.976 DOWN 1  in basis points on the day /

Your closing USA dollar index, 102.02 DOWN 21 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 27.72 OR .38% 
German Dax :CLOSED DOWN 35.02 POINTS OR 0.30%
Paris Cac  CLOSED DOWN 22.27 OR 0.45%
Spain IBEX CLOSED DOWN 23.10 POINTS OR 0.24%
Italian MIB: CLOSED DOWN 327.69 POINTS OR 1.66%

The Dow was DOWN 76.42 POINTS OR .38% 4 PM EST

NASDAQ WAS UP 10.76 POINTS OR .19%  4.00 PM EST
WTI Oil price;  52.41 at 1:00 pm; 

Brent Oil: 55.46  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.86 (ROUBLE DOWN 24/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS TO +0.278%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$51.82

BRENT: $54.75

USA 10 YR BOND YIELD: 2.368%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.961%

EURO/USA DOLLAR CROSS:  1.0573 up .0046

USA/JAPANESE YEN:116.04  down 0.860

USA DOLLAR INDEX: 101.96  down 27  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2159 : DOWN 105  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.278%

 

END

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

TRADING IN GRAPH FORM

Crude Crushed, Dollar Dumps As Bonds & Bullion Bounce

 

Chinese currency vol exploding, US labor market deteriorating, and oil tumbling…

 

Bonds and Bullion beating stocks so far this year…

 

But global financial market stress has collapsed to its lowest since just before China devalued the Yuan in August 2015 and sent markets turmoiling…

 

Despite Yuan volatility near record highs…

 

Only the Nasdaq managed gains today (record highs)… stocks closed weak…

 

Healthcare and tech outperformed today with Energy the laggard (and Utes down despite lower rates)

 

Healthcare Sector ETF is up 5 days in a row and just brome abvove its 200DMA…

 

Stocks erased most of the post-payrolls gains as gold leads the way…

 

Nasdaq continues to be the year’s big winner with a new record high today (and Trannies the loser along with Small Caps)…

 

Goldman has gone nowhere in a month…

 

“Most Shorted” stocks seem less under attack than the opening days of the year…

 

Breadth remains unsupportive…

 

VIX briefly tagged 12.00 today before fading lower but ended the day higher overall with 19,900 the new 20,000 for The Dow…

 

As a reminder, SVXY Puts (bearish bets on the inverse VIX – in English – levered bearish bets on stocks) have never been higher…

 

Bonds bounced back notably today with 30Y back below 3.00%… (most of the curve down 4-5bps today)

 

Perhaps not a total surprise given the stunningly one-sided positioning across the bond complex…

 

Notably the entire Treasury curve (even 2Y barely) is now lower on the year…

 

Cable sold off notably on Theresa May comments early on but AUD, JPY, and EUR all rallied against the greenback as US opened, dragging the USD index lower on the day…USD down 6 of the last 8 days

 

Yuan crashed again erasing half of the gains durng the massive short-squeeze last week…

 

And the peso slipped lower amid more chatter of automaker moves…

 

Worst day for WTI Crude since July 2016…

 

Gold is now back above Fed rate-hike levels (though Silver is lagging)…

end

 

Trump is on a roll:  He thanks Fiat Chrysler as they are going to invest 1 billion USA in a new plant in Ohio:

(courtesy zero hedge)

“It Finally Happened”: Trump Thanks Fiat And Ford For Investing In The US, Adding New Jobs

Having succeeded in turning around Ford’s plans to invest $1.6 billion in Mexico last week, and converting it into a US-targeted investment into the US last week, after similar twitter-based confrontations with Toyota and GM also last week, moments ago Trump tweeted his thanks to Fiat which as reported last night, also announced plans to invest $1 billion in Ohio plants, adding some 2,000 jobs.

“It’s finally happening – Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2000 jobs. This after Ford said last week that it will expand in Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford & Fiat C!”

Donald J. Trump @realDonaldTrump

It’s finally happening – Fiat Chrysler just announced plans to invest $1BILLION in Michigan and Ohio plants, adding 2000 jobs. This after…

9:14 AM – 9 Jan 2017 Donald J. Trump @realDonaldTrump

Ford said last week that it will expand in Michigan and U.S. instead of building a BILLION dollar plant in Mexico. Thank you Ford & Fiat C!

9:16 AM – 9 Jan 2017

Having used his Twitter “bully pulpit” successfully so far to change corporate capital allocation plans, it is unlikely that Trump will end his “shaming” of pulbic companies now, and will likely double down on his aggressive approach to push more investment in the US.

 

 

end

 

Both Alibaba and Toyota plan to invest mega dollars to create millions of USA jobs

(courtesy zero hedge)

 

Toyota To Invest $10 Billion In America As Jack Ma Meets Trump To Discuss Creation Of 1 Million US Jobs

While there are many questions about the sincerity, not to mention underlying viability of his company (which many skeptical investors have accused of being an accounting shell whose operations raise many questions), moments ago Alibaba’s Jack Ma appeared at the Trump Tower for a meeting with Donald Trump, where according to CNBC, he will discuss plans to create 1 million new U.S. jobs over the next five years.  The Monday meeting will focus on the Chinese e-commerce company’s U.S. expansion plans, according to spokespeople for both Alibaba and Trump.

It is unclear why Beijig would be ok with Ma creating 1 million jobs in the US and not China, but let’s ignore that for now.

While the meeting comes amid tensions between China and the Trump administration as a result of the proposed steep tariffs on trade with China, Trump has shown more tolerance at the micro level in his discussions with prominent Asian businessmen and investors, like SoftBank’s Masayoshi Son, who recently assured Trump he would create 50,000 jobs in the US.

Ma previously told CNBC that he wasn’t worried about anti-China sentiment on the presidential campaign trail. “Somebody has to stand up and say hey, we should not be anti-trade,” said Ma. Alibaba’s wide-ranging set of international businesses, from financial services to e-commerce to logistics, have managed to dominate many of America’s tech companies in China.

A deal with Ma could be adverse news for one of his bigger competitors, Jeff Bezos. Trump also repeatedly been critical of Bezos (who owns the Washington Post) and his internet retail giant Amazon, which like Alibaba, offers cloud services and a marketplace for third-party sellers. Trump has said Amazon will have “such problems” during his presidency, because of their tax structure.

That said, Alibaba has a complicated relationship with U.S. regulators. The company faced an SEC investigation about its accounting methods last year, and its property, Taobao, has been rebuked by American trade officials for allowing sale of counterfeit goods.

* * *

And in separate news, following last week’s Trump-tweeted barb aimed at Toyota, the Japanese car giant said it plans to invest $10 billion in the US over the next 5 years.

Speaking in an interview with Bloomberg TV, Toyota’s North American CEO, Jim Lentz, said that his company “understands what President-elect Trump wants to do.” He noted that Toyota does build Corolla in U.S. as well, adding that Toyota is a “relatively small player in Mexico.”

Hinting that Toyota, like other carmakers, are hoping Trump will postpone draconian emmision regulations enacted by the Obama administration, he said that Toyota “seeks predictability on emissions standards.”

Amusingly, Lentz said that Toyota does best with high consumer confidence, low interest rates… as do 100% of all other companies. Still, it may have been the latest hint to Trump to keep rates as low as possible, which may be problematic if Trump’s fiscal stimulus boost inflation, giving the Fed no other option than hiking faster than expected in an attempt to contain inflation.

 

end Trump takes his son in law as senior adviser.  This should make Middle Eastern policy interesting: (courtesy zero hedge) Trump’s Son-In-Law Kushner Named As Senior Advisor

Following earlier speculation, and concerns over conflicts of interest, NBC News’ Peter Alexander has confirmed that Jared Kushner, President-elect Donald Trump’s son-in-law, will be named senior adviser to the president.

Peter Alexander @PeterAlexander

BREAKING: Trump’s son-in-law, Jared Kushner, will be named Senior Advisor to the President, per senior transition official. @NBCNews

12:39 PM – 9 Jan 2017

As Forbes details,

Jared Kushner plans to step down from his role at Kushner Cos, the firm he took over from his father, as he prepares to be one of the key figures in Donald Trump’s White House.

 

Kushner has been the president-elect’s point man on foreign policy, even acting as the go-between for the outgoing administration to Trump on matters around the globe, the New York Times reports. Kushner and his wife, Ivanka Trump, bought a house in Washington, DC, close to the Obamas’ post-presidency home.

 

The Times also reported that Kushner has been taking meetings with Anbang Insurance Group — the Chinese giant that paid a record price for the Waldorf Astoria Hotel and has been on a major global buying spree — about selling some Kushner assets, including 666 Fifth Ave, the most high-profile property in the company’s expansive portfolio.

 

Trump’s transition team had previously requested security clearance for Kushner, and Trump has publicly identified Kushner, an Orthodox Jew, as someone who would be heavily involved in Middle East diplomacy. Despite Kushner’s personal political pivot, his company remains active, most recently as part of a partnership that paid $345M for a development site in Dumbo, Brooklyn, according to The New York Times.

For a full background on Kushner, see here.

end

 

The Fed’s own Labour Market Condition Index drops another .3% and it is now down 5.8% year over year, the biggest plunge in 6 years.  This generally indicates recession

(courtesy zerohedge)

Fed’s Labor Market Conditions Index Plunges Most In 7 Years

While mainstream media clung to The White House spin of record monthly streak of jobs gains after Friday’s payrolls, The Fed’s own Labor Market Conditions Index (LMCI) paints a very different picture of the health of the American job market. With a 0.3% drop in December, the LMCI is now down 5.8% year-over-year, the biggest plunge since Jan 2010.

We are sure The Fed wishes it never created this index…

As we noted previously, that’s only the eighth time in nearly 40 years the index was down on a year-over-year basis, Deutsche Bank Chief U.S. Economist Joseph LaVorgna wrote in a note to clients today. Of the seven previous occasions, LaVorgna wrote, “four were soon followed by recession.”

(In the three other cases, two were false alarms, in 1986-87 and 1995-96, and in 1981 the recession began shortly before the annual change in the LMCI turned negative.)

LaVorgna said the weakness in the LMCI indicates a rising possibility of recession.

“The upshot is that the economic outlook remains fragile despite the ostensible robustness of the labor market,” he wrote.

One look at the historical revisions (notably the last few months) and it’s clear, however, every effort is being made to improve this data…

Perhaps the economy being handed to Donald Trump is not as ‘awesome’ as some would suggest?

 

 

end

 

Student and car loans rise by another 11 billion dollars as we are now at a record 2.758 trillion

 

(courtesy zero hedge)

Consumer Credit Soars, Driven By Near Record Credit Card-Fueled Spending

After several months of tepid growth in the revolving consumer credit, i.e., credit card, space, the latest monthly report from the Fed revealed that Americans went on a credit card-funded shopping spree in November, when total revolving credit exploded higher by a massive $11 billion, the highest November increase on record, and the second highest of the post crash period.

The credit card spending spike may explain why November, i.e., early holiday sales, were strong only to tumble in the second half of the holiday spending season as various retailers have already complained.

The spike in revolving credit was more than matched by non-revolving credit, which as usual bounced by a solid $13.5 billion, bringing the total monthly increase in consumer credit to $24.5 billion, far above the revised October print of $16.2 billion and also well above the consensus estimate of $18.4 billion.

As noted above, the biggest contributor of November credit was credit card debt, which surged by $11 billion, to a grand total of just under $1 trillion, or $992.4 billion.

At the same time non-revolving credit, or car and student loans, rose to $2.758 trillion, a $13.5 billion jump in the month.

While hardly a surprise, the Fed revised its student and car loan numbers, which as of Sept 30, stood at $1.4 trillion for student loans, and $1.1 trillion for auto loans, both at all time highs.

Finally, for those wondering who remains the biggest source of post-crisis consumer lending, the chart below should answer that question.

 

 

end

 

Well that is all for today

I will see you tomorrow night

h


Jan 6/Lackluster jobs report from the USA/As usual gold and silver whacked with the job report/Japan angry at Trump with the report that the President elect ordered Toyota not to build the Corolla in Mexico/Overnight lending in China over 105%/shorts...

Fri, 01/06/2017 - 18:43

Gold at (1:30 am est) $1171.90 DOWN $7.80

silver  at $16.46:  DOWN 12 cents

Access market prices:

Gold: $1177.40

Silver: $16.52

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

FRIDAY gold fix Shanghai

Shanghai morning fix Jan 6/17 (10:15 pm est last night): $  1196.45

NY ACCESS PRICE: $1179.10 (AT THE EXACT SAME TIME)/premium $17.35

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1191.97

NY ACCESS PRICE: $1174.30 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $17.67

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 6/2017: 5:30 am est:  $.1174.20   (NY: same time:  $1178.40    5:30AM)

London Second fix Jan 6.2017: 10 am est:  $1175.85 (NY same time: $1176.60  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  0 NOTICE(S) FOR nil OZ.  TOTAL NOTICES SO FAR: 1023 FOR 102,300 OZ    (3.1819 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 0 NOTICE(s) FOR 0  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 307 FOR 1,535,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 1172  contracts UP to 165,537 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .828 BILLION TO BE EXACT or 118% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  0 NOTICES FILED FOR 0  OZ.

In gold, the total comex gold ROSE BY 8,215 contracts WITH THE RISE IN  THE PRICE GOLD ($15.90 with YESTERDAY’S trading ). The total gold OI stands at 431,537 contracts.

we had 0 notice(s) filed upon for 0 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no  changes in tonnes of gold at the GLD

Inventory rests tonight: 813.87 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver ROSE by 1172 contracts UP to 165,537 AS SILVER ROSE by  $0.08 with YESTERDAY’S trading. The gold open interest ROSE by 8,215 contracts UP to 431,823 AS THE  PRICE OF GOLD ROSE BY $15.90 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) FRBNY report on earmarked gold movement

(Harvey)

2d) COT report

Harvey

3. ASIAN AFFAIRS i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 11.09 POINTS OR 0.35%/ /Hang Sang closed UP 46.32 OR 0.21%. The Nikkei closed DOWN 66.32 POINTS OR 0.34% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9180/Oil ROSE to 54.17 dollars per barrel for WTI and 56.77 for Brent. Stocks in Europe: ALL IN THE RED. Offshore yuan trades  6.83161 yuan to the dollar vs 6.9180  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES / REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

Japan is angry at Trump especially that he got the facts on Japanese production of the Corolla wrong.  Let us see what will happen in a few weeks when Trump takes over:

( zero hedge)

c) REPORT ON CHINA

i)Overnight the lending rate between banks soars to 105%.  The offshore yuan (CHN ) continues its strength with POBC intervention as the shorts are getting squeezed:

( zero hedge)

ii)Chinese volatility explodes as the offshore yuan goes all over the map.  The POBC are very worried about the new Trump administration labeling the country as a currency manipulator and they may wish to keep a stronger yuan in the following few weeks.  Also the yuan shorts are temporarily getting killed.  However in the long run, the yuan should retreat to the 7.3-8.0 level

( zero hedge)

iii)After China warns its citizens on capital outflowing from China, today they came out and warns more directly against Bitcoin.  They urged its citizenry to take a rational approach to investing in virtual currencies.  It lowered in value immediately but gold rose.

( zero hedge)

4 EUROPEAN AFFAIRS

How European immigration, mainly Muslims are creating problems for the politicians in Europe. In order to deflect attention, government impose bans of the burka.

( Murray/Gatestone Institute)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

The Central bank of Mexico intervenes in the currency market trying to prop up the Peso but failed again.  It seems that they sold a considerable amount of silver in their failed attempt.  Is there something under the hood in the Mexican economy that we should be cognizant about:

( zero hedge)

7. OIL ISSUES

i)Back in April we reported on a huge amount of oil Iran was storing on vessels because of no room on land.  We now now that 13 million barrels of oil held offshore has been sold mainly to China and other Asian interests and at discounts. Iran needs to get its market share back. The question now becomes will Saudi Arabia offer more discounts and/or cheat on its production!

( zero hedge)

ii)do not worry, the crooks have this under control as they are long oil. USA oil rig counts continue to rise as well as total USA production.  OIl prices continue to rise:

(/zero hedge)

8. EMERGING MARKETS

A good snapshot of Venezuela’s finances.  The author claims that the country still has 190 tonnes of gold. I find that hard to believe:

(courtesy Mueller/Mises Institute)

9.   PHYSICAL MARKETS

i)An excellent Reuters report on the huge risks to the global economy as China burns through its foreign FX reserves.  It is probably now below 3 trillion USA

( Reuters/GATA)

ii)A good background on China’s secretive gold reserves

(Ronan Manly/GATA)

iii)Alasdair Macleod’s weekly message for us;

( Alasdair Macleod)

iv)An excellent presentation by Koos Jansen on gold fundamentals between East and West

(Koos Jansen/Bullionstar)

v)Despite its manipulation gold advances against most currencies in the past 15 years

( Goldprice.org/GATA)

 

10.USA STORIES

i)Another phony jobs report.  The BLS reports a gain of only 156,000 workers instead of the expected 178,000. However average earnings jumped .4% in December.

( BLS/zerohedge)

ii)Now for the real story on the jobs report:

the total number of people not in the labour force grew again rising by 18,000 poor souls. The total for the past 3 months was a whopping 841,000. Thus 95. 102 million Americans are now longer in the labour force. There are 152 million people in the labour force of a total citizens of working age:  255 million: thus a participation rate of 62.7% ( zero hedge)

iii)Only the supervisory level jobs saw growth in the earnings not the vast majority of American workers:

( zero hedge)

iv)What a complete utter nonsense: we had a huge increase again in waiter jobs (plus nurses and waste cleaners).  We know the job report on the waiters is false because of massive layoffs in that field due to Obamacare, and health care costs that I brought to your attention in the past few days)( zero hedge)

v)a very ugly number:  November factory orders plunge the most in over 2 years.  And this is after a big rise in defense factory orders:

( zero hedge)

vi)  a.What on earth is going on:  The democrats refused FBI access to their hacked servers and then the FBI claim that Russians hacked their system without the access to those servers?

Give me a break..

( zero hedge)

 

vi) b. And now the report:  what a joke!! No proof whatsoever on the Russian hacking

( zero hedge)

vii) Dave Kranzler reports on a true state of affairs with respect to the USA auto industry, the restaurant industry and on the consumer.

This should pour gasoline on the real jobs report issued today

( Dave Kranzler/IRD)

viii)The TIC report: the trade deficit increased because of the high USA dollar.  Exports fell because of the high dollar while imports rose due to the same factor

( TIC/zerohedge) Federal Reserve Bank of New York: Earmarked gold movements

December report:

Last Oct/2016 we had 7,841 million dollars worth “gold” in inventory at the FRBNY

valued at $42.22 per oz

Last November/2016 we had 7,841 million dollars worth of gold in inventory at FRBNY valued at $42.22 per oz

thus 0 oz moved at $42.22

So far officially, the following has been repatriated to  BuBa from NY:

2013: 5 tonnes

2014: 120 tonnes

2015:  99.5 tonnes

2016: to be officially announced

Their total  quota from NY is scheduled to be 300 tonnes and another 374 tonnes from Paris of which 177 tonnes of gold has officially been sent (Dec 2015) and thus another 197 tonnes to cross the English channel.

Germany has officially 1237 tonnes of gold “stored ” in NY. On conclusion of the repatriation, Paris will have 0 stored there.

end

Let us head over to the comex:

The total gold comex open interest ROSE BY 8,215 CONTRACTS UP to an OI level of 431,823 AS THE  PRICE OF GOLD ROSE $15.90 with YESTERDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a GAIN of 17 contracts UP to 170.  We had 13 notices filed so we GAINED 30 contracts or AN ADDITIONAL 3000 oz WILL STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a GAIN of 1,730 contracts UP to 277,267. March had a gain of 80 contracts as it’s OI is now 276.

We had 0 notice(s) filed upon today for nil oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 1172 contracts FROM 164,365 UP TO 165,537 AS the price of silver ROSE BY $0.08 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 111 contracts FALLING TO  355. We had 110 notice(s) filed on yesterday so we LOST 1 CONTRACT or an additional 5,000 oz will NOT stand for delivery.  The next non active month of February saw the OI rise by 40 contract(s) up to 204.

The next big active delivery month is March and here the OI rose by 548 contracts UP to 134,337 contracts.

We had 0 notice(s) filed for 0 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 232,980  contracts which is  good.

Yesterday’s confirmed volume was 299,421 contracts  which is very good

Initial standings for january  Jan 6/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    8037.500 SCOTIA 250 kilobars Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz   nil No of oz served (contracts) today   0 notice(s) nil oz No of oz to be served (notices) 170 contracts 17,000 oz Total monthly oz gold served (contracts) so far this month 1023 notices 102,300 oz 3.1819 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,547,053.2 oz Today we HAD 1 kilobar transactions/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 0  customer deposit(s): total customer deposits; nil oz We had 1 customer withdrawal(s) i) Out of Scotia: 8037.5 oz (250 kilobars) total customer withdrawal: 8037.500 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1023) x 100 oz or 101,000 oz, to which we add the difference between the open interest for the front month of JANUARY (170 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 119,300 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1023) x 100 oz  or ounces + {OI for the front month (170) minus the number of  notices served upon today (0) x 100 oz which equals 119,300 oz standing in this non active delivery month of JANUARY  (3.7107 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.7197 tonnes total for the 13 months;  226.111 tonnes average 17.393 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,561,744.896 or 48.556 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,109,848.073 or 283.35 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.35 tonnes for a  loss of 20  tonnes over that period.  Since August 8/2016 we have lost 71 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 4 1/2 MONTHS  71 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 6. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  2,126,813.02 0z Scotia CNT JPM Deposits to the Dealer Inventory  nil Deposits to the Customer Inventory  1,081,872.270 oz SCOTIA JPM Scotia No of oz served today (contracts) 0 CONTRACT(S) (0 OZ) No of oz to be served (notices) 355 contracts (1,775,000  oz) Total monthly oz silver served (contracts) 307 contracts (1,535,000 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  8,890,931.1 oz  END today, we had 0 deposit(s) into the dealer account: total dealer deposit: NIL oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 3 customer withdrawal(s): i) Out of CNT:  1,303,242.45 oz ii) Out of Scotia:  573,141.47 oz iii) Out of JPM:  250,429.100 oz TOTAL CUSTOMER WITHDRAWALS: 2,126,813.02 oz  we had 3 customer deposit(s):  i) Into CNT:  14,581.5000  oz ii) Into JPMorgan:  606,264.130 oz iii) Into Scotia:  600,503.920 oz total customer deposits;  1,221,349.550   oz      we had 0  adjustment(s) The total number of notices filed today for the JANUARY. contract month is represented by 0 contract(s) for 0 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  307 x 5,000 oz  = 1,535,000 oz to which we add the difference between the open interest for the front month of JAN (355) 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 JANUARY contract month:  307(notices served so far)x 5000 oz +(355) OI for front month of JAN. ) -number of notices served upon today (0)x 5000 oz  equals  3,315,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We LOST 1 contract(s) or an additional 5,000 oz will not stand. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 65,840 which is excellent YESTERDAY’S  confirmed volume was 70,449 contracts  which is excellent.   Total dealer silver:  28.582 million (close to record low inventory   Total number of dealer and customer silver:   180.685 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

 

At 3:30 pm est we receive the COT report which gives us position levels of our major players. You will recall last week, that the bankers were going net long and the specs were going net short as the bankers goaded the specs.  Let us see what today’s report brings:

 

First gold:

 

Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 208,855 112,305 71,021 97,410 215,022 377,286 398,348 Change from Prior Reporting Period 2,317 4,110 15,185 7,435 4,080 24,937 23,375 Traders 157 88 83 50 46 244 185     Small Speculators         Long Short Open Interest       47,387 26,325 424,673       -1,777 -215 23,160       non reportable positions Change from the previous reporting period   COT Gold Report – Positions as of Tuesday, January 03, 2017

Our large speculators;

those large specs that have been long in gold added 2317 contracts to their long side

those large specs that have been short in gold, added another 4110 contracts to their short side.

 

Our commercials:

those commercials who have been long in gold added 7435 contracts to their long side.

those commercials who have been short in gold added 4080 contracts to their short side.

Our small specs:

those small specs that have been long in gold pitched 1777 contracts from their long side.

those small specs that have been short in gold covered 215 contracts from their short side.

Conclusion:  commercials go net long by another 3355 contracts.large specs go net short by another: 1793 contracts. thus extremely bullish as the specs are again goaded into going net short.

 

And now for silver:

Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 86,821 25,530 9,877 42,493 118,307 2,491 111 -1,432 519 2,326 Traders 98 39 35 34 39 Small Speculators Open Interest Total Long Short 163,812 Long Short 24,621 10,098 139,191 153,714 -863 -290 715 1,578 1,005 non reportable positions Positions as of: 145 103   Tuesday, January 03, 2017   © SilverSeek.com

Our large speculators:

those large specs that have been long in silver added 2491 contracts to their long side

those large specs that have been short in silver added a tiny 111 contracts to their short side.

 

Our commercials;

those commercials that have been long in silver added 519 contracts to their long side.

those commercials that have been short in silver added 2326 contracts to their short side.

Our small specs:

those small specs that have been long in silver pitched 814 contracts from their long side.

those small specs that have been short in silver covered 179 contracts from their short side.

Conclusions:

it seems that our commercials are having a great difficulty in covering their huge shortfall as they continue to go net short by another 1807 contracts.

 

end

 

 

 

 

 

 

And now the Gold inventory at the GLD

Jan 6/no changes in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes Dec 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI) DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes. Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 6/2017/ Inventory rests tonight at 813.87 tonnes *IN LAST 64 TRADING DAYS: 135.94 TONNES REMOVED FROM THE GLD *LAST 11 TRADING DAYS: 10.67 TONNES HAVE LEFT

end

Now the SLV Inventory jan 6/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/ Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/ Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/ . Jan 6.2017: Inventory 341.199  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 7.3 percent to NAV usa funds and Negative 7.3% to NAV for Cdn funds!!!!  Percentage of fund in gold 61.1% Percentage of fund in silver:38.7% cash .+0.2%( jan 6/2017)  . 2. Sprott silver fund (PSLV): Premium FALLS to +.24%!!!! NAV (Jan 6/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO – 0.73% to NAV  ( Jan 6/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.24% /Sprott physical gold trust is back into NEGATIVE territory at -0.73%/Central fund of Canada’s is still in jail.  

end

Major gold/silver trading/commentaries for Friday

GOLDCORE/BLOG/MARK O’BYRNE

Trump’s Twitter “140 Characters” To Push Gold To $1,600/oz in 2017?

http://www.goldcore.com/us/gold-blog/trumps-twitter-140-characters-push-gold-1600oz-2017/

By Mark O’ByrneJanuary 5, 20170 Comments Trump’s Twitter Age Could See Gold Rise 13% In 2017
  • Gold price seen jumping 13% in 2017 after 9% gain in 2016, Bloomberg analyst survey shows
  • 140-character missives by President-elect means new paradigm
  • “140 characters of unfiltered Trump is likely to create tensions with America’s largest trading partners…”
  • Bloomberg Intelligence poll shows 42 percent of respondents predict gold will be the best-performing metal in 2017
  • Two Bloomberg respondents including GoldCore say gold to reach $1,600/oz
  • “Markets that are already shaken by the fallout from Brexit, the coming elections in Europe and indeed the increasing specter of cyber warfare could again see a safe-haven bid…”
  • Gold is not “irrational” today – politicians, policy markers and markets are
  • Gold that can inspect and take delivery of easily a vital hedge against massive irrationality in world of 2017

From Bloomberg:

“The Donald J. Trump era is marking a new age for gold as an investor safe haven.

While the precious metal has always been hoarded in times of trouble, a bevy of political and economic surprises in 2016 sparked a surge in buying that sent bullion to the first annual gain in four years. Prices may rally about 13 percent in 2017, according to a Bloomberg survey of 26 analysts.

Fueling the bullish outlook is the risk of chaos on multiple fronts: a possible trade war from America’s fraying relationship with China, the alleged Russian hack of U.S. political parties, the U.K.’s complicated exit from the European Union, and elections slated in France, Germany and the Netherlands that may see a rise of nationalist groups.

And then there are Trump’s frequent Twitter posts, in which the U.S. president-elect feuded with rivals and made declarations that unsettled allies even before he takes office Jan. 20.

“140 characters of unfiltered Trump is likely to create tensions with America’s largest trading partners,” Mark O’Byrne, a director at broker GoldCore Ltd, said by e-mail.

“Markets that are already shaken by the fallout from Brexit, the coming elections in Europe and indeed the increasing specter of cyber warfare could again see a safe-haven bid.”

Gold for immediate delivery is up 8.9 percent this year (2016) to $1,155.12 an ounce, halting a three-year slide. More than two thirds of the analysts and traders surveyed from Singapore to New York said they were bullish for 2017.

The median year-end forecast was $1,300, with the year’s peak seen at $1,350. Two, including O’Byrne, said the metal may reach $1,600.”

President elect Trump, Twitter and his tweets being a popular topic du jour, the Bloomberg article was syndicated and published very widely internationally and can be read in full on Bloomberg here Gold ‘Lures’ Investors Worried About Trade Wars and Trump Tweets and Bloomberg Quint here Trump’s Twitter Age Brings Chaos Risk Reviving Gold as Haven

http://www.goldcore.com/us/gold-blog/trumps-twitter-140-characters-push-gold-1600oz-2017/

 

end

 

I am very happy to report that Keith Neumeyer is joining us in the class action suit against the major banks  We need to have a major producer as plaintiffs

(courtesy Kitco)

 

Keith Neumeyer on Why He Joined Silver Manipulation Class Action Suit

Jan 06, 2017

Guest(s): Keith Neumeyer CEO, First Majestic

First Majestic’s chief executive officer, Keith Neumeyer speaks out on his role in the silver manipualtion class action suit including various banks. Neumeyer shares his thoughts on the silver price rigging case and shares what he plans to do about it.

http://www.kitco.com/news/video/show/Kitco- News/1463/2017-01-06/Keith-Neumeyer-on
-Why-He-Joined- Silver- Manipulation-Class-Action-Suit

-END-

An excellent Reuters report on the huge risks to the global economy as China burns through its foreign FX reserves.  It is probably now below 3 trillion USA

(courtesy Reuters/GATA)

China’s choices narrowing as it burns through FX reserves to support yuan

Submitted by cpowell on Thu, 2017-01-05 15:21. Section:

By Nichola Saminather
Reuters
Thursday, January 5, 2017

SINGAPORE — As China’s foreign exchange reserves threaten to tumble below the critical $3 trillion mark, the biggest fear for investors is not whether Beijing can continue to defend the yuan but whether it will set off a vicious cycle of more outflows and currency depreciation.

Data this week is expected to show China’s forex reserves precariously perched just above $3 trillion at end-December, the lowest level since February 2011, according to a Reuters poll.

While the world’s second-largest economy still has the largest stash of forex reserves by far, it has been churning through them rapidly since August 2015, when it stunned global investors by devaluing the yuan CNY=CFXS and moving to what it promised would be a slightly freer and more transparent currency regime.

Since then, authorities have repeatedly intervened to support the yuan when it weakened too sharply, burning through half a trillion dollars of reserves and prompting them to sell some of their massive holdings of U.S. government bonds.

They also have put a tightening regulatory chokehold on individuals and businesses who want to move money out of the country, while denying they were imposing new capital controls. …

… For the remainder of the report:

http://www.reuters.com/article/us-china-economy-forex-reserves-analysis-…

 

 

END

 

A good background on China’s secretive gold reserves

(Ronan Manly/GATA)

Bullion Star posts primer on China’s especially secretive gold reserves

Submitted by cpowell on Thu, 2017-01-05 15:25. Section:

10:25a ET Thursday, January 5, 2017

Dear Friend of GATA and Gold:

Bullion Star’s latest primer on central bank gold reserves is about China’s, which, Bullion Star notes, are among the world’s most secret. The primer is posted here:

https://www.bullionstar.com/gold-university/central-bank-gold-policies-p…

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

 

 

END

 

Alasdair Macleod’s weekly message for us;

(courtesy Alasdair Macleod)

Alasdair Macleod: Fiat money quantity breaks $15 trillion

Submitted by cpowell on Thu, 2017-01-05 19:12. Section:

By Alasdair Macleod
GoldMoney.com, St. Helier, Jersey, Channel Islands
Thursday, January 5, 2017

The fiat money quantity has now breached the $15 trillion level, standing at $15,108 trillion on November 1, 2016, the last calculable date. This is now $6.3 trillion above the pre-Lehman crisis trendline, exceeding it by 72 percent. Instead of the Lehman rescue being a temporary fix, the increase in the quantity of fiat money has continued to grow over eight years later.

After the Fed responded to the financial crisis, monetarist commentators warned that the accumulation of bank reserves at the Fed would one day be unleashed into an expansion of bank lending, because every dollar held in reserves could become more than $10 of bank credit. The accumulation of these reserves had had no precedent, and monetary policy was therefore in uncharted territory.

The only way bank reserves can be discouraged from leaving the Fed’s balance sheet is for the Fed to increase the Fed Funds Rate (FFR), which is the interest rate the Fed pays commercial banks on these reserves. The original concern is now becoming justified, because banks have been gradually withdrawing reserves held at the Fed over the last 18 months. For this reason, the Fed had no alternative but to raise the FFR in December 2015 and in December 2016, to start the process of normalizing rates. The Federal Open Markets Committee should be watching the withdrawal of reserves as a key indicator in formulating interest rate policy, not that it is openly admitted in the FOMC’s statements. …

… For the remainder of the commentary:

https://wealth.goldmoney.com/research/goldmoney-insights/fmq-breaks-15-t…

 

END

 

An excellent presentation by Koos Jansen on gold fundamentals between East and West

(courtesy Koos Jansen/Bullionstar)

Koos Jansen: How the West has been selling gold into a black hole

Submitted by cpowell on Fri, 2017-01-06 14:50. Section:

9:50a ET Friday, January 6, 2017

Dear Friend of GATA and Gold:

Gold market researcher Koos Jansen writes today that while gold flows in and out of the London market, once gold gets into China, it doesn’t come back. Jansen sees this pattern as gradually reducing the above-ground metal available for affecting gold’s price and indicating that prices will increase eventually. Jansen’s analysis is headlined “How the West Has Been Selling Gold into a Black Hole” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/how-the-west-has-been-sell…

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

 

 

end

 

Despite its manipulation gold advances against most currencies in the past 15 years

(courtesy  Goldprice.org/GATA)

GoldPrice.org chart shows metal gained in all major currencies in 15 years

Submitted by cpowell on Fri, 2017-01-06 15:03. Section:

10:03a ET Friday, January 6, 2017

Dear Friend of GATA and Gold:

GoldPrice.org has posted a chart of gold’s performance in major currencies since 2002, and it shows far more green than red and net gains in all of them, ranging from a low of 156 percent in the Chinese yuan and a high of 496 percent in the Indian rupee. The chart is posted here:

http://goldprice.org/charts/history/gold-price-performance_x.png?1924122…

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

 

 

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 6.9180(SMALL DEVALUATION SOUTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY  TO 6.83161 / Shanghai bourse CLOSED DOWN 11.09 POINTS OR 0.35%   / HANG SANG CLOSED UP 46.32 OR 0.21% 

2. Nikkei closed DOWN 66.32 POINTS OR 0.34%  /USA: YEN RISES TO 115.97

3. Europe stocks opened ALL IN THE RED       ( /USA dollar index RISES TO  101.71/Euro DOWN to 1.0577

3b Japan 10 year bond yield: FALLS TO    +.056%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 115.97/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  54.17  and Brent: 56.77

3f Gold DOWN/Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund FALLS TO +.251%/Italian 10 yr bond yield DOWN  to 1.932%    

3j Greek 10 year bond yield RISES to  : 6.88%   

3k Gold at $1176.10/silver $16.50(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN   5/100 in  roubles/dollar) 59.39-

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

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 115.97 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0112 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0705 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLS to  +.251%

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

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

4. USA 10 year treasury bond at 2.355% early this morning. Thirty year rate  at 2.952% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS US Futures Flat Ahead Of December Payrolls; Dollar Rebounds

European shares fell modestly, Asian equities declined for the first day in three, and US equity futures were unchanged before the December U.S. nonfarm payrolls report. China’s offshore yuan fell the most in a year to pare a record weekly rally, while Mexico’s peso climbed after the central bank sold dollars. Oil was trading lower in early trading.

The main economic event on the financial calendar is today’s 8:30am ET December payroll report. The market consensus for today’s print is 178k which is in line with the 178k in November. It’s worth noting that there’s a reasonable range between economists though with the low forecast at 125k and the high forecast at 221k. DB’s Joe LaVorgna is at the lower end of the range and has pegged a 150k print which is more or less where yesterday’s ADP private employment survey came in at for December (153k vs. 175k expected). What might be more interesting though is whether or not the drop in the unemployment rate is sustained. As a reminder the U3 rate fell to 4.6% in November and the lowest since 2007 from 4.9% in October. The drop has been a focus for Fed officials with more talking about an undershooting of the longer run rate so it is worth watching. As always also keep an eye on average hourly earnings. The consensus is for a +0.3% mom rise in December which would have the effect of pushing the annual rate up to +2.8% yoy from +2.5%.

Should the report come in stronger than expected and provide evidence of a healthy U.S. labor market, we could see a second wind to a flagging dollar hit by doubts that Donald Trump will usher in an era of fiscal easing and rapid growth. The employment report is expected to confirm a sixth straight year with more than 2 million jobs added, which may help to stem the steepest losses on a Bloomberg gauge of 10 major currencies this week. Market positioning in options signals the dollar is poised for further gains against the euro.

Ahead of the report, world stocks held near 1-1/2 year highs and the dollar moved up from a three-week low on Friday, with investors looking to upcoming U.S. jobs data to provide clues on the pace of U.S. interest rate rises this year. The MSCI’s gauge of the world’s stock markets hit its highest since July 2015, taking its gains so far this year to 1.7 percent, helped by this week’s generally upbeat economic readings in the U.S., China and Europe. The yen, euro and British pound all weakened for the first time in three days and the Turkish lira extended its loss. European equities declined the most in a week and U.S. futures signaled losses, while the MSCI Asia Pacific Index declined for the first day in three. The three-month interbank lending rate for the offshore yuan rose to a record in Hong Kong.

A quick rundown of global indices from Bloomberg:

  • The Stoxx Europe 600 Index was down 0.2 percent, as was the Dax in Germany.
  • The MSCI Asia Pacific Index slipped 0.3 percent. The gauge is still headed for its best start to a year since 2010. Japan’s Topix Index fell 0.2 percent, though gainers outnumbered losers 996 to 859 on the gauge.
  • Hong Kong’s Hang Seng rose 0.2 percent and Australia’s S&P/ASX 200 Index was little changed. South Korea’s Kospi advanced 0.4 percent as Samsung climbed. Singapore’s Straits Times Index rose 0.2 percent in a fourth day of gains.
  • The Shanghai Composite slid 0.4 percent, while Taiwan’s Taiex index rose 0.2 percent, gaining for the fifth day. India’s S&P BSE Sensex lost 0.1 percent after climbing 0.4 percent earlier.
  • The MSCI Emerging Markets Index was little changed after rising for three straight days. The benchmark index in the Philippines rose 0.5 percent to bring its weekly gain to 6 percent.
  • Futures on the S&P 500 Index edged lower after the underlying gauge fell 0.1 percent Thursday, just below its record set on Dec. 13.

Weaker-than-expected private-sector ADP payrolls data on Thursday contributed to the dip in the dollar, despite strong data elsewhere. Investors were looking to today’s jobs figures to see if the bounceback for the dollar could be sustained.

“It’s likely that a stronger jobs number will, in the shorter term, strengthen the dollar. But (soon) people will start questioning how much of a strong dollar the Fed can stomach,” ETF Securities’ head of research and investment strategy, James Butterfill, told Reuters. “Given the sell-off in the dollar, there could be appreciation over the next few weeks, but in the coming few months we could see further dollar weakness.”

Already under pressure as the Trump rally wanes, the dollar extended losses on Thursday as China stepped up efforts to support the yuan, sparking speculation that it wants a firm grip on the currency ahead of Trump’s Jan. 20 inauguration. As noted last night, the cost of borrowing the yuan in Hong Kong, the main offshore yuan trading center, sky-rocketed and at one point hit 105%, making it too costly for speculators to sell the yuan against the dollar.

The offshore yuan has gained more than 2 percent in the last two sessions, its biggest two-day gain on record, to a two-month high of 6.7833 per dollar before it eased back about 1 percent in Asia on Friday to 6.8610. Having posted its biggest gain for 7 months, of 1.1 percent, in the previous session, it fetched $1.0589 EUR= on Friday.

“What’s going on is a correction of the ‘Trump trade’ since the election. The markets have been trying to fully price in his policies just based on hopes,” Standard Chartered’s executive director of finance, Koichi Yoshikawa, said. “From now on, it’s not going to be a simple one-way bet.”

Investors also closed short positions in U.S. bonds, one of the most popular plays since the election because Trump’s policies are seen as stoking inflation.

Oil prices were steady as Saudi Arabia and Abu Dhabi stared promised supply cuts, but doubts that all producers will implement output reductions agreed in a landmark OPEC deal last year kept markets from rising further. Gold retreated 0.4 percent to $1,175.17 per ounce after a three-day, 2.9 percent climb. Bitcoin slumped again and was trading at $900 at last check.

In rates, Australian bonds climbed, sending 10-year yields down five basis points to 2.68 percent, a level last seen in November; similar New Zealand rates dropped five basis points to 3.19 percent. U.S. Treasuries rallied Thursday by the most since the post-Brexit jolt, with the yield on the 10-year benchmark falling nine basis points to 2.34 percent. That was the biggest drop since June 27.

Markets Snapshot

  • S&P 500 futures down less than 0.1% to 2262
  • Stoxx 600 down 0.2% to 365
  • FTSE 100 down less than 0.1% to 7194
  • DAX down 0.2% to 11561
  • German 10Yr yield up less than 1bp to 0.25%
  • Italian 10Yr yield down 2bps to 1.92%
  • Spanish 10Yr yield up 2bps to 1.5%
  • S&P GSCI Index up 0.5% to 399.8
  • MSCI Asia Pacific down 0.2% to 139
  • Nikkei 225 down 0.3% to 19454
  • Hang Seng up 0.2% to 22503
  • Shanghai Composite down 0.4% to 3154
  • S&P/ASX 200 up less than 0.1% to 5756
  • US 10-yr yield up less than 1bp to 2.35%
  • Dollar Index up 0.08% to 101.6
  • WTI Crude futures up 0.9% to $54.25
  • Brent Futures up 0.9% to $57.38
  • Gold spot down 0.2% to $1,178
  • Silver spot down 0.6% to $16.49

Global Headline News

  • Carlyle Said to Explore Sale of Vitamin Maker Nature’s Bounty: Company said to be valued at about $6 billion
  • China Said to Mull Scrutiny of U.S. Firms Amid Trump Tension: Options include antitrust, tax probes of American companies
  • Trump Axing Obama Power Plan Means Coal Supplying 61% More Power: U.S. would use 523 billion kilowatt-hours more of electricity generated from coal in 2050 if Obama’s Clean Power Plan is dropped
  • Trump Hits Toyota on Mexico as Car Criticism Spreads to Japanese: threatens to tax Toyota into building a plant in the U.S. instead
  • FBI Says Democrats Refused Access to Hacked E-Mail Servers: Trump scheduled to be briefed Friday on campaign breach
  • Marchionne Enters Final Push to Free Fiat Chrysler From Debt: Executives have expressed increasing confidence at recent investor meetings that they’ll reach their goals, according to people familiar
  • Mylan’s EpiPen Sales Plan: Schools Today, Everywhere Tomorrow: wants to set up its own pharmacy to cut out middlemen and lobby for new laws that could expand sales of its biggest product
  • Boeing Said Close to $10.1 Billion Order From India SpiceJet: Deal for 92 jets may grow based on outcome of negotiations
  • Brevan Howard’s Hedge Fund Posts First Gain in Three Years: Returns 3% according to an investor letter
  • McDonald’s Japan Same- Store Dec. Sales Rose 17% Y/y; 2016 Same-Store sales rose 20%
  • Frontier Airlines Said to Aim to Raise About $500m in IPO that would imply a valuation of ~$2b company: NYT
  • Morgan Stanley Said to Cut Equities Traders’ Bonus Pool Up to 4%: Firm is set to pay annual bonuses to employees next month

In Asian markets, stocks traded mixed following a lacklustre lead from Wall Street where financials underperformed, although the NASDAQ 100 still finished positive on strength in pharmaceuticals and FANG stocks. Asian stocks decline for first day in three. With MSCI Asia Pacific down 0.3% today it’s still headed for its best start to a year since 2010. Hong Kong stocks post their biggest weekly advence in three months. 6 out of 11 sectors drop as retail, material stocks underperform, real estate, telecoms outperform. Asian bourses were also indecisive as participants were tentative ahead of NFP, with Nikkei 225 (-0.3%) dampened by JPY strength and losses in Fast Retailing after Uniqlo same-store sales fell 5% Y/Y in December. ASX 200 (Unch.) was uneventful and traded flat while the KOSPI (+0.3%) was underpinned by better than expected Q4 preliminary results from Samsung Electronics. Chinese markets were mixed with the Hang Seng (+0.2%) led by energy names, while Shanghai Comp (-0.4%) lagged following a large net weekly drain of CNY 595BN by the PBoC. 10-yr JGBs traded higher amid the dampened risk sentiment in Japan with the yield curve flatter on outperformance in the long end, while the recent weekly securities transactions data also showed foreign investors returned to net buying of Japanese bonds.

Top Asian News

  • Tata Sons Calls Shareholders Meeting to Oust Mistry From Board: Extraordinary general meeting scheduled to be held Feb.
  • Bitcoin Buyers Eye Beijing Nervously as Price Drops Off High: Yuan accounts for 98% of bitcoin trading due to zero fees
  • Wartime Sex Slave Dispute Resurfaces to Rattle Japan-Korea Ties; Tokyo suspends talks with Seoul over a foreign currency swap arrangement; temporarily recalls ambassador to South Korea; halts high-level economic talks
  • Fiery Booze Drinkers Drive China’s Biggest Gains in Stocks: consumer staples surge led by baijiu-makers Moutai, Wuliangye
  • China Seen Keeping Reserves Near $3 Trillion to Avoid Alarm: Stockpile is seen holding above key level for December

In Europe equity markets (Stoxx600 -0.1%) are trading mildly in the red as mining underperform in the FTSE 100 (flat) in what has been a particularly quiet session ahead of NFP. Stoxx Europe 600 Index declines 0.3% as travel & leisure, utility and commodity stocks underperform; real estate stocks gain. 18 of 19 sectors decline. 31% of Stoxx 600 members gain; 56% decline. Financials are the outperforming sector after some notable broker moves for Worldpay (WPG LN) and Lloyds (LLOY LN), subsequently both Co.’s are at the top of the FTSE leader board. Fixed income markets have not seen too much action thus far, with Bunds trading lower by 8 ticks and in the periphery 10 year PGB yield has found support at the 4% psychological area.

Top European News

  • Sanofi Shares Slump After Amgen Wins Ban on Cholesterol Medicine: Court ruling blocks Sanofi and partner Regeneron Pharmaceuticals from selling the cholesterol-lowering medicine Praluent in the U.S. because it infringes Amgen’s patents
  • Euro-Area Confidence Jumps to Highest Since 2011 on ECB Stimulus: recovery in the 19-nation region showed further signs of strengthening
  • Draghi’s German Problem Flares as Inflation Jump Stirs Anger: Germans fret that the guardian of price stability will let them down
  • BOE’s Haldane Says ‘Fair Cop’ to Getting Brexit Forecasts Wrong: Says economists have a lot of work to do to recover from failed predictions over the global financial crisis and Brexit
  • U.K.’s May Tries to Charm Trump, Hoping for Early 2017 Meeting: Premier’s chiefs of staff made secret trip to U.S. in December
  • TP ICAP Shares Soar After U.S. Election Boosts Revenue Growth: Company says 2016 revenue will probably rise 12% to 796 million pounds
  • France Sees Three-Way Race for President as Fillon Bounce Fades: Independent Emmanuel Macron gains support, Socialist Party’s Valls would be well out of run- off range

In currencies,  the offshore yuan fell 1.1 percent to 6.8599 per dollar after a four-day climb. The onshore yuan fell 0.6 percent. The euro declined 0.2 percent to 1.05843 per dollar and the pound was down 0.3 percent at 1.23793. The Bloomberg Dollar Spot Index rose 0.2 percent after falling 1 percent Thursday in its biggest slide since July on a closing basis. Companies added fewer jobs than forecast in December, according to a private research group. The yen fell 0.7 percent to 116.18 per dollar after strengthening 1.7 percent Thursday. The Aussie and kiwi dropped 0.3 percent and 0.2 percent, respectively. South Korea’s won lost 0.6 percent. Mexico’s peso jumped 0.5 percent after Banxico sold dollars to bolster the exchange-rate. The currency Thursday erased an advance of 1.5 percent after  Trump threatened Toyota Motor Corp. with a border tax for planning to build a factory in Mexico. The Turkish lira was down 0.8 percent at a record low 3.6226 per dollar following a 0.6 percent drop the previous day.

In commodities, crude was down 0.4 percent at $53.55 a barrel after climbing 0.9 percent Thursday following a report that Saudi Arabia is cutting production as it implements an agreement to ease a global supply glut sparked the turnaround. However, further gains have been struggling on trader caution over OPEC implementation of last year’s output agreements. This morning there have been reports of Kuwait making a larger cut in production than required. Oil pushed higher but holds off weekly highs. Performance in base metals also staggering, and with recent gains all on fiscal spending hopes, while Gold prices come off better levels, but marginally so as yet.  Gold retreated 0.4 percent to $1,175.17 per ounce after a three-day, 2.9 percent climb.

US Event Calendar

  • 8:30am: Trade Balance, Nov., est. -$45.4b (prior -$42.6b)
  • 8:30am: Change in Nonfarm Payrolls, Dec., est. 175k (prior 178k); Unemployment Rate, Dec., est. 4.7% (prior 4.6%)
  • 10am: Factory Orders, Nov., est. -2.3% (prior 2.7%); Durable Goods Orders Nov. F, est. -4.6% (prior -4.6%)
  • 11:15am: Fed’s Evans Speaks on Economy and Policy in Chicago
  • 1pm: Baker Hughes rig count
  • 3:30pm: Fed’s Kaplan Speaks in Chicago

DB’s Jim Reid completes the overnight wrap

It may be a holiday shortened week but there’s been more than enough news to keep markets on their toes in the first few days 2017. Global growth hopes have been boosted following the latest round of PMI’s. The FOMC minutes revealed that “uncertainty” is the new buzzword while one eye has been closely kept on the latest appointments by President-elect Trump. Meanwhile European politics continues to bubble below the surface. The latest food for thought though and the big focus over the last 24 hours has been in China where we’re back to watching the moves in the Renminbi closely after the offshore currency posted the biggest two-day rally on record.

We’ll dig into that shortly but before we get there we’ve got the final US employment report of 2016 to preview. As always nonfarm payrolls will be the big focus and the market consensus for today’s print is 175k which is just a shade below the 178k in November. It’s worth noting that there’s a reasonable range between economists though with the low forecast at 125k and the high forecast at 221k. Our US economists are at the lower end of the range and have pegged a 150k print which is more or less where yesterday’s ADP private employment survey came in at for December (153k vs. 175k expected). What might be more interesting though is whether or not the drop in the unemployment rate is sustained. As a reminder the U3 rate fell to 4.6% in November and the lowest since 2007 from 4.9% in October. The drop has been a focus for Fed officials with more talking about an undershooting of the longer run rate so it is worth watching. As always also keep an eye on average hourly earnings. The consensus is for a +0.3% mom rise in December which would have the effect of pushing the annual rate up to +2.8% yoy from +2.5%. All that to look forward to at 1.30pm GMT.

Back to China where yesterday the offshore Renminbi rallied a further +1.12% to 6.7889 and in doing so clocked a +2.51% two-day gain and the most on record. In fact up to yesterday’s close the currency had rallied +2.76% in 2017 already having weakened -6.20% last year. As a result the PBoC also moved to strengthen the fixing in the onshore currency this morning by the most since 2005 or since the Renminbi was de-pegged from the US Dollar. The rally for the offshore Renminbi has however faded a bit this morning (currently -0.50%). The catalyst for that earlier surge appears to be the crackdown by the PBoC on capital outflows at the end of last year – something we talked about in Tuesday’s EMR. In addition overnight lending rates in Hong Kong have surged in recent days (CNH Hibor touched 61% this morning and the second highest level on record) and liquidity is thin which is helping to exacerbate the moves.

It wasn’t just the Renminbi which had a good day against the Greenback yesterday with EM currencies also surging. The USD index actually closed -1.15% and is already back to mid-December levels. It’s little changed this morning. The Mexican Peso was also back in focus yesterday after Mexico’s Central Bank stepped in to stem the recent slide which helped the currency to rally back over +2%. However that was short lived with President-elect Trump taking to social media again and targeting Toyota this time with a border tax for planning to build a new plant in Mexico to import into the US. Meanwhile Treasuries were notably stronger with the benchmark 10y yield rallying 9.5bps to 2.345% – the lowest level since December 7th. Similar maturity Bund yields also edged down 3.3bps although the periphery was notably weaker (yields 5bps to 14bps higher).

There wasn’t much to report at the other end of the risk spectrum. The S&P 500 (-0.08%) paused for breath with financials and retailers suffering while in Europe the Stoxx 600 finished the day +0.10%. Elsewhere, over in credit markets the focus continues to be on the flying start for primary issuance in the US. Another $10bn priced in US IG yesterday which takes the week-to-date figure past $50bn and making it one of the biggest weeks of all time. What perhaps makes this more incredible is that, unlike in other record weeks, this week’s issuance total has not been boosted by one or two jumbo deals. Rather it’s been a steady diet of benchmark size deals.

Over in Asia this morning it’s been another fairly mixed start. The Nikkei (-0.39%) is in the red while the Hang Seng (+0.54%) and Kospi (+0.42%) are firmer. The Shanghai Comp and ASX are little changed. There’s been some focus on a Bloomberg story this morning too which suggests that China is prepared to step up measures aimed at scrutinizing US companies conducting business in China should Trump take punitive measures against the country. It’s hard to gauge how reliable the story is but it’s one to watch.

Moving on. While yesterday’s ADP print in the US may have come in a tad disappointing, data out of the services sector was less so. The services PMI was revised up at the final count to 53.9 in December from the earlier 53.4 flash reading. Meanwhile the ISM non-manufacturing print came in at 57.2 which, while unchanged versus November, was still better than expected (56.8 expected). Notably the new orders component ticked up to 61.6 from 57.0. The remaining data was the latest weekly initial jobless reading which saw claims fall steeply to 235k from 263k. There was also some Fedspeak yesterday with San Francisco Fed President Williams saying that three hikes in 2017 is a “pretty reasonable” assumption. Meanwhile in Europe yesterday the only significant data was in the UK where the services PMI for the December was reported as rising 1pt to 56.2 and to the highest since July 2015.

Before we look at today’s calendar a quick mention that this morning our European Equity Strategist Sebastian Raedler has raised his year-end Stoxx 600 target from 345 to 375 (3% upside from current levels). He expects 9% EPS growth this year, helped by the rebound in global growth momentum, stronger commodity prices and euro weakness. This would make 2017 the first year of meaningful European EPS growth since 2010. He argues that European equities benefit from two important inflection points. First, global growth is accelerating for the first time since 2013. Secondly, European earnings are rising again,

end

i)Late  THURSDAY night/FRIDAY morning: Shanghai closed DOWN 11.09 POINTS OR 0.35%/ /Hang Sang closed UP 46.32 OR 0.21%. The Nikkei closed DOWN 66.32 POINTS OR 0.34% /Australia’s all ordinaires  CLOSED UP 0.07%/Chinese yuan (ONSHORE) closed WELL DOWN at 6.9180/Oil ROSE to 54.17 dollars per barrel for WTI and 56.77 for Brent. Stocks in Europe: ALL IN THE RED. Offshore yuan trades  6.83161 yuan to the dollar vs 6.9180  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN

Japan is angry at Trump especially that he got the facts on Japanese production of the Corolla wrong.  Let us see what will happen in a few weeks when Trump takes over:

(courtesy zero hedge)

An Angry Japan Responds To Trump’s Toyota Taunts

After Trump’s Thursday morning twitter taunt targeted Toyota, when the President-elect warned Japan’s biggest carmaker that it will face heavy penalties if it chooses to make cars for the US market in Mexico, writing  “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax“, a tweet which sent shares of Japanese carmakers sliding on Friday with a 1.7% fall for Toyota, 2.2% for Nissan and 3.2% for Mazda, an angry Japanese government and corporate establishment pushed back against Trump’s criticism of Toyota as the attack on the country’s most powerful corporate name sent shockwaves across “Japan Inc.”

As the FT notes, CEOs of Japanese companies including Sony’s Kazuo Hirai and Nissan’s Carlos Ghosn weighed in, while analysts feared the president-elect’s targeting of Toyota would lead to a broader fallout on Japan-US trade relations, similar to concerns about an escalating trade war between the US and China.

“Toyota is responsible for large employment at US plants such as in Kentucky. It’s questionable whether the new US president has a grasp of how many vehicles Toyota builds in the US,” said Taro Aso, Japan’s finance minister.  Hiroshige Seko, minister for trade and industry, added that the Japanese government would do its part to explain to the US administration about the contribution of the country’s car industry to the US economy.

“Toyota is equivalent to Japan as a whole, so Mr Trump’s criticism could be interpreted as a message to the Japanese government,” said Koji Endo, motor industry analyst at SBI Securities, expressing concerns about the impact on bilateral trade negotiations once Mr Trump is officially appointed later this month.

Analysts said Trump’s focus on Toyota, after Ford this week announced that it would pull plans for a $1.6bn Mexican plant, is not surprising but ironic for the Japanese carmaker who was the latecomer among global rivals in shifting production to Mexico. They noted that Toyota, which has an existing manufacturing facility in Baja to build the Tacoma pick-up truck, only made about 6% of 2.2m vehicles sold in the US in Mexico during the January to November period, compared with 33% for Nissan and 47 per cent for Mazda, according to SBI Securities, both of which companies are said to be far more exposed to Trump’s future ire than Toyota.

As the FT adds, in 2015, Toyota announced plans to spend $1 billion building a new facility in the central state of Guanajuato that will make Corolla vehicles from 2019.

The decision was a symbolic one for Akio Toyoda, Toyota’s chief executive, as it marked the lifting of a three-year moratorium on plant construction. It also underscored the company’s recovery since Mr Toyoda faced a US congressional grilling in 2010 in the wake a massive recall of spontaneously accelerating Toyota vehicles.

Having experienced the US recall crisis and the subsequent political backlash, analysts say Toyota may eventually adjust its strategy in Mexico, either by reducing the planned number of vehicle production or increasing the capacity of existing US plants in Texas or Mississippi.

“The company will carefully try to avoid taking action that would leave a negative impression on the new US administration,” said Masahiro Akita, analyst at Credit Suisse. “Considering how Toyota has operated in the past, it wouldn’t be surprising if the company makes a policy shift.”

In response to Trump’s tweet, Toyota has said no US jobs would be lost as a result of its planned new plant in Mexico. CEO Toyoda also said the company would “see what policies the incoming president adopts” before deciding whether to take action.

Still, Mr Akita said a complete reversal of Toyota’s plan to construct a new plant in Guanajuato was unlikely considering Mr Toyoda’s concerns about the impact on employment and the regional economy.

* * *

Then again, the Trump twitter effect may soon fizzle according to Reuters Breakingviews, which noted that Toyota’s day in Donald Trump’s crosshairs “could mark peak Twitter-Trump.”

On Thursday, the U.S. president-elect threatened tariffs on the Japanese carmaker, if it sold Mexico-made Corollas in the United States. Yet a 2 percent fall in Toyota’s Tokyo-listed shares looks muted considering Ford and General Motors performed as poorly or worse on New York trading. That’s because it quickly became clear Trump had all his facts wrong. The more that happens, the less impact his tweet storms will have.

Trump’s bully pulpit, both online and at rallies, can certainly be effective. General Motors, Lockheed Martin and Boeing have all scrambled to respond. This week Ford ditched a plan to build a new plant in Mexico that Trump had slated.

In Toyota’s case, a 35 percent import tax on 200,000 Corollas built annually at its new plant in Mexico would add $1.4 billion to their overall cost, assuming a $20,000 sticker price per car. That’s around 10 percent of this year’s expected earnings, which either Toyota or customers would have to swallow.

That’s never going to happen, though, for one very simple reason: Toyota’s new plant would replace one in Canada, not America. All Corolla production for U.S. sales remains in the company’s Mississippi factory. The plant is also in Guanajuato, not Baja, as Trump asserted.

Getting such basic facts wrong might not bother Trump’s supporters. But shareholders are more likely to get wise to such antics and start focusing on more concrete issues.

Contrast Toyota with Constellation Brands, the $30 billion alcoholic drinks firm. Its shares dropped more than 7 percent on Thursday, despite strong earnings. The maker of Corona and other Mexican brews faces higher costs if tax breaks are scrapped for overseas costs. That’s a central tenet of tax reforms sought by congressional Republicans and Trump. And these would be easier to put in place than long-term cross-border tariffs, which break trade agreements.

None of this means Trump’s ability to micromanage via social-media bullying is over. But the more his punches fall wide of the mark, the more inclined investors will be to ignore him.

While that may eventually pan out, for now the market (and various Trump tweet scanning apps) is far more transfixed by what Trump tweets in his daily social media sermons than even statements made by many if not all Fed members.

end

c) REPORT ON CHINA

Overnight the lending rate between banks soars to 105%.  The offshore yuan (CHN ) continues its strength with POBC intervention as the shorts are getting squeezed:

(courtesy zero hedge)

Chinese Overnight Funding Rate Hits Unprecedented 105%

It appears Chinese authorities are deadly serious about crushing shorts and halting speculative outflows as the liquidity freeze in Chinese markets has sent overnight deposit rates to a record 105% as one or more bank’s utter desperation for funds looks like a giant fat finger.

Today’s spike is up 45 percentage points from yesterday’s 60% rate…

and at the same time, PBOC strengthened the Yuan fix by the most since 2005 to narrow the gap to the massive short squeeze move in offshore yuan...

END

Chinese volatility explodes as the offshore yuan goes all over the map.  The POBC are very worried about the new Trump administration labeling the country as a currency manipulator and they may wish to keep a stronger yuan in the following few weeks.  Also the yuan shorts are temporarily getting killed.  However in the long run, the yuan should retreat to the 7.3-8.0 level

(courtesy zero hedge)

Chinese Volatility Explodes: Yuan Tumbles Most In One Year After Biggest 2-Day Rally Ever

While China’s unprecedented currency moves have quickly become the main talking point across global markets which otherwise have started off 2017 in an eerily calm fashion, it is the sudden surge in two-way volatility that has emerged a major threat to global market stability.

Case in point, the offshore Yuan fell as much as 1.1% to 6.8623 a dollar in Hong Kong, the most in exactly one year, after a record 2.5% surge over the past two sessions. This took place as a result of conflicting signals, as on one hand China continued to drain liquidity and sent overnight deposit rates into all time high territory, yet on the other the PBOC raised its fixing less than projected, but still the most since 2005, and Goldman Sachs advised its clients that the best time to short the yuan are just after interventions – like the recent one – which flush out bearish positions, or when China concerns were off traders’ radar screens.

China’s central bank raised its daily reference rate by 0.92% to 6.8668 per dollar on Friday the biggest rise since unpegging from the US dollar in 2005, following a 1 percent drop in a gauge of the greenback’s strength overnight. The offshore yuan was trading 0.8 percent weaker at 6.8457 per dollar as of 5:23 p.m. in Hong Kong, paring its weekly gain to 1.9 percent, the most in data going back to 2010. The onshore rate slumped 0.6 percent. Friday’s fixing was weaker than Mizuho Bank Ltd.’s prediction of 6.8447 and Australia & New Zealand Banking Group Ltd.’s estimate of 6.8456.

As we observed on Thursday evening, Yuan short sellers were once again squeezed in Hong Kong this week after interbank borrowing rates soared, and the dollar weakened as Bloomberg News reported that Chinese policy makers were preparing contingency plans to support the exchange rate even as they prepared for trade war with Donald Trump.

The three-month yuan interbank rate in Hong Kong, known as Hibor, surged to a record high, while the overnight rate jumped 23 percentage points to 61 percent, the highest since last January’s cash crunch. Rising interbank rates can make some short positions prohibitively expensive.

The move widened the offshore yuan’s premium over the onshore rate to 1.6%, the most since February last year. While borrowing rates in Hong Kong remained elevated on Friday, a broad recovery in the U.S. currency eased some of the pressure on bears.

Speaking to Bloomberg, Roy Teo, senior currency strategist at ABN Amro Bank NV in Singapore said that “The offshore yuan is sinking because there is some recovery in the dollar, perhaps the unwinding of short-yuan positions has mostly been done, and it’s closing the gap with the onshore currency.” The yuan is likely to weaken this year as capital outflows continue and the U.S. Federal Reserve increases interest rates, Teo said.

As shown in the chart below, in wildly volatile swings, the gave back much of its gains after a week that echoed the short squeeze in January of last year. That abrupt reversal marked the beginning of a nearly 5 percent rally lasting two months.

Chinese policy makers have several reasons to engineer a stronger or stable yuan in the short term. U.S. President-elect Donald Trump has pledged to label the country a currency manipulator on his first day in office, while the exchange rate came close to breaking through the psychologically-important level of 7 per dollar earlier this week. Policy makers also want to avoid a flood of capital outflows as citizens’ annual foreign-exchange quotas reset for the new year.

Meanwhile, Goldman warned that the Yuan will probably drop to 7.3 per dollar by December, emerging-market strategists led by Kamakshya Trivedi in London predicted in a note dated Thursday.

“The squeeze will have a temporary impact,” Luke Spajic, head of emerging Asia portfolio management at Pacific Investment Management Co., said in Hong Kong. “But I don’t think it necessarily changes the challenge, and the challenge is they still have to worry about the $50 billion to $60 billion a month of outflows and what they’re going to do about the value of their currency. And they have to face the fact that the U.S. is probably going to keep hiking rates.”

Benjamin Fuchs, chief investment officer at the $2 billion hedge fund BFAM Partners (Hong Kong), said China’s moves to repeatedly tighten capital controls risk eroding confidence in its currency. The dollar’s advance against the yen and other currencies has also increased competitive pressure on China to let the yuan depreciate, he said.

“We’re starting to see more and more of a negative cycle being created,” Fuchs said. China’s attempts to curb outflows are “just making people want to take money out quicker, and make companies change their behavior.”

The biggest problem, however, is that this volatility is starting to spillover into other currency, and asset markets, and as a result of the Chinese interventions even the dollar is starting to backoff from its recent 13 yearhighs.

Finally, in what may be a mockery of what traders observe every day, moments ago the PBOC said that China will keep the Yuan exchange rate “Basically Stable.” It added that it “will continue to improve yuan exchange rate formation mechanism this year” according to a statement after PBOC annual meeting on 2017 work.

Among other PBOC focuses:

  • To improve policy framework, infrastructure for global yuan: PBOC
  • To maintain prudent, neutral monetary policy: PBOC
  • To keep liquidity basically stable: PBOC

Considering that China has failed abysmally at all three so far, markets are increasingly concerned that the worst possible outcome may be inevitable: China losing control over the currency. The global consequences would be severe.

END

After China warns its citizens on capital outflowing from China, today they came out and warns more directly against Bitcoin.  They urged its citizenry to take a rational approach to investing in virtual currencies.  It lowered in value immediately but gold rose.

(courtesy zero hedge)

Bitcoin Tumbles After China Urges Investors To Be “Rational”

After warning about cracking down on ‘virtual’ capital outflows earlier in the week, Chinese officials have come out more directly against Bitcoin this morning with the country’s central bank urging China’s institutional and individual investors should take a rational approach to investing in virtual currencies. Bitcoin in China has legged lower on the news.

As Reuter reports,

Bitcoin prices had showed abnormal fluctuations, the Shanghai head office of the People’s Bank of China (PBOC) said in a notice.

This prompted branch officials to meet representatives of a major bitcoin trading platform in China, BTCC.

They cautioned against potential risks in the platform’s operations and asked it to carry out “self-inspection” according to the law, the bank said.

It stressed bitcoin is not a currency and cannot be circulated as a real currency in the market.

The reaction is clear with Bitcoin China tumbling to 5700 Yuan – down 35% from record highs…

Of course, this is no surprise, as we noted earlier, for those buying the dip here in bitcoin, having been driven by Chinese momentum, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of an even more dramatic, and sharp, drop in its price.

4 EUROPEAN AFFAIRS

How European immigration, mainly Muslims are creating problems for the politicians in Europe. In order to deflect attention, government impose bans of the burka.

(courtesy Murray/Gatestone Institute)

European Immigration: Mainly Muslim, Mainly Male, Mainly Young

Submitted by Douglas Murray via The Gatestone Institute,

  • In the wake of the attack in Nice, there should have been a fullsome public discussion over what if anything can be done to ensure that people who have been in France for many years — in some cases their entire lives — are not indoctrinated to hate the country so much that they drive a truck through a crowded sea-front on Bastille Day.
  • Or there could have been a wide public debate over whether, with so many radicalised Muslims already in France, it was a wise or foolish idea to continue to import large numbers of Muslims into this already simmering situation.
  • Merkel seems to hope that with this raising of a burka ban the German public will forgive or forget the fact that here is a political leader so devoid of foresight that she unilaterally chose to allow an extra 1-2% of the population to be added to her country in a single year, mainly Muslim, mainly male and mainly young.
  • The burka and burkini, like the headscarf, are only issues because millions of people have been allowed, unchecked, into Europe for years. The garment is merely the simplest issue at which to take aim. Far harder are the issues of immigration and integration. It is possible that Europe’s politicians cannot answer these questions, because any and all answers would point the finger at their own failings.
  • The European publics might get fed up with the distraction tactics of talking about garments and instead seek answers to the challenge we now face, as well as retribution at the polls for the politicians who brought us here.

2016 was a fine year for Islamist terrorism and an even finer year for Western political distraction. While Islamic terrorists repeatedly succeeded in carrying out mass-casualty terrorist attacks, as well as a constant run of smaller-scale strikes, the political leadership of the free world continued to try to divert their public.

The most striking example of the year came in the summer with the French debate over whether or not to ban the “burkini” from the beaches of France. The row erupted in the days after another 86 people were murdered in a jihadist terrorist assault — this time in Nice, France. With no one sure how to prevent access to vehicles or any idea how many French Muslims might want to follow suit, the French media and authorities chose to debate an item of beachwear. The carefully staged decision by an Australian Muslim woman to have herself filmed while wearing a burkini on a French beach ignited the row, which was eagerly seized upon by politicians.

At the local and national level, the decision to discuss the burkini allowed all the larger political issues behind Europe’s growing security problem to be ignored. In the wake of Nice, there should have been a fullsome public discussion over what if anything can be done to ensure that people who have been in France for many years — in some cases their entire lives — are not indoctrinated to hate the country so much that they drive a truck through a crowded sea-front on Bastille Day. Or there could have been a wide public debate over whether, with so many radicalised Muslims already in France, it was a wise or foolish idea to continue to import large numbers of Muslims into this already simmering situation.

As it was, neither of these debates did occur, and no meaningful political action was taken. Instead, the issue of the burkini sucked all the oxygen out of the debate, leaving no room to discuss anything more serious or longer term than beachwear.


In the wake of the July 14 attack in Nice, France, in which 86 people were murdered, there should have been a fulsome public discussion over what if anything can be done to ensure that people who have been in France for many years — in some cases their entire lives — are not indoctrinated to hate the country so much that they drive a truck through a crowded sea-front on Bastille Day. (Image source: France24 video screenshot)

Across the continent in 2016, it appeared that other politicians realised the enormous advantage of such distraction debates. For instance, in the Netherlands in November, the country’s MPs voted for a ban on wearing a burka in public places. Prime Minister Mark Rutte apparently found this an enormously convenient debate. Not only did it temporarily reduce some of the pressure that his government is feeling at the rise of Geert Wilders’s Freedom Party to the top of opinion polls, but it also distracted attention from the years of mass immigration and lax integration demands which have been a hallmark of the Dutch experience.

After importing hundreds of thousands of people whose beliefs the Dutch authorities rarely bothered to question, the public would be satisfied — the Rutte government hoped — if only the small number of Dutch Muslim women who wear the burka were prevented from doing so. The Netherlands will have to see whether its implementation of such a law works any better than it does in neighbouring France, where “white knights” routinely show up to pay the fines of women fined for violating the burka ban there.

The Rutte government was not the only one to adopt this cynical strategy. Its most cynical deployment of all came in December, with the announcement by the German Chancellor, Angela Merkel, that she would ban the burka in Germany.

As with the Dutch government, Merkel clearly hoped that in throwing this tidbit to the German public she might head off the threat that the Alternative for Germany party (AfD), among others, now poses to her party in this year’s election. But the move also raises the question of just how stupid does Angela Merkel believe the German people to be? It would seem that Merkel hopes that with this burka ban the German public will forgive or forget that here is a political leader so devoid of foresight that she unilaterally chose to allow an extra 1-2% of the population to be added to her country in a single year, mainly Muslim, mainly male and mainly young.

This is a Chancellor who, even having previously admitted that Germany’s multicultural model had “failed,” revved immigration up to unprecedented and unsustainable levels. Now, like her counterparts across the continent, she must hope that the German public are satisfied by this burka morsel and that, as a result, they will return Merkel and her party to power so that they can repeat whichever of their mistakes they choose in the years ahead.

It is possible, of course, that the European publics are wiser than their leaders and that they will see through these cynical and distracting tactics. There are extremely good reasons to ban any garment which covers a person’s face and allows them to wander as an anonymous stranger in our societies. There are some — though fewer — reasons to ban wearing a burkini on a beach. Certainly the governments of France, the Netherlands and Germany are within their rights to instigate and enforce any and all such bans. Such moves, however, are but the smallest register imaginable of a problem that seems far beyond this generation of politicians.

The burka and burkini, like the headscarf, are only issues because millions of people have been allowed, unchecked, into Europe for years. The garment is merely the simplest issue at which to take aim. Far harder are the issues of immigration and integration. It is possible that Europe’s politicians cannot answer these questions because any and all answers would point the finger at their own failings. Or it is possible that they have no answers to the problems with which they have presented the continent. Whichever it is, they would do well to reflect that in 2017, the European publics might get fed up with the distraction tactics of talking about clothing and instead seek answers to the challenge we now face, as well as retribution at the polls for the politicians who brought us here.

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

The Central bank of Mexico intervenes in the currency market trying to prop up the Peso but failed again.  It seems that they sold a considerable amount of silver in their failed attempt.  Is there something under the hood in the Mexican economy that we should be cognizant about:

(courtesy zero hedge)

Silver Dumps, Peso Jumps As Mexican Central Bank Intervenes (Again)

If at first you don’t succeed, intervene again! For the second time today (at midnight ET), Banxico officials confirmed the central bank entered the market to sell US dollars in an attempt to strengthen the peso. Now we await the next Trump tweet to take the peso back down…

As Bloomberg reports, according to a Banxico official who asked not to be identified, the central bank is looking to strengthen Mexican peso.

For now the move is far less impressive – which is odd given the lack of liquidity and an irrational peso buyer…

We have one other question… Is Banxico dumping its silver to receive dollars to sell to buy pesos?

Around $200mm notional of Silver was dumped in those few minutes.

As we noted at their earlier attempt, we can’t really blame Banxico for intervening: with the local population, of which over half lives in poverty, angry and protesting the recent “Gasolinazo”, or 20% increase in the price of gas, the crashing currency is sure to send many other prices, especially of imported goods, through the roof while sending much of the population over the edge. Which is why Goldman’s Alberto Ramos agrees that the central bank had to do something:

“In our assessment, some FX market intervention at this juncture is justified since market liquidity conditions became somewhat tighter, the MXN entered overshooting territory (excessively undervalued) and from current levels, significant additional exchange rate weakness, while making exporters even more competitive, can threaten two valuable public goods: price and local financial market stability. A very weak currency can have significant medium-term costs for the broader economy as it is likely to add pressure on inflation and wages (which would over time reduce the cost-competitiveness of the Mexican exporters) and prompt to a tighter monetary stance. Overall, higher inflation/wages and higher rates would be a clear negative shock to the non-tradable sectors of the Mexican economy, for they would not enjoy the exporters (tradable sectors) benefit of a weak currency.

So much for a “brave new world” in which global trade imbalances can be resolved without central bank intervention. If anything, the events from the first 4 days of 2017, in which we first saw a dramatic indirect intervention by the PBOC which sent the overnight CNH deposit rate to the highest ever in a desperate attempt to crush shorts, and then the Mexican direct intervention, have confirmed that 2017 will be very much like 2016 when it comes to central bank intervention, if not more so.

However, as Goldman admits, Banxico made one mistake which explains why virtually the entire post-intervention move has been faded:

In our assessment, if the MXN remains under pressure the authorities should entertain the possibility of using different intervention instruments, such as USD Dollar swaps, for they are not a direct claim on reserves and offer valuable FX hedging protection to the market in a period of significant uncertainty but no large spot market outflows.

There is a problem with using reserves to fight a currency war, one which China is very familiar with:

On the other hand, using USD swaps is precisely what the PBOC shifted to late in 2015 (perhaps as advised by Goldman then too) when it too realized that using reserves was a very rudimentary (if effective) attempt at intervention. The only problem is that it eventually catched up to the central bank, and just like in the case of China which used swaps for about 3-4 months even as the capital outflows persisted, it ultimately had to return to draining reserves for a full blown intervention.

Ironically, even that has failed, and as we have documented extensively in the past 2 months, the PBOC is now scrambling with intraday gimmicks like crushing shorts using deposit rates. That too only works for a while.

Meanwhile, Mexico is caught between a rock and a hard place, because while the currency is depreciating, and the “MXN is now visibly undervalued versus theoretical fundamental fair-value under any of the three model metrics we use” Goldman warns that any further depreciation can undermine the inflation backdrop and/or risk unleashing destabilizing financial forces.

Which is all Trump needs: a several economic crisis just south of the border.

Actually, there is another thing Trump “needs”: Mexico launching an all out currency war against the US, whether through reserve draining (which would hit US assets) or USD swaps. Should the central bank intervene on a few more occasions to offset today’s failed revaluation attempt, which the market is now openly mocking, we eagerly await the barrage of tweets that will be launched by the Trump account as the president-elect, having slammed the occasional stock, shifts to FX.

Trump aside, what happens next? Once today’s intervention fails, the Peso is looking at a lot more downside, and as Rabobank’s Christina Lawrence writes,the MXN could fall as far as 23, as there “is little room for MXN relief as Banxico is highly unlikely to provide any lasting support for peso as market is too liquid and Mexico’s reserves will start to evaporate very quickly.” Putting trading volumes in context, MXN is the 10th most liquid currency globally with an average daily volume in the spot market of $43b and $112b when including options.

Rabo says that it “expects volatility to rise further and for the skew to continue moving to the right as market participants move to protect themselves from further USD/MXN upside”

Finally, the real message here is that the Banxico’s intervention “may also be seen as sign of greater underlying problems.” Bingo.

 

 

END

 

Let’s have a little humour tonight:

(courtesy Vicente Fox/ (former President of Mexico)/zerohedge)

 

 

Mexico’s Former President Tweets: “Trump, I Am Not Paying For That Fucken Wall”

It appears the world has officially gone mad.

While nothing new here with former Mexican president Vicente Fox Quesada, we just find it mind-numbingly laughable that this is the message sent from one country’s (former) president to another country’s (soon to be) president…

is-deciderHtmlWhitespace" cite="https://twitter.com/VicenteFoxQue/status/817480450285375488">

Vicente Fox Quesada

@VicenteFoxQue

TRUMP, when will you understand that I am not paying for that fucken wall. Be clear with US tax payers. They will pay for it.

4:18 PM – 6 Jan 2017

Of course, this is not the first time Fox has let his feelings show on Twitter…

View image on Twitter

is-deciderHtmlWhitespace" cite="https://twitter.com/VicenteFoxQue/status/718189404435537920">

Vicente Fox Quesada

@VicenteFoxQue

Trump,this beautiful Cancun. YOU ARE NOT WELCOME HERE.

5:31 PM – 7 Apr 2016

Perhaps it’s time to retire gracefully? As the more Fox talks, the more the peso collapses?

 end 7. OIL ISSUES

Back in April we reported on a huge amount of oil Iran was storing on vessels because of no room on land.  We now now that 13 million barrels of oil held offshore has been sold mainly to China and other Asian interests and at discounts. Iran needs to get its market share back. The question now becomes will Saudi Arabia offer more discounts and/or cheat on its production!

(courtesy zero hedge)

Iran Sold Over 13 Million Barrels Of Oil Held On Tankers In Post-Deal Price Jump

Remember when back in April we showed a strange map of the Iranian oil tanker armada, which according to Windward data was storing as much as 50 million barrels offshore, yet which was just sitting on anchor going nowhere?

As a reminder, Iran has lacked sufficient land storage facilities to store its oil and, to enable it to keep pumping crude, has relied on its tanker fleet to park excess stocks until it can find buyers.

Well, we can now close the book on what happened to all those tankers full of oil, because according to Reuters, capitalizing on the run up in oil prices following the OPEC output deal which exempted Iran from a production freeze, Iran has sold more than 13 million barrels of oil that it had long held on tankers at sea as it scrambled to sell at higher price levels in its attempt to regain market share.

Citing industry sources, Reuters notes that in the past three months, in the window provided since the Algiers deal, Tehran sold almost half the oil it had held in floating storage, which had tied up many of its tankers as it struggled to offload stocks in an oversupplied global market.

As a result of the rush to dump its offshore-held oil, unsold oil is now tying up only 12 to 14 Iranian tankers, out of its fleet of about 60 vessels, compared with around 30 in the summer.

Who bought it? Mostly China and Europe:

The oil sold in recent months has gone to buyers in Asia including China, India and South Korea and to European countries including Italy and France, according to the sources and data. It was unclear which companies bought the oil.

Having demonstrated good faith during the recent sales, Iran is now looking to cements its market share gains and is using the deal exemption to push into new markets in Europe, including Baltic and other central and eastern European countries.

As part of the Vienna OPEC deal meant to address excess oil inventory, Iran was exempt from production cuts. The country successfully argued it should not limit its production which was slowly starting to recover after the lifting of international sanctions in January last year. While the deal did not come into effect until the beginning of 2017, industry sources said Tehran had already been offering aggressive discounts, aiming to coax buyers globally into stocking up for winter in anticipation of the OPEC cut.

Reuters further notes that in another sign of the rising activity, Iran’s oil ministry news agency SHANA reported in late December that the number of tankers able to berth at major terminal Kharg Island had reached a record in 2016 of 10 vessels at the same time.

“Iran got its way at OPEC and the Saudis agreed not to limit their capabilities. Iran will go ahead and look to export whatever they can for winter demand (globally),” said Mehdi Varzi, a former official at NIOC who is now an independent global industry consultant. “This is a commercial policy of trying to get rid of a lot of their crude oil on tankers as holding oil on tankers is very expensive.”

The good news did not stop there: while in the past, numerous foreign ship insurers refused to work with Iran over fears of a backlash by either the Obama administration or Saudi Arabia, in recent months they have resumed providing cover for Iranian vessels, which has also given Iran more scope to use its tankers to make deliveries or carry out ship to ship oil transfers rather deploying them for storage.

Now the next question is as Iran and Saudi Arabia face off in direct competition for the same end clients, especially those in Asia, how much of a discount will Iran offer to remain competitive, and whether the Saudis will match these price cuts, as the temptation to cheat on the Vienna deal suddenly rises.

 

 

end

 

do not worry, the crooks have this under control as they are long oil. USA oil rig counts continue to rise as well as total USA production.  OIl prices continue to rise:

 

(courtesy/zero hedge)

 

 

US Oil Rig Count Rises To 1 Year Highs

US oil rig counts have now risen for 30 of the last 32 weeks (up 4 to 529 today) – the highest in a year…

Following lagged oil prices and leading US crude production higher…

 

While the market continues to ignore this data (for now), we note that if the codependence remains, then OPEC will need to slash output further to balance the market as US shale output is not dropping any time soon.

end

8. EMERGING MARKETS

A good snapshot of Venezuela’s finances.  The author claims that the country still has 190 tonnes of gold. I find that hard to believe:

(courtesy Mueller/Mises Institute)

Venezuela’s March Toward Default

Submitted by Anthony Mueller via The Mises Institute,

It is only a matter of time until Venezuela will default on its foreign debt. After a short peak in 2009, when the country’s foreign exchange reserves stood at over $40 billion, Venezuela has been steadily hemorrhaging its reserves down to $10 billion. In 2016, Venezuela started to sell gold in order to compensate for the loss of its monetary reserves. As a consequence, Venezuela’s gold reserves plunged from over 360 tons down to less than 190 tons. Other than in the case that some foreign power, such as China, for example, would jump in as a lender, Venezuela’s default seems unavoidable (graph 1).

Venezuela is not only the victim of falling oil prices although these have the strongest immediate effect on the country’s finances. Oil revenue finances more than half of Venezuela’s government budget and accounts for almost all export income. Venezuela’s deeper problem comes from the fact that almost all of the government’s so-called social benefits in the wake of the “Bolivarian Revolution” under presidents Hugo Chavez and Nicolás Maduro have been financed by monetary expansion.

In 1998, before Hugo Chavez became president, the extended broad money supply (M3) stood at 10.6 billion bolivars. By 2010, the Venezuelan money supply had already risen to more than 290 billion bolivars, and as of October 2016, money supply M3 reached 7,513.9 billion Venezuelan bolivars (graph 2).

Consequently, annual price inflation shot up from around 25 percent in the years before 2012 to over 180 percent by the end of 2015 until the government practically stopped publishing the official figure. The International Monetary Fund estimates an inflation rate of 480 percent for 2016 and of 1,640 percent for 2017.

Since 2012, the price of Venezuelan oil has dropped from $100 per barrel to less than $50. Due to political turmoil and socialization of the industry, the overall oil production of the country has fallen to a 13-year low in 2016. Venezuela’s exports that consist almost completely of oil have plummeted from a peak of $30.7 billion in the third quarter of 2008, to currently less than $10 billion per quarter. In February 2016, the Venezuelan government officially devalued its currency by 37 percent against the US dollar from 6.3 to 10 bolivars all the while when the black market rate stood at over 1,000 bolivars for one dollar.

The Bolivarian Revolution, which Hugo Chávez started in 1999, is coming to its end. Severe shortage of basic goods, food lines, exorbitant black market prices, the collapse of the currency and hyperinflation now afflict a country that claims to possess the highest proven oil reserves of the world.

It is only a matter of time until Venezuela can no longer finance its imports and social and political chaos of unprecedented proportions will afflict the country. The fallout will also affect Venezuela’s neighboring countries.

end

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

Euro/USA   1.0577 DOWN .0027/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATES

USA/JAPAN YEN 115.97 UP 0.626(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2375 DOWN .0045 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3261 UP .0032 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS FRIDAY morning in Europe, the Euro FELL by 27 basis points, trading now WELL BELOW the important 1.08 level FALLING to 1.0577; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED DOWN 11.09 or 0.35%     / Hang Sang  CLOSED UP 46.72 POINTS OR 0.21%  /AUSTRALIA  CLOSED UP 0.07%  / EUROPEAN BOURSES ALL IN THE RED 

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

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

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

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

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

The NIKKEI: this FRIDAY morning CLOSED DOWN 66.32 POINTS OR 0.34%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 46.32 OR 0.21%  Shanghai CLOSED DOWN 11.09 POINTS OR 0.35%   / Australia BOURSE CLOSED UP 0.07% /Nikkei (Japan)CLOSED IN THE RED  /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1175.90

silver:$16.43

Early FRIDAY morning USA 10 year bond yield: 2.355% !!! DOWN 1/2 IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  2.952, DOWN 1 IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 101.71 UP 31 CENT(S) from THURSDAY’s close.

This ends early morning numbers FRIDAY MORNING

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And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield: 4.05% UP 2  in basis point yield from THURSDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.059% DOWN 1/ 10  in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.54%  UP 6  IN basis point yield from  THURSDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.961  UP  3  in basis point yield from THURSDAY 

the Italian 10 yr bond yield is trading 42 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.298% UP 6 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR FRIDAY

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

Euro/USA 1.0544 DOWN .0059 (Euro DOWN 59 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 116.91 UP: 1.564(Yen DOWN 156 basis points/ 

Great Britain/USA 1.2291 UP 0.01284( POUND DOWN 129 basis points)

USA/Canada 1.3235 UP 0.0005(Canadian dollar DOWN 5 basis points AS OIL ROSE TO $54.10

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 59 basis points to trade at 1.0544

The Yen FELL to 116.91 for a LOSS of 156 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND FELL 128  basis points, trading at 1.2291/

The Canadian dollar FELL by 5 basis points to 1.3235,  WITH WTI OIL RISING TO :  $54.10

The USA/Yuan closed at 6.9175 the 10 yr Japanese bond yield closed at +.059% DOWN 1/ 10 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 5 IN basis points from THURSDAY at 2.41% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.99 UP 2  in basis points on the day /

Your closing USA dollar index, 102.12 UP 72 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 14.74 OR .20% 
German Dax :CLOSED UP 14.07 POINTS OR 0.12%
Paris Cac  CLOSED UP 9.20 OR 0.19%
Spain IBEX CLOSED UP 27.70 POINTS OR 0.29%
Italian MIB: CLOSED UP 44.90 POINTS OR 0.23%

The Dow was up 64.51 POINTS OR .32% 4 PM EST

NASDAQ WAS UP 33.12 POINTS OR .60%  4.00 PM EST
WTI Oil price;  54.10 at 1:00 pm; 

Brent Oil: 56.60  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.51 (ROUBLE DOWN 17/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.298%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.60

BRENT: $56.60

USA 10 YR BOND YIELD: 2.421%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.01%

EURO/USA DOLLAR CROSS:  1.0569 DOWN .0035

USA/JAPANESE YEN:116.49  UP 1.146

USA DOLLAR INDEX: 102.20  UP 80  cents (BREAKS AGAIN HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2314 : DOWN 106  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.298%

END

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

TRADING IN GRAPH FORM

“19,999.63!”

The Washington Post is very disappointed…

 

The Dow tried (and failed) 8 times…

 

is-deciderHtmlWhitespace" cite="https://twitter.com/zerohedge/status/817449087683493890">

zerohedge @zerohedge

So far, Putin has prevented 6 intraday attempts at Dow 20,000

2:13 PM – 6 Jan 2017

 

Here is how Bob Pisani explained it…

 

VIX with a 10 handle could not get Dow to 20k…

 

It’s been since The Fed hiked rates…

 

Small Caps ended the day red, Nasdaq surged…

 

On the week, Nasdaq soared (best week in a month, 2nd best week post-election)…

 

The Dow’s moves were all USDJPY driven today as once again it was Buy The Fucking Payrolls Dip day…

 

Bear in mind that The Dow had gone nowhere since Nov 2014 until the election…

 

Notably S&P 500 (and Nasdaq) also broke to fresh intraday record highs…

 

All major S&P sectors closed green on the week with Healthcare (Biotechs) outperforming…

 

Gold is 2017’s best performing asset for now…

 

The USD rallied today post payrols but was already moving higher as Yuan tumbled overnight… The USD Index closed the week unchanged…

 

Bonds sold off hard today but the entire curve (except 2Y) ended the week lower in yield, led by 30Y yields dropping 6bps to end the week perfectly at 3.00%

 

Crude closed the week lower with silver and gold outperforming…

 

One last thing…

View image on Twitter

is-deciderHtmlWhitespace" cite="https://twitter.com/zerohedge/status/817462993743204361">

zerohedge @zerohedge

“It should give investors great confidence…”

3:09 PM – 6 Jan 2017

END

 

Another phony jobs report.  The BLS reports a gain of only 156,000 workers instead of the expected 178,000. However average earnings jumped .4% in December.

(courtesy BLS/zerohedge)

Jobs Disappoint In Obama’s Final Month, Rise Only 156K, But Average Hourly Earnings Jump

With Wall Street expecting a 178K payrolls print for president Obama’s final full monthly December jobs report, the headline December nonfarm payrolls increase of just 156K is likely to disappoint. However, the poor December number will likely be offset by a revision to the November print from 178K to 204K, even as October was revised downward from 142K to 135K, for a net revision of the past two months to 19K higher.

For all of 2016, job growth totaled 2.2 million for the year, less than the increase of 2.7 million in 2015.

The unemployment rate printed at 4.7% as predicted, fractionally higher from last month’s 4.6%.

However, the big silver lining in today’s jobs report, and what Wall Street will likely mostly focus on, is the jump in average hourly earnings, which rose 0.4% in December, up from the disappointing November -0.1% decline, and ahead of the 0.3% expected by consensus. It was also the best print since 2009. On an annual basis, the increase was 2.9%, also on of the highest gains since the crisis, strengthening the case for the Fed to hike on multiple occasions in 2017.

On the other hand, average weekly earnings continued their muted performance, rising 2.3% Y/Y in December.

Some more details from the report:

Total nonfarm payroll employment rose by 156,000 in December, with an increase in health care and social assistance. Job growth totaled 2.2 million in 2016, less than the increase of 2.7 million in 2015.

Employment in health care rose by 43,000 in December, with most of the increase occurring in ambulatory health care services (+30,000) and hospitals (+11,000). Health care added an average of 35,000 jobs per month in 2016, roughly in line with the average monthly gain of 39,000 in 2015.

Social assistance added 20,000 jobs in December, reflecting job growth in individual and family services (+21,000). In 2016, social assistance added 92,000 jobs, down from an increase of 162,000 in 2015.

Employment in food services and drinking places continued to trend up in December (+30,000). This industry added 247,000 jobs in 2016, fewer than the 359,000 jobs gained in 2015.

Employment also continued to trend up in transportation and warehousing in December (+15,000). Within the industry, employment expanded by 12,000 in couriers and messengers. In 2016, transportation and warehousing added 62,000 jobs, down from a gain of 110,000 jobs in 2015.

Employment in financial activities continued on an upward trend in December (+13,000). This is in line with the average monthly gains for the industry over the past 2 years.

In December, employment edged up in manufacturing (+17,000), with a gain of 15,000 in the durable goods component. However, since reaching a recent peak in January, manufacturing employment has declined by 63,000.

Employment in professional and business services was little changed in December (+15,000), following an increase of 65,000 in November. The industry added 522,000 jobs in 2016.

Employment in other major industries, including mining, construction, wholesale trade, retail trade, information, and government, changed little in December.

The average workweek for all employees on private nonfarm payrolls was unchanged at 34.3 hours in December. In manufacturing, the workweek edged up by 0.1 hour to 40.7 hours, and overtime edged up by 0.1 hour to 3.3 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.6 hours.

In December, average hourly earnings for all employees on private nonfarm payrolls increased by 10 cents to $26.00, after edging down by 2 cents in November. Over the year, average hourly earnings have risen by 2.9 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees increased by 7 cents to $21.80.

The change in total nonfarm payroll employment for October was revised down from +142,000 to +135,000, and the change for November was revised up from +178,000 to +204,000. With these revisions, employment gains in October and November were 19,000 higher than previously reported. Over the past 3 months, job gains have averaged 165,000 per month.

end Now for the real story on the jobs report: the total number of people not in the labour force grew again rising by 18,000 poor souls. The total for the past 3 months was a whopping 841,000. Thus 95. 102 million Americans are now longer in the labour force. There are 152 million people in the labour force of a total citizens of working age:  255 million: thus a participation rate of 62.7% (courtesy zero hedge) In Obama’s Final Jobs report, A Record 95.1 Million People Were Not In The Labor Force

As it began so it will finish.

Putting the exclamation point on a trend that has marked Obama’s entire presidency, in the final Obama jobs report, the BLS announced that the total number of people not in the labor force grew once more, rising by 18,000 in December, and a whopping 841,000 in the past three months, to a new all time high of 95.102 million Americans no longer in the workforce.

This meant that the perennial bogeyman of the Trump administration, the collapsing labor force participation rate, remained flat near 35 year lows, risint fractionally from last month to 62.7% as a result of 152.111 million people employed in a civilian non-institutional population of 254.742 million.

end Only the supervisory level jobs saw growth in the earnings not the vast majority of American workers: (courtesy zero hedge) Not So Fast: This Is Where All The “Blistering” Hourly Earnings Growth Came From

There is a simple reason why the vast majority of American workers, some 82% of them, are not feeling any wage growth: there simply isn’t any.

After today’s jobs report, Wall Street has been fast to ignore the modest headline payrolls disappointment, which in December rose less than expected following an upward revised November, and focus exclusively on that “other” number, the jump in average hourly earnings, which in December rose 0.4% on a monthly basis, and a blistering 2.9% Y/Y, the highest annual growth since the financial crisis, as shown in the chart below.

Wall Street analysts were quick to praise the jump in hourly earnings, such as Deutsche Bank’s Alan Ruskin who said the following:

The particular medium-term relevance of the acceleration in earnings is:

i) this is coming well before any fiscal stimulus hits, and underscores the unusual timing and therefore inflationary influence that a fiscal stimulus can have at this point in the business cycle;

ii) it tends to provide evidence that indeed the economy is at full employment and that estimates of the nature rate are not apt to drift much lower, negating some of the spare capacity participation arguments that would suggest otherwise.

iii) it plays to the idea that the Fed may already be behind the curve, not least because the impetus from lower oil prices has turned more inflationary as well.

A nice analysis, there is just one problem: it may well be totally wrong.

As we try to point out every month, this headline hourly earnings number – impressive as it may be – tells an incomplete story as it consolidates earnings for two very distinct labor groups in the US, production & nonsupervisory employees, which comprise the vast majority, or 82.3% of the labor force, and the top echelon of workers, the 17.7% of private workers who are classified as supervisory, and managerial.

What happens when one looks at just the subset of production and nonsupervisory private workers, which in October amounted to 101.3 million, or just over 82% of the entire private workforce? Well, we find that their wage growth story is very different. According to the BLS, these particular workers made on average $21.80 per hour, up only 2.5% from $21.26 a year ago, which as the chart below shows is where wage growth for this group has been for three years, and after a modest dip in late 2014, has been largely unchanged since the start of 2014.

Indicatively, this particular group of workers saw a 4% annual growth in wages at the time the 2007 recession hit.

In other words, for the vast majority of American workers, real wage growth is still as anemic as it has been for years, barely outpacing official measures of inflation.

So where did the wage growth come from? Simple: the 17.7% of supervisory, managerial private workers that are excluded from the above grouping, but make up the balance of America’s 123.1 million private workers. It is this group that saw a surge in their implied average wages, which soared by a record high 4.7% in December!

So when the Fed sits down next time to pats itself on the back for a job hike well done in hopes of “keeping inflation in check”, it may want to hike rates only for those 18% of workers who are benefiting from rising wages, because for the rest of America, the income picture remains as dreary as it has been for years.

 

 

end

 

What a complete utter nonsense: we had a huge increase again in waiter jobs (plus nurses and waste cleaners).  We know the job report on the waiters is false because of massive layoffs in that field due to Obamacare, and health care costs that I brought to your attention in the past few days)

(courtesy zero hedge)

Where The December Jobs Were: Nurses, Waiters, And Waste Cleaners

Something remains very broken with the US labor market: while the unemployment rate remains just shy of the lowest print since August 2007, rising fractionally to 4.7%, wage growth for most workers, as reported earlier, rose just 2.5%, far below the 4.0% it was when the unemployment rate last hit 4.7%.

This continues to vex economists who have vowed that if only one lowers the unemployment rate far enough, all the slack in the labor market will be soaked up. Alas, that is not happening, for several reasons, the chief of which is that the quality of jobs added remains subpar, with wage growth – especially for less than “supervisory” and management positions – flat.

Still, according to the BLS at least, some 155,000 seasonally adjusted jobs were added in December, arbitrarily goalseeked as they may have been. Where were they?  Here is the answer:

  • The most actively hiring sector was health care, which saw a whopping 70,000 increase in December jobs, nearly half of total. Most of the increase occured in ambulatory health care services (+30,000) and hospitals (+11,000). Social assistance added 20,000 jobs in December, reflecting job growth in individual and family services (+21,000).
  • Professional and Busines Services rose by a total of 30,500, the second highest gaining category. here the biggest contributor was Administrative and Waste Services to Buildings and Dwellings, which rose by 10,600.
  • Another minimum wage job category that added jobs in December was
    Leisure and Hospitality, which added a grand total of 24,000 jobs. here, the biggest contributor was an old favorite: employment in food services and drinking places, which continued to trend up in December (+30,000).
  • What is curious is that while retailers have been laying off thousands of people left and right, according to the BLS this category added another 6,300 in December, if a substantial drop from November’s 19,500.
  • Highly paid construction jobs declined by 3,000 in December after posting a substantial rebound of 17,000 in November
  • Just as troubling was the ongoing decline in Information jobs, which declined by 6,000 in December, after dropping double that amount in November
  • Also concerning was the sharp drop in Temp Help services: a harbinger of pent up labor demand, this category tumbled by 15,500 in December, the biggest monthly decline in years.
  • There was some good news for higher paying wages in December: Employment edged up in manufacturing (+17,000), with a gain of 15,000 in the durable goods component.
  • Employment in the highly paid financial activities also continued on an upward trend in December (+13,000).
  • Finally, government added an additional 12,000 jobs.

The visual summary is below:

 

 

end

 

a very ugly number:  November factory orders plunge the most in over 2 years.  And this is after a big rise in defense factory orders:

(courtesy zero hedge)

“We’re Gonna Need More War” – November Factory Orders Plunge Most Since August 2014 Despite Defense Spike

Following October’s pre-election surge in new factory orders, November saw orders plunge 2.4% MoM (worse than expected) and the biggest drop since Aug 2014. This drop comes despite a 103% MoM rise in defense aircraft orders as non-defense aircraft orders crashed 73.8%. Factory Orders also dipped back into negative territory YoY.

An ugly drop in factory orders in November…

And Year-over-year, Factory Orders declined for the 23rd month of the last 25…

It appears we are going to need more war to keep this dream alive…

Does this look like a healthy economy being handed to Trump?

 

 

end

What on earth is going on:  The democrats refused FBI access to their hacked servers and then the FBI claim that Russians hacked their system without the access to those servers?

Give me a break..

(courtesy zero hedge)

Trump Asks “What Is Going On” After It Emerges Democrats Refused FBI Access To Hacked Servers

Closing off his tweeting on Thursday evening, the president-elect questioned why the Democratic National Committee did not reportedly cooperate with the FBI’s investigation of hacks into its servers; a hack which the US intelligence agencies were quick to conclude was the action of Russia despite, allegedly, not having seen all the evidence.

As Bloomberg reports, while the DNC says the FBI never requested access to its servers after they were breached, a senior law enforcement official said the FBI repeatedly asked for access “only to be rebuffed.”  If the FBI itself never examined DNC servers, Trump wrote on Twitter, “how and why are they so sure about hacking”?

“What is going on?” Trump added.

Donald J. Trump @realDonaldTrump

The Democratic National Committee would not allow the FBI to study or see its computer info after it was supposedly hacked by Russia……

7:30 PM – 5 Jan 2017 Donald J. Trump @realDonaldTrump

So how and why are they so sure about hacking if they never even requested an examination of the computer servers? What is going on?

7:40 PM – 5 Jan 2017

The FBI Thursday released a statement confirming Trump’s claim.

“The FBI repeatedly stressed to DNC officials the necessity of obtaining direct access to servers and data, only to be rebuffed until well after the initial compromise had been mitigated,” the agency said. “This left the FBI no choice but to rely upon a third party for information. These actions caused significant delays and inhibited the FBI from addressing the intrusion earlier.”

Earlier in the week DNC spokesman Eric Walker told BuzzFeed this week that while the DNC had several meetings with FBI agents, FBI officials “never requested access” to DNC servers.

“The DNC had several meetings with representatives of the FBI’s Cyber Division and its Washington (D.C.) Field Office, the Department of Justice’s National Security Division, and U.S. Attorney’s Offices,” he said, adding, “the FBI never requested access to the DNC’s computer servers.”

And according to BuzzFeed, no U.S. intelligence agency has done an independent forensics analysis on the servers. Instead, the FBI has relied on an analysis from CrowdStrike, the third-party security firm that investigated the DNC breach.

However, as The Hill notes, a senior law enforcement official on Thursday disputed the DNC’s characterization that the FBI never requested access to the DNC servers.

Separately, at the same time Trump criticized leaks to several media outlets detailing contents of a classified report on alleged Russian hacking of the presidential election. The leaks came before Trump’s own briefing on those details by the intelligence community. The 50-page report was delivered to US President Barack Obama on Thursday, and is to be delivered to President-elect Donald Trump on Friday by top intelligence officials, including Director of National Intelligence James Clapper and CIA Director John Brennan, the Washington Post reports, one of several outlets that were given priority over the president-elect in learning the details of the document.

CNN and NBC News also reported on the classified report, sparking outrage from Trump.

“How did NBC get ‘an exclusive look into the top secret report he (Obama) was presented?’ Who gave them this report and why? Politics!” Trump said in a tweet.

Donald J. Trump @realDonaldTrump

How did NBC get “an exclusive look into the top secret report he (Obama) was presented?” Who gave them this report and why? Politics!

7:24 PM – 5 Jan 2017

According to the reports, US spies cited as evidence of Russian interference intercepted communications between Russian officials who called Trump’s victory a geopolitical success for Russia. The report also said that US intelligence identified the ‘go-betweens’ who allegedly handed over stolen Democratic Party emails to WikiLeaks. The US media did not name those individuals or explain how they were linked to the Russian government.

Many Russian officials made no secret of their preference for a Trump presidency after his surprise win in November. The Russian parliament even stood and applauded at the news. The president-elect is perceived by many as capable of restarting relations with Russia with a clean slate, while his Democratic rival Hillary Clinton was blamed for policies which in part have led to numerous conflicts between Russia and the US.

Early this morning, Wikileaks also chimed in on the topic, not surprisingly taking Trump’s side.

WikiLeaks @wikileaks

The Obama admin/CIA is illegally funneling TOP SECRET//COMINT information to NBC for political reasons before PEOTUS even gets to read it.

5:48 AM – 6 Jan 2017 end And now the report:  what a joke!! No proof whatsoever on the Russian hacking (courtesy zero hedge) Here Is The US Intel Report Accusing Putin Of Helping Trump Win The Election By “Discrediting” Hillary Clinton

The farce is complete.

One week after a joint FBI/DHS report was released, supposedly meant to prove beyond a reasonable doubt that Russia intervened in the US presidential election, and thus served as a diplomatic basis for Obama’s expulsion of 35 diplomats, yet which merely confirmed that a Ukrainian piece of malware which could be purchased by anyone, was responsible for spoofing various email accounts including that of the DNC and John Podesta, moments ago US intelligence agencies released a more “authoritative”, 25-page report, titled “Assessing Russian Activities and Intentions in Recent US Elections“, and which not surprisingly only serves to validate the media narrative, by concluding that Russian President Vladimir Putin ‘ordered‘ an effort to influence U.S. presidential election.

Specifically, the report concludes the following:

We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump.

What proof is there? Sadly, again, none. However, as the intelligence agencies state, “We have high confidence in these judgments“… just like they had high confidence that Iraq had weapons of mass destruction.

And while the report is severely lacking in any evidence, it is rich in judgments, such as the following:

  • We assess Russian President Vladimir Putin ordered an influence campaign in 2016 aimed at the US presidential election. Russia’s goals were to undermine public faith in the US democratic process, denigrate Secretary Clinton, and harm her electability and potential presidency. We further assess Putin and the Russian Government developed a clear preference for President-elect Trump. We have high confidence in these judgments.
  • We also assess Putin and the Russian Government aspired to help President-elect Trump’s election chances when possible by discrediting Secretary Clinton and publicly contrasting her unfavorably to him. All three agencies agree with this judgment. CIA and FBI have high confidence in this judgment; NSA has moderate confidence.
  • Moscow’s approach evolved over the course of the campaign based on Russia’s understanding of the electoral prospects of the two main candidates. When it appeared to Moscow that Secretary Clinton was likely to win the election, the Russian influence campaign began to focus more on undermining her future presidency.
  • Further information has come to light since Election Day that, when combined with Russian behavior since early November 2016, increases our confidence in our assessments of Russian motivations and goals.
  • Moscow’s influence campaign followed a Russian messaging strategy that blends covert intelligence operations—such as cyber activity—with overt efforts by Russian Government agencies, state-funded media, third-party intermediaries, and paid social media users or “trolls.” Russia, like its Soviet predecessor, has a history of conducting covert influence campaigns focused on US presidential elections that have used intelligence officers and agents and press placements to disparage candidates perceived as hostile to the Kremlin.
  • Russia’s intelligence services conducted cyber operations against targets associated with the 2016 US presidential election, including targets associated with both major US political parties.
  • We assess with high confidence that Russian military intelligence (General Staff Main Intelligence Directorate or GRU) used the Guccifer 2.0 persona and DCLeaks.com to release US victim data obtained in cyber operations publicly and in exclusives to media outlets and relayed material to WikiLeaks.
  • Russian intelligence obtained and maintained access to elements of multiple US state or local electoral boards. DHS assesses that the types of systems Russian actors targeted or compromised were not involved in vote tallying.
  • Russia’s state-run propaganda machine contributed to the influence campaign by serving as a platform for Kremlin messaging to Russian and international audiences.
  • We assess Moscow will apply lessons learned from its Putin-ordered campaign aimed at the US presidential election to future influence efforts worldwide, including against US allies and their election processes.

Or, as some have stated, just a regurgitation of already existing opinions and absolutely zero facts.

Some more highlights:

  • Moscow’s influence campaign followed a Russian messaging strategy that blends covert intelligence operations—such as cyber activity—with overt efforts by Russian Government agencies, state-funded media, third-party intermediaries, and paid social media users or “trolls.”
  • We assess Russian intelligence services collected against the US primary campaigns, think tanks, and lobbying groups they viewed as likely to shape future US policies. In July 2015, Russian intelligence gained access to Democratic National Committee (DNC) networks and maintained that access until at least June 2016.
  • Russian Propaganda Efforts. Russia’s state-run propaganda machine—comprised of its domestic media apparatus, outlets targeting global audiences such as RT and Sputnik, and a network of quasi-government trolls—contributed to the influence campaign by serving as a platform for Kremlin messaging to Russian and international audiences. State-owned Russian media made increasingly favorable comments about President-elect Trump as the 2016 US general and primary election campaigns progressed while consistently offering negative coverage of Secretary Clinton.

Meanwhile, in Russia:

 

There is much more in the full report below, although unfortunately, no actual proof (link)

 

end

The TIC report: the trade deficit increased because of the high USA dollar.  Exports fell because of the high dollar while imports rose due to the same factor (courtesy TIC/zerohedge)

International Trade Balance Widened in November

January 6, 2017

The U.S. international trade deficit expanded in November to $45.2 billion, up from $42.6 billion in October, according to the U.S. Census Bureau of Economic Analysis. The expansion reflected a $0.4 billion decrease in exports along with a $2.4 billion increase in imports.

The goods deficit increased $3.4 billion to $66.6 billion, while the services surplus rose $0.5 billion to $21.4 billion.

Exports of goods fell $0.7 billion to $122.4 billion in November, driven by decreases in capital goods. Exports of capital goods fell by $1.8 billion, largely due to a $1.3 billion decrease in civilian aircraft exports. Exports of services increased $0.3 billion to $63.5 billion.

Imports of goods increased $2.7 billion to $189.0 billion, mostly due to an increase in industrial supplies and materials, which rose by $2.2 billion. Imports of services decreased $0.3 billion to $42.1 billion in November.

-END-

 

 

 

Dave Kranzler reports on a true state of affairs with respect to the USA auto industry, the restaurant industry and on the consumer.

This should pour gasoline on the real jobs report issued today

(courtesy Dave Kranzler/IRD)

Auto Sales: The Fake Economic News Bubble January 6, 2017Financial Markets, Market Manipulation, U.S. Economy,, ,

The headlines are reporting that auto sales in December hit a record, when looked at on a “seasonally adjusted annualized rate” basis.  No one questions the validity of the seasonal adjustments.   The average news consumer sees or hears the headline word-byte/soundbyte and that becomes the truth.   Fake economic news is another form of Establishment propaganda:   seduce the populace into believing what you want them to believe rather than presenting the truth.  It’s Jim Sinclair’s “MOPE:”  Management of Perception Economics.”

Along with the geopolitical and domestic political fake news epidemic is an epidemic in economic fake news.  Collectively it’s a “fake news bubble,”  with one of the highly insidious consequences of this bubble being the messy abortion otherwise known as the “Presidential election.”

Turning to the auto sales fake news, based on the SAAR estimates, automobile sales allegedly hit a selling rate of 18.2 million units in December.  But seasonal adjustments notwithstanding the facts, does the data fit the facts of the related areas of consumer spending?   By this I mean restaurant and retail sales.

Though not reported yet for December, restaurant same store sales declined 1.3% in November from October and dropped 3.3% from November 2015.  It was the ninth consecutive month of negative same-store sales and the worst decline since July.  Perhaps with constrained disposable income, consumers cut out restaurants to buy holiday gifts?

Looking at what we know about retail sales during the holiday period so far, First Data reported that holiday spending is up 2% vs. last year (through Dec 12).  Last year that number was 2.4%.  So there’s a deceleration in retails sales growth spending.   Cowen research reported that foot traffic at malls was down 10% in December through December 17th.  Granted online sales growth of 9% this holiday season is taking some mall spending away, but online spending represents only 8% of total retail sales spending.  I guess maybe consumers cut back on holiday gifts this year to spend $40,000 (average cost of a new GM car according the auto sales report) on a new car?

Finally, I cover two companies that provide subprime auto loans.  Both companies were reporting declining loan application volume in their last financial reports.  Interest rates spiked up 100 basis points during November and December, which means the cost of auto loans spiked up as well.   Even though auto lenders are reporting lowered loan application volumes, we’re to assume that – despite significantly higher interest rates – consumers decided to skip eating out and buying holiday gifts in order to buy a new car during December?

Does any of this make sense?  To make matters less believable and uglier, GM reported that its unsold inventory of cars sitting on dealer lots exploded to 844,942 cars in December, a nearly quarter of a million unit increase over December 2015.  Call me skeptical but I would suggest that a large portion of those cars sitting in dealer lots were counted as sales when the cars left the factory floor.

The likely source of “record” auto sales is in the “seasonal adjustments” that are applied to the data. Moreover, I would suggest that the data itself is suspect.  I would like to see a study that correlates a “sale” with the actual transfer of title to either an auto finance company or to a buyer who paid cash – i.e. tie a “sale” to an actual end-user taking delivery and driving off the lot.  THAT number, based on all of the related supporting evidence as detailed above, is likely a much different (lower) number than what was reported.

 

end

 

Let us wrap up the week with this great offering form Greg Hunter of USAWatchdog

(courtesy Greg Hunter)

Still No Proof of Russia Hacking, Attempt to Delegitimize Trump Win, Audit the Fed

By Greg Hunter’s USAWatchdog.com 

The Senate held hearings with top intelligence chiefs, and there is still no proof that Russia had an influence on the 2016 Presidential Election. Now, the story changes again, and the charge is a third party gave DNC emails to Wiki Leaks.  James Clapper, the Director of National Intelligence, says they do have evidence.  The problem with Clapper is credibility.  He committed perjury and lied to Congress about NSA spying back in 2013.

Meanwhile, the founder of Wiki Leaks, Julian Assange, said in a fresh interview that his source was “NOT the Russians.” Assange has made this claim repeatedly, and his group has a pristine record of releasing authentic documents that reveal what is going on behind the scenes in government.  Assange also says, “Obama is trying to say that President-elect Trump is not a legitimate president.”

Many think the elites are going to crash the economy and blame it on Donald Trump. Trump may turn the tables and put blame squarely where it belongs, and that is on the Federal Reserve.  Senator Rand Paul is introducing a Bill to Audit the Fed, and Senator Paul says it has the backing of President-elect Trump.

Join Greg Hunter as he gives his take on the most important stories of the past week.

After the Wrap-Up:

Bill Holter of JSMineset.com will be the Early Sunday Release. Holter predicts this will be the “Year of the Truth Bombs.”

end

Well that about does  it for the week

Gold/silver equity shares rose late in the day as the bankers tried to cover their shorts.  We thus should see a very positive day for gold/silver on Monday.

I will see you Monday night

Harvey


JAN 5/Chaos in China as overnight lending rises to 80%/offshore yuan rises to 6.83 killing many shorts/Trump threatens Toyoto to build their plant in the USA and not in Mexico to avoid the border tax/Panic in Mexico as the Peso plummets to 21.44 to ...

Thu, 01/05/2017 - 19:36

Gold at (1:30 am est) $1179.70 UP $15.90

silver  at $16.58:  UP 8 cents

Access market prices:

Gold: $1180.40

Silver: $16.58

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

THURSDAY gold fix Shanghai

Shanghai morning fix Jan 5/17 (10:15 pm est last night): $  1188.91

NY ACCESS PRICE: $1740.25 (AT THE EXACT SAME TIME)/premium $14.66

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1195.33

NY ACCESS PRICE: $1177.25 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $18.08

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 5/2017: 5:30 am est:  $.1173.05   (NY: same time:  $1173.35    5:30AM)

London Second fix Jan 5.2017: 10 am est:  $1176.80 (NY same time: $1176.80  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  13 NOTICE(S) FOR 1300 OZ.  TOTAL NOTICES SO FAR: 1023 FOR 102,300 OZ    (3.1819 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 110 NOTICE(s) FOR 550,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 307 FOR 1,535,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest ROSE by 553  contracts UP to 164,365 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .821 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

FOR THE JANUARY FRONT MONTH IN SILVER:  110 NOTICES FILED FOR 550,000  OZ.

In gold, the total comex gold FELL BY 1065 contracts DESPITE THE RISE IN  THE PRICE GOLD ($3.40 with YESTERDAY’S trading ). WE MUST HAVE HAD SHORT COVERING.The total gold OI stands at 423,608 contracts.

we had 13 notice(s) filed upon for 1300 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no  changes in tonnes of gold at the GLD

Inventory rests tonight: 813.87 tonnes

.

SLV

we had no changes in silver into the SLV

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver ROSE by 553 contracts UP to 164,305 AS SILVER ROSE by  $0.15 with YESTERDAY’S trading. The gold open interest FELL by 1,065 contracts DOWN to 423,608 DESPITE THE FACT THAT THE  PRICE OF GOLD ROSE BY $3.40 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) FRBNY report on earmarked gold movement

(Harvey)

3. ASIAN AFFAIRS i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 6.22 POINTS OR 0.21%/ /Hang Sang closed UP 322.22 OR 1.46%. The Nikkei closed UP 230.90 POINTS OR 1.23% /Australia’s all ordinaires  CLOSED UP 0.29%/Chinese yuan (ONSHORE) closed WELL UP at 6.8920/Oil ROSE to 53.75 dollars per barrel for WTI and 56.89 for Brent. Stocks in Europe: ALL IN THE GREEN EXCEPT PARIS Offshore yuan trades  6.83660 yuan to the dollar vs 6.8920  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES / REPORT ON JAPAN  SOUTH KOREA NORTH KOREA AND CHINA 3a)THAILAND/SOUTH KOREA

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)Wednesday night/9 pm est

This is nuts:  Overnight lending rates between banks skyrockets to 45%. And now Bitcoin is trading higher than gold:  Bitcoin $1252.00 usa/gold 1172.usa. Offshore yuan 6.8870 as the shorts are getting crushed!

( zero hedge)

ii)Thursday morning

The interbank lending rate between banks rose to 80% and the USA/CNH lowered (yuan rose) to 6.83.  No doubt that this will stem the outflow of dollars temporarily.  However China has to worry about the Donald taking control of uSA on January 20 and he will also use his wrath against China

(courtesy zero hedge)

iii)With the Chinese authorities stating that they were going to crack down on cryptocurrencies like Bitcoin, in an attempt to stop the outflow the dollars, finally we see Bitcoin collapse in price down 31% to $893.00 usa.  The true currency, gold continues to rise:

( zero hedge)

iv)This is what happens when you try and grow your economy by 7% per year.  The steel mills etc are running at full blast despite poor global demand.  This causes poor air.  Just look at the following story where a cruise ship could not dock in Beijing because they had no visibility

( zero hedge)

4 EUROPEAN AFFAIRS

Now we have Italy’s Grillo slamming mainstream media for fake news

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)Mexico is beginning to panic as they now believe that Trump will be true to his word;

( zero hedge)

ii)Next on the list, Donald tells Toyota not to build a plant in Mexico or face a huge border tax.  More woes for Mexico

(courtesy zero hedge) iii)Mexico now out of control as looting and rioting are on the streets in Mexico due to the huge 20% gas hike.( zero hedge)

7. OIL ISSUES

i)DOE reports huge inventory build and down goes oil

( zero hedge)

ii)Strange:  crude jumps on a report that the Saudi are fully impleminting their OPEC output cut

( zero hedge) 8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS

i)Brought this to your attention yesterday but it is worth repeating.  Trump will push for the audit of the Fed and then we can see what the crooks have been doing behind the curtain

( Shroeder/The Hill/GATA)

ii)Saville has been anti gold for decades

( Chris Powell/GATA)

iii)The following bullion star infographic highlights the fractional gold reserve banking system orchestrated by the gold ETF’s.  This is what I have been harping on for years:

( Ronan Manly/GATA)

10.USA STORIES

i)The following commentary is an essential reading to all.  You must read this to understand what is going on.  Five major uSA banks have mainly underwritten over 2 trillion USA credit derivatives on sovereign Europe and its banks. A failure by a European bank like Banco Monte dei Paschi de Sienna and Unicredit will bring the USA financial system:

( PAM AND RUSS MARTENS/WALL STREET ON PARADE)

ii)Just take a look at what the doorknobs are doing in Philadelphia:  a huge tax on soda.  It heightens their bill dramatically!

( Jim Quinn/BurningPlatform)

endiii)Now we see that the Russian hacking story has changed again.  Now the media is suggesting that an intermediary sent the emails to Wikileaks

( zero hedge)

iv)Now Donald is going to attack the merger plan with Time Warner and A T and T

( zero hedge) Federal Reserve Bank of New York: Earmarked gold movements

December report:

Last Oct/2016 we had 7,841 million dollars worth “gold” in inventory at the FRBNY

valued at $42.22 per oz

Last November/2016 we had 7,841 million dollars worth of gold in inventory at FRBNY valued at $42.22 per oz

thus 0 oz moved at $42.22

So far officially, the following has been repatriated to  BuBa from NY:

2013: 5 tonnes

2014: 120 tonnes

2015:  99.5 tonnes

2016: to be officially announced

Their total  quota from NY is scheduled to be 300 tonnes and another 374 tonnes from Paris of which 177 tonnes of gold has officially been sent (Dec 2015) and thus another 197 tonnes to cross the English channel.

Germany has officially 1237 tonnes of gold “stored ” in NY. On conclusion of the repatriation, Paris will have 0 stored there.

end

Let us head over to the comex:

The total gold comex open interest FELL BY 1,065 CONTRACTS DOWN to an OI level of 423,608 DESPITE THE FACT THAT THE  PRICE OF GOLD ROSE $3.40 with YESTERDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a LOSS of 861 contracts DOWN to 153.  We had 875 notices filed so we GAINED 14 contracts or AN ADDITIONAL 1400 oz WILL STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 5,083 contracts DOWN to 275,537. March had a gain of 80 contracts as it’s OI is now 196.  We had considerable short covering yesterday as the bankers saw the writing on the wall.

We had 13 notice(s) filed upon today for 1300 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI ROSE by 553 contracts FROM  163,812 UP TO 164,365 AS the price of silver ROSE BY $0.15 with YESTERDAY’S trading.  We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI ROSE by 2 contracts RISING TO  466. We had 1 notice(s) filed on yesterday so we GAINED 3 or an additional 15,000 oz will stand for delivery.  The next non active month of February saw the OI rise by 1 contract(s) up to 164.

The next big active delivery month is March and here the OI rose by 208 contracts UP to 133,789 contracts.

We had 110 notice(s) filed for 550,000 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 277,631  contracts which is very good.

Yesterday’s confirmed volume was 202,711 contracts  which is very good

Initial standings for january  Jan 5/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    4,147.35 HSBC 129 kilobars Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz    4147.35 oz JPMorgan 129 kilobars No of oz served (contracts) today   13 notice(s) 1300 oz No of oz to be served (notices) 140 contracts 14,000 oz Total monthly oz gold served (contracts) so far this month 1023 notices 102,300 oz 3.1819 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,539,015.7 oz Today we HAD 2 kilobar transactions/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1  customer deposit(s): Into JPMorgan:  4147.35 oz 129 kilobars total customer deposits; 4147.35 oz We had 1 customer withdrawal(s) i) Out of HSBC: 4147.3 5 oz total customer withdrawal: 4147.35 oz We had 0  adjustment(s) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 13 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1023) x 100 oz or 101,000 oz, to which we add the difference between the open interest for the front month of JANUARY (1153 contracts) minus the number of notices served upon today (13) x 100 oz per contract equals 116,300 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1023) x 100 oz  or ounces + {OI for the front month (153) minus the number of  notices served upon today (13) x 100 oz which equals 116,300 oz standing in this non active delivery month of JANUARY  (3.6174 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.5738 tonnes total for the 13 months;  225.975 tonnes average 17.382 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,561,744.896 or 48.556 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,117,885.513 or 283.60 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.60 tonnes for a  loss of 19  tonnes over that period.  Since August 8/2016 we have lost 70 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 4 1/2 MONTHS  70 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 5. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  1,552,084.880 0z Scotia CNT Brinks Deposits to the Dealer Inventory   157,596.400 OZ CNT Deposits to the Customer Inventory  1,221,349.550 oz CNT JPM Scotia No of oz served today (contracts) 110 CONTRACT(S) (550,000 OZ) No of oz to be served (notices) 356 contracts (1,780,000  oz) Total monthly oz silver served (contracts) 307 contracts (1,535,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  6,764,118.1 oz  END today, we had 1 deposit(s) into the dealer account:  i) Into CNT: 157,596.400 oz total dealer deposit: 157,596.400 oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 3 customer withdrawal(s): i) Out of CNT:  690,951.310 oz ii) Out of Scotia:  606,264.130 oz iii) Out of Brinks: 245,869.440 TOTAL CUSTOMER WITHDRAWALS: 1,552,084.880 oz  we had 3 customer deposit(s):  i) Into CNT:  14,581.5000  oz ii) Into JPMorgan:  606,264.130 oz iii) Into Scotia:  600,503.920 oz total customer deposits;  1,221,349.550   oz      we had 1  adjustment(s) i) Out of CNT: 373,959.35 oz was adjusted out of the customer and this landed into the dealer account of CNT: The total number of notices filed today for the JANUARY. contract month is represented by 110 contract(s) for 550,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  307 x 5,000 oz  = 1,535,000 oz to which we add the difference between the open interest for the front month of JAN (466) and the number of notices served upon today (110) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JANUARY contract month:  307(notices served so far)x 5000 oz +(466) OI for front month of JAN. ) -number of notices served upon today (110)x 5000 oz  equals  3,315,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We gained 3 contracts or an additional 15,000 oz will not stand. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 66,229 which is excellent YESTERDAY’S  confirmed volume was 54,660 contracts  which is very good.   Total dealer silver:  28.582 million (close to record low inventory   Total number of dealer and customer silver:   181.730 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD Jan 5/no change in gold inventory at the GLD/inventory rests at 813.87 tonnes Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes Dec 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI) DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes. Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 5/2017/ Inventory rests tonight at 813.87 tonnes *IN LAST 62 TRADING DAYS: 135.94 TONNES REMOVED FROM THE GLD *LAST 9 TRADING DAYS: 10.67 TONNES HAVE LEFT

end

Now the SLV Inventory Jan 5/no changes in inventory at the SLV/Inventory rests at 341.199 million oz Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/ Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/ Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/ . Jan 5.2017: Inventory 341.199  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.0 percent to NAV usa funds and Negative 7.8% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.9% Percentage of fund in silver:38.8% cash .+0.3%( jan 5/2017)  . 2. Sprott silver fund (PSLV): Premium RISES to +.58%!!!! NAV (Jan 5/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.54% to NAV  ( Jan 5/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.58% /Sprott physical gold trust is back into NEGATIVE territory at -0.54%/Central fund of Canada’s is still in jail.  

end

Major gold/silver stories for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE

2017 – The Year of Banana Skin By Stephen FloodJanuary 4, 20170 Comments http://www.goldcore.com/us/gold-blog/2017-year-banana-skin/

2016 is behind us and we have started a new year with great gusto and no small measure of anxiety. The potential for unknown unknowns turning into banana skins is very high. Right now we are looking at:

  • The broad US stock markets & the UK FTSE are breaking new highs
  • Investment flows are rotating from Bonds to Equities on the back of a Trump driven reflation outlook
  • Donald Trump is President Elect
  • The Fed has initiated a long anticipated rise in interest rates
  • Global Debt levels as a percentage of GDP has never been higher
  • Britain is going through the painful process of divorcing itself from the EU,
  • France is facing elections where far right and and anti EU parties may take power
  • Italy’s banking system is in crisis with the weight of EUR 300 Billion in bad debts
  • Germany’s Merkel is losing core support and the Anti – EU forces are gathering power
  • China is being buffeted by global protectionist rhetoric and lacklustre domestic demand, can she manage the domestic discontented?

What could possible go wrong?

Many of these changes have their genesis in misguided monetary policy, specifically those pursued by the US Fed in the 1990’s and since, with micro management of economies via stimulus, artificial interest rates and the Pandora’s box that is Quantitative Easing. The risk of the “2 a.m. tweet” where policy is poorly stated or misunderstood is very real. What is of real concern is that many of the themes we identify are based on developments that are very new and lack much historic context, especially when one considers the scale of the economies that may be effected.

2017 market performance will be determined by a number of themes.

  • Can Trump deliver reflation or are the markets set to be disappointed?
    Trump has been elected on with a mandate to shake up the establishment, to protect US jobs and to focus internally. The question is can someone with no political experience, significant conflicts of interest, despised by the right and liberal factions, within the US political establishment, deliver? The short answer is that no one knows, but so far he has proven all is naysayers wrong and you would be a fool to bet against his form. The USD dollar has strengthened to its highest level since 1984 and this will certainly  hurt US companies’ capacity to earn from foreign operations and thus suppress GDP.
  • Can the Fed normalise interest rates?
    The Fed has taken that first tentative step and started its long awaited tightening cycle. The concern is with debt levels at such elevated levels, can institutions wishing to refinance do so at newer higher rates and what will this do to debt affordability?
  • Will Britain and the EU agree an amicable divorce or will it be a nasty drawn-out affair? The EU has appointed a French bureaucrat as its chief negotiator who is seen as a federalist and someone who maybe likely to seek to punish Britain for leaving. On the British side Britain’s ambassador to the EU resigned yesterday. His resignation note hinted at “muddled” thinking within the British camp.

Outlook for Gold

Positive on continued strong 2016 demand. In 2016 GoldCore experienced significant increases in our bullion storage programme. Clients moved cash out of banks which they believe may be subject to bail-in risks as governments and regulator capitalise the banking systems with depositors cash deposits. Clients also sold gold proxy investments such as Gold ETF funds and Digital gold holdings where clients are forced to hold unallocated and unsegregated gold holdings in favour of GoldCore Segregated and Allocated gold storage.

We do not see a change in this trend and with strong account openings and a massive increase in interest from corporate treasurers seeking to diversify bank risk, we are very bullish for gold demand in the year ahead.

Allocations for gold should be between 5% and 20% depending on a clients risk appetite. Significant systemic risk is very real and can materialise from a number of sectors. Bank deposits remain at very real risk and diversification is advisable.

 

 

END

 

the crook Jon Corzine settles with the CFTC over the MF Global scandal

(courtesy zero hedge)

 

Jon Corzine Settles Over MF Global Collapse: Agrees To Lifetime Ban, $5 Million Fine

Three years ago, in February 2013, traders were outraged upon learning that the National Futures Association refused to ban former MF Global chief Jon Corzine from trading with other people’s money, rejecting a motion brought before that body’s board of directors to do so. The decision was a blow to a vocal group within the commodities trading world who – noting that Corzine has not been held accountable by the government for alleged crimes – wanted to see him publicly upbraided by his peers in the market.

All that changed today when Corzine agreed to pay a $5 million civil fine to settle a lawsuit by the U.S. Commodity Futures Trading Commission over the 2011 collapse of the former New Jersey governor’s brokerage, MF Global Holdings. More importantly, under the settlement disclosed on Thursday, Corzine also agreed to be barred for life and never again work for a futures commission merchant, or register with the CFTC in any capacity.

Which means Corzine’s dreams of running a hedge funds are now over.

“I am pleased to have reached this settlement to resolve the CFTC’s claims,” Corzine, 70, said in a statement. “As the CEO of MF Global in 2011, I have accepted responsibility for its failure, and I deeply regret the impact it had on customers, employees, shareholders and others.”

The CFTC alleged Corzine failed to fix inadequate controls that led to $1 billion in missing customer funds and knew of the New York-based firm’s extreme cash shortage. The agency also said he didn’t ask questions about the origins of funds used to make transfers that he had ordered. Corzine previously said he never directed the misuse of customer funds to help his firm stay afloat as it dealt with margin calls on bad bets in 2011 as Bloomberg notes. He testified to Congress that he asked that overdrafts with JPMorgan Chase & Co. be corrected. In 2013, MF Global’s brokerage unit was fined $100 million by the CFTC and admitted regulatory failures.

Edith O’Brien, MF Global’s former assistant treasurer, agreed to pay a $500,000 civil fine and accept an 18-month ban to settle related claims.

Thursday’s settlement resolves the last piece of litigation against Corzine stemming from MF Global’s Oct. 31, 2011 bankruptcy.

 

 

end

 

Brought this to your attention yesterday but it is worth repeating.  Trump will push for the audit of the Fed and then we can see what the crooks have been doing behind the curtain

(courtesy Shroeder/The Hill/GATA)

‘Audit the Fed’ bill gets new push under Trump

Submitted by cpowell on Wed, 2017-01-04 19:55. Section:

By Peter Schroeder
The Hill, Washington, D.C.
Wednesday, January 4, 2017

Controversial legislation to subject the Federal Reserve’s monetary policy powers to outside scrutiny is getting new life in Washington.

Rep. Thomas Massie, R-Ky., and Sen. Rand Paul, R-Ky., have re-introduced legislation to “audit the Fed” after a similar effort stalled in the last Congress.

But such a proposal, which has been vocally opposed by Federal Reserve Chairwoman Janet Yellen, may face its best odds ever of becoming law. Both chambers are controlled by Republicans long critical of the Fed’s policies, and President-elect Donald Trump has heaped scorn on the central bank since the beginning of his presidential campaign.

Paul specifically mentioned Trump in a statement about the bill today, making clear the measure’s proponents believe they have an ally in their cause coming to the White House. …

… For the remainder of the report:

http://thehill.com/policy/finance/312662-audit-the-fed-bill-gets-new-pus…

 

 

END

 

Saville has been anti gold for decades

(courtesy Chris Powell/GATA)

Saville doesn’t get it: Rig the gold price and you rig all prices

Submitted by cpowell on Wed, 2017-01-04 20:47. Section:

3:49p ET Wednesday, January 4, 2017

Dear Friend of GATA and Gold:

Manipulation of the gold market by investment banks, technical analyst Steve Saville writes this week in the Speculative Investor, is not necessarily long-term price suppression:

http://tsi-blog.com/2017/01/market-manipulation-is-not-price-suppression…

Yes, GATA strives to distinguish between market activity by investment banks and market activity by governments and central banks. GATA is much more interested in the latter activity.

Yet all the investment banks targeted for gold and silver market rigging by the antitrust lawsuit in federal court in New York enjoy the U.S. Federal Reserve’s coveted classification of primary dealer in U.S. government securities:

http://www.gata.org/node/17037

And while the transcripts disgorged by Deutsche Bank in that lawsuit, showing trader collusion in gold market rigging by all the defendant banks, have been public for many weeks now, the Fed has taken no action against the banks. It seems as if the Fed doesn’t mind if its primary dealers manipulate the gold market as long as the manipulation is, as the transcripts suggest, primarily downward. This at least tacit approval would be even more probable if the investment banks lease gold from governments and central banks, making the investment banks effectively the agents of governments and central banks in the gold market.

Saville expresses no curiosity about these connections.

But Saville misses even more when he argues that gold price suppression over a long period is disproved by “the close relationship over the past three years between the U.S. dollar gold price and the bond/dollar ratio (the T-bond price divided by the dollar index).” For even Saville might admit that governments are intervening around the clock in the bond and currency markets. Making such interventions stick requires preventing gold from giving the markets contrary signals, signals that could put bond and currency prices in question.

So why wouldn’t governments intervene surreptitiously in the gold market too to protect their bond and currency market interventions?

In any case no one’s charts or philosophy can contradict the documentation of gold price suppression by governments and central banks that is summarized here —

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

— documentation that Saville and other deniers of gold price suppression never bother to examine and dispute. Maybe one may argue over why governments and central banks intervene surreptitiously in the gold market, but the fact of that intervention right up to the present day is well established.

Indeed, Saville seems determined to abandon the subject entirely before being forced to examine the documentation. He writes: “You are allowed to make money in the financial markets by doing something other than buying or owning gold. Therefore, if you truly believe that a powerful group has both the means and the motive to suppress the gold price, then the solution is obvious: Don’t buy gold.”

The problem is that gold, an international reserve currency, is powerfully connected to all other markets. Manipulate the gold price and you manipulate all currency values. Manipulate all currency values and you manipulate the price of everything valued in currencies. That covers just about everything except maybe your dog’s affections.

Thus the choice is far more profound than Saville’s framing of it — whether to buy gold. It is whether to aspire to free and transparent markets or just try to trade on the side of the governments manipulating markets — that is, whether to accept totalitarianism and totalitarians, who may be grateful for the camouflage offered to them by Saville and his charts.

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

 

 

END

 

The following bullion star infographic highlights the fractional gold reserve banking system orchestrated by the gold ETF’s.  This is what I have been harping on for years:

(courtesy Ronan Manly/GATA)

Bullion Star ‘infographic’ on gold ETFs shows how they undermine the gold price

Submitted by cpowell on Wed, 2017-01-04 21:03. Section:

4:03p ET Wednesday, January 4, 2017

Dear Friend of GATA and Gold:

Bullion Star today has posted an interesting “infographic” about exchange-traded gold funds and its main point seems to be to remind investors that when they buy shares in gold ETFs, they are facilitating the fractional-reserve gold banking system — that is, facilitating the artificial inflation of the gold supply, making gold seem more plentiful than it is and thus undermining the gold price. The Bullion Star “infographic” is here:

https://www.bullionstar.com/blogs/bullionstar/infographic-gold-etf-mecha…

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

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 6.8920(HUGE REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY  TO 6.83660 / Shanghai bourse CLOSED UP 6.62 POINTS OR 0.21%   / HANG SANG CLOSED UP 322.22 OR 1.46% 

2. Nikkei closed UP 230.90 POINTS OR 1.23%  /USA: YEN FALLS TO 116.61

3. Europe stocks opened ALL IN THE GREEN EXCEPT PARIS CAC      ( /USA dollar index FALLS TO  102.33/Euro UP to 1.0500

3b Japan 10 year bond yield: FALLS TO    +.060%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 116.61/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  53.75  and Brent: 56.89

3f Gold UP/Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.296%/Italian 10 yr bond yield UP 11  full basis points to 1.97%    

3j Greek 10 year bond yield FALLS to  : 6.78%   

3k Gold at $1173.45/silver $16.58(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   80/100 in  roubles/dollar) 59.57-

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

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT 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 116.61 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0196 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0707 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.296%

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

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

4. USA 10 year treasury bond at 2.437% early this morning. Thirty year rate  at 3.037% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Global Stocks Rise To 1.5 Year High After Chinese Intervention Halts Dollar Rally

Asian stocks rose, led by Hong Kong, while European shares and U.S. equity-index futures are little changed. Euro, yen climb as the dollar posted an unexpected loss following some serious fireworks out of China, which intervened in funding market to crush offshore Yuan shorts.

Top news stories include Macy’s and Kohl’s cutting their outlook after weak holiday season, Deutsche Bank exploring lending money to PE firms buying distressed loans, Apple planning to invest $1b in SoftBank’s new technology fund.

Declines in the USD outweighed major peers in the past week as traders interpreted minutes from the last Fed meeting to indicate a slower path to interest-rate increases, boosting demand for bonds and assets of developing nations. The offshore yuan surged the most on record after the government encouraged companies to stock up on the currency before the week of lunar New Year celebrations.

Gold climbed to the highest in a month.

As Bloomberg notes, the growing backlash against the dollar coincides with more-sober outlooks on whether President-elect Donald Trump’s plans to boost fiscal spending will achieve rapid reflation. The Fed reiterated that a “gradual” pace of rate hikes over the coming years would likely remain appropriate, damping speculation officials will step in to counter inflation with higher rates. Stocks have rallied with the dollar, while Treasuries have plunged since Trump’s election.

While the Dow continues to flirt with 20,000, world stocks hit their highest level since mid-2015 on Thursday after strong Chinese data added to the optimism about global growth and inflation that has been driving markets since the start of the new year. The MSCI world equity index was up 0.4% at one stage to hit its highest level since July 2015. At that level it was up over 1.5 percent for the year so far. The index was pushed up by Asian shares, which rose for the eighth consecutive day on Thursday .

Growth in China’s services sector accelerated to a 17-month high in December, a private sector survey showed, adding to upbeat factory and service sector surveys out of the United States, Europe and Asia released this week.

In addition, minutes from the U.S. Federal Reserve’s December meeting showed that many of the central bank’s policy makers are expecting a pick-up in economic growth and inflation in the world’s biggest economy as a result of fiscal, regulatory or other policies, although most expressed concern that the pace of Trump fiscal stimuli could end up overpowering the economy, and pushing inflation (and the dollar) too high.

“Recent economic data is pretty good so markets are in risk-on mode overall,” said Yukio Ishizuki, currency strategist at Daiwa Securities. “But U.S. bond yields are being capped so the dollar is losing the driver behind its rally.”

Stocks and bond yields have been rising ever since the election of Republican Donald Trump as U.S. president on expectations that fiscal stimulus will boost growth and inflation. Trump’s inauguration takes place on Jan. 20. “The FOMC’s minutes to its Dec meeting released post yesterday’s European close could best be characterized as perhaps tilted toward the hawkish side but tempered by a heavy dose of uncertainty,” said Rabobank strategist Richard McGuire. “All the policymakers emphasized the uncertainty of the outlook, reminding investors that the outlook is more nuanced than the market seems to think,” he said.

With just two weeks to go before Trump takes over, investors and policymakers are waiting to see if his actions match his rhetoric and if his policies will be approved by Republican lawmakers. The dollar extended its losses on Thursday, falling 0.42% against a basket of six major currencies – though still near the 14-year high hit on Tuesday – following losses against the Chinese yuan, which soared after Beijing stepped into both its onshore and offshore yuan markets to shore up the faltering yuan for a second day on Wednesday, sparking speculation that it wants a firm grip on the currency ahead of Trump’s inauguration.

“In the past two months it’s really been the U.S. versus the rest of the world,” said Simon Quijano-Evans, a strategist at Legal & General Group Plc in London. “Maybe there will be some wind taken out of the sails. As we move towards the end of January and the lunar new year holidays, the Chinese authorities are being overly cautious to prevent a rout.”

Maybe, but not today as the DJIA is about to try once again to cross the long-awaited 20,000 barrier.

* * *

Markets Snapshot

  • S&P 500 futures down less than 0.1% to 2264
  • Stoxx 600 down less than 0.1% to 365
  • FTSE 100 down less than 0.1% to 7186
  • DAX down 0.2% to 11560
  • German 10Yr yield up less than 1bp to 0.28%
  • Italian 10Yr yield up 4bps to 1.91%
  • Spanish 10Yr yield up 5bps to 1.48%
  • S&P GSCI Index down less than 0.1% to 396
  • MSCI Asia Pacific up 1% to 138
  • Nikkei 225 down 0.4% to 19521
  • Hang Seng up 1.5% to 22457
  • Shanghai Composite up 0.2% to 3165
  • S&P/ASX 200 up 0.3% to 5753
  • US 10-yr yield down less than 1bp to 2.43%
  • Dollar Index down 0.42% to 102.27
  • WTI Crude futures down less than 0.1% to $53.25
  • Brent Futures down less than 0.1% to $56.41
  • Gold spot up 0.8% to $1,173
  • Silver spot up 1% to $16.60

Global Headline News

  • Macy’s Declines After Reducing Outlook, Moving to Cut 6,200 Jobs: Holiday sales came in at low end of company’s projections
  • Kohl’s Tumbles After Cutting Its Fiscal 2016 Profit Forecast: ‘Sales were volatile throughout the holiday season,’ CEO says
  • Deutsche Bank Said to Eye Private Equity Help in Settlement: Bank looking to make loans to PE funds buying distressed loans
  • Apple to Invest $1 Billion in SoftBank Fund to Support Tech: Qualcomm says it also will invest undisclosed amount in fund
  • VW Ordered to Face Investor Suit in U.S. Over Diesel Cheating: Ex-Chairman Winterkorn also loses bid to toss shareholder case
  • Barclays Flags ‘Black Swan Threats’ to Commodities This Year: There is ‘a high likelihood of disruption risk,’ bank says
  • Amazon and Forever 21 Said to Mull Bidding for American Apparel: Troubled retailer filed for second bankruptcy in November

Looking at Asian markets, stocks here traded mostly higher following the upbeat lead from Wall Street where all 3 major indices closed positive with the consumer discretionary sector underpinned by strong auto sales and the DJIA finished within 60 points of the 20,000 level. ASX 200 (+0.3%) was supported by miners and energy names after a pullback in USD buoyed the commodities complex, while Nikkei 225 (-0.4%) was dampened by a firmer JPY and as the index took a breather from yesterday’s stellar gains. Elsewhere, Hang Seng (+1.5%) outperformed following encouraging Chinese Caixin Services and Composite PMIs, although the Shanghai Comp (+0.2%) lagged amid continuing liquidity concerns and surges in money market rates after the PBoC only conducted a paltry CNY 10bIn open market operation today. Finally, 10-yr JGBs were relatively flat with minimal gains seen amid a slightly cautious tone in Japan, while today’s 10yr JGB auction later also failed to spur demand with the b/c and lowest accepted prices weaker than prior.

Top Asian News

  • Bears Scramble for Yuan as China Chokes Flows, Aids Currency: Offshore yuan set for biggest two-day gain on record
  • Chinese Media Say ‘Big Sticks’ Await Trump If He Seeks Trade War: The Communist Party’s Global Times newspaper writes in an editorial Thursday
  • Philippines’ Duterte Open to Joint Maritime Drills With Russia: Russian ships could exacerbate tensions in South China Sea
  • Xiaomi’s India Sales Pass $1 Billion as Chinese Brands Hold Sway: Shipments grow by almost 150% in 2016
  • JPMorgan Lashing by Indonesia Signals Global Threat to Analysts: More governments are seeking to stifle negative market views

European equities rebounded from some early downside, into rose into mid-morning trade relatively flat (Euro Stoxx 50: +0.1%), with the FTSE 100 reaching fresh record highs and printing above 7200 for the first time. The FTSE 100 benefitted from GBP softness, with material names among the best performers while Homebuilders also led the way higher after Persimmon (+4.8%) reported earnings pre-market. In a similar fashion to equity markets, fixed income has seen the entirety of the opening moves retraced, with Bunds opening around the 163.50 before closing the opening gap to trade around 163.20. Of note, today we are looking out for the potential pricing of the French 50Y, while participants will also be keeping an eye on the quantity of corporate issuance, given the significant slate so far this week. Finally, Italian yields remain in focus with the short end of curve underperforming significantly while the GE/IT 10Y spread back above 160bps.

Top European News

  • U.K. Economy Maintains Solid Growth Momentum as Services Surge: Markit surveys point to 0.5% quarterly economic growth
  • Lansdowne’s $9 Billion Hedge Fund Suffers First Loss Since 2012: Lansdowne’s main hedge fund lost almost 15% in 2016
  • Ericsson Deepens Cisco Tie-Up to Combine Wi-Fi, Mobile Networks: Partnership to broaden Swedish network builder’s offering

In currencies, the offshore yuan surged 0.6 percent to 6.8913 per dollar as of 11:25 a.m. in London after surging 1.4 percent Wednesday, putting it on track for a record two-day gain. The Bloomberg Dollar Index extended losses, declining 0.2 percent, after touching its highest level since its 2004 inception 4.5 percent since Nov. 9. It fell against The euro was little changed at $1.0490. Overall, it has been a  busy session for FX, with the USD finally seeing a little more flexibility after the strong post US election gains seen. In USD/JPY, the pair dropped as low as 115.60, before rebounding 100 pipe higher. Yesterday’s FOMC minutes added to the Dollar pullback, which was largely a function of over-extended levels, but with some Fed members incorporating Trump’s expansionary policy intentions into their forecasts and rate outlook (accordingly), cause for some ‘uncertainty’ to be re-factored into the USD has since taken place. EUR/USD has pushed back through 1.0500 as a result, and with German and EU inflation rises also bolstering. Firmer commodity prices are helping to lift the related FX pairs, with AUD pushing up to fresh highs around .7325-30. NZD has been dragged higher accordingly as we tipped .7000 here also. CAD has been leading the way however, outpacing Oil price gains over the past week or so and reinforcing the resistance seen ahead of 1.3600.

In commodities, crude slipped 0.4% to $53.45 a barrel in New York as investors weighed rising Libyan supply against signs OPEC output began slipping. Gold rose 0.7 percent to the the highest level in almost a month. Aluminum led base metals higher with a 0.7 percent gain. Nickel rose 0.3 percent and zinc was up 0.4 percent.

Looking at the day ahead, the early data print in the US is the ADP employment change reading for last month which should help anchor expectations for tomorrow’s payrolls. Market consensus for the ADP print is currently 175k which compares to 216k in November. Also due out is the latest weekly initial jobless claims reading while the final services and composite PMI’s will also be confirmed. Also of note is  the ISM non-manufacturing reading for last month which will come hot on the heels of the strong manufacturing print earlier this week. Market consensus for this is 56.8. Away from the data we’re due to hear from BoE Chief Economist Andy Haldane this afternoon when he speaks at an event in London.

DB’s Jim Reid concludes the overnight wrap

A quick scan through last night’s FOMC minutes will reveal no mention of President-elect Trump’s name but it’s pretty clear where the debates and discussions at the Fed now lie. In a nutshell “almost all” officials made mention of upside risks to their growth forecasts as a result of prospects for more expansionary fiscal policies while interestingly “about half” of the Fed officials incorporated fiscal policy into their forecasts. The caveat though is that the outlook is distinctly uncertain. Indeed the minutes acknowledged that “participants emphasized their considerable uncertainty about the timing, size and composition of any future fiscal and other economic policy initiatives as well as about how those policies might affect aggregate demand and supply”. Officials also acknowledged that this “made it more challenging to communicate to the public about the likely path of the federal funds rate”.

The minutes also acknowledged that the staff’s forecasts for higher real GDP growth over the next few years “were substantially counterbalanced by the restraint from the higher assumed paths for longer-term interest rates and the foreign exchange value of the dollar”. Away from Trump the rest of the minutes didn’t offer a whole lot of new information with officials seemingly a bit more confident about the balance of risks. That said there was a subtle change to the number of officials concerned about a sizable undershooting of the longerrun normal unemployment rate from “a few members” in November to “several members” in December.

So the overall tone fits in with Yellen’s post-meeting statement last month where she said that the Fed is “operating under a cloud of uncertainty at the moment”. So every Trump move will continue to be closely watched and scrutinized. With that in mind it’s worth circling the 11th January in your diary as it’s when Trump is due to hold a ‘general news conference’. It’s his first since the election victory and comes just 9 days before his official inauguration so it should be a closely watched event. Evaluating Trump’s administration appointments in the mean time will continue to be a focus for now though. One which stands out is the appointment of Robert Lighthizer as his new trade representative. Lighthizer is seen as a longstanding advocate of greater protectionism and was formerly a trade official under Ronald Reagan. The WSJ also notes that Lighthizer has three decades of experience arguing for punitive tariffs on overseas companies. So it appears that the appointment confirms what is likely to be a major shift in  trade policy under a Trump presidency.

Meanwhile markets turned a fairly blind eye to the minutes yesterday. 10y Treasury yields were hovering around 2.450% leading into the minutes before closing the day at 2.440% and 0.5bps lower on the day. 2y yields finished flat at 1.216% while the USD index, which had struggled as the session wore on, closed -0.67% but again with little reaction post the minutes. It’s been nothing but good news for risk assets in the US so far this year though. The S&P 500 finished +0.57% and so taking the 2017 YTD gain to +1.43%. That’s the best start to the year since 2013. Consumer names were a big driver yesterday although it’s worth noting that both Macy’s and Kohl’s tumbled after market (by -8% and -9% respectively) after both lowered earnings guidance following softer holiday season sales. The MSCI EM equity index also returned +0.35% and has now gained in 7 of the last 8 sessions. The rally in Europe had earlier stalled however with the Stoxx 600 closing down a fairly modest -0.12%. Elsewhere credit has also gotten off to a flier, particularly across the pond and yesterday we saw CDX IG tighten just over 2bps to take the index to the tightest level since May 2015. The new issue market hasn’t taken any time to warm up either with Bloomberg reporting that US IG primary issuance is over $45bn in the first two trading days of the year already and so overtaking that for the first week in 2016 and 2015.

As we refresh our screens this morning it’s been a bit of a mixed performance in Asia so far. While the Hang Seng (+1.30%) has risen strongly led by gains for the energy sector, bourses in China are little changed while the Nikkei is -0.24%. The Kospi (-0.09%) is also a shade lower while the ASX (+0.29%) is up a touch. US equity index futures are also slightly in the red. There was also some data in China this morning where the Caixin services PMI was confirmed as rising 0.3pts to 53.4 in December. That’s helped push the composite reading up to 53.5 from 52.9 and to the highest level in 45 months.

Moving on. Away from the minutes, yesterday’s economic data was also generally supportive. In the US we learned that total vehicles sales increased to an annualized rate of 18.3m in December (vs. 17.7m) from 17.8m in the month prior. Over in Europe it was revealed that the estimate of headline Euro area CPI had risen more than expected in December after printing at +1.1% (vs. +1.0% expected) from +0.6% in November. That puts headline inflation at the highest level since September 2013 and encouragingly while higher energy prices led, the increase was actually relatively broad based. The core was also up after rising one-tenth to +0.9% yoy. Meanwhile the remaining PMI’s were also out in Europe yesterday. The final composite PMI for the Euro area in December was revised up to 54.4 from 53.9 after the services reading was revised up 0.6pts to 53.7. That is the highest PMI reading since 2011, just beating the 54.3 seen in August and December 2015. Our European economists also noted that at the same time, a number of the sub-indices, including the composite input and output prices and the backlog of orders, were confirmed at new cyclical highs. Across countries the news was broadly positive across the EMU countries while Italy was the relative disappointment with the composite down 0.5pts to 52.9, although this came after a 2.2pt rise in November. Our colleagues go on to say that at 53.8 on average in Q4  the composite PMI was back to in line with its 2015 levels, a year in which Euro area GDP grew on average by 0.5% qoq.

Wrapping up the remaining news yesterday. Over in France National Front presidential candidate Marine Le Pen confirmed that she wanted to remove France from the Euro and also redenominate French  overnment debt in a new national currency. Le Pen confirmed that she wanted “a national currency with the euro as a common currency” and as the FT made mention to, suggests some softening in her views in favour of a looser form of currency sharing rather than a hard return to a national French currency. Meanwhile in the UK, PM Theresa May moved quickly and decisively to replace Sir Ivan Rogers as the UK Ambassador to the EU by appointing Tim Barrow to the role. He was previously the political director of the government’s Foreign and Commonwealth Office.

Looking at the day ahead, the diary is a bit thinner in Europe this morning with the only notable data due out being the remaining December PMI’s in the UK (services and composite) and the PPI print for the Euro area. This afternoon in the US the early data print is the ADP employment change reading for last month which should help anchor expectations for tomorrow’s payrolls. Market consensus for the ADP print is currently 175k which compares to 216k in November. Also due out is the latest weekly initial jobless claims reading while the final services and composite PMI’s will also be confirmed. Also of note is  the ISM non-manufacturing reading for last month which will come hot on the heels of the strong manufacturing print earlier this week. Market consensus for this is 56.8. Away from the data we’re due to hear from BoE Chief Economist Andy Haldane this afternoon when he speaks at an event in London.

end

i)Late  WEDNESDAY night/THURSDAY morning: Shanghai closed UP 6.22 POINTS OR 0.21%/ /Hang Sang closed UP 322.22 OR 1.46%. The Nikkei closed UP 230.90 POINTS OR 1.23% /Australia’s all ordinaires  CLOSED UP 0.29%/Chinese yuan (ONSHORE) closed WELL UP at 6.8920/Oil ROSE to 53.75 dollars per barrel for WTI and 56.89 for Brent. Stocks in Europe: ALL IN THE GREEN EXCEPT PARIS Offshore yuan trades  6.83660 yuan to the dollar vs 6.8920  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

Wednesday night/9 pm est

This is nuts:  Overnight lending rates between banks skyrockets to 45%. And now Bitcoin is trading higher than gold:  Bitcoin $1252.00 usa/gold 1172.usa. Offshore yuan 6.8870 as the shorts are getting crushed!

(courtesy zero hedge)

Bitcoin Explodes Higher As Chinese Interbank Liquidity Freezes; Overnight Yuan Rate Hits 45%

As one veteran trader noted “something is very broken.” After a massive short-squeeze sent the offshore yuan soaring during the US day session, overnight yuan deposit rates have exploded 31.5 percentage points higher to 45% – just shy of the record highs – as China’s interbank liquidity crisis is front-and-center. At the same time, coincidence or not, Bitcoin denominated in yuan has gone vertical, smashing through previous record highs.

Continuing the recent trend of demonstrably withdrawing liquidity, the People’s Bank of China injected a paltry CNY10 billion via seven-day reverse repos and skipped both 14-day and 28-day reverse repos at its open-market operations Thursday, according to traders. The moves resulted in a net drain of CNY140 billion for the day and a whopping CNY435 billion in liquidity at OMMOs so far this week. Yes, nearly half a trillion yuan in liquidity has been withdrawn in just the past week, a time when banks are already scrambling for every spare source of cheap funding.

As a result of this forced drain which was likely orchestrated by the central bank to crush any remaining shorts, and the utter desperation for liquidity, has prompted deposit rates to explode.

And perhaps whatever liquidity there is left is being placed elsewhere.

Smashing higher in the last few hours.

For now the short squeeze efforts of the PBOC are not extending the move in CNH.

end

Thursday morning

The interbank lending rate between banks rose to 80% and the USA/CNH lowered (yuan rose) to 6.83.  No doubt that this will stem the outflow of dollars temporarily.  However China has to worry about the Donald taking control of uSA on January 20 and he will also use his wrath against China

(courtesy zero hedge)

“Incredibly Aggressive” China Crushes Yuan Bears: CNH Surges Most On Record As Deposit Rate Hits 80%

Last night we were amazed to report that with China starting its trading day, the overnight offshore yuan (CNH) deposit rate had exploded 31.5% points higher to 45%, in a move which while freezing interbank liquidity and unleashing havoc to short-term bank funding needs, had the more direct intention of crushing Yuan shorts, by making short holding costs soar through the roof and forcing a short squeeze.

As it turns out, that was just the beginning, because before the night was over, the overnight offshore Yuan deposit would hit a record 80%, while the USDCNH would tumble as low as 6.78, resulting in the biggest 2-day move higher in the offshore Yuan on record, or as Bloomberg reports, “the yuan gained 1% at 2:53 p.m. in Hong Kong, taking its two-day move to 2.3%, the most in data going back to 2010.”

But the one chart everyone is talking about today is that of the overnight CNH deposit rate, which after touching 45% at the start of China trading day, surged to a record 80% just a few hours later…

… while the spread between the offshore and onshore exchange rates widened to the on record. Ultimately, the offshore yuan erased the day’s losses in a sudden move around 1:05 p.m as the premium over the onshore rate widened to 1.2%.

This follows after Chinese policymakers explicitly urged SOE banks to sell foreign currencies, and further “punish” short sellers.

The overnight deposit rate in the city surged to a record 80 percent, while the spread between the offshore and onshore exchange rates widened to the most since 2010. Bloomberg News earlier reported Chinese policy makers were encouraging state-owned enterprises to sell foreign currency.

As SocGen summarized the unprecedented indirect intervention by the PBOC, “investors are cutting bullish positions in the dollar after the report underscored China’s determination to support the yuan.”

The overnight fireworks come, of course, after policymakers in Beijing recently unveiled a slew of new capital control measures to tighten control of the currency market, including placing higher scrutiny on citizens’ conversion quotas and stricter requirements for banks reporting cross-border transactions.

“Given the recent capital controls, the channels for domestic institutions and retails to bring out onshore cash to the offshore market have also been tightened,” said Becky Liu, a rates strategist in Hong Kong at Standard Chartered Plc. “There is a lack of supply of yuan liquidity.”

Meanwhile, the liquidity drain which we have followed every day this week continued, and is set to accelerate further as tomorrow forward points surged to a record. In other signs of yuan scarcity, HSBC Holdings raised its three-month yuan deposit rate to 2.85 percent from 1.8 percent, according to the Oriental Daily, while the cost of borrowing yuan overnight in Hong Kong surged by 21.4 percentage points, Bloomberg reported. That’s the most since January 2016, when the authorities choked yuan supply to burn speculators betting on declines.

Paradoxically, the measures have only heightened skepticism among currency watchers: “We know the capital controls aren’t working because that’s why they’re having to raise the overnight deposit rate so aggressively by the PBOC, which is still basically the guiding hand in the offshore yuan market,” said Michael Every, head of financial markets research at Rabobank Group in Hong Kong. “It’s an incredibly aggressive tactic.”

High short-term funding costs, which will continue to trend higher, could dissuade significant short yuan positions from being added in the near term, Societe Generale strategists led by Jason Daw wrote in a note Thursday.

The good news is that, if only briefly, the rebounding Yuan would alleviate capital outflow pressure on Chinese authorities, who are battling to curtail capital flowing offshore after an annual $50,000 quota for citizens to buy foreign exchange reset on Jan. 1 and the imminent inauguration of U.S. President-elect Donald Trump lifts the dollar. Investors have been watching for the yuan to break the psychologically key level of 7 against the greenback for the first time since 2008.

However, make no mistake, this is capital control war to prevent the Yuan from being dragged lower as the dollar surges, a war which overnight spilled over into other Asian currencies, most of which jumped in sympathy with the Yuan.

“The weaker dollar overnight should help push the yuan further away from the 7 level for now, aiding the Chinese authorities’ recent efforts to stabilize the currency,” said Christy Tan, head of markets strategy in Hong Kong at National Australia Bank Ltd. “We expect the authorities to maintain an elevated currency management mode in the run-up to Donald Trump’s inauguration on Jan. 20, and until after the Lunar New Year break from Jan. 27 to Feb. 2.”

Ultimately,  the offshore yuan’s strength will be short-lived because the Hong Kong Monetary Authority may add supply of the currency to lower funding costs, and the dollar could rally, said Andy Ji, a Singapore-based currency strategist at Commonwealth Bank of Australia… but not before enough shorts have been carted out feet first. Even so, the long-term direction of the Yuan is clear: the onshore exchange rate will decline 3.6 percent to 7.15 per dollar by the end of this year, according to the median estimate in a Bloomberg survey.

“Fundamental reasons that are driving depreciation, such as capital outflows and concerns on Trump’s China policies, haven’t changed,” said Qi Gao, a Singapore-based foreign-exchange strategist at Scotiabank, quoted by Bloomberg.

 

 

end

 

With the Chinese authorities stating that they were going to crack down on cryptocurrencies like Bitcoin, in an attempt to stop the outflow the dollars, finally we see Bitcoin collapse in price down 31% to $893.00 usa.  The true currency, gold continues to rise:

(courtesy zero hedge)

Another Bubble Bursts – Bitcoin China Crashes Over 30%

First it was Chinese stocks, then Chinese real estate (twice), then Chinese commodities (twice), and now Chinese Bitcoin’s bubble has burst as a massive short squeeze on the offshore Yuan combined with comments on ‘virtual’ capital controls has sparked a bloodbath in the cryptocurrency from 8,896 yuan to 6,101 yuan in the last few hours…a 31% collapse.

Despute the collapse – BTC China is only back at 2 week lows…

For those chasers, don’t say we did not warn you, as we noted previously, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

 

 

end

This is what happens when you try and grow your economy by 7% per year.  The steel mills etc are running at full blast despite poor global demand.  This causes poor air.  Just look at the following story where a cruise ship could not dock in Beijing because they had no visibility

(courtesy zero hedge)

Chinese Cruise Ship With 2,000 Passengers Stuck At Sea For Two Days Due To Smog

Beijing’s pollution problem is getting worse by the day.

On Wednesday, the Chinese capital issued its highest red fog alert” for only the second day in history, keeping highways closed in and around the city which is already under a smog alert after weeks of choking winter pollution. China’s weather bureau warned of visibility of less than 50 meters in some areas, leading many airports to cancel flights.

The heavily polluted Hebei province, which surrounds most of Beijing, said on Tuesday it had ordered all polluting firms in Tangshan, China’s biggest steel-producing city to the east of Beijing, to shut down which likely means that China is in for a substantial “manufacturing” shock in the coming months.

Hebei, which was home to seven of China’s 10 smoggiest cities in 2015, will build the world’s biggest dust prevention barrier, stretching nearly two miles, at the major coal port of Qinhuangdao in a bid to cut pollution, state media said on Wednesday.

For now, however, China is very much defenseless against the toxic byproduct of its rapid industrialization, which also happens to be a major factor permitting the Chinese economy to grow at the goalseeked 6-7% level or somewhere thereabouts. Unfortunately for Beijing, it’s a choice of either stable manufacturing growth or clean air: the two are mutually exclusive.

And nowhere was that more visible today, so to speak, than near the port of Tianjin, where according to the Beijing Evening News, a large cruise ship with more than 2,000 people on board was stuck at sea for two days because it was unable to dock in the heavy smog that has enveloped much of northern China. The vessel finally returned to the Port of Tianjin on Monday afternoon after drifting for two days at sea. The thick air pollution had earlier made it impossible to safely berth the vessel, according to the article

A passenger was quoted as saying that the ship was scheduled to return on New Year’s Eve after traveling to South Korea and Japan. But she was told by the crew that the ship could not dock as visibility was severely compromised by the smog. She said the passengers had been unsure how long they would be stuck at sea but were grateful there was plenty of entertainment on board to kill time.

“Unlike passengers who are stuck at some public facilities like an airport, we got to use the pool and the gym to keep ourselves busy,” she said.

As Reuters adds, poor visibility prompted three major northern ports to suspend the loading of ships on Tuesday, maritime safety agencies said.

Unless Beijing’s leadership is willing to take draconian measures to curb smog production, which inevitably means an economic slowdown, expect scenes such as the ones shown below to continue.

View image on Twitter

Chris Buckley 储百亮 @ChuBailiang

It’s started snowing in Beijing. What do you call smoggy snow? Smow? Snog?

9:33 PM – 4 Jan 2017 Chris Hadfield @Cmdr_Hadfield

Beijing out my window – the air has taste and texture today.

9:25 PM – 4 Jan 2017

View image on Twitter

Jim Sciutto @jimsciutto

Beijing from the air as smog blankets the city. Just otherworldly – and alarming

9:19 AM – 4 Jan 2017

end

4 EUROPEAN AFFAIRS

Now we have Italy’s Grillo slamming mainstream media for fake news

(courtesy zero hedge)

Italy’s Grillo Slams Mainstream Media “Manifest Manipulation Of Reality”

“Fake news” has officially crossed the pond and once again it the mainstream media that is producing more of it (while blaming the alternative media). Beppe Grillo, founder of Italy’s Five Star anti-euro movement lashed out at the country’s journalists for “manufacturing false news,” accusing them of fabricating stories to keep the Five Stars down.

“Newspapers and television news programmes are the biggest manufacturers of false news in the country, with the aim of ensuring those who have power keep it,” he said on his blog on Tuesday.

As Local.It reports, he called for “a popular jury to determine the veracity of the news published,” and said in cases of fake news “the editor must, head bowed, make a public apology and publish the correct version at the start of the program or on the paper’s front page”.

 …the politicians are now demanding stronger measures against bloggers…

[BUT], have never urged punishment for those who commit more serious crimes, lying in absolute bad faith, abusing the credibility of institutions. That lie can not be punished. It is not in the interest of mainstream politicians.

All major newspapers should be closed for manifest manipulation of reality, or obliged to go out with a sticker that certifies the lack of credibility.

The media world was – of course – enraged…

The news director of the private TG La7 channel, Enrico Mentana, said he would sue the comedian, while journalists’ union FNSI slammed the “lynching of all journalists”.

What Grillo is proposing “is called Fascism, and those who play it down are accomplices,” PD senator Stefano Esposito said.

Marco Travaglio, editor of the far-left Il Fatto Quotidiano daily, agreed with Grillo but said the popular jury idea would never work.

“The biggest lies are those spread by the television and newspapers, but the solution he is proposing is naive,” he said.

end

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

Mexico is beginning to panic as they now believe that Trump will be true to his word;

(courtesy zero hedge)

Mexico Panics As Trump’s Leverage “Far Greater Than What Mexican Elites Thought”

Earlier this morning we noted that the Mexican Peso was plunging once again – very close to all-time record lows – as fears spread that Ford’s decision yesterday to cancel a $1.6 billion plant may become the norm following president-elect Trump’s tweet that “this is just the beginning.”

Donald J. Trump

@realDonaldTrump

Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow

8:19 AM – 4 Jan 2017

And here is the peso:

And while many senior politicians within the Mexican government dismissed Trump’s campaign speeches as empty rhetoric, per the Associated Press, Ford’s cancellation of it’s $1.6 billion auto plant has served as a “much needed wake-up call” that shows that Trump has far greater leverage “than what Mexican elites thought until recently.”

“Trump leaves Mexico without 3,600 jobs,” read the headline on El Universal. “Ford’s braking jolts the peso,” said Reforma, referring to the Mexican currency’s nearly 1 percent slump following the news.

Two weeks before inauguration, the scuttling of the planned Ford factory and Trump’s pressure on General Motors should be a “much-needed wake-up call,” said Mexico analyst Alejandro Hope.

It shows “how much actual leverage Trump has within specific companies, which is far greater than what Mexican elites thought until recently,” Hope said. “They claimed that at the end of the day economic interests would prevail over political messaging. That’s clearly not the case.”

All of which has caused some level of panic within the Mexican political and media spheres from the elites who are slowly realizing that when Trump says he wants to disrupt the status quo by renegotiating NAFTA and building a border wall, “he means it”….as completely shocking as it may be that a politcian might actually mean what he says.

In an editorial, El Universal also recalled the deal Trump struck in December with Carrier to keep 800 of 1,300 jobs at an Indiana furnace factory from being sent to Mexico, in return for millions of dollars in tax incentives. It also implicitly criticized the Mexican government’s response to the incoming administration.

“Mexico loses thousands of jobs with no word on a clear strategy for confronting the next U.S. government which has presented itself as protectionist and, especially, anti-Mexican,” the paper wrote. “Trump will try to recover as many U.S. companies that have set up in Mexico as possible. He will try to make them return at whatever cost, through threats or using public resources.”

“Ford’s decision is indicative of what awaits the economies of both countries,” the daily La Jornada said. “For ours a severe decrease in investment from our neighboring country, and for the U.S. a notable increase in their production costs.”

Hope said more decisions like Ford’s are likely to come. And while the loss of a single planned plant probably does not fundamentally change the U.S.-Mexico economic relationship, “it certainly shows that the idea that the status quo was entrenched was false.”

“This should put us on notice that when he says that he wants to renegotiate NAFTA, he means it,” Hope said.

As we pointed out a few days ago, with Trump scoring new victories with every passing day, the question no longer seems to be whether or not Vicente Fox will pay for the “f**king wall,” but rather, how he’ll pay for it…cash or credit, Mr. Fox?

end Next on the list, Donald tells Toyota not to build a plant in Mexico or face a huge border tax.  More woes for Mexico. The peso plummets to 21.44 to the dollar (courtesy zero hedge) Trump Threatens Toyota: “Build New Plant In The US Or Pay Big Border Tax”

Poor Mexico just can’t catch a break.

After its currency crashed to record lows this week after Ford cancelled plans to build a $1.6 billion plant in Mexico, prompting the central bank to intervene and sell $1 billion USD to stabilize the currency, moments ago Trump lobbed another shot at Mexico, this time threatening Toyota with paying a big border tax if it building its new pant in Baja instead of the US.

Just around 1:15pm Eastern, Trump tweeted: “Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax”

is-deciderHtmlWhitespace" cite="https://twitter.com/realDonaldTrump/status/817071792711942145">

Donald J. Trump @realDonaldTrump

Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.

1:14 PM – 5 Jan 2017

Sure enough the selling in the Peso has resumed, and it is now back to where it was before Banxico wasted $1 billion in reserve to push it higher.

 

It’s not just the peso though: TOYOTA ADRS DROP TO SESSION LOW ON TRUMP TWEET.

 

 

end

 

Mexico now out of control as looting and rioting are on the streets in Mexico due to the huge 20% gas hike.

(courtesy zero hedge)

Looting, Riots In Mexico Spiral Out Of Control Over 20% Gas Hike; Hundreds Arrested

Four days after the first sporadic protests emerged in Mexico City, following the infamous “gasolinazo”, or mandatory 15%-20% increase in Mexican gas prices which went into effect on January 1, the mood across the country has significantly deteriorated, with hundreds of demonstrators blocking highways, snarling traffic, raiding gas stations, jeopardizing critical supplies, and looting stores as angry but impotent motorists lashed out at the price surge, which is only going to get worse as inflation spikes even more following the record plunge in the Mexican Peso.


Residents steal fuel and diesel from a gas station in Veracruz state

As a reminder, the price of oil rose Sunday by as high as 20.1% to 88 cents per liter, with diesel at 83 cents — the equivalent of 12 days of a minimum wage to fill a tank of gas – compared to the U.S.’s seven hours — and the price ceiling will be adjusted daily starting Feb. 18, before letting supply and demand determine them in March.

The unrest has caused some gas stations to close altogether. Antonio Caballero, who heads a network of 800 gas stations, said at a press conference this week he will temporarily close any filling station threatened by violent protesters. According to unconfirmed reports, even the local drug cartels warned ahead of the price hike they would burn down gas stations should the price increase come into effect.

However, as tends to happen during mass civil disturbances, it’s not just gas stations that are being targeted. Some protesters have used the gasolinazo as an excuse to loot supermarkets and other stores in several states.

A man runs with toys as a store is ransacked by a crowd in the port of Veracruz,
Mexico after gas price hikes rage out of control

As of Thursday morning, 250 stores had been looted and 170 were closed or blockaded in all of Mexico, according to the National Association of Self-Service and Department Stores.

At least 430 protesters were detained on charges of vandalism, including four police officers according to El Universal.


Protesters block the entrance to a Pemex gas station as they burn tires during a
protest against the rising prices of gasoline

The unrest ‘resulting in the theft of merchandise put at risk the lives of clients and workers in the stores, primarily in Mexico State, Michoacan, Hidalgo and Mexico City,’ the statement said.


Suspects are detained by navy police after a store was ransacked by a crowd in
the port of Veracruz during gasoline price protests

In the Gulf coast city of Veracruz, store guards were overrun Wednesday
by crowds who carried off clothing, food, washing machines, televisions,
DVD players and refrigerators; 50 establishments including convenience stores, supermarkets and big-box outlets suffered looting, according to a preliminary count by the local chamber of commerce.


A group of people grabs toys as a store is ransacked by a crowd in the port of
Veracruz, Mexico after frustrations over a sharp gas price hike erupt into violence

Store guards were overrun by crowds who carried off clothing, food, washing machines, televisions, DVD players and refrigerators

Extra police patrols were deployed, and at least 14 people were detained, the state government reported. At one supermarket officers fired into the air to disperse the multitudes.

According to Fusion, adding to the chaos on the streets is a wave of unconfirmed news and threats on social media perpetuating rumors about a curfew on Wednesday, pushing some businesses to temporarily close two days before Mexico’s Día de Reyes, a religious holiday that normally has parents flocking to stores to buy toys for their kids.


People form a human chain to block access to a gas station in Mexico City

The state-owned oil company Pemex said Tuesday that blockades of fuel terminals in the states of Chihuahua, Morelos and Durango had caused a “critical situation” in distributing fuel to gas stations there. It said that if the blockades continued, it could interrupt operations at airports in Chihuahua and Baja California.

Mexicans’ collective anger over the situation is being directed mostly at President Enrique Peña Nieto, who in 2015 had promised that country’s frequent pump price hikes would end with his much-touted finance and energy reform plans. However, as a result of the plunge in oil prices , the long-awaited liberalization of the country’s energy sector which would have led to lower prices, the promised relief at the pump has yet to materialize.

Speaking at a press conference on Wednesday, president Nieto called the gas price hike “painful” yet “inevitable.”

is-deciderHtmlWhitespace" cite="https://twitter.com/EPN/status/551941854804336640">

Enrique Peña Nieto

@EPN

2) Gracias a la Reforma Hacendaria, por 1era. vez en 5 años, ya no habrá incrementos mensuales a los precios de la gasolina, diésel y gas LP

10:22 PM – 4 Jan 2015

“I call society to listen to the reasons for taking this decision, which, without having been made, I must say, would have led to more painful effects and consequences,” he said Wednesday after several days of notable silence. He added that he understands the anger of Mexicans and did not want to make the “painful, difficult and inevitable” move, but had to.

He told Mexicans Wednesday to accept the dramatic hike in gas prices as a necessary move, to the anger of “gasolinazo” protesters, who reiterated their call to take down the country’s most unpopular president on record.

Demonstrators stormed several government buildings on Wednesday, demanding the resignation of Nieto and sympathetic state governors who have promoted the Institutional Revolutionary Party’s neoliberal reforms that have included privatizing the national oil company Pemex. Pena Nieto had promised to lower gas prices in his campaign, but they have kept rising since he took office.

A series of actions, including boycotts, petition signing, meetings, assemblies and civil disobedience are planned for the week, as the prologue to a national march next week. As of earlier this week, tens of thousands have already participated in roadblocks and seized, looted and vandalized gas stations, prompting 400 stations to close and affecting the operations of airports and bus stations.

The tweet below lays out a “map of peaceful protests against gasolinazo. We have the right to protest.”

Meanwhile, the blowback against the unpopular price hike is spreading to the political class. Pemex has requested that state governors help open access to stations to continue business, but several governors have already come out against the hike. The governor of Chihuahua, Javier Corral, said he would not deploy forces to quell the protest, which he supports, and Aristoteles Sandoval of Jalisco, who is a member of the PRI, said Mexicans have a right to be angry. Veracruz Governor Miguel Angel Yunes said he expects the rise to mostly affect the poor and threaten political stability, lamenting that Peña Nieto did not consult governors before implementing the measure.

Taxes represent 44 percent of the price of gasoline, tweeted Guadalajara Mayor Enrique Alfaro, adding to a trending hashtag, #ReversaAlGasolinazo, to reverse the measure by lowering taxes.

Several media and politicians, including Peña Nieto, have denounced the protests as violent, which organizers insist is a mischaracterization of the peaceful actions, which aim to redistribute oil for free or at significantly reduced prices. Many extrapolated their opposition as opposition also to violence, corruption and impunity in the country, with which they hope to create a wider front against Peña Nieto’s administration and business-as-usual in traditionally authoritarian Mexican politics.

“The history of our country is stained with big and deep social problems without resolution,” wrote feminist group MujerEs YA!, “where violence and impunity have marked the path of daily life, until the point of voracious alienation that plays between indifference and immobility, which uses whatever measure to convince the public of its uselessness, of its drowned inert voice, accustomed to the toxic, a population that merits little, because it demands little, because it naturalizes its own death.”

is-deciderHtmlWhitespace" cite="https://twitter.com/SamuelMdzM/status/816331690561912833">

Samuel Mendoza @SamuelMdzM

3er día de protestas vs . Ojalá q en 2018 ésto le cueste muy caro al PRI. RT si estás de acuerdo. pic.twitter.com/UuF8buhON2 @jrisco

12:13 PM – 3 Jan 2017

But the worst is yet to come. According to increasingly more analysts, who initially were silent on the topic, the price increase will raise the price of basic goods, provoke unemployment, inflation, economic stagnation and potentially economic contraction and even recession.

7. OIL ISSUES

DOE reports huge inventory build and down goes oil

(courtesy zero hedge)

WTI, RBOB Tumble After Massive Product Inventory Builds

Following API’s larger than expected crude draw (and huge product builds), DOE reports massive builds in Distillates (+10mm – biggest sine Jan 2015) and Gasoline (+8.3mm – biggest since Jan 2016) and another big build in Cushing inventories. Crude inventories drew down 7.05mm barrels – confirming API’s data. US crude production also picked up and WTI prices tumbled.

API

  • Crude -7.431mm (-2mm exp)- biggest draw since Sept 2016
  • Cushing +482k (+900k exp)
  • Gasoline +4.25mm (+1mm exp)- most since Jan 2016
  • Distillates +5.244mm (-800k exp) – most since Jan 2016

DOE

  • Crude -7.051mm (-2mm exp) 
  • Cushing +1.074mm (+200k exp)
  • Gasoline +8.307mm (+1mm exp) – most since Jan 2015
  • Distillates +10.051mm (-800k exp) – most since Jan 2016

Total crude stockpiles remain over 35% above the five-year seasonal norm.Cushing jumps to the highest level since May with the sixth gain in seven weeks.

Bloomberg notes that much of that draw in crude stocks looks to be attributable to imports which dropped by 984 kbbls/d across the US with 612 kbbls/d of that coming in PADD 3, that’s a 4,284 kbbls/d drop over the week.

US Crude production continues to generally follow the lagged trend of the rising rig count…

Bloomberg notes that U.S. production has been trending higher since September, with the Energy Information Administration sharply increasing its weekly estimates in November and again December. Newly released monthly data for October shows the EIA underestimated output significantly(weekly figures pointed to 8.5 million barrels a day, while the monthly data was of 8.8 million barrels a day).

WTI tagged $54 this morning – higher post-API data – but is dropping after the huge builds…

And Gasoline futures also…

 end Strange:  crude jumps on a report that the Saudi are fully impleminting their OPEC output cut (courtesy zero hedge) Crude Jumps On Report Saudis Fully Implemented OPEC Output Cut

Despite earlier comments that the Saudis did not appear to have implemented their output cut (as per OPEC agreement), WSJ reports that Saudi Arabia cut oil output – fully implementing OPEC cut pledge. Oil is bouncing on the news.

From this morning – no cut!:

 Saudi Arabia crude supplies have been abundant and doesn’t look to be cutting, Takashi Hirose, Executive Vice President at TonenGeneral, says in Tokyo on Thursday.

And now – Fully cut

is-deciderHtmlWhitespace" cite="https://twitter.com/georgikantchev/status/817059850698051584">

Georgi Kantchev

@georgikantchev

BREAKING: Saudi Arabia has cut oil output by at least 486,000 b/d 10.058 million b/d, fully implementing OPEC cut pledge: Source @WSJ

12:27 PM – 5 Jan 2017

which has provided a modest bid to crude prices…

 

The move is very modest though – it seems either everyone is fully positioned or no one really believes it.

8. EMERGING MARKETS

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   1.0500 UP .0003/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATES

USA/JAPAN YEN 116.61 DOWN 0.528(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2317 UP .0006 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3299 UP .0007 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS THURSDAY morning in Europe, the Euro ROSE by 3 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0500; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 6.62 0r 0.21%     / Hang Sang  CLOSED UP 322.22 POINTS OR 1.46%  /AUSTRALIA  CLOSED UP 0.29%  / EUROPEAN BOURSES ALL IN THE GREEN EXCEPT PARIS 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED UP 230.90 POINTS OR 1.23%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 322.22 OR .1.46%  Shanghai CLOSED UP 6.62 POINTS OR 0.21%   / Australia BOURSE CLOSED UP 0.29% /Nikkei (Japan)CLOSED IN THE GREEN   /  INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: $1173.45

silver:$16.58

Early THURSDAY morning USA 10 year bond yield: 2.437% !!! DOWN 1/2 IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.037, DOWN 1/2 IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 102.33 DOWN 19 CENT(S) from WEDNESDAY’s close.

This ends early morning numbers THURSDAY MORNING

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And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield: 4.03% UP 13  in basis point yield from WEDNESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.060% DOWN 1/ 2  in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.48%  UP 5  IN basis point yield from  WEDNESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.931  UP  4  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 45 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.243% DOWN 3 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

Euro/USA 1.0595 UP .0099 (Euro UP 99 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 115.47 DOWN: 1.656(Yen UP 166 basis points/ 

Great Britain/USA 1.2407 UP 0.0084( POUND UP 84 basis points)

USA/Canada 1.3229 DOWN 0.0070(Canadian dollar UP 70 basis points AS OIL ROSE TO $53.33

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 99 basis points to trade at 1.0595

The Yen ROSE to 115.47 for a GAIN of 165 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 84  basis points, trading at 1.2407/

The Canadian dollar ROSE by 70 basis points to 1.3229,  WITH WTI OIL RISING TO :  $53.33

The USA/Yuan closed at 6.8869 the 10 yr Japanese bond yield closed at +.060% DOWN 1/ 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 9 IN basis points from WEDNESDAY at 2.359% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.969 DOWN 7  in basis points on the day /

Your closing USA dollar index, 101.45 DOWN 107 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED UP 5.57 OR .63% 
German Dax :CLOSED UP 0.63 POINTS OR 0.01%
Paris Cac  CLOSED UP 1.24 OR 0.03%
Spain IBEX CLOSED UP 25.30 POINTS OR 0.27%
Italian MIB: CLOSED UP 16.17 POINTS OR 0.08%

The Dow was down 42.87 POINTS OR .21% 4 PM EST

NASDAQ WAS UP 10.93 POINTS OR .20%  4.00 PM EST
WTI Oil price;  53.33 at 1:00 pm; 

Brent Oil: 56.59  1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.65 (ROUBLE UP  72/100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD FALLS TO +0.243%  FOR THE 10 YR BOND  1:30 EST

END

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

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

WTI CRUDE OIL PRICE 5 PM:$53.82

BRENT: $56.90

USA 10 YR BOND YIELD: 2.349%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.946%

EURO/USA DOLLAR CROSS:  1.0607 up .0110

USA/JAPANESE YEN:115.34  DOWN 1.776

USA DOLLAR INDEX: 101.43  down 110  cents (BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2419 : up 96  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.243%

END

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

TRADING IN GRAPH FORM

Bonds & Bullion Bounce But Banks Bruised And Bitcoin Bloodbath’d

It appears China chaos is finally starting to spread. Liquidity freezes and currency spikes…

Offshore has exploded higher – erasing all the losses post-Trump…

 

We get the feeling this is appropriate…

 

The USD Index is getting hammered…biggest 2-day drop since June 2016

 

China comments sparked a bloodbath in bitcoin…

 

And Treasury bond yields have plunged… (how do you say “policy error” in Chinese?)

 

ADP’s miss this morning seemed to spark a less exuberant tilt…

 

For the 3rd day in a row, stocks dumped into the European close and ramped after…Once again today stocks rallied into the close and VIX was pressured lower but Dow 20k remains elusive (perhaps the machines can make it tomorrow on payrolls print)

 

Nasdaq rallied on the day…

 

…but Trannies slipped back to unch on the year… Nasdaq record high

 

Trump had some notable effects on Time-Warner, Toyota, and Mexican Peso…

NOTE the last chart above – as Banxico intervened early but was stymied by Trump tweets pushing the peso back towards record lows.

 

The dollar weakness was dominated by Yuan strength…

 

The entire Treasury yield curve is now lower in 2017 with 30Y collapsing…

 

Silver remains the year’s biggest winner (with gold close) and crude just in the red for 2017…

 

Crude tumbled on inventories data then rallied on two headlines saying that Saudi production cuts were happening…

 

Gold is up 9 of the last 10 days…

 end

The following commentary is an essential reading to all.  You must read this to understand what is going on.  Five major uSA banks have mainly underwritten over 2 trillion USA credit derivatives on sovereign Europe and its banks. A failure by a European bank like Banco Monte dei Paschi de Sienna and Unicredit will bring the USA financial system:

(COURTESY PAM AND RUSS MARTENS/WALL STREET ON PARADE)

U.S. Quietly Drops Bombshell: Wall Street Banks Have $2 Trillion European Exposure

By Pam Martens and Russ Martens: January 3, 2017

Just 17 days from today, Donald Trump will be sworn in as the nation’s 45th President and deliver his inaugural address. Trump is expected to announce priorities in the areas of education, infrastructure, border security, the economy and curtailing the outsourcing of jobs. But Trump’s agenda will be derailed on all fronts if the big Wall Street banks blow up again as they did in 2008, dragging the U.S. economy into the ditch and requiring another massive taxpayer bailout from a nation already deeply in debt from the last banking crisis. According to a report quietly released by the U.S. Treasury’s Office of Financial Research less than two weeks before Christmas, another financial implosion on Wall Street can’t be ruled out.

The Office of Financial Research (OFR), a unit of the U.S. Treasury, was created under the Dodd-Frank financial reform legislation of 2010. It says its role is to: “shine a light in the dark corners of the financial system to see where risks are going, assess how much of a threat they might pose, and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate them.” Its 2016 Financial Stability Report, released on December 13, indicates that Wall Street banks have been allowed by their “regulators” to take on unfathomable risks and that dark corners remain in the U.S. financial system that are impenetrable to even this Federal agency that has been tasked with peering into them.

At a time when international business headlines are filled with reports of a massive banking bailout in Italy and the potential for systemic risks from Germany’s struggling giant, Deutsche Bank, the OFR report delivers this chilling statement:

“U.S. global systemically important banks (G-SIBs) have more than $2 trillion in total exposures to Europe. Roughly half of those exposures are off-balance-sheet…U.S. G-SIBs have sold more than $800 billion notional in credit derivatives referencing entities domiciled in the EU.”

When a Wall Street bank buys a credit derivative, it is buying protection against a default on its debts by the referenced entity like a European bank or European corporation. But when a Wall Street bank sells credit derivative protection, it is on the hook for the losses if the referenced entity defaults. Regulators will not release to the public the specifics on which Wall Street banks are selling protection on which European banks but just the idea that regulators would allow this buildup of systemic risk in banks holding trillions of dollars in insured deposits after the cataclysmic results of similar hubris in 2008 shows just how little has been accomplished in terms of meaningful U.S. financial reform.

Adding to the potential for another epic crash on Wall Street taking down the entire U.S. economy is data within the OFR report showing how interconnected the big Wall Street banks have become to the largest U.S. insurers through derivatives. This has been allowed to happen despite the fact that the giant insurer, AIG, required a government backstop of $182 billion following the 2008 crash because it had sold credit default protection via derivatives to the big Wall Street banks.

The OFR report includes the following data on life insurers:

“At the end of 2015, U.S. life insurers’ derivatives exposure, as reported in statutory filings, totaled $2 trillion in notional value. This $2 trillion does not include derivative contracts held in affiliated reinsurers, non-insurance affiliates, and parent companies that do not have to file statutory statements. Details on these entities’ derivatives positions are not publicly available.”

Just who is backstopping this $2 trillion in risk? The answer is mind-numbing. The counterparties to the life insurers are the same behemoth Wall Street banks who have their own potential nightmare scenario if there are major European bank defaults. The OFR report indicates the following:

“According to statutory data on insurance company legal entities, nine large U.S. and European banks are counterparties to about 60 percent of U.S. life insurers’ $2 trillion in notional derivatives. These data show that despite central clearing, derivatives interconnectedness between the U.S. life insurance industry and banks remains substantial.”

An accompanying chart shows (in order of magnitude) the following Wall Street banks with the greatest interconnectedness via derivatives to U.S. life insurers: Goldman Sachs, Deutsche Bank, Bank of America, Citigroup, Credit Suisse, Morgan Stanley, Barclays, JPMorgan Chase, and Wells Fargo.

It is impossible to overstate the dangers of this daisy chain of interconnectedness. The Wall Street banks that created the greatest financial collapse since the Great Depression in 2008 have now metastasized their failed derivatives model throughout the life insurance industry of the U.S. – raising the very real specter that in the next crash both massive banks and massive life insurers would require a taxpayer bailout.

Five of the largest U.S. banks that show up on the derivatives counterparty list to the U.S. life insurers, also show up on another list. The OFR report notes:

“The Basel Committee methodology measures banks’ complexity in part by looking at data on notional derivatives positions. These data reflect the nominal value of underlying derivatives contracts. They have been volatile since 2012 but remain highly concentrated among the five largest banks. As with OFR findings on insurance (see Section 2.5), OFR analysis suggests higher derivatives exposures for banks are associated with greater systemic risk.”

The five banks referenced above are: JPMorgan Chase, Citigroup, Goldman Sachs, Bank of America and Morgan Stanley.

The OFR report also indicates that regulators still do not have access to adequate data from the biggest banks and insurers to assess the dangers in real time. The report notes:

“Deficiencies in data and data management remain a critical vulnerability. Data needs remain unfilled, particularly in shadow banking markets. Many of the new data are not ready or available for analysis. Despite progress, the probability remains high that data deficiencies will again prevent risk managers and regulators from assessing risks before it is too late.”

President-elect Donald Trump and his closest advisers should make it their top priority to read this OFR report carefully, reflect on the current and future ramifications of the reckless and irresponsible U.S. banking model on its citizens and economy at large, and immediately begin to press Congress for the restoration of the Glass-Steagall Act upon his swearing in on January 20.

 

 

end

 

Just take a look at what the doorknobs are doing in Philadelphia:  a huge tax on soda.  It heightens their bill dramatically!

(courtesy Jim Quinn/BurningPlatform)

Masses Shocked By Philly Beverage Tax Impact

Submitted by Jim Quinn via The Burning Platform blog,

Check out this receipt and you realize why the country just elected Donald Trump. Liberal Democrat scumbag mayor Jim Kenney and his entirely Democrat city council thought it was a brilliant idea to ram a beverage tax down the throats of Philadelphians last year. They were doing it for the chilruns. It’s always for the chilrun. The ignorant masses bought the load of bullshit because they don’t understand maff. They understand it now. The tax went into effect on January 1 and the sticker shock is infuriating the ignorant masses.

This receipt for a 10 pack of flavored water shows a 51% beverage tax. It gets even better. PA has a sales tax of 6%. Philly already charges another 2% (for the chilruns) to make the sales tax 8%. These bastards now charge the 8% on the original price plus the beverage tax. Last week this purchase came to $6.47. Today it is $9.75.

Now ask yourself, who drinks the most sugary drinks? That’s right. Obese uneducated poor people who are likely to be scraping by on food stamps or very low incomes. Kenney and his liberal minions have fucked over their main voters. This tax is going to drive grocery purchases outside the city and hurt small restaurant owners. It isn’t benefiting kids. It’s funding the bloated pensions of teachers and government employees. Overall tax revenue will decline. Democrats are complete idiots when it comes to economics. Taxing their people to death is destroying Philly.

As a side note, PA, which already had the highest gas tax in the country, increased it by another 8 cents per gallon on January 1. I’m sure the corrupt PA Dept of Transportation will spend the millions wisely on bloated union construction contracts for sub-par work that is only two years late getting completed. Happy New Year from Taxylvania!!!!

Philadelphia rang in the new year with a controversial new beverage tax on soda and other sugar-sweetened drinks. The tax, which went into effect on Sunday, is the first one of its kind in a major city in the United States.

While the tax is technically 1.5 cents per ounce, which doesn’t sound too terrible, when buying a 10-pack of 20 oz bottles those numbers climb pretty quickly. In this case, a 10-pack of Propel flavored water that originally retailed for $5.99 had an additional three dollars tacked on to it in taxes.

Chuck Andrews picked up a $1.77 gallon jug of tea, got home and looked at his receipt.

“When I read the receipt I’m like, ‘Wait a minute. I paid more in tax than I did for the product,’” Andrews said.

The tax on the $1.77 gallon of tea was $1.92 cents.

“Which is OK if you had told me,” he said.

Andrews’ point is he would rather have the full cost, the product and the tax inclusive, posted on the main shelf tag.

A customer at a Save-A-Lot on Woodhaven Road snapped a picture of a 12-pack of diet green tea and the price surge of what normally costs $4.99. It’s now $8.03.

The money generated from the tax will help fund Mayor Jim Kenney’s Pre-K program.

“I understand that the school systems need money, but there’s other ways to go about it than to make such a drastic increase on soda,” Elena Porsch of South Philadelphia said.

The mayor’s office tells Action News, “The tax is on the distribution of sweetened beverages from companies like Coca-Cola to dealers like supermarkets, and because it’s not a sales tax… distributors don’t have to pass it on to customers.”

Small businesses like Franzones in Manayunk have already been getting an earful from customers about the higher prices and wonder what this will mean for their future.

“The businesses take a hit with profits, the customers take a hit with payment, and it’s kind of a lose-lose in Philadelphia with this tax,” Mike Maziarz of Franzones said.

Many people are saying they will go out of Philadelphia rather than pay the tax. Others say they will change what they buy.

“So now I know. I’m buying water, water, water,” Carl Saulsbury of North Philadelphia said.

It’s also important to note, if grocery stores purchased these taxable beverages last week from their distributors, then the soda tax wouldn’t apply. But if the beverages were purchased on the first of January or after, it would.

* * *

Philadelphia is not alone. As the WSJ adds, Bay Area voters in San Francisco and Oakland also approved a penny-per-ounce tax on sugary beverages, the same rate as Berkeley’s. And Boulder, Colo., residents, approved the nation’s steepest soda levy, at two pennies an ounce—or a $1.35 extra—for a two-liter bottle. Those taxes are taking effect in coming months.

“They represent a new frontier of tax policy,” said Scott Drenkard, director of state projects for the Tax Foundation, a think tank that favors lower taxes. Soda taxes, he said, are “very stark examples of state and local governments using the tax code to influence nutrition choices, which are by definition very personal.”

Supporters of the taxes say the levies encourage people to drink healthier beverages. Instead, the newly implemented surcharges will likely just lead to a lot of very angry (sur)taxpayers.

end

 

Now we see that the Russian hacking story has changed again.  Now the media is suggesting that an intermediary sent the emails to Wikileaks

(courtesy zero hedge)

The “Russian Hacking” Story Changes Again

Today at 9:30 am, senior U.S. intelligence officials face questions at a Senate hearing that will be dominated by the intelligence community’s assessment that Russia meddled in the presidential election to help Donald Trump win. Participating will be James R. Clapper, Jr., Director Of National Intelligence. Marcel J. Lettre II, Under Secretary Of Defense For Intelligence and Admiral Michael S. Rogers, USN, Commander, United States Cyber Command.

The Armed Services Committee’s cyber threats hearing on Thursday comes a day before the president-elect is to be briefed by the CIA and FBI directors — along with the director of national intelligence — on the investigation into Russia’s alleged hacking efforts. Trump has been deeply critical of their findings, even appearing to back controversial WikiLeaks founder Julian Assange’s contention that Russia did not provide him with hacked Democratic emails.

The committee’s session is the first in a series aimed at investigating purported Russian cyber-attacks against U.S. interests and developing defenses sturdy enough to blunt future intrusions. “We will obviously be talking about the hacking, but the main thing is the whole issue of cybersecurity,” the committee’s Republican chairman, Sen. John McCain of Arizona, said ahead of the hearing. “Right now we have no policy, no strategy to counter cyberattacks.”

More importantly, however, the hearing comes hours after Reuters reported overnight that U.S. intelligence agencies obtained what they considered to be conclusive evidence after the November election that Russia provided hacked material from the Democratic National Committee to WikiLeaks. However, in the latest change of the narrative, this time the allegation is that Russia provided the hacked data through a third party, three U.S. officials said on Wednesday.

Wikieaks was quick to highlight that according to the report, US officials admitted that the Wikileaks “source” was not Russia, and that the goal posts now shifted to the source’s source:

WikiLeaks

@wikileaks

Reuters: Anon US officials admit that WikiLeaks “source” is not Russia. Now shifts goal posts to source’s source. http://www.chinadailyasia.com/news/2017-01/05/content_15552111.html …

10:12 PM – 4 Jan 2017

In keeping with the theme of providing no proof to the general public, the officials declined to describe the intelligence obtained about the involvement of a third-party in passing on leaked material to WikiLeaks, saying they did not want to reveal how the U.S. government had obtained the information. So just trust them, please.

The shift in the narrative is curious because as a reminder, officials had concluded “months earlier” that Russian intelligence agencies had directed the hacking, but had been less certain that they could prove Russia also had controlled the release of information damaging to Democratic presidential candidate Hillary Clinton. It now appears that along with lack of evidence, the attention has shifted to an “intermediary” as being the responsible party .

In an interview with Fox News, WikiLeaks founder Julian Assange said he did not receive emails stolen from the DNC and top Hillary Clinton aide John Podesta from “a state party.” Assange did not rule out the possibility that he got the material from a third party.

Trump on Wednesday sided with Assange and again questioned the U.S. intelligence community’s conclusion that Russia tried to help his candidacy and hurt Clinton’s.

Concern by U.S. officials over the hacking first spiked in August, when intelligence agencies concluded that Russian intelligence, with the direction of President Vladimir Putin, had been trying to disrupt and discredit the presidential and congressional elections. Obama in August rejected recommendations from some of his advisors to disclose the Russian link and take some limited covert action as “a shot across Putin’s bow to knock it off,” one official with knowledge of the matter said. Instead, Obama warned Putin privately, arguing that a similar private message to Chinese President Xi Jinping had reduced Chinese hacking into U.S. agencies and companies.

Ultimately, the additional intelligence informed U.S. President Barack Obama’s decision to retaliate on Dec. 29 by expelling 35 suspected Russian spies and sanctioning two Russian spy agencies, four intelligence officers and three companies, a decision that capped four months of debate at the White House about how to respond.

So far not a shred of evidence has been provided confirming the Kremlin’s involvement in the matter, aside from some Ukrainian malware code exposed in a 13-page joint DHS/FBI report which could be purchased by anyone online.

 end Now Donald is going to attack the merger plan with Time Warner and A T and T (courtesy zero hedge) Time Warner Slides On Report Trump Still Opposes AT&T Merger

Slowly but surely, Trump is dismantling the massively overpriced market, one stock at a time, and after taking a detour into the world of FX earlier when he slamming the Peso for the second time this week when he warned Toyota not to build a planta in Baja, Mexico, moments ago Time Warner slumped on Bloomberg news that Trump has told a confidant that he still opposes the AT&T- TIme Warner deal.

  • TIME WARNER FALLS 3.8% AS TRUMP SAID TO OPPOSE AT&T DEAL
  • TRUMP SAID TO TELL CONFIDANT HE STILL OPPOSES AT&T-TIME WARNER

As a reminder, he explicitly said during his presidential campaign that he would seek to undo this deal, as such it probably should not come as a major surprise, and yet…

And for those who feel they are unable to keep up with Trump’s non-stop tweeting, and its impact on various asset classes, there is good news: as Yahoo reports, there is now an app alerting you whenever Trump tweets about stocks you own.

The free iPhone app works by letting you set up financial “triggers,” which you can then use to guide your investment decisions. For example, you can set a reminder to sell a stock when its price reaches a certain level, moves a specific percentage, hits a one-year low or high, and so on. When the condition occurs, Trigger sends you a notification, and you can decide whether to act on it.

 

Now the company has rolled out a special “Trump trigger.” The trigger “gives you the ability to trade stocks based off of Trump’s tweets about public companies,” the startup wrote. Basically, the trigger works by notifying you if Trump tweets about a publicly traded stock that you own, in real time.

 


Trigger characterized the Trump trigger as the first step toward the startup using “not just price based data but relevant world events to condense into simple IF this, THEN that rules.” Expect a bunch of varied types of financial signals in the future.

Good, now they just need to expand this to FX, and ultimately, Treasuries which will likely be the last finaly class impacted by Trump’s tweeting.

 

end

 

Tomorrow is the jobs report and thus expect huge volatility

See you tomorrow night

Harvey


JAN 4/Gold and silver rise/GLD holds constant/Chinese offshore yuan soars as controls take hold in China/China thinking about dumping USA treasuries/Bitcoin rises to par with gold/Mexican peso plummets/Macy’s and Kohl’s crash with poor results today

Wed, 01/04/2017 - 20:26

Sorry I am late/had to attend a funeral.

 

Gold at (1:30 am est) $1163.80 UP $3.40

silver  at $16.50:  UP 15 cents

Access market prices:

Gold: $1163.0

Silver: $16.56

THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON

.

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

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

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

And now the fix recordings:

WEDNESDAY gold fix Shanghai

Shanghai morning fix Jan 4/17 (10:15 pm est last night): $  1183.11

NY ACCESS PRICE: $1160.20 (AT THE EXACT SAME TIME)/premium $22.91

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1186.99

NY ACCESS PRICE: $1162.05 (AT THE EXACT SAME TIME/2:15 am)

HUGE SPREAD 2ND FIX TODAY!!:  $24.94

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

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

London Fix: Jan 4/2017: 5:30 am est:  $.1165.90   (NY: same time:  $1165.95    5:30AM)

London Second fix Jan 3.2017: 10 am est:  $1164.25 (NY same time: $1165.00  (10 AM)

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

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

end

For comex gold: 

NOTICES FILINGS FOR JANUARY CONTRACT MONTH:  875 NOTICE(S) FOR 87500 OZ.  TOTAL NOTICES SO FAR: 1010 FOR 101,000 OZ    (3.1415 TONNES)

For silver:

 NOTICES FOR JANUARY CONTRACT MONTH FOR SILVER: 1 NOTICE(s) FOR 5,000  OZ. TOTAL NUMBER OF NOTICES FILED SO FAR; 197 FOR 985,000 OZ

Let us have a look at the data for today

.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest FELL by 975  contracts DOWN to 163,812 with respect to YESTERDAY’S TRADING  (short covering by the banks).    In ounces, the OI is still represented by just less THAN 1 BILLION oz i.e. .819 BILLION TO BE EXACT or 117% of annual global silver production (ex Russia & ex China).

 

FOR THE JANUARY FRONT MONTH IN SILVER:  1 NOTICES FILED FOR 5,000  OZ.

In gold, the total comex gold ROSE BY 1319 contracts WITH THE RISE IN  THE PRICE GOLD ($10.40 with YESTERDAY’S trading ).The total gold OI stands at 424,673 contracts.

 

we had 875 notice(s) filed upon for 87,500 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

We had no  changes in tonnes of gold at the GLD

Inventory rests tonight: 813.87 tonnes

.

SLV

we had a small change in silver into the SLV: a withdrawal of 149000 oz (probably to pay for fees)

THE SLV Inventory rests at: 341.199 million oz

.

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

1. Today, we had the open interest in silver FELL by 975 contracts DOWN to 163,812 DESPITE THE FACT THAT SILVER ROSE by  $0.41 with YESTERDAY’S trading. The gold open interest ROSE by 1,319 contracts UP to 424,673 AS THE  PRICE OF GOLD ROSE BY $10.40 WITH YESTERDAY’S TRADING

(report Harvey).

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

2c) FRBNY report on earmarked gold movement

(Harvey)

3. ASIAN AFFAIRS

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.83 POINTS OR 0.73%/ /Hang Sang closed DOWN 15.93 OR .07%. The Nikkei closed UP 479.79 POINTS OR 2.51% /Australia’s all ordinaires  CLOSED UP 0.06%/Chinese yuan (ONSHORE) closed DOWN at 6.9348/Oil FELL to 52.62 dollars per barrel for WTI and 55.85 for Brent. Stocks in Europe: ALL IN THE RED  .  Offshore yuan trades  6.9014 yuan to the dollar vs 6.9348  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

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

none today

b) REPORT ON JAPAN

none today

c) REPORT ON CHINA

i)Offshore yuan soars as on fears of capital controls:

( zero hedge)

ii)As stated above China may dump her USA treasuries to keep the yuan stable while preparing for additional capital controls:

( zero hedge)

iii)With the above problems in China it is now wonder that Bitcoin soars to $1100.00 per coin

( zero hedge)

4 EUROPEAN AFFAIRS

Deutsche bank’s top crime fighter (regulator) quits after only 6 months on the job as the heat was too much for him

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

none today

6.GLOBAL ISSUES

i)We have heard of robots in the fast food industry; we had heard of driverless cars and now we witness computers replacing white collar workers.  Take a look at what is going on in the insurance field:

( Mish Shedlock/Mishtalk)

ii)Mexico

The Mexican peso plummets to record lows, not helped with Trump’s tweet that Ford is cancelling its move to Mexico.  Oil price rises is helping Mexico a bit but PEMEX reserves are also plummeting.  Not a good recipe for Mexico

( zero hedge)

7. OIL ISSUES

i)Crude distillates see big inventory buildup

( zero hedge)

ii)So much for Russia cutting output

( Dave Forest/Oil Price.com) 8. EMERGING MARKETS

none today

9.   PHYSICAL MARKETS i)Mike Kosares states that gold and silver are in an uptrend and the dollar will be heading south ( Mike Kosares/GATA) ii) Due to the huge foreign debts held by Chinese companies, the POBC is doing everything it can to slow the descent of the yuan:( Lingling Wei/Wall Street Journal/GATA)

10.USA STORIES

i)Just take a look at what happens when government interferes in the restaurant business:

a) minimum wage hikes

b) health care payments

c)Obamacare payments

d) zero interest rate policy causes land to skyrocket which in turn causes rents to rise

 

all of the above have killed the restaurant business

( zero hedge)

ii)USA Debt for Dec 31/2016 totals 19.98 trillion just 24 billion shy of the magic 20 trillion.  Exactly one yr ago we had debt of 18.92 trillion and thus a gain of a little over 1 trillion dollars of debt. This year, the total debt is expected to rise even higher by around 1.4 trillion

( zero hedge)

iii)The process begins on the repeal of Obamacare. Obama is furious!

( zero hedge)

iv)They are getting ready for Donald:  Rand Paul reintroduces legislation to Audit the Fed.  Now the fun begins in earnest:

( zerohedge) v)It seems that Donald has provided a lot of nervousness with the Fed.  They state that there are increased risks in the system.  Half the economists thought the minutes were hawkish and some thought even dovish(courtesy zero hedge)

vi)Oh OH!! after the market closed Macy’s and Kohl’s crash after reporting dismal holiday sales and they both cut guidance.  They announce massive layoff and store closures…but the Dow keeps going up??

( zero hedge)

 

end

Federal Reserve Bank of New York: Earmarked gold movements

December report:

Last Oct/2016 we had 7,841 million dollars worth “gold” in inventory at the FRBNY

valued at $42.22 per oz

Last November/2016 we had 7,841 million dollars worth of gold in inventory at FRBNY valued at $42.22 per oz

thus 0 oz moved at $42.22

So far officially, the following has been repatriated to  BuBa from NY:

2013: 5 tonnes

2014: 120 tonnes

2015:  99.5 tonnes

2016: to be officially announced

Their total  quota from NY is scheduled to be 300 tonnes and another 374 tonnes from Paris of which 177 tonnes of gold has officially been sent (Dec 2015) and thus another 197 tonnes to cross the English channel.

Germany has officially 1237 tonnes of gold “stored ” in NY. On conclusion of the repatriation, Paris will have 0 stored there.

end

Let us head over to the comex:

The total gold comex open interest ROSE BY 1,319 CONTRACTS UP to an OI level of 424,673 AS THE  PRICE OF GOLD ROSE $10.40 with YESTERDAY’S trading. We are now in the contract month of JANUARY and it is one of the poorest deliveries of the year.

With the front month of January we had a GAIN of 7 contracts UP to 1014.  We had 2 notices filed so we GAINED 9 contracts or AN ADDITIONAL 900 oz WILL STAND for gold in this non active delivery month of January. For the next big active delivery month of February we had a LOSS of 2251 contracts DOWN to 280,620. March had a gain of 92 contracts as it’s OI is now 116.

 

We had 875 notice(s) filed upon today for 87,500 oz

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

And now for the wild silver comex results.  Total silver OI FELL by 975 contracts FROM  164,787 DOWN TO 163,812 DESPITE THE FACT THAT the price of silver ROSE BY $0.41 with YESTERDAY’S trading.WE THUS HAD CONSIDERABLE SHORT COVERING BY THE BANKS We are moving  further from the all time record high for silver open interest set on Wednesday August 3/2016:  (224,540).

We are now in the non active delivery month of January and here the OI FELL by 3 contracts FALLING TO  464. We had 1 notice(s) filed on yesterday so we lost 2 or an additional 100,000 oz will not stand and no doubt were cash settled.  The next non active month of February saw the OI rise by 55 contracts up to 163.

The next big active delivery month is March and here the OI FELL by 221 contracts UP to 134,257 contracts.

We had 1 notice(s) filed for 5,000 oz for the January contract.

VOLUMES: for the gold comex

Today the estimated volume was 191,864  contracts which is fair.

Yesterday’s confirmed volume was 255,583 contracts  which is very good

Initial standings for january  Jan 4/2017. Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz    91,997.756 Scotia Deposits to the Dealer Inventory in oz nil oz Deposits to the Customer Inventory, in oz    59,847.756 oz JPMorgan No of oz served (contracts) today   875 notice(s) 87,500 oz No of oz to be served (notices) 139 contracts 13,900 oz Total monthly oz gold served (contracts) so far this month 1010 notices 101,000 oz 3.1415 tonnes Total accumulative withdrawals  of gold from the Dealers inventory this month   nil oz Total accumulative withdrawal of gold from the Customer inventory this month     4,534,868.9 oz Today we HAD 0 kilobar transactions/ Today we had 0 deposit(s) into the dealer: total dealer deposits:  nil  oz We had nil dealer withdrawals: total dealer withdrawals:  nil oz we had 1 strange customer deposit(s): Into JPMorgan:  59,847.756 oz (However note that 91,997.756 oz was withdrawn from Scotia/difference exactly 32,150.0000 or one tonne of gold/extremely suspicious) total customer deposits; 59,847.756 oz We had 1 customer withdrawal(s) i) Out of Scotia:  91,997.756 oz was removed and landed into JPMorgan Problem:  32,150.000 evaporated!! total customer withdrawal: 91,997,756 oz We had 2  adjustment(s) i) out of Brinks:  6,376.660 oz was adjusted from the customer and this landed into the dealer account of brinks ii) 4026.945 oz exact weight was removed from the customer account of Delaware as a counting error. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

For January:

Today, 0 notice(s) were issued from JPMorgan dealer account and 875 notices were issued from their client or customer account. The total of all issuance by all participants equates to 875 contract(s)  of which 0 notices were stopped (received) by jPMorgan dealer and 0 notice(s) was (were) stopped/ Received) by jPMorgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the JANUARY. contract month, we take the total number of notices filed so far for the month (1010) x 100 oz or 101,000 oz, to which we add the difference between the open interest for the front month of JANUARY (1014 contracts) minus the number of notices served upon today (875) x 100 oz per contract equals 114,900 oz, the number of ounces standing in this non  active month of JANUARY.   Thus the INITIAL standings for gold for the JANUARY contract month: No of notices served so far (1010) x 100 oz  or ounces + {OI for the front month (1014) minus the number of  notices served upon today (875) x 100 oz which equals 114,000 oz standing in this non active delivery month of JANUARY  (3.5738 tonnes) On first day notice for January 2016, we had .9642 tonnes of gold standing. At the conclusion of the month we had only .5349 tonnes standing so you can visualize the increasing demand for physical gold a t the comex. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx I have now gone over all of the final deliveries for this year and it is startling. First of all:  in 2015 for the 13 months: 51 tonnes delivered upon for an average of 4.25 tonnes per month. Here are the final deliveries for all of 2016 and the first month of January 2017 Jan 2016:  .5349 tonnes  (Jan is a non delivery month) Feb 2015:  7.9876 tonnes (Feb is a delivery month/deliveries this month very low)
March 2015: 2.311 tonnes (March is a non delivery month) April:  12.3917 tonnes (April is a delivery month/levels on the low side And then something happens and from May forward deliveries boom! May; 6.889 tonnes (May is a non delivery month) June; 48.552 tonnes ( June is a very big delivery month and in the end deliveries were huge) July: 21.452 tonnes (July is a non delivery month and generally a poor one/not this time!) August: 44.358 tonnes (August is a good delivery month and it came to fruition) Sept:  8.4167 tonnes (Sept is a non delivery month) Oct; 30.407 tonnes complete. Nov.    8.3950 tonnes. DEC.   29.931 tonnes JAN/     3.5738 tonnes total for the 13 months;  225.932 tonnes average 17.379 tonnes per month vs last yr  51.534 tonnes total for 13 months or 3.964 tonnes average per month. Total dealer inventor 1,561,744.896 or 48.556 tonnes DEALER RAPIDLY LOSING GOLD Total gold inventory (dealer and customer) = 9,122,708.202 or 283.75 tonnes    Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 283.75 tonnes for a  loss of 19  tonnes over that period.  Since August 8/2016 we have lost 70 tonnes leaving the comex. However I am including kilobar transactions and they are very suspect at best I have a sneaky feeling that these withdrawals of gold in kilobars are being used in the hypothecating process  and are being used in the raiding of gold! The gold comex is an absolute fraud.  The use of kilobars and exact weights makes the data totally absurd and fraudulent! To me, the only thing that makes sense is the fact that “kilobars: are entries of hypothecated gold sent to other jurisdictions so that they will not be short with their underwritten derivatives in that jurisdiction.  This would be similar to the rehypothecated gold used by Jon Corzine at MF Global.   IN THE LAST 4 1/2 MONTHS  69 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE DECEMBER DELIVERY MONTH JANUARY INITIAL standings  Jan 4. 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory  486,364.480 0z Scotia CNT Brinks HSBC Deposits to the Dealer Inventory   nil OZ Deposits to the Customer Inventory  902,609.96 oz oz No of oz served today (contracts) 1 CONTRACT(S) (5,000 OZ) No of oz to be served (notices) 463 contracts (2,315,000  oz) Total monthly oz silver served (contracts) 197 contracts (985,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month  5,212,033.1 oz  END today, we had 0 deposit(s) into the dealer account:  i total dealer deposit: nil oz we had nil dealer withdrawals: total dealer withdrawals: nil oz we had 4 customer withdrawal(s): i) Out of CNT:  12,128.800 oz ii) Out of Scotia:  364,520.120 oz iii) Out of Brinks: 4538.96 oz iv) Out of HSBC: 12,128.800 TOTAL CUSTOMER WITHDRAWALS: 486,364.480 oz  we had 2 customer deposit(s):  i) Into Brinks;  599,023.340 oz ii) Into JPMorgan: 303,586.620 oz total customer deposits;  902,609.96  oz      we had 2  adjustment(s) i) Out of Brinks: 598,147.360 oz was adjusted out of the customer and this landed into the dealer account of Brinks: ii) Out of Delaware:  1,519,209.626 oz was adjusted out of the customer account and this landed into the dealer account The total number of notices filed today for the JANUARY. contract month is represented by 1 contract(s) for 5,000 oz. To calculate the number of silver ounces that will stand for delivery in JANUARY., we take the total number of notices filed for the month so far at  197 x 5,000 oz  = 985,000 oz to which we add the difference between the open interest for the front month of JAN (463) and the number of notices served upon today (1) x 5000 oz equals the number of ounces standing    Thus the initial standings for silver for the JANUARY contract month:  197(notices served so far)x 5000 oz +(463) OI for front month of JAN. ) -number of notices served upon today (1)x 5000 oz  equals  3,300,000 oz  of silver standing for the JAN contract month. This is  STILL huge for a non active delivery month in silver. We lost 2 contracts or an additional 100,000 oz will not stand. At first day notice for the January/2016 silver contract month we had 1,845,000 oz standing for delivery.  By the conclusion of the delivery month we had only 575,000 oz stand. Volumes: for silver comex Today the estimated volume was 53,842 which is very good YESTERDAY’S  confirmed volume was 88,158 contracts  which is huge.   Total dealer silver:  28.050 million (close to record low inventory   Total number of dealer and customer silver:   181.903 million oz The total open interest on silver is NOW moving away from  its all time high with the record of 224,540 being set AUGUST 3.2016.

end

And now the Gold inventory at the GLD Jan 4/no change in inventory/inventory rests at 813.87 tonnes Jan 3.2017/a huge 9.49 tonnes of gold leaves the GLD/inventory rests at 813.87 tonnes DEC 30/no changes in gold inventory at the GLD/Inventory rests at 823.36 tonnes Dec 29/no changes in gold inventory at the GLD/Inventory rests at  823.36 tonnes Dec 28/no change in gold tonnage at the GLD/inventory rests at 823.36 tonnes Dec 27/a withdrawal of 1.18 tonnes from the GLD/Inventory rests at 823.36 tonnes Dec 23/NO CHANGES IN GOLD INVENTORY AT THE GLD/RESTS TONIGHT AT 824.54 TONNES Dec 22/no change in inventory at the GLD/Inventory rests at 824.54 tonnes DEC 21/another massive 3.56 tonnes leaves the GLD/Inventory rests at 824.54 tonnes Dec 20/no changes in gold inventory at the GLD/Inventory rests at 828.10 tonnes Dec 19/A MASSIVE WITHDRAWAL OF 14.23 TONNES OF GOLD FROM THE GLD (WITH GOLD UP THESE PAST TWO TRADING SESSIONS)/INVENTORY RESTS TONIGHT AT 828.10 TONNES Dec 16/no changes at the GLD/Inventory rests at 842.33 tonnes Dec 15/ANOTHER HUGE WITHDRAWAL OF 7.11 TONNES OF GOLD/INVENTORY RESTS AT 842.33 TONNES DEC 14/another huge withdrawal of 6.82 tonnes from the GLD/Inventory rests at 849.44 tonnes/ DEC 13/no changes in gold inventory at the GLD/Inventory rests at 856.26 tonnes Dec 12/a withdrawal of 1.19 tonnes of gold from the GLD/Inventory rests at 856.26 tonnes Dec 9/another huge withdrawal of 3.26 tonnes of gold leaves the GLD vaults on its way to Shanghai/Inventory rests this weekend at 857.45 tonnes Dec 8/ANOTHER HUGE WITHDRAWAL OF 2.96 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 860.71 TONNES (THIS GOLD IS HEADING TO SHANGHAI) DEC 7/ a huge change in gold inventory/a withdrawal of 6.23 tonnesas this gold is heading towards Shanghai/inventory rests at 863.67 tonnes Dec 6/no changes in gold inventory/inventory rests at 869.92 tonnes. Dec 5./ a tiny withdrawal of .32 tonnes and this is probably to pay for fees/inventory rests tonight at 869.92 tonnes Dec 2/a huge withdrawal of 13.64 tonnes of gold leaving the GLD vaults/no doubt this is heading to Shanghai taking advantage of the huge premium/inventory rests tonight at 870.22 tonnes Dec 1/no change in gold inventory at the GLD/Inventory rests at 883.86 tonnes xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Jan 4/2017/ Inventory rests tonight at 813.87 tonnes *IN LAST 62 TRADING DAYS: 135.94 TONNES REMOVED FROM THE GLD *LAST 9 TRADING DAYS: 10.67 TONNES HAVE LEFT

end

Now the SLV Inventory Jan 4/a small withdrawal of 149,000 oz (probably to pay for fees/inventory rests at 341.199 million oz Jan 3.2017/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz/ DEC 30/no changes in silver inventory at the SLV/inventory rests at 341.348 million oz/ Dec 29/no changes in silver inventory at the SLV/Inventory rests at 341.348 million oz Dec 28/no changes in silver inventory at the SLV/Inventory at 341.348 million oz/ Dec 27/a big deposit of 1.138 million oz/Inventory rests at 341.348 million oz Dec 23/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ Dec 22/WE HAD A SMALL DEPOSIT OF 948,000 OZ INTO THE SLV/INVENTORY RESTS AT 340.210 MILLION OZ/ DEC 21/no change in silver inventory at the SLV/Inventory rests at 339.262 million oz Dec 20/a small withdrawal of 758,000 oz/inventory rests at 339.262 tonnes Dec 19A HUGE DEPOSIT OF 1.327 MILLION OZ INTO THE SLV/INVENTORY RESTS AT 340.020 MILLION OZ Dec 16/A HUGE WITHDRAWAL OF 2.37 MILLION OZ FROM THE SLV/INVENTORY RESTS AT 338.693 MILLION OZ/ Dec 15/NO CHANGES IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 341.063 MILLION OZ/ Dec 14.no change in inventory at the SLV/Inventory rests at 341.063 million oz/ DEC 13/ a huge withdrawal of 1.802 million oz from the SLV/Inventory rests at 341.063 million oz Dec 12/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 9/no change in silver inventory/inventory rests at 342.865 million oz/ Dec 8/a huge withdrawal of 3.09 million oz from the SLV/Inventory rests at 342.865 million oz DEC7/no changes in silver inventory at the SLV/Inventory rests at 345.995 million oz/ Dec 6/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz Dec 5/no changes in silver inventory at the SLV/inventory rests at 345.995 million oz/ Dec 2 a tiny withdrawal of 155,000 oz and this is probably to pay for fees/inventory rests at 345.995 million oz/ . Jan 4.2017: Inventory 341.199  million oz  end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 8.0 percent to NAV usa funds and Negative 7.8% to NAV for Cdn funds!!!!  Percentage of fund in gold 60.9% Percentage of fund in silver:38.8% cash .+0.3%( jan 4/2017)  . 2. Sprott silver fund (PSLV): Premium RISES to +.42%!!!! NAV (Jan 3/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO – 0.58% to NAV  ( Jan 3/2017) Note: Sprott silver trust back  into POSITIVE territory at +0.42% /Sprott physical gold trust is back into NEGATIVE territory at -0.58%/Central fund of Canada’s is still in jail.  

end

Major gold/silver stories for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE

Holiday will be back soon

END

 

This is huge:  Turkey imports 36.7 tonnes into their country in December. This is very unusual for them: do they know that something is up with respect to declining gold inventory?

(courtesy Lawrie Williams/Sharp’s Pixely)

 

 

LAWRIE WILLIAMS: Huge rise in Turkish gold imports in DecemberJAN
04

The political dissent in Turkey and the accompanying government clampdown on accused dissidents, coupled with the country’s active participation in the civil war in neighbouring Syria and the raised terrorist threat and action, has seen a big increase in gold imports into the country in December.

According to Reuters. gold imports to Turkey rose to 36.7 tonnes in December, up from 4.65 tonnes in the same period a year earlier, their highest monthly level in just over two years. And, for 2016 as a whole, imports more than doubled to 106.2 tonnes from 48.7 tonnes in 2015, the latest data shows.

Turkey has been a key conduit for gold flowing into other Middle Eastern nations – notably Iran when the latter had sanctions imposed on it. Turkey is a big importer of Iranian natural gas, and paying for this in gold enabled monetary sanctions to be circumvented. Turkey does have a burgeoning gold mining sector, but overall only produced around 27.4 tonnes in 2015 – a fall from the two previous years according to consultancy Metals Focus. Its mine production apparently peaked in 2013 at 33.6 tonnes, but there has been a considerable amount of gold exploration and some good sized deposits have been delineated. One can probably expect gold output to rise in the years ahead.

If one classifies Turkey as being in Europe, which it likes to do itself, and Russia as being in Asia, Turkey is very comfortably the European continent’s largest gold producer, although technically all the gold output comes from mines in the Asia Minor part of the country. According to the Turkish Gold Miners Association (TGMA), the country hosts some of the world’s largest gold deposits with reserves of 800 tonnes and predicted resources of 5,700 tonnes. However contrary to TGMA forecasts which were looking for 50 tonnes of gold output in 2015 the miners have fallen short due to working lower grades and permitting difficulties which have hindered some expansions and new projects – although perhaps only temporarily. 2016 gold mine output is thus estimated at around 30 tonnes. Turkey is, according to the IMF, the world’s 13th largest holder of gold at 452.5 tonnes. However the nation includes gold holdings by it commercial banks in its total figure so this level is more prone to fluctuation than that for most other nations.

While Turkey may be acting as a gold conduit into Iran, it is also a major consumer of gold in its own right and it citizenry has a strong affinity for the yellow metal. A World Gold Councilreport, published in early 2015 about the role of gold in Turkey entitled ‘Turkey: Gold in action’ was introduced thus: “At an average of 181 tonnes per annum over the past 10 years, Turkey is the world’s fourth largest consumer of gold accounting for around 6% of global consumer demand, and we estimate that Turkish households have accumulated at least 3,500t of ‘under-the- pillow’ gold.” This serves to demonstrate just how important Turkey’s role is in the global supply/demand/hoarding equation. While nowhere near China and India as a top gold importer it is hugely significant as an ‘also ran’ gold consumer so the big rise in the December import figure is an important pointer towards gold demand in areas of unrest, or close to them.

-END- Mike Kosares states that gold and silver are in an uptrend and the dollar will be heading south (courtesy Mike Kosares/GATA) Mike Kosares: The gold owner’s guide to 2017 Submitted by cpowell on Tue, 2017-01-03 19:47. Section:

2:45p ET Tuesday, January 3, 2017

Dear Friend of GATA and Gold:

In his “Gold Owner’s Guide to 2017,” Mike Kosares of USAGold in Colorado writes that gold remains in a long-term uptrend and the U.S. dollar in a long-term downtrend despite the movements of the last several years. Silver, Kosares adds, has been doing especially well. His analysis is posted at USAGold here:

http://www.usagold.com/publications/NewsViewsJan2017.html

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

 

 

END

 

Due to the huge foreign debts held by Chinese companies, the POBC is doing everything it can to slow the descent of the yuan:

(courtesy Lingling Wei/Wall Street Journal/GATA)

China Inc.’s large dollar debts fuel Beijing’s efforts to curb yuan plunge Submitted by cpowell on Tue, 2017-01-03 23:11. Section:

By Lingling Wei
The Wall Street Journal
Tuesday, January 3, 2017

BEIJING — The large pile of foreign debt owed by Chinese companies, from state-owned banks to airlines, is giving added impetus to Beijing’s efforts to keep the yuan from falling too steeply against the rallying dollar.

The yuan dropped by 4 percent over the past three months, as the dollar recently hit a 14-year high against 16 currencies. The faster-than-expected depreciation is causing more businesses and individuals to try to get out of yuan, further pressuring the currency.

To bolster the yuan, the central bank and other agencies have ratcheted up controls on Chinese companies as well as citizens investing offshore. In the latest move banks were ordered over the weekend to step up scrutiny of individuals’ purchases of foreign currency. …

… For the remainder of the report:

http://www.wsj.com/articles/china-inc-s-large-dollar-debts-fuel-beijings

 

 

 

END

 

Not good:  USA libor breaks above 1% for the first time since 2009

(courtesy Reuters/GATA)

U.S. LIBOR breaks above 1 percent for first time since 2009 Submitted by cpowell on Wed, 2017-01-04 15:58. Section:

By Richard Leong and Dan Burns
Reuters
Wednesday, January 4, 2017

The rate banks charge each other to borrow dollars for three months rose above 1 percent today for the first time since May 2009 as global interest rates extend their climb on expectations of accelerating growth and inflation.

The London interbank offered rate, or LIBOR, for three-month dollars was fixed at 1.00511 percent, the highest level since 1.00688 percent on May 1, 2009, which was also the last date the rate topped 1 percent. …

… For the remainder of the report:

http://www.reuters.com/article/us-usa-moneymarkets-idUSKBN14O1GC

 

 

end

what a bombshell!!

from Chris Powell and Bill Murphy of GATA)

 

“GATA has spent 17 years doing what we could to expose the gold/silver manipulation scheme by the U.S. Government and various bullion banks. We not only want to expose it, but do what we can to end it, if at all possible.

At least recent events are lighting a fire on the issue. First there were the scandalous revelations in Deutsche Bank paying close to $100 million dollars for manipulating the gold and silver markets, implicating other bullion banks in the process.

Now, this bombshell which confirms what we have been saying all these years”

(courtesy Chris Powell/GATA)

State Dept. cable confirms gold futures market was created for price suppression Submitted by cpowell on Wed, 2017-01-04 16:28. Section:

11:27a ET Wednesday, January 4, 2016

Dear Friend of GATA and Gold:

The U.S. gold futures market was created in 1974 as a result of collusion between the U.S. government and gold dealers in London to facilitate volatility in gold prices and thereby discourage gold ownership by U.S. citizens, according to a December 1974 State Department cable obtained by Wikileaks and disclosed today by the TF Metals Report:

http://www.tfmetalsreport.com/blog/8075/42-years-fractional-reserve-alch…

The cable was sent to the State Department from the U.S. embassy in London by someone named Spiers, apparently Ronald I. Spiers, the embassy’s deputy of chief at that time:

https://en.wikipedia.org/wiki/Ronald_I._Spiers

The cable describes the embassy’s extensive consultations with London bullion dealers about the likely impact of re-legalization of gold ownership in the United States and possible substantial gold purchases by oil-exporting Arab nations.

The cable reads: “The major impact of private U.S. ownership, according to the dealers’ expectations, will be the formation of a sizable gold futures market. Each of the dealers expressed the belief that the futures market would be of significant proportion and physical trading would be miniscule by comparison. Also expressed was the expectation that large-volume futures dealing would create a highly volatile market. In turn, the volatile price movements would diminish the initial demand for physical holding and most likely negate long-term hoarding by U.S. citizens.”

The cable is interesting not just for confirming the assertion of GATA and others in the gold-price suppression camp that futures markets function largely as mechanisms of commodity price suppression and support for government currencies, an assertion perhaps first made comprehensively in 2001 by the British economist Peter Warburton —

http://www.gata.org/node/8303

— but also for showing the close connections between the U.S. government and London gold dealers, some of which are cited by name, including Samuel Montagu & Co., Sharps Pixley & Co., Mocatta & Goldsmid, and Consolidated Gold Fields.

The cable is posted at the Wikileaks internet site here:

https://wikileaks.org/plusd/cables/1974LONDON16154_b.html

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

 

end

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

1 Chinese yuan vs USA dollar/yuan DOWN to 6.9348(HUGE REVALUATION NORTHBOUND  /CHINA UNHAPPY TODAY CONCERNING USA DOLLAR RISE/MORE $ USA DOLLARS LEAVE CHINA/OFFSHORE YUAN NARROWS COMPLETELY  TO 6.9014 / Shanghai bourse CLOSED UP 22.83 POINTS OR 0.73%   / HANG SANG CLOSED DOWN 15.93 OR .07% 

2. Nikkei closed UP 479.79 POINTS OR 2.51%  /USA: YEN RISES TO 117.65

3. Europe stocks opened ALL IN THE RED      ( /USA dollar index FALLS TO  103.01/Euro UP to 1.0428

3b Japan 10 year bond yield: RISES TO    +.065%/     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 117.65/ THIS IS TROUBLESOME AS BANK OF JAPAN IS RUNNING OUT OF BONDS TO BUY./JAPAN 10 YR YIELD FINALLY IN THE POSITIVE/BANK OF JAPAN LOSING CONTROL OF THEIR YIELD CURVE AS THEY PURCHASE ALL BONDS TO GET TO ZERO RATE!!

3c Nikkei now JUST BELOW 17,000

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

3e WTI::  52.62  and Brent: 55.65

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” OFF THE TABLE FOR NOW /REVERSE OPERATION TWIST ON THE BONDS: PURCHASE OF LONG BONDS  AND SELLING THE SHORT END

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10yr bund RISES TO +.257%/Italian 10 yr bond yield UP 3  full basis points to 1.86%    

3j Greek 10 year bond yield FALLS to  : 6.82%   

3k Gold at $1165.60/silver $16.40(8:45 am est)   SILVER BELOW RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP   15/100 in  roubles/dollar) 60.76-

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

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/GOT 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 117.65 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  1.0265 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0703 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT

3r the 10 Year German bund now POSITIVE territory with the 10 year RISES to  +.257%

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

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

4. USA 10 year treasury bond at 2.465% early this morning. Thirty year rate  at 3.053% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

HELICOPTER MONEY STILL ON THE TABLE FOR THE FUTURE/JAPANESE STIMULUS PLAN DISAPPOINTS Risk On: 2017 Stock Rally Continues As Global Inflation Accelerates  

Following another day of upbeat economic data, with growing signs that inflation on both sides of the Atlantic is accelerating, investors rediscovered their faith in the Trumpflation rally, pushing global stocks and US equity futures higher, fuelling a second day of 2017 equity gains ahead of today’s release of the Fed’s December minutes.

The dollar slumped and the euro moved further above $1.04 after data showed French consumer confidence hit its highest for nine years and businesses across the euro zone ended 2016 by ramping up activity at the fastest pace for five-and-a-half years. This followed similarly upbeat reports this week on U.S., UK, Chinese and Japanese business activity.

“The year has started with a stream of good macro stories which has justified a risk on position with investors,” Andrew Milligan, head of global strategy at Standard Life Investments told Bloomberg. He favors stocks and bonds of developed countries poised to benefit from a reflating U.S. economy that will boost the dollar over emerging markets.

The Eurozone composite Purchasing Managers’ Indexclimbed to 54.4 in December from 53.9 in November, IHS Markit said on Wednesday. That’s the highest in 67 months and above a Dec. 15 estimate. Strength in both the manufacturing and service sectors was due in part to a weaker euro, London-based Markit said in a statement. Economic expansion was signaled across the “big-four” nations, with Spain leading the way, followed closely by Germany.

Figures also showed that euro zone December inflation hit its highest since September 2013, which helped support a rise in oil, commodity prices and bond yields. Consumer prices rose 1.1% from a year earlier, following a 0.6% gain in November, according to Eurostat on Wednesday. That’s above a median forecast of 1 percent in a Bloomberg survey of economists. Core inflation, which excludes volatile items such as energy and food, increased to 0.9 percent last month.

The data follow the ECB’s decision to prolong quantitative easing to guarantee a sustained pickup in inflation in a year that could see economies hit by political uncertainty. Surprisingly strong accelerations of headline rates in Germany and Spain, mainly driven by a surge in the cost of oil, may strengthen the central bank’s focus on weakness in underlying price pressures as it assesses policy in coming months.

The unexpectedly strong acceleration in both regional and national inflation rates follows a 12.6 percent surge in Brent crude last month. ECB President Mario Draghi said in December that price growth remained weak, even as Executive Board member Benoit Coeure told Boersen-Zeitung last week that inflation could face upside risks. Bundesbank President Jens Weidmann, one of the ECB’s most hawkish officials, has argued in favor of a swift unwinding of stimulus once price growth allows, while Ifo President Clemens Fuest said in an interview published Tuesday the central bank may want to consider ending asset purchases as early as March.

“This latest data could mark the beginning of the end to ECB’s bond-buying program and expansive monetary policy as it edges closer to their inflation target of two percent,” Xtrade’s Chief Market Analyst, Paul Sirani, said.

Looking at global stocks, the MSCI All-Country World Index rose for a second day to trade 0.3 percent higher, and its index of major Asian shares excluding Japan rose for a seventh consecutive day, gaining 0.3%.

In Europe, The Stoxx Europe 600 Index was little changed, dragged down by declines on retailers. One of the biggest movers on major European bourses was UK retailer Next. Its shares fell as much as 14 percent after cutting its annual profit forecast and forecasting a difficult year ahead. The stock has lost nearly 40 percent over the past year.

Japan’s Topix index and Nikkei 225 Stock Average both gained at least 2.4 percent, the best first day of trading since 2013.

U.S. futures pointed to a higher opening of between 0.1 percent and 0.2 percent on Wall Street, priming the Dow Jones for another test of the 20,000-point mark.

In currencies, the potential for further U.S. rate hikes this year ensured profit-taking on the dollar’s run on Tuesday was limited to just 0.15 percent against a basket of currencies. The dollar’s strength in Asian trading helped Japan’s exporter-heavy stock market rally toward its biggest daily increase for almost two months.

The euro rose 0.3 percent to $1.0435, and the dollar gave up earlier gains against the yen to trade little changed at 117.75 yen. Euro zone inflation expectations are moving closer to the European Central Bank’s target of just below 2 percent, offering some welcome relief to ECB policymakers who for years have struggled to lift growth and inflation.

In rates, U.S. Treasury notes due in 2026 edged lower, with the yield rising one basis point to 2.457 percent.  German and UK yields were flat at 0.26 percent and 1.32 percent, respectively. Germany’s 10-year yield had hit a two-week high of 0.29 percent on Tuesday. The Markit iTraxx Europe Index of credit-default swaps on investment-grade companies declined one basis point to 69 basis points. A gauge of swaps on high-yield companies fell two basis points to 280 basis points, the lowest since July 2015.

Investors will now turn their attention to the minutes of the Federal Reserve’s policy meeting last month when it raised rates.

“What is important is the Fed’s view on inflation, especially after the (strong) ISM manufacturing survey data yesterday,” said Naeem Aslam, analyst at Think Markets. “Improvement in input prices is going to have an impact on final products which would, in turn, move the scale on inflation, upon which the Fed can no longer be reticent,” he said.

Market Snapshot

  • S&P 500 futures up 0.2% to 2256
  • Stoxx 600 down less than 0.1% to 366
  • FTSE 100 down less than 0.1% to 7177
  • DAX down 0.1% to 11572
  • German 10Yr yield up less than 1bp to 0.27%
  • Italian 10Yr yield down 2bps to 1.85%
  • Spanish 10Yr yield down 1bp to 1.41%
  • S&P GSCI Index up 0.4% to 392.2
  • MSCI Asia Pacific up 1.3% to 137
  • Nikkei 225 up 2.5% to 19594
  • Hang Seng down less than 0.1% to 22134
  • Shanghai Composite up 0.7% to 3159
  • S&P/ASX 200 up less than 0.1% to 5736
  • US 10-yr yield up 1bp to 2.46%
  • Dollar Index down 0.19% to 103.01
  • WTI Crude futures up 0.7% to $52.71
  • Brent Futures up 0.7% to $55.85
  • Gold spot up 0.6% to $1,165
  • Silver spot up 0.7% to $16.40

Top Global News

  • Ford, Toyota Form Telematics Bloc to Stymie Google and Apple: Mazda, PSA, Fuji and Suzuki join to ensure connectivity choice
  • J&J Judge Slashes $1 Billion Verdict Over Pinnacle Hip Implants: Judge found punitive-damage award was constitutionally flawed
  • Tesla Deliveries Miss Forecasts Again on Production Delays: Model S maker cites production challenges related to Autopilot
  • Bloomberg’s Winning Economic Forecasters Lay Out 2017 Calls: Most-accurate predictors of inflation, unemployment and growth explain their outlook for this year
  • Trump Tariff on GM Would Violate NAFTA. That May Not Stop Him: U.S. trade deal with Mexico and Canada forbids tariffsQualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough: Snapdragon 835 will enable thinner handset with larger battery
  • Blackstone Said to Near Deal to Buy Sesac: WSJ reports company in advanced talks to buy Sesac, citing unidentified people familiar.
    Trump Says His Briefing on ‘So-Called’ Russia Hacking Is Delayed
  • China Said to Consider Options to Back Yuan, Curb Outflows
  • Qualcomm’s Newest Smartphone Chip Aimed at PC Breakthrough
  • Nikkei’s Financial Times Buys GIS Planning to Expand Services
  • Manhattan Home Prices Fall as Sellers Concede to Slowing Market

In Asia, equity markets traded mostly positive following gains on Wall Street, where strong data underpinned sentiment despite a slump in oil markets. Nikkei 225 (+2.5%) outperformed with gains of over 2.0% as the index played catch-up to yesterday’s advances on return from holiday with JPY weakness also benefiting exporters. Furthermore, the index also benefited from firm domestic manufacturing PMI data and rhetoric from PM Abe that he will continue to make the economy a priority and there will be no snap election. ASX 200 (+0.1%) stalled at 19-month highs, with weakness in real estate capping gains in the index. Shanghai Comp. (+0.8%) and Hang Seng (-0.1%) traded indecisive with cautiousness seen after another weak liquidity operation by the PBoC which effectively drained CNY 140bIn in liquidity today, while HSBC shares outperformed after the bank increased its 3-month CNH deposit rate in Hong Kong to 2.85%. 10yr JGBs traded lower despite a JPY 1.12tIn bond buying operation by BoJ as participants sought riskier assets on return to the market, while the yield curve steepened amid underperformance in the super-long end.

Top Asian News

  • China Said to Consider Options to Back Yuan, Curb Outflows: Authorites may order state-owned firms to sell dollars
  • India Sets Date for Polls Seen as Referendum on Modi’s Note Ban: Country’s most populous state heads to polls from Feb. 11
  • KFC’s Return to Malaysian Bourse Heralds Rebound in Deal Volumes: Fundraising from Malaysian IPOs is poised to rebound from the lowest in 16 years
  • Tencent Shares Losing $35 Billion Shows Depth of China Gloom: Technology giant has tumbled 13% from September record
  • Indonesia Temporarily Suspends All Military Ties With Australia: Move threatens to undermine improved relations between sides

European bourses have failed to remain afloat despite the spate of better than expected Eurozone PMI readings support by Germany and France. While the FTSE 100 continues to hover around record highs, however the index has been dragged lower by Next (-11%) after the company cut their profit guidance. Elsewhere, financials continue their strong start to the year with major financial names among the notable outperformers in Europe.

European Eco Data

  • (FR) Dec. Consumer Confidence 99, est. 99
  • (SP) Dec. Unemployment MoM Net (’000s) 86.8, est. -50
  • (SP) Dec. Markit Services PMI 55.5, 54.7 est.
  • (SP) Dec. Markit Composite PMI 55.5, est. 55
  • (IT) Dec. Markit/ADACI Services PMI 52.3, est. 52.6
  • (IT) Dec. Markit/ADACI Composite PMI 52.9, est. 53
  • (FR) Dec. Markit Services PMI 52.9, est. 52.6
  • (FR) Dec. Markit Composite PMI 53.1, est. 52.8
  • (EC) Dec. Markit Services PMI 53.7, est. 53.1
  • (EC) Dec. Markit Composite PMI 54.4, est. 53.9
  • (UK) Dec. Markit/CIPS Construction PMI 54.2, est. 52.5
  • (EC) Dec. CPI Estimate YoY 1.1%, est. 1%
  • (EC) Dec. CPI Core YoY 0.9%, est. 0.8%
  • (IT) Dec. CPI EU Harmonized MoM 0.4%, est. 0.2%
  •     (IT) Dec. CPI EU Harmonized YoY 0.5%, est. 0.3%

Top European News

  • Hard Brexit Looms Large With Resignation of U.K.’s EU Envoy: Rogers says negotiating expertise ‘in short supply’ in London
  • Euro-Area Inflation Outpaces Expectations as Oil Prices Surge: Consumer prices rise 1.1%, core inflation increases to 0.9%
  • CEZ Sees No Impact on 2017 Earnings From Czech Currency Cap Exit: Czech central bank plan to exit its currency-cap regime after 1Q will have “practically no impact” on CEZ’s 2017 earnings, CFO Martin Novak says
  • Swedish Six-Hour Workday Runs Into Trouble: It’s Too Costly: Swedes looking forward to a six-hour workday just got some bad news: the costs outweigh the benefits.

In currencies, the U.S. Dollar Index was 0.3 percent lower after touching its highest level since at least 2005. Across FX markets, the USD index has continued to run out of steam against its major counterparts with the US 10yr yield below 2.5% and USD/JPY moving further away from 118.00. Elsewhere, AUD/USD hovers at intra-day highs having tripped stops through 0.7250 while near term resistance resides at 0.7280. EUR/GBP has failed to find any firm direction with price action likely to be magnetised around 0.8500 amid a large vanilla option expiry worth lbln. Additionally, Eurozone inflation continued its upward momentum in December, accelerating at the fastest pace since 2013, however limited reaction had been observed given that the figures were largely in-line with consensus. The rand strengthened 1.4 percent as of 10:40 a.m. in London while the ruble added 0.3 percent in its second day of advances.  Citigroup strategists said in a Jan. 3 note to clients that “Russia and South Africa could be outperformers” in developing Europe, “but it might still be a bumpy ride for EMFX as the relatively hawkish FOMC signal from mid-December permeates.”

In commodities, crude oil futures climbed as much as 1.2 percent in New York after tumbling 2.6 percent Tuesday, before returning to broadly unchanged. Dampened sentiment has been due to concerns surrounding cooperation among other oil producing nations, while some note that Libya and Nigeria who are exempt from cuts have already made progress on increasing production. Elsewhere, Gold continues to remain in modest positive territory with prices in close proximity to 3-week highs while Copper rebounded of its worst levels overnight amid a mostly positive risk tone in the Asia-Pacific region.

DB’s Jim Reid concludes the overnight wrap

It hasn’t taken long for markets to dust off the holiday cobwebs and start acclimatizing to 2017. The good news is that unlike the freefall sparked by China’s equity markets this time last year, the mood in 2017 is so far so good with some decent data out of the manufacturing sector helping to set the early pace.

Indeed after the generally positive data in Europe on Monday, the UK manufacturing PMI was yesterday reported as surging to 56.1 in December (vs. 53.3 expected) from 53.6 and to the highest in two and a half years. In the afternoon we then learned that the ISM manufacturing reading in the US had risen to 54.7 in December (vs. 53.8 expected) and the highest since December 2014. The details revealed that the new orders component surged to 60.2 from 53.0 in the month prior too which is particularly noteworthy in light of the recent strength for the US Dollar. To put in perspective this component printed at 48.8 in December 2015. Meanwhile the final manufacturing PMI for the US last month was revised up a tad to 54.3 (from 54.2). It’s worth noting that Greece is the only developed nation with a manufacturing PMI below 50 but even that reading (49.3) is still at a four-month high.

Equity markets were generally firmer across the board yesterday as a result with the Stoxx 600 closing +0.70% and the S&P 500 kicking off 2017 with a +0.85% gain. European Banks (+2.84%) have also started the year in style with the catalyst yesterday appearing to be the news that the Basel Committee had postponed a meeting due for this weekend to consider a contentious reforms package, fuelling expectations that some of the proposals could potentially be watered down. Meanwhile the US auto sector was also in focus after Ford announced that they were to scrap plans for a $1.6bn expansion in Mexico and instead create new jobs in Michigan following proposals by President-elect Trump to slap tariffs on foreign made vehicles. That news also came as Trump turned to social media to criticize General Motors for production of vehicles in Mexico. The Peso (-1.82%) was a notable underperformer in FX as a result.

If that wasn’t enough then a complete reversal for Oil also added another dimension to yesterday’s session. WTI Oil peaked at $55.24/bbl in the early morning, or over 2% higher, before then plummeting some 5% from those early highs to close -2.59% on the day at $52.33/bbl. Natural Gas also tumbled -10.66% for the biggest one-day decline since February 2014. While forecasts for milder weather in the US this month were attributed to the decline for the latter, there didn’t appear to be an obvious catalyst for the sharp swing in Oil aside from the continued strength for the Greenback.

Meanwhile the rates market was an interesting microcosm of the volatility that we expect this year. Yields initially surged in Europe supported by the early gains for Oil and then later on by the bumper inflation report in Germany where headline CPI jumped +1.0% mom in December (vs. 0.6% expected) and so helping the YoY rate to hit +1.7% from +0.7% in November and the highest since July 2013. The wider Euro area CPI report is due today and a similar jump, assuming it can be maintained, will surely give the ECB some food for thought. Anyway the data helped 10y Bund yields jump +7.7bps to 0.258% while yields in the periphery were anywhere from +9.0bps to +20.8bps higher. The Treasury market opened in similar fashion with that US data also helping matters and 10y Treasury yields peaked at 2.516% (after opening at 2.445%) before the energy complex went into reverse. Treasury yields completely unwound that move higher and finished unchanged by the closing bell.

A reminder that today we’ll also get the FOMC minutes from that December meeting where we’re expecting the tone to reflect the moderately more hawkish nature of the statement. Ahead of this sentiment has remained fairly buoyant in the Asia session this morning where bourses in Japan in particular have reopened in style. The Nikkei and Topix have surged +2.14% and +2.17% respectively with financials leading the way while there are also gains in China with the Shanghai Comp +0.39% and CSI 300 +0.42%. The Kospi and ASX are little changed along with the Hang Seng while credit indices are generally tighter in Asia Pac. US equity index futures are also up modestly while Oil has rebounded about half a percent.

Moving on. Yesterday we got the latest ECB CSPP breakdown as of the end of December. The numbers took on added interest with the addition of the primary and secondary market split too. With regards to holdings, the ECB announced total holdings of €51.07bn which works out as net purchases settled during the month of €3.89bn, albeit with an unsurprising slowdown into year end. In terms of the split, of the total holdings currently, €6.93bn or 13.6% were made in the primary market and €44.14bn or 86.4% were made in the secondary market. Interestingly while the overall primary market purchases (in percentage terms) were ramped up from June to October, they have held relatively steady over the months of November and December although this may also reflect the slowdown in the new issue market into the end of the year.

Meanwhile there were some interesting developments on the Brexit front in the UK yesterday too with the announcement that Britain’s ambassador to the EU, Sir Ivan Rogers, had unexpectedly resigned just a couple of months out from the UK’s formal resignation from the EU and prior to the end of his official tenure in October. Various reports suggested that Rogers was one of most experienced EU negotiators and was heavily criticized last year by Conservative eurosceptics. His resignation letter – obtained by the FT – stated that ‘serious multilateral negotiating experience is in short supply’ and that ‘we do not yet know what the government will set as negotiating objectives for the UK’s relationship with the EU after exit’. No obvious reason was provided for his early resignation although Rogers did confirm that it would make more sense to have a team in place which see’s Britain through the entire Brexit process. The news could come as a bit of a blow to the ‘Soft’ Brexit camp though and clearly comes at a crucial time in talks so it’ll be interesting to see if there is any further fallout following this announcement.

Looking at the day ahead, this morning in Europe we’ll get the remaining December PMI’s (services and composite prints) including the final revisions for the Euro area, Germany and France as well as a first look at the data for the periphery. Also due out this morning is the CPI report for the Euro area where headline inflation is expected to have ticked up to +1.0% yoy from +0.6%. The UK will also release the November money and credit aggregates data while in France we’ll get the latest consumer confidence print. Over in the US this afternoon the lone data release is the December vehicle sales data while later on this evening we’ll get the FOMC minutes from the December meeting.

end

i)Late  TUESDAY night/WEDNESDAY morning: Shanghai closed UP 22.83 POINTS OR 0.73%/ /Hang Sang closed DOWN 15.93 OR .07%. The Nikkei closed UP 479.79 POINTS OR 2.51% /Australia’s all ordinaires  CLOSED UP 0.06%/Chinese yuan (ONSHORE) closed DOWN at 6.9348/Oil FELL to 52.62 dollars per barrel for WTI and 55.85 for Brent. Stocks in Europe: ALL IN THE RED  .  Offshore yuan trades  6.9014 yuan to the dollar vs 6.9348  for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE NARROWS COMPLETELY TRYING TO STOP  DOLLARS  LEAVING CHINA’S SHORES /

3a)THAILAND/SOUTH KOREA/:

none today

b) REPORT ON JAPAN c) REPORT ON CHINA

Offshore yuan soars as on fears of capital controls:

(courtesy zero hedge)

Offshore Yuan Soars Most In One Year On Fears Of Capital Controls

Following last night’s trial ballon by the PBOC, when as reported overnight the PBOC was studying possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans, the Offshore Yuan has reacted accordingly, and soared by 0.9% to as high as 6.8950 per dollar as of 7:20pm in Hong Kong. That was the biggest increase on a closing basis since Jan. 11 last year.

Meanwhile, the onshore yuan up 0.3%, most since July. As shown in the chart below, the spread between the two is now the most negative since the start of 2016.

“China has been challenged by capital outflows and declining foreign-exchange reserves, and policy makers are taking measures to solve the problem,” said Eddie Cheung, a Hong Kong-based foreign-exchange strategist at Standard Chartered Plc, the most accurate forecaster for Asian emerging-market currencies according to a Bloomberg ranking. “Funds will continue to exit in the first half due to individuals’ purchases of the dollar and on concerns of U.S. political uncertainty.”

As further reported, in a familiar twist, China warned it may also further sell U.S. Treasuries in 2017 if needed to keep the yuan’s exchange rate stable, Bloomberg’s sources said, adding that the size of the reduction will depend on capital outflows and market intervention. The nation’s holdings of Treasuries declined to the lowest in more than six years in October as the world’s second-largest economy used its currency reserves to support the yuan.

For now, concerns of a full-blown clampdown are working, forcing yet another short squeeze in the yuan, although as usual the question remains how much of what the PBOC has warned about is it actually willing to implement, as it remains trapped: should it implement aggressive capital controls it will benefit the Yuan in the short end, however it will only lead to further capital flight in the longer run as concerns spread among the local population of what it is the PBOC is concerned about. Sure enough, earlier this morning Bitcoin hit $1,090 in US trading, the highest level in three years as capital flight using the digital – and still unregulated – currency continues.

 

 

end

 

As stated above China may dump her USA treasuries to keep the yuan stable while preparing for additional capital controls:

(courtesy zero hedge)

China Warns May Dump Treasuries To Keep Yuan Stable, Prepares More Capital Controls

In China, announcing new (and ever more ineffective) capital controls has become a daily thing.

Last week, Beijing unveiled its latest set of capital controls according to which Chinese banks would be required to report all yuan-denominated cash transactions exceeding 50,000 yuan (around 7,100 US dollars) to the People’s Bank of China (PBOC), down from the current level of 200,000 yuan. Cross-border transfers more than 200,000 yuan by individuals would also be subject to the report process.

Then, overnight, China’s currency regulator, the State Administration of Foreign Exchange (SAFE) added its own round of capital control limitations, when it announced it wanted to close loopholes exploited for purposes such as money laundering and illegally channeling money into overseas property. As a result, while the regulator kept existing quotas of $50,000 of foreign currency per person a year, citizens faced draconian new currency exchange disclosure requirements, requiring foreign currency buyers to indicate how they plan to use the money and when they plan to spend it. Additionally, mainlanders would be restricted from using the FX proceeds to buy overseas property, securities, life insurance or other investment-style insurance products. In fact, among the list of approved uses of funds are tourism, schooling, business travel and medical care. Which means any offshore asset purchases have been effectively limited.

What made the above capital controls especially amusing is that as Xinhua reported over the weekend, “the policy stoked worries that the government is trying to impose capital control in a disguised form.” And since the official admission of capital controls would only lead to even more panicked outflows, PBOC economist Ma Jun intervened, saying that the new cash transaction rules, i.e. capital controls, are “not capital control at all.

We leave it up to readers to decide what that means.

Then, fast forward two days when China, no longer bothering with euphemisms, admitted that it has “studied possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans”, Bloomberg reported citing people familiar with the matter.

Among the “contingency plans” are proposals recently suggested by such banana countries as Turkey and Venezuela, which include China’s government  asking state-owned enterprises to temporarily convert some foreign-currency holdings into yuan, said Bloomberg’s sources, who are clearly mostly interested in the market’s response to this particular Bloomberg-mediated trial balloon

Bloomberg adds that financial regulators have already encouraged some SOEs to sell FX under current account.

But most troubling is the admission that “China may further cut U.S. Treasury holdings in 2017 if needed to keep exchange rate stable; size of reduction depends on capital outflows and FX market intervention,” or in other words, the worst-case scenario which so many serious “economists” have said can not conceivably happen.

Well, China is now actively considering it, which means that should the Yuan continues to slide, Beijing is close to implementing it.

Not unexpectedly, as a result of this latest daily escalation in China’s capital controls, the offshore Yuan is now surging, and is back under 6.95, up nearly 200 pips on the session so far.

END

 

With the above problems in China it is now wonder that Bitcoin soars to $1100.00 per coin

(courtesy zero hedge)

 

Bitcoin China Soars To Record High Amid Capital Control Concerns

While Yuan rallied following last night’s trial balloon by the PBOC – when as reported overnight the PBOC was studying possible scenarios of yuan exchange rate and capital outflows in 2017 based on models, stress tests and field research, and is preparing contingency plans – Bitcoin in China soared to new record highs amid massive volumes.

It appears fears of crackdowns on “virtual” currency outflows – as described by China researchers – is not there yet as the momentum-chasing Chinese have found a new friend as Commodities crumble.

 

In USD, Bitcoin remains just shy of record highs:

But as we noted earlier, for those buying into bitcoin here on the momentum, most of which originates in China, we urge readers to be cautious as by now the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing capital controls in China. Should Beijing mandate that bitcoin no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.

 

 

END

4 EUROPEAN AFFAIRS

Deutsche bank’s top crime fighter (regulator) quits after only 6 months on the job as the heat was too much for him

(courtesy zero hedge)

Deutsche Bank’s Top “Crime Fighter” Quits After Only Six Months At The Job

It will probably not come as a big surprise that the head of Deutsche Bank’s global anti-financial crime unit, a post also known as the bank’s top “crime fighter”, plans to leave that position after just six months at the bank, and will be replaced as soon as next week, Germany’s Manager Magazin first reported.

Peter Hazlewood, who joined Deutsche Bank to oversee anticrime compliance as recently as July 2016, could stay at the German lender in a different position, but that hasn’t been determined, the WSJ reports.

Considering the ongoing barrage of civil and criminal accusations lobbed relentless at the German lender, which over the past few years has been accused of manipulating and rigging virtually every market, culminating with the recent RMBS settlements with the DOJ which briefly sent its stock price to all time lows amid concerns of bank failure in late 2016, it is perhaps more surprising that he lasted as long as he did.

The job includes overseeing controls to prevent money laundering and assuring compliance with other financial laws and regulations. The anti-financial crime chief reports to Sylvie Matherat, Deutsche Bank’s Chief Regulatory Officer and a member of the management board.

It was not immediately clear what the reason was behind the accelerated transition.

The WSJ added that Deutsche Bank execs plan to name a replacement as soon as next week, pending management approval of an internal candidate who’s likely to take the position.

Hazlewood, whose official title is global head of anti-financial crime and group money-laundering reporting officer, previously worked at JPMorgan, as well as HSBC Holdings and Standard Chartered PLC, two other banks embroiled in allegations of global impropriety.

Deutsche Bank has faced a series of legal and regulatory hurdles including improving its policing of trades and controls to avoid violations of sanctions and money laundering. After a high-level management shake-up in 2015, which included the appointment of John Cryan as chief executive and a near-complete makeover of the management ranks, senior executives have focused in part on overhauling compliance, seeking to end a series of legal missteps that have cost Deutsche Bank billions of dollars.

Cryan is trying to resolve the bank’s remaining legal battles, following last year’s $7.2 billion settlement with the U.S. over its role in the sale of mortgage securities in the run-up to the 2008 financial crisis. Deutsche Bank is still being probed by U.S. and U.K. authorities over whether it failed to catch transactions that may have moved billions of dollars out of Russia from 2012 to 2015, Bloomberg added.

After settling the U.S. case last month, Cryan said in a memo to staff that an internal investigation by the bank had found “no indication of a breach of sanctions” in Russia. The probe did detect “deficiencies” in the bank’s systems and controls that were being addressed, according to the memo.

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6.GLOBAL ISSUES

We have heard of robots in the fast food industry; we had heard of driverless cars and now we witness computers replacing white collar workers.  Take a look at what is going on in the insurance field:

(courtesy Mish Shedlock/Mishtalk)

It’s Not Just Blue-Collar Jobs – Insurance Claim Adjusters Replaced By “IBM Watson Explorer”

Submitted by Mike Shedlock via MishTalk.com,

Manufacturing jobs have already been decimated by robots. White collar workers are next in line.

Fukoku Mutual Life Insurance in Japan is about to replace claim adjusters with a software robot from IBM.
 

Most of the attention around automation focuses on how factory robots and self-driving cars may fundamentally change our workforce, potentially eliminating millions of jobs. But AI that can handle knowledge-based, white-collar work are also becoming increasingly competent.

 

One Japanese insurance company, Fukoku Mutual Life Insurance, is reportedly replacing 34 human insurance claim workers with “IBM Watson Explorer,” starting by January 2017.

 

The AI will scan hospital records and other documents to determine insurance payouts, according to a company press release, factoring injuries, patient medical histories, and procedures administered. Automation of these research and data gathering tasks will help the remaining human workers process the final payout faster, the release says.

 

Fukoku Mutual will spend $1.7 million (200 million yen) to install the AI system, and $128,000 per year for maintenance, according to Japan’s The Mainichi. The company saves roughly $1.1 million per year on employee salaries by using the IBM software, meaning it hopes to see a return on the investment in less than two years.

 

Watson AI is expected to improve productivity by 30%, Fukoku Mutual says. The company was encouraged by its use of similar IBM technology to analyze customer’s voices during complaints. The software typically takes the customer’s words, converts them to text, and analyzes whether those words are positive or negative. Similar sentiment analysis software is also being used by a range of US companies for customer service; incidentally, a large benefit of the software is understanding when customers get frustrated with automated systems.

 

The Mainichi reports that three other Japanese insurance companies are testing or implementing AI systems to automate work such as finding ideal plans for customers. An Israeli insurance startup, Lemonade, has raised $60 million on the idea of “replacing brokers and paperwork with bots and machine learning,” says CEO Daniel Schreiber.

This trend will accelerate at a rapid pace once its proven. If it works in Japan, it will work here.

 

 

end

 

Mexico

The Mexican peso plummets to record lows, not helped with Trump’s tweet that Ford is cancelling its move to Mexico.  Oil price rises is helping Mexico a bit but PEMEX reserves are also plummeting.  Not a good recipe for Mexico

(courtesy zero hedge)

 

Peso Plunges To Record Low After Trump Tweet

The Mexican Peso is plunging once again this morning – very close to all-time record lows – as fears spread that Ford’s decision yesterday may become the norm following president-elect Trump’s tweet that “this is just the beginning.”

is-deciderHtmlWhitespace" cite="https://twitter.com/realDonaldTrump/status/816635078067490816">

Donald J. Trump @realDonaldTrump

Thank you to Ford for scrapping a new plant in Mexico and creating 700 new jobs in the U.S. This is just the beginning – much more to follow

8:19 AM – 4 Jan 2017

Bloomberg notes that Ford’s move, which follows a similar decision by United Technologies Corp.’s Carrier in November, makes it all the more important for Mexican President Enrique Pena Nieto to dissuade other foreign companies from following suit in the face of Trump’s wrath. Mexico’s northern neighbor buys 80 percent of the Latin American nation’s exports, and luring U.S. companies is a cornerstone of the government’s plans to modernize industries from construction to oil.

“A lot’s at stake, considering that since 1999 close to 46 percent of foreign direct-investment flows into Mexico originated in the U.S.,” said Alonso Cervera, chief Latin America economist for Credit Suisse Group AG. “Investors will likely be anxious to see which other companies may do the same.”

The damage caused by companies buckling under political pressure offers a preview of the ripples that could jolt Mexico’s economy should Trump also follow through with threats to tear up free-trade agreements and to build a border wall. Economists in Bloomberg surveys have already cut their median forecasts for GDP growth in 2017 to 1.7 percent from an estimate of 2.3 percent before Trump was elected.

 

But, as Bloomberg details, the economic outlook for Mexico remains challenging after disappointing results in 2016. Tighter global financial conditions and uncertainty about the future of bilateral relations with the U.S. since the election of Donald Trump in November are a drag on investment. Potential trade and immigration-policy changes in the U.S. may prompt additional downside risks for activity and external accounts in 2017. Tight monetary and fiscal policy to contain accelerating inflation and rising public debt should also weigh on growth.

A weak and more competitive peso already support net exports, but the relief could be limited if bilateral trade with the U.S. comes under pressure from potential protectionist measures. Higher oil prices are also positive, but the upside is limited by falling output and lingering problems in Pemex.

end

7. OIL ISSUES

Crude distillates see big inventory buildup

(courtesy zero hedge)

Crude Confusion As Gasoline, Distillates See Biggest Inventory Build In A Year

Crude prices remain lower since last week’s inventory data indicated a surprise (albeit small) build (but bounced today). With expectations for a 2mm draw this week, API reported crude inventories plunged 7.431mm last week – the most since September. However, Gasoline and Distillates saw huge inventory builds (biggest since Jan 2016) and WTI prices whipsawed.

 

API

  • Crude -7.431mm (-2mm exp)- biggest draw since Sept 2016
  • Cushing +482k (+900k exp)
  • Gasoline +4.25mm (+1mm exp)- most since Jan 2016
  • Distillates +5.244mm (-800k exp) – most since Jan 2016

 

Distillates build was notably bigger than median expectations…

#Distillate#DOE Estimates (in mbbls) for Week Ending December 30, 2016 pic.twitter.com/F3ESCYtUp8

— EnergyBasis (@EnergyBasis) January 4, 2017

 

Crude kneejerked higher on the crude draw print but dropped quickly on the product builds only to rebound to unch…

 

end So much for Russia cutting output (courtesy Dave Forest/Oil Price.com) This “Rogue” Oil & Gas Nation Just Set A Slew Of Output Records

Submitted by Dave Forest via OilPrice.com,

With 2016 now closed out, we’re getting the first looks at year-end data. And numbers from one nation in the energy space have been particularly eye-catching this week.

Russia.

Over the last 15 years, Russia vaulted upwards in oil and gas production — challenging for the world’s top producer of crude. A fact that’s especially critical given this big producer is a “rogue” nation that lies outside the purview of OPEC.

And 2016 was another big year for Russian oil output. With stats showing the country’s production rose again this past year — to an average 10.96 million barrels per day, up from 10.72 million barrels per day in 2015.

That came on the back of strong national production in December, where Russian producers pumped 11.21 million barrels per day — marking the highest output level in nearly 30 years.

That’s a very important data point for energy markets, showing that Russian supply is continuing to surge even as other big producers like Saudi Arabia are seeking production cuts.

And it isn’t just oil where Russia is having a major impact on global markets. Recent stats show the nation also had a banner year for natural gas output.

Russian natgas giant Gazprom said this past week that it increased 2016 production levels to 419 billion cubic meters, or 14.8 trillion cubic feet. A mark that exceeded Gazprom’s own forecasts for the year by 2.7 percent.

That rising production translated into higher exports, with Gazprom shipping 179 billion cubic meters to Europe during 2016 — marking a record yearly total.

It’s not just pipeline gas that’s surging either. Russia’s burgeoning LNG exports also saw a 1.1 percent rise during 2016, to 14.69 billion cubic meters, according to government reports this week.

In fact, Russian LNG has been picking up speed even in the past few weeks, with December exports up 10.8 percent, to a total 1.47 billion cubic meters.

That puts Russia’s LNG shipments on pace for a 20 percent rise this coming year.

Watch for more numbers on supply growth from this critical energy nation — and resulting effects on pricing in both oil and natural gas markets.

8. EMERGING MARKETS

end

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

Euro/USA   1.0428 UP .0011/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP WINS THE ELECTION/USA READY TO GO ON A SPENDING BINGE WITH THE TRUMP VICTORY/ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/USA RAISING RATES

USA/JAPAN YEN 117.65 UP 0.022(Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER/KURODA:  HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST

GBP/USA 1.2273 UP .0031 (Brexit by March 201/UK government loses case/parliament must vote)

USA/CAN 1.3352 DOWN .0067 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT FROM EU)

Early THIS WEDNESDAY morning in Europe, the Euro ROSE by 11 basis points, trading now WELL BELOW the important 1.08 level RISING to 1.0428; 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 Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ AND TODAY MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED UP 22.87 0r 0.73%     / Hang Sang  CLOSED DOWN 15.93 POINTS OR 0.68%  /AUSTRALIA  CLOSED UP 0.06%  / 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 479.79 POINTS OR 2.51%  

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 15.93 OR .07%  Shanghai CLOSED UP 22.83 POINTS OR 0.73%   / Australia BOURSE CLOSED UP 0.06% /Nikkei (Japan)CLOSED IN THE GREEN   /  INDIA’S SENSEX IN THE RED

Gold very early morning trading: $1164.85

silver:$16.38

Early WEDNESDAY morning USA 10 year bond yield: 2.465% !!! UP 1 IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%. THE RISE IN YIELD WITH THIS SPEED IS FRIGHTENING

 The 30 yr bond yield  3.053, UP 0 IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 103.01 DOWN20 CENT(S) from TUESDAY’s close.

This ends early morning numbers WEDNESDAY MORNING

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And now your closing WEDNESDAY NUMBERS

Portuguese 10 year bond yield: 3.90% DOWN 1  in basis point yield from TUESDAY  (does not buy the rally)

JAPANESE BOND YIELD: +.065% UP 2  in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD:1.43%  UP 2  IN basis point yield from  TUESDAY (this is totally nuts!!/

ITALIAN 10 YR BOND YIELD: 1.895  UP  3  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 47 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.276% UP 1 IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for WEDNESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/5:00 PM 

Euro/USA 1.0487 UP .0070 (Euro UP 70 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 117.28 DOWN: 0.346(Yen UP 35 basis points/ 

Great Britain/USA 1.2361 UP 0.0073( POUND UP 73 basis points)

USA/Canada 1.3307 DOWN 0.01147(Canadian dollar UP 114 basis points AS OIL ROSE TO $53.26

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This afternoon, the Euro was UP by 70 basis points to trade at 1.0487

The Yen ROSE to 117.28 for a GAIN of 35 basis points as NIRP is STILL a big failure for the Japanese central bank/HELICOPTER MONEY IS NOW DELAYED/BANK OF JAPAN NOW WORRIED AS AS THEY ARE RUNNING OUT OF BONDS TO BUY AS BOND YIELDS RISE  /OPERATION REVERSE TWIST ANNOUNCED SEPT 21.2016

The POUND ROSE 73  basis points, trading at 1.2316/

The Canadian dollar ROSE by 114 basis points to 1.3307,  WITH WTI OIL RISING TO :  $53.21

The USA/Yuan closed at 6.9321 the 10 yr Japanese bond yield closed at +.065% UP 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 2 IN basis points from TUESDAY at 2.441% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 3.041 DOWN 1  in basis points on the day /

Your closing USA dollar index, 102.54 DOWN 67 CENT(S)  ON THE DAY/1.00 PM 

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for WEDNESDAY: 1:30 PM EST

London:  CLOSED UP 11.85 OR .17% 
German Dax :CLOSED UP 0.07 POINTS OR 0.00%
Paris Cac  CLOSED UP 0.07 OR 0.00%
Spain IBEX CLOSED DOWN 31.80 POINTS OR 0.33%
Italian MIB: CLOSED UP 53.16 POINTS OR 0.27%

The Dow was UP 60.40 POINTS OR .630% 4 PM EST

NASDAQ WAS UP 47.92 POINTS OR .88%  4.00 PM EST
WTI Oil price;  53.26 at 5:00 pm; 

Brent Oil: 56.47  5:00 EST

USA /RUSSIAN ROUBLE CROSS:  60.38 (ROUBLE UP  1 /100 roubles from YESTERDAY)

TODAY THE GERMAN YIELD RISES TO +0.276%  FOR THE 10 YR BOND  2:30 EST

 

END

 

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

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

WTI CRUDE OIL PRICE 5 PM:$53.81

BRENT: $56.87

USA 10 YR BOND YIELD: 2.441%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 3.041%

EURO/USA DOLLAR CROSS:  1.0487 up .0070

USA/JAPANESE YEN:117.28  DOWN 0.346

USA DOLLAR INDEX: 102.54  down 67  cents (BREAKS HUGE resistance at 101.80)

The British pound at 5 pm: Great Britain Pound/USA: 1.2316 : up 73  BASIS POINTS.

German 10 yr bond yield at 5 pm: +.276%

 

END

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

TRADING IN GRAPH FORM

Fed Fails To Deliver Dow 20k But Bitcoin Hits Record High

“20,000 will be mine… oh yes, she will be mine…”

 

The post-Fed Minutes reactions were mixed initially

 

But perhaps the biggest news of the day was Bitcoin surged to record highs today… coming close to parity with gold…

 

NOTE – As stocks got hit in the last few seconds so Bitcoin also skidded

 

Another day, another cash open pump-and-dump in futures…

 

As “Most Shorted” stocks extended yesterday’s afternoon rip…

 

Sending Small Caps ripping…

 

VIX was smashed as Fed Minutes hit and then leaked lower as every effort was made to keep The Dow green and pushing for 20k… (NOTE VIX went a littel crazy at the very last minute and stocks gapped down)

 

Notably the SVXY Puts remain massively positioned relative to calls (SVXY Puts should be considered similar to VIX Calls, or implicitly leveraged market Puts/hedges)

 

Bonds rallied, dropped, and then pushed back higher (in price) post-Fed…

 

30Y yields remain lower so far in 2017…

 

The USD Index slipped lower overnight but after a brief dip post-Fed, pushed higher – but ended the day lower unable to extend on yesterday’s 14-year highs…

 

EURUSD tagged 1.05 post-fed but faded as all the majors gained against the USD…

 

But the biggest news in FX markets was the explosion higher in Offshore Yuan…following capital control crackdown concerns – the biggest rise since jan 2016

 

Some context for this move…

 

Crude bounced back modestly from its big dump yesterday (ahead of API inventories report later).

 

NatGas saw no such bounce following yesterday’s bloodbath…

 

But remains red on the week as silver leads in the new year…

 

end

 

Just take a look at what happens when government interferes in the restaurant business:

i) minimum wage hikes

ii) health care payments

iii)Obamacare payments

iv) zero interest rate policy causes land to skyrocket which in turn causes rents to rise.

all of the above have killed the restaurant business

 

(courtesy zero hedge/McMaken/Mises two stories)

 

There’s A Massive Restaurant Bubble, And It’s About To Burst

In January 2009, just three days after his inauguration, an arrogant President Obama, a “community organizer” and one-term senator from Illinois, proclaimed to then Republican Whip Eric Cantor that “elections have consequences, and at the end of the day, I won.”  Unfortunately, he was absolutely right and the consequences of Obama’s election, having already crushed the coal industry, are about to bring the restaurant industry crashing down as well.

To be fair, Obama hasn’t crushed the restaurant industry single-handedly.  While Obamacare went a long way toward destroying the industry, it’s demise would not have been certain without a little help from leftist state legislators that have passed a slew of egregious minimum wage hikes in recent years (not that Obama didn’t try and fail twice to accomplish the same thing at the federal level).  Add to that a multi-year run of near 0% interest rates that have driven commercial real estate soaring and a dash of “hope” from culinary grads looking to become America’s next  famous celebrity chef and it’s easy to see that you’ve had a recipe for disaster simmering on low heat for years.

And while he avoided the political attributions we note above, a recent Thrillist article by Keven Alexander highlights the demise of one independently owned restaurant in San Francisco, AQ, that will be shutting down later this month for all the same reasons.

When it comes to minimum wage, Alexander highlights that just a $1 per hour minimum wage increase can reduce an independent restaurant’s already thin profit margins by $20,000, or 10%.  So we imagine the $5 minimum wage hike that California just passed is probably slightly less than optimal for companies like AQ in San Francisco.

I should say before I go any further that all of the restaurant owners and chefs I’ve talked to are compassionate humans who support better coverage and livable wages, and seem on the whole progressive by nature, but restaurant margins are already slim as hell. There are no political agendas here — they’re just genuinely worried about how to afford to pay extra without radically changing the way they do business.

Let’s start with the minimum wage. According to the Bureau of Labor Statistics, of the 2.6 million people earning around the minimum wage in 2015, the highest percentage came from service jobs in the food industry. Though the Obama administration’s attempt to increase the federal minimum wage above $7.25 failed, 21 states and 22 cities have raised the minimum wage starting this year, including Washington, DC ($12.50 an hour), Massachusetts ($11), New York ($9.70), and Arkansas ($8.50).

Considering that hour-wage workers are usually the lowest earners and the increase is essential to ensure they earn an actual living, this is the least controversial of the newer expenses and something almost everyone in the industry supports, in theory, but it doesn’t change the fact that it’s an additional cost that must be factored in. If you have 10 hourly employees working eight-hour shifts, five days a week and you raise the wages a dollar an hour, that comes out to a nearly $20K increase on the year. In AQ’s best year — a phenomenal year by restaurant standards — that would have been nearly 10% of profits.

And while California is certainly the poster child for misinformed liberal policies, as the Wall Street Journal recently pointed out, they’re hardly alone in their implementation of a massive minimum wage hike in 2017.

Meanwhile, when it comes to Obamacare, Alexander notes that AQ was hit with an incremental $72,000 of annual expenses in 2015 that didn’t exist in 2012, which eroded another ~30% of the company’s peak net income.

Then there’s health care. For the better part of its history, the restaurant business was a health care-free zone, which is ironic, given this Bureau of Labor Statistics’ description of the back-of-house work environment: “Kitchens are usually crowded and filled with potential dangers.” With the introduction of Obamacare, most restaurant workers finally got the coverage they’ve needed for years through the employer mandate, but critics often talk about the strain it puts on small-business owners due to a puzzling and controversial element that defines “full time” as 30 hours per week, and not the 40-hour workweek used almost everywhere else (the Save American Workers Act proposes to move this back to 40 hours).

Though this mainly affects bigger restaurants with staffs of 50 or more full-time workers, independent sit-down restaurants still need to provide suitable coverage (meaning it has to be affordable, less than 9.5% of the employee’s income) or face fees of $2K per employee. Consider AQ. Semmelhack told me that in 2012 they paid $14,400 for health care costs. In 2015, they paid $86,400. That’s an increase of $72K MORE per year than 2012, or 29% of their best year’s profit.

Then there are those pesky rental rates which have been driven ever higher by nearly a decade of 0% interest rates that have resulted in artificially high demand for “yieldy” commercial real estate.

In the restaurant world, rent always sucks. Unless you manage to play it perfectly, as a restaurant owner you’re either moving into a sketchy or “emerging” neighborhood where the rent is cheap but few want to go there, or you’re overpaying for an established ‘hood and need to be a runaway success from day one. And even if you do manage to make it in the former type of neighborhood, your success often ends up pricing you out of the ‘hood you helped revitalize.

In Miami, Michelle Bernstein’s Cena by Michy helped rebirth the MiMo historic district but was forced to close this year, after the landlord attempted to triple the rent. And even Danny Meyer had to close and move Union Square Cafe in New York, which, since 1985, had served as one of America’s culinary landmarks, when he couldn’t rationalize paying the huge rent hike the landlord proposed.

For all the reasons above, Alexander notes that “AQ will serve its last meal sometime in January, 2017″…an inconvenient fact that we’re sure the liberal politicians in Sacramento will promptly ignore.

And while the publicly-traded restaurant companies have potentially started to take note of some of the risks above…

…the broader markets, which are also exposed to the same risks albeit to varying degrees, couldn’t seem to care less.

 

 

end

 

Restaurants To Eliminate More Waiters In Response To Minimum Wage Hike

Submitted by Ryan McMaken via The Mises Institute,

Colorado was among the four states where voters approved a minimum wage hike in November. Among the specific provisions for the new wage hike was the stipulation that tipped workers — such as waiters who receive tips and are paid below the standard minimum wage — will receive a mandated wage hike of 99 cents.

Naturally, this will lead to an increase in costs for restaurant owners who will then seek to raise prices and/or reduce costs.KDVR in Denver reports:

Kanatzer owns The Airplane Restaurant in Colorado Springs and said he has already increased his kids menu prices. …

 

“I increased it a dollar — my kids menu prices went from $4.99 to $5.99,” Kanatzer said.

Raising prices can only go so far, however. Contrary to what many non-economists seem to believe, it is not possible to simply “pass on the extra cost to customers.” As any economics-major undergraduate knows, it is only possible to pass on a portion of the increased cost to the customer because higher prices and competition from other firms will lead to fewer sales if the owner simply attempts to “pass on the cost.” And even if all restaurants are subject to the same wage hike, there are always substitutes in the form of take-out and other types of dining.

Specifically, in response to the forced wage hike we can expect to see more food-service business go the way of so-called “fast casual dining” which include brands such as Chipotle and Noodles and Company. These are restaurants where patrons order food at the counter, and then take their food to their tables themselves. These places often offer alcoholic beverages and higher-quality food than “fast food” places such as McDonalds, and somewhat approximate the “casual dining” experience at lower cost thanks to the elimination of servers.

Thus, in order to control costs, restaurants that have in past hired wait staff will become more like fast casual restaurants. The KDVR report suggests exactly this, in fact:

Kanatzer estimates most restaurants will adjust prices and change staffing levels as a result, which could mean fewer servers and longer waits.

 

“I’ve got a friend who has a restaurant and he’s going to do counter service from 2-4 (p.m.) so he’s not going to have a server at all,” Kanatzer said.

 

…Kanatzer suspects more restaurants will install kiosks at tables in the hopes technology might eliminate the need for most servers.

So, we should expect restaurants to hire fewer servers and move toward more counter service and use of technology to replace servers. 

Some waiters have become concerned that the new wage hike is endangering their jobs. They should be concerned:

Even some servers who are recipients of the pay raise fear possible impacts.

 

“I’m more worried about [the restaurant owner] and how it might affect him — not how it impacts me,” said Lisa Bowen, a server at The Airplane Restaurant.

The effect on workers will be that many of them will need to move to lower-wage jobs due to there being fewer waiter opportunities. Many people who are now waiters and potential waiters will have to take jobs as cashiers and other workers at fast food and fast casual restaurants instead of waiting tables. As anyone who has worked in food service knows, these sorts of jobs often pay far less per hour than traditional waiter jobs. So, the minimum wage hike will mean an actual pay cut for many people who could have made more as waiters, were it not for the minimum wage hike.

Moreover, it means that in the future, waiter positions that might have existed in the absence of the minimum wage hike will never exist. More restaurants that rely on a large wait staff will change their model, close down, or never be opened at all, further cutting the job opportunities for workers who would benefit from working as waiters.

However, these unseen positions that never came into existence will not show up in any unemployment data, and thus the proponents of minimum wage hikes will claim that higher wages to not lead to less employment. The media will interview the lucky waiters who managed to keep their jobs and wait tables in an environment of higher prices — and higher tips. Competition for these remaining jobs will become more fierce meaning lower-skill waiters will find themselves locked out of waiter jobs. In the end, proponents of minimum wage hikes will declare victory and ignore all the unseen consequences imposed on the most vulnerable, unskilled, and marginal members of the workforce. 

 

 

END

 

 

USA Debt for Dec 31/2016 totals 19.98 trillion just 24 billion shy of the magic 20 trillion.  Exactly one yr ago we had debt of 18.92 trillion and thus a gain of a little over 1 trillion dollars of debt. This year, the total debt is expected to rise even higher by around 1.4 trillion

(courtesy zero hedge)

US Ends 2016 With $19.98 Trillion In Federal Debt; Up $1,054,647,941,626.91

On the last day of calendar 2016, total US public debt jumped by $98 billion, mostly as a result of end of quarter Social Security debt allocation, which accounted for $70.4 billion of the daily increase. As a result, total US government debt on December 30, 2016 was $19,976,826,951,047.80.

This compares to $18,922,179,009,420.89 on the last day of 2015 and means that the increase in US federal debt in 2016 was just over $1 trillion, or $1,054,647,941,626.91 to be specific.

Putting this increase in context, during Barack Obama’s time in office, federal debt has increased by $9,349,949,902,134.72, or 88%, rising from $10,626,877,048,913.08 on Jan. 20, 2009, the day of Obama’s inauguration to $19,976,826,951,047.80 on the last day of 2016.