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Updated: 8 hours 12 min ago

August 18/2017*/Steve Bannon ousted/Breitbart promises “thermonuclear war”/gold down 35 cents/silver down 4 cents on 7th consecutive raid/Deborah Wasserman Schultz’s aide charged.

Fri, 08/18/2017 - 18:47

GOLD: $1286.15  DOWN $0.35

Silver: $17.02  DOWN 4 cent(s)

Closing access prices:

Gold $1284.50

silver: $16.99

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1291.88 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1287.95

PREMIUM FIRST FIX:  $3.93

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SECOND SHANGHAI GOLD FIX: $1298.42

NY GOLD PRICE AT THE EXACT SAME TIME: $1287.40

Premium of Shanghai 2nd fix/NY:$9.02

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LONDON FIRST GOLD FIX:  5:30 am est  $1295.25

NY PRICING AT THE EXACT SAME TIME: $1295.85 

LONDON SECOND GOLD FIX  10 AM: $1295.50

NY PRICING AT THE EXACT SAME TIME. $1297.65 ????

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 0 NOTICE(S) FOR  nil  OZ.

TOTAL NOTICES SO FAR: 4581 FOR 458,100 OZ  (14.248 TONNES) 

For silver: AUGUST  51 NOTICES FILED TODAY FOR 255,000  OZ/ Total number of notices filed so far this month: 1051 for 5,255,000 oz

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end

Today for the 7th consecutive day we had a raid on both gold and silver.

 

Late at night after I received the preliminary data which gives me a good idea of where we are heading for the next day…..

 

I wrote this to my friends:

“my goodness!!……

I will be shocked if we do not have another raid for the 7th consecutive trading day. the Oi for gold is just too high.. let us see.” with gold ready to puncture $1300.00 and silver $17.25, you could sense that the bankers had to cool both of our precious metals. The fact that silver lagged behind gold was a good sign that a raid was called upon as well as the weak close of the gold/equity stocks. The most important aspect of today’s data is in silver. In the COT report, the bankers did not increase their massive shortfall position in silver because they are aware of the acute shortage of metal in London. The COT report shows a huge increase in commercial short position in gold but not silver. The bankers needed a good positive close at the Dow and Nasdaq with the Bannon firing. After the Dow initially rose past 50 points, it closed down 75 points on the day….expect huge weakness again once the new week begins.

Let us have a look at the data for today

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In silver, the total open interest  ROSE BY 1,565 contracts from 188,247 up to 189,812 with THE RISE IN THE PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (UP 11 CENTS) . THE BANKERS AGAIN PROVIDED THE SHORT PAPER TO INITIATE ANOTHER RAID YESTERDAY (6TH CONSECUTIVE DAY OF TORMENT). THAT FAILED IMMEDIATELY AS SILVER STARTED TO ADVANCE IN PRICE.  NEWBIE SPEC LONGS REALIZING ANOTHER FAILED RAID, JUMPED ONTO THE BANDWAGON WITH PURCHASES.  HOWEVER THE COMMERCIALS WERE STILL LOATHE TO SUPPLY THE SHORT CONTRACTS. THUS A HUGE ADVANCE IN PRICE WITH A SMALLER THAN GOLD GAIN IN OI. 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.949 BILLION TO BE EXACT or 136% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 51 NOTICE(S) FOR 255,000  OZ OF SILVER

In gold, the open interest ROSE by A MONSTROUS 10,722 WITH THE GOOD SIZED RISE in price of gold ($13.45 GAIN YESTERDAY.). The new OI for the gold complex rests at 493,127. A raid was called upon yesterday by the bankers and it failed. The bankers initiated the raid with short paper but newbie longs entered the arena with reckless abandon with the lower price of gold . Thus the bankers were not successful in covering their shorts but they did supply the necessary short paper to our newbie spec longs.  The result: increase in open interest with a higher price for gold.

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:

Today, no changes in gold inventory:

Inventory rests tonight: 795.44 tonnes

IN THE LAST 25 TRADING DAYS: GLD SHEDS 41.53 TONNES YET GOLD IS HIGHER BY $53.15 . 

SLV

Today:  WE HAD NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 334.407 MILLION OZ

end

.

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

1. Today, we had the open interest in silver RISE BY 1565 contracts from 188,247 up to 189,812 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) WITH THE  RISE IN SILVER PRICE (11 CENTS). THE INITIAL RAID THURSDAY MORNING WAS REBUFFED IMMEDIATELY BY A HUGE INFLUX OF NEWBIE LONGS ENTERING THE SILVER COMEX CASINO.  BUT THIS TIME IT WAS GOLD THAT WAS IN THE LEAD AND SILVER LAGGED BEHIND. THE BANKERS STILL HAD A HARD TIME COVERING DUE TO THAT RISE IN PRICE.  YOU CAN CLEARLY VISUALIZE BANKER CAPITULATION AS THEY TRY DESPERATELY TO EXIT SOME OF THEIR ENORMOUS SHORTS.. NEWBIE LONGS ENTERED ONCE THEY SAW THE FAILED RAID, WITH THE SUPPLY COMING FROM OLD SPECS EXITING FOR A PROFIT.  RESULT: HIGHER PRICE WITH A SMALLER OI GAIN.

(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 THURSDAY night/FRIDAY morning: Shanghai closed UP 0.29 POINTS OR 0.01%   / /Hang Sang CLOSED DOWN 296.65 POINTS OR 1.08% The Nikkei closed DOWN 232.22 POINTS OR 1.18%/Australia’s all ordinaires CLOSED DOWN 0.49%/Chinese yuan (ONSHORE) closed UP at 6.6722/Oil UP to 47.18 dollars per barrel for WTI and 51.02 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6807 yuan to the dollar vs 6.6722 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

South Korea and the USA are scheduled to have a massive war games on the peninsula.  Kim is already angry and predicts a “catastrophe”. Not only is North Korea angry but so is China who is suppose to rein in this unpredictable buffoon.

( zero hedge)

b) REPORT ON JAPAN c) REPORT ON CHINA 4. EUROPEAN AFFAIRS  SPAIN i)There were two or three separate terror events in Spain yesterday. The following highlights the second plot in the town of Cambrils where the police killed 5 terrorists ( zerohedge) The Barcelona terrorists were planning a much bigger devastating attack but the building in which the plot was hatched blew up taking with them most of the explosives. ( zero hedge) iii)GERMANY/FINLANDTwo knife attacks today: one in Germany and the other in Finland( zero hedge) 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES 7. OIL ISSUES

Oil rises of a bigger than expected rig count drop

( zerohedge)

8. EMERGING MARKET 9.   PHYSICAL MARKETS i)Mike Kosares on why we need gold and silver ownership ( Mike Kosares/GATA)

ii)Anglogold Ashanti is not too happy with its South African gold assets. It now has revived plans to spin these off

( Reuters/GATA) 10. USA Stories

i)Do not read too much into this:  soft data University of Michigan consumer sentiment beats expectations but most of the interviews were done prior to Charlottesville

 

( zero hedge)

ii)It seems that anybody with a pulse received financing for car.  Even bonuses were handed out for loaning money to poor credit risks.  It now looks like deep subprime auto delinquencies are spiking to 1o yr highs.  Trouble ahead in this arena

 

( zero hedge)

iii)Well that did not take long.  Wasserman Schultz’s IT aide, Awan has been indicted on 4 counts of bank fraud by lying to banks trying to obtain loan money.  Now the fun begins as they dig deeper into the DNC.  The big question: why did Debby Wasserman Schultz keep Awan on her payroll right up until he was arrested

(courtesy zero hedge)

iv)Matt Drudge reports that Steve Bannon is out at the White House that will remove another key antagonist to the Goldman Sachs people surrounding the president. ( Matt Drudge/zero hedge)

v)As I mentioned above, Steve Bannon will be going after the globalists in Trump’s team which will further sever the chances for anything being done. Many voters who put Trump in power with the slogan America first will be thoroughly disappointed

 

a must read.

( zerohedge)

vi)Bannon set to go to war for Trump by trying to “drain the swamp”. He needs to marginalize the neocons and the Goldman Sachs lobby to win:

( zerohedge)

vii)It looks like a pardon for Julian Assange is coming forth so he can provide the correct person(s) who provided information to Wikileaks in the hacking of the DNC.

( zero hedge)

viii)This is something that we have been pointing out to you for the past few weeks:  Goldman Sachs sees a 50% chance of a government shutdown.  So do we!

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 10,722 CONTRACTS UP to an OI level of 493,127 WITH THE RISE IN THE PRICE OF GOLD ($13.45 with THURSDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY TACKLING THE LOWER PRICE AS ANOTHER RAID WAS CALLED UPON BY OUR CROOKED BANKERS. THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER.  THE HIGH OPEN INTEREST IN THE GOLD COMPLEX WAS FODDER AGAIN FOR OUR CROOKS AS THEY TRIED AGAIN  TO SHAKE MANY OF THE GOLD LEAVES FROM THE GOLD TREE: IT FAILED MISERABLY!!!.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract GAINED 9 contract(s) to stand at 908 contracts. We had 2 notices filed on YESTERDAY so we GAINED 11 contracts or an additional 1100 oz will stand at the comex and 0 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI LOSE 20 contracts DOWN to 1363.

The next active contract month is Oct and here we saw a GAIN of 1076 contracts UP to 50,629.

The very big active December contract month saw it’s OI GAIN 9520 contracts UP to 385,921.

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

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI  ROSE BY 1565 CONTRACTS FROM  188,247 UP TO 189,812 WITH YESTERDAY’S GOOD SIZED 11 CENT GAIN.  THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER ARE CHOKING THEM TO DEATH. THE BANKERS INITIATED ANOTHER RAID SUPPLYING  GOOD SIZED PAPER SHORTS WHICH INITIALLY DROVE THE PRICE OF SILVER DOWN. HOWEVER IN TOTAL CONTRAST TO YESTERDAY, IT WAS SILVER THAT WAS LAGGING WITH RESPECT TO THE RISE IN GOLD. THE BANKERS STILL COULD NOT COVER ANY OF THEIR SHORTS WHICH WAS AGAIN THE OBJECT OF THE EXERCISE. THE NET RESULT: A SMALLER RISE IN OPEN INTEREST WHEN COMPARED TO GOLD AND A GOOD SIZED RISE IN PRICE.

We are now in the next big non active silver contract month of August and here the OI FELL 34 contracts DOWN TO 60. We had 85 notice(s) filed yesterday.  Thus we GAINED ANOTHER 51 contract(s) or an additional 255,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 1476 contacts down to 94,017.  The next non active contract month for silver after September is October and here the OI gained 176 contacts up TO 405. After October, the big active contract month is December and here the OI GAINED by 2629 contracts UP to 83,530 contracts.

We had 51 notice(s) filed for  255,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

YESTERDAY’S confirmed volume was 340,107 which is excellent

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 18/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   1,318.151 oz Scotia Brinks Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  83,289.359 oz Brinks No of oz served (contracts) today   0 notice(s) nil OZ No of oz to be served (notices) 908 contracts (90,800 oz) Total monthly oz gold served (contracts) so far this month 4581 notices 458,100 oz 14.248 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   28,096.8  oz Today we HAD  2 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 1  customer deposit(s):  i) into Brinks: 83,289.359 oz total customer deposits;  83,289.359  oz We had 2 customer withdrawal(s) i) Out of Scotia:  1286.000 oz (40 kilobars) ii) Out of brinks: 32.151 oz (1 kilobar) total customer withdrawals; 1318.151 oz  we had 0 adjustment(s)   For AUGUST:

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 j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4581) x 100 oz or 458,100 oz, to which we add the difference between the open interest for the front month of AUGUST (908 contracts) minus the number of notices served upon today (0) x 100 oz per contract equals 548,900  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4581) x 100 oz  or ounces + {(908)OI for the front month  minus the number of  notices served upon today (0) x 100 oz which equals 548,800 oz standing in this  active delivery month of AUGUST  (17.073 tonnes)  we GAINED 11 contracts or an additional 1100 oz will stand for delivery and 0 EFP’s for August were issued.(FOR FIAT BONUS PLUS ANOTHER DELIVERABLE CONTRACT WHICH MOST LIKELY IS A LONDON BASED FORWARD) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,311.027 or 23.58 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,707,110.590 or 270.82 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 270.82 tonnes for a  loss of 31  tonnes over that period.  Since August 8/2016 we have lost 82 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 12 MONTHS  82 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 18  2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 31,236.910 oz  CNT Brinks Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  nil oz No of oz served today (contracts) 51 CONTRACT(S) (255,000 OZ) No of oz to be served (notices) 9 contracts ( 45,000 oz) Total monthly oz silver served (contracts) 1051 contracts (5,255,000 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 2,617,221.8 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 2 customer withdrawal(s): i) out of  brinks: 1012.84 oz ii) out of CNT: 30,224.110 oz TOTAL CUSTOMER WITHDRAWALS:  31,236.910 oz We had 0 Customer deposit(s): ***deposits into JPMorgan have stopped  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: nil oz    we had 2 adjustment(s) i) Out of Delaware: 4998.646 oz was adjusted out of the dealer and this landed into the customer account of Delaware The total number of notices filed today for the AUGUST. contract month is represented by 51 contract(s) for 255,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 1051 x 5,000 oz  = 5,225,000 oz to which we add the difference between the open interest for the front month of AUGUST (60) and the number of notices served upon today (51) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  1051 (notices served so far)x 5000 oz  + OI for front month of AUGUST(60 ) -number of notices served upon today (51)x 5000 oz  equals  5,300,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 51 contracts or an additional 255,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month. At this point in the delivery cycle last year on August 16/2016 we had 100,246 contracts standing vs this yr at 94,017. Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex YESTERDAY’s  confirmed volume was 110,319 contracts which is OUT OF THIS WORLD FRIDAY’S CONFIRMED VOLUME OF 110,319 CONTRACTS WHICH EQUATES TO 551 MILLION OZ OF SILVER OR 79% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.323 million (close to record low inventory   Total number of dealer and customer silver:   215.627 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 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 7.4% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.6% Percentage of fund in silver:37.4% cash .+0.0%( August 18/2017)  2. Sprott silver fund (PSLV): STOCK   NAV RISES TO +0.49% (August 18/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.32% to NAV  (August 17/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.49/Sprott physical gold trust is back into NEGATIVE/ territory at -0.32%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 18/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 795.44 TONNES

August 17/late last night, a deposit of 4.43 tonnes of gold at the GLD/inventory rests at 795.44 tonnes/the bleeding of gold has stopped.

August 16/no change in gold inventory at the GLD. Inventory rests at 791.01 tonnes

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 18 /2017/ Inventory rests tonight at 795.44 tonnes *IN LAST 215 TRADING DAYS: 154.44 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 155 TRADING DAYS: A NET  2.99 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY. *FROM FEB 1/2017: A NET  13.82 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 18/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY REST AT 334.407 MILLION OZ

August 17/A WITHDRAWAL OF 1.418 MILLION OZ LEAVES THE VAULTS OF THE SLV (WITH SILVER UP 25 CENTS YESTERDAY?)/INVENTORY RESTS AT 334.407 MILLION OZ

August 16/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz/

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

August 18.2017:

 Inventory 334.407  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.34%
  • 12 Month MM GOFO + 1.49%
  • 30 day trend

end

 

at 3:30 pm est we receive the COT report.  No doubt we will see in gold the commercials increasing their mass positions.

Let us see.

COT Gold, Silver and US Dollar Index Report – August 18, 2017  — Published: Friday, 18 August 2017 | Print  | Comment – New!

Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 277,730 89,996 37,693 122,138 318,769 437,561 446,458 Change from Prior Reporting Period 31,353 -7,544 1,285 -3,030 34,090 29,608 27,831 Traders 160 109 68 53 56 242 209   Small Speculators   Long Short Open Interest   40,360 31,463 477,921   -414 1,363 29,194   non reportable positions Change from the previous reporting period COT Gold Report – Positions as of Tuesday, August 15, 2017 Our large speculators

wow!!

those large specs that have been long in gold added a whopping 31,353 contracts to their long side

those large specs that have been short in gold covered 7544 contracts from their short side.

specs go net long by 39,000 contracts.

Our commercials

those commercials that have been long in gold pitched 3030 contracts from their long side

those commercials that have been short in gold added 34,090 contracts to their short side.

commercials go net short by 37,000 contracts

Our small specs

those large specs that have been long in gold pitched 414 contracts from their long side

those large specs that have been short in gold added 1363 contracts to their short side.

Conclusions:

commercials go hugely net short by supplying the short paper to which the longs gleefully accepted.

exactly as how I described it to you these past two weeks.

this is why we are experiencing mega raids every day

 

and now for our Silver COT

Silver COT Report: Futures Large Speculators Commercial Long Short Spreading Long Short 91,596 52,745 16,096 55,918 104,006 251 -4,736 -5,504 -3,355 5,172 Traders 87 60 50 39 39 Small Speculators Open Interest Total Long Short 187,955 Long Short 24,345 15,108 163,610 172,847 1,400 -2,140 -7,208 -8,608 -5,068 non reportable positions Positions as of: 150 131 Tuesday, August 15, 2017   © SilverSee

Please note the difference between gold and silver.

the bankers are having a tough time supplying the short paper.

Our large speculators

those large specs that have been long in silver added only 251 contracts to their long side

those large specs that have been short in silver covered 4736 contracts from their short side

large specs go net long by 5000 contracts.

 

 

Our commercials

those commercials that have been long in silver pitched 3355 contracts from their long side

those commercials that have been short in silver were only able to add  5172 contracts to their short side (to initiate raids)

commercials go net short by only 8400 contracts.

Our small specs

those small specs that have been long in silver added 1588 contracts to their long side

those small specs that have been short in silver covered 1834 contracts from their short side.

Conclusions:

As I have described to you throughout the past 10 days, our commercials are having extreme trouble trying to cover their shorts.

end

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold, Silver Consolidate On Last Weeks Gains, Palladium Surges 36% YTD To 16 Year High

By janskoylesAugust 18, 20170 Comments

– Gold and silver rise as stocks fall sharply after Barcelona attack
– Gold, silver 0.6% higher in week after last weeks 2%, 5% rise
– Palladium +36% ytd, breaks out & reaches 16 year high (chart)
– Gold to silver ratio falls to mid 75s after silver gains last week
– Perfect storm of financial and geopolitical tensions is driving safe haven demand and should see higher prices
– Weekly close over $1,300 could see gold quickly test $1,400
– Palladium at 16 year highs today; gold, silver in coming months?

2017 YTD Relative Performance (Finviz)

Editor Mark O’Byrne

This morning readers woke to the news that a second attack in 24 hours had taken place in Barcelona. So-called Islamic State claimed responsibility for the attacks in Spain.

Global stocks have fallen and precious metals have eked out gains this morning as investors seek out safe haven assets. Gold has risen to trade at its highest level since the beginning of June.

Gold’s reaction to the Barcelona events is likely to last and may continue today. The combination of heightened risk in the global geopolitical sphere is likely to support both gold and silver, pushing them through recent resistance. A weekly close above $1,300 per ounce will be very positive for gold and should see a rapid move to test the $1,400 level.

Gold and silver outperforming stocks

After losses earlier in the week, gold and silver have come right back and are now up 0.55% and 0.64% respectively. This is very positive as profit taking was to be expected after last weeks strong gains.

Gold and silver have consistently remained in the top-performing assets throughout the year and are beginning to outperform stocks.

In the year to date, gold is up nearly 13% whilst silver has climbed over 7.5%. The benchmark S&P500 is up 8.6% after weakness last week and this.

Both precious metals have performed well thanks to safe haven demand, much of which has been driven by very strong demand in India, China and Asia and ETF-demand in Europe.

Palladium at 16 year highs today; gold and silver in coming months

Palladium is up over 36% in the year-to-date and is the best performing commodity and market this year.

Palladium in USD – 30 Years (Macrotrends.net)

Consumption of the rare industrial precious metal is expected to hit 10.8 million ounces this year, an all-time high. Demand from the automotive industry, the biggest buyer of the metal, is up 4% this year.

Due to the high demand and limited availability of palladium there is market deficit of over 1 million ounces. The apparent five-year-long market deficit has begun to impact the availability of above-ground stocks.

This has prompted leasing rates to dramatically increase, taking the palladium market into backwardation of around 5-10%/year.

Much of palladium’s increased demand is thanks to increased demand for SUV vehicles which have to abide by tightening emission legislation from the EU. The latest announcement in the UK regarding a ban on diesel engines will also help to boost demand as consumers shift from diesel to petrol engines.

This suggests that there is little let-up for the tight supply conditions the palladium market is currently experiencing.

Safe haven demand to last

Safe haven demand is coming back and is again one of the firm drivers of precious metal prices. We have seen strong demand in August in what is frequently a quieter month as investors switch off and go on holidays.

We are operating in a very nervous financial and geopolitical environment globally. Geopolitical events can lead to price gains and safe haven demand. But the real risk is that a massive terrorist event or a cluster of many such events could impact consumer confidence, markets and the wider global economy.

And geopolitical risk is also seen in the complete mess that is U.S. politics and the Trump Presidency.

For instance, the latest drama from the Trump camp regarding the collapse of his business councils, is not in itself a reason to rush to precious metals. However, it is another sign of the cracks emerging in Trump’s administration and their complete inability to deliver on campaign promises.

The same can be said for the President’s reaction to the Charlottesville tragedy at the weekend. Both events (added to all issues since January) suggest that the current White House administration are perhaps losing sight of what it means to run the world’s declining super power.

Leading from struggles in the White House, the combative approaches of President Trump and North Korea ruler Kim Jong Un throughout the year has also helped to provide safe haven support for gold and silver.

These aren’t the only issues that are creating nervousness and uncertainty in the marketplace:

– Vladimir Putin’s geo-political ambitions combined with Russia’s growing closeness with China.

– The deteriorating relationship between Iran and the US, Israel, Saudi Arabia and significant players in the Middle East

– The near impossible problems in the Middle East—including but not limited to ISIS and al Qaeda, Syria, the worsening situation between Israel and Palestine

– Increasing divisions between Turkey and Europe – Turkey having previously been seen as an ally for the West, in the Middle East

– Signs of growing differences between many Western allies, significantly President Trump and European leaders in regard to how to deal with the above.

Will gold break $1,300?

In recent months gold has attempted to break through the $1,300 barrier a few times. This level is being touted as a psychological barrier which, when broken, could see gold perform in a way not seen since its 2011 run when the inflows of speculative money drove prices up $500 in just nine months.

However, it might not be political events that push it past this barrier. Interestingly if one looks at gold’s behaviour in the last seven or eight years, it has not reacted to political tensions (see graph below).

Source: ANZ

Instead, it has been mainly affected by monetary policy, QE, the hunt for yield and shifting inflationary / deflationary concerns. An interesting point to consider as it is, arguably, counterintuitive.

Therefore, we may see gold break through the $1,300 barrier on account of the US Federal Reserve whose last minutes surprised the markets. Whilst they gave no indication as to how the FOMC might move ahead, they did show a lack of consensus between members.

Janet Yellen previously indicated there might be three (or even four) possible interest rate rises for 2017. So far, we have had two of these which have increased U.S. interest rates by 50 basis points.  These latest Fed minutes are perhaps suggesting that the FOMC is unlikely to implement even a third rate rise this year.

This should not be surprising given the lack of recovery in the US economy, inflation not meeting the required 2% and employment levels failing to reach targets.

However, we should not dismiss political tensions and their push for safe haven demand. Central banks may talk and talk but the bottom line is that ultra loose monetary policies are set to continue and remain very supportive.

For many decades we have not seen a geopolitical situation so tense, where it feels so many countries are looking over their shoulders at what could come next both in terms of political and financial threats.

The push over $1,300 could be due to a perfect storm of financial, economic and geopolitical risks, each pushing investors to look for a safe haven and time-proven financial insurance.

Conclusion

Palladium is the best performing precious metal this year. This is not thanks to events which happen today and (sadly) become tomorrow’s news.

Palladium’s stellar performance is thanks to a series of decisions and events which have caused a major supply deficit whilst demand continues to climb.

The same can be said of gold and silver. Investors must not look to one-off events such as a terrorist attacks or an angry Tweet from Trump.

It is when these events are no longer isolated incidents and instead form a much bigger picture about the uncertain state of the world.

This picture is taking shape and is slowly impacting the way people look at their finances. Soon, the picture will be much clearer and will drive safe haven investment demand.

In the meantime, those with clearer foresight would do well to see the climbing numbers in the performance chart and realise now is a good time to take advantage of low prices and insultate and rebalance your portfolio with some safe haven protection in the form of allocated, segregated gold and silver bullion.

Given these many risks, there is no good reason, that gold and silver will not follow palladium’s lead and surge to multi year highs in the coming months.

News and Commentary

Gold Futures Punch Through $1,300 as Global Stocks Extend Losses (Bloomberg.com)

Gold lifted by haven demand; palladium logs 16-year high (MarketWatch.com)

Gold steady, buoyed by geopolitical worries (Reuters.com)

Nikkei slumps to 3-month low as Asian markets dip (MarketWatch.com)

India Bans Gold Exports Above 22 Carats to Plug Trade Loopholes (Bloomberg.com)

Futures Now: Gold shines (CNBC.com)

Markets Roiled on Trump Stance Tensions: Markets Wrap (Bloomberg.com)

High-Profile Sectors Start To Roll Over (DollarCollapse.com)

What can you do about this recurring crisis? (StansBerryChurcHouse.com)

New Currency in Race to Remake One of World’s Oldest Markets (Bloomberg.com)

Gold Prices (LBMA AM)

18 Aug: USD 1,295.25, GBP 1,004.34 & EUR 1,102.65 per ounce
17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce
16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce

Silver Prices (LBMA)

18 Aug: USD 17.15, GBP 13.30 & EUR 14.60 per ounce
17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce
16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce
10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce


Recent Market Updates

– Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard
– World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2
– Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017
– Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
– What Investors Can Learn From the Japanese Art of Kintsukuroi
– Bitcoin, ICO Risk Versus Immutable Gold and Silver

 END Mike Kosares on why we need gold and silver ownership (courtesy Mike Kosares/GATA) Mike Kosares: Historical inevitability and gold and silver ownership

Submitted by cpowell on Thu, 2017-08-17 19:43. Section: 

3:45p ET Thursday, August 17, 2017

Dear Friend of GATA and Gold:

USAGold’s Mike Kosares argues today that there are broad cycles in history and economic matters and that owners of the monetary metals can take some comfort in the hedging they provide against what most needs to be hedged: the times. Kosares’ commentary is headlined “Historical Inevitability and Gold and Silver Ownership” and it’s posted at USAGold here:

http://www.usagold.com/cpmforum/2017/08/17/historical-inevitability-and-…

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

END Anglogold Ashanti is not too happy with its South African gold assets. It now has revived plans to spin these off (courtesy Reuters) angloGold Ashanti revives plans to spin off S. African mines, sources tell Reuters

Submitted by cpowell on Fri, 2017-08-18 14:42. Section: 

By Zandi Shabalala and Clara Denina
Reuters
Friday, August 18, 2017

AngloGold Ashanti is considering separating its South African assets from the rest of its portfolio, two sources familiar with the matter told Reuters, three years after shareholders revolted against a similar effort.

Africa’s top bullion producer has hired Deutsche Bank to evaluate options but discussions are at an early stage, one of the sources said.

AngloGold and Deutsche Bank declined to comment.

The miner is looking at listing its international assets, which include gold mines in Western Australia and Brazil, in London, while the South African assets, some of which will be sold as part of the plan, will remain in the existing Johannesburg listing, the sources added. …

… For the remainder of the report:

http://www.reuters.com/article/us-anglogold-ashnti-m-a-idUSKCN1AY0ZC

END Gold trading:  the bankers’ defense of 1300.00 dollar gold/USA/Yen tumbles!! Gold Spikes Above $1300 As USDJPY Tumbles

For the first time since early June, Gold has just broken back above $1300, continuing to mirror the ebbs and flows of USDJPY (which just snapped below 109.00).

Is 3rd time the charm?

 

Gold is now outperforming The Dow year-to-date..

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 STRONGER 6.6722 (REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6807/ Shanghai bourse CLOSED UP 0.29 POINTS OR 0.01%  / HANG SANG CLOSED DOWN 296.65 POINTS OR 1.08% 

2. Nikkei closed DOWN 232.22 POINTS OR 1.18%    /USA: YEN FALLS TO 109.02

3. Europe stocks OPENED DEEPLY IN THE RED     ( /USA dollar index FALLS TO  93.49/Euro UP to 1.1749

3b Japan 10 year bond yield: FALLS  TO  +.0330%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  47.18 and Brent: 51.02

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  +.412%/Italian 10 yr bond yield DOWN  to 2.027%    

3j Greek 10 year bond yield RISES to  : 5.625???  

3k Gold at $1295.05  silver at:17.19 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 21/100 in  roubles/dollar) 59.43-

3m oil into the 47 dollar handle for WTI and 51 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 GOOD SIZED REVALUATION NORTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.02 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9609 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1291 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.421%

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 2.1887% early this morning. Thirty year rate  at 2.7754% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

“From Nukes To Terrorism”: Battered Investors Flee Risk For Safety Of Bonds And Gold

The global risk-off mood accelerated overnight on Trump “stability concerns”, coupled with fallout from the Spain terrorist attack and lingering North Korea tensions, even if the VIX is off its latest highs, trading just above 15. Investors fled into German and U.S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona.

“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr Trump’s strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona,” is how DB’s Jim Reid summarized the week’s psychedelic events.

Concerns that Trump’s stimulus is in peril spiked following speculation that his top economic advisor, former Goldman COO Gary Cohn, was set to resign roiled markets on Thursday until reports that he’d opted to stay on board steadied the ship, however heightened terror fears added to the risk off sentiment after at least 13 people died when a van plowed into pedestrians in Barcelona. The terror attack was a reminder of lingering geopolitical risks, with nerves still raw after last week’s escalation of tensions on the Korean peninsula.

USD/JPY dropped below 109.00 and EUR/JPY 128.00; EUR/USD and GBP/USD both run upside stops as USD weakens across the board. Core fixed income markets rally, curves bull flatten with 10Y bund yield falling below 40bps. Spot gold hits YTD high just below $1300/oz, while a strong close for Dalian iron ore futures once again lifts China industrial metals.

ING Bank analysts predicted the dollar would remain pinned near current levels, at the expense of the yen. “Tail risks such as geopolitics, protectionism and the unwind of easy central bank money all provide valid reasons to remain cautious in chasing risk,” they told clients. “Dollar/yen continues to capture this nervousness and could move down towards the 109.00 level.”

European stocks tumbled, with Spanish shares leading losses, as two Spanish terrorist incidents added to investor worries about U.S. policy chaos under the Trump administration.  The Stoxx Europe 600 Index dropped 1% percent, reducing the weekly rebound to just 0.3%. In the US, S&P futures were largely flat while Asian dropped with the dollar on rising US political turmoil. Gold, yen and oil gained despite another weekly increase in US shale production. Credit spreads widen, iTraxx Crossover touches widest level seen during North Korea troubles.

Travel and hospitality shares led the 1% drop in the Stoxx Europe 600 along with banks, while industries across the board were caught in the downturn. Spain’s IBEX index dropped more than 1 percent. Equities fell from Tokyo to Sydney earlier after the S&P 500 Index on Thursday tumbled 1.5 percent, its second-biggest drop for 2017. The VIX soared higher for the second time in one week, while core bonds across the euro region advanced.

In Asia, Japan’s Topix fell 1.1% at the close, down 1.2% over the week, while Australia’s S&P/500 Index ended 0.6% lower. The seemingly impervious to anything, including nuclear war Kospi index ended barely changed 0.1 percent lower. Hong Kong’s Hang Seng Index fell 0.6%.  The MSCI Asia Pacific Index lost 0.5 percent, paring gains for the week.

“The terror attacks in the U.S. and Spain just add to all the other geopolitical mess,” Simon Quijano-Evans, a strategist at London-based Legal & General Investment Management Ltd., said in a note to clients. “At some stage that is likely to culminate into a more extreme market reaction.”

In rates, yields have fallen in recent days following the ECB comments and amid the dash for defensive assets, with 10-year Bunds at a one-week low of 0.41 percent while 10-year Treasuries traded just off one-week lows hit on Thursday; 10Y Gilts fell one basis point to 1.075%. The turmoil also benefited gold, with spot prices for the metal rising 0.4 percent to the highest in more than two months and on track for its second week of gains.

Brent crude futures rose 0.35 percent, rising off three-week lows hit on Thursday as the dollar continued to weaken and signs appeared that supply is becoming tighter in the world’s biggest energy consumer, the United States.

Today’s data include August Michigan consumer sentiment. Deere, Estee Lauder, Foot Locker and Ascendis Pharma are among companies reporting earnings.

Market Snapshot

  • S&P 500 futures down 0.01% to 2,427.25
  • STOXX Europe 600 down 0.9% to 373.47
  • MXAP down 0.5% to 159.06
  • MXAPJ down 0.6% to 522.83
  • Nikkei down 1.2% to 19,470.41
  • Topix down 1.1% to 1,597.36
  • Hang Seng Index down 1.1% to 27,047.57
  • Shanghai Composite up 0.01% to 3,268.72
  • Sensex down 1.1% to 31,438.75
  • Australia S&P/ASX 200 down 0.6% to 5,747.11
  • Kospi down 0.1% to 2,358.37
  • Gold spot up 0.4% to $1,293.58
  • U.S. Dollar Index down 0.07% to 93.55
  • German 10Y yield fell 1.9 bps to 0.407%
  • Euro up 0.1% to $1.1738
  • Brent Futures up 0.3% to $51.17/bbl
  • Italian 10Y yield fell 1.8 bps to 1.737%
  • Spanish 10Y yield rose 10.4 bps to 1.543%

Top Overnight News

  • European Union officials accepted the U.K.’s request to delay the start of the next round of Brexit talks to enable British officials to have time off on Britain’s Aug. 28 “summer bank holiday,” according to two people familiar with the plans
  • Yellen speech at Jackson Hole confirmed for Friday, Aug. 25 at 10 a.m. New York time, topic will be financial stability; Draghi speech same day at 3 p.m. New York time
  • Trump: advisory council for infrastructure will not move forward, according to a White House spokesperson
  • China govt. to further limit outbound investments in foreign property, hotels, sports and gambling
  • Barcelona: five suspected terrorists killed by police; Islamic State claims responsibility
  • Five suspected terrorists killed by police following Barcelona attack
  • China home prices rise in 56 cities vs 60 prev as property market cools
  • Energy Capital Is Said to Plan $5.5 Billion Calpine Takeover
  • Ping An Undervalued Even After 50%-Plus Gain, President Says
  • Gap’s Old Navy Chain Keeps Retailer’s Turnaround Hopes Alive
  • Roche, Sanofi May Move on House Democrats MS Drug Price Probe
  • Guangzhou Auto Says No Plans to Buy Fiat Chrysler: Reuters
  • Fed’s Kashkari repeats there’s no rush to raise rates;
  • Kaplan urges
    patience, would like ’more progress on inflation’ before next hike
  • JPMorgan Hires Chen From Deutsche Bank For Senior China Role
  • James Murdoch to Donate $1m to Anti-Defamation League: Yahoo
  • July U.S. Total Video Game Sales Up 19% to $588m: NPD
  • Gap CEO Says Gap Brand ‘Stable and Steady,’ Not Yet Satisfying
  • Bunge Expands Soy Crush in Brazil, Cites Long-Term Positive View
  • Holidays on Hold as Bond Market Defies Usual August Slowdown
  • Quants Deliver Swift 10% Gain on Iron Ore From New BNP Model
  • Five Suspected Terrorists Killed After Twin Attacks on Spain
  • Elliott Is Said to Signal Backing for $6.3 Billion Stada Buyout
  • Merkel Jeered by Immigration Foes in Biggest Campaign Unrest Yet
  • Applied Materials Machines in Demand as Data Use Explodes
  • ROST Boosts FY EPS View, Midpoint Beats Est.; Shares Rise 8.4%

Bulletin Headline Summary from RanSquawk

  • European equities enter the North America crossover amid yesterday’s terror incident and further turmoil in Washington
  • JPY has been the main beneficiary in FX markets with macro newsflow otherwise relatively light
  • Looking ahead, highlights include: Canadian CPI, Uni. Of Michigan and Kaplan

In Asian trading, all major Asia-Pac indices traded in negative territory as the risk averse tone triggered by terror incidents in Spain and resignation rumours related to Trump’s chief economic advisor Cohn, rolled over to the region. ASX 200 (-0.56%) dampened from the open with the largest weighted financials sector leading the declines as all big 4 banks traded with firm losses, while Nikkei 225 (-1.18%) exporters felt the brunt of the safe-haven flows into FY.  Hang Seng (-1.08%) and Shanghai Comp. (+0.01%) also mirrored the global risk averse tone, although downside was stemmed in the mainland after the PBoC switched to net weekly injection in its operations vs. last week’s drain and as participants mulled over the latest property price data which suggested the effectiveness of curbs to cool the over rampant sector. 10yr JGBs were marginally higher with mild support seen amid the negative backdrop in global equities, while the BoJ were also in the market for JPY 1.05fin of JGBs with maturities of up to 10yrs.

Top Asian News

  • Malaysia GDP Growth Beats Forecasts as Economy Expands 5.8%
  • After Alibaba Bonanza, Manager Said to Plan New Asia Hedge Fund
  • Company Founders Find Fighting Back Has a Cost in India
  • Japan Stocks to Watch: JT, Kyoei Steel, NGK Insulators, Tosoh
  • Iron Ore in China Ends Week With Bang as Demand Seen Holding Up
  • Ping An’s Tech Push Undervalued by Investors, Ren Says: Q&A
  • Conflict With Infosys’ Founders Prompts CEO Sikka to Quit
  • U.S. Equities See Further Outflows, Europe Sees Inflows: BofAML
  • Falling House Prices in Shenzhen Don’t Bode Well for Steel
  • Kingsgate Surges as Thailand Lifts Gold Mine’s Suspension

Across European markets sentiment has soured with the Eurostoxx falling over 1%, sector wise the losses are broad based with travel stocks among the worst performers following yesterday’s terror attacks in Barcelona. Financials also taking a hit this morning after reports that banks are being sued by the FDIC over the Libor-rigging scandal. Flight to quality flow keeping EGBs afloat, the German curve is slightly bull flattening while the 10Y yield is approaching 0.4%. Peripheral debt spreads wider with the Italian 10Y yield edging higher.

Top European News

  • Commerzbank Early Retirement Offers Accepted by Almost 40%
  • City of London Only Sign of Brexit Weakness, Kingspan CEO Says
  • Straumann Stopped Share Sale as Investors Wanted Bigger Discount
  • Sistema Requests Break in Hearing After New Documents Submitted
  • Czechs Move to Strip Election Favorite of Immunity Before Vote

In currenices, JPY firmer across the board amid the fall seen across equity markets and as such USD/JPY is eying 109.00 to the downside, while support in the short term is situated at 108.70-80. USD softer against its major counterparts, EUR and GBP higher by 0.25% with the later making a move to breach 1.29. However, the backdrop of Brexit continues to weigh on GBP/USD and curb the upside. CAD: Today will see the release of the Canadian CPI figures where expectations are for a slight pick-up in inflation. Although, a miss on this could see USD/CAD make a push through 1.27.

In commodities, safe-haven commodities supported with gold prices moving to intra-day highs. Elsewhere, the softer USD also sees crude prices ticking up as Brent crude breaches USD 51. Another day of gains for base metals, Zinc rising near 2%.

Looking at the day ahead, in the US, the University of Michigan sentiment index (94 expected) will be released. Further, the Fed’s Kaplan will speak again today.

US Event Calendar

  • 10am: U. of Mich. Sentiment, est. 94, prior 93.4; U. of Mich. Current Conditions, est. 112.9, prior 113.4; U. of Mich. Expectations, est. 81.5, prior 80.5
    • U. of Mich. 1 Yr Inflation, prior 2.6%; U. of Mich. 5-10 Yr Inflation, prior 2.6%

DB’s Jim Reid concludes the overnight wrap

In a week where we started by worrying about nuclear war, markets have quickly moved on from this with yesterday’s weak session more of a response to fears that Mr Trump’s strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona.

The S&P 500 (-1.54%) fell sharply for its 2nd worst day of the year with the VIX surging 32.5% to 15.55, the fifth highest close of the year. We’ve now gone through last week’s ‘fire and fury’ lows. The hits kept coming yesterday with speculation that Trump’s key economic advisor Gary Cohn was about to resign sending an early US session shock to markets. He is seen as the glue holding Trump’s pro-business agenda together. The fears are that if he goes you take a further step back from tax cuts and deregulation. Notably the VIX moved from just over 12 to nearly 13.74 in 25mins as the news swept through the markets. The story was denied and markets calmed a little but sold off sharply into the close as the shocking news broke from Barcelona that terrorists killed 13 people as a vehicle rammed into pedestrians.

This morning in Asia, markets are following the negative leads from the US and are lower. The Nikkei (-1.33%), Hang Seng (-0.71%) and Chinese bourses (c.-0.2%) are all down. Elsewhere, the annual military drills between US and South Korean troops starting Monday seem to be having little impact on the markets, with the Kospi down 0.20%.

Now onto the ECB minutes. They noted that “concerns were expressed about the risk of the (Euro) overshooting in the future” and that policy makers discussed making “incremental” changes to their forward guidance. Later on, Draghi told reporters that the incoming data confirmed the strength of the Eurozone economy, but on inflation “we need to be persistent and patient, because we’re not there yet…” and “a very substantial degree of monetary accommodation is still needed for underlying inflation pressure to gradually build up”. Members have retained their pledge to the asset purchase program and Draghi noted later that “the last thing that the council may want is an unwanted tightening of the financing conditions”.

Given the focus on the Euro and Draghi, DB’s Mark Wall has just published a report highlighting the spectrum of Draghi’s comments on the exchange rate since becoming the President of the ECB. Draghi will speak at the Jackson Hole meeting but is not now expected to set expectations for the timing of a decision on QE. That said, Mark argues that Draghi’s view on the macro should be no more cautious than he was back at the July ECB council meeting.  Across the pond, the Fed has confirmed that Yellen will speak on the topic of financial stability at next week’s Jackson Hole symposium.

Back to the market’s performance yesterday. US equities have all weakened, with the S&P (-1.54%), the Dow (-1.24%) and the Nasdaq (-1.94% and marking the third largest daily decline in 2017). Within the S&P, all sectors were in the red, with the financials hit harder (BAC -2.27%; WFC -1.69%), in part as nervousness around Cohn hit the sector as he is expected to help deliver tax cuts, an easing in bank regulations and drive bond yields higher. European markets were also down, the Stoxx 600 fell -0.6%, with all sectors excluding utilities in the red. Similarly, financials were also more impacted, with large banks down -1.5% to -2.5%. Across the region, the DAX (-0.49%), FTSE 100 (-0.61%), CAC (-0.58%) and the Italian FTSE MIB (-0.89%) all fell.

Bond yields also fell in both US and Europe, with the UST10y down 4bps and core European yields down 2bps. Across the region, the decline in bond yields were fairly uniform at the long end of the curve, with bunds (2Y: +1bp; 10Y: -2bps), Gilts (2Y: -1bp; 10Y: -2bps) and OATs (2Y: +1bp; 10Y: -2bps) all lower i yield even if at the 2y part of the curve, changes were a bit more mixed, but little changed. This morning, UST10y has reversed a little, with yields back up 1.6bps.

Turning to currencies, earlier in the day the USD had strengthened against the euro, with EUR/USD down as much as -1%, but the aforementioned developments in the US saw the dollar retreat and allow the Euro to close down -0.4% for the day. Elsewhere, Euro/Sterling and Sterling/USD both dipped 0.2%, while the US dollar index finished +0.1% higher for the day. In commodities, WTI pared back from three consecutive days of losses to be up +0.7% yesterday. Precious metals were little changed (Gold +0.4%; Silver -0.5%), while industrial metals increased on the back of traders speculation of tighter supply (Copper +2.3%, Zinc +4.6%, Aluminium +2.5%), although some of the gains were offset this morning.

Away from the markets and the Gary Cohn story, tension continues to grow in US politics and may add to doubts on Trump’s pro-growth reforms. Republican senator Corker has told reporters that “..the president needs to….move away beyond himself…move to a place where daily he’s waking up thinking about what is best for the nation.” Further, another Republican senator Scott said “what we want to see from our president is clarity and moral authority.” Elsewhere, Trump was also busy himself, twitting “publicity seeking (Republican senator) Graham falsely stated that I said….such a disgusting lie.” and that Republican senator Flake is “toxic” and a “non-factor in the senate”.

Elsewhere, the German Constitutional Court has raised concerns that ECB’s public sector purchase program (PSPP) might violate the prohibition of monetary financing in EU law. The highest German court has referred the complaint to the European Court of Justice (ECJ) for “preliminary ruling”. DB’s Boettcher does not expect an ECJ decision on the motion before Q1 2018. This could push a final verdict by the GCC into late 2018, thus into a period when we expect the ECB to have progressed on winding down QE.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, data was mixed but broadly in line. The July industrial production was a tad lower at 0.2% mom (vs. 0.3% expected), whilst manufacturing output fell 0.1% mom (vs. 0.2% expected), with the 3.6% mom decline in auto production (the third consecutive monthly decline) being the biggest weight in the month. Elsewhere, the Philadelphia Fed business index was higher than expected at 18.9 (vs. 18) and the July conference board leading index was in line at 0.3%. Employment indicators remain solid, with initial jobless claims at 232k (vs. 240k) and continuing claims at 1.953m (vs. 1.955m). Across the pond, UK’s July retail sales was higher than expectations at 0.5% mom for exauto (vs. 0.1% expected) and 1.5% yoy (vs. 1.2%). Elsewhere, the Eurozone’s July inflation was in line at -0.5% mom, while the final inflation reading was unchanged at 1.2% yoy (core inflation). The French unemployment rate edged down to 9.2% in 2Q, meeting market expectations.

Looking at the day ahead, the German PPI’s will be out as this note is published, then the Eurozone’s June current account stats and construction output data are due. In the US, the University of Michigan sentiment index (94 expected) will be released. Further, the Fed’s Kaplan will speak again today.

 END 3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed UP 0.29 POINTS OR 0.01%   / /Hang Sang CLOSED DOWN 296.65 POINTS OR 1.08% The Nikkei closed DOWN 232.22 POINTS OR 1.18%/Australia’s all ordinaires CLOSED DOWN 0.49%/Chinese yuan (ONSHORE) closed UP at 6.6722/Oil UP to 47.18 dollars per barrel for WTI and 51.02 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6807 yuan to the dollar vs 6.6722 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE WEAKER DOLLAR. CHINA IS HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

South Korea and the USA are scheduled to have a massive war games on the peninsula.  Kim is already angry and predicts a “catastrophe”. Not only is North Korea angry but so is China who is suppose to rein in this unpredictable buffoon.

(courtesy zero hedge)

“Armageddon Risk” Returns: North Korea Predicts “Catastrophe” As Massive U.S. War Games Begin Monday

Traders barely had time to enjoy the lull from the “Armageddon trade” – the rising possibility of a nuclear exchange between the US and North Korea, which peaked over the weekend when various US officials said a nuclear war is not imminent, echoed by a statement by N. Korea’s state-run news agency KCNA, before a new set of worries promptly took over, chief among them the ongoing slow motion train wreck in Donald Trump’s administration coupled with yesterday’s double terrorist attacks in Spain. Alas, “nuclear war” risk is about to come back with a vengeance because on Monday US and South Korea are scheduled to begin joint military exercises, a massive show of force which every time in the past has infuriated North Korea, sometimes triggering a show of force.

Held every fall in South Korea, the Ulchi-Freedom Guardian war games are the world’s largest computerized command and control exercise. Some 30,000 U.S. soldiers and more than 50,000 South Korean troops usually take part, along with hundreds of thousands of first responders and civilians, some practicing for a potential chemical weapons attack.

Scheduled long before the recent diplomatic fallout between Washington and Pyongyang, the U.S. and South Korean militaries will simulate warfare with North Korea from Aug. 21 to 31, well aware that North Korea could respond with another missile test, according to McClatchy.

In light of this perceived provocation by North Korea, which will almost certainly prompt some reaction, Scott A. Snyder, a Korea specialist with the Council on Foreign Relations said “Over the course of the next two weeks I expect tensions to escalate. This is always a sensitive issue, but it is more hair-trigger as the North Koreans are very sensitive to the likely additional nuclear-capable aircraft flyovers.”

While the Pentagon has repeatedly stated that the biannual exercises are “defensive” in nature, both North Korea and China have long criticized them as a provocation and an affront to regional security. “There certainly will be some reaction,” said J.D. Williams, a retired Marine colonel and defense policy researcher at the RAND Corporation in California. He said he wouldn’t be surprised if North Korea conducted some kind of missile launch — not a test but a defiant demonstration of might.

As discussed earlier in the week, North Korea’s Kim backed off a threat to launch missiles at Guam, saying he’d watch “the foolish and stupid conduct of the Yankees” before deciding on the launch, a decision that Trump quickly tweeted was “very wise and well reasoned.” While the exchange suggested that cooler heads were prevailing in the latest U.S. standoff with North Korea. But next week’s war games could rekindle hostilities. On Thursday, North Korean state media declared that the military exercises will “further drive the situation on the Korean Peninsula into a catastrophe.”

It’s not just North Korea: Beijing will likely be rather unhappy too.

The exercise, along with one in March, often triggers anti-war protests in South Korea and condemnation from China. While Chinese President Xi Jinping has been noticeably cool toward Kim Jong Un, and has been critical of North Korea’s development of nuclear weapons, China has long wanted the United States to shrink its military footprint in Asia, including some 12 bases in South Korea and Japan.

 

In an editorial Monday, China’s Global Times newspaper, an arm of the Communist Party’s People’s Daily, lambasted the decision by the United States and South Korea to go ahead with Monday’s exercises.

 

“The drill will definitely provoke Pyongyang more, and Pyongyang is expected to make a more radical response,” the newspaper said. “If South Korea really wants no war on the Korean Peninsula, it should try to stop this military exercise.”

In other words, China – which is largely expected to rein in North Korea – is already hedging in case North Korea does something impulsive, suggesting the exercise itself could be the provocation that sets Kim off. And set him off, it will: in the past North Korea has reacted strongly during the biannual war games. In 2014, the north fired off scud missiles during the March exercises held by the U.S.-South Korean command, called Foul Eagle.

During the 2015 Ulchi-Freedom Guardian exercises, North Korea and South Korea exchanged artillery and rocket fire over their border. That exchange came after two South Korean soldiers were maimed stepping on land mines in the Demilitarized Zone. South Korea accused North Korean soldiers of sneaking across the border and planting the land mines.

Last week, China and Russia urged the United States to consider a “freeze for freeze” agreement to reduce tensions. In such a deal, Pyongyang would agree to suspend its tests of missiles and nuclear weapons, and Washington and Seoul would agree to suspend large-scale military exercises. That, however, is not happening: U.S. military experts say such a deal would give a lopsided advantage to North Korea, which could continue its military training even as the U.S.-South Korea exercises were suspended. “It is hard to imagine why the United States would accept that, because of the vulnerability it would create,” said Bruce Bennett, a senior defense researcher at RAND.

In a media briefing on Tuesday, U.S. State Department spokeswoman Heather Nauert said the United States will continue to hold joint exercises with South Korea. And since North Korea will immediate see this “provocation” as a green light for a response, the respite that traders got from the “Armageddon trade” that sent the VIX soaring by one of its biggest and fastest intraday moves in history, may prove very short-lived. Perhaps the only silver lining is that the exercises don’t begin until Monday, so traders don’t have to do anything too crazy ahead of the weekend.

b) REPORT ON JAPAN

end

c) REPORT ON CHINA 4. EUROPEAN AFFAIRS  There were two or three separate terror events in Spain yesterday. The following highlights the second plot in the town of Cambrils where the police killed 5 terrorists (courtesy zerohedge) Caught On Tape: Spanish Police Kill Five Terrorist In Separate Terror Plot

Update 2: The explosive belts worn by attackers killed by police in the Catalan resort town of Cambrils were fake, the Spanish region’s head Carles Puigdemont told local radio station RAC1 on Friday. A suspected Islamist militant drove a van into crowds in Barcelona, killing 13 people on Thursday, and police also said they had killed five attackers later that evening in Cambrils to thwart a separate attack using explosive belts. Puigdemont said bomb experts had now confirmed the explosive belts were duds.

* * *

Update: The police force for Spain’s Catalonia region says its troopers shot and killed four suspects and wounded a fifth in a resort town south of Barcelona to “respond to a terrorist attack.” The regional police said in a tweet that they are investigating whether the Cambrils suspects were wearing explosive vests. Its officers planned to carry out several controlled explosions. The force says it is working on the theory that the Cambrils suspects were linked to the Barcelona attack, as well as to a Wednesday night explosion in the town of Alcanar in which one person was killed.

Subsequently, the police said the fifth suspect shot in the resort town of Cambrils has died and six civilians have been injured. Police earlier Friday morning had said four suspects had been killed in the town south of Barcelona during a police operation to “respond to a terrorist attack.”

* * *

Spanish police have shot and killed four people while carrying out an operation in response to what was reportedly another terrorist attack in a town south of Barcelon .

The regional police for the Catalonia region said on Twitter early on Friday that officers are in Cambrils, a seaside resort town about 100 kilometers (62 miles) from Barcelona, where they are dealing with a “possible terror attack.”

EmergènciesCatalunya 

@emergenciescat

L’operatiu policial a  provoca retencions a vies properes a a  
DEMANEM PACIÈNCIA DAVANT SITUACIÓ EXCEPCIONAL

 

Videos capturing the shooting and the immediate aftermath were distributed on twitter:

alejandro ruiz @alexruiz300

 terroristas abatidos.

8:18 PM – Aug 17, 2017

 

Nick LG @NickLG13

 ni tranquilo puedes estar..

8:22 PM – Aug 17, 2017

The military operation was announced around midnight local time, when the Catalonia emergency service tweeted: “IF YOU’RE NOW IN £Cambrils avoid going out. Stay home, stay safe. Police operation ongoing.”

The service urged people in the town not to go out on the streets.

EmergènciesCatalunya 

@emergenciescat

IF YOU’RE NOW IN  avoid going out. Stay home, stay safe. Police operation ongoing

As AP reports citing Spain’s RTVE, regional police troopers killed four people and injured another seven. The broadcaster added that the police suspected they were planning an attack in Cambrils just hours after a van swerved onto a pedestrian promenade in Barcelona, killing 13.

It also adds that according to police sources“the terrorists carried explosives attached to the body.” The broadcaster said the suspects tried to carry out a similar attack to the one in Barcelona.

Which begs the question: has Spain become the focal point of another suicide bombing terrorist cell?

Developing.

end The Barcelona terrorists were planning a much bigger devastating attack but the building in which the plot was hatched blew up taking with them most of the explosives. (courtesy zero hedge) Barcelona Terrorists Planned A “Devastating Attack” With Explosives

When we described the second terrorist attack to take place in Spain, around midnight local time in the resort town of Cambrils, in which local police killed 5 people who had run over civilians and in which the terrorists were said to have carried “explosives attached to the body”, we asked “has Spain become the focal point of another suicide bombing terrorist cell?”

Moments ago we got what appears to be an affirmative answer, when the police chief heading the investigation said on Friday that the terrorists behind the Barcelona attack had planned a devastating assault with explosives and may have rammed pedestrians with vehicles after their initial plan failed. According to Catalan police chief Josep Lluis Trapero, who spoke to reporters moments ago, the large explosion in the early hours of Thursday which brought down a building in Alcanar – where police think a group of terrorists had been plotting an attack for some time – deprived the terrorists of bomb-making material. This forced them to carry out the twin attacks on Barcelona and Cambrils “in a more rudimentary way.”

“The explosion in Alcanar stopped larger attacks from happening because they no longer had some of the material they needed,” Trapero said.

He also said that “It was a group, we do not know the specific number, but we do not rule out that they had other attacks in mind.” and added that there was a “clear link” between the Alcanar explosion and the attacks in Barcelona and Cambrils.

Curiously, Trapero also confirmed that the Cambrils attackers were wearing fake suicide belts. “they were carrying belts which looked like suicide vests, but in the end they turned out to be fake. They were trying to simulate explosives,” he said. He said the investigation is focused on those in the building in Alcanar and the vehicles in Barcelona and Cambrils.

“We think they [the suspects in Alcanar] were preparing at least one or more attacks in Barcelona. The explosion took out some of the material they were counting on to carrying out even bigger attacks, than the ones that happened.”

The Catalan police chief also revealed that a single police officer killed four of the suspects who carried out the attack in the Catalan seaside town of Cambrils. A total of five suspects were killed after the Cambrils attack in which a car plowed into a crowd, killing a woman.

More importantly, Trapero confirmed that the driver of the Barcelona van has still not been identified. He said that one of the five suspects killed in Cambrils could have been the driver in Barcelona. He added: “We’re working on the hypothesis that the authors [of the attacks] had been planning them both for a while in the building in Alcanar, but we can’t join up all the scenarios. It was a group – we don’t have a concrete number – but we’re not discounting the idea that they were planning other attacks.

Trapero said there would be more news in a few hours.

Source: Guardian

END

 

GERMANY/FINLAND

Two knife attacks today: one in Germany and the other in Finland

 

(courtesy zero hedge)

One Person Killed In Stabbing Attack In Germany, Manhunt Underway

One person was killed and one person was injured in a stabbing attack in the German city of Wuppertal-Elberfeld today, according to police. As ABC reports, a manhunt has been launced by the Wuppertal police who are searching for one or more suspects in the stabbings. The person who was killed in the attack was reportedly a 31-year-old man. The injured person is 25 years old.

“There has been a homicide in Elbelfeld [part of Wuppertal]. One man is dead, one injured. Perpetrators are on the run,” police said in a statement. No information has been released about the possible motive of the attack.

View image on Twitter

WDR Aktuelle Stunde 

@aktuelle_stunde

: Großeinsatz nach Messerstecherei in der Nähe der City-Arkaden. Polizei: Täter hat sich vermutlich in einem Gebäude verschanzt.

According to the Westdeutsche Zeitung, the attack took place at a hair salon, and Der Westen adds that the police are not sure whether there were several perpetrators or just one. Police are conducting searches in nearby buildings, according to a special forces commander cited by Express.

This marks the second reported stabbing attack in Europe today, as two people died and eight were stabbed in an attack in the Finnish city of Turku on Friday, police said. Police said that there was just a single suspect in the stabbing case at the moment, adding that it was unclear if the Turku incident was related to terrorism.

The witness added that another elderly woman was injured on the other side of the square where the incident reportedly took place. Multiple ambulances are at the scene, according to the newspaper. The outlet also reported that a body has been covered at a junction, and that police and rescue personnel are at the scene.

According to police, security will be reinforced nationwide after the stabbing, with additional patrols deployed and surveillance boosted across Finland.

L-S poliisi @L_S_poliisi

The police is searching for possible more perpetrators in Turku. People are asked to leave and avoid the center of Turku.

The two knife attacka come just one day after a van plowed into pedestrians on a popular tourist street in Barcelona, killing 13 people and injuring more than 100 others. Hours later, terrorists launched a second attack in the seaside town of Cambrils, injuring seven people, one of whom later died. Police killed five people believed to be behind the attack.

Stabbing attacks have taken place across Europe in recent months. In late July, a knife-wielding man shouting “Allahu Akbar”attacked police on the Spanish-Moroccan border, injuring an officer. The suspect was immediately arrested.

 

5. RUSSIA AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES

 

end 7. OIL ISSUES

Oil rises of a bigger than expected rig count drop

(courtesy zerohedge)

Rig Count Drops Most In 7 Months As ‘Traders’ Panic-Buy Crude Futures

The US oil rig count dropped 5 to 763 last week, the biggest drop in 7 months. However, crude production from the Lower 48 has surged (rising the most since June last week) to the highest since July 2015. Even with today’s sheer farce panic-buying squeze higher in WTI crude, oil looks set for its 3rd weekly close lower as BNP notes the“whole supply surplus story is not likely to go away anytime soon.”

  • *U.S. OIL RIG COUNT DOWN 5 TO 763 , BAKER HUGHES SAYS :BHGE US
  • *U.S. GAS RIG COUNT UP 1 TO 182 , BAKER HUGHES SAYS :BHGE US

As we have noted previously, this inflection point in the rig count fits with the rolover in crude prices…

 

While the rig count growth has stabilized, crude production continues to rise in the Lower 48 (though had dropped in Alaska for 3 straight weeks) but both saw a rise this week (total production up 79k) as Lower 48 production hit its highest since July 2015…

Bloomberg notes that U.S. oil production from major shale plays is set to hit another record at 6.15 million barrels a day next month,according to the EIA. It’s not just the Permian that’s growing, as the agency sees higher output across the board.

WTI Crude remains lower on the week despite the panic-buying… with no catalyst at all except bannon momentum ignition in USDJPY.

Soime chatter on the crude curve – “Flat price is finally catching up with some of the signs we’ve seen that the physical market is tightening,” Clayton Rogers, an energy derivative broker at SCS Commodities, says.

8. EMERGING MARKET

VENEZUELA

 

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

Euro/USA   1.1749 UP .0033/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA FALLING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE RED 

USA/JAPAN YEN 109.02 DOWN 0.310(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2886 UP .0023 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2649 DOWN .0037 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS FRIDAY morning in Europe, the Euro ROSE by 33 basis points, trading now ABOVE the important 1.08 level  RISING to 1.1749; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 0.29 POINTS OR 0.01%     / Hang Sang  CLOSED DOWN 296.65 POINTS OR 1.08% /AUSTRALIA  CLOSED DOWN 0.49% / EUROPEAN BOURSES OPENED  DEEPLY 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 232.22 POINTS OR 1.18%

Trading from Europe and Asia:
1. Europe stocks  OPENED DEEPLY IN THE RED 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 296.65 POINTS OR 1.08%  / SHANGHAI CLOSED UP 0.29 POINTS OR 0.01%   /Australia BOURSE CLOSED DOWN 0.49% /Nikkei (Japan)CLOSED DOWN 232.22  POINTS OR 2.18%   / INDIA’S SENSEX IN THE RED

Gold very early morning trading: 1295.55

silver:$17.19

Early FRIDAY morning USA 10 year bond yield:  2.1887% !!! UP 0   IN POINTS from THURSDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

The 30 yr bond yield  2.7784, UP 0  IN BASIS POINTS  from THURSDAY night.

USA dollar index early FRIDAY morning: 93.49 DOWN 13  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: 2.773% DOWN 0 in basis point(s) yield from THURSDAY 

JAPANESE BOND YIELD: +.033%  DOWN 2   in   basis point yield from THURSDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.561% UP 12   IN basis point yield from THURSDAY 

ITALIAN 10 YR BOND YIELD: 2.033 UP 1/2  POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 47 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.415% DOWN 1  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 1.1747 UP .0032 (Euro UP  32 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.30 DOWN 0.040(Yen UP 4 basis points/ 

Great Britain/USA 1.2851 DOWN  0.0013( POUND DOWN 13 BASIS POINTS)

USA/Canada 1.2580 DOWN .0105 (Canadian dollar UP  105 basis points AS OIL ROSE TO $47.63

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This afternoon, the Euro was UP  by 32 basis points to trade at 1.1747

The Yen ROSE to 109.30 for a GAIN of 4  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 BY 13  basis points, trading at 1.2851/ 

The Canadian dollar ROSE by 105 basis points to 1.2580,  WITH WTI OIL RISING TO :  $47.63

The USA/Yuan closed at 6.6704/ the 10 yr Japanese bond yield closed at +.033%  DOWN 2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 1  IN basis points from THURSDAY at 2.1922% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.777 DOWN 2 in basis points on the day /

Your closing USA dollar index, 93.53  DOWN 10 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 DOWN 63.89 POINTS OR 0.86%
German Dax :CLOSED DOWN 38.27 POINTS OR 0.31%
Paris Cac  CLOSED DOWN 32.70 POINTS OR 0.64% 
Spain IBEX CLOSED DOWN  58.10 POINTS OR 0.56%

Italian MIB: CLOSED UP 26.10 POINTS OR 0.12% 

The Dow closed DOWN 76.22 OR 0.35%

NASDAQ WAS closed DOWN 5.39  POINTS OR 0.09%  4.00 PM EST

WTI Oil price;  47.63 at 1:00 pm; 

Brent Oil: 52.03 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.14 DOWN 8/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 8 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.415%  FOR THE 10 YR BOND  4.PM EST 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 5:00 PM:$48.68

BRENT: $52.84

USA 10 YR BOND YIELD: 2.196%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.778%

EURO/USA DOLLAR CROSS:  1.1761 up .0045

USA/JAPANESE YEN:109.18  DOWN  0.149

USA DOLLAR INDEX: 93.41  down 22  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2873 : UP 13 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2569 up 116 BASIS pts 

German 10 yr bond yield at 5 pm: +0.415%

END

And now your more important USA stories which will influence the price of gold/silver TRADING IN GRAPH FORM FOR THE DAY ‘Bannon Bounce’ Fails To Correct ‘Cohn Crash’ As Nasdaq Drops For 4th Straight Week

Well that was a week…

 

Roller-coaster day for stocks – 2 overnight pump efforts failed; stocks sank into and beyond the US cash open, then went bid as Bannon headlines hit… only to slide as reality struck that with Bannon gone, the probability of war is considerably higher…and an ugly close into OPEX

 

All major cash indices close lower today… as it appears no one wants to hold risk into the weekend…

 

VIX across all major indices rose on the week…

 

Small Cap stocks actually dipped into the red year-to-date in this morning’s initial flush, before bouncing on Bannon headlines…

 

But Gold’s gains this week pushed it ahead of The Dow for 2017…

 

The last time Nasdaq fell for 4 straight weeks was May 2016

 

The S&P 500 remains below its 50DMA finding support at its 100DMA (2418)…NOTE – S&P has not been this close to its 100-day moving-average since the election

 

Financials were unable to hold on to gains after Bannon, Tech eked out a small gain on the week. Energy and retailers were hit hard…

 

Energy stocks pretty much ignore crude’s idiocy today…

 

And this is interesting…

 

Mixed day today for bonds but the long-end closed the week modestly lower and the rest of the curve very slightly higher in yield…

 

At the short end, the bill curve is notably inverted…

 

with the panic line in the sand around 9/28…

 

The 30Y Treasury Yield test 2.75%, near 2-month lows…

 

The Dollar Index ended the week very marginally higher but the trend was very clear into the close…

 

For those who ‘believe’ – Trump favorability has actually improved this week, implying dollar strength to come…

 

Copper outperformed on the week with gold, silver, and WTI all modestly lower… (NOTE – WTI exploded higher today, ‘triggered’ at the same time as Banon headlines hit)

 

Gold topped $1300 once again – the 3rd time this year

 

This chart made us laugh… USDJPY vs Gold…

 

Bitcoin had another big week – rising 16.5% to new record highs at around $4400. This is the 5th weekly rise in a row (and BTC is up 86% since the fork)…

 

But Bitcoin did tumble today amid increasing talk of another fork….

 

Finally, a reminder that ‘stuff’ is hitting fans – even if stocks don’t really show it… USA default/devaluation risk is now twice that of Germany…

 

END

 

Do not read too much into this:  soft data University of Michigan consumer sentiment beats expectations but most of the interviews were done prior to Charlottesville

 

(courtesy zero hedge)

UMich Beats But Warns A Drop Is Imminent

The University of Michigan Sentiment survey beat expectations with its preliminary August print (97.6 vs 94.0 exp) driven by a massive spike in ‘hope’ as currenct conditions slump to their weakest since Nov 2016.

How long will that ‘hope’ spike last?

 

As UMich details, half of all consumers in each of the last three Michigan surveys reported that their finances had recently improved, the best reading since 2000, the report showed. Americans were also upbeat about their financial prospects in the year ahead. 

However, while noting that there were too few interviews were conducted following Charlottesville to assess how much it will weaken consumers’ economic assessment, UMich goes on to warn…

The fallout is likely to reverse the improvement in economic expectations recorded across all political affiliations in early August.

 

Moreover, the Charlottesville aftermath is more likely to weaken the economic expectations of Republicans, since prospects for Trump’s economic policy agenda have diminished.

 

Nonetheless, the partisan difference between the optimism of Republicans and the pessimism of Democrats is still likely to persist, with Independents remaining as the bellwether group. At this point, the data continue to indicate a gain of 2.4% in personal consumption expenditures in 2017.

end

 

It seems that anybody with a pulse received financing for car.  Even bonuses were handed out for loaning money to poor credit risks.  It now looks like deep subprime auto delinquencies are spiking to 1o yr highs.  Trouble ahead in this arena

 

(courtesy zero hedge)

Carmageddon: Deep Subprime Auto Delinquencies Spike To 10-Year Highs

If you’re still on the fence about whether the auto market in this country is anything but a massive bubble being propped up by extremely loose credit underwriting standards, then we think Equifax has just provided some definitive evidence that just might push you over the edge.

In discussing delinquency trends in deep subprime auto ABS deals, Equifax Chief Economist Amy Crews Cutts recently pointed out that 2016 and 2017 vintage deals are mysteriously performing more like 2007 securitizations than those underwritten in 2010.

Here’s more from Bloomberg:

“Performance of recent deep subprime vintages is awful,” Equifax said in a slide show on second-quarter credit trends.

 

“We’re seeing an increase in delinquencies across all credit scores, but in the highest credit quality, it’s just a basis point or two,” Chief Economist Amy Crews Cutts said in an email Tuesday. “In deep subprime, the rise is more substantial. What stood out to me was the issuers. Those that have been doing this for a decade or more were showing the ‘better’ performance, while those that were relative newcomers were in the ‘worse’ category.”

 

And while we can’t be sure, we’re going to go out on a limb and suggest that the soaring delinquency rates of 2016/2017 vintage deals might just have something to do with promotions like the following one that literally offers a $1,500 discount to people with “Low Credit Scores.”  And, lest you think this is a joke, here is the fine print on the promotion:

“April 2017 Pricing on all new vehicles may include up to $1500 in finance rebates that have certain credit requirements to be able to claim this rebate. The finance office is Credit Score based and you must be below 620 to qualify. If you are over a 620 you must add up to $1500 to the price. Varies by make and model. Not all units are eligible for this rebate. Call Dealer for Details.”

Let that sink in for a moment…this lender is actually trying to attract borrowers with lower credit scores rather than higher…on a $55,000 vehicle no less.

 

All of which helps to explain why this happened:

 

Meanwhile, Cutts seems to agree with our assessment noting that credit scores haven’t really changed but lenders continue to get more and more aggressive on underwriting standards in order to keep the party going just a little longer…which sounds familiar to those of us old enough to have lived through the mortgage crisis 10 years ago.

The reason for the increase, she posited, is that lenders have loosened underwriting requirements as more firms tap into a declining market for car loans, not that there are more customers with worsening credit profiles.

 

“It isn’t a case of chasing a larger subprime share,” Cutts said in an email Tuesday. There’s been “almost no change in median credit scores. That means they are letting other underwriting characteristics slide,” she said, referring to the lenders that issue the bulk of subprime loans — so-called monolines that specialize in one area of the credit market and dealer-finance companies that work specifically with car sellers.

 

“As soon as lenders (and the investors behind them) get overconfident that they have better models and can make excess profits by disrespecting credit risk, they always get their hats handed to them sooner or later,” Cutts said. “The mortgage market learned this lesson at the expense of the entire global financial system, and it is playing out now in a micro-level, in the ABS market for subprime auto loans.”

As we like to say, math always wins in the end…and somehow we suspect that offering $0 down, 0% financing for 80 months so deep subprime borrowers making $30k a year can purchase a $40,000 BMW doesn’t actually pencil out over the long haul…

end

 

Well that did not take long.  Wasserman Schultz’s IT aide, Awan has been indicted on 4 counts of bank fraud by lying to banks trying to obtain loan money.  Now the fun begins as they dig deeper into the DNC.  The big question: why did Debby Wasserman Schultz keep Awan on her payroll right up until he was arrested

(courtesy zero hedge)

 

Wasserman Schultz IT Staffer Indicted By Grand Jury On 4 Counts

The walls may be closing in on Debbie Wasserman Schultz after her former IT aide, the one who was arrested by the FBI at Dulles airportlast month while trying to flee the country to Pakistan via Qatar, has officially been indicted by a grand jury on four counts including bank fraud and making false statements.

As Fox News points out, the charges include Awan’s wife Hina Alvi and are tied to allegations that the pair conspired to make false statements on applications for home equity lines of credit and then sent the proceeds of those loans to individuals in Pakistan.

Imran Awan, a former IT aide for Democratic Florida Rep. Debbie Wasserman Schultz, was indicted Thursday on four counts including bank fraud and making false statements.

 

The grand jury decision in U.S. District Court for the District of Columbia comes roughly a month after Awan was arrested at Dulles airport in Virginia trying to board a plane to Pakistan, where his family is from.

 

The indictment also includes his wife Hina Alvi.

 

The indictment itself, which merely represents formal charges and is not a finding of guilt, addresses separate allegations that Awan and his wife engaged in a conspiracy to obtain home equity lines of credit from the Congressional Federal Credit Union by giving false information about two properties – and then sending the proceeds to individuals in Pakistan.

So why is the real estate angle important?  As we noted previouslytitle companies, unlike individuals, can wire large sums of money to international bank accounts without arousing the suspicions of federal investigators.

Title companies can wire large sums abroad without attracting the suspicion Imran did at the bank, and with Hina — the nominal sole owner of each of the houses — residing in that country, it would be natural to send the proceeds to her.

 

In addition to the three houses sold or slated to be sold since June 20, Imran’s lawyer, Chris Gowen, told The New York Times that the $283,000 wire in January was preceded by other similar transfers to Pakistan. “Gowen said the transfer represented the latest payment by his client for a piece of property he was buying in the country,” The Times reported.

 

Gowen would not tell TheDCNF whether the proceeds of the $360,000 June 20 home sale were wired to Pakistan, nor where the income from the two upcoming sales would go. The office of the U.S. Attorney for the District of Columbia declined to comment on whether it would block the disbursements.

 

The value of the known homes that have been sold since November or are currently being sold is $1.8 million. There is also the $283,000 January wire transfer from the Congressional bank, in addition to previous wires of unknown amounts that Imran’s lawyer acknowledged.

 

Since Imran’s lawyer said the January wire of nearly $300,000 was the latest in a series of wires, the transfers may have been about moving money from the $4 million in House payments or other sources.

 

As background, Imran was first employed in 2004 by former Democrat Rep. Robert Wexler (FL) as an “information technology director”, before he began working in Rep. Debbie Wasserman Schultz’s office in 2005.

The family was paid extremely well, with Imran Awan being paid nearly $2 million working as an IT support staffer for House Democrats since 2004. Abid Awan and his wife, Hina Alvi, were each paid more than $1 million working for House Democrats. In total, since 2003, the family has collected nearly $5 million.

In total, Imran’s firm was employed by 31 Democrats in Congress, some of whom held extremely sensitive positions on the House Permanent Select Committee on Intelligence and the House Committee on Foreign Affairs.

Meanwhile, as we noted before, it is still unclear whether the bank fraud charges are just a placeholder for other charges that are yet to come. 

While details are scarce, media reports have alleged that Awan and his brothers potentially ran a procurement scheme in which they bought equipment, then overcharged various House members that employed their IT firm.  Meanwhile, some congressional technology aides have alleged that the Awan’s were blackmailing representatives based on the contents of their emails and files, due to the fact that these representatives have displayed unwavering and intense loyalty towards the former aides.

Of course, one of the most intriguing parts of the Awan narrative has continued to be why former DNC Chair Debbie Wasserman-Schultz decided to keep him on her taxpayer-funded payroll right up until his arrest and whether that decision had anything to do with the whole DNC / Hillary email scandals that erupted last summer.

Perhaps we are finally getting closer to an answer…

end Matt Drudge reports that Steve Bannon is out at the White House that will remove another key antagonist to the Goldman Sachs people surrounding the president. Bannon will do more harm to the President outside rather than his post inside the White HOuse. (courtesy Matt Drudge/zero hedge) Matt Drudge: “Bannon Out At White House”

It appears the final nails are being hammered into the coffin of Steve Bannon’s White House stay. Following earlier headlines that a decision is imminent, none other than Matt Drudge has taken to his personal Twitter account – a very unusual act – to seemingly bid Bannon farewell…

MATT DRUDGE 

@DRUDGE

Bannon had one hell of a run…

The Durdge Report reports

  • SENIOR ADVISOR MOVING ON AFTER IMPRESSIVE RUN, THE DRUDGE REPORT HAS LEARNED…
  • POPULIST HERO MAY RETURN TO BREITBART…

As The New York Times reports,

President Trump has told senior aides that he has decided to remove Stephen K. Bannon, the embattled White House chief strategist who helped Mr. Trump win the 2016 election, according to two administration officials briefed on the discussion.

 

The president and senior White House officials were debating when and how to dismiss Mr. Bannon. The two administration officials cautioned that Mr. Trump is known to be averse to confrontation within his inner circle, and could decide to keep on Mr. Bannon for some time.

 

As of Friday morning, the two men were still discussing Mr. Bannon’s future, the officials said. A person close to Mr. Bannon insisted the parting of ways was his idea, and that he had submitted his resignation to the president on Aug. 7, to be announced at the start of this week, but it was delayed in the wake of the racial unrest in Charlottesville, Va.

So, simply put, Goldman wins again

Globalist 1 – 0 Nationalist

And the markets love it…

end

The official announcement:

 

Bannon Ousted From The White House

Confirming earlier reports from Matt Drudge and the NYT, on Friday afternoon the White House confirmed that Trump decided to push out his chief strategist, and the man who according to many got him elected, Stephen Bannon.

“White House Chief of Staff John Kelly and Steve Bannon have mutually agreed today would be Steve’s last day. We are grateful for his service and wish him the best,” the White House said in an emailed statement.

And so, Trump’s chief strategist Steve Bannon, the “nationalist firebrand” who helped to fuel Donald Trump’s dizzying rise to the presidency, is leaving the administration.

Before Bannon, Trump already fired two other aides who helped him win the White House — Reince Priebus and Michael Flynn — but the departure of Bannon, the former head of Breitbart News, is perhaps the most significant change yet.

Reporting on the departure, the NYT says that Trump has decided to remove Bannon, and he and top aides “were debating when and how to dismiss” the strategist. Ultimately, Bannon was fired, although there was some confusion:  “A person close to Bannon” said the chief strategist first decided to leave, according to the Times, having submitted his resignation on August 7, but the announcement was delayed after violence at a white nationalist rally in Charlottesville, Virginia, over the weekend, the newspaper reported.

Trump hinted that Bannon was on his way out on Tuesday, when during a press conference he was asked by a reporter if he still had confidence in his chief strategist: “We’ll see what happens with Mr. Bannon,” Trump responded, adding that while he believes he is a “good person,” Bannon “came on very late” to the campaign.

On Friday, Bannon did not attend a national security meeting on Afghanistan with Trump at Camp David Friday, even though he had been involved in the debate over troop levels. Increasingly isolated by the “Goldman” wing, Bannon had few allies left in the White House following the departure of Priebus as chief of staff. The two men had formed a strategic partnership out of political convenience but had become genuine allies.

His departure could be another sign that new chief of staff John Kelly has broad authority to clean house in a West Wing that has been hobbled by infighting and leaks.

Bannon’s worldview is at odds with many of Trump’s senior aides, and he clashed with the president’s son-in-law Jared Kushner, National Economic Council Director Gary Cohn and national security adviser H.R. McMaster. Their feuds would often spill into the press, exacerbating tensions in the White House. And with Priebus gone, Bannon was at the mercy of Kelly, a retired Marine general who has been running a tight ship and is eager to rid the White House of drama.

Additionally, Bannon became a political liability in the wake of the Charlottesville protests, when Democrats cast Bannon, who once described Breitbart as “the platform for the alt-right,” as one of the “racists in the White House.” Pressure had been growing on Trump to cut ties with his nationalist wing, which also includes advisers Sebastian Gorka and Stephen Miller. Even some Republicans called for Bannon to go, calling him a divisive figure who had muddied the president’s authority on international issues

As the Post writes, while Bannon had been on the outs with Trump before, the president suspected Bannon was one of the main leakers in the administration, trashing his colleagues in the press.

The notoriously thin-skinned president also resented the publicity Bannon had been getting as the supposed mastermind of Trump’s campaign and upset victory. One White House source told Axios, “His departure may seem turbulent in the media, but inside it will be very smooth. He has no projects or responsibilities to hand off.”

Bannon in recent days gave interviews to publications including the New York Times in which he defended Trump’s controversial comments in the wake of the racial violence in Charlottesville, Va., last weekend.

The biggest risk for Trump is that Bannon is the biggest conduit to Trump’s conservative base. His departure could and likely will provoke a backlash among Trump’s core supporters, who are fearful that the president is now being advised by liberals and who they refer to as “globalists,” like Cohn, Kushner and McMaster. Breitbart News has been hammering McMaster in particular, who in recent weeks successfully rid the National Security Council of several of Bannon’s allies, according to the HIll.

“Steve’s allies in the populist nationalist movement are ready to ride to the gates of hell with him against the West Wing Democrats and globalists like [national security aide] Dina Powell, Jared Kushner, Ivanka Trump, Jared Kushner, Gary Cohn and H.R. McMaster,” said one Bannon ally.

 

“They should all be very worried that they’re efforts to undermine the president will be exposed. If they think what’s happened with Steve is rough, wait until they see what he does outside the White House.”

Speaking to the Post, a source close to Bannon added: “This week is a good window into what Bannon outside the [White House] would look like: A strong defense of POTUS and ‘fire and fury’ for enemies of the Trump agenda. Get ready for Bannon the barbarian.”

Finally, with the ouster of Bannon, the list of high-ranking personnel fired by Trump rises to 13:

  • Sally Yates, the acting attorney general and an appointee of former President Barack Obama, was fired by Trump just ten days after he assumed office. Yates had refused to uphold the Trump administration’s controversial travel ban in January.
  • Michael Flynn resigned in February after serving in the position for less than a month. Flynn misled Vice President Mike Pence and other administration officials about the contents of his phone conversations with Sergey Kislyak, Russia’s ambassador to the US. Flynn reportedly discussed the Obama administration’s sanctions against Russia with Kislyak prior to Trump assuming office.
  • Katie Walsh, the former deputy chief of staff and close ally to chief of staff Reince Priebus left the White House just nine weeks into the job to run America First, a pro-Trump group outside of the government.
  • Preet Bharara, the former US Attorney for the Southern District of Manhattan and ‘Sheriff’ of Wall Street, was fired by Trump in March after Bharara refused to submit a resignation letter to Attorney General Jeff Sessions.
  • James Comey, the former FBI durector, was fired by Trump in May.
  • Michael Dubke, the former White House communications director, resigned in May. Dubke was replaced by Anthony Scaramucci, the founder of a hedge fund and a top Trump donor. Scaramucci was fired after just 10 days on the job (see below).
  • Walter Shaub, the former director of the Office of Government Ethics, resigned earlier this month after clashing with the White House over Trump’s complicated financial holdings. Shaub called Trump’s administration a “laughingstock,” following his resignation, and advocated for strengthening the US’s ethical and financial disclosure rules, per The New York Times.
  • Mark Corralo, spokesman for President Donald Trump’s legal team, resigned on July 20 within two months of being on the job.
  • Sean Spicer, the embattled former White House press secretary, resigned on July 21 after telling Trump he vehemently disagreed with the selection of Anthony Scaramucci as White House communications director.
  • Micheal Short, the former White House press aide, resigned the same day as Spicer, after Scaramucci revealed plans to fire him.
  • Reince Priebus, the former White House chief-of-staff, resigned just six months into his tenure after a public feud with Anthony Scaramucci, the White House communications director.
  • Anthony Scaramucci, who “resigned” as the new White House Communications Director on July 31, after just 10 days on the job.
  • Steve Bannon, Trump’s chief strategist, who first resigned on August 7 and was then fired by the White House on August 18.

end

As I mentioned above, Steve Bannon will be going after the globalists in Trump’s team which will further sever the chances for anything being done. Many voters who put Trump in power with the slogan America first will be thoroughly disappointed

 

a must read.

(courtesy zerohedge)

 

“They’re Going Thermonuclear”: Breitbart Declares “War” On The White House

The love affair between Breitbart, whose former head Steve Bannon was just fired by Donald Trump, just turned to hate, as confirmed by Joel Pollak, a Breitbart Editor, who moments ago tweeted one word:

Joel B. Pollak @joelpollak

As Axios’ Jonathan Swan explains, “Joel is a Breitbart editor. They’re going thermonuclear, I’m told. 

Jonathan Swan 

@jonathanvswan

Joel is a Breitbart editor. They’re going thermonuclear, I’m told. Story tk on Axios. https://twitter.com/joelpollak/status/898595085247324161 …

Separately, as iBankCoin reports, investigative journalist and former Breitbart employee, Lee Stranahan, offered a quick quip on today’s news that Bannon has resigned from the White House, suggesting that Steve would ‘unleash the beast’ through his online publication and call out those working against the Trump agenda in the White House.

Lee Stranahan 

@stranahan

Dear @POTUS :

You have not yet figured out who your real enemies in the White House are. Best of luck without Bannon. 

Stranahan has been a long time loyalist to Bannon and ardent opponent to several people inside Trump’s White House, namely McMaster, Powell and Cohn. The theory he’s putting forth is that Bannon will have more power outside the White House than inside. While that might be true for Steve, I fail to see how fomenting more internal strife inside the Trump White House will be constructive at this point.

Nevertheless, it’s about to get real interesting soon. Watch

 

As for what Steve Bannon’s next steps would be, Axios reports that it “will be all about the billionaire Mercer family.”

I’m told Bannon, who visited New York this week, met with Bob Mercer and together they will be a well-funded force on the outside.

  • Bannon has felt liberated since it became clear he was being pushed out, according to friends. He’s told associates he has a “killing machine” in Breitbart News, and it’s possible he returns to lead their editorial operation.
  • A source familiar with Breitbart’s operations told me they would go “thermonuclear” against “globalists” that Bannon and his friends believe are ruining the Trump administration, and by extension, America.
  • Watch for Breitbart’s Washington Editor Matt Boyle to be a central figure in this war — which has already begun — against White House officials like HR McMaster, Dina Powell, Gary Cohn, and Jared and Ivanka.

Then again, Trump may be spared. As Politico’s Robert Costa tweets, “One theme I’m picking up: Bannon believes next battle is *not* w/ Trump but w/ Kushner/Cohn/Dina/HR McMaster. “Save Trump,” as one R put it.

Robert Costa 

@costareports

One theme I’m picking up: Bannon believes next battle is *not* w/ Trump but w/ Kushner/Cohn/Dina/HR McMaster. “Save Trump,” as one R put it.

end

 

Bannon has been the anti- neocon in Trump’s advisory team. With him gone does that mean we are more at risk for war in North Korea?

(courtesy zero hedge)

With Bannon Out, Is War With North Korea More Likely: Here Are The Scenarios

When just three weeks ago today Trump fired Reince Priebus and replaced him Gen. John Kelly, we said that with a military veteran now whispering in Trump’s ear every day, Kim Jong-Un’s days are now numbered.” Then, just two days ago, Steve Bannon himself confirmed in an interview with The American Prospect, that when it comes to matters North Korean Bannon had been the biggest “dove” in the White House, and the natural anti-neocon foil to Kelly and Mattis, both of whom are quite eager and itching to launch a some military engagement against the Kim regime with the following surprising, “off the record” statement:

Contrary to Trump’s threat of fire and fury, Bannon said: “There’s no military solution [to North Korea’s nuclear threats], forget it. Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.” Bannon went on to describe his battle inside the administration to take a harder line on China trade, and not to fall into a trap of wishful thinking in which complaints against China’s trade practices now had to take a backseat to the hope that China, as honest broker, would help restrain Kim.

 

Bannon said he might consider a deal in which China got North Korea to freeze its nuclear buildup with verifiable inspections and the United States removed its troops from the peninsula, but such a deal seemed remote. Given that China is not likely to do much more on North Korea, and that the logic of mutually assured destruction was its own source of restraint, Bannon saw no reason not to proceed with tough trade sanctions against China.

Of course, the implication is that with Bannon now out, the probabilities of a real war with North Korea are substantially higher. How much higher? Well, for the answer take the following analysis from Nomura of 5 specific “scenario” outcomes, and 5-10% to the bellicose ones. As they stand currently, the breakdown is as follows:

  • Continuation of current trajectory: 60%
  • “Killer” saanctions by year end: 20%
  • War sooner rather than later: 10%
  • “Out of left field” event: 10%

Consider today’s departure of Bannon to be one such “left field” event, one which skews the entire matrix in a significantly pro-war direction.

As for what a potential catalyst may be, recall that earlier today we previewed next week’s main geopolitical event: massive war games held just off the Korean coast:

on Monday US and South Korea are scheduled to begin joint military exercises, a massive show of force which every time in the past has infuriated North Korea, sometimes triggering a show of force.

Held every fall in South Korea, the Ulchi-Freedom Guardian war games are the world’s largest computerized command and control exercise. Some 30,000 U.S. soldiers and more than 50,000 South Korean troops usually take part, along with hundreds of thousands of first responders and civilians, some practicing for a potential chemical weapons attack.

Scheduled long before the recent diplomatic fallout between Washington and Pyongyang, the U.S. and South Korean militaries will simulate warfare with North Korea from Aug. 21 to 31, well aware that North Korea could respond with another missile test.

 

On Thursday, North Korean state media declared that the military exercises will “further drive the situation on the Korean Peninsula into a catastrophe.”

So while one may speculate, the answer of what the “Bannon-vacuum” means for world peace, or in this case war, may reveal itself as soon as next week. Which, incidentally is also the reason why the market isn’t exactly surging on the news that Bannon is out: traders have realized that all that took place today is the replacement of some domestic policy security with far more foreign policy insecurity.

 

 

end

Bannon set to go to war for Trump by trying to “drain the swamp”. He needs to marginalize the neocons and the Goldman Sachs lobby to win:

(courtesy zerohedge)

 

Bannon Speaks: “I’m Going To War For Trump”

While Breitbart has warned of war ‘against’ Trump – should he break from the policies upon which he was elected – former White House Chief Strategist Steve Bannon has spoken for the first time since being fired today.

In an interview with Bloomberg, Bannon said he was “going to war” for Trump…

If there’s any confusion out there, let me clear it up.

 

I’m leaving the White House and going to war for Trump against his opponents… on Capitol Hill, in the media, and in corporate America,

So, war it is!

Presumably, being outside The White House allows him more freedom to pursue his tactics. The question is – given the narrative being spun is he resigned by mutual agreement – does Bannon stil have Trump’s ear? And if so, will Cohn, Kelly, and Kushner stand for it? We already know his agenda is anything but in line with theirs.

Notably The White House formally launched a probe of China’s intellectual property practices tonight – invoking Section 301 just as Bannon had said.

With regard his internal adversaries, at the departments of State and Defense, who think the United States can enlist Beijing’s aid on the North Korean standoff, and at Treasury and the National Economic Council who don’t want to mess with the trading system, Bannon was ever harsher…

“Oh, they’re wetting themselves,” he said, explaining that the Section 301 complaint, which was put on hold when the war of threats with North Korea broke out, was shelved only temporarily, and will be revived in three weeks. As for other cabinet departments, Bannon has big plans to marginalize their influence.

 

“That’s a fight I fight every day here,” he said. “We’re still fighting. There’s Treasury and [National Economic Council chair] Gary Cohn and Goldman Sachs lobbying.”

 

“We gotta do this. The president’s default position is to do it, but the apparatus is going crazy. Don’t get me wrong. It’s like, every day.”

Bannon dismissed the far-right as irrelevant:

“Ethno-nationalism—it’s losers. It’s a fringe element. I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more.”

 

“These guys are a collection of clowns,” he added.

And finally, Bannon scoffed at The Democrats

“…the longer they talk about identity politics, I got ’em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats.

It looks like a pardon for Julian Assange is coming forth so he can provide the correct person(s) who provided information to Wikileaks in the hacking of the DNC.

(courtesy zero hedge)

Trump Jr. Follows Julian Assange, Sparks Media Panic That A Presidential Pardon Is In The Works

Earlier this week we noted that Representative Dana Rohrabacher (R-CA) had a three hour meeting with Julian Assange at the Ecuadorian embassy in London to discuss ‘helpful’ information which Assange purported would prove that Russia was not his source for the DNC / Podesta leaks last year.

Not surprisingly, the mainstream media chose not to focus on that angle and decided instead to focus all of their efforts on branding Rohrabacher as a Russian spy.  That said, here is how Rohrabacher recounted the details of the meeting with Assange to The Hill:

“Our three-hour meeting covered a wide array of issues, including the WikiLeaks exposure of the DNC emails during last year’s presidential election,” Rohrabacher said,  “Julian emphatically stated that the Russians were not involved in the hacking or disclosure of those emails.”

 

Pressed for more detail on the source of the documents, Rohrabacher said he had information to share privately with President Donald Trump.

 

“Julian also indicated that he is open to further discussions regarding specific information about the DNC email incident that is currently unknown to the public,” he added.

Now, the following tweet from an account that tracks the every move of the Trump family has sparked new speculation that a Presidential pardon of Julian Assange may be in the works…something that is undoubtedly not all that palatable to our friends at CNN and MSNBC.

Trump Alert @TrumpsAlert

DonaldJTrumpJr has just followed @JulianAssange.

 

Meanwhile, we would note that Jr. is also a long-time follower of @wikileaks so that must necessarily mean that he coordinated the DNC / Podesta hacks directly with them.  Combine that with the fact that we’re almost certain that parsing through the nearly 1,200 accounts that Jr. follows would also reveal at least a couple of Russian sounding names and we’re pretty sure that Mueller’s grand jury has all they need for an indictment.

Of course, if Assange really has concrete evidence that his source is anyone other than a Kremlin-connected official then you would think that information might be deemed useful to Special Counsel Mueller since it’s basically the only reason his investigation exists in the first place.

Moreover, one would think that an immunity deal for Assange in return for such information would also be reasonable…rendering a presidential pardon moot. Certainly, the majority of Hillary’s staff was granted immunity deals for far less useful information…

END

This is something that we have been pointing out to you for the past few weeks:  Goldman Sachs sees a 50% chance of a government shutdown.  So do we!

(courtesy zerohedge)

Goldman Sees 50% Chance Of A Government Shutdown

As we pointed out earlier, the chances of government agreeing any kind of debt ceiling deal (and avoiding a government shutdown) is dropping fast as USA default risk spikes and the Treasury Bill curve inverts. Goldman Sachs is now concerned also…

Uncertainty in The White House is starting to make investors realize the chance of successfully navigating the debt ceiling crisis without a government shutdown are dwindling…

Via Goldman Sachs,

Low approval ratings raise legislative risks.

 

In the near term, we believe there is a 50% chance of a brief government shutdown, as the president seeks to solidify support among his base by embracing more controversial positions, despite needing Democratic support to pass spending legislation.

 

That said, we expect that the debt limit, which needs to be raised around the same time, will prevent a longer shutdown from occurring.

It seems the credit markets are a little less sanguine than Goldman… 

 

As we noted earliersure, Congress has always come together at the 11th hour in the past.  They’ve raised the debt ceiling 78 times over the last 57 years.  So, won’t they just raise it again?

This time around, we have some reservations.  Quite frankly, this Congress has proven that it is not motivated to do what’s best for the American people.  Each representative has an illogical logic unto himself.  Just ask John McCain – he doesn’t know what he wants until the precise moment he votes.

What’s more, these days the debt ceiling has become ultra-politicized in Congress.  Big time horse trading must first take place before an agreement can be reached.  Big time bluster and chest pounding must take place too.

The point is, over the past six months this Congress has been incapable of getting a doggone thing done.  What makes you think they’ll somehow get their act together in just 12 days?

end

Let us close out the week with this wrap up courtesy of Greg Hunter of uSAWatchdog

 

(courtesy Greg Hunter/USAWatchdog)

Trump Racism More Fake News, KKK & Atifa Both Violent, Fed Melts Dollar

By Greg Hunter On August 18, 2017 In Weekly News Wrap-Ups

The propaganda mainstream media and democrats are now trying to paint President Trump as a racist when he clearly is not. The Democrats are out of ideas, and the only thing they have to offer are lies. The Democrats also want to erase our history and attack the Founding Fathers as racists. The Democrat Party, which has all the earmarks of communism, wants to tear up the Constitution because it was written by racists, according to them. It’s one lie after another from the party of liars and cheaters that does not have a single idea to help the average American. This is not going to work either.

If you watch the propaganda media, you would think the only evil people at the recent Charlottesville protest that turned violent were the KKK and Nazis. In fact, the counter protesters, such as Antifa, were equally violent, reckless and evil. Both sides came to this so-called peaceful protest with bats, pepper spray, shields and helmets. There was no way this was going to remain peaceful if both sides are ready to hit one another over the head with a baseball bat. Trump was spot on when he said both sides were to blame, and there is evidence that some of the counter protesters to the KKK were paid by people like George Soros. The media is only reporting one side to try to paint Trump a racist to score political points, which is the definition of propaganda. Don’t fall for the MSM con, they all lie and are approved and paid to do so.

The Fed revealed they are worried about the economy and are very reluctant to raise interest rates. Gregory Mannarino of TradersChoice.net says the Fed knows all too well the economy is much weaker than they would like to admit and is probably not going to raise rates. Mannarino says he thinks they will continue to melt down the dollar and melt up the stock market until it pops. Mannarino says keep an eye on the bond market for signs of trouble. He says that’s where a crash will start.

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

(To Donate to USAWatchdog.com Click Here )

Video Link

http://usawatchdog.com/trump-racism-more-fake- news-kkk-atifa-both-violent-fed-melts-dollar/

 

 

end

 

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you MonDAY  night

Harvey.


August 17/Terror in Spain: Van mows down and kills 13 pedestrians in another terrorist attack/gold rises by $13.45 and silver is up 11 cents/New China report from renowned author Chu claims China has a total debt of $35 trillion and non performing...

Thu, 08/17/2017 - 18:48

GOLD: $1286.50  UP $13.45

Silver: $17.06  UP 11 cent(s)

Closing access prices:

Gold $1288.60

silver: $17.04

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1291.94 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1288.50

PREMIUM FIRST FIX:  $3.44

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1291.49

NY GOLD PRICE AT THE EXACT SAME TIME: $1287.15

Premium of Shanghai 2nd fix/NY:$4.34

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1285.90

NY PRICING AT THE EXACT SAME TIME: $1286.15 

LONDON SECOND GOLD FIX  10 AM: $1285.15

NY PRICING AT THE EXACT SAME TIME. $1285.95 

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 2 NOTICE(S) FOR  200  OZ.

TOTAL NOTICES SO FAR: 4581 FOR 458,100 OZ  (14.248 TONNES) 

For silver: AUGUST  85 NOTICES FILED TODAY FOR 425,000  OZ/ Total number of notices filed so far this month: 1000 for 5,000,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

Today for the 6th consecutive day we had a raid on both gold and silver and again forces loyal to gold and silver rebuffed their attempts to discredit our precious metals.  I am witnessing banker capitulation in silver which seems to be their Achilles heal. The difference between gold and silver is simple:  there are always enough above ground gold to borrow against (central bank gold) but physical silver has already been spent in all of the extremely useful advances it has made in pharmaceuticals, photo-voltaic cells etc. The boys are having great difficulty borrowing against a declining inventory.

 

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest SURPRISINGLY ROSE BY ONLY  292 contracts from 187,955 UP TO 188,247 DESPITE THE HUGE RISE IN THE PRICE THAT SILVER UNDERTOOK WITH  YESTERDAY’S TRADING (UP 25 CENT(S) . THE BANKERS PROVIDED THE SHORT PAPER TO INITIATE ANOTHER RAID YESTERDAY (5TH CONSECUTIVE DAY OF TORMENT). THAT FAILED IMMEDIATELY AS SILVER STARTED TO ADVANCE IN PRICE.  NEWBIE SPEC LONGS REALIZING ANOTHER FAILED RAID, JUMPED ONTO THE BANDWAGON WITH PURCHASES.  HOWEVER THE COMMERCIALS WERE STILL LOATHE TO SUPPLY THE SHORT CONTRACTS. THUS A HUGE ADVANCE IN PRICE WITH A TINY GAIN IN OI. 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.941 BILLION TO BE EXACT or 134% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 85 NOTICE(S) FOR 425,000  OZ OF SILVER

In gold, the open interest ROSE by A CONSIDERABLE 4,484 WITH THE SMALL RISE in price of gold ($3.85 GAIN YESTERDAY.) Most of gold’s gains came after the comex closed and we will see the resultant OI of those gains in tomorrow’s reading. The new OI for the gold complex rests at 482,405. A raid was called upon yesterday by the bankers and it failed. The bankers initiated the raid with short paper but newbie longs entered the arena with the lower price following silver’s lead. Thus the bankers were not successful in covering their shorts but they did supply the necessary paper to our newbie spec longs.  The result: increase in open interest with a higher price for gold.

we had: 2 notice(s) filed upon for 200 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, a big change late last night in gold inventory: a deposit of 4.43 tonnes

Inventory rests tonight: 795.44 tonnes

IN THE LAST 24 TRADING DAYS: GLD SHEDS 41.53 TONNES YET GOLD IS HIGHER BY $53.45 . 

SLV

Today: THIS LOOKS SINISTER

 

WE HAD A HUGE CHANGES IN SILVER INVENTORY TONIGHT: A WITHDRAWAL OF 1.418 MILLION OZ  (WITH SILVER UP?)

INVENTORY RESTS AT 334.407 MILLION OZ

end

.

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

1. Today, we had the open interest in silver RISE BY ONLY 292 contracts from 187,955 UP TO 188,247 (AND now A LITTLE CLOSER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE THE HUGE RISE IN SILVER PRICE (25 CENTS). THE INITIAL RAID WEDNESDAY MORNING WAS REBUFFED IMMEDIATELY BY A HUGE INFLUX OF NEWBIE LONGS ENTERING THE SILVER COMEX CASINO.  THE BANKERS HAD A HARD TIME COVERING DUE TO THAT RISE IN PRICE AS YOU CAN VISUALIZE BANKER CAPITULATION. NEWBIE LONGS ENTERED ONCE THEY SAW THE FAILED RAID, WITH THE SUPPLY COMING FROM OLD SPECS EXITING FOR A PROFIT.  RESULT: HIGHER PRICE WITH A TINY OI GAIN.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 21.98 POINTS OR 0.68%   / /Hang Sang CLOSED DOWN 64.85 POINTS OR 0.24% The Nikkei closed DOWN 26.65 POINTS OR 0.41%/Australia’s all ordinaires CLOSED DOWN 0.06%/Chinese yuan (ONSHORE) closed UP at 6.6766/Oil DOWN to 46.66 dollars per barrel for WTI and 50.13 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6855 yuan to the dollar vs 6.6766 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS  HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

b) REPORT ON JAPAN c) REPORT ON CHINA

A very important commentary today as zero hedge remarks on the analysis of Charlene Chu formerly of Fitch who has made a career out of figuring out the true debt of China and then its non performing loans.  Her figure of $35 trillion is now well received by all pundits. Her figure of 7.6 trillion of non performing loans is scaring the living daylights out of Wall Street executives

( zero hedge/Charlene Chu/Hong Kong)

4. EUROPEAN AFFAIRS i)The Euro dumps to below 1.17 when minutes reveal that the ECB will basically not tolerate a move to the 1.20 level. ( zerohedge)

ii)Spain is becoming the second largest destination  by sea after Greece for our Migrants

( Kern/Gatestone Institute)

 

iii)Massive crash in Barcelona after a van plows into a crowd at the Rambla  (City centre)

 

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES

Despite the media proclaiming global growth, the total global negative yielding debt has now surged to its highest level in almost a year

 

( zero hedge)

 

7. OIL ISSUES 8. EMERGING MARKET

VENEZUELA

 

The faster they get this buffoon out of there, the better.  Average Venezuelans are suffering drastic weight loss due to lack of food.  Remember, this nation has the world’s highest oil reserves in the ground

 

( zerohedge)

9.   PHYSICAL MARKETS i)Brian Lundin explains:  If government is trying to persuade you not to buy gold, then maybe you should buy it to protect yourself ( Brien Lundin/GATA)

ii)John Embry comments that the social fabric in the USA is breaking down and it is these people who are least interested in gold

( John Embry/Kingworld news)

This is interesting:  Assange in a 3 hour meeting with a Californian Congressman offered to prove that the Russians were not his source for the Democrat email hacking.  He wants a seat at the White House Press briefing and of course an absolute pardon

 

(courtesy zero hedge)

10. USA Stories i)Hussman warns that the equity bubble will burst after the Fed warns that the markets are “vulnerable to elevated valuations”

( Hussman/zero hedge)

 

ii)Oh oH! this is a good indicator for problems in the uSA economy:  WalMart’s free cash flow falls and fails to cover its dividends and buybacks.  WalMart stock drops due to its guidance of lower earnings

 

( zerohedge)

 

iii)Soft data Philly Fed index slides to its weakest level since the Trump election with employment the killer

 

( Philly Index/zero hedge)

iv)USA industrial production rose by only .2% month/month in July missing expectations.  Last month’s data: .4% month/month and this is showing an economy that is slowing down.  Industrial production numbers are hard data

 

( zero hedge/Industrial production)

v)A new study shows what we have been telling you:  higher minimum wages are bringing job losses.  The hardesthit: females and minority workers

 

( zerohedge)

vi)This is a strange one!!  The FBI now reopens a Freedom of Information case on the Lynch Clinton Tarmac meeting after they got caught in a huge lie

( zero hedge)

vii)Bannon breaks his silence and gives his opinion on China, North Korea and what is happening internally . Correctly he admits that the USA is in an economic war with China and they must try and curtail their advances.

 

a must read..

 

( zero hedge)

viii)This is deadly and not good for Trump: Senator Corker, who is probably the wealthiest of all the senators has now called for a “radical change’ in the White House

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 4,484 CONTRACTS UP to an OI level of 482,405 WITH THE RISE IN THE PRICE OF GOLD ($3.85 with TUESDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY TACKLING THE LOWER PRICE DUE TO ANOTHER RAID IN YESTERDAY’S TRADING. THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER.  THE HIGH OPEN INTEREST IN THE GOLD COMPLEX WAS FODDER FOR OUR CROOKS AS THEY TRIED AGAIN  TO SHAKE MANY OF THE GOLD LEAVES FROM THE GOLD TREE. TODAY ANOTHER SMALL RAID (FLASH CRASH) FAILED MISERABLY.  YESTERDAY MOST OF THE GOLD PRICE GAINS CAME AFTER THE COMEX CLOSED SO WE WILL SEE ELEVATED OI IN GOLD IN TOMORROW’S READING.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 71 contract(s) to stand at 899 contracts. We had 32 notices filed on YESTERDAY so we LOST 39 contracts or an additional 3900 oz will NOT stand at the comex and 39 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI GAIN 1 contract UP to 1383.

The next active contract month is Oct and here we saw a LOSS of 137 contracts DOWN to 49,553.

The very big active December contract month saw it’s OI GAIN 4515 contracts UP to 376,411.

We had 2 notice(s) filed upon today for   200 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI SURPRISINGLY ROSE BY ONLY 292 CONTRACTS FROM  187,955 UP TO 188,247 DESPITE YESTERDAY’S HUGE 25 CENT GAIN.  THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER ARE CHOKING THEM TO DEATH. THE BANKERS INITIATED THE RAID SUPPLYING A GOOD SIZED PAPER SHORTS WHICH INITIALLY DROVE THE PRICE OF SILVER DOWN. HOWEVER SILVER REBOUNDED ALMOST IMMEDIATELY CATCHING THE BANKERS TOTALLY OFFSIDE. THE BANKERS COULD NOT COVER ANY OF THEIR SHORTS WHICH WAS THE OBJECT OF THE EXERCISE. WHEN THE BANKERS WERE LOATHE TO SUPPLY NEW SHORT POSITIONS, SILVER SKYROCKETED NORTHBOUND. RESULT: A SMALL OPEN INTEREST GAIN WITH A HUGE PRICE RISE.

We are now in the next big non active silver contract month of August and here the OI ROSE 9 contracts UP TO 94. We had 15 notice(s) filed yesterday.  Thus we GAINED ANOTHER 24 contract(s) or an additional 120,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 2,965 contacts down to 95,493.  The next non active contract month for silver after September is October and here the OI gained 114 contacts up TO 229. After October, the big active contract month is December and here the OI GAINED by 3014 contracts UP to 80,901 contracts.

We had 85 notice(s) filed for 425,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

YESTERDAY’S confirmed volume was 278,381 which is excellent

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 17/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   3009.62 oz Scotia Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   2 notice(s) 200 OZ No of oz to be served (notices) 897 contracts (89,700 oz) Total monthly oz gold served (contracts) so far this month 4581 notices 458,100 oz 14.248 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   26,778.6  oz Today we HAD  1 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 0  customer deposit(s): total customer deposits;  nil  oz We had 1 customer withdrawal(s) i) Out of Scotia:  3009.620 oz total customer withdrawals;  3009.62 oz  we had 1 adjustment(s)  i) Out of Brinks:  96.45 oz was adjusted out of the customer and this landed into the dealer account of Brinks (3 kilobars)   For AUGUST:

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 2  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4581) x 100 oz or 458,100 oz, to which we add the difference between the open interest for the front month of AUGUST (899 contracts) minus the number of notices served upon today (2) x 100 oz per contract equals 547,800  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4581) x 100 oz  or ounces + {(899)OI for the front month  minus the number of  notices served upon today (2) x 100 oz which equals 547,800 oz standing in this  active delivery month of AUGUST  (17.038 tonnes)  we lost 39 contracts or an additional 3900 oz will not stand for delivery and 39 EFP’s for August were issued.(FOR FIAT BONUS PLUS ANOTHER DELIVERABLE CONTRACT WHICH MOST LIKELY IS A LONDON BASED FORWARD) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,311.027 or 23.58 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,625,139.302 or 268.27 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.27 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 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 12 MONTHS  85 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 17  2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 151,204.08 oz  Scotia Brinks Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  41,065.080 oz CNT No of oz served today (contracts) 85 CONTRACT(S) (425,000 OZ) No of oz to be served (notices) 9 contracts ( 45,000 oz) Total monthly oz silver served (contracts) 1000 contracts (5,000,000 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 2,585,984.9 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 2 customer withdrawal(s): i) out of  brinks: 40,380.29 oz ii) out of Scotia: 110,823.790 oz TOTAL CUSTOMER WITHDRAWALS:  151,204.08 oz We had 1 Customer deposit(s):  i) Into CNT:  41,065.080 oz ***deposits into JPMorgan have stopped  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: 41,065.080 oz    we had 2 adjustment(s) i) Out of Brinks: 5265.610 oz was adjusted out of the customer and this landed into the dealer account of Brinks ii) Out of CNT: 30,337.334 oz was adjusted out of the dealer and this landed into the customer account of CNT The total number of notices filed today for the AUGUST. contract month is represented by 85 contract(s) for 425,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 1000 x 5,000 oz  = 5,000,000 oz to which we add the difference between the open interest for the front month of AUGUST (94) and the number of notices served upon today (85) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  1000 (notices served so far)x 5000 oz  + OI for front month of AUGUST(94 ) -number of notices served upon today (85)x 5000 oz  equals  5,045,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 24 contracts or an additional 120,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month. At this point in the delivery cycle last year on August 16/2016 we had 104,058 contracts standing vs this yr at 95,753. Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex YESTERDAY’s  confirmed volume was 111,656 contracts which is OUT OF THIS WORLD FRIDAY’S CONFIRMED VOLUME OF 111,645 CONTRACTS WHICH EQUATES TO 558 MILLION OZ OF SILVER OR 80% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.323 million (close to record low inventory   Total number of dealer and customer silver:   215.627 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 6.5 percent to NAV usa funds and Negative 6.3% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.5% Percentage of fund in silver:37.5% cash .+0.0%( August 17/2017)  2. Sprott silver fund (PSLV): STOCK   NAV RISES TO +0.21% (August 17/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.54% to NAV  (August 17/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.21/Sprott physical gold trust is back into NEGATIVE/ territory at -0.54%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 17/late last night, a deposit of 4.43 tonnes of gold at the GLD/inventory rests at 795.44 tonnes/the bleeding of gold has stopped.

August 16/no change in gold inventory at the GLD. Inventory rests at 791.01 tonnes

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 17 /2017/ Inventory rests tonight at 795.44 tonnes *IN LAST 214 TRADING DAYS: 154.44 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 152 TRADING DAYS: A NET  2.99 TONNES HAVE NOW BEEN ADDED INTO  GLD INVENTORY. *FROM FEB 1/2017: A NET  13.82 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 17/A WITHDRAWAL OF 1.418 MILLION OZ LEAVES THE VAULTS OF THE SLV (WITH SILVER UP 25 CENTS YESTERDAY?)/INVENTORY RESTS AT 334.407 MILLION OZ

August 16/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz/

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

 

August 17.2017:

 Inventory 334.407  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.31%
  • 12 Month MM GOFO + 1.49%
  • 30 day trend

end

Major gold/silver trading/commentaries for THURSDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Must See Charts – Gold Hedges USD Devaluation, Rise in Oil, Food and Cost of Living Since Nixon Ended Gold Standard

By janskoyles August 17, 2017 0 Comments

– Gold hedges massive ongoing devaluation of U.S. Dollar
– 46th anniversary of ‘Tricky Dicky’ ending Gold Standard (see video)
– Savings destroyed by currency creation and now negative interest rates
– Long-term inflation figures show gold a hedge against rising cost of fuel, food and cost of living
– $20 food and beverages basket of 1971 cost $120.17 in 2017
– Household items increased by average of 2000% and oil by 5,373% since 1913
– Gold gained 5,669% since 1913; by nearly 3,000% since 1971
– Dollar has been reserve currency of world in the period and most other currencies have seen greater devaluation
– Evidence of gold’s role as inflation and currency devaluation hedge

 Editor: Mark O’Byrne

US dollar Purchasing Power As measured By Gold’
Source: Goldchartsrus

You don’t need ‘Tricky Trump’ to devalue the dollar, it’s been doing that since 1913 and ‘Tricky Dicky’ in 1971

In 2015 President Donald Trump made headlines when he told a town hall event in Atkinson, New Hampshire about how his father had once given him a ‘small loan of a million dollars.’

Outcry swept around the media who asked how much the future President was really in touch with the common voter.

Whilst Trump’s reference to ‘small’ was in relation to the (apparent) size of the empire he subsequently built he may as well have been referring to the value of a million dollars now and how small it is compared to in 1975 when he was lent the money.

$1 million dollars was a lot of currency in 1975. Today it will barely buy you a nice house in a nice city.

Using today’s CPI data Trump Sr’s $1 million loan would today be equivalent to $4.4 million. The purchasing power of a 1975 US dollar has fallen by over 400%. It has fallen a lot more since 1971.

In this week 46 years ago on August 15 1971, President Nixon announced the U.S. Dollar would completely cut ties with sound money gold (see video below).

Without gold backing and gold as a monetary anchor, we can now see just how much the purchasing power of the consumer dollar has declined since 1971.

You can see an even better example of the dollar’s collapse in purchasing power when measured in gold ounces (see charts above).

Prices climb by over 2000% since 1913 and creation of the Fed

‘[Since 1913] the general public and policymakers have focused almost constantly on inflation; they have feared it, bemoaned it, sought it, and even tried to whip it.’ Bureau of Labour Statistics 

In 1970, after many decades of dollar devaluation, Herbert W. Armstrong quoted the Labor Department’s figures for how much $5 would have purchased in 1913:

“15 pounds of potatoes, 10 pounds of flour, 5 pounds of sugar, 5 pounds of chuck roast, 3 pounds of round steak, 3 pounds of rice, 2 pounds each of cheese and bacon, and a pound each of butter and coffee; that money would also get you two loaves of bread, 4 quarts of milk and a dozen eggs. This would leave you with 2 cents for candy.”

Percent (%) change in US prices (1913 – 2017)

What changed in 1913? The US adopted the Federal Reserve Banking System and the journey towards dismantling the gold standard and currency debasement began.

In the same year the United States government started tracking prices. This was thanks to President William Howard Taft who signed a bill promoting the Department of Labor to a Cabinet-level Department. Following this move the Consumer Price Index (CPI) was created in 1921 and backdated to 1913.

Many things have changed since 1913, the most obvious is that the US Dollar is no longer backed by gold and that inflation has been slowly destroying wealth. Despite government efforts to track prices, little has been done about the impact of inflation and our loss of purchasing power.

This is best illustrated not just with gold but through day-to-day items that we can all relate to. Below it is clear to see that since before the beginning of the World War I prices of everyday items have climbed by over 2,000%, on average.

We can also appreciate how much the U.S. Dollar has depreciated in value when we consider that a $100 bill at the end of the First World War has the equivalent purchasing power of $1,196, today.

This is in significant contrast to the price and purchasing power of store of value gold.

We often talk about the role of gold during times of war and upheaval. This seems particularly relevant today as Trump and North Korea engage in saber-rattling.

The table above shows just how important gold was during war time for the millions of people who were uprooted in the run up to and in 1914 and found themselves refugees, without a country to call home and in need of a borderless currency which would serve them wherever they found themselves.

The children or grandchildren of those who escaped with gold would own as asset which has protected and grown their wealth and is today worth over 5,000% more than it was in 1913.

CPI measure, questionable but available

When we complain that food and other household items are becoming more expensive what we are usually experiencing is the devaluation in the US dollar and impact on inflation.

To give you an idea of how much the dollar has fallen in value since the removal of the gold standard in 1971, the purchasing power of $100 then would be equivalent to $616.65 today.

By comparison, $100 worth of gold in 1971 is now worth nearly $3,700.

Today the CPI is the fiat-centric world’s way of tracking consumer prices and, therefore, inflation. We rarely hear about the depreciation of our currencies, instead we are bamboozled with odd figures which rarely translate into our every day life.

Despite this, we are still able to use CPI as real evidence of the rising cost of living over time. This is particularly interesting when you look at the change in food prices using 1971 as a base year.

We use 1971 as since then the US currency has not been tied to or associated with gold. In the period since then we have seen a slow but damaging impact on the value of people’s wealth and the purchasing power of their earnings.

As with our piece on British food prices, British inflation and rising cost of living, we would have preferred to have used actual price information in order to look at the depreciation of the U.S. Dollar. Unfortunately individual price information isn’t readily available for the periods of most interest.

Below you can see how much the CPI numbers have increased for items which are considered key in an household’s food basket. When you consider 1971 = 100 as the base year and price, you can see the dramatic changes in prices.

The CPI can be misleading and confusing. When looking at the CPI data for the last 46 years it was interesting to note that halfway through the years the BLS decided to change the base year, thus making it appear as though inflation had not increased at quite the rate it had been. The numbers above have been adjusted to the best of our ability.

One thing we also noticed when gathering the data was the climb in price of unprocessed foods, look at potatoes, carrots and apples as an example of freshly grown produce.

As we looked deeper into data between 1971 and 2017 the list of foods included in the CPI basket grew, thanks to the advent of processed and unhealthy food all of which appear to be more affordable and suffering less from price climbs.

As our currency has been debased so has our food.

For those who are interested in actual prices, rather than the CPI data, we were only able to gather certain figures from the earliest point of 1980. Here you can see that on average the price of food has risen sharply.

% change in (US) prices 1980 – 2017

This is quite a powerful indication of how gold has acted as a hedge against inflation. Even for those who bought gold, nine years into the bull market and near the top in 1980, gold protected their purchasing power.

Not just about food

As we mentioned when we looked at the depreciation of the British pound, the price of food is not the only thing to hurt the average consumer.

Fuel is the backbone of any economy, it affects the price of living both directly and indirectly. It affects the price of your food through to the cost of the journey from the farm to the fork.

The price of oil, fuel and energy related items have increased massively since 1971. The graph above, courtesy of the St Louis FRED database, shows just how much the price of fuel items have increased since 1971.

The depreciation of the dollar, just a myth?

A couple of years ago Business Insider ‘Stalwart’ Joe Weisenthal, now Bloomberg presenter and host wrote about how the depreciation of the US Dollar was a ‘myth’.

He based this on the logic that hardly anyone keeps their cash in a box or ‘under the mattress’ anymore, but (he conceded):

‘Yes, if someone had a bunch of cash in 1959 and literally put it in a shoebox, they’d have lost a lot of money over the last several decades”

But what happens when you don’t keep your money to yourself?

You have to put it in a bank account or invest it in stocks, bonds, IRAs etc. All of those things come with counterparty risk. For some of us, it makes sense to hold a percentage of our wealth outside of the banking and financial system.

However we cannot do this with paper bank notes as, as Mr Weisenthal reminds us, it just loses its value over time.

This is why we recommend clients hold some of their savings in gold and silver.  You are not keeping it in the banking system, you do not need to ‘fear’ the impact of inflation and you certainly do not need to worry about counterparties either devaluing it or trying to confiscate it – if owned in safer jurisdictions such as Singapore and Switzerland.

Gold has acted as hedge against inflation and a financial insurance against the tyranny of central bank policies, throughout history but no more so than in the last century.

No matter banking system, measure of inflation or government your country has, one ounce of gold remains one ounce of gold. It is the same and is recognised everywhere which confers vitally important liquidity.

It is clear to see from the charts above that the fiat currency system works against the long-term desire to protect and grow our wealth.

This is thanks to both the fractional reserve banking system but also thanks to the confiscatory practices of governments and powerful the financial industry and the currency debasement of central banks.

As former Federal Reserve Chairman Alan Greenspan said himself

“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”

We are no longer on a gold standard, nor are we likely to be on one for the foreseeable future. But this does not mean savers cannot implement their own version in their portfolios.

We all need to eat and we all need to use fuel, but we must learn to protect ourselves from the ongoing devaluation of the dollar and all fiat currencies in order to ensure we can keep doing what we need to do before our savings are destroyed by the fiat monetary system.

News and Commentary

Gold, silver soar after US Fed minutes; palladium hits over 16-year high (IndiaTimes.com)

Gold ends higher as Trump disbands 2 White House advisory groups (MarketWatch.com)

Gold edges up after gaining on softer dollar (Reuters.com)

Unlike Bitcoin – “Gold has demonstrated ability to preserve value under all circumstances ” – Morgan Stanley (Bloomberg.com)

Bitcoin Is Literally Soaring Into Space After Rocket-Like Surge (Bloomberg.com)

Source: David Stockman via Daily Reckoning

5 Charts Prove Market A Bubble (DailyReckoning.com)

Bitcoin is a bubble – but bubbles change the world (MoneyWeek.com)

Corporate Employers Flee Pensions With Gap Topping $375 Billion (Bloomberg.com)

This is what every ETF investor needs to know today (StansBerryChurcHouse.com)

What’s so special about gold? – Lundin (PeakProsperity.com)

Gold Prices (LBMA AM)

17 Aug: USD 1,285.90, GBP 998.12 & EUR 1,096.74 per ounce
16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce
09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce

Silver Prices (LBMA)

17 Aug: USD 17.02, GBP 13.23 & EUR 14.55 per ounce
16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce
10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce
09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce


Recent Market Updates

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– What Investors Can Learn From the Japanese Art of Kintsukuroi
– Bitcoin, ICO Risk Versus Immutable Gold and Silver
– This Is Why Shrinkflation Is Making You Poor

END Brian Lundin explains:  If government is trying to persuade you not to buy gold, then maybe you should buy it to protect yourself (courtesy Brien Lundin/GATA) Brien Lundin: If government doesn’t want you to own gold, you probably should

Submitted by cpowell on Wed, 2017-08-16 14:08. Section: 

10:07a Wednesday, August 16, 2017

Dear Friend of GATA and Gold:

Manipulation of the gold market by central banks figures heavily in an interview this week with Gold Newsletter editor and New Orleans Investment Conference organizer Brien Lundin by Peak Prosperity’s Chris Martenson.

Martenson comes closer than ever to joining the supposed tin-foil hat crowd with a remark that may sound familiar to GATA supporters: “It’s easier to find plans for a nuclear bomb online than it is to find out the actual state of the gold market.”

Lundin offers this advice: “What’s so special about gold? If what they tell us — that it’s a barbaric relic and it has no use in society — is true, then why be so secretive about it? Why be so reluctant to have your citizens own it? That alone tells you all you really need to know. If they don’t want you to know about it, if they don’t want you to own it, you probably should.”

Audio of the interview and a transcript are posted at Peak Prosperity here:

https://www.peakprosperity.com/podcast/110158/brien-lundin-if-dont-want-…

GATA Chairman Bill Murphy and your secretary/treasurer will be speaking at the New Orleans conference, which will be held Wednesday through Saturday, October 25-28, and information about it is posted here:

http://neworleansconference.com/wp-content/uploads/2017/07/NOIC2017_powe…

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

 END John Embry comments that the social fabric in the USA is breaking down and it is these people who are least interested in gold (courtesy John Embry/Kingworld news) Those who most need monetary metals are least interested, Embry says

Submitted by cpowell on Wed, 2017-08-16 19:37. Section: 

3:35p ET Wednesday, August 16, 2017

Dear Friend of GATA and Gold:

Interviewed today by King World News, Sprott Asset Management’s John Embry marvels at the lack of interest of Americans in the monetary metals, since he thinks they will need the metals most.

“Social cohesion appears to be breaking down” in the United States, Embry says. “This is occurring before the real economic and financial problems that will cripple America have unfolded. I am extremely uncomfortable with what might occur in the face of real economic hardship, with a heavily armed and angry populace reacting badly to a sharply lower standard of living.”

Embry’s comments are excerpted at KWN here:

http://kingworldnews.com/john-embry-deep-state-operatives-becoming-despe…

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 STRONGER 6.6766 (REVALUATION NORTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6855/ Shanghai bourse CLOSED UP 21.98 POINTS OR 0.68%  / HANG SANG CLOSED DOWN 64.85 POINTS OR 0.24% 

2. Nikkei closed DOWN 26.65 POINTS OR 0.41%    /USA: YEN RISES TO 110.18

3. Europe stocks OPENED DEEPLY IN THE RED     ( /USA dollar index RISES TO  93.91/Euro DOWN to 1.1697

3b Japan 10 year bond yield: RISES  TO  +.0540%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  46.66 and Brent: 50.13

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 FALLS TO  +.440%/Italian 10 yr bond yield DOWN  to 2.029%    

3j Greek 10 year bond yield RISES to  : 5.564???  

3k Gold at $1286.00  silver at:17.07 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 2/100 in  roubles/dollar) 59.41-

3m oil into the 46 dollar handle for WTI and 50 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.18 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9679 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1322 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.440%

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 2.2395% early this morning. Thirty year rate  at 2.8198% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

S&P Futures, Euro, Stocks Fall After Fed’s Low Inflation Warning

S&P futures, European stocks and bond yields all fell in early trade alongside oil and the euro after the latest Fed minutes expressed concern over weak U.S. inflation, while Asian equities rose overnight ahead of WalMart earnings and the latest ECB minutes. Gold rose as high as $1,290 before fading most gains as the USDJPY rebounded. Fund futures are now pricing in about a 40% chance the Fed will raise rates by December, compared to 50% before the Fed’s minutes.

Last week’s market turmoil and resultant near record jump in volatility in the wake of heightened tensions between the U.S. and North Korea has continued to ease, bringing down gauges of equity and bond volatility and repairing most of the damage done to stock markets, in fact as Bank of America showed, the retracement in the VIX on Monday was among the fastest on record.

But political angst isn’t over; investors continue to watch the political trainwreck in Washington where President Trump disbanded two high-profile business advisory councils amid the fallout from his response to the weekend violence in Virginia.

 

“Trump dissolving his major business groups makes the investment community even more pessimistic because this sets the stage for even more failure for him,” Naeem Aslam, chief market analyst at Think Markets in London, wrote in a note.

Lost in the political noise was the July FOMC minutes, where the most notable takeaway was the reference to “most participants expected inflation to pick up over the next couple of years….and to stabilize around the 2% objective over the medium term”. However, many participants “saw some likelihood that inflation might remain below 2% for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.” The debate on inflation echoed recent comments made public by various Fed presidents, while some members noted the “committee could afford to be patient….in deciding when to increase the rates further and argued against additional adjustments until incoming information confirmed that the recent low inflation were not likely to persist”. However, those comments were balanced by the observation that “…some other participants were more worried about risks arising from a labour market that had already reached full employment and was projected to tighten further from the easing in financial conditions”. Elsewhere, on the balance sheet unwind topic, “several” members favoured an announcement in the July meeting, but most preferred to defer that decision to the next meeting in September.

With concerns about weak inflation in the air, the Stoxx 600 Index was down 0.1%, with declines in banking shares offsetting advances in healthcare stocks. Germany’s DAX, France’s CAC 40 and the UK’s FTSE 100 all fell 0.1%. Yesterday’s Reuters’ trial balloon, according to which Mario Draghi would not say anything of note next week during the Jackson Hole conference, weakened the euro, which traded as low at 1.1700 this morning and gave support to fixed income assets with European government bond yields dropping, and the 10Y Bund yield down nearly 2 bps to 0.42%, down from Wednesday’s high of 0.47%. Most other euro zone yields fell 1-2 basis points.

In currencies, in addition to the euro sliding before the ECB minutes release, most Asian currencies rose overnight, with the Korean won up 0.3% after tensions over North Korea continued to ease. Overnight, the yen gained for a second day as the dollar decline on declining US rate hike expectations. The Australian dollar rose a second day against the U.S. dollar to reach the highest in nearly 2 weeks after July employment data beat estimates while prior month data was revised higher and iron ore prices erase week-to-date losses. In Europe, the pound rose against the euro after strong U.K. retail sales data.

In commodities, London copper, aluminum and zinc hit multi-year highs on expectation China’s reform of its metals industry will curb supply against a backdrop of robust demand. Gold and tin were among the best performing metals, and zinc traded near a 10-year high.  Oil prices edged higher after new data showed U.S. crude stocks have fallen by 13 percent from a peak in March. Brent crude futures were at $50.36 per barrel, up 0.2 percent from their last close.

Today’s data include jobless claims, Philadelphia Fed Business Outlook and industrial production. Wal-Mart, Gap, Ross Stores and Madison Square Garden are among companies reporting earnings.

Bulletin Headline Summary from RanSquawk

  • Choppy GBP reaction to UK retail sales
  • Financial leading the declines in Europe post last night’s FOMC minutes
  • Looking ahead, highlights include ECB minutes, US Philly Fed and jobless claims

Market Snapshot

  • S&P 500 futures down 0.1% to 2,465
  • STOXX Europe 600 down 0.1% to 378.62
  • MSCI Asia up 0.5% to 159.86
  • MSCI Asia ex Japan up 0.5% to 526.58
  • Nikkei down 0.1% to 19,702.63
  • Topix down 0.07% to 1,614.82
  • Hang Seng Index down 0.2% to 27,344.22
  • Shanghai Composite up 0.7% to 3,268.43
  • Sensex up 0.4% to 31,888.42
  • Australia S&P/ASX 200 down 0.1% to 5,779.21
  • Kospi up 0.6% to 2,361.67
  • German 10Y yield fell 1.0 bps to 0.435%
  • Euro down 0.3% to $1.1738
  • Italian 10Y yield unchanged at 1.755%
  • Spanish 10Y yield fell 1.0 bps to 1.454%
  • Brent futures down 0.2% to $50.17/bbl
  • Gold spot up 0.3% to $1,287.08
  • U.S. Dollar Index up 0.2% to 93.70

Top Overnight News

  • Alibaba, Wal-Mart Report Earnings; ECB Minutes Watched for Taper Clues
  • The U.S.’s top general declined to comment on South Korean leader Moon Jae-in’s assertion that he needed to sign off on a war against North Korea, saying President Donald Trump had the final say on a unilateral military strike
  • Trump’s pro-business image tarnished as CEOs abandon president
  • China believes the Korean Peninsula issue can only be solved via dialogue and negotiations, Fan Changlong, Vice Chairman of Central Military Commission said
  • Saudi Arabia shipped the least oil in almost three years in June, just as domestic stockpiles are dwindling.
  • U.K. retail sales rose 0.3% m/m in July, exceeding the median estimate of +0.2%, driven by the biggest jump in purchases of food in almost two years
  • President Donald Trump waded into a longstanding scrap between online retailers and their brick- and-mortar rivals with a Twitter posting Wednesday about Amazon.com Inc. and taxes
  • Fed officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong
  • Investors are about to get their first look at Bill Ackman’s plans for improving the performance of Automatic Data Processing Inc., which the activist investor contends is losing ground to smaller rivals
  • Credit Suisse, JPMorgan and Citigroup have struck the first deals on a new structured debt platform amid a boom in repackaged note transactions
  • Most industrial metals eased back after a rally that took zinc to the highest level in almost 10 years on signs of supply curbs and faster economic growth around the world
  • U.K. consumers are flagging, stripping the economy of its most consistent and important support over the past two years.
  • Air Berlin Plc’s insolvency could open the way for Deutsche Lufthansa AG to add new hubs for inter-continental flights while allowing short-haul discount specialist EasyJet Plc to boost its presence in the German capital
  • South Korea’s Moon says will be no war again on the peninsula
  • Japan July trade 418.8b yen vs 327.1b est; exports 13.4% vs 13.2% est
  • Australia July jobs 27.9k vs 20.0k est; unempl rate 5.6% vs 5.6% est
  • New Zealand Aug ANZ consumer confidence 126.2 vs 125.4; +0.6% m/m
  • Elliott Is Said to Buy Debt in Move to Block Berkshire Oncor Bid
  • For Bull Market in U.S. Stocks, You’re Only as Young as You Feel
  • Credit Suisse’s London Sublease to WeWork Said to Be Blocked
  • Trump’s Pro-Business Image Tarnished as CEOs Abandon President
  • Republican Leaders Duck for Cover After Trump’s Race Remarks

Asia equity markets traded indecisive following a relatively tepid close in the US where basic materials outperformed as zinc rose above USD 3000/ton to a decade high, while energy and financials declined on oil weakness and after US yields were pressured post¬FOMC minutes. ASX 200 (-0.10%) was choppy with miners underpinned by strength across the metals complex and as a slew of earnings releases also drove individual stocks, while Nikkei 225 (-0.14%)was subdued by a firmer currency. Shanghai Comp (+0.68%) and Hang Seng (-0.24%) were both initially higher, although the latter then pared gains on profit taking and amid an increase in money market rates. 10yr JGBs traded flat amid an indecisive risk tone in Japan, while the 5yr auction also failed to spur price action as the results were mixed. PBoC injected CNY 60bln in 7-day reverse repos and CNY 40bln in 14-day reverse repos. (Newswires) PBoC set CNY mid-point at 6.6709 (Prey. 6.6779). Japanese Trade Balance (Jul) JPY 418.8bln vs. Exp. JPY 327.1b1n (Prey. JPY 439.9b1n); Exports (Jul) Y/Y 13.4% vs. Exp. 13.2% (Prey. 9.7%);Imports (Jul) Y/Y 16.3% vs. Exp. 17.0% (Prey. 15.5%)

Top Asian News

  • Economic Growth in the Philippines Exceeds 6% for Eighth Quarter
  • Casino Giants Look for Clarity as Japan Begins Public Debate
  • Series of Gaffes Taint Unicom’s $11.7 Billion Sale Announcement
  • Gemadept Seeks $125M From Stake Sales in 2 Units: CEO Minh
  • Tokyo Stocks Slip as Yen Strengthens After Dovish Fed Minutes
  • Taiwan Blackout Seen Pressuring Tsai to Reconsider Energy Policy
  • BOJ Seen Trimming Bond Purchases Further If Yields Extend Slide
  • China Kickstarts Privatization Push With Unicom Share Sale
  • Tencent’s Appetite for AI Sends Sector Stocks Surging in China

European equities trade modestly lower (Eurostoxx 50 -0.2%) with financials underperforming in the wake of yesterday’s FOMC minutes which received a somewhat dovish response given concerns at the Fed regarding inflation. To the upside, material names outperform in response to the gains seen overnight in the metals complex with Dalian iron ore prices up over 6% during Asia-Pac trade. In fixed income markets, prices were originally supported by the softness seen in European equities and the fallout of yesterday’s FOMC minutes with the 10yr Bund approaching 164.00 to the upside. Looking ahead, investors will likely turn towards today’s ECB minutes release for any views on concerns surrounding scarcity of core paper and any potential biases the central bank could have in purchasing paper from across the continent.

Top European News

  • U.K. Said to Plan Visa-Free Travel for Europeans After Brexit
  • U.K. July Retail Sales Rise, Led by Surge in Demand for Food
  • Nets CEO Opens Door to European Expansion Amid Deals Speculation
  • Axa, NN Are Said to Near Deal for Billionaire March’s Encampus
  • Seadrill Shields Seadrill Partners From Impact of Chapter 11
  • Novo’s Diabetes Drug Bests Lilly’s in Aiding on Weight Loss
  • Vestas Maintains Outlook, Begins $706 Million Share Buy Back
  • Lufthansa Swoop for Air Berlin Would Add Lower-Cost U.S. Routes

In currencies, sterling was once again a key focus for FX markets amid further tier 1 data from the region, this time with retail sales on the data slate. Upon the release, GBP/USD saw a spike higher after 3/4 headline metrics exceeded expectations before prices were dragged lower to pre-announced levels with all 4 components revised lower. USD has regained some ground against its major counterparts following the losses seen last night in the wake of the FOMC minutes. USD has particularly out-muscled EUR with participants looking for further insight via the ECB minutes into the current train of thought at the central bank given yesterday’s source reports. AUD has regained some ground amid firmer metals prices, subsequently shrugging off the domestic jobs data overnight.

In commodities, the metals complex traded higher overnight with gold prices extending on gains seen following the FOMC minutes. Elsewhere, Copper traded higher alongside broad strength across basic materials with Dalian iron ore prices up nearly 6%, while WTI traded quiet overnight and failed to make any significant recovery from yesterday’s post-DoE declines. Saudi Arabia June output rose 190K bpd M/M to
10.07mln bpd, while Saudi Arabia June crude exports fell 40K bpd M/M to 6.889mn bpd, according to JODI data. Libya’s NOC said that the Sharara oil field is “working normally and the situation is currently stable” following recent security breaches.

Looking at the day ahead, we’ve got a fair bit of data due today including July IP (0.3% mom expected), capacity utilisation, conference board US leading index (0.3% expected), the Philadelphia Fed business outlook survey (19 expected), initial jobless claims and continuing claims stats. Away from the data, the ECB will publish the account of its July policy meeting and the Fed’ Kaplan will also speak. Further, Wal-Mart will report its results today.

US Event Calendar

  • 8:30am: Initial Jobless Claims, est. 240,000, prior 244,000; Continuing Claims, est. 1.96m, prior 1.95m
  • 8:30am: Philadelphia Fed Business Outlook, est. 18, prior 19.5
  • 9:15am: Industrial Production MoM, est. 0.3%, prior 0.4%; Capacity Utilization, est. 76.7%, prior 76.6%
  • 9:45am: Bloomberg Consumer Comfort, prior 51.4, Bloomberg Economic Expectations, prior 47
  • 10am: Leading Index, est. 0.3%, prior 0.6%
  • 1pm: Fed’s Kaplan Speaks in Lubbock, Texas

DB’s Jim Reid – or in this case not – concludes the overnight wrap

Don’t panic. Jim’s absence today isn’t because his twins have arrived early. Although we’re not totally sure which of the following shocks he’s getting over this morning. The fact that it’s 25 years today since his A-Level results, his 4th wedding anniversary today or being told last night by the consultant that the twins will be coming a little earlier than planned and to expect to be called in anytime in the next 10 days. Luckily we haven’t had to alert him to any super important market related news this morning although things did get a bit more interesting towards the end of the US session last night. Initially the news that one of President Trump’s business advisory groups was disbanding in reaction to events in Virginia over the weekend saw risk assets initially pare some gains. Then after that we got the release of the FOMC minutes which showed a relatively healthy debate amongst policy makers about inflation and which the market appeared to take slightly dovishly given the decent rally for Treasuries into the close. We’ll jump into both of events those shortly.

Prior to that the lack of any more updates or news on the North Korea/US front seemed to be helping keep things fairly calm overall and in fact after all the excitement of last week the S&P 500 and Stoxx 600 have clawed back nearly three-quarters of last week’s moves lower after ticking up another +0.14% and +0.69% yesterday. The VIX is also back down to 11.74 after nudging down another -2.5% yesterday and having peaked at just over 16 last week. We’ve been saying for a while that we are likely in for a quiet spell although after Amazon’s $16bn bond deal attracted orders equivalent to the GDP of Belarus ($47bn) it seems that markets are still some way from a taking a full holiday just yet.

Back to the FOMC minutes, the most notable takeaway was the reference to “most participants expected inflation to pick up over the next couple of years….and to stabilize around the 2% objective over the medium term”. However, many participants “saw some likelihood that inflation might remain below 2% for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.” The debate on inflation echoed recent comments made public by various Fed presidents, while some members noted the “committee could afford to be patient….in deciding when to increase the rates further and argued against additional adjustments until incoming information confirmed that the recent low inflation were not likely to persist”. However, those comments were balanced by the observation that “…some other participants were more worried about risks arising from a labour market that had already reached full employment and was projected to tighten further from the easing in financial conditions”. Elsewhere, on the balance sheet unwind topic, “several” members favoured an announcement in the July meeting, but most preferred to defer that decision to the next meeting in September.

So while the tone of the minutes was actually fairly balanced much of the focus was on the inflation references and particularly the dovish elements. Treasuries were a bit stronger heading into the minutes although yields nosedived a bit further after the text was digested and we saw 10y yields end 5bps lower at 2.223%. 2y yields were also a couple of basis points lower, while the USD (-0.33%) ended weaker for the first time this week. Gold also rallied +0.90% along with the wider precious metals space while EM currencies also benefited from the weaker Greenback (South African Rand +1.08%, Mexican Peso +0.85%, Ruble  +0.58%). That was interestingly also in the context of a weaker day for Oil with WTI falling -1.62% following the latest US crude production data.

Staying with the US, President Trump’s political agenda appeared to take another blow yesterday, as he was effectively forced to disband two of his business advisory councils pre-emptively, given reports (per Bloomberg) that one of the groups, led by the Blackstone CEO is planning to quit. The story is taking up plenty of column space in the papers this morning and while the impact on markets wasn’t huge the S&P 500 did end up paring a gain of closer to +0.50% just before the headlines broke with some suggestion that this might make fiscal progress more difficult. It feels like one to keep an eye on.

Closer to home yesterday, European govies had a very very brief moment of excitement too at the open when a Reuters report hit the wires suggesting that President Draghi won’t deliver any new messages at the Jackson Hole conference next week on 25th. Instead the article quoted an ECB spokesman as saying that the focus will be on the “theme of the symposium, fostering a dynamic global economy”. That sounds about as vague as you can get which probably fits the bill that he’s looking for. There had been a fairly decent buzz building around the event although in fairness the ECB did suggest that the debate over tapering was more likely to take place at the September council meeting so it probably would have been a big surprise to hear anything prior to this of any substance. In terms of the moves for rates, as we noted it was very brief with Bunds at best 2bps stronger in a short period of time, only then to completely reverse and edge a little higher in the mid-morning which is roughly where they held into the close to finish up 1.2bps at 0.439%. The Euro also mostly recovered a temporary dip lower to end just +0.3% on the day.

Jumping over to the latest in Asia this morning, markets are broadly speaking flat to slightly firmer. The Nikkei is back to unchanged following a weak start, while the ASX and Hang Seng are also little changed. China bourses are up around +0.35% and the Kospi is +0.6%. US equity futures are slightly in the red however. Away from markets, Sky news reported late last night that the next phrase of Brexit talks are likely to be delayed until December (from October), in part driven by the challenge and timing of getting a more formal engagement from a new German government as federal elections will occur in September. However, it does mean leaving less than a year for talks on the future trading relationship between the UK and the EU, and another two months of the two-year Article 50 timetable being used up. The reaction for Sterling has been fairly subdued however and if anything it’s a little stronger this morning.

Moving on. In terms of data yesterday most of the focus was on GDP numbers in Europe. The eurozone print of +0.6% qoq was in line while the annual rate pushed up one-tenth to +2.2% yoy, which is the highest since March 2011. The Netherlands (+3.3% yoy vs. +2.3% expected) and Italy (+1.5% yoy vs. +1.4% expected) in particular stood in some of the details after coming in stronger than expected. This follows decent GDP data in Germany on Tuesday too.

In the US yesterday the July housing data were a tad lower than expected, with housing starts falling 4.8% mom to 1.16m (vs. 1.22m expected), largely due to a 15.3% mom decline in the multi-unit sector. Building permits fell 4.1% in July to 1.22m (vs. 1.25m expected), but this follows an upward revision to the prior month, leaving a still solid annual growth of 4.1%. Elsewhere, MBA mortgage applications dipped 0.1%.

Looking at the day ahead, the Eurozone’s July CPI came in as expected (-0.5% mom) while UK July retail sales ex fuel printed at 0.5%, above the 0.2% expected. In the US we’ve got a fair bit of data due today including July IP (0.3% mom expected), capacity utilisation, conference board US leading index (0.3% expected), the Philadelphia Fed business outlook survey (19 expected), initial jobless claims and continuing claims stats. Away from the data, the ECB will publish the account of its July policy meeting and the Fed’ Kaplan will also speak. Further, Wal-Mart will report its results today.

 END 3. ASIAN AFFAIRS

i)Late WEDNESDAY night/THURSDAY morning: Shanghai closed UP 21.98 POINTS OR 0.68%   / /Hang Sang CLOSED DOWN 64.85 POINTS OR 0.24% The Nikkei closed DOWN 26.65 POINTS OR 0.41%/Australia’s all ordinaires CLOSED DOWN 0.06%/Chinese yuan (ONSHORE) closed UP at 6.6766/Oil DOWN to 46.66 dollars per barrel for WTI and 50.13 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6855 yuan to the dollar vs 6.6766 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONG TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS  HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

A very important commentary today as zero hedge remarks on the analysis of Charlene Chu formerly of Fitch who has made a career out of figuring out the true debt of China and then its non performing loans.  Her figure of $35 trillion is now well received by all pundits. Her figure of 7.6 trillion of non performing loans is scaring the living daylights out of Wall Street executives

(courtesy zero hedge/Charlene Chu/Hong Kong)

Analyst Lays Out China’s “Doomsday” Scenario  Charlene Chu, formerly with Fitch has done a super job analyzing the total debt inside China and then calculate its total non performing loans. Total loans outstanding, 35 trillion USA.  Total bad debts;  7.6 trillion. This will not end well. (courtesy zero hedge)

The first time we laid out the dire calculations about what is perhaps the biggest mystery inside China’s financial system, namely the total amount of its non-performing loans, by former Fitch analyst Charlene Chu we called it a “neutron bomb” scenario, because unlike virtually every other rosy forecast the most dire of which topped out at around 8%, Chu argued that the amount of bad debt in China was no less than a whopping 21% of total loans.

Corporate investigator Violet Ho never put a lot of faith in the bad loan numbers reported by China’s banks: crisscrossing provinces from Shandong to Xinjiang, she’s seen too much – from the shell game of moving assets between affiliated companies to disguise the true state of their finances to cover-ups by bankers loath to admit that loans they made won’t be recovered. The amount of bad debt piling up in China is at the center of a debate about whether the country will continue as a locomotive of global growth or sink into decades of stagnation like Japan after its credit bubble burst. Bank of China Ltd. reported on Thursday its biggest quarterly bad-loan provisions since going public in 2006.

 

Charlene Chu, who made her name at Fitch Ratings making bearish assessments of the risks from China’s credit explosion since 2008, is among those crunching the numbers. While corporate investigator Ho relies on her observations from hitting the road, Chu and her colleagues at Autonomous Research in Hong Kong take a top-down approach. They estimate how much money is being wasted after the nation began getting smaller and smaller economic returns on its credit from 2008. Their assessment is informed by data from economies such as Japan that have gone though similar debt explosions.

 

While traditional bank loans are not Chu’s prime focus — she looks at the wider picture, including shadow banking — she says her work suggests that nonperforming loans may be at 20 percent to 21 percent, or even higher.

The chart below shows just how much of an outlier Chu’s stark forecast was in comparison to her peers, and especially the grotesquely low and completely fabricated official number released by the banks and the government.

To be sure, it has always been in Beijing’s best interest to keep true NPL data well-hidden by everyone from the lowliest bank teller to the Politburo, who all know that merely the recognition of the problem would be sufficient to spark if not a full-blown panic then certainly accelerate capital outflows form the nation to an unstoppable degree.

Another problem with making estimates of adequate collateral protection in China, one which makes such a venture more complicated than solving the proverbial riddle, wrapped in a mystery, inside an enigma, is that the very premise of collateralization in the world’s most populous nation is nebulous. Recall that one of the biggest scandals in China in 2014 was the realization (as many had warned previously) that millions of tons of commodities were rehypothecated countless times, and thus “pledged” as collateral to numerous counterparties, and that as a result these same counterparties were unable to make sense of who owns what at one of China’s largest ports, Qingdao. In this context, it is safe to assume that loss given default rates in China are if not 100% (or more, which is impossible in theoretical terms but in practice is quite possible, as another curious side effect of unlimited collateral rehypothecation), then as close to it as possible. In early June, Reuters published an expose on China’s “Ghost Collateral” reminding China watchers that this most insidious phenomenon is anything but gone.

Since then, fears about both China total debt load and the size of its NPLs have only grown, and most recently came under the spotlight of the IMF itself, which two days ago issued a warning about Beijing’s reluctance to rein in “dangerous” levels of debt, blaming Beijing’s tolerance of high debt levels on its goal of doubling the size of the economy between 2010 and 2020.

“International experience suggests that China’s credit growth is on a dangerous trajectory, with increasing risks of a disruptive adjustment and/or a marked growth slowdown,” the IMF said. This statement is spot on, because as the IIF recently showed, total Chinese debt/GDP has now crossed above 300%, a level that in every historical instance, led to a financial crisis.

What was left unsaid is that it is only because China doubled its total debt load following the financial crisis that the world managed to avoid succumbing to an unprecedented depression in the years following the financial crisis. However, by engaging on this unprecedented debt rampage, China only delayed the inevitable.

The IMF tried to sound mutedly optimistic, adding that “the [Chinese] authorities will do what it takes to attain the 2020 GDP target,” however one look at the exponential rise in China’s various credit product prompts substantial doubt how much longer Beijing can delay the inevitable.

And then there is, of course, the biggest wildcard: how much of China’s debt is already impaired, i.e., bad.

* * *

Fast forward to today, when Charlene Chu, described by the FT as “one of the most influential analysts of China’s financial system” is back with a revised estimate that the bad debt in China has now reached a stunning $6.8 trillion above official figures and warns that the government’s ability to enforce stability has allowed underlying problems to go unchecked.

Charlene Chu built her reputation as China banking analyst at credit rating agency Fitch, where she was among the earliest to warn of risks from rising debt, especially in the country’s shadow banking system. Today many of her original views — such as concern about Chinese banks concealing risky credit in off balance sheet vehicles — have become consensus among analysts.

The story repeated with grim determination by Charlene Chu, who left Fitch in 2014 to launch the Asia operation for Autonomous Research, is a familiar one: “everyone knows there’s a credit problem in China, but I find that people often forget about the scale. It’s important in global terms,” Chu told the FT in an interview.

So if Chu held the wildly outlier view nearly two years ago that China’s NPLs amount to 21% of total, what is her latest estimate? The number is a doozy: in her latest report, Chu estimates that bad debt in China’s financial system will reach as much as Rmb51 trillion , or $7.6 trillion, by the end of this year, more than five times the value of bank loans officially classified as either non-performing or one notch above.” That estimate implies a bad-debt ratio of 34%, orders of magnitude above the official 5.3% ratio for those two categories at the end of June.

Needless to say, there is a solid pushback against Chu’s conclusion, and especially those who are currently invested in Chinese financial assets are doing everything in their power to prevent her opinion from becoming gospel.

Chu is among the most bearish observers of China, and some analysts question her methodology. In particular, her estimate of Rmb51tn in bad debt is based on average credit losses across other 11 other economies that previously experienced rapid debt increases comparable to China, including Japan in 1985-97 and the US in 2000-07.

 

But Chen Long, China economist at Gavekal Dragonomics in Beijing, said this methodology implicitly assumes that an economic crash will eventually occur in China.

 

Mr Chen argues that credit losses are highly correlated with economic performance: bad loans rise when growth slows. If China can prevent a sharp downturn, credit losses will be much smaller, despite the extraordinary increase in leverage.

Chen’s conclusion is delightfully and perversely reflexive: as long as China can avoid a crash, it will avoid a crash: “If there’s an economic collapse, of course there will be massive credit losses. No one disagrees about that. But the issue is whether the collapse will actually happen. She takes that as a given,” he said, adding that Chu failed to consider examples such as Korea in the 2000s or Japan after 1997, when debt rose strongly without harming growth. Which is true, but what Chen forgot to note is that globalsince both of those examples has risen to never before seen levels, in the process making the recurrence of such one-time “success stories” impossible.

Clearly Chen sees a far happier, non “crash landing” ending for the country with the 300% debt/GDP.

As for Chu, she acknowledges that an acute crisis does not appear imminent as the government suffocating influence over both borrowers and lenders has allowed Beijing to delay problems much longer than would be possible in a more market-driven system. One factor that has foiled countless shorts over the years is that Beijing can simply order state-owned banks to keep lending to a lossmaking zombie company or to a smaller lender that relies on short-term interbank funding to stay liquid, and that’s precisely what has been happening, when looking at the various non-conventional credit pathways in China in recent years, which include Wealth Management Products, Bank Loans to Non-Bank Institutions, Shadow Banking, Repos and Certificates of Deposit.

But Chu said the ability to avoid recognizing losses only delays the inevitable day of reckoning as problems fester for longer, and grow larger than in an economy where actors respond purely to market incentives. That said, the recent spike in corporate bankruptcies indicates that even Beijing is slowly shifting to a more “market” driven stance.

“What I’ve gotten a greater appreciation for is how everything is so orchestrated by the authorities,” she said. “The upside is that it creates stability. The downside is that it can create a problem of proportions that people would think is never possible. We’re moving into that territory.”

Finally, putting it all in context is the following chart showing the total size of China’s financial sector, which as of the latest quarter has grown to $35 trillion, double the size of the US.

If Chu is right, and local savers and investors certainly know best, it would explain why when looking at SAFE data showing “onshore FX settlement” and “cross-border RMB flows”, and which reveals that net flow of RMB from onshore to offshore was another $13.8billion in July , contrary to PBOC reports Chinese outflows have not ceasued since the summer of 2015…

… as a third of Chinese bank assets being “bad” would be nothing short of a “doomsday” scenario for China’s financial system and also explains the relentless attempts by local to park their money offshore before the system one day “unexpectedly” crashes.

END

Wolf Richter on the same subject as above

(courtesy Wolf Richter/WolfStreet)

So When Will China’s Debt Bubble Finally Blow Up? by  • Aug 17, 2017 • 34 Comments The upside is fake stability. The downside is too ugly to contemplate.

Corporate debt in China has soared to $18 trillion, or 169% of GDP, the largest pile of corporate debt in the world, according to the worried Bank for International Settlements. The OECD has warned about it earlier this year. The New York Fed warned about this debt boom in February and that it could lead to a “financial crisis,” but that authorities have many tools to control it.

The IMF regularly warns about China’s corporate debt, broken-record-like, and did so again a few days ago, lambasting the authorities for their reluctance to tamp down on the growth of debt. The “current trajectory,” it said, “could eventually lead to a sharp adjustment.”

The Chinese authorities – the government and the central bank, supported by the state-owned megabanks – have allowed some bonds to default, rather than bail them out, to make some kind of theoretical point, and they have been working furiously on a balancing act, tamping down on the credit growth that fuels the economy and simultaneously stimulating the economy with more credit to keep the debt bubble from imploding. A misstep could create a global mess.

“Everyone knows there’s a credit problem in China, but I find that people often forget about the scale; it’s important in global terms,” Charlene Chu told the Financial Times. Back in 2011, when she was still a China banking analyst at Fitch Ratings, she went out on a limb with her radical estimates that there was much more debt than disclosed by the central bank, particularly in the shadow banking system, that banks were concealing risky loans in off-balance-sheet vehicles, and that this soaring opaque debt could have nasty consequences. Her outlandish views at the time have since then become the consensus.

And this pile of debt is in much worse shape than officially acknowledged, she says in her latest report, cited by the FT. She’s now with Autonomous Research. She figured that by the end of 2017, bad debt in China could hit 51 trillion yuan, or $7.6 trillion.

Or about 68% of GDP! It would take the bad-debt ratio to an astronomical 34% of all loans, and way above the 5.3% that the authorities are proffering.

And the authorities – the government, the central bank, supported by the state-owned banks – are now pulling all levers to keep this under control.

“What I’ve gotten a greater appreciation for is how everything is so orchestrated by the authorities,” she said. “The upside is that it creates stability. The downside is that it can create a problem of proportions that people would think is never possible. We’re moving into that territory.”

 

By orchestrating this superficial appearance of stability of the bad-debt problem, the authorities have over the years allowed and encouraged this problem to get much worse.

Chu’s methodology, as the FT pointed out, is not without critics:

In particular, her estimate of Rmb51tn in bad debt is based on average credit losses across 11 other economies that previously experienced rapid debt increases comparable to China, including Japan in 1985-97 and the US in 2000-07.

But Chen Long, China economist at Gavekal Dragonomics in Beijing, said this methodology implicitly assumes that an economic crash will eventually occur in China.

But if that economic crash doesn’t occur, and if the economy continues to grow, credit will perform better, and loans won’t go bad to that extent, he argues.

The government understands this too. Hence the mantra that growth must be maintained no matter what the costs. But since that growth is debt-fueled, and since it is now taking more and more debt to obtain diminishing growth rates, the math gets a little tricky.

So an acute crisis does not appear imminent, Chu told the FT. The authorities – combination of central bank and government – control the state-owned megabanks and can tell them to lend more even to zombie companies, many of them state-owned, to refinance nonperforming debts, to lend to smaller banks that rely on interbank funding, and to support the debt bubble in other ways. This keeps the money flowing. It has kept a credit crisis from toppling the system. And as long as the megabanks have the total support of the authorities, they won’t topple either.

So where does that leave China short sellers, like Kyle Bass, who bet very publicly against the monstrous credit bubble in China and against the yuan?

Publicly shorting China, hoping for an implosion, is like daring the Chinese authorities – the government, the central bank, the state-owned megabanks, and their whole apparatus – to come out and crush you. And they do that just to make a point. The yuan, after declining relentlessly from the beginning of 2014 through the end of 2016, is up over 3% against the dollar so far this year.

And so far, the authorities still have this credit bubble under control. They have special tools since they control not only the monetary printing press but also the lenders and the borrowers. This is why Chu conceded that, since her bold pronouncements years ago, she has “gotten a greater appreciation” for “how everything is so orchestrated by the authorities.” The upside is the current fake stability. The downside is too ugly to contemplate.

China’s efforts to keep the debt bubble under control already impacted in the US, where the last big enthusiastic buyer, China, is leaving the party. Read…  This Hits the Wheezing Commercial Real Estate Bubble at Worst Possible Time

 

4. EUROPEAN AFFAIRS  The Euro dumps to below 1.17 when minutes reveal that the ECB will basically not tolerate a move to the 1.20 level. (courtesy zerohedge) Euro Dumps To Session Lows After ECB Minutes Reveal Concerns About “Euro Overshooting”

While hardly a surprise after yesterday’s Reuters trial balloon, which killed any speculation that Draghi would use the Jackson Hole podium to announce ECB balance sheet tapering, sending the EUR sliding, moments ago the EUR dumped to fresh session lows after the highly anticipated ECB minutes were released and confirmed that “concerns were expressed about the risk of the exchange rate overshooting in the future,” confirming what we speculated last week, namely that for all the pseudo-hawkish rhetoric from Draghi since Sintra (and before), the ECB simply will not tolerate a Euro which approaches 1.20 and threatens to dent European corporate earnings.

The immediate kneejerk result:

Among the other highlights from the minutes, which were initially read as dovish across most Wall Street desks, were the following observations:

  • The appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-a-vis the rest of the world” but “concerns were expressed about the risk of the exchange rate overshooting in the future”
  • “Looking ahead, the Governing Council needed to gain more policy space and flexibility to to adjust policy and the degree of monetary policy accommodation, if and when needed, in either direction.”
  • “The overall degree of accommodation was determined by the combination of all the monetary-policy measures”
  • “The asset purchase program would continue to be a key instrument if the Governing Council assessed the sustained adjustment of inflation at risk”

And perhaps the key quote, confirming what we have said since 2012, namely that it is the flow, not stock, that matteers:

  • “In this context, it was also suggested that the stock versus flow effects of the asset purchases be considered.”

This suggests that Draghi is well aware that stocks will tumble once the ECB stops buying various bonds, or simply reduces the monthly purchases, even if it ultimately keeps its balance sheet constant.

And yet, the ECB itself admits it is trapped, because the longer it waits, the more it will have to do in the future to reverse the current dovish path, especially once the ECB hits the red line where it runs out of (German) bonds to buy:

  • “A suggestions was made that some consideration be given to an incremental adjustment in the language on forward guidance, because postponing an adjustment for too long could give rise to a misalignment between the Governing Council’s communication and its assessment of the state of the economy, which could trigger more pronounced volatility in financial markets when communication eventually had to shift”

In kneejerk reaction to this latest slide in the Euro, European shares have reversed losses, with the Stoxx 600 rising as much as 0.1% after the minutes, paring an earlier loss of as much as 0.5%, while Germany’s DAX rose up as much as 0.2% before trading little changed. Meanwhile in bond markets, Bund futures spiked higher in kneejerk reaction to the ECB minutes release fueled by the Euro slump to session lows. However, this jump too was quickly retraced, after a read of the the rest of the ECB’s July meeting was deemed to be “more balanced”, with “incremental” changes to forward guidance discussed, and some concern over potential financial market volatility if policy adjustments are postponed for too long.

As a reminder, when Draghi meets the press after the governing council’s next vote on September 7 he will have to explain why the bank is holding discussions on slowing down the pace of its bond buying in 2018, while at the same time presenting forecasts for weaker inflation. As the FT notes, a decision on tapering is expected at the council’s October meeting. Further recall that it is none other than Draghi to blame for the recent surge in the Euro, and the near record number of spec shorts in the currency: the EUR rose sharply after Draghi’s Sintra speech in late June in which the ECB president mentioned “reflationary” forces were emerging in the eurozone economy, and again after his press conference following the July vote.

Today’s minutes put the currency’s rise down to two factors: the removal, following the election of Emmanuel Macron as France’s president, of the political uncertainty that erupted in the wake of the Brexit vote and market expectations over US interest rates. “These two factors were now largely priced out, leaving the euro back around the levels prevailing before the UK referendum.”

Of course, the real reason why the market has been so convinced that the ECB will have to accept a higher Euro – and launch balance sheet tapering 0 is because over the next 3-6 months the amount of bonds the ECB can monetize at the current purchase pace will collapse to virtually nil.

 

 

end

 

SPAIN

Amazing:  this bankrupt nation sees its bond yields plunge to record lows as the so called analysts claim their ‘economy’ is improving. Yet their youth unemployment is 44.4%

Spanish Bond Yields Plunge To Record Lows As ‘Economy Improves’ (Just Don’t Tell The Nation’s Youth)

Spain’s two-year bond yields have collapsed to a record low -35bps this week and Portugal‘s followed suit, plunging near record low levels as Draghi’s “whatever it takes” has benefitted all those front-running bondholders but left youth unemployment hovering still near record-high levels.

As a strong euro weighs on the region’s inflation outlook, it makes it harder for the European Central Bank to end quantitative easing and negative interest rates, said Peter Chatwell, head of European rates strategy at Mizuho International Plc in London, and sure enough today’s reports that Draghi’s Jackson Hole appearance will be a nothing burger has sparked more anticipation that QE isn’t ending anytime soon, despite better-late-than-never complaints from the Germans.

“Whatever it takes” to keep asset prices high!

 

 

END

 

 

Spain is becoming the second largest destination  by sea after Greece for our Migrants

(courtesy Kern/Gatestone Institute)

 

Europe: Migrant Crisis Reaches Spain

Authored by Soeren Kern via The Gatestone Institute,

  • “The biggest migration movements are still ahead: Africa’s population will double in the next decades. A country like Egypt will grow to 100 million people, Nigeria to 400 million. In our digital age with the internet and mobile phones, everyone knows about our prosperity and lifestyle.” — German Development Minister Gerd Müller.
  • “Young people all have cellphones and they can see what’s happening in other parts of the world, and that acts as a magnet.” — Michael Møller, Director of the United Nations office in Geneva.
  • “If we do not manage to solve the central problems in African countries, ten, 20 or even 30 million immigrants will arrive in the European Union within the next ten years.” — Antonio Tajani, President of the European Parliament.

Spain is on track to overtake Greece as the second-biggest gateway for migrants entering Europe by sea. The sudden surge in migration to Spain comes amid a crackdown on human smuggling along the Libya-Italy sea route, currently the main migrant point of entry to Europe.

The westward shift in migration routes from Greece and Italy implies that Spain, situated only ten miles from Africa by sea, may soon find itself at the center of Europe’s migration crisis.

More than 8,300 illegal migrants have reached Spanish shores during the first seven months of 2017 — three times as many as in all of 2016, according to the International Organization for Migration (IOM).

You will find more statistics at Statista

Thousands more migrants have entered Spain by land, primarily at the Spanish enclaves of Ceuta and Melilla on the north coast of Morocco, the European Union’s only land borders with Africa. Once there, migrants are housed in temporary shelters and then moved to the Spanish mainland, from where many continue on to other parts of Europe.

In all, some 12,000 migrants have arrived in Spain so far this year, compared to 13,246 for all of 2016. By comparison, 14,156 migrants have arrived in Greece so far in 2017.

Italy remains the main migrant gateway to Europe, with around 97,000 arrivals so far this year, compared to 181,436 for all of 2016. Italy has been the main point of entry to Europe since the EU-Turkey migrant deal, signed in March 2016, shut off the route from Turkey to Greece, at one time the preferred point of entry to Europe for migrants from Asia and the Middle East. Almost 600,000 migrants have arrived in Italy during the past four years.

Migrants wait to be rescued by crewmembers from the Migrant Offshore Aid Station (MOAS) Phoenix vessel on June 10, 2017 off Lampedusa, Italy. (Photo by Chris McGrath/Getty Images)

In May, Italy signed a deal with Libya, Chad and Niger to stem the flow of migrants across the Mediterranean through improved border controls. In July, Italy also reached a deal with France and Germany to tighten the regulation of charities operating boats in the Mediterranean and to increase funds to the Libyan coast guard.

Since then, the Libyan coast guard has prevented thousands of migrants from leaving the Libyan coast for Italy. The crackdown, however, has sent would-be migrants scrambling for an alternative route to cross the Mediterranean. This appears to explain the increase in migrants arriving in Spain.

On August 14, Frontex, the European Union’s border agency, reportedthat the number of African migrants arriving in Italy from Libya had dropped by more than half in July compared to the month before. During this period, the number of migrants arriving in Spain rose sharply.

Frontex said that 10,160 migrants had arrived in Italy by sea in July — 57% fewer than in June and the lowest level of arrivals for a July since 2014. According to Frontex, 2,300 migrants made it to Spain in July, more than four times as many as the year before. Most of the migrants arriving in Italy and Spain are believed to be economic migrants seeking a better life in Europe, not refugees fleeing war zones.

“The vast majority of migrants crossing to Italy from Libya come from Senegal, Gambia, Guinea and other west African countries,” said Joel Millman, an IOM spokesman, in an interview with the Financial Times. “Given the crackdown on migration from Libya, it seems natural that many would forsake the dangerous dessert [sic] crossing to Libya and choose to cross from Morocco.”

Julio Andrade, a city councilor in Málaga, a port city in southern Spain, called it “the balloon effect.” In an interview with the Irish Times, he said: “If you squeeze one area, the air goes elsewhere. If there is a lot of police pressure and arrests of mafias around the Mediterranean routes via Greece and Italy, for example, then the mafias will look for other routes.”

Spanish authorities have reported that there is a surge in African migrants attempting to cross the land border at Ceuta by scaling fences that are up to six meters (20 feet) tall and topped by razor wire. Spanish Interior Minister Juan Ignacio Zoido said there were 2,266 attempts to jump the perimeter at Ceuta during the first seven months of 2017, compared to a total of 3,472 attempts in all of 2016.

On August 7, more than 300 mostly sub-Saharan Africans ambushed Spanish and Moroccan security forces and stormed the border crossing at El Tarajal; 186 migrants made it onto Spanish territory. On August 8, more than a thousand migrants armed with spears and rocks attempted to breach the same crossing. On August 9, Spanish authorities closed the border for a week. On August 10, around 700 migrants stormed the border; 200 migrants were arrested.

Meanwhile, on August 9, a video showed a rubber boat carrying dozens of migrants arrive at a beach full of sunbathers in Cádiz. José Maraver, the head of a rescue center in nearby Tarifa, told the Telegraph that a second boat had landed on another beach in the area and that this scene was now a regular occurrence. “Every day there are boats, every day there is migration,” he said. “The situation is getting very complicated.”

Migrants are also using other means to reach Spain. On August 6, for example, four Moroccans reached the coast of Málaga on jet skis. During July and August, police intercepted at least two dozen migrants using jet skis to cross over to Spain. On August 10, police using motion detectors and thermal imaging sensors found 56 migrants, including 14 children, hiding inside trucks en route from Ceuta to the mainland ferry port in Algeciras.

In an August 9 editorial, Spain’s El País newspaper said that it was “obvious that migratory pressure has moved to the western Mediterranean and there is no indication that this situation will change in the near future.” It added:

“The migratory pressure Spain has experienced during the past several weeks is an increase of such dimensions that it exceeds all measures of surveillance and control. The massive entry of sub-Saharan people across the border of Ceuta, whether by jumping the fence or crossing the El Tarajal border, reveals the enormous difficulties in stopping the entry of those fleeing war, famine or economic hardship….

 

“The management of migratory flows requires a strong European policy and sufficient economic resources. Spain cannot stand alone as the guardian of southern Europe.”

German Development Minister Gerd Müller recently warned that Europe must prepare for the arrival of millions more migrants from Africa:

“The biggest migration movements are still ahead: Africa’s population will double in the next decades. A country like Egypt will grow to 100 million people, Nigeria to 400 million. In our digital age with the internet and mobile phones, everyone knows about our prosperity and lifestyle.”

The director of the United Nations Office in Geneva, Michael Møller, has echoed those concerns:

“What we have been seeing is one of the biggest human migrations in history. And it’s just going to accelerate. Young people all have cellphones and they can see what’s happening in other parts of the world, and that acts as a magnet.”

The President of the European Parliament, Antonio Tajani, said that in order to staunch the flow of migrants from Africa, the European Union would need to invest billions and develop a long-term strategy to stabilize the continent: “If we do not manage to solve the central problems in African countries, ten, 20 or even 30 million immigrants will arrive in the European Union within the next ten years.”

end

 

 

Massive crash in Barcelona after a van plows into a crowd at the Rambla  (City centre). Now at least 13 killed

 

(courtesy zero hedge)

Van Plows Into Barcelona Pedestrians In “Terrorist Attack” /Armed Men Enter Restaurant Live Feed: At Least 13 Killed After Van Plows Into Barcelona Crowd; One Attacker Dead

Summary of the latest:

  • Here’s the latest:
    • A terror attack took place in Barcelona when a van plowed into a crowd in Las Ramblas, killing at least 12 and injuring 80.
    • The driver was arrested after escaping on foot; a second suspect has also been arrested.
    • A third attacker has died after being shot dead by the police.
    • The Islamic State has claimed responsibility.
    • The Spanish passport of a person of Moroccan origin was found at the scene of the attack, TV3 reports. 
    • Driss Oukabir Soprano was named in connection to the attack although he has since denied involvement
    • This would be the deadliest terrorist attack in Spain since 2004 bombing, when Islamist militants placed bombs on commuter trains in Madrid, killing 191 people and wounding more than 1,800.

    * * *

Update 9: Local media reports that one of the attackers has died. It is unclear if this is the same assailant who previously was reported to have been arrested.

* * *

Update 8: The Catalan Police says that in response to reports, there is nobody held up in a bar in Barcelona. Meanwhile, Fox reports that someone has opened fire on police in a second possible attack:

View image on Twitter

Fox News 

@FoxNews

Report: Somebody has opened fire on police in second possible attack. 

* * *

Update 7: The Spanish passport of a person of Moroccan origin was found at the scene of the attack, TV3 reports.  At the same time, Spanish public broadcaster RTVE says that one suspect in the Barcelona van attack has been arrested.

* * *

Update 6: Trump and Melania tweet:

Donald J. Trump 

@realDonaldTrump

The United States condemns the terror attack in Barcelona, Spain, and will do whatever is necessary to help. Be tough & strong, we love you!

Melania Trump 

@FLOTUS

Thoughts and prayers to 

 

* * *

Update 5: Attack witness Lourdes Porcar has told Spain’s TV3 television station that she saw the van running people over. “It was going very fast, without caring about who was in its way.”  

Additionally, Police have set up roadblocks around the city amid reports that a second van was involved in the attack and fled the scene.

As reported earlier, there are also reports that at least on attacker is holed up in a Turkish restaurant on Carrer Hospital, which leads off from the spot in which the van appears to have come to a halt. Television pictures show that a van came to a halt on top of a Joan Miro mosaic, half-way down Las Ramblas – meaning that it would have covered more than 500 metres, mowing dow anyone in its path.

* * *

Update 4: According to a leading terrorism analyst, there is “growing confidence” the Islamic State may be behind the Barcelona attack as message to Spain popping up on key IS-linked Telegram channels.

View image on Twitter

Michael S. Smith II 

@MichaelSSmithII

Indicator of growing confidence Islamic State may be behind  attack: Msgs to Spain popping up on key IS-linked Telegram channels

Update 3: According to El Mundo the number of dead increased to 13, while over 50 have been injured. Additionally, as the Telegraph adds, Police stationed at the cordon a block away from Plaza Catalunya, on Passeig de Gracia, say they have no information what is happening inside. Confused tourists, shoppers and business owners gathered at its edges, awaiting some word or direction as to what to do.  

The Catalan police say they are treating the crash as a suspected terrorist attack but cannot yet confirm the motive.  According to media reports, the attack vehicle was a rented van.  That would suggest, if this is confirmed as a terrorist attack, that terrorists are imitating the perpetrators of the London Bridge attack, where a rented van was also used.

Sky News reports that police are now looking for a second van that may have been involved in the attack.

* * *

Update 2: Daksha Dixit, a 28 year old tourist visiting from Mumbai with family, told the Telegraph they had been on a tourist bus which had just dropped them off one block from Plaza Cataluña when they heard the news.  “We got off and people were panicking, no one knew what was going on. There was panic everywhere.”  The family arrived just yesterday for a one week trip and their hotel is on the Ramblas inside the cordon. They were unclear as to what exactly was unfolding, with Miss Dixit adding: “I don’t know what to do”.

* * *

Update 1: According to Reuters, two armed men have holed up inside a Turkish restaurant after the crash and have taken hostages, while El Periodico tweets that there was an active shootout in the area, in what the Barclona police now say is considered a “terrorist attack.”

El Periódico 

 @elperiodico

Replying to @elperiodico

 Atentado en Barcelona: La CIA avisó a los Mossos hace dos meses de que Barcelona y la Rambla podía ser un objetivo http://elPeriodi.co/ifgou8  pic.twitter.com/aGOKNpk0Ho

The location of the terrorist attack:

Reuters also adds that at least two have been killed in the van crash while El Mundo adds that more than 20 people have been injured. Pictures from the scene of the crash show emergency services and civilians attending to at least two people on the ground. One twitter video post shows bodies strewn across the pavement for at least 100 metres of the famous street.

Defend Europa @DefendEvropa Replying to @DefendEvropa

Video footage from the scene.  pic.twitter.com/IVYDsB2UST

Defend Europa @DefendEvropa

Another video clip from the scene.  pic.twitter.com/VHSXBLY8bS

11:56 AM – Aug 17, 2017

According to El Pais the driver of the van attack ran on foot and is still on the run.

Spanish newspaper El Periodico said two armed men were holed up in a bar in Barcelona’s city center, and reported gunfire in the area, although it did not cite the source of the information. It was not immediately clear whether the incidents were connected.

A source familiar with the initial U.S. government assessment said the incident appeared to be terrorism, and a White House spokeswoman said President Donald Trump was being kept abreast of the situation.

Media reports said the van had zigzagged at speed down the famous Las Ramblas avenue, a magnet for tourists.

“I heard screams and a bit of a crash and then I just saw the crowd parting and this van going full pelt down the middle of the Ramblas and I immediately knew that it was a terrorist attack or something like that,” eyewitness Tom Gueller told the BBC.

“It wasn’t slowing down at all. It was just going straight through the middle of the crowds in the middle of the Ramblas.”

Mobile phone footage posted on Twitter showed several bodies strewn along the Ramblas, some motionless. Paramedics and bystanders bent over them, treating them and trying to comfort those still conscious. Around them, the boulevard was deserted, covered in rubbish and abandoned objects including hats, bags and a pram.

“We saw a white van collide with people. We saw people going flying because of the collision, we also saw three cyclists go flying,” Ellen Vercamm, on holiday in Barcelona, told El Pais newspaper. Vehicles have been used to ram into crowds in a series of militant attacks across Europe since July 2016, killing well over 100 people in Nice, Berlin, London and Stockholm.

Witness Ethan Spibey told Britain’s Sky News: “All of sudden it was real chaos. People just started running screaming, there were loud bangs. People just started running into shops, there was a kind of mini-stampede where we were, down one of the alleyways.”

He said he had taken refuge with dozens of other people in a nearby church. “They’ve locked the doors because I’m not sure whether the person who may have done it has actually been caught, so they’ve locked the doors and told people just to wait in here.”

* * *

A “massive crash” has taken place in Barcelona, where a white van has ploughed into a crowd of “dozens of people” in the city’s center, at the main Rambla de Catalunya promenade, one of the most well-known and popular parts of the city, visited by tourists and locals alike. Catalan emergency services said people should not go to the area around Placa Catalunya.

View image on Twitter

Lauren Rose  @millennialgirlx

At least two dead in La Rambla de Barcelona after a van plowed into dozens. Driver fled the scene on foot… http://www.dailymail.co.uk/news/article-4799836/People-hurt-van-crashes-pedestrians-Barcelona.html …

11:51 AM – Aug 17, 2017

El Pais newspaper said the driver of the vehicle had fled on foot after mowing down dozens of people. While full details of the incident were not immediately clear, since July 2016 vehicles have been used to ram into crowds in a series of militant attacks across Europe, killing well over 100 people in Nice, Berlin, London and Stockholm. In recent weeks, threatening graffiti against tourists has appeared in Barcelona, which draws at least 11 million visitors a year.

In one video released under the slogan “tourism kills neighbourhoods”, several hooded individuals stopped a tourist bus in Barcelona, slashed the tyres and spray-painted the windscreen.

Press TV 

@PressTV

Fresh footage shows suspected ‘terrorist attack’ in Barcelona

From Reuters:

As Vanguardia adds citing several sources, the driver appears to have run over a dozen people. The local police reported that there are “several injured”, without giving further details. Local emergency services say that police forces have evacuated the area, while several ambulances are attending to the injured.

Sky News Newsdesk 

 @SkyNewsBreak

Local media reports a van has crashed into a crowd of people in Barcelona’s city centre

Sky News Newsdesk 

@SkyNewsBreak

Police in Barcelona say there has been a “massive crash” involving a van in the city centre and say several people have been injured

11:22 AM – Aug 17, 2017

Pablo #SÍ @Pablo_Morante_

Vídeos de las ramblas

Diari ARA 

@diariARA

ÚLTIMA HORA Una furgoneta atropella desenes de persones a la Rambla de Barcelona http://www.ara.cat/societat/Atropellament-massiu-Rambles-Barcelona_0_1852614886.html …

11:17 AM – Aug 17, 2017

View image on Twitter

Breaking News @News_Update247

BREAKING: Truck plows into pedestrians in Ramblas, Barcelona. Many injured, unconfirmed deaths.

Jordi Perez Colome @jordipc

Estampida ahora mismo en El Corte Inglés de Plaza Catalunya en Barcelona

11:11 AM – Aug 17, 2017

Francisco Camacho @camachosoft

Una furgoneta atropella a una multitud de personas en las Ramblas de Barcelona. En desarrollo

11:15 AM – Aug 17, 2017

 

EmergènciesCatalunya 

@emergenciescat


IMPORTANT x incident zona Plaça Catalunya evitin sortir al carrer
Eviten salir a la calle zona plaza Catalunya por incidente grave

11:09 AM – Aug 17, 2017 Twitter Ads info and privacy

Developing

end 5. RUSSIA AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES

Despite the media proclaiming global growth, the total global negative yielding debt has now surged to its highest level in almost a year

 

(courtesy zero hedge)

Despite ‘Growth Promise’, Global Negative-Yielding Debt Surges To Highest Since October

The market value of bonds yielding less than zero percent has jumped by a quarter over the past month to $8.68 trillion, the highest since October... which is odd given the mainstream narrative that everything is awesome and global growth is heading for escape velocity?

“probably nothing”

 

As Bloomberg notes, slower-than-forecast inflation data and haven demand on geopolitical risk have revived bond bulls around the world.

With global borrowing costs already so low, central banks should be prepared to cut interest rates deep into negative territory in the next economic downturn, warn economists including Harvard professor Kenneth Rogoff.

end 7. OIL ISSUES 8. EMERGING MARKET

VENEZUELA

The faster they get this buffoon out of there, the better.  Average Venezuelans are suffering drastic weight loss due to lack of food.  Remember, this nation has the world’s highest oil reserves in the ground

 

(courtesy zerohedge)

“The Maduro Diet” – Venezuelans Suffer Drastic Weight Loss As Hunger Crisis Strikes

Shortages are becoming ever more severe in Venezuela. As Deutsche Welle reports, according to the World Health Organization, hospitals lack 95% of necessary medicines. Many people are undernourished and they receive no help from the government.

“An estimated 75% of Venezuelans lost at least 10 kilos last year because there is not enough food to go around… people here call it ‘The Maduro Diet’

 

“When we say people are eating from the garbage, we are not joing, it’s our reality… people don’t have enough to eat.”

Furthermore, a lack of food and basic services is also creating an education crisis with more than 1 million children no longer attending school due to a lack of food, running water and/or electricity.

About 30 percent of students who now stay home do not attend school because of water problems at home or on campus, 22 percent do not attend because of electricity blackouts and 15 percent do not attend due to school strikes, the survey found.

 

About 10 percent said a lack of food at home or in school was the reason for their absence. The survey said those in that category are considered among the poorest who previously never skipped school because they did not have food at home.

Of course, the failure of Venezuela’s socialist utopia likely means that civil war is all but inevitable at some point in the future absent a quick doubling of crude prices…

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   1.1697 DOWN .0076/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE RED 

USA/JAPAN YEN 110.18 UP 0.194(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2867 DOWN .0022 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2640 UP .0016 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS THURSDAY morning in Europe, the Euro FELL by 76 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1697; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 21,98 POINTS OR 0.68%     / Hang Sang  CLOSED DOWN 64.85 POINTS OR 0.24% /AUSTRALIA  CLOSED DOWN 0.06% / EUROPEAN BOURSES OPENED  DEEPLY IN THE RED 

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

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

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

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

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

The NIKKEI: this THURSDAY morning CLOSED DOWN 26.65 POINTS OR 0.41%

Trading from Europe and Asia:
1. Europe stocks  OPENED DEEPLY IN THE RED 

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 64.85 POINTS OR 0.24%  / SHANGHAI CLOSED UP 21.98 POINTS OR 0.68%   /Australia BOURSE CLOSED DOWN 0.06% /Nikkei (Japan)CLOSED DOWN 26,65  POINTS OR 0.41%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1285.10

silver:$17.05

Early THURSDAY morning USA 10 year bond yield:  2.2395% !!! UP 1   IN POINTS from WEDNESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

The 30 yr bond yield  2.8198, UP 1  IN BASIS POINTS  from WEDNESDAY night.

USA dollar index early THURSDAY morning: 93.91 UP 37  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: 2.774% DOWN 5 in basis point(s) yield from WEDNESDAY 

JAPANESE BOND YIELD: +.054%  UP 1   in   basis point yield from WEDNESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.439% DOWN 3   IN basis point yield from WEDNESDAY 

ITALIAN 10 YR BOND YIELD: 2.029 DOWN 1 POINTS  in basis point yield from WEDNESDAY 

the Italian 10 yr bond yield is trading 60 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.426% DOWN 1  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 1.1738 DOWN .0036 (Euro DOWN 36 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.87 DOWN 0.122(Yen DOWN 12 basis points/ 

Great Britain/USA 1.2885 DOWN  0.0004( POUND DOWN 14 BASIS POINTS)

USA/Canada 1.2648 UP .0025 (Canadian dollar DOWN  25 basis points AS OIL ROSE TO $46.95

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This afternoon, the Euro was DOWN  by 36 basis points to trade at 1.1738

The Yen FELL to 109.87 for a GAIN of 12  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 BY 4  basis points, trading at 1.2885/ 

The Canadian dollar FELL by 25 basis points to 1.2707,  WITH WTI OIL RISING TO :  $46.95

The USA/Yuan closed at 6.6755/ the 10 yr Japanese bond yield closed at +.054%  UP 1 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield DOWN 6  IN basis points from WEDNESDAY at 2.209% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.794 DOWN 4 in basis points on the day /

Your closing USA dollar index, 93.66  UP 12 CENT(S)  ON THE DAY/1.00 PM 

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

London:  CLOSED DOWN 45.16 POINTS OR 0.61%
German Dax :CLOSED DOWN 60.40 POINTS OR 0.49%
Paris Cac  CLOSED DOWN 29.76 POINTS OR 0.57% 
Spain IBEX CLOSED DOWN  100.50 POINTS OR 0.95%

Italian MIB: CLOSED DOWN 195.99 POINTS OR 0.89% 

The Dow closed DOWN 274.14 OR 1.24%

NASDAQ WAS closed DOWN 123.19  POINTS OR 1.94%  4.00 PM EST

WTI Oil price;  46.95 at 1:00 pm; 

Brent Oil: 50.69 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.09 DOWN 29/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 29 BASIS PTS)

TODAY THE GERMAN YIELD FALLS TO  +0.426%  FOR THE 10 YR BOND  4.PM EST 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 5:00 PM:$47.01

BRENT: $50.84

USA 10 YR BOND YIELD: 2.183%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.7723%

EURO/USA DOLLAR CROSS:  1.1719 DOWN .0055

USA/JAPANESE YEN:109.58  DOWN  0.412

USA DOLLAR INDEX: 93.72  UP 18  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2867 : UP 50 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2674 DOWN 50 BASIS pts 

German 10 yr bond yield at 5 pm: +0.426%

END

And now your more important USA stories which will influence the price of gold/silver TRADING IN GRAPH FORM FOR THE DAY Stocks Slammed Amid ‘Cohn Of Uncertainty’ As Hindenburg Omen Cluster Nears Record

“Pause that refreshes?”, “Fleshwound?”, or “beginning of the end?”

 

Between Bannon’s China trade war threats and fears over Cohn leaving, risk was off today, not helped by dismal Industrial Production data and the utter horror in Barcelona… Trannies were worst but this was an ugly say all around and losses accelerate into the close ahead of tomorrow’s OPEX…

NOT OFF THE LOWS>>>

 

Small Caps are now back to unchanged year-to-date…

 

S&P closed at critical support around 2430…

 

From “Fire & Fury”, Nasdaq is leading the drop…

 

In order, from worst to first, retailers, energy, financials, and tech have tumbled since “fire and fury” with Utes holding gains…

 

Cohn Uncertainty crushed Goldman…

 

S&P VIX surged back to 15 and Russell/Nasdaq back over 18… Thursday Spike, Monday Plunge, Thursday Spike… this is the quickest reversal in VIX since Sept 2016

 

Over the last few weeks, a cluster of Hindenburg Omens have been erupting across the major equity indices…

 

In fact, as @AlpePinnazzo notes, the size of the cluster is flashing a major warning…

 

The S&P dropped back below its 50DMA… (this is the biggest drop below the 50DMA since before the election) to its lowest in 5 weeks…

 

Tech stocks gave up the week’s gains…

 

AAPL was down today but FANG stocks were worse…

 

HY Credit tumbled to stop exactly at its 200DMA ($87.36 HYG)… plunging thru its 50DMA…

 

And stocks catching down to credit…

 

Treasury yields slid further today (again the AMZN rate lock pressure lifted and safe haven demand) with 30Y yields now lower on the week… (10Y ended with a 2.18% handle)

 

With 30Y yields back at one-week lows…

 

 

The dollar pumped higher overnight (seemingly bid after Bannon’s comments) but tumbled after ECB Minutes, Industrial Production, and Cohn rumors…

 

The biggest driver of USD swings today was EURUSD which shifted on ECB Minutes…

 

The drop in the dollar during the day session managed to lift WTI Crude modestly back above $47…

 

Gold jumped again today, pushed higher overnight by Bannon’s China trade war threats…

 end

Hussman warns that the equity bubble will burst after the Fed warns that the markets are “vulnerable to elevated valuations”

(courtesy Hussman/zero hedge)

Hussman Predicts Massive Losses As Cycle Completes After Fed Warns Markets “Vulnerable To Elevated Valuations”

Buried deep in today’s FOMC Minutes was a warning to the equity markets that few noticed…

This overall assessment incorporated the staff’s judgment that, since the April assessment, vulnerabilities associated with asset valuation pressures had edged up from notable to elevated, as asset prices remained high or climbed further, risk spreads narrowed, and expected and actual volatility remained muted in a range of financial markets…

 

According to another view, recent rises in equity prices might be part of a broad-based adjustment of asset prices to changes in longer-term financial conditions,importantly including a lower neutral real interest rate, and, therefore, the recent equity price increases might not provide much additional impetus to aggregate spending on goods and services.

 

According to one view, the easing of financial conditions meant that the economic effects of the Committee’s actions in gradually removing policy accommodation had been largely offset by other factors influencing financial markets, and that a tighter monetary policy than otherwise was warranted.

Roughly translated means – higher equity prices are driving financial conditions to extreme ‘easiness’ and The Fed needs to slow stock prices to regain any effective control over monetary conditions.

And with that ‘explicit bubble warning’, it appears the ‘other’ side of the cycle, that Hussman Funds’ John Hussman has been so vehemently explaining to investors, is about to begin…

Nothing in history leads me to expect that current extremes will end in something other than profound disappointment for investors. In my view, the S&P 500 will likely complete the current cycle at an index level that has only 3-digits. Indeed, a market decline of -63% would presently be required to take the most historically reliable valuation measures we identify to the same norms that they have revisited or breached during the completion of nearly every market cycle in history.

The notion that elevated valuations are “justified” by low interest rates requires the assumption that future cash flows and growth rates are held constant. But any investor familiar with discounted cash flow valuation should recognize that if interest rates are lower because expected growth is also lower, the prospective return on the investment falls without any need for a valuation premium.

At present, however, we observe not only the most obscene level of valuation in history aside from the single week of the March 24, 2000 market peak; not only the most extreme median valuations across individual S&P 500 component stocks in history; not only the most extreme overvalued, overbought, overbullish syndromes we define; but also interest rates that are off the zero-bound, and a key feature that has historically been the hinge between overvalued markets that continue higher and overvalued markets that collapse: widening divergences in internal market action across a broad range of stocks and security types, signaling growing risk-aversion among investors, at valuation levels that provide no cushion against severe losses.

We extract signals about the preferences of investors toward speculation or risk-aversion based on the joint and sometimes subtle behavior of numerous markets and securities, so our inferences don’t map to any short list of indicators. Still, internal dispersion is becoming apparent in measures that are increasingly obvious. For example, a growing proportion of individual stocks falling below their respective 200-day moving averages; widening divergences in leadership (as measured by the proportion of individual issues setting both new highs and new lows); widening dispersion across industry groups and sectors, for example, transportation versus industrial stocks, small-cap stocks versus large-cap stocks; and fresh divergences in the behavior of credit-sensitive junk debt versus debt securities of higher quality. All of this dispersion suggests that risk-aversion is rising, no longer subtly. Across history, this sort of shift in investor preferences, coupled with extreme overvalued, overbought, overbullish conditions, has been the hallmark of major peaks and subsequent market collapses.

..

The chart below shows the percentage of U.S. stocks above their respective 200-day moving averages, along with the S&P 500 Index.The deterioration and widening dispersion in market internals is no longer subtle.

Market internals suggest that risk-aversion is now accelerating. The most extreme variants of “overvalued, overbought, overbullish” conditions we identify are already in place.

A market loss of [1/2.70-1 =] -63% over the completion of this cycle would be a rather run-of-the-mill outcome from these valuations. All of our key measures of expected market return/risk prospects are unfavorable here. Market conditions will change, and as they do, the prospective market return/risk profile will change as well. Examine all of your investment exposures, and ensure that they are consistent with your actual investment horizon and tolerance for risk.

 

END

Oh oH! this is a good indicator for problems in the uSA economy:  WalMart’s free cash flow falls and fails to cover its dividends and buybacks.  WalMart stock drops due to its guidance of lower earnings

 

(courtesy zerohedge)

 

 

Wal-Mart Slides, Free Cash Flow Fails To Cover Dividends And Buybacks

Despite reporting strong earnings which beat on both the top and bottom line in today’s most anticipated earnings report, Walmart stock is down 3%, sliding to the lowest level since late July after it provided full year EPS guidance whose midpoint was below Wall Street expectations.

First, here are WMT’s otherwise respectable historical results.

  • Q2 adj. EPS $1.08, beating est. $1.07, on the top end of the $1.00- $1.08 range
  • Q2 revenue $123.4BN, beating est. $123.05b
  • Total U.S. comps. ex-fuel up 1.7%, in line with consensus est. of 1.7%
  • Wal-Mart U.S. comps. up 1.8%, est. up 1.8%; forecast up 1.5%-2.0% in Feb.
  • Wal-Mart U.S. traffic up 1.3% y/y, avg ticket up 0.5%
  • Wal-Mart U.S. E- commerce sales up 70 bps y/y, GMV up 67%

Sam’s Club results were a little weaker, with comps of 1.2% missing expectations of 1.4% increase, as a result of the average ticket down 0.9% despite a 2.1% increase in traffic.

  • Sam’s Club comps. ex- fuel up 1.2%, est. up 1.4% (Consensus Metrix); co. saw up 1%-1.5%
  • Sam’s Club traffic up 2.1%, avg ticket down 0.9%

Meanwhile, as Bloomberg notes, Costco, Sam’s Club main competitor, reported monthly comp. sales ahead of estimates in each of May, June, and July

And while WMT’s historical data was solid across the board, traders were concerned with the company’s guidance:

  • Sees 3Q EPS 90c-98c vs est. 98c (range 90c-$1.05)
  • Sees 3Q Wal- Mart U.S. comp. sales ex-fuel up +1.5%-2%
  • Sees 3Q Sam’s Club ex- fuel comps. up 1%-1.5%

But the biggest red flag was the full year adjusted EPS forecast, which at $4.30-$4.40 (vs the previous $4.20-$4.40), the midpoint of which trailed the consensus estimate of $4.39.

Finally, in terms of cash flow, Wal-Mart reported a sharp drop in YTD operating cash flow, which declined by $3.6 billion, and with CapEx largely unchanged, YTD Free Cash Flow of $6.9 billion was $3.4 billion worse than the year ago period. This is troubling because as the table below shows, WMT used up more than 100% of its YTD free cash flow to fund dividends of $3.1 billion and stock buybacks $4.4 billion for the first 6 months of the year. Should the FCF decline acceleate, how long until WMT’s sacrosanct dividend (or buyback) is in jeopardy?

As a result, the stock was down as much as 3.0% in the pre-market, sliding to three week lows.

Full earnings presentation here.

end

 

Soft data Philly Fed index slides to its weakest level since the Trump election with employment the killer

 

(courtesy Philly Index/zero hedge)

Philly Fed Slides To Weakest Since Election As Employment Sinks

Following Empire Fed’s exuberant six-sigma beat and surge to three year highs, Philly Fed failed to live up to its neighbor’s promise, dropping from 19.5 to 18.9 in August (a small beat of 18.0 expectations).

This is the weakest print since Nov 2016, despite a surge in new orders and average workweek as inventories tumbledand employment slipped.

Hope remains alive and well though.

The diffusion index for future general activity increased from a reading of 36.9 in July to 42.3 this month, its highest reading in four months. Over the next six months, nearly 49 percent of the firms expect increases in activity, and only 7 percent expect decreases.

Notably 7 of the 9 subindices improved… but the headline still declined.

end

 

USA industrial production rose by only .2% month/month in July missing expectations.  Last month’s data: .4% month/month and this is showing an economy that is slowing down.  Industrial production numbers are hard data

 

(courtesy zero hedge/Industrial production)

 

 

US Manufacturing Drops In July As Auto Production Slumps

Industrial Production, leaked early, rose just 0.2% MoM in July, missing expectations and slowing from last month’s 0.4% gain. Manufacturing production actually shrank (-0.1%)…

 

The biggest driver of the decline was a 3.6% slump in motor vehicle production…

 

Still, none of that matters…

end

 

A new study shows what we have been telling you:  higher minimum wages are bringing job losses.  The hardesthit: females and minority workers

 

(courtesy zerohedge)

 

 

Study Finds Higher Min. Wages Bring Crushing Job Losses For Female And Minority Workers

Anyone who has a basic understanding of elementary-level arithmetic and some common sense can easily explain why raising the minimum wage is bad for employment levels.  In a nutshell, higher labor costs simply improve the payback profile of capital investments in technology thus accelerating job losses.

We recently shared the following example regarding California’s minimum wage hike from $10 per hour to $15.  At $10 per hour and a 10-year payback, employers may be reluctant to invest in new technology.  But, at $15 per hour and a 6-years payback, that investment become a no-brainer.

Unfortunately, while these concepts are somewhat simplistic for most us, they have confounded left-leaning economists and politicians pretty much since the beginning of time.

And while no amount of empirical evidence will change their minds, here is yet another study, this time from Grace Lordan of the London School of Economics and David Neumark of UC Irvine, offering up evidence that raising minimum wages only serves to increase unemployment and disproportionately crushes female and minority low-income workers.

Entitled “People Versus Machines: The Impact of Minimum Wages on Automatable Jobs,” the study found that each $1 increase in the minimum wage decreased the “share of lowskilled automatable jobs by 0.43 percentage point.”  Here’s a summary of Lordan’s findings:

Overall, we find that increasing the minimum wage decreases significantly the share of automatable employment held by low-skilled workers. Our estimates suggest that an increase of the minimum wage by $1 (based on 2015 dollars) decreases the share of lowskilled automatable jobs by 0.43 percentage point (an elasticity of ?0.11). However, these average effects mask significant heterogeneity by industry and by demographic group. In particular, there are large effects on the shares of automatable employment in manufacturing, where we estimate that a $1 increase in the minimum wage decreases the share of automatable employment among low-skilled workers by 0.99 percentage point (elasticity of ?0.17). Within manufacturing, the share of older workers in automatable employment declines most sharply, and the share of workers in automatable employment also declines sharply for women and blacks.

 

Meanwhile, the results are even worse for workers over 40, females and minorities…

For example, a higher minimum wage significantly reduces the shares of both younger (? 25) and older (> 40) workers in jobs that are automatable, by a larger magnitude compared to those aged 26-39. For the younger and older groups, the estimates imply that a $1 increase in the minimum wage reduces the shares in automatable work by 0.94 and 0.72 percentage points respectively (the corresponding elasticities are ?0.20 and ?0.17. Looking by both age and industry, for older workers (? 40 years old) the negative effect mainly arises in the manufacturing and public administration sectors (a decrease of 1.68 and 3.50 percentage points for a $1 minimum wage increase respectively), while for younger workers (< 25 years old) the effects are large in many sectors but the estimate is close to zero for manufacturing. The middle age group, also, exhibits a decline in the share of workers in automatable jobs in manufacturing when the minimum wage increases – a 1.21 percentage point decline for a $1 increase. Thus, older workers appear more vulnerable to substitution away from automatable jobs when the minimum wage increases.

 

On average, females are affected more adversely than males: in the aggregate estimates in column (1), the negative estimate is significant only for females, and is almost ten times larger, indicating that, for females, a minimum wage increase of $1 causes a decrease of 1.01 percentage points in the share of automatable jobs (the elasticity is ?0.14). Across industries, these negative effects for females are concentrated in manufacturing, services, and public administration; for example, a $1 minimum wage increase reduces the share of automatable jobs in public administration by 3.67 percentage points – an elasticity of ?0.41). For males, only the estimate for manufacturing is statistically significant; the estimated effect implies that a $1 increase in the minimum wage causes a decrease of 0.62 percentage point (an elasticity of ?0.13).

 

Table 3 also points to similar overall effects by race, with a $1 increase in the minimum wage reducing the share in automatable jobs by 0.57 percentage point for whites and 0.72 percentage point for blacks. However, the effects are heterogeneous across industries. There are large estimated effects in manufacturing (1.19 percentage points) and public administration (1.53 percentage points) for whites, although only the first estimate is statistically significant. For blacks, there are large and statistically significant decreases in automatable shares in manufacturing and transport (declines of about 4.5 percentage point in both).

 

But, as usual, we’re sure this extra data will have no impact on Bernie’s “Fight for $15.”  Amazing how some politicians will embrace math and science when arguing climate change but completely reject it when discussing minimum wage…wonder why?

end

The FBI agent who botched the Hillary investigation into her emails suddenly departs from Mueller.  I guess Mueller does not want another botched case?? (courtesy zero hedge) FBI Investigator Who Led Hillary Email Case Suddenly Resigns From Mueller’s Team

After being appointed to Special Counsel Mueller’s team just over a month ago, ABC is now reporting that Peter Strzok, the FBI agent who oversaw the botched investigation of Hillary Clinton’s email case, has now decided to step down.  ABC reports that their anonymous sources have yet to discover the reasons for Strzok’s sudden departure.

One of the FBI’s top investigators, tapped by special counsel Robert Mueller just weeks ago to help lead the probe of Russian meddling in last year’s presidential election, has left Mueller’s team, sources tell ABC News.

 

The recent departure of FBI veteran Peter Strzok is the first known hitch in a secretive probe that by all public accounts is charging full-steam ahead.

 

It’s unclear why Strzok stepped away from Mueller’s team of nearly two dozen lawyers, investigators and administrative staff. Strzok, who has spent much of his law enforcement career working counterintelligence cases and has been unanimously praised by government officials who spoke with ABC News, is now working for the FBI’s human resources division.

 

As The Daily Caller noted when Strzok was hired by Mueller last month, he is the same FBI agent who had the distinguished honor of interviewing Hillary Clinton just 3 days before she was cleared of all charged by former FBI Director James Comey.

Special counsel Robert Mueller has picked the FBI official who oversaw the Hillary Clinton email investigation to manage the investigation into any illegal connections between the Trump campaign and Russian government.

 

Strzok was one of two U.S. officials who interviewed Clinton on July 2 as part of the federal investigation into classified information found on her private email server.

 

Strzok interviewed Clinton along with Justice Department official David Laufman.

 

Three days later, then-FBI Director James Comey announced that charges would not be filed against Clinton for mishandling classified information found on her server.

Perhaps Mueller decided that one massively botched investigation was enough for Strzok?

 

 

END

 

This is a strange one!!  The FBI now reopens a Freedom of Information case on the Lynch Clinton Tarmac meeting after they got caught in a huge lie

(courtesy zero hedge)

FBI ‘Reopens’ FOIA Case On Lynch-Clinton Tarmac Meeting After Getting Caught In Lie

Last October Jay Sekulow of the American Center for Law and Justice (ACLJ) received the following letter from the FBI regarding his FOIA request for any documents related to the now-infamous Clinton-Lynch tarmac meeting in June 2016.  The letter quite simply stated there were“no records responsive to your request.”

 

Of course, since the DOJ has subsequently provided numerous documents which include email traffic with various FBI officials (see: FOIA Dump Reveals Collusion Between Lynch, FBI And Media To Bury Bill Clinton Meeting), we now know that the FBI’s original response was either (i) just a simple reflection of their complete incompetence (best case) or (ii) an outright lie (worst case).

Alas, it seems as though the FBI has finally admitted in a new letter sent to Sekulow that maybe, just maybe, there are “records potentially responsive to your request” and, as such, they’ve ‘reopened’ the case to search for those records. 

“…your request has been reopened under the FOIPA number listed above as the FBI has determined records potentially responsive to your request may exist.  We are currently in the process of searching for any responsive material.”

 

 

Meanwhile, and for obvious reasons, the FBI’s continued refusal to acknowledge basic facts about a FOIA case that have been proven beyond a shadow of a doubt by DOJ records prompted a scathing retort from Sekulow who posted the following to the ACLJ website earlier:

After being caught hiding the truth from the American people, the FBI has just “reopened” our FOIA case.

 

The ACLJ just received a letter from the FBI bureaucracy informing us that it has “reopened” our Freedom of Information Act (FOIA) request into the clandestine meeting between former Obama Attorney General Lynch and former President Clinton while the Department of Justice (DOJ) and FBI were conducting a criminal investigation of Hillary Clinton.

 

The FBI’s letter – dated one week after we publicly excoriated the FBI for lying to us when the Comey-led FBI told us last October that it had “no” records responsive to our request – now states that “records potentially responsive to your request may exist.”

 

It is unbelievable that the FBI bureaucracy still only admits that some documents “may exist.”

 

We know they exist.

 

What else was the FBI hiding?

 

While we appreciate that the FBI has “reopened” the case file and is now “searching” for documents responsive to our duly submitted FOIA request from more than a year ago, it stretches the bounds of credulity to suggest that the FBI bureaucracy just discovered that “potentially responsive” records “may exist” on its own accord.

Sekulow also appeared on Fox News this morning to discuss the ‘reopened’ case:

 

Perhaps it’s time to refile all of those FOIA requests related to the various Hillary Clinton investigations that were submitted under the Obama administration…who knows what treasures may have been ‘overlooked’ in the initial FBI/DOJ responses…

 

 

END

 

This is interesting:  Assange in a 3 hour meeting with a Californian Congressman offered to prove that the Russians were not his source for the Democrat email hacking.  He wants a seat at the White House Press briefing and of course an absolute pardon

 

(courtesy zero hedge)

Assange Vows To Prove That Russia Was Not His Source In 3-Hour Meeting With Congressman

In a three hour meeting with Representative Dana Rohrabacher (R-CA) at the Ecuadorian embassy in London, Julian Assange vowed to provide proof that Russia was not the source of his leaks last year and promised more ‘helpful’ information in the near future.  Rohrabacher recounted the details of the meeting with Assange to The Hill:

“Our three-hour meeting covered a wide array of issues, including the WikiLeaks exposure of the DNC emails during last year’s presidential election,” Rohrabacher said,  “Julian emphatically stated that the Russians were not involved in the hacking or disclosure of those emails.”

 

Pressed for more detail on the source of the documents, Rohrabacher said he had information to share privately with President Donald Trump.

 

“Julian also indicated that he is open to further discussions regarding specific information about the DNC email incident that is currently unknown to the public,” he added.

Of course, this is hardly the first time that Assange has publicly denied that Russia was his source for the DNC and/or Podesta leaks.  Back in January, Assange recorded an interview with Sean Hannity of Fox News and unequivocally stated that “our source is not the Russian government and it is not a state party.”

HANNITY: Can you say to the American people, unequivocally, that you did not get this information about the DNC, John Podesta’s emails, can you tell the American people 1,000 percent that you did not get it from Russia or anybody associated with Russia?

 

ASSANGE: Yes. We can say, we have said, repeatedly that over the last two months that our source is not the Russian government and it is not a state party… Obama is trying to say that President-elect Trump is not a legitimate President.

http://content.jwplatform.com/players/8o1zA4rX-EAYoNgFe.html

 

So, what does Assange want in return for his evidence that could completely undermine Special Counsel Mueller’s entire investigation?  Apparently he would like for Wikileaks to be granted a seat in the White House press corps…oh, and we’re sure a presidential pardon would be welcome as well.

Rohrabacher said he had information he planned to carry back to Trump when he returned to the United States, including a request that the WikiLeaks organization be given a news media seat inside the White House press room.

 

“Julian passionately argued the case that WikiLeaks was vital to informing the public about controversial though necessary issues. He hoped that Wikileaks — an award winning journalistic operation — might be granted a seat in the White House press corps. As a former newsman myself I can’t see a reason why they shouldn’t be granted news status for official press conferences,” he said.

 

As for other information to be given to the president, Rohrabacher said: “We left with the understanding that we would be going into further details in the near future. The rest of the message is for the president directly and I hope to convey it to him as more details come in.”

Of course, we’re certain it won’t take long for the mainstream media to label Rohrabacher as just another of Putin’s “useful idiots” and discredit whatever information Assange eventually releases about his source as a desperate attempt to curry favor with an administration that could negotiate his freedom after being holed up in the Ecuadorian embassy for 5 years.

 end

 

 

Bannon breaks his silence and gives his opinion on China, North Korea and what is happening internally . Correctly he admits that the USA is in an economic war with China and they must try and curtail their advances.

 

a must read..

 

(courtesy zero hedge)

 

Bannon Breaks Silence: Slams “Far-Right Clowns”, Vows “Economic War With China”

After weeks of speculation about his future, Trump White House Chief Strategist Steve Bannon has broken free of his self-imposed exile, unloading a torrent of Scaramucci-esque comments to none other than Robert Kuttner – the editor of The American Prospect, a progressive publication (the cover lines on whose first two issues after Trump’s election were “Resisting Trump” and “Containing Trump.”

Kuttner sets the surprising scene…

Trump’s embattled strategist phones me, unbidden, to opine on China, Korea, and his enemies in the administration…

 

Needless to say, I was a little stunned to get an email from Bannon’s assistant midday Tuesday, just as all hell was breaking loose once again about Charlottesville, saying that Bannon wished to meet with me.

But unload Bannon did:

He began with China

“We’re at economic war with China,” he added. “It’s in all their literature. They’re not shy about saying what they’re doing. One of us is going to be a hegemon in 25 or 30 years and it’s gonna be them if we go down this path.

 

Bannon said he might consider a deal in which China got North Korea to freeze its nuclear buildup with verifiable inspections and the United States removed its troops from the peninsula, but such a deal seemed remote. Given that China is not likely to do much more on North Korea, and that the logic of mutually assured destruction was its own source of restraint, Bannon saw no reason not to proceed with tough trade sanctions against China.

 

“To me,” Bannon said, “the economic war with China is everything. And we have to be maniacally focused on that. If we continue to lose it, we’re five years away, I think, ten years at the most, of hitting an inflection point from which we’ll never be able to recover.”

Contrary to Trump’s threat of fire and fury, Bannon said of Korea:

“On Korea, [China’s] just tapping us along. It’s just a sideshow.”

 

“There’s no military solution [to North Korea’s nuclear threats], forget it.

 

Until somebody solves the part of the equation that shows me that ten million people in Seoul don’t die in the first 30 minutes from conventional weapons, I don’t know what you’re talking about, there’s no military solution here, they got us.”

 

Bannon went on to describe his battle inside the administration to take a harder line on China trade, and not to fall into a trap of wishful thinking in which complaints against China’s trade practices now had to take a backseat to the hope that China, as honest broker, would help restrain Kim.

Bannon’s plan of attack includes: a complaint under Section 301 of the 1974 Trade Act against Chinese coercion of technology transfers from American corporations doing business there, and follow-up complaints against steel and aluminum dumping.

“We’re going to run the tables on these guys. We’ve come to the conclusion that they’re in an economic war and they’re crushing us.”

With regard his internal adversaries, at the departments of State and Defense, who think the United States can enlist Beijing’s aid on the North Korean standoff, and at Treasury and the National Economic Council who don’t want to mess with the trading system, Bannon was ever harsher…

“Oh, they’re wetting themselves,” he said, explaining that the Section 301 complaint, which was put on hold when the war of threats with North Korea broke out, was shelved only temporarily, and will be revived in three weeks. As for other cabinet departments, Bannon has big plans to marginalize their influence.

 

“That’s a fight I fight every day here,” he said. “We’re still fighting. There’s Treasury and [National Economic Council chair] Gary Cohn and Goldman Sachs lobbying.”

 

“We gotta do this. The president’s default position is to do it, but the apparatus is going crazy. Don’t get me wrong. It’s like, every day.”

Bannon dismissed the far-right as irrelevant:

“Ethno-nationalism—it’s losers. It’s a fringe element. I think the media plays it up too much, and we gotta help crush it, you know, uh, help crush it more.”

 

“These guys are a collection of clowns,” he added.

And finally, Bannon scoffed at The Democrats

“…the longer they talk about identity politics, I got ’em. I want them to talk about racism every day. If the left is focused on race and identity, and we go with economic nationalism, we can crush the Democrats.

Read more here…

Bannon going down with a fight or a massive effort to distract from the carnage of the last few days? You decide.

end

 

This is deadly and not good for Trump: Senator Corker, who is probably the wealthiest of all the senators has now called for a “radical change’ in the White House

(courtesy zerohedge)

 

Republican Senator Corker Calls For “Radical Change” In The White House

Tennessee Republican Senator Bob Corker has just unloaded on President Trump as he spoke to reporters…

I do think that there do need to be radical changes. The President has not yet been able to demonstrate the stability nor some of the competence that he needs to demonstrates in order to be successful. And we need for him to be successful, our nation needs for him to be successful. It doesn’t matter whether you are republican or democrat. We need for our president, the world needs our president to be successful.”

 

He also has recently not demonstrated that he understands the character of this nation. He has not demonstrated that he understands what makes this nation great and what it is today. He has got to demonstrate the characteristics of a president who understands that.

 

And without the things that I just mentioned happening our nation is going to go through great peril.

 

We should hope that he inspires, that he does some self-reflection that he does what is necessary to demonstrate stability, to demonstrate competence, to demonstrate that he understands the character of our nation and works daily to bring out the best in the people of our nation.

Corker’s comments come a day after he appeared in Knoxville and declined to rebuke Trump for his statements about the violence that erupted in Charlottesville, Va., over the weekend.

“I did not see them (Trump’s comments),” he said.

 

“I don’t see a lot of television, I apologize … look, I respond in my own way. My comments are the ones I focus on and I think the media does a plenty good job and has plenty of panelists on and others giving editorial comment about other peoples’ comments and mine.”

Watch the full interview below…

https://www.facebook.com/plugins/video.php?href=https%3A%2F%2Fwww.facebook.com%2FChloeNooga%2Fvideos%2F1527134817346102%2F&show_text=0&width=560

Separately, the IJR quoted a GOP aide who said that “It’s just frustrating to be constantly reacting to his sh*t…. The president has torched whatever political capital or moral authority he ever had,” he said, adding that “he is uniquely incapable of political leadership. If we get tax reform done, it won’t be with his help. It’ll be in spite of him and his vortex of incompetence and destruction.”

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you FRIDAY  night

Harvey.


August 16/Trump’s manufacturing advisory panel disbands after many participants left earlier: sends gold and silver skyrocketing/Gold up $3.55 to 1277.55 and silver up to $16.95 for a gain of 25 cents/in access trading: gold at $1282.00 and silver at...

Wed, 08/16/2017 - 18:31

GOLD: $1277.55  UP $3.85

Silver: $16.95  UP 25 cent(s)

Closing access prices:

Gold $1282.95

silver: $17.11

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1278.74 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1273.70

PREMIUM FIRST FIX:  $5.04

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1274.86

NY GOLD PRICE AT THE EXACT SAME TIME: $1272.60

Premium of Shanghai 2nd fix/NY:$2.26

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1270.15

NY PRICING AT THE EXACT SAME TIME: $1270.00 

LONDON SECOND GOLD FIX  10 AM: $1272.25

NY PRICING AT THE EXACT SAME TIME. $1273.25 

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 32 NOTICE(S) FOR  3200  OZ.

TOTAL NOTICES SO FAR: 4579 FOR 457900 OZ  (14.24 TONNES) 

For silver: AUGUST  15 NOTICES FILED TODAY FOR 75,000  OZ/ Total number of notices filed so far this month: 915 for 4,575,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

The star today was silver as this metal completely rebuffed all attempts by the crooked bankers who initiated a raid for the 5th consecutive day.  Gold got a spurt when Trump’s entire advisory board was disbanded.  It seems that the entire Trump team is in chaos.

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest SURPRISINGLY FELL AGAIN ONLY  950 contracts from 189,478 DOWN TO 187,955 DESPITE THE  HUGE FALL IN THE PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (DOWN 44 CENT(S) . THE BANKERS PROVIDED THE SHORT PAPER TO INITIATE THE RAID. WITH THE LOWER PRICE NEWBIE SPECS ENTERED FULL BLAST DRIVING THE PRICE A LITTLE HIGHER FROM THEIR LOWS WITH THE COMMERCIALS NEEDING TO SUPPLY THAT PAPER. THE COMMERCIALS ARE HAVING A TOUGH TIME COVERING…AND  THUS NOT MUCH OF A CHANGE IN OPEN INTEREST.

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.940 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 15 NOTICE(S) FOR 75,000  OZ OF SILVER

In gold, the open interest FELL by A TINY 2222 WITH THE HUGE FALL in price of gold ($11.00 LOSS YESTERDAY.)  The new OI for the gold complex rests at 477,921. A raid was called upon yesterday by the bankers and it succeeded in driving the price of gold southbound. The bankers initiated the raid with short paper but newbie longs entered the arena with the lower price. The bankers were not as successful in covering their shorts as they would have liked. They again called for another raid today but that too has failed

we had: 32 notice(s) filed upon for 3200 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, no changes in gold inventory:

Inventory rests tonight: 791.01 tonnes

IN THE LAST 23 TRADING DAYS: GLD SHEDS 45.96 TONNES YET GOLD IS HIGHER BY $40.00 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 335.825 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FALL BY 950 contracts from 188,905 down to 187,955 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787).  I wrote this yesterday: “THE FALL IN OPEN INTEREST WAS ACCOMPANIED BY A HUGE FALL IN PRICE AND IT STILL LOOKS LIKE WE ARE WITNESSING BANKER CAPITULATION.  BANKERS ARE LOATHE TO SUPPLY NEW SHORT PAPER AND THE LONGS CONTINUE TO ENTER THE ARENA PURCHASING WHATEVER SILVER THEY CAN AND WILLING TO TAKE ON OUR CROOKED BANKERS. THUS A SMALL DECLINE IN OPEN INTEREST”.  TODAY BANKER CAPITULATION CONTINUES AS SILVER RISES DESPITE THE RAID ATTEMPT.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

 

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY:  Bloomberg

3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 4.81 POINTS OR 0.15%   / /Hang Sang CLOSED UP 234.11 POINTS OR 0.86% The Nikkei closed DOWN 24.03 POINTS OR 0.12%/Australia’s all ordinaires CLOSED UP 0.46%/Chinese yuan (ONSHORE) closed DOWN at 6.6950/Oil UP to 47.68 dollars per barrel for WTI and 51.03 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.7020 yuan to the dollar vs 6.6950 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY  

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

Trump praises Kim for a “wise decision” to not threaten the uSA.. (so far)

( zero hedge)

ii0Then just to antagonize Kim Jong Un some more, the USA and Japan hold joint drills over the Korean Peninsula. Both China and North Korea are fuming this morning

 

(courtesy zero hedge)

b) REPORT ON JAPAN c) REPORT ON CHINA

We knew that this was going to happen:  Indian and Chinese soldiers clash following Chinese incursion on Indian soil.  China claims that it is their territory:

( zero hedge)

4. EUROPEAN AFFAIRS

Turmoil in the Euro has Draghi sends a message that he will not announce tapering at his Jackson Hole meeting but he may make his announcement in October.  The Euro tumbles.

( zero hedge)

5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)IRAN

A very important commentary:  Iran states that it will restart its nuclear program within hours of new sanctions.  The problem for Iran is basically sanctions which stop the selling of Iranian oil in markets will cripple that country.  It can ill afford new sanctions.  The uSA knows this and wants Iran to stop helping terrorism and their support of terrorist groups like Hezbollah.

 

( zerohedge)

ii)QATAR Cash strapped Qatar cuts its holdings in Credit Suisse as the embargo is hurting them considerably (courtesy zero hedge) 6 .GLOBAL ISSUES

(courtesy zero hedge)

7. OIL ISSUES

i)Well that did not take long:  WTI and gasoline both fall as oil production continues to surge

( zero hedge)

8. EMERGING MARKET

VENEZUELA

With his new powers, Maduro can imprison anybody who is a dissident

 

( zerohedge)

9.   PHYSICAL MARKETS

i)Three Ukrainian Parliamentarians disclose that between them they own $45 million of bitcoin.

( zero hedge)

ii)Without a valid reason, India bans the exporting of gold.  It seems that India is trying desperately trying to knock on gold again and hurt exporters

( Mish Shedlock/Mishtalk)

iii)With the next recession looming, central banks better get ready for increasing negative rates:

( Verma/Bloomberg/GATA)

iv)Nico Simons, a Dutch journalist, (mainstream journalist) writes that the LBMA is a front for gold rigging by the central banks.

 

(Nico Simons/GATA)

10. USA Stories

ia) The big announcement from the Fed:

 

the key: they are not getting wage inflation and that is killing them. They will supposedly begin the balance sheet normalization in Sept..good luck to them..

 

(courtesy zerohedge)

i b)If the USA government would remove mortgage deductibility from their taxes, house prices would collapse and put many under water. It would also kill the charitable organizations

 

( zerohedge)

ii)Trump lashes out at Jeff Bezos of Amazon as he states that he is doing great damage to retailers something that we have been pointing out.  He states that he is hurting cities and of course jobs

( zero hedge) iii)Another dandy commentary from David Stockman.  He tells the real truth behind the strength of the uSA economy. He feels that the real crunch will come next month when the debt ceiling stops the uSA dead in its tracks and nothing will be done due to the fractured nature of Republicans and the hatred between the Democrats and Republicans ( David Stockman/DailyReckoning)

iv) Seems that June’s starts and permits was another of those false reports:  July reports a huge plunge in both starts and permits as well as a collapse in rental units..the USA economy is not performing well!( zerohedge)

v)As many advisers to the Trump manufacturing council and Policy forum left, the President decided to disband the council in its entirety.  Seems the administration is falling apart.  Gold and silver rise on the news.

( zerohedge)

vi) Jamie Dimon to his staff: He “strongly disagrees with President Trump’s reaction re Charlotteville

( zero hedge)

 

vii)it now seems that a company hired a “crowd” for 25 dollars per hour recruiting political activists and these individuals landed in Charlottesville

 

(courtesy zero hedge)_

Let us head over to the comex:

The total gold comex open interest FELL BY A tiny 2222 CONTRACTS DOWN to an OI level of 477,921 WITH THE FALL IN THE PRICE OF GOLD ($11.00 with TUESDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY TACKLING THE LOWER PRICE DUE TO THE RAID IN YESTERDAY’S TRADING. THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER.  THE HIGH OPEN INTEREST IN THE GOLD COMPLEX WAS FODDER FOR OUR CROOKS AS THEY TRIED TO SHAKE MANY OF THE GOLD LEAVES FROM THE GOLD TREE.  IT SEEMS THAT THEY FAILED AS THE OPEN INTEREST REMAINED RELATIVELY CONSTANT. THEY ATTEMPTED ANOTHER RAID TODAY AND IT TOO FAILED.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 99 contract(s) to stand at 970 contracts. We had 26 notices filed on YESTERDAY so we LOST A HUGE 64 contracts or an additional 6400 oz will NOT stand at the comex and 64 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI LOSE 62 contracts DOWN to 1382.

The next active contract month is Oct and here we saw a LOSS of 1036 contracts DOWN to 49,690.

The very big active December contract month saw it’s OI LOSE 1147 contracts DOWN to 371,896.

We had 32 notice(s) filed upon today for   3200 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI SURPRISINGLY FELL BY ONLY 950 CONTRACTS FROM  188,905 DOWN TO 187,955 DESPITE YESTERDAY’S 44 CENT LOSS.  THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER ARE CHOKING THEM TO DEATH. THE BANKERS INITIATED THE RAID SUPPLYING A GOOD SIZED PAPER SHORT WHICH DROVE THE PRICE OF SILVER DOWN. NEWBIE SPEC LONGS ENTERED THE SILVER COMPLEX YESTERDAY WITNESSING WITH GLEE THE LOWER PRICE. ON THE SUPPLY SIDE: THE BANKERS WERE JUST PLAIN FRIGHTENED TO KEEP SUPPLYING THE NECESSARY PAPER. THUS A SMALL  DECLINE IN SILVER OI WITH A HUGE SIZED FALL IN PRICE. ANOTHER RAID WAS CALLED UPON TODAY AND IT TOO FAILED SENDING SILVER SOARING IN PRICE.

We are now in the next big non active silver contract month of August and here the OI FELL 55 contracts DOWN TO 85. We had 70 notice(s) filed yesterday.  Thus we GAINED ANOTHER 15 contract(s) or an additional 75,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 3,194 contacts down to 98,418.  The next non active contract month for silver after September is October and here the OI gained 3 contacts up TO 115. After October, the big active contract month is December and here the OI GAINED by 1,555 contracts UP to 77,887 contracts.

We had 15 notice(s) filed for 75,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

YESTERDAY’S confirmed volume was 29,588 which is good

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 16/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   4018.75 oz Scotia 125 kilobars Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   32 notice(s) 3200 OZ No of oz to be served (notices) 938 contracts (93,800 oz) Total monthly oz gold served (contracts) so far this month 4579 notices 457,900 oz 14.242 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   23,769.0  oz Today we HAD  1 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 0  customer deposit(s): total customer deposits;  nil  oz We had 1 customer withdrawal(s) i) Out of Scotia:  4018.75 oz (125 kilobars) total customer withdrawals;  4018.75 oz  we had 1 adjustment(s)  i) Out of Delaware:  295.915 oz was adjusted out of the dealer and this landed into the customer account of Delaware   For AUGUST:

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 32  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4579) x 100 oz or 457,900 oz, to which we add the difference between the open interest for the front month of AUGUST (970 contracts) minus the number of notices served upon today (32) x 100 oz per contract equals 551,700  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4579) x 100 oz  or ounces + {(970)OI for the front month  minus the number of  notices served upon today (32) x 100 oz which equals 551,700 oz standing in this  active delivery month of AUGUST  (17.160 tonnes)  we lost 64 contracts or an additional 6400 oz will not stand for delivery and 64 EFP’s for August were issued.(FOR FIAT BONUS PLUS ANOTHER DELIVERABLE CONTRACT WHICH MOST LIKELY IS A LONDON BASED FORWARD) xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,214.577 or 23.58 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,628,149.002 or 268.37 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.37 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 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 12 MONTHS  85 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 16  2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 284,367.190 oz  Scotia Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  2943.700 oz CNT No of oz served today (contracts) 15 CONTRACT(S) (75,000 OZ) No of oz to be served (notices) 70 contracts ( 350,000 oz) Total monthly oz silver served (contracts) 915 contracts (4,575,000 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 2,434,780.8 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 1 customer withdrawal(s): ii) out of JPMorgan: 284,367.190 oz TOTAL CUSTOMER WITHDRAWALS:  284,367.190 oz We had 0 Customer deposit(s): ***deposits into JPMorgan have stopped  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: nil oz    we had 0 adjustment(s) The total number of notices filed today for the AUGUST. contract month is represented by 15 contract(s) for 75,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 915 x 5,000 oz  = 4,575,000 oz to which we add the difference between the open interest for the front month of AUGUST (85) and the number of notices served upon today (15) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  915 (notices served so far)x 5000 oz  + OI for front month of AUGUST(85 ) -number of notices served upon today (15)x 5000 oz  equals  4,925,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 15 contracts or an additional 75,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month. At this point in the delivery cycle last year on August 16/2016 we had 106.311 contracts standing vs this yr at 98,746. Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex YESTERDAY’s  confirmed volume was 111,780 contracts which is OUT OF THIS WORLD FRIDAY’S CONFIRMED VOLUME OF 111,780 CONTRACTS WHICH EQUATES TO 558 MILLION OZ OF SILVER OR 80% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.348 million (close to record low inventory   Total number of dealer and customer silver:   215.737 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 end NPV for Sprott and Central Fund of Canada 1. Central Fund of Canada: traded at Negative 5.9 percent to NAV usa funds and Negative 6.1% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.8% Percentage of fund in silver:37.2% cash .+0.0%( August 16/2017)  2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO +0.05% (August 16/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.55% to NAV  (August 16/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.05/Sprott physical gold trust is back into NEGATIVE/ territory at -0.55%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 16/no change in gold inventory at the GLD. Inventory rests at 791.01 tonnes

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 16 /2017/ Inventory rests tonight at 791.01 tonnes *IN LAST 214 TRADING DAYS: 158.87 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 152 TRADING DAYS: A NET  1.44 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY. *FROM FEB 1/2017: A NET  18.25 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 16/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz/

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

August 16.2017:

 Inventory 335.825  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.31%
  • 12 Month MM GOFO + 1.49%
  • 30 day trend

end

Major gold/silver trading/commentaries for WEDNESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

World’s Largest Hedge Fund Bridgewater Buys $68 Million of Gold ETF In Q2 By Mark O’Byrne August 16, 2017 No Comments

– World’s largest hedge fund Bridgewater buys $68 million of gold ETF in Q2
– Investors poured $870 million into SPDR Gold in Q2

– Billionaire Paulson keeps 4.36 million shares in SPDR Gold
– “Risks are now rising and do not appear appropriately priced in” – warns Dalio on Linkedin
– Investors should avoid ETFs and paper gold and own physical gold
– Given negative interest rates, companies should consider allocating some of corporate deposits to physical gold as done by Munich Re

From Bloomberg:

Hedge-fund managers including billionaire John Paulson are being rewarded as investor worries over everything from uneven economic data to U.S.-North Korean tensions fuel a rally in bullion.

At the end of June, Paulson & Co. owned 4.36 million shares of SPDR Gold Shares, a U.S. government filing showed Monday. That’s unchanged from the three months through March. Bridgewater Associates, the world’s largest hedge fund, added the ETF to its portfolio in the quarter, with the purchase of 577,264 shares valued at $68.1 million, a regulatory filing showed Aug. 10. Templeton Global Advisors Ltd. boosted its stake in Barrick Gold Corp.

Investors poured $870 million into SPDR Gold in the second quarter, taking the fund’s total assets to $34 billion as U.S. inflation continued to undershoot the Federal Reserve’s target, putting at risk policy makers’ projection for rising interest rates. While the prospect of monetary policy tightening remains, investors recently turned their focus on geopolitical strains as North Korea’s Kim Jong Un threatened the U.S. territory of Guam, boosting demand for bullion as a haven.

“Prospective risks are now rising and do not appear appropriately priced in,” billionaire Ray Dalio, who manages Bridgewater, said in a LinkedIn post, as he recommended investors allocate 5 percent to 10 percent of their assets to gold.

Dalio also flagged rising odds that the U.S. Congress may fail to raise the debt ceiling, “leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system.”

 Full article on Bloomberg here


Related Content

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News and Commentary

Gold falls on easing North Korea tensions, strong U.S. data (Reuters.com)

Gold prices inch up ahead of minutes from latest Fed meeting (Reuters.com)

Asian Shares Mixed, Korea Advances as Calm Returns (Bloomberg.com)

UK car lenders vulnerable after surge in risky loans – BoE (IrishTimes.com)

‘Deep’ Subprime Car Loans Hit Crisis-Era Milestone (Bloomberg.com)

Bank of America Warns of an ‘Ominous’ Sign for Stocks (Bloomberg.com)

Investors should be looking at gold (Barrons.com)

UK debt tide is rising – how can you avoid drowning? (TheGuardian.com)

Prepare for negative interest rates in the next recession – Rogoff (Telegraph.co.uk)

US dollar’s fall could become a self-fulfilling prophecy (SCMP.com)

Own a few bitcoin but realise it is speculation (StansBerryChurcHouse.com)

Gold Prices (LBMA AM)

16 Aug: USD 1,270.15, GBP 985.13 & EUR 1,082.29 per ounce
15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce
09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce
08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce

Silver Prices (LBMA)

16 Aug: USD 16.68, GBP 12.96 & EUR 14.25 per ounce
15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce
10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce
09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce
08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce


Recent Market Updates

– Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War”
– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017
– Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
– What Investors Can Learn From the Japanese Art of Kintsukuroi
– Bitcoin, ICO Risk Versus Immutable Gold and Silver
– This Is Why Shrinkflation Is Making You Poor
– Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble

END

gold trading this afternoon:

 

 

Gold Jumps, Stocks Dump After Trump Disbands CEO Councils

The initial reaction to headlines about President Trump’s councils being disbanded was a leak lower in stocks, but once Trump tweeted, gold spiked and stocks slumped...

 

 

The dollar is sinking and bonds are bid…

 

 

end

 

Three Ukrainian Parliamentarians disclose that between them they own $45 million of bitcoin.

(courtesy zero hedge)

Ukrainian Lawmakers Disclose $45 Million In Bitcoin Holdings

As Ukraine’s crackdown on corruption continues, three lawmakers from Ukraine’s ruling party revealed this week that they own a combined $45 million in bitcoin, according to a report by RIA Novosti, a Russian foreign news service.

Their holdings came to light during mandatory financial disclosures by members of the Ukrainian parliament, part of an IMF-approved strategy to tamp down corruption in Ukraine. The country’s democratic institutions, which were never very robust to begin with, have been further destabilized by the civil war that’s seen pro-Russian separatists seize control of two regions in eastern Ukraine. Lawmakers must now disclose their assets and wealth in an online database.

Dmitry Golubov possesses the most bitcoin, with 8,752 BTC, an amount worth roughly $36 million at current prices, according to CoinDesk.Alexander Urbansky possesses 2,494 BTC, or $10.3 million, while Dmitry Belotserkovets owns 398 BTC, or $1.6 million.

Ukraine’s central bank plans to develop a regulatory framework for cryptocurrencies after discussing the legal implications of the virtual tokens at a meeting next month.  

“The disclosures come as Ukraine inches toward regulating the cryptocurrency.

 

As reported previously, the National Bank of Ukraine – the country’s central bank – revealed last week that the legal implications of cryptocurrencies will be discussed at the next meeting of the Financial Stability Board of Ukraine. That hearing, scheduled for the end of August, will bring together the nation’s financial authorities.

 

It’s unclear at this time exactly what steps the government will ultimately take. Local sources reported last week that a large cache of bitcoin mining machines were confiscated after authorities discovered them at a state-owned facility.”

Ukrainians have been exposed to the vast differences between the fortunes amassed by the country’s politicians and the more modest holdings of those they represent since an anti-corruption reform requiring senior Ukrainian officials to declare their wealth online was implemented late last year.

Some lawmakers have declared millions of dollars in cash. Others said they owned fleets of luxury cars, expensive Swiss watches, diamond jewelry and large tracts of land. These revelations have no doubt undermined public confidence in the country’s government, particularly the ruling party led by President Petro Poroshenko, whose family amassed a fortune in the confectionary business. By comparison, the average salary in Ukraine is just over $200 per month.

Poroshenko – a prominent fixture of the Panama Papers – retains control of a top TV channel and has failed to follow through on his promise to sell off his Roshen chocolate empire due to a lack of foreign interest and a dearth of rich-enough investors in Ukraine itself.

While the online declaration system has been intended to represent a show of good faith that officials are willing to open their finances up to public scrutiny, to be held accountable, and to move away from a culture that tacitly allowed bureaucrats to amass wealth through cronyism and graft, the public reaction has been one of shocked dismay at the extravagant lifestyles conjured up by many of the disclosures.

“We did not expect that this would be such a widespread phenomenon among state officials. I can’t imagine there is a European politician who invests money in a wine collection where one bottle costs over $10,000,” said Vitaliy Shabunin, the head of the non-governmental Anti-Corruption Action Center.

Ukraine’s economy is on track to shrink by about 12 percent this year and only return to marginal growth should the eastern campaign end in 2016. Unrest in the country began back in 2014 when former President Viktor Yanukovich, who was perceived to be too close with Russian President Vladimir Putin, was forced to abdicate. 

 

end

 

Without a valid reason, India bans the exporting of gold.  It seems that India is trying desperately trying to knock on gold again and hurt exporters

(courtesy Mish Shedlock/Mishtalk)

 

India Bans Gold Exports “Without A Valid Reason”

Authored by Mike Shedlock via MishTalk.com,

In addition to its crackdown on cash, India stepped up its attack on gold. The aim is to cut down on gold imports. India does that in a roundabout way, by cracking down on exports.

Bloomberg reports India Bans Gold Exports Above 22 Carats to Plug Trade Loopholes.

India has banned the export of gold products with purity above 22 carats with immediate effect, a move that the industry sees as a way of curbing irregularities in the trade.

 

The Directorate General of Foreign Trade issued a notice limiting shipments of jewelry, coins and medallions to 22 carats or below, without giving a reason.

 

“The move may be to reduce round-tripping of jewelry and coins, wherein a trader can import the gold coins or jewelry at a lower import tax because of trade agreements with some countries and re-export the same stock without any value addition,” said Ketan Shroff, joint secretary of the India Bullion and Jewellers Association Ltd. The exporters would benefit from not paying the 10 percent import tax currently levied on most inbound shipments of gold, he said.

 

Indian imports are said to have more than doubled last month from a year ago partly due to a jump in purchases from South Korea, with which India has a free-trade agreement. Importers have previously used free-trade treaties with countries such as Thailand and Indonesia to escape the import duty.

Round-Trip Nonsense

The stated round-trip reason is nonsense. If a vendor imported gold then immediately exported it, there would be no gain to the vendor other than random price fluctuations.

Prior to this announcement, a vendor could purchase gold and hold it until he had a profit, betting either on a price rise in gold, or a plunge in the Indian Rupee.

The new rule is not a crackdown on gold exports, it’s a crackdown on gold period. India wants to punish those who trade in gold.

end

 

With the next recession looming, central banks better get ready for increasing negative rates:

(courtesy Verma/Bloomberg)

With recession looming, central banks better make peace with negative rates

Submitted by cpowell on Tue, 2017-08-15 13:02. Section: 

By Sid Verma and Cecile Gutscher
Bloomberg News
Tuesday, August 14, 2017

Negative interest rates are back in the spotlight.

Investors and analysts are redoubling their warnings that with global borrowing costs already so low, central banks will need to be prepared to cut interest rates deep into negative territory in the next economic downturn. The message is taking on urgency as anxiety builds that the United States is nearing the end of its current economic expansion cycle.

“I don’t think the central bankers would like to go back into negative rates once they get out of it, but they may well have to during the next recession,” Iain Stealey, the head of global aggregate strategies at JPMorgan Asset Management in London, said in a Bloomberg TV interview Monday. …

… For the remainder of the report:

https://www.bloomberg.com/news/articles/2017-08-14/central-banks-told-to..

END

Nico Simons, a Dutch journalist, (mainstream journalist) writes that the LBMA is a front for gold rigging by the central banks.

 

(Nico Simons/GATA)

Nico Simons: LBMA is the front for gold market rigging by central banks

Submitted by cpowell on Tue, 2017-08-15 17:52. Section: 

1:51p ET Tuesday, August 15, 2017

Dear Friend of GATA and Gold:

Dutch financial journalist Nico Simons today compiles admissions of central bank involvement with the gold market and concludes that the London Bullion Market Association is just a front for central bank rigging of the price of the monetary metal.

The LBMA, Simons writes, provides central banks with the secrecy necessary for market rigging and this rigging, not any free market, determines the gold price.

Simons’ analysis is headlined “The LBMA Is a Ploy of the Central Bank Community” and it’s posted in PDF format at Money Insights here:

http://moneyinsights.org/wp-content/uploads/20170815-The-LBMA-is-a-ploy-…

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 WEAKER 6.6950 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.7020/ Shanghai bourse CLOSED DOWN 4.81 POINTS OR 0.15%  / HANG SANG CLOSED UP 234.11 POINTS OR 0.86% 

2. Nikkei closed DOWN 24.03 POINTS OR 0.12%    /USA: YEN RISES TO 110.77

3. Europe stocks OPENED DEEPLY IN THE GREEN     ( /USA dollar index RISES TO  94.03/Euro DOWN to 1.1707

3b Japan 10 year bond yield: FALLS  TO  +.040%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  47.68 and Brent: 51.03

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 RISES TO  +.457%/Italian 10 yr bond yield DOWN  to 2.05%    

3j Greek 10 year bond yield RISES to  : 5.587???  

3k Gold at $1270.55  silver at:16.67 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 21/100 in  roubles/dollar) 59.49-

3m oil into the 47 dollar handle for WTI and 51 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 GOOD SIZED DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.77 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9741 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1404 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to  +0.457%

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 2.2728% early this morning. Thirty year rate  at 2.8520% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

Global Stocks Rise Amid Unexpected ECB “Trial Balloon”; Dollar Flat Ahead Of Fed Minutes

European markets continued their risk-on mood in early trading for the third day, rising to the highest in over a week and rallying from the open led by mining stocks as industrial metals spike higher after zinc forwards hit highest level since 2007, lifting copper and nickel. The EUR sold off sharply, boosting local bond and risk prices after the previously discussed Reuters “trial balloon” report that Draghi’s speech at Jackson Hole would not announce the start of the ECB’s taper. The EURUSD has found support at yesterdays session low. Bunds have rallied in tandem before gilts drag core fixed income markets lower after U.K. wages data surprises to the upside. Early EUR/JPY push higher through 130.00 supports USD/JPY to come within range of 111.00.

In Asia, Japan’s JGB curve was mildly steeper after the BOJ continued to reduce its purchases of 5-to-10-yr JGBs; the move was consistent with the BOJ’s desire to cut back whenever markets stabilize, according to Takenobu Nakashima, strategist at Nomura Securities Co. in Tokyo. The yen is little changed after rising just shy of 111 overnight. The S.Korean Kospi is back from holiday with gains; The PBOC weakened daily yuan fixing; injects a net 180 billion yuan with reverse repos; the Hang Seng index rose 0.9%, while the Shanghai Composite closed -0.2% lower. Dalian iron ore declines one percent. Japan’s Topix index closed little changed. South Korea’s Kospi index rose 0.6 percent, reopening after a holiday. The Hang Seng Index added 0.8 percent in Hong Kong, while the Shanghai Composite Index fell 0.2 percent. Australia’s S&P/ASX 200 Index advanced 0.5 percent. Singapore’s Straits Times Index was Asia’s worst performer on Wednesday, falling as much as 1.1 percent, as banks and interest-rate sensitive stocks dropped.

The Stoxx Europe 600 Index rose 0.7%, the highest in a week.  The MSCI All-Country World Index increased 0.3%. The U.K.’s FTSE 100 Index gained 0.6%. Germany’s DAX Index jumped 0.8% to the highest in more than a week. Futures on the S&P 500 Index climbed 0.2% to the highest in a week. Global markets are finally settling down after a tumultuous few days spurred by heightened tensions between the U.S. and North Korea. Miners and construction companies led the way as every sector of the Stoxx Europe 600 advanced as core bonds across the region declined. Crude gained for the first time in three days after industry data was said to show U.S. inventories tumbled 9.2 million barrels last week.

U.S. stock-index futures rise slightly with European and Asian equities and oil. Data include MBA mortgage applications and housing starts. Cisco, Target, L Brands and NetApp are among companies reporting earnings. Italian banks also outperform after HSBC make positive comments on Intesa Sanpaolo and Unicredit.

In overnight macro, the Bloomberg Dollar Spot Index was unchanged after two days of gains and Treasury yields edged higher as European stocks rose and investors awaited minutes of the Fed’s July 25-26 meeting. As shown in the chart below, after “Long USD” was seen as the “most crowded traded” for months until the start of Q2, the BofA Fund Manager Survey respondents now “Short USD” as the second most crowded trade.

In Asia The yen slid a third day against the dollar as market participants positioned themselves ahead of the FOMC minutes and as geopolitical tensions on North Korea abated; Australia’s dollar gained for the first time in three days as traders covered short positions after second-quarter wage data matched estimates, boosting prospects of an upbeat July employment print this week. The pound rose against the dollar as a U.K. labor-market report showed wage growth exceeded the median estimate of economists and unemployment unexpectedly dropped to the lowest since 1975.

The latest European data released overnight showed more nations joined the recovery as the euro-area economy gathers pace. Italy’s economy expanded for a 10th straight quarter, matching estimates of a 0.4% increase while growth in the Netherlands beat economists’ estimates.

Eastern European economies including Romania, the Czech Republic and Poland also exceeded expectations, confirming that a broad-based recovery is taking hold.

In rates, the yield on 10-year Treasuries climbed one basis point to 2.28 percent, the highest in more than two weeks.  Germany’s 10-year yield increased three basis points to 0.46 percent, the highest in more than a week. Britain’s 10-year yield gained four basis points to 1.121 percent, the highest in more than a week.

In today’s key event, minutes from the Fed meeting will be parsed closely; policy makers have indicated they may announce plans to reduce the central bank’s balance sheet in September and then potentially raise interest rates again this year.

Global Market Snapshot

  • S&P 500 futures up 0.2% to 2,468.90
  • STOXX Europe 600 up 0.8% to 379.51
  • MSCI Asia up 0.2% to 158.83
  • MSCI Asia ex Japan up 0.5% to 523.28
  • Nikkei down 0.1% to 19,729.28
  • Topix down 0.01% to 1,616.00
  • Hang Seng Index up 0.9% to 27,409.07
  • Shanghai Composite down 0.2% to 3,246.45
  • Sensex up 0.7% to 31,664.31
  • Australia S&P/ASX 200 up 0.5% to 5,785.10
  • Kospi up 0.6% to 2,348.26
  • German 10Y yield rose 1.5 bps to 0.448%
  • Euro down 0.2% to $1.1717
  • Italian 10Y yield rose 2.5 bps to 1.756%
  • Spanish 10Y yield fell 0.4 bps to 1.469%
  • Brent futures up 0.7% to $51.16/bbl
  • Gold spot down 0.06% to $1,270.71
  • U.S. Dollar Index up 0.09% to 93.94

Overnight Top News

  • The FOMC minutes may provide a better feel for how many policy makers remain resolved to raise interest rates again this year, and how many are wavering amid a five-month stretch of soft inflation reports
  • Akzo Nobel NV and activist investor Elliott Management agreed to end their legal skirmishes that had dragged the two parties into acrimonious confrontations, giving new Chief Executive Officer Thierry Vanlancker some breathing space to proceed with a planned split of the Dutch paint-and-chemicals maker
  • Uber Technologies Inc. is in exclusive talks to line up funding from four investors, but a deal, which could reach as much as $12 billion, hangs on the outcome of a courtroom brawl between two board members
  • Apollo sweetened terms on nearly $1.8 billion of financing for its buyout of a golf country-club operator after investors pushed back on some of its plans
  • The main derivatives trade group is considering industrywide fixes for the disarray that the demise of Libor could bring to more than $350 trillion of markets
  • China reclaimed its position as the top foreign owner of U.S. Treasuries after increasing its holdings for the fifth straight month
  • UBS Group AG is proposing to charge clients about $40,000 a year to access basic equity research once new regulations known as MiFID II come into effect in January
  • Fed’s Fischer: Will probably be a break between announcement of unwinding of QE and the start of the process; Fed could always press pause if unanticipated circumstances arise: FT
  • ECB President Mario Draghi will not deliver a new policy message at the
    Fed’s Jackson Hole conference, Reuters reports, citing two unidentified
    people familiar with the situation
  • Efforts to loosen constraints on banks 10 years after financial crisis are “dangerous and extremely short-sighted,” Fed Vice Chairman Stanley Fischer says in FT interview
  • Kaplan repeats Fed should be patient on timing of next hike; should start balance sheet unwind very soon
  • ECB’s Hansson: Wage pressures are beginning to emerge despite low
    inflation in the euro area but are “very uneven” across the bloc
  • Trump Again Drags GOP Onto Dangerous Ground, This Time Over Race
  • Euro-area GDP rose 0.6% q/q in 2Q, in line with the median estimate of economists, and was supported by continued growth in Germany, the region’s largest economy, and the strongest Spanish performance in almost two years
  • Holders of credit-default swaps in Banco Popular Espanol SA still haven’t been compensated after the bank’s junior notes were wiped out in Europe’s first forced sale of a failing lender under its new resolution regime
  • German Finance Minister Wolfgang Schaeuble doesn’t share opinion of German Federal Constitutional Court about ECB policy, Handelsblatt reports
  • Bank of Japan cut purchases of bonds maturing in five to 10 years by 30 billion yen ($270 million) to 440 billion yen at its regular debt-buying operations on Wednesday
  • The 220 billion-krone ($28 billion) Government Pension Fund Norway, the domestic counterpart of the country’s sovereign wealth fund, is cutting risk as big active bets have lost their luster
  • API inventories according to people familiar w/data: Crude -9.2m; Cushing +1.7m; Gasoline +0.3m; Distillates -2.1m
  • BOJ cuts purchases of 5-to-10 year bonds by 30 billion yen
  • Urban Outfitters Gains After Smaller Chains Prop Up Results
  • Netflix Co-Founder to Sell Ads to Pay for $10 Movie Pass
  • Italian Economy Expands, Boosting Optimism on Recovery

Asia equity markets followed from the indecisive tone seen on Wall Street where quiet newsflow kept stocks rangebound. This resulted to a mixed picture in Asia with the ASX 200 (+0.48%) subdued by several earnings releases, while Nikkei 225 (-0.12%) traded choppy amid a lack of drivers. KOSPI (+0.60%) welcomed the reduced geopolitical tensions on return from holiday, while Shanghai Comp (-0.15%) and Hang Seng (+0.86%) were mixed after lending declined from the prior month and although still surpassed estimates, it was another notch to add to the recent slew of softer Chinese data releases. 10yr JGBs were marginally higher amid an indecisive risk tone in the region, although gains were capped amid a reserved Rinban announcement in which the BoJ continued to reduce its purchases of 5yr-10yr maturities.
PBoC injected CNY 150bln in 7-day reverse repos and CNY 130bln in 14-day reverse repos. PBoC set CNY mid-point at 6.6779 (Prey. 6.6689).

Top Asian News

  • Thailand Keeps Key Rate Unchanged as It Warns of Baht Risk
  • Taiwan President Apologizes for Blackout Affecting Millions
  • Ex-Nomura Man Exiled in Chicago Goes Hostile at Tiny Japan Firms
  • As Good as It Gets: Iron Ore Risks a Reversal as China Cools
  • China Honqqiao Seals Citic Stake and Confirms Capacity Cuts
  • Institutional Investors Oppose Hong Kong’s Dual-Class Share Plan
  • Vietnam Rubber Group Expects to Hold IPO in Dec.

European equities have traded higher across the board (Eurostoxx 50 +0.8%) since the get-go despite a quiet start to the session with sentiment later bolstered by the latest ECB source reports. Gains on a sector specific stand-point have been relatively broad-based with materials recovering from recent losses. The most notable individual mover has been AP Moller Maersk (+2%) who initially opened lower amid disappointing earnings before reversing course after the CEO managed to provide an upbeat commentary on the Co. Source reports indicate that ECB Draghi will not deliver fresh policy message at Jackson Hole and wants to hold off on debate until Autumn. Paper was initially hampered by the modest upside in European equities before European bonds were supported by the aforementioned ECB source reports. Peripheral bonds used the source reports as an opportunity to tighten to their core counterparts given the potential for more accommodative monetary policy. However, prices overall then began to reverse once again as UK Gilts dragged paper lower in the wake of the promising UK jobs report.

Top European News

  • Euro Whipsaws on Report Draghi May Hold Off at Jackson Hole
  • Aviva, China Resources Are Said to Mull U.K. Wind Farm Bids
  • Derivatives Group Looks at Industrywide Cure for Libor’s Demise
  • U.K. Wage Growth Beats Forecasts But Still Lags Inflation
  • Zinc Smashes Through $3,000 Barrier as Metals Rally Gathers Pace
  • Danone ‘Extreme’ Cost Actions May Hamper Volume Recovery: Citi

In overnight currency markets, the GBP has once again been a key source of focus for markets amid the latest UK jobs report. GBP was bolstered and approached 1.2900 to the upside amid the firmer than expected earnings numbers, unexpected fall in unemployment rate and fall in the claimant count rates; albeit wages still lag inflation by quite a distance. Elsewhere, EUR has faced some selling-pressure (EUR/USD back below 1.1750) in the wake of the latest ECB source comments with sources suggesting that Draghi will not use next week’s Jackson Hole Symposium to communicate a change in stance with markets and will instead hold-off until the Autumn. Elsewhere, the USD remains relatively steady with markets awaiting the latest FOMC minutes release. Yesterday saw the greenback outperform after strong retail sales data, which took the spot rate above 94.00 briefly. This morning, the USD-index is relatively flat, which may well be the case for much of the day ahead of the FOMC minutes later this evening. AUD firmer amid cross related buying AUD/NZD which broke back above 1.08, subsequently taking the spot above 0.7850. Wage price index remaining firm, which also comes ahead of tonight’s employment figures, of note, large options are keeping AUD anchored with 1.86b1n at 0.7830 and 910mln at 0.7875. Attention will be placed on both CAD and MXN as NAFTA renegotiations get underway, as it stands the Trump administration aim to shrink the rising trade deficit with Mexico and tighten the rules of origin for cars and parts. Elsewhere, CAD is slightly firmer as oil prices stabilise following last night’s sizeable drawdown in the API report.

Commodity markets have seen WTI and Brent crude futures hold onto gains seen in the wake of last night’s API report which revealed a notable 9.155m1n draw (and came in the context of last week’s 7.839m1n draw). Elsewhere, Gold has been modestly hampered by the broad risk-sentiment with markets also keeping half an eye out for tonight’s FOMC minutes release. Overnight, mild short-covering helped copper pare some of yesterday’s losses.

Looking at the day ahead, preliminary 2Q GDP stats for the Eurozone (0.6% qoq, 2.1% yoy expected) and Italy (0.4% qoq and 1.5% yoy expected) are due this morning. Then for UK, we have the July jobless claims and claimant count rate and the June ILO unemployment data (4.5% expected). Across the pond, we get the FOMC meeting minutes along with the July housing starts (1,225k expected) and MBA mortgage applications stats. Onto other events, the NAFTA talks between US, Canada and Mexico kicks off in Washington today. Furthermore, Target and Cisco will report their results today.

Looking at the day ahead, we get the FOMC meeting minutes along with the July housing starts (1,225k expected) and MBA mortgage applications stats. Onto other events, the NAFTA talks between US, Canada and Mexico kicks off in Washington today. Furthermore, Target and Cisco will report their results today.

US Event Calendar

  • 7am: MBA Mortgage Applications, prior 3.0%
  • 8:30am: Housing Starts, est. 1.22m, prior 1.22m; Housing Starts MoM, est. 0.41%, prior 8.3%
  • 8:30am: Building Permits, est. 1.25m, prior 1.25m; Building Permits MoM, est. -1.96%, prior 7.4%
  • 2pm: FOMC Meeting Minutes

DB’s Jim Reid concludes the overnight wrap

Although I’m generally a bit more relaxed about the UK’s future post Brexit than most of my colleagues in research, I was amused at a comment on twitter yesterday in light of the UK’s decision to silence London’s iconic Big Ben for 4 years as of next Monday as repairs are made. The comment suggested that how could the UK Parliament expect repairs of a clock to take 4 years while expecting whole Brexit negotiations to be done in 18 months? A fair point. So if you’re a regular visitor to London don’t expect to hear any bongs for the next few years. Apparently it’s all about health and safety for the ears of the repairers.

Thankfully after last night, hopefully Liverpool will still be in Europe for a few more weeks and months whatever happens with our negotiations. Talking of Brexit and DB research, yesterday Oliver Harvey updated his thoughts after the UK government released a position paper on customs arrangements after Brexit. The paper clarifies that UK intends to remain part of the EU customs union in all but name after March 2019 for a time-limited transitional period. Further, it sets out two potential options for the UK’s future customs relationship with the EU27, one involving a hard border and the other proposing a new and untested  customs partnership arrangement. Harvey notes the paper fails to address future trade in services, or the apparent contradiction between desire for unchanged customs arrangements during a transitional deal and PM May’s stated red line on ECJ jurisdiction after March 2019. Moreover, he argues that the absence of any mention of legal enforceability and product standards is particularly puzzling as non-tariff barriers are typically a larger obstacle to trade than tariffs and the need to ensure harmonized regulatory standards during a transitional deal and afterwards will be one of the key challenges for policymaking. More details here The fact that we haven’t yet mentioned North Korea suggests that it was another day of no news which is obviously good for markets. The unpredictability of the main players in this stand-off mean that markets will likely want a fair few days of more calm before they return markets back to their pre “fire and fury” tweet levels.

Having said that we saw equities generally edge higher yesterday with larger increases in bond yields. The UST 10y was up 5bps overnight, following the higher than expected retail sales data (discussed later). Core European government bond yields also increased c3bps at the longer end of the curve, with Bunds (2Y: +1bp; 10Y: +3bps) and OATs (2Y: +2bps; 10Y: +3bps) reversing some of the recent safe haven move. Gilts outperformed a little (2Y: +1bp; 10Y: +1bps), following the lower than expected July inflation data (discussed later). Elsewhere, peripheral bond yields also increased with Italian BTPs (2Y: +2bps; 10Y: +4bps) and Portugal (2Y: +1bps; 10Y: +4bps) slightly under performing.

This morning in Asia, markets are generally slightly higher with China underperforming. The Nikkei (+0.02%), Kospi (+0.5%), Hang Seng (+0.4%) are higher with Chinese bourses ranging from -0.3% to +0.2% as we type.

Back to the markets yesterday, US equities were broadly unchanged, with the S&P (-0.1%), the Dow (+0.02%) and the Nasdaq (-0.1%) taking a breather after yesterday’s rally. Within the S&P, modest gains in the utilities and consumer staples sector were broadly offset by losses in Telco (-1%) and consumer discretionary (-0.9%) names. European markets were slightly higher, with the Stoxx 600 up 0.1%, the DAX (+0.1%) and both the FTSE and CAC up 0.4%. Within the Stoxx, modest gains in utilities (+0.5%) and health care were largely offset by losses in energy and materials.

Turning to currency, the USD dollar index gained 0.5%, following the stronger than expected retail sales data. Conversely, the Euro/USD fell 0.4%, but Sterling/ USD fell a bit more (-0.7%), impacted by the UK’s inflation data. Elsewhere, Euro/Sterling continues to gain (+0.4%), up for the fourth consecutive day and edging higher again this morning, effectively marking the highest point since November 09. In commodities, WTI oil was broadly flat yesterday but is up 0.4% this morning following API reporting lower US crude inventories. Elsewhere, gold fell 0.8% and silver was down 2.6%, while the industrial metals were little changed (Copper -0.1%; Aluminium -1.3%). Agricultural commodities were broadly softer this morning, with corn (-0.1%), wheat and soybeans (-0.2%), cotton (-0.9%), sugar (-2.7%) and coffee (-3.5%).

Away from markets, the IMF has revised up China’s growth outlook compared to last year’s report, now expecting the growth between 2017 and 2021 to average 6.4% (vs. 6% previous), partly given that China continues to transition to a more sustainable growth path and reforms have advanced across a wide domain. The paper also noted that given the solid growth momentum, now is the time to intensify deleveraging efforts and boost domestic consumption. The report expects non-financial sector debt (includes household, corporate and government) to continue to rise strongly, up from 242% of GDP in 2016 to ~300% by 2022, which raises concerns for a possible sharp decline in growth in the medium term.

The minutes for the July FOMC meeting will be out later today, our US economists expect the Committee to remain on course to announce the commencement of its balance sheet unwind at the September 20 meeting. However, there is likely to be a healthy debate regarding the inflation outlook as several policymakers have indicated that improvement in near-term inflation trends will be crucial to the prospects of another interest rate hike by year end. Elsewhere, the Trump administration has made no decision yet to stop or continue making payments to insurers (cost sharing reduction) to help lowincome people to afford their Obamacare plans. That said, the Congressional budget office did indicate that ending such payments could raise billions of dollars over the next decade for the government.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. In the US, macro data were broadly stronger than expected. The July retail sales were materially higher than expected, both at the headline and core level. Headline was 0.6% mom (vs. 0.3% consensus, but in line with DB’s forecast) and ex-auto was 0.5% mom (vs. 0.3% expected). Notably, these readings also follow positive revisions to the prior month. The July result together with revisions means that through-year growth improved across all aggregates, with ex-auto spending up 3.8% yoy. Elsewhere, the empire manufacturing survey came in at 25.2 (vs. 10.0 expected), the best reading since September 2014, the NAHB housing market index was 68 (vs. 64 expected). The June business inventories was slightly higher than expected at 0.5% mom (vs. 0.4%) and July import price index was in line at 0.1% mom.

Over in Germany, the preliminary 2Q GDP was lower than expected at 0.6% qoq (vs. 0.7% expected). However, this follows a positive +0.1% revision to the 1Q reading, leaving a solid annual growth reading of 2.1% yoy (vs. 1.9% expected). According to DB’s Schneider, both the 1Q and 2Q 2017 readings and the data revisions confirm our story that overheating risks in Germany are on the rise in 2018 and that recent confidence data does not suggest that the German economy will decelerate much in 3Q.

In the UK, July inflation data was slightly lower than expected, dampening concerns that high inflation readings might cause the BoE to soon tighten monetary policy settings. CPI was -0.1% mom (vs. 0% expected) and 2.4% yoy for core inflation (vs. 2.5%). However, the July retail price index was slightly ahead at 0.2% mom (vs. 0.1% expected) and 3.6% yoy (vs. 3.5%). Meanwhile pipeline inflation appears to have peaked, with the core PPI outputs index rising 2.4% yoy in July (vs. 2.5% expected), the least since February.

Looking at the day ahead, preliminary 2Q GDP stats for the Eurozone (0.6% qoq, 2.1% yoy expected) and Italy (0.4% qoq and 1.5% yoy expected) are due this morning. Then for UK, we have the July jobless claims and claimant count rate and the June ILO unemployment data (4.5% expected). Across the pond, we get the FOMC meeting minutes along with the July housing starts (1,225k expected) and MBA mortgage applications stats. Onto other events, the NAFTA talks between US, Canada and Mexico kicks off in Washington today. Furthermore, Target and Cisco will report their results today.

 END 3. ASIAN AFFAIRS

i)Late TUESDAY night/WEDNESDAY morning: Shanghai closed DOWN 4.81 POINTS OR 0.15%   / /Hang Sang CLOSED UP 234.11 POINTS OR 0.86% The Nikkei closed DOWN 24.03 POINTS OR 0.12%/Australia’s all ordinaires CLOSED UP 0.46%/Chinese yuan (ONSHORE) closed DOWN at 6.6950/Oil UP to 47.68 dollars per barrel for WTI and 51.03 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.7020 yuan to the dollar vs 6.6950 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

Trump praises Kim for a “wise decision” to not threaten the uSA.. (so far)

(courtesy zero hedge)

Embattled Trump Praises Kim Jong Un For “Very Wise Decision”

After a fiery press conference yesterday that seemingly did more damage than good, President Trump seems desperate to change the topic this morning.  Having attacked Amazon earlier over Twitter, the President just tweeted the following message thanking Kim Jong Un for a “very wise and well reasoned decision” saying the “alternative would have been catastrophic.”

“Kim Jong Un of North Korea made a very wise and well reasoned decision. The alternative would have been both catastrophic and unacceptable!”

Donald J. Trump 

@realDonaldTrump

Kim Jong Un of North Korea made a very wise and well reasoned decision. The alternative would have been both catastrophic and unacceptable!

 

Seems we’ve come a long way since the “fire and fury” promised last week.

Fox News 

@FoxNews

.@POTUS: “North Korea best not make any more threats to the U.S. They will be met with fire and fury like the world has never seen.”

 

So, with a nuclear showdown with North Korea moved to the back burner for now, what other fireworks will we get from Trump Tower today?  More advisory council resignations perhaps?

end

 

Then just to antagonize Kim Jong Un some more, the USA and Japan hold joint drills over the Korean Peninsula. Both China and North Korea are fuming this morning

 

(courtesy zero hedge)

US, Japan Hold Joint Air Drills Over Korean Peninsula As China, North Korea Fume

Since unlike Donald Trump he does not have access to twitter, we can only assume that North Korean leader Kim Jong Un is probably fuming this morning after US and Japanese fighter jets conducted joint “air maneuvers” southwest of the Korean peninsula, according to Reuters. The exercises threaten to reignite tensions between the US and the North after Kim Jong Un reportedly told his generals on Tuesday to shelve a plan to strike Guam with an ICBM.

The exercises were held a day after Kim said that he would put plans to attack the US island territory on hold, but that his generals would closely monitor the “Yankees” for any signs of hostility. The exercises involved two US Airforce B-1B Lancers, and two Japanese F-15 jet fighters, according to Reuters. The North, as its state-run news agency has stated repeatedly in the past, typically interprets military exercises as tantamount to an act of war.

“The exercise in the East China Sea involved two U.S. Air Force B-1B Lancer bombers flying from Andersen Air Force Base on the Pacific island of Guam and two Japanese F-15 jet fighters, Japan’s Air Self Defense Force said in a news release. ‘The exercise is meant to improve interoperability and bolster combat skills,’ it said. The U.S. planes, which were designed to carry nuclear bombs but were later upgraded to carry conventional weapons, have flown several sorties in East Asia over the past several weeks. In addition to air drills with Japanese fighters, the bombers have also exercised with South Korean aircraft.

“Reclusive North Korea has made no secret of its plans to develop a missile capable of carrying a nuclear warhead and of reaching the United States to counter what it perceives as constant U.S. threats of invasion – such as U.S. war drills with neighboring South Korea and Japan.”

Wednesday’s test runs were part of a 19-day long period of joint exercises between the US and Japan that began on Aug. 10, according to AFP. On a military installation in Northern Japan, some 300 Japanese and US military personnel carried out live-fire artillery training, according to Agence France-Presse. Japan also tested its Patriot Advanced Capability-3 missile defense system. The system was tested in Shimane, Hiroshima and Kochi prefectures, which North Korea had warned could be along its missiles’ flight path.

The air drill also upset China, which said “they do nothing to ease tension.”

On Wednesday, a senior Chinese military officer reiterated China’s position on the need to maintain peace and stability to the United States’ top general, chairman of the U.S. Joint Chiefs of Staff Joseph Dunford, China’s Defence Ministry said.

 

Song Puxuan, commander of China’s Northern Theatre Command, stressed to Dunford that the North Korean nuclear issue must be resolved politically through talks, the ministry added, without saying where the two met.

More importantly, the overnight drill is a preview of what is coming: US and South Korean militaries will proceed with massive sea, land and air exercises next week despite a tenuous stalemate between the US and North Korea.

The annual joint exercises, named Ulchi-Freedom Guardian, have long been planned for 21-31 August, but now come at a time when both Washington and Pyongyang are on heightened alert, raising the spectre of a mishap or overreaction, according to the Guardian.  Washington and Seoul say the exercises, involving tens of thousands of American and South Korean troops, are a deterrent against North Korean aggression.

In the past, the practices are believed to have included “decapitation strikes” – trial operations for an attempt to kill Kim Jong-un and his top generals, further antagonising a paranoid leadership.

Next week’s massive joint drill is widely seen among Wall Street commentators as a potential catalyst for the next flare up in tensions and/or hostilities involving Kim’s regime.

 

 

 

 

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

We knew that this was going to happen:  Indian and Chinese soldiers clash following Chinese incursion on Indian soil.  China claims that it is their territory:

(courtesy zero hedge)

Indian, Chinese Soldiers Clash Following Alleged Chinese “Incursion”

In what may be the first documented clash between Chinese and Indian soldiers who have been piling up across the border between the two nations, Reuters reports that “Indian and Chinese soldiers were involved in an altercation” in the western Himalayas on Tuesday, “further raising tensions between the two countries which are already locked in a two-month standoff in another part of the disputed border.”

While there has been no official confirmation yet by either India or China, a Reuters source in New Delhi who was briefed on the military situation on the border, said Indian soldiers “foiled a bid by a group of Chinese troops to enter Indian territory in Ladakh, near the Pangong lake.” He added that some of the Chinese soldiers carried iron rods and stones, and in the melee there were minor injuries on both sides, the source said.

“There was an altercation near the Pangong lake,” said a police officer in Srinagar, the capital of India’s Jammu and Kashmir state, under which the area falls. An army source in Srinagar, quoted by Reuters, spoke of an altercation following what he called a Chinese army “incursion in Pangong lake area“. This fresh standoff at Pangong Tso lake in Ladakh comes in the backdrop of tensions between Indian and Chinese troops over Doklam plateau in Sikkim sector with the PLA skipping the ceremonial border meetings on Independence Day.


Pangong Tso Lake

Here are additional details from the Indian Express:

Amid strained ties over the Doklam standoff in the Sikkim sector, Indian and Chinese boat patrols clashed at the Pangong lake in Ladakh on Tuesday even as the People’s Liberation Army declined the Indian invitation to participate in ceremonial border meetings on the occasion of India’s Independence Day. This is the first time since 2005 that the PLA has declined to meet with their Indian counterpart.

Courtesy of the Indian newspaper, here is a breakdown of all that happened in the past 24 hours

1. Indian and Chinese boat patrols clashed with each other at Pangong Tso lake in Ladakh at 7:30 am near the Finger-6 part of the 135-km long lake, one-third of which is in Indian control and the rest under Chinese control. The brief standoff led to jostling and exchange of blows between soldiers of the two armies. No shots were fired though.

 

2. Sources told the Indian Express said at least 52 trucks belonging to the Chinese army were spotted parked on the road built by the Chinese on the side of the lake but they moved out by the evening. The Indian Army, however, refused to comment on the issue. Also Read: Indian, Chinese patrols clash on Ladakh lake, PLA skips Independence Day meets

 

3. This fresh standoff at Pangong Tso lake in Ladakh comes in the backdrop of tensions between Indian and Chinese troops over Doklam plateau in Sikkim sector with the PLA skipping the ceremonial border meetings on Independence Day.

 

4. For the first time since 2005, the ceremonial meeting with the troops of both sides was not held on August 15. Another ceremonial meeting, which used to be held on the Chinese side on August 1, the founding day of the PLA, was also not held this year.

 

5. Indian and Chinese troops have been engaged in a stand-off in the Doklam area of the Sikkim sector for seven weeks now after Indian troops stopped the Chinese army from building a road in the disputed area. China claimed that they were constructing the road within their territory and has been demanding immediate pull-out of the Indian troops from the disputed Doklam plateau. New Delhi has expressed concern over the road building, apprehending that it may allow Chinese troops to cut India’s access to its northeastern states.

 

6. India has conveyed to the Chinese government that the road construction would represent a significant change of status quo with serious security implications for it. Doka La is the Indian name for the region which Bhutan recognises as Doklam, while China claims it as part of its Donglang region.

 

7. Of the 3,488-km-long India-China border from Jammu and Kashmir to Arunachal Pradesh, a 220-km section falls in Sikkim. China also claims that Thimphu has no dispute with Beijing over Doklam.

To summarize: soldiers of the world’s two populous nations just got into a mini skrimish over a terrotorial dispute that is far from over, and if anything, is just beginning. As a reminder, the two armies are already engaged in a standoff in the Doklam plateau further east, in another part of their 3,500 km (2,175 mile) unmarked mountain border. As we reported on Friday, India had deployed even more troops to fortify existing positions, as China does the same, while raising the military “caution” level.

China has repeatedly asked India to unilaterally withdraw from the Doklam area, or else face the prospect of an escalation. As reported last month, Chinese state media warned India of a fate worse than its crushing defeat in a brief border war in 1962.

The latest standoff between China and India started in June when India sent troops to stop China building a road in the Doklam area, which is remote, uninhabited territory claimed by both China and India’s ally Bhutan.  New Delhi said it sent its troops because Chinese military activity in Doklam, near the trijunction of the borders of India, China and Bhutan, was a threat to the security of its own northeast region. But Beijing has said India had no role to play in the area and diplomatic efforts to defuse the crisis have not made much headway.

An Indian government minister told Reuters efforts were continuing to find a way to end the standoff.  The minister, “speaking on condition of anonymity because of the sensitivity of the issue” , said Prime Minister Narendra Modi’s government had “no choice but to act to stop the Chinese road activity in the region because it had come too close for comfort.”

4. EUROPEAN AFFAIRS

Turmoil in the Euro has Draghi sends a message that he will not announce tapering at his Jackson Hole meeting but he may make his announcement in October.  The Euro tumbles.

(courtesy zero hedge)

 

Euro Turmoils After ECB Walks Back Draghi Jackson Hole Appearance

Just yesterday morning, we said that with the Euro rising as much as it has in recent months (or is that the dollar tumbling), the ECB’s next move could – or should – be to talk down the common currency, instead of carrying the hawkish “bias” Draghi has pushed for the past half year, culminating with the Sintra mini tantrum in which the poor central banker was “misunderstood” by markets. Well, just 24 hours later that’s precisely what happened when this morning the EUR turmoiled, first tumbling then regaining all losses after Reuters “trial ballooned” that the much anticipated Draghi presentation at the Fed’s Jackson Hole conference in just over a week, where he was widely expected to unveil the ECB’s taper, would be a “nothingburger” to use the parlance of our times, and “will not deliver a new policy message” according to two Reuters sources familiar with the situation said, tempering expectations for the bank to start charting the course out of stimulus.

Perhaps having finally seen how high the EURUSD has risen, an ECB spokesman told Reuters that Draghi “will focus on the theme of the symposium, fostering a dynamic global economy, in his Aug. 25 remarks, while the sources added that he was keen to hold off on the policy discussion until the autumn, as agreed at the last rate-setting meeting in July. 

Well, so much for the narrative set by the WSJ one month ago, which set expectations that Draghi’s Jackson Hole address would frontrun the central bank’s tapering blueprint.

Expectations for the speech had been building in recent weeks with investors pointing to next Friday’s event as the likely kick off in the ECB’s debate how to recalibrate monetary policy given solid growth, rapidly falling unemployment but persistently weak underlying inflation.

 

In 2014, the last time Draghi spoke at Jackson Hole, considered the world’s top central banking get-together, he laid the foundations for the ECB’s quantitative easing scheme, also fuelling expectations for a major speech this year.

 

“Expectations that this will be a big monetary policy speech are wrong,” one of the sources said.

As Reuters further adds, another source said while the speech was initially seen as an ideal slot for a major address, “Draghi told rate setters at the last policy meeting that he would honour the Governing Council’s decision to hold off on the discussion until the autumn.”

And in the most amusing twist, Reuters “reports” that Draghi “may have decided to skip the Jackson Hole opportunity as markets interpreted his speech at a similar conference in Sintra, Portugal very differently than the ECB hoped, sending markets on a rollercoaster and instilling an added sense of caution at the bank.

Draghi then hoped to strike a balanced tone but noted that better growth would provide increased support to the economy, letting the ECB claw back its own stimulus to keep the overall level of accommodation broadly unchanged.  That was seen as a hawkish message, paving the way to reducing and then ending asset purchases.

Uhm, what markets? The one where the ECB now owns 14% of Europe’s corporate bond market and 40% of Eurozone GDP in the form of public debt? That’s the market that Draghi is complaining about? Or is that the market where the ECB buy billions in Apple stock every quarter.

So if not Jackson Hole then when?

Policymakers speaking to Reuters on condition of anonymity earlier said that October is the likely date for the most substantial decision given the incoming data schedule, particularly on wages.

The ECB’s big dilemma is that while the euro zone economy has grown for 17th straight quarters and employment is rising faster than expected, wage growth remains anemic, keeping a lid on consumer prices.

 

Economists are now trying to figure out whether wages are showing an unexpectedly delayed response or whether wage setting dynamics may have fundamentally changed in the post-crisis, globalised economy.

Following the report, the Euro whipsawed with the EUR/USD rising as much as 0.2% to 1.1758 as BBDXY erased its gains, only to reverse course and slide as low as 1.1692 as cable also dropped, although as Bloomberg then adds, a mix of leveraged and interbank names were seen on the bid in EUR/USD, most likely the ECB once again intervening indirectly in the market it so loudly complains about.

end

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

IRAN

A very important commentary:  Iran states that it will restart its nuclear program within hours of new sanctions.  The problem for Iran is basically sanctions which stop the selling of Iranian oil in markets will cripple that country.  It can ill afford new sanctions.  The uSA knows this and wants Iran to stop helping terrorism and their support of terrorist groups like Hezbollah.

(courtesy zerohedge)

Iran Threatens Trump With Restart Of Nuclear Program “Within Hours”

One day after Iran announced it was preparing to send a flotilla of warships to the western Atlantic Ocean following the announcement of a massive $500 million investment in war spending, the Iranian regime is fast emerging as the latest potential geopolitical headache for the Trump administration, after it warned on Tuesday that Iran could abandon its 2015 nuclear deal signed with Obama with world powers “within hours” if the United States imposes further sanctions on Tehran, president Hassan Rouhani said in his first address to Iran’s parliament since being sworn in to a second term, and hinted that Iran could quickly boost enrichment up to levels even higher than before it signed the nuclear accord.

“Those who try to return to the language of threats and sanctions are prisoners of their past delusions,” Rouhani said in the address. “If they want to go back to that experience, definitely in a short time — not in weeks or months, but within hours or days — we will return to our previous [nuclear] situation very much stronger.”

He also said Iran prefered to stick with the nuclear deal, which he called “a model of victory for peace and diplomacy over war and unilateralism” but that this was not the “only option“. In response, the US warned it would continue to punish Iran’s “non-nuclear destabilising activities.”

Rouhani’s statement comes as Obama’s sole diplomatic achievement, the Iran Nuclear deal, finds itself under mounting pressure after Tehran carried out missile tests and strikes, and Washington imposed new sanctions, with each accusing the other of violating the spirit of the agreement. Rouhani has warned that Iran was ready to walk out of the deal, which saw the lifting of most international sanctions in return for curbs on its nuclear programme, if Washington persisted.

As a reminder, last month Iran tested a powerful new ballistic missile that resulted in new US sanctions, and as reported last night, Iran’s parliament voted overwhelmingly to increase budget spending to $260 million for the ballistic missile programme, which is not limited by the nuclear deal. The vote also covered  a further US$260 million spending on regional operations of the Islamic Revolutionary Guard Corps’ foreign wing, the Quds Force, which is leading a range of militias in Syria and Iraq.

Rouhani warned that a reconstituted nuclear program would be “far more advanced” the NYT reports, a veiled threat that the country could start enriching uranium up to the level of 20%, a step toward building a nuclear weapon. Such enrichment activities were a major concern before 2015, when Tehran signed a landmark agreement with the United States and other world powers that lifted crippling economic sanctions in return for severe limits on Iran’s nuclear activities

Separately, Rouhani said Trump had shown he was an unreliable partner not just for Iran but for US allies.

Joining pretty much every other world leader in mocking the US president, Rouhani said that “in recent months, the world has witnessed that the US, in addition to its constant and repetitive breaking of its promises in the [nuclear deal], has ignored several other global agreements and shown its allies that the US is neither a good partner nor a reliable negotiating party,” he said, highlighting Trump’s decisions to withdraw from the Paris climate agreement and international trade deals.

State Department spokeswoman Heather Nauert refused to address Rouhani’s comments directly, insisted Washington was in full compliance with its side of the nuclear deal, however she did confirm the US administration was reviewing its policy towards Iran and that it believes the nuclear deal did not put an end to Tehran’s other “destabilising activities” in its region. Rouhani’s warning was also sharply criticized by Nikki Haley, the US ambassador to the United Nations, who said in a statement that the warning amounted to an Iranian attempt at blackmail.

“Iran cannot be allowed to use the nuclear deal to hold the world hostage,” Ms. Haley said in the statement, titled “Ambassador Haley on Iran’s Threats to Quit the JCPOA.”

 

The new United States sanctions on Iran, she said, were not a violation of the nuclear deal but part of an effort to “hold Iran responsible for its missile launches, support for terrorism, disregard for human rights, and violations of U.N. Security Council resolutions.”

Which begs the questions: what’s the point of the deal, how much longer will it remain in place, and what happens to the price of oil if and when some 2-3 million barrels per day of Iranian oil exports are again taken out of the global market, crippling Iran’s economy.

Of course, Iran is aware what the devastating consequences of such an escalation – the bottom line is tens of billions in lost oil revenue – could do to its economy, which is why some analysts cited by The National, cautioned that Rouhani’s remarks on the nuclear deal do not indicate that Iran is close to, or even considering, pulling out of the deal. It is much more likely a tactical move to protect the moderate president’s political flank on the right from the IRGC and other hardliners who oppose the cultural and economic opening that the deal is intended to facilitate, but which could weaken their grip on society and on the economy.

“I clearly do not think it is alarming,” said Marc Martinez, Iran analyst at the Delma Institute in Abu Dhabi. “It is a political speech for a domestic audience and a display of unity” as Washington steps up pressure.

 

“Rouhani’s remarks are a classic act of political bravado, but the president’s intentions [and] Iran’s intentions are quite evident when we consider that Javad Zarif was reappointed minister of foreign affairs,” Mr Martinez said. “Iran is highly benefiting from the JCPOA, and it makes the calculus that the international community will not support Trump’s adventurism.”

Which is spot on, and yet one can’t help but think that Iran is, perhaps worried about Trump’s unpredictable decision-making nature, hedging its bets. It would expain why on Monday night Rouhani spoke with Russian President Vladimir Putin, vowing to build on their joint military efforts across the region.

Tehran welcomes the active presence of Russia’s investors… in major infrastructure projects including in the fields of industry and energy,” his office said as Putin, no longer busy manipulating several tens of millions of middle class Americans to vote against Hillary Clinton, smiled in the background.

It’s not just the Kremlin that Tehran is building up close ties: the European Union, which initially supported global sanctions against Iran under President Barack Obama, has started to invest heavily in the country since the nuclear deal was signed, and it is not likely to support new penalties. China has also been a partner to the Iranians for many years.

end

 

QATAR Cash strapped Qatar cuts its holdings in Credit Suisse as the embargo is hurting them considerably (courtesy zero hedge) Cash-Strapped Qatar Unexpectedly Cuts Credit Suisse Stake

Is the ongoing Qatar blockade starting to seriously squeeze the finances of the tiny, but rich (or maybe not so rich any more) Gulf nation?

Overnight, Credit Suisse’s largest shareholder, Qatar, announced it has lowered its direct shareholding in the largest Swiss bank to 4.94% through the nation’s sovereign wealth fund – the Qatar Investment Authority – marking a rare sale of the Swiss bank’s stock. The QIA previously owned 5.01% in voting rights and is reporting a sale of shares for the first time since 2008. Qatar’s overall holding – including convertible bonds – declined to 15.91% from 17.98% after a rise in the number of outstanding Credit Suisse shares because of its capital increase.

In June, Credit Suisse, which is halfway through a three-year strategy revamp, raised about CHF4.1 billion after tapping shareholders for a second time since CEI Tidjane Thiam took over in mid-2015, Bloomberg reported. The fresh funding would boost its common equity Tier 1 capital to 13.4% of risk-weighted assets, up from 11.7% in the first quarter.

Qatar’s sovereign wealth fund has been the Zurich-based bank’s biggest shareholder since the financial crisis of 2008-09. Then, the cash-rich emirate helped Credit Suisse avert a state bailout by injecting billions in capital into the bank; now Qatar itself may be on the verge of needing a bailout.  The sale has come at a price: the infusion was designed as convertible bonds in Credit Suisse, for which the bank has paid a coupon of between 9 and 9.5%. However, in a harbinger of what’s to come, in February Credit Suisse said that Bin Hamad J.J. Al Thani, who represented the Qataris on Credit Suisse’s board of directors, won’t stand for re-election. Saudi Arabian group Olayan is also a major shareholder in Credit Suisse.

As shown below, Qatar boasts one of the world’s largest sovereign wealth funds, with stakes in companies from Glencore to Barclays to Volkswagen (come to think of it, all companies that have one or major major “structural” issues). The small peninsular nation also hosts the regional headquarters for U.S. Central Command, making it a critical outpost for the US military’s ongoing involvement in the middle east.

In the nearly ten years since the capital investment, Credit Suisse has made hundreds of millions in annual payments to Qatar. That changed in February of this year when as noted above, Qatar’s board representative, Jassim Bin Hamad J.J. Al Thani, left the bank with little explanation and no replacement. However, Qatar did participate in Credit Suisse’s CHF4.1 billion capital-raising to full up its depleted cushion of capital.

Now, Qatar has sharply lowered its overall stake in Credit Suisse. The emirate now holds 4.94% of shares and 10.97% in converts, down from 5.0%1 in shares and 12.96% in the securities, or from 17.98% to 15.91% in total.

The sale comes against the backdrop of tensions between the emirate and Saudi Arabia, Egypt, Bahrain, and the United Arab Emirates, which according to some have led to a sharp deterioration in the country’s finances.  The move has unpleasant consequences for Credit Suisse as well: Abu Dhabi has reportedly boycotted banks in which Qatar is invested. Besides Credit Suisse, those include Germany’s Deutsche Bank and London’s Barclays Bank, also a crisis beneficiary of Qatar’s generosity.

6 .GLOBAL ISSUES 7. OIL ISSUES

Well that did not take long:  WTI and gasoline both fall as oil production continues to surge

(courtesy zero hedge)

WTI/RBOB Slide After Oil Production Surge Offsets Biggest Crude Draw Since Sept

Following last night’s mixed mesage from API (crude draw, gasoline build), WTI prices have gone nowhere as all eyes focus on DOE data this morning. Confirming API’s trend, crude saw its biggest draw since Sept 2016 but Gasoline, Distillates, and Cushing (most since March) saw builds which upset the machines and sent prices lower. Crude production rose once again to its highest since July 2015.

 

API

  • Crude -9.2mm (-3.38mm exp) – biggest draw since Sept 2016
  • Cushing +1.7mm (+700k exp) – biggest build since March
  • Gasoline +301k (-450k exp) – second weekly build in a row
  • Distillates -2.1mm (-250k exp)

DOE

  • Crude -8.945mm (-3.38mm exp) – biggest draw since Sept 2016
  • Cushing +678k (+700k exp) – biggest build since March
  • Gasoline +22k (-450k exp)
  • Distillates +702k (-250k exp)

Last week’s surprise build in gasoline (confirmed by API) and big draw in crude (also confirmed by API overnight) remains the big focus and DOE data confirmed it with the biggest crude draw since Sept 2016 but builds in products and at Cushing…

While the builds in produst were modest, they were nevertheless a surprise shift in trend from draws to builds…

Imports from Saudi Arabia jumped 47 percent to 813,000 barrels a day, but remain well under the 1-million barrel figure exceeded through much of the first two quarters of this year.

As Bloomberg’s David Marino notes, the total stockpile draw of 7.32 million barrels brings inventories to the lowest since January 2016, but still more than 200 million barrels above November 2014, when the glut really started building up. A lot of work still to do, as OPEC well knows.

While rig count growth has stabilized, crude production continues to rise in the Lower 48 (though had dropped in Alaska for 3 straight weeks) but both saw a rise this week (total production up 79k) as Lower 48 production hit its highest since July 2015…

Bloomberg notes that U.S. oil production from major shale plays is set to hit another record at 6.15 million barrels a day next month, according to the EIA. It’s not just the Permian that’s growing, as the agency sees higher output across the board.

 

WTI Crude prices barely budged from last night’s API print heading into the DOE data, spiked higher on the crude draw but slipped back lower on product builds and production surge…

Heading into the print, “the size of a potential draw in crude inventories is “going to be the most material” aspect of the report, Brad Hunnewell, senior equity analyst at Rockefeller & Co., says, adding that “investors also expect to see a rise in gasoline demand.”

However, as Bloomberg Intelligence energy analyst Vince Piazza notes:

No change to our bearish view: long road to recovery still ahead. We still see mid $50-$60s as the threshold for acceleration of U.S output. Commentary from exploration and production company conference calls implies drilling efficiencies are aiding productivity.

 

Elevated refining utilization has helped deplete bloated inventories across the petroleum value chain during the key seasonal driving period, and exports have helped as well. However, the market is seeing the end to summer, with runs traditionally declining in early fall.

8. EMERGING MARKET

VENEZUELA

With his new powers, Maduro can imprison anybody who is a dissident

 

(courtesy zerohedge)

Venezuelans Face 25 Years In Prison For “Hate Or Intolerance”

In a harbinger of what – for various reasons – may be coming to the US, Venezuela’s brand new “all-powerful” constituent assembly is set to pass a bill that will jail anyone who expresses “hate or intolerance” for up to 25 years, a measure which the local opposition – and everyone else – is certain will be used by Maduro’s regime to silence and punish all dissent.

“The question is whether this is the peace he’s looking for: creating a law that gives him and his obedient supreme court judiciary powers to lock up dissidents for 25 years,” Tamara Taraciuk, head Venezuela researcher for Human Rights Watch, told Reuters in a Wednesday telephone interview. To be sure, less extreme versions of this proposal have cropped up across the developed world, where while “hate or intolerance” – as defined by some arbitrary but very powerful authority – will result if not in jail time, then certainly in loss of freedom of speech or worse.

As for Venezuela, the “the proposal includes incredibly vague language that would allow them to jail anyone for almost anything,” she added, a blueprint for how crackdown against dissent in “developed” countries may materialize.  It gets worse: straight out of “1984”, Venezuela’s assembly is scheduled later on Wednesday to empanel a “Truth Commission” headed by Maduro loyalist and former Foreign Minister Delcy Rodriguez, to prosecute those responsible for violent anti-government protests.

Over the past month, in his attempt to copycat Turkey’s president Erdogan and seize supreme power, President Nicolas Maduro installed a 545-member assembly stacked with Socialist Party allies earlier this month, who provide him with a greenlight to do virtually anything. The president defends the new legislative superbody as Venezuela’s only hope for peace and prosperity.

Separately, local rights group Penal Forum estimated that Maduro’s government was holding 676 political prisoners as of Wednesday, a number that could rise once a crackdown against hate crimes – however the ruling regime defines these – becomes law. For now the definition is simple: no disagreement with Maduro:

“Anyone who goes out into the streets to express intolerance and hatred will be captured and will be tried and punished with sentences of 15, 20, 25 years of jail,” Maduro recently told the assembly, drawing a standing ovation.

Meanwhile the assembly has wasted no time in usurping power. Just days after firing Venezuela’s top prosecutor Luisa Ortega, the assembly on Tuesday ordered that cases of protesters detained this year be held in civilian rather than military courts. The Geneva-based International Commission of Jurists said in a report on Wednesday that Ortega’s dismissal “removes one of the last remaining institutional checks on executive authority.”

As for Ortega, she is likely going to prison too: the country’s new chief prosecutor, Maduro’s former “human rights ombudsman” Tarek Saab, on Wednesday outlined corruption accusations against his predecessor Ortega, her husband and members of her team of prosecutors. She is unlikely to find any support in the current regime: the opposition, in control of the traditional congress, boycotted the election of the assembly, meaning that all candidates for the new body were Maduro allies.

 

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   1.1707 DOWN .0032/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE GREEN 

USA/JAPAN YEN 110.77 UP 0.182(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2873 UP .0007 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2732 DOWN .0021 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 32 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1707; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  DOWN 4.81 POINTS OR 0.15%     / Hang Sang  CLOSED UP 234.11 POINTS OR 0.86% /AUSTRALIA  CLOSED UP 0.46% / EUROPEAN BOURSES OPENED  DEEPLY IN THE GREEN 

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning CLOSED DOWN 24.03 POINTS OR 0.12%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 234.11 POINTS OR 0.86%  / SHANGHAI CLOSED DOWN 4.81 POINTS OR 0.15%   /Australia BOURSE CLOSED UP 0.46% /Nikkei (Japan)CLOSED DOWN 24,03  POINTS OR 0.12%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1270.70

silver:$16.68

Early WEDNESDAY morning USA 10 year bond yield: 2.2728% !!!  UP 0   IN POINTS from TUESDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.8520, UP 1  IN BASIS POINTS  from TUESDAY night.

USA dollar index early WEDNESDAY morning: 94.03 UP 18  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: 2.828% DOWN 1 in basis point(s) yield from TUESDAY 

JAPANESE BOND YIELD: +.042%  DOWN 4/5   in   basis point yield from TUESDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.463% DOWN 1   IN basis point yield from TUESDAY 

ITALIAN 10 YR BOND YIELD: 2.036 DOWN 1 POINTS  in basis point yield from TUESDAY 

the Italian 10 yr bond yield is trading 58 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.443% 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/1:00 PM 

Euro/USA 1.1698 DOWN .0043 (Euro DOWN 43 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.81 UP 0.224(Yen DOWN 22 basis points/ 

Great Britain/USA 1.2856 DOWN  0.0010( POUND DOWN 10 BASIS POINTS)

USA/Canada 1.2707 DOWN .0046 (Canadian dollar UP  46 basis points AS OIL FELL TO $47.20

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This afternoon, the Euro was DOWN  by 43 basis points to trade at 1.1698

The Yen FELL to 110.81 for a LOSS of 22  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 BY 10  basis points, trading at 1.2856/ 

The Canadian dollar ROSE by 46 basis points to 1.2707,  WITH WTI OIL FALLING TO :  $47.20

The USA/Yuan closed at 6.6916/ the 10 yr Japanese bond yield closed at +.042%  DOWN 4/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 0  IN basis points from TUESDAY at 2.262% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.839 UP 0 in basis points on the day /

Your closing USA dollar index, 94.04  UP 19 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 49.18 POINTS OR 0.67%
German Dax :CLOSED UP 86.82 POINTS OR 0.71%
Paris Cac  CLOSED UP 36.36 POINTS OR 0.71% 
Spain IBEX CLOSED UP  62.80 POINTS OR 0.60%

Italian MIB: CLOSED UP 262.64 POINTS OR 1.21% 

The Dow closed UP 5.28 OR 0.02%

NASDAQ WAS closed DOWN 7.22  POINTS OR 0.11%  4.00 PM EST

WTI Oil price;  47.20 at 1:00 pm; 

Brent Oil: 50.61 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.45 DOWN 23/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 23 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.443%  FOR THE 10 YR BOND  4.PM EST 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 5:00 PM:$46.77

BRENT: $50.30

USA 10 YR BOND YIELD: 2.225%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.810%

EURO/USA DOLLAR CROSS:  1.1766 UP .0026

USA/JAPANESE YEN:110.10  DOWN  0.43

USA DOLLAR INDEX: 93.50  DOWN 35  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2885 : UP 18 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2622 UP 69 BASIS pts 

German 10 yr bond yield at 5 pm: +0.443%

END

And now your more important USA stories which will influence the price of gold/silver TRADING IN GRAPH FORM FOR THE DAY Gold Gains As Stocks Sink After Trump Turmoil, Fed Fear-mongering

Shitty day for Housing Recovery enthusiasts, the Trump administration, and Fed followers…

 

Stock actually ended the day higher thanks to the overnight bid and panic squeeze at the open but the theme of the day was simple – Trump is in trouble (agenda on the rocks) and The Fed is explicitly warning about bubbles…

 

VIX ended the day lower but once again it was a game of two halves (NOTE Russell 2000 ‘VIX’ was higher on the day)…

 

AAPL pushed to new record highs as the great rotation from FANG stocks continues…

 

The Dollar was dumped and bond yields tumbled after Trump and accelerated after The Fed…

 

With the AMZN issue out of the way, selling pressure lifts on bonds and today’s turmoil put a bid under prices…

 

The Dollar Index erased most of its gains from the last two days…

Flows swung toward risk-off after U.S. Vice President Pence dialed up the rhetoric, saying North Korea must permanently abandon its nuclear ambitions. This followed news from the White House earlier in the day that Trump and Pence would meet with the National Security team regarding Southeast Asia on Friday at Camp David.

 

Gold jumped on warmongery and Trump turmoil then shifted higher on a dovish Fed statement… Crude was ugly after a large crude draw offset by a surprise build in gasoline stocks.

 

The analog continues to hold…

 

end

 

The big announcement from the Fed:

 

the key: they are not getting wage inflation and that is killing them. They will supposedly begin the balance sheet normalization in Sept..good luck to them..

 

(courtesy zerohedge)

 

 

FOMC Minutes Signal Balance Sheet Normalization Begins In September, Most Saw Inflation Pick Up

Since the July 26th ‘nothingburger’ FOMC statement, Nasdaq is down but bonds and bullion are higher as domestic politics and global war have trumped monetary machinations. All eyes in today’s Minutes will be on any mention of inflation and the balance sheet. The Fed sees inflation “picking up over the next couple years” but this came before last week’s dismal CPI/PPI data (and they noted “downside risks”), and confirmed that they will make a balance sheet move “at upcoming meeting.”

Additional headlines:

  • *MOST FED OFFICIALS SAW INFLATION PICK-UP OVER NEXT COUPLE YEARS
  • *MOST FED OFFICIALS BACKED B/SHEET MOVE AT `AN UPCOMING MEETING’

However, The Fed is worried about inflation:

  • MANY FED OFFICIALS SAW WEAK INFLATION DUE IDIOSYNCRATIC FACTORS
  • SOME OFFICIALS CONCERNED BY WEAK INFLATION, ARGUE FOR PATIENCE

The key segments, courtesy of Bloomberg:

On the start of balance sheet unwind:

  • “Although several participants were prepared to announce a starting date for the program at the current meeting, most preferred to defer that decision until an upcoming meeting while accumulating additional information on the economic outlook and developments potentially affecting financial markets.”

More on timing:

  • “Participants generally agreed that, in light of their current assessment of economic conditions and the outlook, it was appropriate to signal that implementation of the program likely would begin relatively soon, absent significant adverse developments in the economy or in financial markets. Many noted that the program was expected to contribute only modestly to the reduction in policy accommodation.”

On inflation:

  • “Most participants indicated that they expected inflation to pick up over the next couple of years from its current low level and to stabilize around the Committee’s 2 percent objective over the medium term.”
  • “Many participants, however, saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.”
  • “Many participants noted that much of the recent decline in inflation had probably reflected idiosyncratic factors.”
  • “Participants agreed that a fall in longer-term inflation expectations would be undesirable, but they differed in their assessments of whether inflation expectations were well anchored.”
  • “A few participants cited evidence suggesting that this framework was not particularly useful in forecasting inflation. However, most participants thought that the framework remained valid, notwithstanding the recent absence of a pickup in inflation in the face of a tightening labor market and real GDP growth in excess of their estimates of its potential rate.”
  • “Some participants expressed concern about the recent decline in inflation, which had occurred even as resource utilization had tightened, and noted their increased uncertainty about the outlook for inflation.”

On a possible overshoot in the labor market:

“A few participants expressed concerns about the possibility of substantially overshooting full employment, with one citing past difficulties in achieving a soft landing.”

On rising lending risks:

  • “A couple of participants expressed concern that smaller banks could be assuming significant risks in efforts to expand their CRE lending.”

On policy uncertainty:

  • “Several participants noted that uncertainty about the course of federal government policy, including in the areas of fiscal policy, trade, and health care, was tending to weigh down firms’ spending and hiring plans.”
  • “It was also observed that the budgets of some state and local governments were under strain, limiting growth in their expenditures. In contrast, the prospects for U.S. exports had been boosted by a brighter international economic outlook.”

The now traditional commentary on markets and financial conditions.

  • Several participants noted that the further increases in equity prices, together with continued low longer-term interest rates, had led to an easing of financial conditions. However, different assessments were expressed about the implications of this development for the outlook for aggregate demand and, consequently, appropriate monetary policy.
  • According to another view, recent rises in equity prices might be part of a broad-based adjustment of asset prices to changes in longer-term financial conditions, importantly including a lower neutral real interest rate, and, therefore, the recent equity price increases might not provide much additional impetus to aggregate spending on goods and services.

On equity valuations:

  • “Participants also considered equity valuations in their discussion of financial stability. A couple of participants noted that favorable macroeconomic factors provided backing for current equity valuations; in addition, as recent equity price increases did not seem to stem importantly from greater use of leverage by investors, these increases might not pose appreciable risks to financial stability.”

And the punchline as regards to stocks:

  • According to one view, the easing of financial conditions meant that the economic effects of the Committee’s actions in gradually removing policy accommodation had been largely offset by other factors influencing financial markets, and that a tighter monetary policy than otherwise was warranted.

Of course, any confusion in these minutes can always be cleaned up next week at Jackson Hole.

* * *

Key conclusions:

  • As expected, September remains in play for balance-sheet announcement, though no specific timetable mentioned
  • Most FOMC participants preferred to announce the start of the balance-sheet runoff at “an upcoming meeting,” while “several” were ready to go in July
  • Inflation debate deepens. Most officials expected inflation to pick up next couple years and stabilize around 2%; many saw chances inflation may stay below that level for longer than expected
  • Some Fed officials see scope for rate-hike patience, others caution a delay could lead to inflation overshoot
  • FOMC united against a loosening of financial regulations that would allow for risky practices;
  • The Fed is concerned about policy uncertainty hurting investment
  • FOMC discussed equities, agreed to monitor bank behavior; some concern expressed about small-banks’ risk in commercial real-estate lending

*  *  *

Rate hike odds for December are around 42% – unchanged from the FOMC Statement in July…

 

Not what The Fed was hoping for…

 

The dollar is unchanged but bonds are bid…

 

Why is the FOMC considering raising rates again this year? Bloomberg notes one reason is concern about asset prices and the potential from the unwinding of a bubble. This could well have been debated, with, for example, Eric Rosengren of Boston particularly worried about commercial real estate, while Yellen has cited stock prices as being elevated.

 

Of course, that’s not how the market sees it…

 

Full FOMC Minutes below:

 

 

If the USA government would remove mortgage deductibility from their taxes, house prices would collapse and put many under water. It would also kill the charitable organizations

 

(courtesy zerohedge)

 

Realtors Warn Of “Another Housing Crash” If Mortgage Tax Deductions Are Scrapped

After failing miserably if their efforts to repeal and replace Obamacare, Republicans are set to shift their legislative agenda to focus on tax reform when they get back from their generous month-long August recess (taxpayers are such great employers).  Among other things, proposed changes to the personal tax code would include eliminating nearly all tax write-offs, including those for state and local taxes, and instead doubling the standard deduction.

Of course, potentially no industry would be more impacted by such a move as the housing market which has sparked a slight panic at the National Association of Realtors (NAR).  As Reuters points out this morning, roughly 30 million taxpayers taxpayers claim mortgage interest deductions totaling some $70 billion each year which provides a huge incentive to own a home.

The National Association of Realtors issued an “August Recess Talking Points” circular imploring members to remind lawmakers that “Homeowners must be treated fairly in tax reform” to avoid “another housing crash.”

 

The group cited a report it commissioned from PwC that estimated home values could quickly dive more than 10 percent if the tax plan becomes law.

 

Currently, about 30 million taxpayers claim the mortgage interest deduction, with about $70 billion in total claims, according to Robert Dietz, an economist with the National Association of Homebuilders.

 

Estimates suggest more than half of taxpayers would stop itemizing under the proposed plan, Dietz said, warning that this would create a large ripple effect through the economy. He said people in early years of a mortgage would suffer most, along with prospective home buyers.

 

Meanwhile, talking points distributed by NAR, intended to give realtors around the country ammunition against their elected officials while they’re ‘vacationing’ in their districts, warns that tampering with the mortgage deduction could cause “home values everywhere to plunge” resulting in many homeowners once again going “under water” on their primary asset.

–  Proposals limiting tax incentives for homeownership would cause home values everywhere to plunge. Estimates provided by PwC show that values could fall in the short run by more than 10 percent if a Blueprint-like tax reform plan were enacted. The drop could be even larger in high-cost areas.   It may take years for home values to rebound from such a significant decrease.

 

–  With a reduction in values of this size, homeowners with relatively small amounts of equity would again see their mortgages go under water, finding they owe more than what their home is worth. For many, this will lead to defaults, foreclosures, or short sales, creating havoc for families, neighborhoods and communities.

 

–  The home is the most valuable asset for most owners. Millions of families have built equity for years with the hope of using it to help pay for retirement or college for children. Many of these dreams would evaporate.

But it’s not just the housing market that would be impacted as the CEO of the American Red Cross warned that removing charitable deductions would be “devastating” for non-profit organizationsthat currently collect some $13 billion worth of tax-deductible donations annually.

Charitable organizations are not arguing against increasing the standard deduction. But they are asking members of Congress to consider creating a “universal deduction,” so taxpayers taking the standard deduction can get additional credit for donations without itemizing.

 

Taxpayers claim an estimated $13 billion each year in charitable deductions. Charities fear giving would plummet if the standard deduction were doubled without creating a universal deduction.

 

Gail McGovern, president and CEO of the American Red Cross, said reducing charitable deductions would be “devastating.”

But it’s probably no ‘yuge’ deal…the U.S. housing stock is only worth about $30 trillion so we’re sure the homebuilders and lenders can absorb a small $3 trillion valuation loss, right?

 end Trump lashes out at Jeff Bezos of Amazon as he states that he is doing great damage to retailers something that we have been pointing out.  He states that he is hurting cities and of course jobs (courtesy zero hedge) Trump Lashes Out At Bezos: “Amazon Is Doing Great Damage To Retailers; Hurting Cities And Jobs”

Amazon stock dropped a much as 1.2% in the pre-market (down 0.7% last), after an early start of the Trump tweets on Wednesday where with his first tweet he attacked the giant online retailer, saying “Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”

Donald J. Trump 

@realDonaldTrump

Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!

Trump’s comment hardly conveys new information, and underscores what Dick’s CEO Ed Stack said yesterday during his striking conference call in which he said the retail industry is in “panic mode”, liquidating inventory to keep market share, and hit by a “perfect storm” in which Amazon is a key culprit:  “Dick’s is another example of Amazon becoming the new middleman… Here we go down the gross margin rabbit hole just in time for the holidays.”

The question, of course, is whether the tweet is indicative of another policy shift by the Trump administration, one in which the president will focus on the giant online retailer as a potential monopoly and bring up anti-trust considerations, potentially sparking fears of a government mandated break up. Of course, Trump’s tweet may have simply been prompted by something he read in the Bezos-owned WaPo this morning, resulting in the angry tweet.

Indicatively, last week Defense Secretary James Mattis visited Amazon’s HQ in Seattle, where CEO Jeff Bezos posted a photo of him showing Mattis around the headquarters.

 

 

end

 

Seems that June’s starts and permits was another of those false reports:  July reports a huge plunge in both starts and permits as well as a collapse in rental units..the USA economy is not performing well!

(courtesy zerohedge)

 

Housing Recovery False Alarm – Starts, Permits Plunge In July As Rental Units Collapse

Following June’s huge surprise jumps in Housing Starts (revised lower) and Building Permits (revised notably higher), July saw both starts and permits plunge (-4.8% and -4.1% respectively) dramatically missing expectations. The majority of the plunge is driven by multi-family starts crashing 35.2% YoY to its lowest since Sept 2016.

 

Permits’ 7.4% June surge was revised up to a 9.2% spike (the biggest since Nov 2015) before July’s plunge.

 

Multi-Family Starts plunged to the lowest levels since September 2016…

 

This is a 5.6% slump in Housing Starts…

With Multifamily starts crashing 17.1% sequentially and 35.2% year-over-year – this is the 5th month in a row of year-over-declines…something that hasn’t happened outside of recession

 

Permits drop was also dominated by multi-family…

 

The Northwest and Midwest saw over 15% crashes in starts MoM but The South dominates the trend with a 16.5% collapse year-over-year.

 

end

Another dandy commentary from David Stockman.  He tells the real truth behind the strength of the uSA economy. He feels that the real crunch will come next month when the debt ceiling stops the uSA dead in its tracks and nothing will be done due to the fractured nature of Republicans and the hatred between the Democrats and Republicans (courtesy David Stockman/DailyReckoning)

 

After 100 Months Of Buying-The-Dip – Stockman Warns Of “Peak Crazy”

Authored by David Stockman via The Daily Reckoning,

Just call it Peak Crazy and move on. There is absolutely no reason for the stock markets to be at current levels, let alone melting-up day after day. The fact that this is happening is a measure of how impaired capital markets have become as a result of massive central bank intrusion.

The robo-machines and day traders keep buying the dips because that has “worked” for the last 100 months. There is nothing more to it than residual momentum.

Under a regime of honest money and price discovery, the stock market discounts the future. There is no plausible future from here that’s worth 24 times S&P 500 value or 96 times the Russell 2000.

Surely the year-ahead earnings boom that Wall Street’s artists have penciled in is not in the slightest bit plausible. With 84% of the S&P 500 reporting Q2 results, LTM earnings are still 1.3% below where they were in September 2014.

Nothing has happened to corporate earnings in the last three years except deflation in the energy, materials and industrial sectors. After hitting $106 per share in September 2014, the global deflation cycle brought them to a low point of $86.44 per share in March 2016 in response to low $30s oil prices. The latter has since recovered to the $50 dollar zone – bringing S&P 500 earnings back to $104.61 during the current quarter.

The question remains: How does an aging business cycle and immense global headwinds justify the expectation of a red hot earnings breakout during the next 18 months? Yet that’s what’s happening on Wall Street. We’ve hit nearly $133 per share of GAAP earnings (and $145 of the ex-items variety) for the LTM period ending in December 2018, meaning a prospective surge of 27%.

Even if you credit Wall Street’s ex-items approach to operating earnings, the story is the same. Why will the eventual 2018 outcome be any different than the cliff-diving of the last three years?

As things stand, 2018 expectations look way elevated.

The current earnings growth estimated for 2018 would amount to more than the 23% gain that has been recorded during the past decade!

In June 2007, reported LTM earnings for the S&P 500 was posted at $85 per share. That would mean that earnings have grown at the tepid rate of 2.1% per annum for the last 10-years; and those are nominal dollars.

Take out inflation and share buybacks and there’s essentially no gain at all on a peak-to-peak basis.

When it comes to robo-traders, there are some very powerful muscle memory aspects pushing the averages relentlessly higher. It’s the deformation you get when the normal mechanisms of market discipline, such as short sellers and economic pricing of options and hedges, that are destroyed by wealth effects based central planning.

It is Wall Street’s extreme vulnerability to violent crashes that come when two-way markets are destroyed in the name of tricking people into believing they are wealthier than they actually are. The bubble reaches its height and then there is nothing left below because stock prices have become decoupled from economic and profit fundamentals.

The financial truth remains that nothing grows to the sky, including the Dow index. The cracks are already emerging all around. The end-of-bubble narrowing to fewer and fewer big cap safe havens is proceeding rapidly.

Since July 25, before Amazon’s big earnings miss, most of the market had been falling or treading water. While the Dow is up by 2.2%, the transports were down by 2.8% and the Russell 2000 is off by 2.6%. The S&P 500 equal weight index is off by 0.8% and even the NASDAQ 100 is 0.5% below its July 25th level.

In this machine driven market, any of these indices could resume their mad momentum based climb. But negative divergences are breaking out everywhere, and that’s usually a sign that the end is near.

Margins on debt has again reached an all-time high of $550 billion. The chart below leaves little doubt as to what comes next. After the 2000 peak, margin debt collapsed by 50% as stocks were violently liquidated to meet margin calls. All this while in 2008 the shrinkage of margin debt was even larger – nearly 60%. This time, however, a similar shrinkage would cause a $325 billion decline in margin balances.That’s a lot of stocks on a fire sale.

The casino will eventually collapse under its own weight, even as the fractures and divergences continue to mount.

The economic Swans are coming. If Trump’s continued tweet-storms are any indication, the first Swan is likely to be Orange. The fact is, the occupant of the Oval Office is flat-out delusional and unhinged.

Within 4-5 weeks Trump will be impaled on a debt ceiling and continuing resolution crisis which will suck all the air from the governance process in Washington. The event will make a mockery of the White House pitch and any belief for House action on the tax bill in October.

The only thing which will happen by year-end on Capitol Hill is an inglorious defeat on ObamaCare repeal (instead, there will be an insurance company bailout in return for some tiny changes in the ObamaCare insurance mandates). Expect repeated short-term patches on the debt ceiling and continuing resolutions that will manage to keep the lights on in the Washington Monument a few weeks at a time.

We seriously doubt the Donald will survive the market crash which is likely to be triggered by the unexpected fiscal bloodbath just around the corner. From there he will rue the day that he left Janet Yellen at the Fed in place, rather than allowing the “big fat, ugly bubble” to collapse on their account in January.

Now that Trump and his surrogates are taking ownership of a hideously over-valued stock market, there’s little doubt that the coming crash will be the straw that breaks the camel’s back.

As we have previously noted, Tricky Dick’s election in 1972 was also treated with a 15% market bump. And that was on the back of a 42-28 million vote landslide and running the tables on the electoral college with 504 votes.

Nixon appeared to be especially invincible in January 1973 because he had spent 27 years on the GOP circuit. He had spoke for more GOP politicians and candidates than any President in recorded history, before or since.

Still, the Nixon bubble evaporated steadily – dropping by more than one-third until Tricky Dick was shown his way out of the White House.

It now seems likely that Trump Bubble’s collapse will be far faster, deeper and more violent. The Orange Swan is what now hangs over the market like the Sword of Damocles. The question is only about when, not if, it comes plunging down on a casino mad with Peak Crazy.

end

 

As many advisers to the Trump manufacturing council and Policy forum left, the President decided to disband the council in its entirety.  Seems the administration is falling apart.  Gold and silver rise on the news.

(courtesy zerohedge)

Trump Disbands Manufacturing Council & Strategy & Policy Forum; Pence Ends LatAm Trip Early

While the CEOs within the various administration councils had decided to disband, President Trump has tweeted over the top to give the appearance that he decided to shut them down…

Donald J. Trump 

@realDonaldTrump

Rather than putting pressure on the businesspeople of the Manufacturing Council & Strategy & Policy Forum, I am ending both. Thank you all!

 

 

As we detailed earlier, with CEOs dropping like flies from Trump’s manufacturing councel, with 3M and Campbell Soup CEOs announcing they are out, CNBC reports that President Trump’s Strategic and Policy Forum has agreed to disband.  The business advisory council is, or rather was, made up of top business leaders is separate from Trump’s manufacturing council, which several business leaders left this week.

The Strategic and Policy Forum, led by Blackstone CEO Steve Schwarzman, featured, among others:

  • JPMorgan Chase’s Jamie Dimon
  • BlackRock’s Larry Fink
  • Wal-Mart’s Doug McMillon
  • IBM’s Ginni Rometty

“The thinking was it was important to do as a group,” a member told CNBC. “As a panel, not as individuals because it would have more significant impact. It makes a central point that it’s not going to go forward. It’s done.”

Bloomberg confirms that Trump’s council of senior business leaders who advise on strategy and policy is disbanding, according to a person familiar with the matter.

The executive council, which is led by Blackstone Group LP’s Stephen Schwarzman, planned to inform the White House Wednesday before making the announcement public, according to the person, who wasn’t authorized to discuss the matter publicly.

 

The strategy group is one of several the White House convened earlier this year to advise the president.

 

Several CEOs from a manufacturing council have quit this week, following blowback over Trump’s remarks about racially charged violence in Virginia on Saturday.

This follows the mass exodus of CEOs, most recently 3M and Campbell CEOs. Inge Thulin, the chairman and CEO of 3M , on Wednesday announced his resignation from President Donald Trump’s manufacturing council.

“Sustainability, diversity and inclusion are my personal values and also fundamental to the 3M Vision. The past few months have provided me with an opportunity to reflect upon my commitment to these values,” he said in a statement. “I joined the Manufacturing Jobs Initiative in January to advocate for policies that align with our values and encourage even stronger investment and job growth – in order to make the United States stronger, healthier and more prosperous for all people. After careful consideration, I believe the initiative is no longer an effective vehicle for 3M to advance these goals. As a result, today I am resigning from the Manufacturing Advisory Council. At 3M, we will continue to champion an environment that supports sustainability, diversity and inclusion. I am committed to building a company that improves lives in every corner of the world.”

And Campbell Soup Company CEO left shortly after:

Richard Trumka, Thea Lee resign from Pres. Trump’s manufacturing council: “We cannot sit on a council for a president who tolerates bigotry” pic.twitter.com/lE7Zi566II

ABC News 

@ABC

NEW: Inge Thulin, Pres. and CEO of 3M, resigns from Trump’s manufacturing council: “We will continue to champion…diversity and inclusion.” pic.twitter.com/914A2G2Z9z

12:29 PM – Aug 16, 2017

They join Merck CEO Kenneth Frazier, Under Armour’s Kevin Plank, Intel’s Brian Krzanich, Alliance for American Manufacturing president Scott Paul and AFL-CIO president Richard Trumpka in exiting the council, which is headed by Dow Chemical CEO Andrew Liveris. Thea Lee, former deputy chief of staff of the AFL-CIO, said on Twitter she is quitting the council as well.

Tesla’s Elon Musk and Disney’s Bob Iger in June dropped out of a strategic and policy forum to the president following his decision to withdraw the United States from the Paris climate accord. Since-ousted Uber CEO Travis Kalanick quit the council in February over employee backlash.

As a reminder, President Trump tweeted yesterday:

“For every CEO that drops out of the Manufacturing Council, I have many to take their place. Grandstanders should not have gone on. JOBS!”

That remains to be seen, meanwhile VP Pence just made statement confirming he will be returning early from his LatAm trip:

  • PENCE: WILL END TRIP A BIT EARLY AFTER PANAMA VISIT
  • PENCE SAYS HE’S RETURNING TO U.S. TOMORROW FROM LATIN AMERICA

end

Jamie Dimon to his staff: He “strongly disagrees with President Trump’s reaction re Charlotteville

(courtesy zero hedge)

Jamie Dimon’s Memo To JPMorgan Employees: “I Strongly Disagree With President Trump’s Reaction”

With Trump’s key economic advisory forums now disbanded following a mass exodus of corporate CEOs, moments ago JPM CEO Jamie Dimon joined the pile up stating that “the members of the President’s Strategic and Policy Forum agreed to disband” and noting that “the group put out its own statement” he wanted “you to understand why I personally supported this decision and how strongly I feel about these issues.”

His argument:

…fanning divisiveness is not the answer. Constructive economic and regulatory policies are not enough and will not matter if we do not address the divisions in our country. It is a leader’s role, in business or government, to bring people together, not tear them apart.

 

Racism, intolerance and violence are always wrong. The equal treatment of all people is one of our nation’s bedrock principles. There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity.

The full message from Dimon follows:

I strongly disagree with President Trump’s reaction to the events that took place in Charlottesville over the past several days. Racism, intolerance and violence are always wrong. The equal treatment of all people is one of our nation’s bedrock principles. There is no room for equivocation here: the evil on display by these perpetrators of hate should be condemned and has no place in a country that draws strength from our diversity and humanity.

 

As a company and for all business in general, it is critical that we help develop rational, intelligent policies to help expand opportunities for all of our citizens. I know that times are tough for many. The lack of economic growth and opportunity has led to deep and understandable frustration among so many Americans. But fanning divisiveness is not the answer. Constructive economic and regulatory policies are not enough and will not matter if we do not address the divisions in our country. It is a leader’s role, in business or government, to bring people together, not tear them apart.

 

Today, the members of the President’s Strategic and Policy Forum agreed to disband. The group put out its own statement. But I also wanted you to understand why I personally supported this decision and how strongly I feel about these issues.

 

I’m very proud of the 250,000 people working here at JPMorgan Chase. I see your values every day – in how you treat your clients, your communities and each other. I am proud to see so many of you leading by example and not losing sight of the core principles which made our country great. I stand with you.

end

 

it now seems that a company hired a “crowd” for 25 dollars per hour recruiting political activists and these individuals landed in Charlottesville

 

(courtesy zero hedge)_

 

Why Was This ‘Crowd Hire’ Company Recruiting $25 An Hour ‘Political Activists’ In Charlottesville Last Week?

Trump ignited a political firestorm yesterday during an impromptu press conference in which he said there was “blame on both sides” for the tragic events that occurred in Charlottesville over the weekend.

Now, the discovery of a craigslist ad posted last Monday, almost a full week before the Charlottesville protests, is raising new questions over whether paid protesters were sourced by a Los Angeles based “public relations firm specializing in innovative events” to serve as agitators in counterprotests.

The ad was posted by a company called “Crowds on Demand” and offered $25 per hour to “actors and photographers” to participate in events in the “Charlotte, NC area.”  While the ad didn’t explicitly define a role to be filled by its crowd of “actors and photographers” it did ask applicants to comment on whether they were “ok with participating in peaceful protests.”  Here is the text from the ad:

Actors and Photographers Wanted in Charlotte

 

Crowds on Demand, a Los Angeles-based Public Relations firm specializing in innovative events, is looking for enthusiastic actors and photographers in the Charlotte, NC area to participate in our events. Our events include everything from rallies to protests to corporate PR stunts to celebrity scenes. The biggest qualification is enthusiasm, a “can-do” spirit. Pay will vary by event but typically is $25+ per hour plus reimbursements for gas/parking/Uber/public transit.

 

For more information about us, please visit www.crowdsondemand.com

 

If you’re interested in working with us, please reply to this posting with the following info:

  • Full Name
  • Prior relevant experience (as an actor/performer, photographer, brand ambassador, political activist, etc)
  • When are you usually available for work?
  • Resume (optional)
  • If you’re a photographer, what equipment do you use?
  • Are you ok with participating in peaceful protests (optional)?

And a screenshot of the original post:

 

So what is “Crowds on Demand?”  According to their own website, they’re in the business of sourcing large crowds of people to “provide clients with protests, rallies, [and] flash-mobs” all over the country.  They even have an entire page on their website dedicated to “Protests and Rallies.”

Are you looking to create a buzz anywhere in the United States? At Crowds on Demand, we provide our clients with protests, rallies, flash-mobs, paparazzi events and other inventive PR stunts. These services are available across the country in every major U.S city, every major U.S metro area and even most smaller cities as well. We provide everything including the people, the materials and even the ideas. You can come to us with a specific plan of action and we can make it happen. OR, you can approach us with a general  idea and we can help you plan the strategy then execute it.

 

We’ve made campaigns involving hundreds of people come to action in just days. We have a proven record of delivering major wins on even the toughest campaigns and delivering phenomenal experiences with even the most logistically challenging events.

The CEO of Crowds on Demand denied to Snopes that his firm was involved in the Charlottesville protests but refused to provide details on the specific purpose of the craigslist ad and/or why it was temporarily removed yesterday before being restored.

“We were not involved in any capacity with the recent tragic events in Charlottesville, Virginia. Our thoughts and prayers are with the families of those impacted by the violence”

Silly question, but if your cause is worthy of protest then why would you need to pay $25 per hour to get people to show up?

 end

 

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you THURSDAY  night

Harvey.


August 15/ANOTHER RAID BY THE CROOKED BANKERS: GOLD DOWN $11.00 AND SILVER DOWN 44 CENTS/KIM AND TRUMP SILENT ON THE NORTH KOREAN POWDER KEG/CHINA REINS IN ITS SHADOW BANKING SECTOR AND WE SHOULD EXPECT BANK RUNS SHORTLY/CARNAGE IN THE USA RESTAURANT...

Tue, 08/15/2017 - 18:43

GOLD: $1273.70  DOWN $11.00

Silver: $16.70  DOWN 44 cent(s)

Closing access prices:

Gold $1271.90

silver: $16.64

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1281.93 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1274.90

PREMIUM FIRST FIX:  $5.02

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1279.81

NY GOLD PRICE AT THE EXACT SAME TIME: $1274.15

Premium of Shanghai 2nd fix/NY:$5.66

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1274.60

NY PRICING AT THE EXACT SAME TIME: $1274.80 

LONDON SECOND GOLD FIX  10 AM: $1282.30

NY PRICING AT THE EXACT SAME TIME. $1282.30 

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 26 NOTICE(S) FOR  2600  OZ.

TOTAL NOTICES SO FAR: 4547 FOR 454700 OZ (14.14 TONNES) 

For silver: AUGUST  70 NOTICES FILED TODAY FOR 350,000  OZ/ Total number of notices filed so far this month: 900 for 4,500,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

 

Today, the bankers succeeded in their raid on both gold and silver. The open interest in silver continues to fall despite a rise in price (yesterday) and it sure looks like banker capitulation as they try to extricate themselves from their mess. It will be important to see how much open interest in both gold and silver evaporated.  It will get the numbers late tonight  (after 11 pm) and I will insert them between the xxx’s

 

 

xxxxxxxxx

preliminary OI for tonight 11 pm est  xxxxxxx

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest SURPRISINGLY FELL AGAIN BY  573 contracts from 189,478 DOWN TO 188,905 DESPITE THE  RISE IN THE PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP 6 CENT(S) AND THE FAILED RAID. SIMPLE EXPLANATION SAME STORY AS YESTERDAY: THE BANKERS HAVE CAPITULATED….THEY ARE TRYING TO COVER THEIR SHORTFALL AT HIGHER AND HIGHER PRICES. THE BANKERS ARE HAVING EXTREME DIFFICULTY IN SUPPLYING ADDITIONAL SHORT PAPER AND LONGS CONTINUE TO ADVANCE TAKING ON THE BANKER SHORTS. THE BATTLE OF WATERLOO WILL BE FAST APPROACHING 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.945 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 70 NOTICE(S) FOR 350,000  OZ OF SILVER

In gold, the open interest FELL by A TINY 772 WITH the FALL in price of gold ($3.10 GAIN YESTERDAY.)  The new OI for the gold complex rests at 480,143. A raid was called upon by the bankers and it failed.  The bankers supplied the short paper but just as many longs entered the arena as banker shorts covered.  Thus a small gain in open interest.

we had: 26 notice(s) filed upon for 2600 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, no changes in gold inventory:

Inventory rests tonight: 791.01 tonnes

IN THE LAST 22 TRADING DAYS: GLD SHEDS 45.96 TONNES YET GOLD IS HIGHER BY $35.85 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 335.825 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FALL BY 573 contracts from 189,478 down to 188,905 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787). THE FALL IN OPEN INTEREST WAS ACCOMPANIED BY A SMALL RISE IN PRICE AND FOR THE FIRST TIME WE ARE WITNESSING BANKER CAPITULATION.  BANKERS ARE LOATHE TO SUPPLY NEW SHORT PAPER AND THE LONGS CONTINUE TO ENTER THE ARENA PURCHASING WHATEVER SILVER THEY CAN AND WILLING TO TAKE ON OUR CROOKED BANKERS. 

(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 UP 13.90 POINTS OR 0.43%   / /Hang Sang CLOSED DOWN 75.27 POINTS OR 0.28% The Nikkei closed UP 216.21 POINTS OR 1.11%/Australia’s all ordinaires CLOSED UP 0.43%/Chinese yuan (ONSHORE) closed DOWN at 6.6817/Oil DOWN to 47.37 dollars per barrel for WTI and 50.36 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6930 yuan to the dollar vs 6.6817 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

Mattis warns that the North Korean standoff could escalate into war very quickly

( zero hedge)

ii)Kim is briefed on the Guam attack plan but he then backs off his threat of an imminent missile launch

( zerohedge)

iii)We now have independent scientists who now claim that the payload was light and thus the trajectory of North Korea’s latest launch was higher and thus longer that it ought to be.  Basically these guys suggest that North Korea does not have the capability to hit the USA(courtesy zerohedge)

 

b) REPORT ON JAPAN c) REPORT ON CHINA

 i)The USA is angry at China’s theft of intellectual property.  However they have put off tariffs for a year as Wilbur Ross is set to study the situation and report back.  China is threatening retaliation if the uSA damages trade ties

 

( zero hedge)

ii)Approximately 2 months ago China announced that it was going to rein in its shadow banking industry which totals 9 trillion USA or approximately equates to its GDP. Last night the POBC announced a 64 billion yuan  (9.58 billion USA) drop in outstanding loans. While it looks like the move by the POBC is bearing fruit, the contraction will mostly likely spur a run on all of its banks

( zerohedge)

4. EUROPEAN AFFAIRS 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)IRAN

It seems like  Trump is gearing up to end the nuclear agreement with Iran in October but there will be consequences with its European partners

 

(courtesy ISN Security Watch/OilPrice.com)

ii)To add to the mess globally, Iran will now send a warship flotilla to the West Atlantic as they will build their arsenal.  No doubt they are using the hostage money to build up their weapons.

( zerohedge) 6 .GLOBAL ISSUES

 

(courtesy zero hedge)

7. OIL ISSUES

i)As rig counts continue to rise, production seems to be rising in the Permian basin.  Will this push oil prices down to 40$ per barrel

( I. Slav/Oil Price.com)

ii)WTI lifts towards $48.00 after a huge draw

( zerohedge) 8. EMERGING MARKET 9.   PHYSICAL MARKETS

i)Overnight, bitcoin after reaching $4400 drops 500 to hit $3900

( zerohedge)

ii)James Turk seems to support my thinking that central bank suppression is about to break for silver

( James Turk/Kingworldnews)

iii)The geopolitical landscape, especially the Korean situation plus USA home grown problems is causing the dollar’s fall and this may precipitate into further declines ( Kimberley/South China Morning post, Hong Kong) 10. USA Stories

 

i)I have been highlighting to you the 3 major debt categories inside household debt for uSA citizens:

i) revolving credit (credit card debt)

ii) student loan debt

iii) auto loan debt

although mortgages represents the largest category for household debt, it is the above 3 that are signalling trouble for citizens. The Fed has now sounded the alarm bell on the above

( zerohedge)

ii)the USA restaurant business is now in a mess as people just shy away from eating out.  As far are discretionary spending is concerned, this seems to be the first to take a hit.

Can someone explain then how could the BLS report an increase in bartenders and waitresses with this going on?

 

( zero hedge)

iii)We have been also highlighting to you the plight of used car prices. The lower the prices for used car means trouble selling brand new cards.  They have to offer incentives in order to sell.

 

e.g. a brand new car selling for $40,000 as 0 dollars down and 80 months at 0 interest

real problems in the auto sector

( zerohedge)

iv) Retail sales rebound in July but it must be due to huge incentives offered by the auto dealers and dept stores

 

( zero hedge)

v)One analyst just does not believe those retail numbers today

( zerohedge)

vi)Take this with a grain of salt:  the New York Manufacturing Fed surges the highest in 3 years despite profit margins getting crushed

( NYFed Manufacturing Index/zerohedge)

vii)Bricks and Mortar operations continue on its death knell

( zerohedge)

 

viii)Dick’s CEO claims that the retail industry is now in panic mode as they cut prices to stay alive

 

( zerohedge)

ix)The CBO states that if Trump does not pay the Obamacare subsidies in 2018, then premiums will surge around 20% per year and worse: Trump will be blamed

 

( zerohedge)

Let us head over to the comex:

The total gold comex open interest FELL BY A tiny 772 CONTRACTS UP to an OI level of 480,143 WITH THE FALL IN THE PRICE OF GOLD ($3.10 with MONDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY NOTICING THE FAILED RAID IN YESTERDAY’S TRADING.  THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER. NEWBIE SPEC SHORTS ARE NOW COMPLETELY OUT OF THEIR POSITIONS. AS I MENTIONED YESTERDAY: “THE HUGE RISE IN OPEN INTEREST THESE PAST COUPLE OF DAYS WILL BE ADDITIONAL FODDER FOR THE CROOKS TO RAID IN THE COMING WEEK.”

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 187 contract(s) to stand at 1069 contracts. We had 34 notices filed on YESTERDAY so we LOST A HUGE 153 contracts or an additional 15,300 oz will NOT stand at the comex and 153 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI LOSE 141 contracts DOWN to 1444.

The next active contract month is Oct and here we saw a GAIN of 520 contracts UP to 50,726.

The very big active December contract month saw it’s OI GAIN 1425 contracts UP to 373,043.

We had 26 notice(s) filed upon today for   2600 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI SURPRISINGLY FELL BY 573 CONTRACTS FROM 189,478  DOWN TO 188,905 DESPITE YESTERDAY’S 4 CENT GAIN.  THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER ARE CHOKING THEM TO DEATH. I HAVE WARNED YOU, THE NOOSE IS GETTING TIGHTER AROUND OUR FRIENDLY BANKERS’ NECKS. NO DOUBT THAT THE HUGE DELAY IN SILVER DELIVERIES (IN LONDON) ACCOMPANIED WITH THE HUGE GLOBAL DEMAND FOR SILVER IS FINALLY WEIGHING IN ON OUR CROOKS.  NEWBIE SPEC LONGS ENTERED THE SILVER COMPLEX YESTERDAY WITNESSING THE FAILED RAID. ON THE SUPPLY SIDE: THE BANKERS WERE JUST PLAIN FRIGHTENED TO SUPPLY THE NECESSARY PAPER. THUS A  DECLINE IN SILVER OI WITH A SMALL SIZED RISE IN PRICE.

We are now in the next big non active silver contract month of August and here the OI ROSE 21 contracts UP TO 140. We had 20 notice(s) filed yesterday.  Thus we GAINED A MONSTROUS 41 contract(s) or an additional 205,000 oz will stand for delivery in this non active month of August and AGAIN zero EFP’s were issued for the August contract month. Please note that in gold we continually see EFP’s issued but not in silver!!

The next active contract month is September (and the last active month until December) saw it’s OI fall by 2075 contacts down to 101,652.  The next non active contract month for silver after September is October and here the OI gained 16 contacts up TO 112. After October, the big active contract month is December and here the OI GAINED by 1,598 contracts UP to 76,332 contracts.

We had 70 notice(s) filed for 350,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

YESTERDAY’S confirmed volume was 249,054

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 15/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   nil oz Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   26 notice(s) 2600 OZ No of oz to be served (notices) 1043 contracts (104,300 oz) Total monthly oz gold served (contracts) so far this month 4547 notices 454,700 oz 14.14 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   19,750.2  oz Today we HAD  0 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 0  customer deposit(s): total customer deposits;  nil  oz We had 0 customer withdrawal(s) total customer withdrawals;  nil oz  we had 0 adjustment(s)   For AUGUST:

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 26  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4547) x 100 oz or 454,700 oz, to which we add the difference between the open interest for the front month of AUGUST (1069 contracts) minus the number of notices served upon today (26) x 100 oz per contract equals 559,000  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4547) x 100 oz  or ounces + {(1069)OI for the front month  minus the number of  notices served upon today (26) x 100 oz which equals 559,000 oz standing in this  active delivery month of AUGUST  (17.387 tonnes)  we lost 153 contracts or an additional 15300 oz will not stand for delivery and 153 EFP’s for August were issued. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,510.492 or 23.59 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,632,167.752 or 268.49 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.49 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 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 12 MONTHS  85 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 15 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 94,277.15 oz Brinks CNT Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  2943.700 oz CNT No of oz served today (contracts) 70 CONTRACT(S) (350,000 OZ) No of oz to be served (notices) 70 contracts ( 350,000 oz) Total monthly oz silver served (contracts) 900 contracts (4,500,000 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 2,150,413.6 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 3 customer withdrawal(s): ii) out of Brinks: 1,000.000 oz ??? ii) out of Delaware:  3038.483 oz iii) out of Scotia: 741,685.48 oz TOTAL CUSTOMER WITHDRAWALS:  745,723.963 oz We had 2 Customer deposit(s):  i) Into Brinks:  235,300.328 oz ii) Into Scotia:  642,090.95 ***deposits into JPMorgan have stopped  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: 877,391.270 oz    we had 0 adjustment(s) The total number of notices filed today for the AUGUST. contract month is represented by 70 contract(s) for 350,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 900 x 5,000 oz  = 4,500,000 oz to which we add the difference between the open interest for the front month of AUGUST (140) and the number of notices served upon today (70) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  900 (notices served so far)x 5000 oz  + OI for front month of AUGUST(140 ) -number of notices served upon today (70)x 5000 oz  equals  4,850,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 21 contracts or an additional 205,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month. At this point in the delivery cycle last year on August 15/2016 we had 108,939 contracts standing vs this yr at 101,974. Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex YESTERDAY’s  confirmed volume was 81,192 contracts which is OUT OF THIS WORLD FRIDAY’S CONFIRMED VOLUME OF 108 994 CONTRACTS WHICH EQUATES TO 405 MILLION OZ OF SILVER OR 58% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.348 million (close to record low inventory   Total number of dealer and customer silver:   216.113 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 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 7.7% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.4% Percentage of fund in silver:37.6% cash .+0.0%( August 15/2017)  2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO +0.53% (August 15/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.50% to NAV  (August 15/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.53/Sprott physical gold trust is back into NEGATIVE/ territory at -0.50%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 15/no change in gold inventory at the GLD/inventory rests at 791.01 tonnes

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 15 /2017/ Inventory rests tonight at 791.01 tonnes *IN LAST 213 TRADING DAYS: 158.87 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 151 TRADING DAYS: A NET  1.44 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY. *FROM FEB 1/2017: A NET  18.25 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 15/no change in silver inventory at the SLV/Inventory rests at 335.825 million oz.

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

August 15.2017:

 Inventory 335.825  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.32%
  • 12 Month MM GOFO + 1.48%
  • 30 day trend

end

Major gold/silver trading/commentaries for TUESDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Diversify Into Gold Urges Dalio on Linkedin – “Militaristic Leaders Playing Chicken Risks Hellacious War” By Mark O’Byrne August 15, 2017 0 Comments

– Don’t let “traditional biases” stop you from diversifying into gold – Dalio on Linkedin
– “Risks are now rising and do not appear appropriately priced in” warns founder of world’s largest hedge fund
– Geo-political risk from North Korea & “risk of hellacious war”
– Risk that U.S. debt ceiling not raised; technical US default
– Safe haven gold likely to benefit by more than dollar, treasuries
– Investors should allocate at least 5% to 10% of assets to gold
– “If you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this”
– “If you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us …”

Image courtesy of Quotefancy


by Ray Dalio via Linkedin

There are returns, and there are risks. We think of them individually, and then we combine them into a portfolio.

We think of returns and opportunities as coming from those things we’d bet on, and we think of risks as the adverse market consequences of us being wrong due to our being out of balance. We start with our balanced beta portfolio—i.e., that portfolio that would most certainly fund our intended uses of the money.

Everyone should have their own based on their own projected uses of money, though more generally, it’s our All Weather portfolio.

We then create a balanced portfolio of opportunity/alpha bets based on what we think is likely to happen. We then combine them.

We bet on the events/outcomes that we think we have an edge in understanding. For events/outcomes where we don’t think we have a particular edge—e.g., political events—we aim to construct our portfolio to be relatively neutral or balanced to those risks.

Risk and Volatility

As a rule, periods of lower risk/volatility tend to lead to periods of greater risk/volatility. That is reflected in our aggregate market volatility gauge (see below), and markets are pricing in volatility to remain low next year too.

As a related rule, people adapt to the circumstances they have experienced and are then surprised when the future is different than the past.

In other words, most people are inclined to assume that the circumstances they have recently encountered will persist, which leads them to change what they are doing to be consistent with that recently experienced environment.

For example, low-volatility periods in which credit is readily available tend to lead people to assume that it’s safe to borrow more, which leads them to lever up their positions, which contributes to greater volatility and hurts them when things change.

That appears to be the case now—i.e., prospective risks are now rising and do not appear appropriately priced in because of a) a backward looking at risk and b) corporate leveraging up has been high because interest rates are low relative to many companies’ projected ROEs and because past risks have been low.

The emerging risks appear more political than economic, which makes them especially challenging to price in.

Most immediately, during the calm of the August vacation season, we are seeing

1) two confrontational, nationalistic, and militaristic leaders playing chicken with each other, while the world is watching to see which one will be caught bluffing, or if there will be a hellacious war, and

2) the odds of Congress failing to raise the debt ceiling (leading to a technical default, a temporary government shutdown, and increased loss of faith in the effectiveness of our political system) rising.

It’s hard to bet on such things, one way or another, so the best that one can do is be neutral to such possibilities.

When it comes to assessing political matters (especially global geopolitics like the North Korea matter), we are very humble. We know that we don’t have a unique insight that we’d choose to bet on.

Most importantly, we aim to stay liquid, stay diversified, and not be overly exposed to any particular economic outcomes.

We like to hedge our bets, though we are never completely hedged. We can also say that if the above things go badly, it would seem that gold (more than other safe haven assets like the dollar, yen, and treasuries) would benefit, so if you don’t have 5-10% of your assets in gold as a hedge, we’d suggest that you relook at this. 

Don’t let traditional biases, rather than an excellent analysis, stand in the way of you doing this (and if you do have an excellent analysis of why you shouldn’t have such an allocation to gold, we’d appreciate you sharing it with us).

Full article by Dalio on Linkedin here
Follow GoldCore on Linkedin here

News and Commentary

Gold inches lower as N.Korea tensions ease (Reuters.com)

Asian markets bounce back as North Korean threat recedes (MarketWatch.com)

Paulson And Other Hedge Funds Rewarded as Angst Fuels Gold (Bloomberg.com)

Bitcoin Surges Past $4,000 on Speed Breakthrough (Bloomberg.com)

Stocks Surge, Havens Retreat as Korea Fears Wane: Markets Wrap (Bloomberg.com)

 Source: Bloomberg.com

S&P 500’s Biggest Pension Plans Face $382 Billion Funding Gap (Bloomberg.com)

HONG KONG IS HAVING ANOTHER GO AT GOLD TRADING – HERE’S WHY IT WILL SUCCEED THIS TIME (SCMP.com)

Collecting metal: the inner and outer worlds of jewelry, coins, bullion bits, and odd shiny things (UneNumerated)

Black Sky Hazards: Feds To Wargame “Widespread Power Outages” And “Cascading Infrastructure Failures” (ZeroHedge.com)

This Gold Coin Built the Smithsonian (SmithSonIanMag.com)

Gold Prices (LBMA AM)

15 Aug: USD 1,274.60, GBP 986.92 & EUR 1,084.05 per ounce
14 Aug: USD 1,281.10, GBP 987.34 & EUR 1,085.48 per ounce
11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce
09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce
08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce
07 Aug: USD 1,257.55, GBP 963.41 & EUR 1,065.90 per ounce

Silver Prices (LBMA)

15 Aug: USD 16.89, GBP 13.12 & EUR 14.38 per ounce
14 Aug: USD 16.97, GBP 13.09 & EUR 14.39 per ounce
11 Aug: USD 17.09, GBP 13.18 & EUR 14.53 per ounce
10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce
09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce
08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce
07 Aug: USD 16.13, GBP 12.35 & EUR 13.67 per ounce


Recent Market Updates

– Gold Has Yet Another Purpose – Help Fight Cancer
– Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold
– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017
– Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
– What Investors Can Learn From the Japanese Art of Kintsukuroi
– Bitcoin, ICO Risk Versus Immutable Gold and Silver
– This Is Why Shrinkflation Is Making You Poor
– Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble
– Why Surging UK Household Debt Will Cause The Next Crisis

END

Overnight, bitcoin after reaching $4400 drops 500 to hit $3900

(courtesy zerohedge)

Crypto-Carnage – Bitcoin Is Down $500 From Overnight Highs

Cryptocurrencies are crashing this morning…

After a 70% surge following the fork to a new record high at $4400, Bitcoin is getting battered this morning…

 

Dow $500 from overnight highs…

 

As a reminder, Goldman Sachs’ chief technician Sheba Jafari increased her forecast for Bitcoin to over $4800… but warned that the virtual currency could then drop to $2221…

Now that the market is getting closer to reaching this level, it’s going to be important to take note of any/all signs of trend exhaustion.

 

There is of note a 2.618 extension which runs as far as $4,827.

 

 

Once a full 5-wave sequence is in place, the market should in theory enter a corrective phase.

 

This can last at least one third of the time it took to complete the preceding advance and retrace at least 38.2% of the entire move.

 

From current levels, that would measure out to ~2,221.

end

 

James Turk seems to support my thinking that central bank suppression is about to break for silver

(courtesy James Turk/Kingworldnews)

Silver is about to break free of central bank suppression, Turk tells KWN

Submitted by cpowell on Tue, 2017-08-15 00:52. Section: 

8:52p ET Monday, August 14 2017

Dear Friend of GATA and Gold:

Silver seems about to break free of the long-term suppression of monetary metals prices by central banks, GoldMoney founder and GATA consultant James Turk tells King World News tonight. Turk produces some price charts in explanation. The interview is excerpted at KWN here:

http://kingworldnews.com/james-turk-this-catalyst-will-trigger-the-price…

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

END The geopolitical landscape, especially the Korean situation plus USA home grown problems is causing the dollar’s fall and this may precipitate into further declines (courtesy Kimberley/South China Morning post, Hong Kong) US dollar’s fall could become a self-fulfilling prophecy

Submitted by cpowell on Tue, 2017-08-15 11:14. Section: 

By Neal Kimberley
South China Morning Post, Hong Kong
Tuesday, August 15, 2017

Evidence of rising Asian central bank reserves could be the catalyst for another leg down in the US dollar. The currency markets may rationally conclude and react to the notion that such accruals will be accompanied by reserve diversification, as the central banks sell some of their new holdings of the greenback for other major currencies.

Of course, geopolitical concerns could intrude on market sentiment but even then investors make rational, if hurried, decisions. As rising tensions in the Korean peninsula re-emerged last week, the currency markets were quick to look for safe havens, selling US dollars against, among others, the Swiss franc.

But those decisions are by definition reactive whereas for most of 2017 the currency markets have been pro-active in selling the US dollar, and as the greenback has fallen, Asian central bank reserves have been increasing. …

… For the remainder of the report:

http://www.scmp.com/business/article/2106812/us-dollars-fall-could-becom…

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 WEAKER 6.6817 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6930/ Shanghai bourse CLOSED UP 13.90 POINTS OR 0.43%  / HANG SANG CLOSED DOWN 75.27 POINTS OR 0.28% 

2. Nikkei closed UP 216.21 POINTS OR 1.11%    /USA: YEN RISES TO 110.40

3. Europe stocks OPENED DEEPLY IN THE GREEN     ( /USA dollar index RISES TO  93.73/Euro DOWN to 1.1757

3b Japan 10 year bond yield: FALLS  TO  +.050%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  47.39 and Brent: 50.36

3f Gold DOWN/Yen DOWN

3g Japan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa./“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  +.444%/Italian 10 yr bond yield UP  to 2.072%    

3j Greek 10 year bond yield FALLS to  : 5.53???  

3k Gold at $1274.20  silver at:16.86 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble DOWN 2/100 in  roubles/dollar) 59.92-

3m oil into the 47 dollar handle for WTI and 50 handle for Brent/

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

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 110.40 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9710 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1423 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year RISING to  +0.444%

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 2.250% early this morning. Thirty year rate  at 2.8347% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

VIX Tumbles, Global Stocks And Dollar Rally As Korea Tensions Ease

Overnight bulletin summary

  • Global equities trade higher amid easing geopolitical tensions
  • Pound tumbles on weaker than expected inflation data
  • Today’s calendar includes US retail sales, Empire Fed, import prices, NAHB, and API crude oil inventories

Global stocks and US futures are up for a second day, with the VIX sliding 0.65 vols to 11.68 (-5.2%) and haven assets dropping, after a KCNA report report suggested North Korea had pulled back its threat to attack Guam after days of increasingly bellicose “fire and fury” rhetoric with President Trump, and hours after China took its toughest steps to support U.N. sanctions against Pyongyang, while the possibility of a Sino-American trade war was played down. The report, from KCNA on Tuesday, said Kim praised the military for drawing up a “careful plan” to fire missiles toward Guam. Kim was cited by KCNA saying he would watch the U.S.’s conduct “a little more.”

“There is a more relaxed attitude being taken towards the Korean situation in markets. With the report North Korea has put its plans on hold, there is a sense of stepping back from the brink,” Rabobank analyst Lyn Graham-Taylor said.

Notably, risk aversion has not totally gone away, as Defence secretary Mattis also warned earlier that if NK fired missiles at Guam, it would be “game on” and “could escalate into war quickly”. That said, he was vague about what would happen if missiles splashed into the sea near Guam.

The result was a continuation of yesterday’s “risk-on” sentiment: the USD bounced, the USDJPY spiked as hugh as 110.45, while the pound tumbled on poor UK inflation data, while the EUR was dragged lower on what is a holiday across continental Europe. However, as some trading desks warn, this return of risk appetite may be temporary as the US and South Korea have joint military exercises scheduled for next week, which could spark things off again. For now however, traditional haven assets including gold and core bonds across Europe and TSYs slumped.

Global stocks were roughly unchanged, with the MSCI All-Country World Index declined less than 0.05 percent, while Europe was broadly if modestly higher with the Stoxx Europe 600 Index up 0.1%. Germany’s DAX Index jumped 0.3 percent, as did the U.K.’s FTSE 100 Index. S&P Futures are up 0.2%.

In Asia, Japan’s Topix index finished the day 1.1% higher driven by the sharp drop in the Yen, and Australia’s S&P/ASX 200 Index gained 0.5% at the close. Hong Kong’s Hang Seng index dropped 0.3% following a bout of last hour selling, even as the Shanghai Composite Index rose 0.4%. Markets in South Korea and India are closed Tuesday for holidays. The yen fell 0.7% to 110.41 per dollar, the biggest drop in three weeks.

While the overnight session was generally quiet, aside from the previously noted UK inflation miss which sent sterling tumbling, another indication that Europe may be rolling over was German Q2 GDP data, which missed at 0.6%, below the 0.7% expected, as imports outpaced exports following the recent surge in the Euro.

After hawkish comments from Dudley and UST yields doing well, there is a broad USD bid, even though South Korean markets was closed for national holiday. As noted above, the yen dropped on easing of N.Korean tensions, while the pound weakened after U.K. inflation data missed estimates, and Sweden’s krona gained as headline inflation reached the highest level since 2011.

“We have North Korea saying they will wait, and Trump not saying anything at all, compared to his past promise of ‘fire and fury,'” said Mitsuo Imaizumi, chief FX strategist at Daiwa Securities.  “That added up to good news for the dollar, bad news for the yen,” he said.

Also overnight, China’s credit growth came in higher than expected even as broad M2 plunged to a new all time low of 9.2% (exp. 9.4%): new yuan loans printed 825bn vs 800bn expected while aggregate financing came in at 1220bn vs 1000bn. However both measures of credit growth decreased sharply from June, where aggregate financing was 1776bn and new yuan loans increasing 1540bn.

In rates, the yield on 10-year Treasuries advanced three basis points to 2.25 percent.  Germany’s 10-year yield gained two basis points to 0.43 percent.  Britain’s 10-year yield climbed three basis points to 1.01 percent.

Gold fell 0.6 percent to $1,274 an ounce. Oil prices steadied somewhat after falling more than 2.5 percent on Monday to its lowest in about three weeks on the strength of the dollar and reduced refining in China. Brent was last down 2 cents at $50.71 a barrel.

Market Snapshot

  • S&P 500 futures up 0.2% to 2,467.25
  • U.S. 10Y Treasury yield: +3bps to 2.25%
  • EUR/USD: -0.2% to 1.1758
  • USD/JPY: +0.7% at 110.40
  • GBP/USD: -0.5% at 1.2901
  • STOXX Europe 600 up 0.07% to 376.41
  • MSCI Asia up 0.2% to 158.72
  • MSCI Asia ex Japan up 0.07% to 520.98
  • Nikkei up 1.1% to 19,753.31
  • Topix up 1.1% to 1,616.21
  • Hang Seng Index down 0.3% to 27,174.96
  • Shanghai Composite up 0.4% to 3,251.26
  • Sensex up 0.8% to 31,449.03
  • Australia S&P/ASX 200 up 0.5% to 5,757.48
  • Kospi up 0.6% to 2,334.22
  • German 10Y yield rose 1.5 bps to 0.421%
  • Euro down 0.2% to $1.1752
  • Italian 10Y yield fell 0.9 bps to 1.73%
  • Spanish 10Y yield rose 0.2 bps to 1.44%
  • Brent futures down 0.1% to $50.68/bbl
  • Gold spot down 0.6% to $1,274.68
  • U.S. Dollar Index up 0.3% to 93.68

Top Overnight News

  • South Korean President Moon Jae-in said that any military action against Kim Jong Un’s regime requires his nation’s approval, and vowed to prevent war at all costs
  • EU says frictionless trade with the U.K. is not possible outside the Single Market and Customs Union
  • U.K. Brexit Secretary David Davis says he won’t give a figure for Britain’s divorce bill by October
  • Germany’s top judges have put the legality of the European Central Bank’s 2.3 trillion euros ($2.7 trillion) bond-buying program in doubt in a ruling that asks the European Court of Justice for guidance in five cases targeting the policy
  • Intel CEO Becomes Third Chief to Quit Trump Business Council
  • Trump Denounces White Supremacists Amid Backlash to Response
  • Mattis Warns It’s ‘Game On’ If North Korea Strikes Guam
  • U.K. Seeks Interim Customs Union With EU to Smooth Brexit
  • New McDonald’s China Owners to Speed Up Expansion to Catch KFC
  • Danone Is Said to Be Targeted by Activist Investor Corvex
  • Transocean Agrees to Acquire Songa Offshore for $1.2 Billion
  • Wrangler Jeans Owner Will Buy Dickies Maker for $820 Million
  • WebMD Sued by Investor Seeking to Block $2.8 Bln KKR Sale
  • Paulson And Other Hedge Funds Rewarded as Angst Fuels Gold
  • Teva Cedes Spot as Israel’s Biggest Firm in Blow to Prestige
  • ECB’s QE Questioned by German Judges Asking for EU Court Review

Asian stock markets traded higher following the gains in US where the NASDAQ led the advances on continued tech outperformance, while global sentiment was also lifted as geopolitical concerns abated after comments from North Korean leader Kim that they will not strike Guam yet. ASX 200 (+0.47%) and Nikkei 225 (+1.11%) were boosted as tensions de-escalated, with markets in Japan the biggest gainer on JPY weakness. KOSPI is shut for holiday while Hang Seng (-0.28%) and Shanghai Comp (+0.43%) for the majority of the session conformed to the upbeat tone after the PBoC released around CNY 400b1n in MLF loans.

Top Asian News

  • South Korea to Prevent War at All Costs, President Moon Says
  • Hedge Fund Betting on 70% Yuan Devaluation Digs In Amid Gain
  • China Money Supply Growth Slips Again as Leverage Crunch Goes On
  • China’s Economic Speed Bump May Reignite Bond Default Wave
  • Fund Managers’ Positioning Remains Pro-Risk, BofAML Survey Shows
  • Unmarried Indonesians Happier Than Those in Wedlock, Index Shows
  • Modi Says More Indians Paying Tax After Cash Ban, GST Regime

European equities have started the session off strongly (Eurostoxx +0.3%), as geopolitical tensions appear to have abated from the escalation seen last week. More specifically, North Korean leader Kim Jong Un discussed the Guam strike plan with officers and said they will not attack Guam yet, but could have a change of mind based on US actions. On a sector specific basis, energy and material names are the only sectors in the red with WTI back below USD 48.00 and gold losing ground amid the return of risk appetite. To the upside, Danone (+1.8%) are one of the notable gainers in Europe amid Corvex building a USD 400mln stake in the company. In fixed income, price action has largely been dictated by the broader risk-sentiment in the market in what is a week particularly void of EU sovereign supply amid summer-thinned trading conditions. More specifically, core paper is trading circa higher by 1.5bps with peripheral spreads higher by between 0.5-1.0bps. Note: the German Constitutional Court has declined to hear challenge of ECB’s QE programme and will refer case to the European Court of Justice

Top European News

  • German Economy Extends Growth Spurt as Nation Heads for Election
  • Merkel Jeered on Campaign Trail as Refugee Tensions Boil Up
  • Swedish Inflation Hits Target for First Time in Almost Six Years
  • U.K. Inflation Unexpectedly Holds Steady as Pound Drop Unwinds
  • U.K. Growth, Inflation Outlook Cut, Weakening BOE Rate- Hike Case
  • Schibsted Plunges to 8-Month Low as Facebook Expands Marketplace
  • Bank of Russia Sells All 150b Rubles of 3-Month Bills
  • Danone Undervalued, Scope for Margin Improvement, Bernstein Says
  • Next Falls as Berenberg Says Rally Provides Shorting Opportunity

In currency markets, the main data release this morning has come in the form of the latest UK inflation report. Despite expectations for Y/Y CPI to edge towards 3.0% by the year-end, today’s metric fell short of consensus (2.6% vs. Exp. 2.7%) and saw GBP/USD fall circa 40 pips from 1.2950 to 1.2910 with the metric possibly dampening some expectations for a rate hike by the BoE in the short-term. Elsewhere, the USD remains firm against its major counterparts amid hawkish rhetoric yesterday from Fed’s Dudley as well as gaining ground against JPY as JPY suffered from safe-haven outflows. Going forward, focus will likely be on NZD with the upcoming NZ dairy auction (futures pricing in a 4% increase in WMP).

In commodities, metals markets have seen a mixed performance with gold (-0.5%) pressured amid safe-haven outflows as geopolitical concerns subsided while Copper benefited from the upbeat risk tone. WTI failed to make any significant recovery from yesterday’s losses in which prices languished below USD 48/bbl after a bearish Genscape report, OPEC sources and comments from the EIA.

Looking at the day ahead, there will be quite a lot of data, including: July retail sales, import / export price index for July (0.1% mom and 0.3% mom expected respectively), empire manufacturing stats (10 expected), the NAHB housing market index and US foreign net transactions for June. Further, Home depot will report its results today.

US Event Calendar

  • 8:30am: Import Price Index MoM, est. 0.1%, prior -0.2%; 8:30am: Import Price Index YoY, est. 1.5%, prior 1.5%
    • Export Price Index MoM, est. 0.2%, prior -0.2%; 8:30am: Export Price Index YoY, prior 0.6%
  • 8:30am: Empire Manufacturing, est. 10, prior 9.8
  • 8:30am: Retail Sales Advance MoM, est. 0.3%, prior -0.2%; Retail Sales Ex Auto MoM, est. 0.3%, prior -0.2%
    • Retail Sales Ex Auto and Gas, est. 0.4%, prior -0.1%; Retail Sales Control Group, est. 0.4%, prior -0.1%
  • 10am: NAHB Housing Market Index, est. 64, prior 64
  • 10am: Business Inventories, est. 0.4%, prior 0.3%
  • 4pm: Total Net TIC Flows, prior $57.3b; Net Long-term TIC Flows, prior $91.9b

DB’s Jim Reid concludes the overnight wrap

Can we get back to August yet? Unless you are well connected to Kim Jong-un or to a lesser extent Mr Trump then it’s impossible to answer. However a lack of escalation over the weekend and more reassuring words from a top US general has been a big relief for markets. As it’s the 15th today we’re clearly at the midmonth point that the North Korean leader previously suggested was his timetable to potentially launch missiles at Guam although as we’ll see below NK state media has suggested overnight that he is reviewing his plans and will watch the US first. It will be difficult for markets to fully recover their poise until we’re out of this mid-month window with no new provocations (or worse). However every day that no news breaks should help markets recover to where they were before last Monday evening’s “fire and fury’ tweet after the earlier Washington Post story that Pyongyang has produced a nuclear warhead small enough to fit inside one of its missiles.

Following the calmer words from Defence Secretary Mattis and CIA’s director Pompeo over the weekend talkshows, US’s Marine General, Chairman of the Joint Chief of Staff Dunford followed up and told South Korean President Moon that “…everyone hopes to resolve the current situation without going to war…”. Today, President Moon spoke at a separate function and said “there will be no war repeated on the Korean peninsula” and emphasised the need for diplomatic efforts.

The reduced prospect of a US-NK conflict boosted US markets overnight with Asian markets broadly higher this morning. The Kospi (+0.6%), Nikkei (+1.3%), Hang Seng (+0.3%) and Chinese bourses (+0.2%-0.7%) are all higher as we type. Elsewhere, the Korean Won is up 0.5%.

Notably, risk aversion has not totally gone away, as Defence secretary Mattis also warned earlier that if NK fired missiles at Guam, it would be “game on” and “could escalate into war quickly”. That said, he was vague about what would happen if missiles splashed into the sea near Guam. On the other side of the fence, according to the Korean central news agency, Kim Jong-Un has reviewed his missile strike plans and will watch what the US is doing “a little more”.

Looking away from geopolitics, the US’s July retail sales will be out later today. DB’s economist Brett Ryan expect sturdy gains on both headline (+0.6% forecast vs. -0.2% previously) and ex-automobile sales (+0.6% vs. -0.2%) following two consecutive monthly declines. Note that there has been only one other occasion in the current business cycle when ex-auto sales fell for three consecutive months and that was due  to unusually harsh winter weather in late 2014 / early 2015. Elsewhere, US data on June business inventories (+0.4% expected), US foreign net transaction, empire manufacturing (10 expected) and the NAHB housing market index are also due today, all of which should provide us with some clues on the US’s 2H GDP outlook.

Moving back to markets. Remember that steady increase in the S&P we talked about a couple of weeks back. Well before yesterday, it was 77 trading days since the S&P increased by more than 1% in any one day. Clearly the +1.00% S&P gain overnight has just prevented this run continuing. All we needed was 3 more days to beat the prior record set back between November 06 and March 07 (79 trading days). Perhaps we’ll now wait another 10 years before the record is threatened again.

In terms of markets performance, lower risk aversion was evident across the board yesterday with the Vix down 21% to 12.3, gold falling 0.6% and the Swiss franc -0.2%. US equities strengthened, with the S&P up 1%, the Dow (+0.6%) and the Nasdaq (+1.3%). Within the S&P, only the energy sector was in the red (-0.3%), while all other sectors rose, particularly real estate (+1.7%) and IT (+1.6%). European markets were also up, with the Stoxx 600 +1.1% higher, with gains in every sector, particularly real estate and utilities (both +1.8%). Elsewhere, the DAX (+1.3%), FTSE 100 (+0.6%), CAC (+1.2%) and FTSE MIB (+1.7%) were also up.

Government bond yields rose modestly reflecting lower risk aversion, with core yields up 1-3bp at the longer end of the curve, including: German bunds (2Y: unch; 10Y: +2bps), Gilts (2Y: +1bp; 10Y: +1bps) and French OATs (2Y: +2bp; 10Y: +3bps). Peripheral bond yields outperformed as tensions eased with Italian BTPs (2Y: -1bp; 10Y: -1bp) and Portugal (2Y: +2bp; 10Y: -4bp) generally rallying. Across the pond, UST 10Y has increased 3bps this morning to 2.25%.

Turning to the currency markets, the USD dollar index gained 0.4% yesterday, supported by the Fed Dudley’s comments on rates outlook (discussed later). Conversely, both the Euro and Sterling dipped 0.4% versus the USD, while the Euro/Sterling was broadly flat. In commodities, WTI oil fell 2.5% following concerns for slowing Chinese demand (softer IP data) and EIA raising forecasts that US shale output will reach an all-time high in September. Elsewhere, precious metals were slightly lower (Gold -0.6%; Silver -0.2%), while base metals were broadly unchanged, with Copper (+0.2%), Zinc (-0.4%), although aluminium fell -1.6% after a strong 9% rise in the prior week.

Away from the markets, NY Fed president Dudley told the AP he expects inflation to move somewhat higher as the labour market tightens further and suggested the Fed will announce its taper plan next month. On the rates outlook, he said “If (economic forecasts) evolves in line with my expectations … I would be in favour of doing another rate hike later this year.” Elsewhere, he said White House economic adviser Gary Cohn is a “reasonable candidate” to head the Fed if Trump does not name Yellen for a second term.

Following on with the economic outlook, Bloomberg surveyed 38 economists recently, ~76% of them expect congress will pass tax cut legislations by November 2018, albeit the tax cuts are likely to be lower than what the Trump administration had originally promised. The potential policy changes are expected to add 0.2ppt to the pace of GDP expansion in 2018.

The latest ECB CSPP holdings were released yesterday. They bought €1.11bn last week which compares to €1.54bn, €0.79bn, €0.72bn, €1.43bn over the previous four weeks. These continue to be low numbers and this week’s equate to an average of €221mn per day (vs. €354mn/day since CSPP started). The CSPP/PSPP ratio was 11.4% (previous weeks 12.8%, 8.1%, 6%, 10.4%) which is slightly below the average since the April taper begun but the average since this point of 12.8% is still higher than the pre-taper ratio of 11.6%. So the evidence is still in favour of CSPP having been trimmed less than PSPP since April even if there have been some softer weeks of late. The ECB probably did a little front loading to account for summer credit liquidity being worse than in govt. bonds.

Before we take a look at today’s calendar, we wrap up with other data releases from yesterday. Adding onto our comments yesterday for the slightly lower than expected July industrial production data in China, our China research term believes that slower growth was mainly driven by surprisingly weak data from the property sector. (eg: growth of property sales cooled to 4.8% yoy in July after a strong rebound to 30.3% yoy in June). Overall, our team think that the slowdown in July is unlikely to change the government policy stance in Q3 (ie: they do not expect a visible loosening of monetary or fiscal policy). With GDP growth at 6.9% in H1, they argue that the government can afford to allow growth to drop moderately in Q3. Elsewhere, the Eurozone’s June industrial production was slightly lower than expected at -0.6% mom (vs. -0.5%) and 2.6% (vs. 2.8% yoy).

Looking at the day ahead, as our note is published, Germany’s preliminary 2Q GDP will be released, with 0.7% qoq and 1.9% expected. Then the UK’s July CPI (0% mom and 2.7% yoy expected), PPI output and retail price index are due. Over in the US, there will be quite a lot of data, including: July retail sales, import / export price index for July (0.1% mom and 0.3% mom expected respectively), empire manufacturing stats (10 expected), the NAHB housing market index and US foreign net transactions for June. Further, Home depot will report its results today.

 END 3. ASIAN AFFAIRS

i)Late MONDAY night/TUESDAY morning: Shanghai closed UP 13.90 POINTS OR 0.43%   / /Hang Sang CLOSED DOWN 75.27 POINTS OR 0.28% The Nikkei closed UP 216.21 POINTS OR 1.11%/Australia’s all ordinaires CLOSED UP 0.43%/Chinese yuan (ONSHORE) closed DOWN at 6.6817/Oil DOWN to 47.37 dollars per barrel for WTI and 50.36 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6930 yuan to the dollar vs 6.6817 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

Mattis warns that the North Korean standoff could escalate into war very quickly

(courtesy zero hedge)

Mattis Warns, North Korea Standoff “Could Escalate Into War Very Quickly”

Less than a day after Joseph Dunford, the commander of the Joint Chiefs of Staff, told South Korean President Moon Jae-in that the US isready to use “the full range of military capabilities to defend our allies and the U.S. homeland,” Defense Secretary and retired Gen. James Mattis told reporters that the situation with North Korea “could escalate into war” if the isolated country fires a missile at the US.

“If they fire at the United States, it could escalate into war very quickly,” Mattis said, according to Reuters.

Mattis also assured reporters that the US would destroy any missiles fired at the US by the North Korean regime, saying the US would know the trajectory of the missile “within moments.”

If a missile is assessed to be headed toward Guam – North Korea has repeatedly threatened the territory – Mattis said “we will take it out.”

Though it’s unclear how, exactly, the US would be able to guarantee the neutralization of an incoming missile.

While the US THAAD missile shield, which has been deployed around the world, has a solid testing record, it’s designed to target intermediate range missiles, not ICBMs. While the US has completed successful tests of ground-based anti-ICBM capabilities, its testing record for those, and for sea-based interceptors, is shaky. Some experts have compared shooting down an ICBM to “hitting a bullet with a bullet.”

In an op-ed published in the Wall Street Journal late Sunday, Mattis and Secretary of State Rex Tillerson argued that the era of “strategic patience” was over, and the era of “strategic accountability” had begun.

“The object of our peaceful pressure campaign is the denuclearization of the Korean Peninsula. The U.S. has no interest in regime change or accelerated reunification of Korea. We do not seek an excuse to garrison U.S. troops north of the Demilitarized Zone. We have no desire to inflict harm on the long-suffering North Korean people, who are distinct from the hostile regime in Pyongyang.

In the editorial, they also noted that while diplomacy is the US’s top priority, “it is backed by military options.”

“While diplomacy is our preferred means of changing North Korea’s course of action, it is backed by military options. The U.S. alliances with South Korea and Japan are strong. But Pyongyang has persistently rebuffed Seoul’s attempts to create conditions whereby peaceful dialogue can occur, and has instead proceeded on its reckless course of threats and provocation. As a result of these dangers, South Korea’s new government is moving forward with the deployment of U.S. Terminal High-Altitude Area Defense against the threat. We commend South Korea’s decision to deploy this purely defensive capability.”

Tensions between the US and North Korea started escalating this year as North Korea accelerated the pace of its missile testing: It has already engaged in 14 such tests this year, including its July 4 test of an intermediate-range missile that could have reached Alaska. Not only is the North now capable of launching an ICBM that can hit the US mainland, US intelligence has confirmed that it’s likely the North possesses a nuclear warhead small enough to fit inside of one of these missiles. The latest round of back-and-forth sniping between the US and the North began after the United Nations passed new sanctions against the North Korean regime with the full blessing of Russia and China, though those sanctions are expected to come down hardest of North Korean laborers and fishermen.

 end Kim is briefed on the Guam attack plan but he then backs off his threat of an imminent missile launch (courtesy zerohedge) Kim Jong-Un “Briefed On Guam Attack Plan”, Backs Off Threat Of Imminent Missile Launch

While global stock markets breathed a sigh of dip-buying relief today that the world did not end, North Korea just ratcheted up the rhetoric one more time with state media reporting the North Korean leader is “being briefed on the Guam attack plan” today, adding that “if a second Korean War breaks out, it would inevitably be a nuclear war.”

According to the state run KCNA news agency, North Korean leader Kim Jong-un “examined the plan for a long time” on Monday during his inspection to the command of the Strategic Force. North Korea said last week that it will finalize by mid-August its detailed plan to fire four intermediate-range ballistic missiles around Guam and report it to its leader for approval.

As KCNA notes, the North Korean leader received a report from his army on its plans to strike the area around Guam and said “he will watch the actions of the United States for a while longer before making a decision.”

According to the WSJ interpretation of this oddly-worded report, the “North Korean leader has decided not to launch a threatened missile attack on Guam“ but warned that he could change his mind “if the Yankees persist in their extremely dangerous reckless actions.”

As a result, the report “could help dial back tensions that had spiraled last week following an exchange of threats between North Korea and U.S. President Donald Trump.”

North Korean state media said in its report Tuesday that Mr. Kim had made his decision not to fire on Guam after visiting a military command post and examining a military plan presented to him by his senior officers.

Then again, the alternative to that wording would have been for KCNA to say that Kim had decided to launch an attack on Guam, forcing him to do so, which would hardly have achieved any desired outcome.

In any case, trading desks quickly absorbed the WSJ’s interpretation of the KCNA announement as suggestive of conflict de-escalation, and have sent the USDJPY surging by 50 pips in a broad risk-on, stop hunt triggering move, which has also sent gold sliding.

Also, while Kim said he had decided not to launch the attack on Guam “yet“, he advised the U.S. “to take into full account” whether the current standoff was to its benefit. He also said it was incumbent on the U.S. to “stop at once arrogant provocations against the DPRK and unilateral demands and not provoke it any longer.”

Yet Kim ultimately left the ball in Trump’s court, saying “the United States should first make the right decision and show through actions if they wish to ease tensions on the Korean peninsula and prevent a dangerous military clash,” Kim was quoted by KCNA.

Finally, the report contained the usual dose of pleasantries: Kim said that “if the Yankees persist in their extremely dangerous reckless actions on the Korean Peninsula and in its vicinity, testing the self-restraint of the DPRK, the [North] will make an important decision as it already declared.” The N.Korean leader also added that the planned launch could still be carried out at any moment, and said that such a strike would be a “most delightful historic moment” that would “wring the windpipes of the Yankees and point daggers at their necks.”

 

KCNA chose a subtle title for their story… “The US Wants To Kill Itself”

Pyongyang, August 14 (KCNA) (via Google Translate)

The U.S. Defense Department on August 11 announced that the U.S.-south Korea joint military drill Ulchi Freedom Guardian would start on August 21 as scheduled.

 

It declared it would send nuclear carrier strike groups, nuclear strategic submarine and other war hardware to the Korean peninsula in advance and dispatch 12 F-16 fighters and huge armed forces to the U.S. bases in south Korea for the drill.

 

Shortly ago, the commander-in-chief of the U.S. forces and the south Korean chief executive had phone talks over the joint military drill.

 

It is clear what does the start of large nuclear war drill mean under the worst situation on the Korean peninsula.

 

No matter what rhetoric they let out about “annual, regular and defensive drills”, they cannot cover up the danger of a war outbreak.

 

If any accidental case would be sparked, though unwanted, it would never avert a war.

 

What matters is that when a second Korean war breaks out, it would be a nuclear war.

 

The DPRK has already declared in the statement of its government that it would not hesitate to use any form of ultimate means.

 

The U.S. should think twice about the consequences.

 

The Strategic Force of the Korean People’s Army announced that it would finally complete the plan for enveloping fire at Guam until mid August and report it to the commander-in-chief of the DPRK Nuclear Force and wait for his order.

 

The nuclear force of the DPRK is strong in its guts and no one can guess its muscle as the flight trajectory of medium-to-long ballistic rocket Hwasong-12, firing data and the correct hitting-point are made public at home and abroad.

 

Within three days after the publication of the statement of the DPRK government, nearly 3.5 million youth and students and working people volunteered to join or rejoin in the Korean People’s Army. This fact clearly shows the will of the Korean people to finally conclude the standoff with U.S.

 

If the U.S. goes reckless by wielding a nuclear stick before its rival armed with nukes despite the repeated warnings of the DPRK, it would precipitate its self-destruction.

 

We are watching every move of the U.S.

And finally, here are the three dates when NKorea risk could spike:

  • Tomorrow is the National Liberation Day of the Koreas (both North and South). In South Korea, markets are closed.
  • August 21-31 is when South Korea and the US hold a joint annual military exercise. As we reported over the weekend, satellite photos suggest North Korea may be preparing a submarine launched ballistic missile test, as it did two days after the start of last year’s joint drill.
  • September 9, the anniversary of the founding of North Korea: Last year North Korea conducted its fifth nuclear bomb test on this day.

We await President Trump’s “Kelly-approved” response

 

 

end

 

We now have independent scientists who now claim that the payload was light and thus the trajectory of North Korea’s latest launch was higher and thus longer that it ought to be.  Basically these guys suggest that North Korea does not have the capability to hit the USA

(courtesy zerohedge

“Independent Rocket Scientists” Claim North Korea’s Nuclear Missile Claims Are A Hoax

Authored by James Holbrooks via TheAntiMedia.org,

President Donald Trump continued his blustery North Korea rhetoric on Friday, tweeting that the U.S. military was “locked and loaded” and later telling reporters that Kim Jong-un had better not make any “overt threats” against the United States.

“This man will not get away with what he is doing,” Trump told reporters from his golf club in New Jersey, adding that if Kim makes a move against the U.S. or its allies “he will truly regret it and he will regret it fast.”

In the midst of this spike in tension between the United States and the Hermit Kingdom, a team of independent rocket experts published a paper Friday asserting that North Korea’s two July test firings of supposed intercontinental ballistic missiles (ICBMs) were, in fact, “a carefully choreographed deception by North Korea to create a false impression” that the country has missiles capable of striking the continental U.S.

In other words, it was “a hoax,” as one of the experts explained to Newsweek.

The team consisted of Theodore Postol, professor of science, technology, and national security policy at the Massachusetts Institute of Technology (MIT), and German missile engineers Markus Schiller and Robert Schmucker of Schmucker Technologie. Postol has previously disputed official reports on the parties responsible for chemical weapons attacks in Syria.

They opened their paper,  published in the Bulletin of the Atomic Scientists and titled “North Korea’s ‘not quite’ ICBM can’t hit the lower 48 states,”  by highlighting that the July 3 launch was “trumpeted by the US mainstream press” as proof that the United States was vulnerable to an attack from North Korea.

But the Western press jumped the gun, the team argues in their paper:

“The rocket carried a reduced payload and, therefore, was able to reach a much higher altitude than would have been possible if it had instead carried the weight associated with the type of first-generation atomic bomb North Korea might possess.

 

 

Experts quoted by the press apparently assumed that the rocket had carried a payload large enough to simulate the weight of such an atomic bomb, in the process incorrectly assigning a near-ICBM status to a rocket that was in reality far less capable.”

All these assumptions worked out great for the Kim regime, the researchers write:

“From the point of view of North Korean political leadership, the general reaction to the July 4 and July 28 launches could not have been better. The world suddenly believed that the North Koreans had an ICBM that could reach the West Coast of the United States and beyond.”

But these beliefs aren’t based in truth, Postol and his colleagues write:

“In reality, the North Korean rocket fired twice last month — the Hwasong-14 — is a ‘sub-level’ ICBM that will not be able to deliver nuclear warheads to the continental United States.”

The analysts concluded that North Korea is likely “years away from completion” of a nuclear-tipped missile that could reach the continental United States.

The team’s full report, containing the details of their scientific methods, can be found here.

end

b) REPORT ON JAPAN

end

c) REPORT ON CHINA

The USA is angry at China’s theft of intellectual property.  However they have put off tariffs for a year as Wilbur Ross is set to study the situation and report back.  China is threatening retaliation if the uSA damages trade ties

(courtesy zerohedge)

China Threatens With Trade War Retaliation If US “Damages Trade Ties”

Just hours after President Trump authorized an inquiry into China’s alleged theft of intellectual property, China’s Ministry of Commerce said it would take action to defend its interests if the United States damages trade ties.

“This is just the beginning, I want to tell you that. This is just the beginning,” Trump told reporters, and after signing an executive memorandum giving his trade representative, Robert Lighthizer, the power to explore ways to challenge China’s alleged theft of intellectual property and forced transfer of technology – the Trump administration estimates that theft of intellectual property by China could be worth as much as $600 billion – China said the US should “respect objective facts, act prudently, abide by its World Trade Organization pledges, and not destroy principles of multilateralism”, an unidentified spokesman of China’s Ministry of Commerce said in a statement according to Reuters.

“If the U.S. side ignores the facts, and disrespects multilateral trade principles in taking actions that harms both sides trade interests, China will absolutely not sit by and watch, will inevitably adopt all appropriate measures, and resolutely safeguard China’s lawful rights.” The ministry also said the United States should “treasure” the cooperation and favorable state of China-U.S. trade relations, and warned that any U.S. action to damage ties would “harm both sides trade relations and companies”.

The Commerce Ministry complained Trump’s order was “strong unilateralism” that violated the spirit of multinational trade agreements. “We believe the U.S. side should strictly adhere to commitments and should not become the destroyer of multilateral rules,” said the statement.

Ahead of Monday’s order, the Chinese foreign ministry appealed to Trump to avoid a “trade war.” A state newspaper, the China Daily, said an investigation could “intensify tensions,” especially over intellectual property. State news agency Xinhua said the U.S. investigation is a unilateralist “baring of fangs” that will hurt both sides.

More than 20 percent of 100 American companies that responded to a survey by the U.S.-China Business Council, an industry group, said they were asked to transfer technology within the past three years as a condition of market access, according to Jake Parker, the group’s vice president for China operations the AP reported. “We don’t believe market access should be contingent on transferring technology,” said Parker. “It goes counter to China’s WTO commitments.”

In a preemptive move to allay US probe findings, China said it was continuously strengthening its administrative and judicial protections for intellectual property. That said, China’s policy of forcing foreign companies to turn over technology to Chinese joint venture partners and failure to crack down on intellectual property theft have been longstanding problems for several U.S. administrations.  

Meanwhile, experts on China trade policy said the long lead time could allow Beijing to discuss some of the issues raised by Washington without being seen to cave to pressure under the threat of reprisals. China repeatedly rebuffed attempts by previous U.S. administrations to take action on its IP practices, and has insisted it rigorously protects intellectual property.

Jacob Parker, vice president of China operations at the U.S.-China Business Council said Trump’s memo is only the beginning of the process, but that he expected a decision on how to move forward from the administration in 60-90 days. “I think it will be much faster than a year,” Parker said.

In any case, the investigation is likely to cast a shadow over U.S. relations with China, its largest trading partner, just as Trump is asking it to put more pressure on North Korea to give up its nuclear program. Trump has told Beijing he would be more amenable to going easy on China over trade if it were more aggressive in reining in North Korea. China responded by saying the issues of trade with the United States should not be linked to the North Korea problem. Ken Jarrett, president of the American Chamber of Commerce in Shanghai, said in a statement on Tuesday that trade and North Korea should not be linked, but that the investigation was a “measured and necessary step”.

“The president’s executive order reflects building frustration with Chinese trade and market entry policies, particularly those that pressure American companies to part with technologies and intellectual property in exchange for market access,” he said. “Chinese companies operating in the United States do not face this pressure.”

* * *

In an article in the Financial Times timed to coincide with the announcement, Trump’s commerce secretary, Wilbur Ross, accused Beijing of being a “primary culprit” for the theft, piracy and espionage of US intellectual property. Ross claimed China’s government and companies were deliberately targeting US companies pioneering technologies that China lacked as part of a plan known as “Made in China 2025”. “[Trump] is the first president to take any meaningful steps toward dealing with this hugely important issue,” Ross wrote.

At the same time, critics accused Trump of not going far enough. “Unfortunately, the failure to move robustly is another White House mistake in its already long history of troubled dealings with Beijing,” Gordon Chang, a China hawk known for his book The Coming Collapse of China, wrote in the Daily Beast. “From a trade point of view alone, Trump’s action, despite his calling it ‘a very big move,’ looks exceedingly weak.”

Until last week Trump had been expected to announce a so-called ‘section 301’ case against China, which he accused of “raping” the US economy during his presidential campaign. This would have allowed the US to impose tariffs or other trade restrictions on China under the 1974 trade act.  Experts had predicted such a move could draw a “very aggressive” response from Beijing and might even cause a full-blown trade war with potentially huge global ramifications.

Instead, Trump has asked Lighthizer to consider whether this kind of move is necessary, a process that will take up to a year. Trump’s decision to land a far softer blow on China than expected means a trade war between the world’s top two economies is contingent on China’s ongoing behavior; to be sure the relationship between the two nations appears increasingly fraught with US secretary of state, Rex Tillerson, warning earlier this month that ties were at a historic “pivot point” .

On the eve of the announcement, a Chinese state-run newspaper had warned the move would “poison the overall US-China relationship” and on Monday a spokesperson for China’s foreign ministry said there would be “only losers in a trade war”.

end

Approximately 2 months ago China announced that it was going to rein in its shadow banking industry which totals 9 trillion USA or approximately equates to its GDP. Last night the POBC announced a 64 billion yuan  (9.58 billion USA) drop in outstanding loans. While it looks like the move by the POBC is bearing fruit, the contraction will mostly likely spur a run on all of its banks

(courtesy zerohedge)

China’s $9 Trillion Shadow Banking System Shrinks For The First Time In 9 Months

On the surface, the latest Chinese credit data reported overnight by the PBOC was not particularly memorable: new loans tumbled from the near record 1.540TN Yuan in June to only 825.5BN in July, just above the 820BN expected, while Total Social Financing also declined substantially from June’s 1.78TN to 1.22TN, also beating the 1TN estimate. While both July prints were a steep drop from June – reflected in Monday’s miss in retail sales, industrial production and capex – they were a significant increase from the year ago numbers. At the same M2 dropped to a new record low, sliding from June’s 9.4% to 9.2% in July, missing expectations of a modest rebound to 9.5%.

And while there are more details on the various constituent components below, there was one remarkable aspect to last night’s number: for the first time in 9 months China’s $9 trillion Shadow Banking Industry – defined as the sum of Trust Loans, Entrusted Loans and Undiscounted Bank Loans – contracted. These three key components combined resulted in a 64BN yuan drain in credit from China’s economy, the first negative print since October, seen by analysts as more evidence that Beijing’s campaign to contain shadow banking and quash risks to the financial system, is starting to bear fruit.

At the same time, conventional forms of crediting enjoyed a surge, with net corporate bond issuance jumping as non-financial corporations opt for cheaper sources of finance than borrowing in the shadow banking sector, where costs have soared amid the government crackdown on shadow banks: in July Corporate Bond issuance jumped by 284BN following June’s 17BN contraction. This was the highest monthly increase since November.

Furthermore, while on the surface TSF declined sequentially (if not year over year), there was RMB 754 bn issuance of local government bonds in July compared with RMB 461 bn in June, according to WIND data. After including this local government bond net issuance, total adjusted TSF stock grew at 14.8% yoy in July, higher than 14.2% in June. The implied month-on-month growth of adjusted TSF was 21.1% SA ann, higher than 9.7% in June according to Goldman estimates, suggesting that while the government may be phasing out shadow debt, it is replacing it with other, conventional forms of credit, which more than compensate for the transition.

Below is the full breakdown of the latest broad credit data, via Barclays:

  • New loans recorded CNY826bn in July, compared with CNY464bn a year ago, with y/y outstanding growth accelerating to 13.2% from 12.9% previously. Both corporate loans and household loans increased greater than last year. New corporate loans advanced to CNY354bn from a decline of CNY3bn a year ago, with long-term corporate loans contributing CNY433bn (a year ago: CNY151bn) and short-term loans adding CNY63bn (a year ago: CNY-201bn). New household loans registered CNY562bn, compared with CNY458bn a year ago. While short-term household loans added CNY107bn (a year ago: CNY-20bn), long-term household loans (mostly mortgage loans) slowed to CNY454bn, from CNY477bn a year ago. We think the softening momentum in long-term household loans is likely to persist given the government’s tightening measures on the housing market will continue to exert downward pressure on new sales. In addition, M2 growth further decelerated to 9.2% in July (June: 9.4%), but M1 growth slightly rebounded to 15.3% from 15.0% in June (Figure 5).

  • Total Social Financing reached CNY1220bn in July (a year ago: CNY479bn), and its y/y growth rate accelerated to 13.2% (June: 12.8%), the highest since November 2016 (consensus: CNY1000bn,). New loans to the real economy (excluding loans to non-bank financial institutions) rose to CNY915bn from CNY455bn a year ago. This, combined with the loan data, suggests that loan demand from both households and corporates remains strong. Notably, corporate bond financing strongly rebounded to CNY284bn in July (June: CNY-17bn, a year ago: CNY221bn), reflecting the recovering sentiment in the bond market following the improved regulatory policy coordination in recent months (Figure 8). The recovering bond financing may have also crowded out some off-balance-sheet lending, which contracted by CNY64bn in July (June: CNY224bn, a year ago: -CNY313bn). The contraction came from a drop of CNY204bn in undiscounted bankers acceptance bills (July 2016: -CNY512bn), while trusted loans and entrusted loans still expanded by CNY16bn and CNY123bn, respectively.

Finally, some interesting observations from Goldman’s

  • The fall in the level of RMB loans and TSF was completely seasonal. Adjusting for seasonality, growth of total social financing and RMB loans both accelerated in July from the previous month. The acceleration in broad local government debt adjusted TSF to 20% annualized level was particularly meaningful. There has been a rotation away from shadow bank to traditional banking financing in recent months as a part of the government’s attempt to control shadow banking related risks and leverage while maintaining growth stability at the same time. Reflecting this tendency, loan supply has beaten market expectations for 4 months in a row.
  • M2 growth surprised to the downside. Among the drivers of M2 growth, (1) RMB loan growth was robust, (2) FX flows (which contribute to M2 growth when foreign currencies are converted into domestic currency) were likely largely steady so didn’t contribute to the M2 weakness either, (3) net fiscal spending (fiscal deposits held by the government are excluded from M2) made a negative contribution to M2 growth. June’s fiscal policy stance was particularly loose compared to a normal year while July’s was modestly tight. But this contribution was relatively small and not the main driver of slower M2 growth. This means the residual shadow banking products likely made the biggest (negative) contribution. The recent behavior of the economy suggests the impact of the slowdown in these shadow products on real activity is relatively modest, as long as broad TSF growth holds up–although other factors (such as strong external demand) have provided support as well.
  • While July’s activity growth data surprised on the downside, we do not see the need to be overly concerned about the growth outlook as the growth rate in June (particularly strong) and July (particularly weak) combined was at a robust level of 10% ann. Although the higher-than-normal July temperatures would tend to bias IP stronger than otherwise, this is still a healthy level of growth, consistent with loose financial conditions domestically and firm exports growth externally.
  • We expect the authorities to fine tune policy stance on a real time basis to ensure growth stability at least before the end of the Party Congress. Even after the Party Congress this policy put will not disappear, it will just not be as strong as it is now.

Finally, there unspoken question is this: if China’s massive, unregulated and largely uncontrollable shadow banking industry, which was roughly $9 trillion at last check, or not much smaller than China’s GDP,  is now shrinking and thus destroying capital, how long before the current “calm, cool and collected” snaps and the ongoing deleveraging morphs into a bank run, with dire consequences for the nearly $40 trillion Chinese financial sector?

4. EUROPEAN AFFAIRS

end

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

IRAN

It seems like  Trump is gearing up to end the nuclear agreement with Iran in October but there will be consequences with its European partners

 

(courtesy ISN Security Watch/OilPrice.com)

Is Trump Gearing Up To End The Iran Nuclear Deal?

Authored by ISN Security Watch via OilPrice.com,

Jack Thompson and Oliver Thränert argue that President Trump´s administration is laying the groundwork for the U.S. to withdraw from the Iran nuclear deal. However, they suggest that if the U.S. were to end its participation in the Joint Comprehensive Plan of Action (JCPOA) on Iran’s nuclear program, it would severely damage transatlantic relations and the nuclear non-proliferation regime. As a result, Thompson and Thränert urge European governments to talk with Trump’s most influential advisers and convince them that a unilateral withdrawal from the JCPOA will leave the U.S. isolated.

U.S. President Trump seems determined to kill the nuclear deal with Iran. European leaders should strive to prevent this, as it would severely damage transatlantic relations and the nuclear non-proliferation regime.

Key Points

The Joint Comprehensive Plan of Action (JCPOA) of 2015, which would have been impossible without close transatlantic cooperation, brought Iran back into compliance with the Nuclear Non-Prolifera¬tion Treaty (NPT).

 

U.S. President Trump and some of his political advisors are preparing to end participation in the JCPOA, possibly as early as October 2017. Iran is gaining ever more influence in the Middle East, they contend, which is why sanctions need to be reinforced, not lifted.

 

If the U.S. were to withdraw from the JCPOA, it would deal another blow to U.S.-European ties and could weaken the NPT.

 

Hence, European governments need to talk to Trump’s most influential advisers and convince them that withdrawal from the JCPOA would leave the U.S. isolated

One of the most successful examples of transatlantic cooperation in recent years was the conclusion of the Joint Comprehensive Plan of Action (JCPOA), which was finalized in July 2015. The deal imposes strict constraints on Iran’s nuclear program, and provides for enhanced transparency, in return for relief from international sanctions.

However, that deal is now under threat. U.S. President Donald Trump, who as a candidate called the JCPOA the “stupidest deal of all time”, is convinced that it does little to prevent Iran from developing nuclear weapons. Therefore, the White House is laying the groundwork for withdrawal, possibly as early as October 2017.1 If the U.S. were to unilaterally withdraw from the JCPOA, this would antagonize the European signatories who, through their early and intense diplomatic engagement, made the JCPOA possible in the first place. With transatlantic relations already under strain, mostly as a result of the Trump administration’s ambivalence about NATO and, more broadly, the liberal world order, the termination of the JCPOA would constitute yet another significant blow to U.S.-European relations.Furthermore, ending the deal would lift the present limitations on Iran’s nuclear program and weaken the entire nuclear non-proliferation regime. Therefore, decisive European action is required to stop the Trump administration from abandoning the JCPOA.

Divisions in the Trump Administration

Two factors are likely influencing the thinking of Trump and other hardliners.

Partisanship is one. For many conservatives, the Iran deal was emblematic of what they viewed as Barack Obama’s feckless foreign policy, and Trump has been adept at channeling conservative anger at the former president.

 

Second, Trump and other critics emphasize Tehran’s extensive involvement in Syria and Iraq and its support for Hamas and Hezbollah. As a result, they argue, Iran is gaining ever more influence in the Middle East. To stop Iran, goes the argument, sanctions have to be reinforced, not lifted. Intense lobbying by the Saudi and Israeli governments has reinforced the administration’s anti-Iran tendencies.

Key political advisors in the administration, such as Chief Strategist Steve Bannon and Deputy Assistant to the President Sebastian Gorka, have played a role in convincing the president to put more pressure on Tehran, to end the JCPOA, and to enforce sanctions. At the same time, most of the president’s principal national security advisors – with the notable exception of CIA Director Mike Pompeo – oppose leaving the JCPOA. Though some of them are critical of the agreement, unilateral withdrawal would leave the U.S. isolated, they believe, and would remove any ability it would have to influence the development of Iran’s nuclear program. This group includes Secretary of Defense James Mattis, National Security Advisor H.R. McMaster, Chairman of the Joint Chiefs of Staff General Joseph Dunford, and Secretary of State Rex Tillerson. But this faction appears to be losing the battle on the Iran deal. Instead, ideologues such as Bannon, Gorka, and Stephen Miller, a Senior Advisor to the president, appear to have scored an important victory. These aides are skeptical of the national security establishment, which they view as the embodiment of the corrupt Washington “swamp” that is in need of draining, and as hostile to Trump’s presidency.

Even though the president has openly stated that he advocates direct abrogation of the deal, some of his advisors reportedly favor a subtler approach. They believe that it would be preferable to find a way to goad Tehran into withdrawing from the agreement or, alternatively, into taking steps that could be portrayed as being in violation of the JCPOA. The most likely option at present is that the International Atomic Energy Agency (IAEA), which is responsible for conducting inspections under the JCPOA, would be convinced to request unrestricted access to all of Tehran’s military sites. This thinking reflects a complete misunderstanding of international organizations, such as the IAEA, on the part of Trump and his followers: Their purpose is not to serve narrowly defined U.S. national interests, but to implement provisions agreed to by all parties. Furthermore, the IAEA would be well advised to ask for access to particular sites only if it has information that hint at anomalies not compatible with the JCPOA. The U.S. is in the process of attempting to gather intelligence that would convince its allies and the IAEA of the need to inspect these sites. In any event, to gain access to additional military sites, a step that Tehran would likely resist, the U.S. would need the support of a majority of the other JCPOA signatories.

The JCPOA and its Implementation

To be sure, the JCPOA is imperfect. Particularly controversial is the fact that it allows Iran to maintain its entire nuclear infrastructure, and to continue conducting research. Moreover, the deal is of limited duration. Iran can return to full-scale uranium enrichment – a dual-use technology that can be used for the production of bomb-grade fissile material – once special restrictions in the JCPOA are removed, beginning about eight years from now. Because Tehran probably knows how to build nuclear explosive devices, it is what nuclear proliferation experts call a “threshold state”: A country that has the knowledge and the infrastructure available to become a nuclear state in a short period of time. Moreover, the JCPOA does not limit Iran’s right to develop and test ever more sophisticated missiles. It is therefore free to perfect its delivery systems, which could be fitted with nuclear weapons.

In spite of such flaws, the JCPOA is a remarkable achievement. It is the only example of a determined violator of the Nuclear Non-Proliferation Treaty (NPT) having been brought back into full compliance without using military force. This was made possible by the creation of an international coalition, which was initiated by the three main European powers – France, United Kingdom and Germany – in October 2003. In an intense diplomatic effort, this troika and the EU joined forces with an initially hesitant George W. Bush administration, as well as with Russia and China. The E3/EU plus 3, or P-5 plus 1, orchestrated, beginning in July 2006, the adoption of a series of UN Security Council resolutions directed against the Iranian nuclear program, including sanctions. When Barack Obama became president, the US immediately took the lead in these diplomatic efforts, which eventually led to the JCPOA.

Unsurprisingly, Iran has tested the limits of the agreement. For instance, its heavy water production exceeded the cap defined by the JCPOA. But this issue has been addressed through the Joint Commission that was set up as a negotiating channel between the E-3/EU plus 3 and Iran. So far, the IAEA apparently has not inspected Iranian military sites, because it did not feel this to be necessary, given that Iran’s plutonium reactor at Arak remains filled with concrete; 15,000 centrifuges for uranium enrichment remain locked under IAEA supervision; and Tehran continues to provide inspectors with timely access across the entire uranium chain. At this point, in contrast to Trump and the hawks in his administration, representatives of the E-3/EU plus 3 and the IAEA believe that the JCPOA is working.2

The Threat of Nuclear Proliferation

The cornerstone of international efforts to prevent the proliferation of nuclear weapons, the Nuclear Non-Proliferation Treaty (NPT), has been under stress for some time. Many non-nuclear weapons states contend that the disarmament pace prescribed by this treaty is too slow. The recent adoption in the UN of a treaty on the prohibition of nuclear weapons will further complicate matters. All nuclear weapon states, and those that shelter under the U.S. nuclear umbrella, have boycotted this agreement – a split which is heightening divisions within the NPT community.3Furthermore, one of the few things that NPT members agree upon is continued implementation of the JCPOA, which many see as essential.

Hence, if the Trump administration were to abandon the JCPOA, this would weaken the nuclear nonproliferation norm. Iran’s nuclear program would be freed from the special JCPOA constraints.Moreover, more states may consider the nuclear option. For instance, Iran’s archrival Saudi Arabia might seek to develop a nuclear capability, which would further destabilize the Middle East. In addition, at a time when North Korea is in the process of developing intercontinental ballistic missiles that it could fit with nuclear warheads, Japan and South Korea have already begun to question U.S. security guarantees. They note that, in the event of a military confrontation with Pyongyang, Washington would have to reckon with the possibility of a nuclear strike on its west coast. This has bolstered those in both countries, especially in South Korea, who wish to establish an independent nuclear deterrent. Until now, the very existence of the NPT has served as a check on these arguments. But within the context of a weakened NPT, South Korea – and other states such as Japan – going nuclear could become more likely.4

Europe: Time for Action

In the upcoming months, European governments should do their utmost to convince the Trump administration to not abolish the JCPOA. This will require intensive dialogue with the right people in Washington. These are no longer representatives of the State Department, who seem to have entirely lost their influence. Rather, European officials need to approach national security professionals that value transatlantic cooperation, such as Secretary Mattis. However, if possible, a dialogue with Trump advisers such as Bannon and Gorka might also be useful. Furthermore, Congress needs to be brought into the loop. Influential figures such as Republican Bob Corker, Chairman of the Senate Foreign Relations Committee, seem to be more flexible than the hardliners.

European officials should emphasize four points.

First, they should reassure their counterparts that they would continue to support Washington in any meaningful effort to ensure that Iran implements all of the JCPOA provisions, including verification, but that the respective regulations should not be abused.

 

Second, the Europeans need to make it clear that they continue to support U.S. sanctions that are directed against human rights abuses and the Iranian missile program. Such was the case in August 2017, when the U.S., joined by the UK, France and Germany, sent a joint letter to the UN Security Council and the Secretary General. Iran’s launch of a missile that carried a satellite into orbit, the letter noted, was inconsistent with UNSCR 2231, which codified the JCPOA.5

 

Third, European policymakers should seek to convince the White House that they would not allow Tehran to withdraw from the JCPOA, and thereby win the blame game, by arguing that sanctions directed against the Iranian missile program contradict the JCPOA.

 

Fourth, however, Europe must leave no room for doubt: unilateral withdrawal from the JCPOA, let alone military action against Iran, would leave the U.S. isolated.

 end To add to the mess globally, Iran will now send a warship flotilla to the West Atlantic as they will build their arsenal.  No doubt they are using the hostage money to build up their weapons. (courtesy zerohedge) Iran To Send Warship Flotilla To West Atlantic Amid Massive New Military Build Up

Tehran is preparing to send a flotilla of Iranian warships to the western Atlantic Ocean following the announcement of a massive $500 million investment in war spending, according to Iranian leaders, who say the military moves are in response to recent efforts by the United States to impose a package of new economic sanctions on Iran, the Free Beacon reports.

With tensions over sanctions and Iran’s compliance with the nuclear agreement growing, Iranian parliamentary members voted to increase war spending by over half a billion dollars (it was unclear if the cash is from the ransom paid by Obama to free several US hostages one year ago). This is at least the second recent cash infusion to Iran’s military since the landmark nuclear deal that unfroze billions in Iranian assets and saw the United States awarding Tehran millions in cash. As BBC adds, Iranian lawmakers shouted “death to America” as they voted; the new measure proposes that the government allocates an additional $260MM for the “development of the missile programme” and the same amount to Iran’s Quds Force, a branch of the country’s Revolutionary Guards Corps, the official state news agency Irna said.

Iran said the funding for its missile defence was “not in violation” of a 2015 nuclear deal

Parliamentary speaker Ali Larijani said the move was meant to counter Washington’s “terrorist and adventurist activities” in the Middle East, AFP news agency reports. The 27-point bill will also impose sanctions on US military and intelligence officials in the region.

Michael Rubin, a former Pentagon adviser and expert on rogue regimes, said that Iran’s recent behavior shows the regime has not moderated since the nuclear deal was implemented. The Obama administration sold the deal in part on promises that it could help bring Tehran into the community of nations.

 

“Every time the Islamic Republic has cash, it chooses guns over butter,” Rubin told the Washington Free Beacon. “What the [nuclear deal] and subsequent hostage ransom did was fill Iran’s coffers, and now we see the result of that.”
And with the funding procured, Iran wasted no time in delineating plans on how to spend it. Speaking at a military cereomny in Tehran, Real Admiral Habibollah Sayyari said American commanders should not underestimate the capabilities of the Iranian Navy, promising to let his fleet set sail for the western part of the Atlantic in the near future. “No military official in the world thought that we can go around Africa to the Atlantic Ocean through the Suez Canal, but we did it as we had declared that we would go to the Atlantic and its western waters,” the admiral was quoted by Iranian media over the weekend.

Iranian destroyer Alborz

Sayyari also said that in a recent program on CNN US officials had tried to portray the Iranian Navy as weak and unable to operate over large distances: “[In a program aired] on CNN, they [the Americans] drew a line from Bandar Abbas [an Iranian seaport] to the Atlantic and said Iran is by no means is capable of entering the ocean and passing through it,” he added.

“We moved into the Atlantic and will go to its Western waters in the near future,” Sayyari said.

Sayyari has said previously that the redeployment of Iranian Navy forces to the Atlantic was one of his priorities. “Redeployment in the Atlantic Ocean, intelligence superiority, development of communications, progress in the development of the Makran coast and building new vessels are among the navy’s plans this year,” Fars quoted Sayyari in April.

In recent years, Iran’s Navy has been increasing its presence in international waters to protect naval routes and provide security for trade vessels and tankers. The Islamic Republic has repeatedly asserted that its overseas naval presence is meant to convey a message of peace and friendship to other countries. Iranian officials and commanders have repeatedly underlined that all military exercises and trainings of the Iranian Armed Forces are merely meant to serve deterrent purposes.

 end 6 .GLOBAL ISSUES 7. OIL ISSUES

As rig counts continue to rise, production seems to be rising in the Permian basin.  Will this push oil prices down to 40$ per barrel

(courtesy I. Slav/Oil Price.com)

Can The Permian Push Oil Prices Down To $40?

Authored by Irina Slav via OilPrice.com,

Two analyst firms have revised upwards their production growth forecasts for the Permian, expecting oil output there to be 300,000 bpd higher by the end of this year. The firms are none other than Wood Mackenzie, whose analysts expect 300,000 bpd more in Permian output by end-2017—a 200,000-bpd increase to its year-end forecast—and Rystad, which sees the cumulative increase for June-December at 300,000 bpd.

That’s the kind of consensus market players like to see, especially when it comes a couple of days after reports that investors are pulling out from the Permian after Pioneer Resources reported the share of natural gas and gas liquids in its overall output has been rising at the expense of oil. Investors love their crude, after all, and are much less excited about gas.

Amid the worry, which some say is not as widespread as it may seem, the upbeat forecasts of these analysts were certainly welcome. Indeed, EIA data shows that the Permian continues to be the leader among the shale plays in terms of production growth. This month, output there is seen to rise by 64,000 bpd from July, to 2.535 million bpd. To compare, the second-fastest output growth is forecast for Eagle Ford, at a distant 27,000 bpd this month. In fact, the Permian should account for over half of the total U.S. shale oil output increase in August from July. The figure stands at 113,000 bpd. Related: Oil Rises, But Saudis Face Daunting Dilemma

Going back three months in EIA’s drilling productivity reports reveals that the rate of production growth in the Permian was within the range of 65,000 bpd (in June) to 76,000 bpd (in April). In the first quarter, production growth rose from 53,000 bpd in January to 79,000 bpd in March. One thing seems very obvious: the monthly growth rates so far this year are lower than 100,000 bpd, let alone the 300,000 bpd Rystad and Wood Mac forecast.

That’s because so far this year drillers have rushed to add rigs, but the output from these new rigs takes a few months to show up on production reports. This means that over the next four to five months, if the analysts are right, we’re likely to see a pretty sharp increase in Permian oil output. This, in turn, could spell US$40 for West Texas Intermediate.

An analysis by Oil & Gas Financial Journal’s Mikaila Adams quotes some energy independents’ spending plans, which suggest this year’s push will continue as initially planned in the happy days following OPEC’s decision to start cutting, but next year many independents are likely to take it down a notch, anticipating a potential price fall to US$40-45. In other words, these companies are preparing for the consequences of their output boost. Some, and no small fish, have already announced capex cuts for this year, including Anadarko and Continental. The total capex cut for shale producers for the year has come in at US$1.2 billion.

Continental’s Harold Hamm warned his peers that too aggressive an output increase would drive prices into the ground. The temptation, however, must have been irresistible, what with all the debt to pay, so shale operators continue to ramp up production. The latest news suggests they are being more careful than last time, however. These plans to cut spending and reduce rigs counts in case prices start falling below the minimum comfortable level indicate that shale producers are wary of being caught by surprise again, as they were in 2014. Perhaps, if the Permian production growth estimates prove true, we might get to see exactly how nimble shale operators can be when push comes to shove.

 END WTI lifts towards $48.00 after a huge draw (courtesy zerohedge) WTI Lifts Towards $48 After Biggest Crude Inventory Draw Since September

WTI slipped back to almost a $46 handle today before bouncing modestly into the close ahead of tonight’s API report, with all bullish eyes hoping last week’s surprise gasoline build was a ‘blip’. API reported a much larger than expected crude draw (biggest since Sept 2016) and while WTI rallied on the print, it was a very modest move (that for now failed to achieve $48) as we suspect the fact thatgasoline saw another surprise build weighed on sentiment.

 

API

  • Crude -9.2mm (-472k exp) – biggest draw since Sept 2016
  • Cushing +1.7mm (+700k exp)
  • Gasoline +301k (-450k exp) – second weekly build in a row
  • Distillates -2.1mm (-250k exp)

Last week’s surprising gasoline inventory build was overwhelmed by a much larger than expected crude draw reported by API… and the same appears to have happened this week – big crude draw, modest gasoline build…

Additionally, the DOE confirmed it will sell 14 million barrels of crude from the SPR later this month.

 

WTI was hovering around $49 ahead of last week’s API data and is hovering just above $47 into today’s print… futures rose very modestly as the crude draw exuberance was offset by the gasoline build.

“As much as oil inventories have been coming down in the U.S., which is something that is seasonally normal, the fact that U.S. shale production is very resilient and is again confirmed by this EIA Drilling Productivity Report, that is something that is weighing on the market’s mind,” says Harry Tchilinguirian, hea

8. EMERGING MARKET

VENEZUELA

end

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   1.1757 DOWN .0019/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE GREEN 

USA/JAPAN YEN 110.40 UP 0.472(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2874 DOWN .0091 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2739 UP .0010 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS TUESDAY morning in Europe, the Euro FELL by 19 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1757; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 13.90 POINTS OR 0.43%     / Hang Sang  CLOSED DOWN 75.27 POINTS OR 0.28% /AUSTRALIA  CLOSED UP 0.43% / EUROPEAN BOURSES OPENED  DEEPLY IN THE GREEN 

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

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

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

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

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

The NIKKEI: this TUESDAY morning CLOSED UP 216.21 POINTS OR 1.11%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 75.27 POINTS OR 0.28%  / SHANGHAI CLOSED UP 28.92 POINTS OR 0.90%   /Australia BOURSE CLOSED UP 0.43% /Nikkei (Japan)CLOSED UP 216,21  POINTS OR 1.11%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1274.60

silver:$16.88

Early TUESDAY morning USA 10 year bond yield: 2.250% !!!  UP 3   IN POINTS from MONDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.8347, UP 2  IN BASIS POINTS  from MONDAY night.

USA dollar index early TUESDAY morning: 93.73 UP 31  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: 2.840% UP 3 in basis point(s) yield from MONDAY 

JAPANESE BOND YIELD: +.05%  DOWN 4/5   in   basis point yield from MONDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.473% UP 4   IN basis point yield from MONDAY 

ITALIAN 10 YR BOND YIELD: 2.048 UP 3 POINTS  in basis point yield from MONDAY 

the Italian 10 yr bond yield is trading 58 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.433% UP 2  IN  BASIS POINTS ON THE DAY

END

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IMPORTANT CURRENCY CLOSES FOR TUESDAY

Closing currency crosses for TUESDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/5:00 PM 

Euro/USA 1.1733 DOWN .0042 (Euro DOWN 42 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 110.48 UP 0.551(Yen DOWN 55 basis points/ 

Great Britain/USA 1.2865 DOWN  0.0098( POUND DOWN 98 BASIS POINTS)

USA/Canada 1.2762 UP .0033 (Canadian dollar DOWN 33 basis points AS OIL FELL TO $47.54

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This afternoon, the Euro was DOWN  by 42 basis points to trade at 1.1733

The Yen FELL to 110.48 for a LOSS of 55  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 BY 98  basis points, trading at 1.2865/ 

The Canadian dollar FELL by 33 basis points to 1.2762,  WITH WTI OIL FALLING TO :  $47.54

The USA/Yuan closed at 6.6855/ the 10 yr Japanese bond yield closed at +.050%  DOWN 4/5 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 6  IN basis points from MONDAY at 2.262% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.839 UP 5 in basis points on the day /

Your closing USA dollar index, 93.85  UP 43 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 21.50 POINTS OR 0.29%
German Dax :CLOSED UP 11.92 POINTS OR 0.10%
Paris Cac  CLOSED UP 18.58 POINTS OR 0.36% 
Spain IBEX CLOSED UP  20.30 POINTS OR 0.19%

Italian MIB: CLOSED 

The Dow closed UP 5.28 OR 0.02%

NASDAQ WAS closed DOWN 7.22  POINTS OR 0.11%  4.00 PM EST

WTI Oil price;  47.52 at 1:00 pm; 

Brent Oil: 50.85 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.76 DOWN 13/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 13 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.433%  FOR THE 10 YR BOND  4.PM EST 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 5:00 PM:$47.70

BRENT: $50.95

USA 10 YR BOND YIELD: 2.273%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.848%

EURO/USA DOLLAR CROSS:  1.1734 down .0042

USA/JAPANESE YEN:110.63  UP  0.703

USA DOLLAR INDEX: 93.84  up 43  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2862 : down 102 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2754 down 26 BASIS pts 

German 10 yr bond yield at 5 pm: +0.433%

END

And now your more important USA stories which will influence the price of gold/silver TRADING IN GRAPH FORM FOR THE DAY Bonds, Bullion, Bitcoin, & Black Gold Slump As Dollar Jumps Most In 3 Months

Tepper tells us “we’re nowhere near bubble levels in the stock market” – so buy… what’s to worry about?

 

Trannies were top today, Small Caps slammed as Dow, S&P, and Nasdaq trod water… before closing weak… (Boeing and Apple saved The Dow, adding 30 points between them today as HD removed 30)

 

VIX was lower once again on all the major indices…Small Cap vol remains notably elevated relative to the rest…

 

By the close, gold and bonds were unchanged from the retail sales print but Nasdaq was lower…

 

Retailer stocks crashed again today (despite surging retail sales?)

 

Leaving XRT hovering at critical support…

 

With record low correlation to the market…

 

AAPL hit a new record high today as the rotation from FANG stocks continues…

 

Credit ain’t buying the equity bounce...

 

December rate hike odds retraced the entire CPI-miss-drop...

 

Treasury yields roller-coastered today… but the trend continues as we suspect rate-locks and marginal rotation for the AMZN issue were a big driver…

 

30Y yields extended yesterday’s rise overnight as the market prepared for a yuuge AMZN debt issue, spiked higher on Retail Sales, but immediately reversing having tagged 2.87% (last week’s highs) before tumbling… but ending up 3bps…

 

Still despite US bonds pushing higher in yields, Spain hit a new record low (2Y at -33.3bps) and the world’s volume of negative-yielding debt soared back to its highest since Oct 2016…

 

 

The Dollar Index rose for the second day in a row – this is the biggest 2-day jump in over 3 months… (NOTE that like TSYs, USD spiked on the retail sales dats then immediately tumbled back)…

 

The question is – what happens next?

 

EURUSD certainly looks a little rich here…

 

Bitcoin saw some serious vol intraday – dropping $650 from its record $4400 highs, it quickly ramped back up to $4150 by the close…

 

Gold sank once again today…but rebounded off the retail sales dump…

 

And notably GDX short interest surged to its hghest since Feb 2016…

 

Having tagged $50 late last week, WTI traded down to $47 today before bouncing a little ahead of tonight’s API inventory data…

 

And finally, the 1987 analog is stil holding…

 

Maybe this is the catalyst?

 

 

end

 

Early trading this morning:

Dollar Spikes To 3-Week Highs, Nasdaq Dips After Retail Sales Beat

The market’s reaction to this morning’s retail sales beat is mixed. The Dollar is surging, gold is tanking, and while The Dow is unch, Nasdaq is sliding…

Gold, Bonds, and Tech stocks are sinking post-data…

 

But the dollar is surging…

 

We wonder if this is the start of 2016 deja vu all over again…

 

end

 

I have been highlighting to you the 3 major debt categories inside household debt for uSA citizens:

i) revolving credit (credit card debt)

ii) student loan debt

iii) auto loan debt

although mortgages represents the largest category for household debt, it is the above 3 that are signalling trouble for citizens. The Fed has now sounded the alarm bell on the above

(courtesy zerohedge)

 

The Fed Issues A Warning As Household Debt Hits New All Time High

After we first reported last week that US credit card debt hit a new all time high with both student and auto loans rising to fresh records with every new report…

… it won’t come as a surprise that according to the just released latest quarterly household debt and credit report by the NY Fed, Americans’ debt rose to a new record high in the second quarter on the back of an increase in every form of debt: from mortgage, to auto, student and credit card debt. Aggregate household debt increased for the 12th consecutive quarter, and are now $164 billion higher than the previous peak of $12.68 trillion set in Q3, 2008. As of June 30, 2017, total household indebtedness was $12.84 trillion, or 69% of US GDP: a $114 billion (0.9%) increase from the first quarter of 2017 and up $552 billion from a year ago. Overall household debt is now 15.1% above the Q2 2013 trough.

Mortgage balances, the largest component of household debt, increased again during the first quarter to $8.69 trillion, an increase of $64 billion from the first quarter of 2017. Balances on home equity lines of credit (HELOC) were roughly flat, and now stand at $452 billion. Non-housing balances were up in the second quarter. Auto loans grew by $23 billion and credit card balances increased by $20 billion, while student loan balances were roughly flat.

  • Confirming the slowdown in mortgage activity, mortgage originations in Q2 declined to $421 billion from $491 billion. Meanwhile, there were $148 billion in auto loan originations in the second quarter of 2017, an uptick from the first quarter and about the same as the very high level in the 2nd quarter of 2016.
  • Auto loan balances increased by $23 billion, continuing their 6-year trend. Auto loan delinquency rates increased slightly, with 3.9% of auto loan balances 90 or more days delinquent on June 30. The aggregate credit card limit rose for the 18h consecutive quarter, with a 1.6% increase.
  • Outstanding student loan balances rose modestly, and stood at $1.34 trillion as of June 30, 2017. The second quarter typically witnesses slow or no growth in student loan balances due to the academic cycle. As discussed previously, a perilously high 11.2% of aggregate student loan debt was 90+ days delinquent or in default in 2017 Q2.

In a troubling development, the report noted that the distribution of the credit scores of newly originating mortgage and auto loan borrowers shifted downward somewhat, as the median score for originating borrowers for auto loans dropped 8 points to 698, and the median origination score for mortgages declined to 754. For now this credit score decline has not impacted the credit market: about 85,000 individuals had a new foreclosure notation added to their credit reports in the second quarter as foreclosures remained low by historical standards.

And while much of the report was in line with recent trends, and the overall debt that was delinquent, at 4.8%, was on par with the previous quarters, the NY Fed did issue a red flag warning over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.”

Discussing the troubling deterioration in credit card defaults, first pointed out here in April, the New York Fed said that credit card balance flows into both early and serious delinquencies increased from a year ago, describing this as “a persistent upward movement not seen since 2009.” As shown in the chart below, the transition into 30 and 90-Day delinquencies has, over the past two quarters, surged to the highest rate since the first quarter of 2013, suggesting something drastically changed in the last three quarters when it comes to US consumer behavior.

“While relatively low, credit card delinquency flows climbed notably over the past year,” said Andrew Haughwout, senior vice president at the New York Fed. “This is occurring within the context of loosening lending standards, as borrowers with lower credit scores recover their ability to access credit cards. The current state of credit card delinquency flows can be an early indicator of future trends and we will closely monitor the degree to which this uptick is predictive of further consumer distress.

That bolded statement, is the first official warning by the Fed that the US consumer is sick, and the Fed has no way reasonable explanation for this troubling jump in delinquencies. Timestamp it, because this will certainly not the be the last time the Fed warns about the dangerous consequences of all-time high credit card debt.

As for the “further uptick in consumer distress”, we are just guessing but the fact that credit card defaults are jumping at a time when sales at fast food and other restaurants have declined for 17 consecutive quarters, and when $250 billion in US household savings was just “revised” away, may all be connected.

end

 

 

the USA restaurant business is now in a mess as people just shy away from eating out.  As far are discretionary spending is concerned, this seems to be the first to take a hit.

Can someone explain then how could the BLS report an increase in bartenders and waitresses with this going on?

 

(courtesy zero hedge)

 

U.S. Restaurant Industry Stuck In Worst Collapse Since 2009

Shortly after we reported that the “restaurant industry hasn’t reported a positive month since February 2016“, we can add one more month to the running total: according to the latest update from Black Box Intelligence’s TDn2K research, in July both same-store sales and foot traffic declined once again, and this time the slide was more pronounced, tumbling by -2.8% and -4.7% compared to declines of “only” -1% and -3% in June, respectively, in the process extending the stretch of year-over-year declines for the US restaurant industry to 17 consecutive months – the longest stretch since the financial crisis.

Source: @GS_CapSF

Sales rose in only 12 markets while declining in 183 with the Midwest – the worst region in the US – suffering a 3.6% and 5.2% decline in sales and traffic respectively, while even the best region, California”, posted a decline in both sales (-0.7%) and traffic (-3.6%).

Source: TDn2K

Unlike last month, not even Black Box Intelligence’s TDn2K research tried to spin the data, noting that the “sales rebound optimism was short lived” as “July restaurant sales tumbled.”

“July proved to be a tough month for chain restaurants,” said Victor Fernandez, Executive Director of Insights and Knowledge for TDn2K.

“Based on recent trends, we were cautiously optimistic that the tide was turning a bit, especially since brands were comparing against weaker comps in 2016.” But not so much any more.

According to Black Box, calculated on a two-year basis, sales in July 2017 were down -4.2% compared with July of 2015, in other words there has been no growth in over two years. The data is even worse for same-store traffic, which was down -8.7% for that same period. These are the weakest two-year growth rates in over three years, additional evidence that the industry has not reversed the downward trend that began in early 2015.

In light of the surprisingly poor monthly results, the consultant appear to have not only given up on any recovery in the restaurant sector, but are now extrapolating the weakness to the broader economy.

“While the economy keeps growing at a moderate pace and job gains remain strong, the consumer seems to be on vacation – literally and figuratively,” said Joel Naroff, President of Naroff Economic Advisors and TDn2K economist whose Industry Snapshot tracks sales at 27,000 restaurant units from 155 brands, generating $67 billion in annual revenue. That’s about 10% of total “eating and drinking places” revenues as tracked by the Commerce Department

One of the clearest indicators that households are spending cautiously is the softening of big-ticket purchases. In July, for the eleventh month out of the last twelve, vehicle sales were below the rate posted the year before. Home sales, while still trending up, are now expanding at a decelerating pace.”

While food and alcohol sales were down, prices once again rose, with the the average amount per check rising 1.8% in July, which once again was not enough to make up for the decline in customer count, confirming that restaurants have little to no pricing power to even stay up with inflation. Black Box adds that the growth in check averages has slowed in recent months “as brands fight the tide of continuing traffic declines.”

Check increases in 2015 and 2016 were largely an effort to maintain margins in the face of higher labor costs. The slowdown in check growth may be a combination of value platforms and increased deal activity aimed at increasing visitation frequency. It may also be recognition that top-line increases are under more scrutiny despite the potential impact to operating margins. Given that grocery prices have been dropping year over year, it is no surprise that restaurants have been compelled to review their value proposition

More troubling, Naroff pointed out something we first observed two weeks ago: the dramatic revision lower in the US personal savings rate, which wiped out $250 billion from what the Department of Commerce had previously calculated was a healthy personal savings backdrop:

Households are currently maintaining their lifestyles by reducing their savings rate and that is likely restraining spending on discretionary goods. We may have to wait until the fall or early winter, assuming wage gains accelerate by then, to see any pick up in restaurant sales.”

Here, as Wolf Richter laconically adds, “everyone is waiting for wage increases for the lower 80% of the wage earners that will finally outgrow inflation. That’s all it would take to crank up the economy, and even the restaurant business. People have been waiting for years for these real wage increases. But it’s just not happening.”

Furthermore, it goes without saying that the above assumption is a substantial problem for the roughly half of American households who have no savings in which to “dip” and fund discretionary purchases.

Meanwhile, as the vast majority of the US population struggles to make ends meet and digs into their meager savings, the far smaller group of high wage earners continue to spend generously at fine dininf establishments. Indeed, fine dining was the only segment up in July (0.4 percent) even as upscale casual was down fractionally. Still, the slowdown in fast casual sales noted in the past continued in July, as did softness for quick service. While much of fast casual’s headwinds are a result of rapid segment growth, the steady performance decline in lower PPA segments will be important to follow. Both segments outperformed the industry in 2015 and 2016, but trail through July of this year.

As reported last month, the pain among chain restaurants is due to a combination of factors, including:

  • The surge of independent restaurants, from high-end to delis.
  • “Grab-and-go” prepared foods available at every grocery store.
  • VC-funded meal replacement kits, such as Blue Apron, one of the most anticipated IPOs this year that has now totally crashed.
  • Convenience stores and food trucks

Meanwhile, as the government reported recently, June sales for “food service and drinking places” held at $56.0 billion, were flat with November 2016, a period of 8 months without growth. They were down 0.6% from January but still up 1.7% year-over-year. This weakness in nominal sales is also evident in the latest retail sales data which has been on a steady decline for the past two years.

… a fact corroborated by Bank of America’s internal spending data

Ironically, in addition to challenges from falling guest counts, the inability to pass through price increases, rising competition and declining overall spending, strong challenges continue to confront restaurants in both staffing and retaining enough qualified workers.   We say ironically, because as we showed after the latest jobs report, restaurant/fast food/waiter/bartender hiring remains the only strong spot in the US labor market. As the chart below shows, starting in March of 2010 and continuing through June of 2017, there have been 89 consecutive month of payroll gains for America’s waiters and bartenders, an unprecedented feat and an all time record for any job category. Putting this number in context, total job gains for the sector over the past 7 years have amounted to 2.4 million or over 14% of the total 16.7 million in new jobs created by the US over the past 89 months. Needless to say, these jobs fall within leisure and hospitality, that sector pays the worst wages, an average of $13.35 an hour, and $331.08 a week

And yet, according to BlackBox, restaurant operators are pessimistic regarding the difficulty of recruiting in the upcoming quarters. According to TDn2K’s People Report, 63 percent of companies reported an increase in difficulty recruiting qualified employees to staff their restaurants during the second quarter of 2016. Additionally, the expectations component of the index predicts continued job growth for the industry, with 47 percent of restaurant companies anticipating an increase in their number of hourly jobs. 42 percent reported an expected increase in their net number of restaurant management jobs.

As a result, retention continues to be a major challenge for the industry. Both restaurant management and hourly employee turnover increased again during June. However, the latest indicators may be hinting that increasing turnover rates are beginning to taper off. Still, even if turnover rates reach a plateau at their current levels, which is likely to be the best case scenario, they will remain at record high levels and continue to be a source of headaches for restaurant operators forced to keep raising wages to retain waiters and bartenders.

Putting it all together, we give the last word to Wolf Richter who summarizes the unsustainable situation as follows: “so credit card debt, at $1.02 trillion, has hit an all-time high. Auto loan balances, at $1.13 trillion, have far surpassed any prior all-time high. Housing costs are eating up an ever larger share of incomes. Healthcare costs are soaring. Households with kids in college are paying a big price. Many millennials, even those with good jobs, are buckling under their student loans, which have skyrocketed 164% over the past ten years to $1.45 trillion. And inflation-adjusted discretionary spending such as for restaurants by people at the lower 80% of the income scale is taking a hit. Something has to give. It’s the description of a messed-up economy.”

end

 

 

We have been also highlighting to you the plight of used car prices. The lower the prices for used car means trouble selling brand new cards.  They have to offer incentives in order to sell.

 

e.g. a brand new car selling for $40,000 as 0 dollars down and 80 months at 0 interest

real problems in the auto sector

(courtesy zerohedge)

 

 

 

Used Car Prices Crash To Lowest Level Since 2009 Amid Glut Of Off-Lease Supply

The U.S. auto market is at an interesting crossroads with used car prices crashing to new lows every month while new car prices continue to defy gravity courtesy of a somewhat ‘frothy’, if not suicidal, lending market that has seemingly decided that anyone with a pulse is financially qualified for a $0 down, 0% interest, 80 month loan on a brand new $40,000 luxury vehicle of their choice.

As the Labor Department’s consumer-price index data showed last Friday, used car prices once again dropped in July to the lowest level since the ‘great recession’ of 2009.  In fact, since the end of 2015, the cost of used vehicles has dropped in all but three months and are now roughly 10% off their 2013 high.

 

Unfortunately, the outlook for the used market is only expected to get worse with the volume of lease returns expected to soar to nearly 4mm units by 2018.

 

Meanwhile, despite modest weakness over the past two months, new car prices have held up fairly well…

 

…even as the domestic auto OEM’s continue to flood dealer lots with new inventory that isn’t moving.

 

Of course, logic would dictate that some level of substitution would have to take over at some point as the financial benefits of buying a used car eventually outweigh the social indignity of cruising around town in a 3-year old clunker.

That said, those innovative “Low Credit Score” discounts do make new car buying very attractive…

 

end

Retail sales rebound in July but it must be due to huge incentives offered by the auto dealers and dept stores

 

(courtesy zero hedge)

 

Retail Sales Rebound In July – Biggest Jump Since Dec 2016 On Record Auto Incentives

After declining for two straight months, US Retail Sales in July rebounded dramatically to a 0.6% MoM gain – the most since Dec 2016 – driven a surge in motor vehicles (record incentives) and department stores (more inventives?). Year-over-year saw upward revisions and a rebound to a 4.2% rise in July.

The last two month’s declines in Retail Sales have been revised away magically and we have now gone 5 months without a decline…

 

Everything rose except clothing stores (-0.2%), electronics and appliance stores (-0.5%) and gasoline stations (-0.4%)

How sustainable is this? Record automaker incentives and a desperate ‘retailer’/department store business slashing prices to maintain some revenues?

 

END

One analyst just does not believe those retail numbers today

(courtesy zerohedge)

One Analyst Throws Up On Today’s Retail Sales Data: Here’s Why

Two weeks ago we reported that July auto sales were a disaster: recall sales for bloated with inventory GM were down 15% YoY, Ford off 7% and Chrysler down 11% – despite record incentive spending – as overall auto sales declined and disappointed for yet another month. And yet, according to this morning’s retail sales report from the Census Bureau, sales for “motor vehicle & parts stores” rose much more robustly than anyone had anticipated, rising 1.2%, the fastest pace since December.

This number was so bizarre, and so out of context with recent sales data, that SouthBay Research threw up all over it in its morning note today. Here’s why:

  • Retail Sales m/m: 0.6%
  • Retail Sales ex Autos m/m: 0.45%
  • Retail Sales ex Autos & Amazon m/m: 0.3%

Consumer Retail Spending was Actually Mild, As Expected

  • Auto Sales growth unbelievable
  • Amazon Prime Day juiced the results

 

Don’t believe the auto sales data.  Per the BEA, unit sales were flat m/m (+90K).  Meanwhile, per JD Power, July average retail prices were $950 lower than June’s as auto dealers struggled to make sales and incentives averaged $3.9K, the highest on record and $100 higher than June.

  • Hmmm, no rise in auto sales per the real world and the BEA.  Coupled with a fall in net prices. But in fantasy land, the Census Bureau announces a $1.2B m/m jump in sales and a 7%+ y/y rise.

 

Amazon Prime Day Was Huge…and will Cut August Sales

  • Nonstore Retail Sales jumped $700M m/m.  That’s the Amazon Prime Day effect. I modeled it lower and that’s the source of my miss this month

 

Reasons for Caution: Government Data is Overstating Reality

  • The Retail strength does reinforce my view that macro data favors the US in 2H and that the dollar is oversold. But the Retail headline figure is wrong and analysts were correct: consumer spending as captured by Retail is sluggish.  The fact that reality is badly captured by the Retail figures is concerning insofar as it affects the Fed’s decision making.

 

The opportunity is to recognize that consumer spending in the real world will pull back and it will also be missed by the official data.  With Consensus unprepared for the pull back, it will deliver a greater shock.

Meanwhile, here’s a quick look at SouthBay’s proprietary “Vice Index.”

For those who are unfamiliar, the vice index tracks US consumer spending on alcohol, marijuana, prostitution and gambling, Vices are a special form of discretionary spending that is highly sensitive to near-term
economic conditions: i) Cash based: depends on free cash flow; ii) Luxury spending: wants not needs; iii) Significant dollar amount: not pricey but not cheap. Vice spending is broadly representative of the US consumer: i) Broad-based: Every socioeconomic and demographic group participates; ii) High-volume transactions: Over 100M discrete events per year.

The reason why this index is of particular interest, is because vices predict retail spending with a 4-month lead. Luxury spending is the 1st thing to be affected by changes in household finances.

This is what the index shows:

 

 

END

 

Take this with a grain of salt:  the New York Manufacturing Fed surges the highest in 3 years despite profit margins getting crushed

 

(courtesy NYFed Manufacturing Index/zerohedge)

New York Fed Manufacturing Surges To Highest In Three Years But Profit Margins Crushed

The August Empire State Manufacturing Index printed at a blistering 25.2, reversing last month’s plunge to 9.8, smashing expectations of a 10.0 print, and the highest print since September 2014.

The surge was driven by the new orders index which rose seven points to 20.6 and the shipments index, which hit 12.4. Meanwhile, delivery times continued to lengthen suggesting growing capacity problems in the supply chain, while inventory levels declined. More good news came from labor market indicators, which pointed to an increase in employment and hours worked.

However, the biggest red flag was for corporate margins, as prices paid spiked 9.7, from 21.3 to 31.0 while prices received declined -4.8, from 11.0 to 6.2, keeping a lid on profits. The spread between the Prices Received and Prices Paid, a proxy for corporate profits, declined to the lowest in 5 years.

That above, however, did not dent firms’ optimism, and after the Empire State “Hope” Index plunged last month to an 8 month low, it rebounded in August, with indexes assessing the six-month outlook suggested that firms were quite optimistic about future conditions. The index for future business conditions rose ten points to 45.2, and the index for future new orders moved up eight points to 41.3. Employment was  expected to increase modestly, though the average workweek was expected to decline slightly.

Finally, not even the traditionally optimistic outlook had anything good to say about an increase in corporate spending: the future capex index slipped to 11.6, the lowest in almost one year.

 

 

END

 

This is not good:  the huge increase in auto inventories causes the Inventory/sales ratio to jump to its highest level since Nov 16

 

(courtesy zero hedge)

Business Inventories-To-Sales Ratio Jumps To Highest Since Nov ’16 As Auto Inventories Spike

Once again motor vehicles dominated the rise in inventories in June (up 0.7% MoM) as retail inventories rose 0.6% MoM but sales lagged at just 0.3%. This mismatch pushed the aggregate inventory-to-sales ratio back to its highest since Nov 2016 at 1.38 months.

 

But it’s autos that remain near ex-crisis highs in inventories…

 

end

 

Bricks and Mortar operations continue on its death knell

(courtesy zerohedge)

Chain-Store Stock Carnage Continues (Despite Biggest Jump In Retail Sales Since 2016)

Oh the irony – as bulls celebrate the best jump in retail sales since 2016, the scene for retailer stocks is an utter bloodbath

Earlier today, US Retail Sales in July rebounded dramatically to a 0.6% MoM gain – the most since Dec 2016 – driven a surge in motor vehicles (record incentives) and department stores (more inventives?). Year-over-year saw upward revisions and a rebound to a 4.2% rise in July.

The last two month’s declines in Retail Sales have been revised away magically and we have now gone 5 months without a decline…

 

But one glimpse at the carnage in chain-store stocks tells a very different story… Following a week of disappointing earnings from J.C. Penney Co. and Macy’s Inc., the drumbeat resumed Tuesday as results from Advance Auto Parts Inc., Coach Inc. and Dick’s Sporting Goods Inc. sent their shares crashing…

 

As Bloomberg notes, at this rate, the group is poised for the worst annual decline in share prices since the financial crisis.

“Everybody is being burned in retail and people are just questioning, ‘Is there any place that’s Amazon-free?’”Gary Bradshaw, a Dallas-based fund manager for Hodges Capital Management Inc., said by phone.

 

“There will be some winners in retail but boy, it’s just a land mine.”

However, Vitaliy Katsenelson more accurately states It’s not just Amazon’s fault. Changing consumer habits are killing old retail biz…

Retail stocks have been annihilated recently, despite the economy eking out growth. The fundamentals of the retail business look horrible: Sales are stagnating and profitability is getting worse with every passing quarter.

 

Jeff Bezos and Amazon get most of the credit, but this credit is misplaced. Today, online sales represent only 8.5 percent of total retail sales. Amazon, at $80 billion in sales, accounts only for 1.5 percent of total U.S. retail sales, which at the end of 2016 were around $5.5 trillion. Though it is human nature to look for the simplest explanation, in truth, the confluence of a half-dozen unrelated developments is responsible for weak retail sales.

 

Our consumption needs and preferences have changed significantly. Ten years ago we spent a pittance on cellphones. Today Apple sells roughly $100 billion worth of i-goods in the U.S., and about two-thirds of those sales are iPhones.

 

Consumer income has not changed much since 2006, thus over the last 10 years $190 billion in consumer spending was diverted toward mobile phones. Between phones and their services, this is $340 billion that will not be spent on T-shirts and shoes.

 

But we are not done. The combination of mid-single-digit health-care inflation and the proliferation of high-deductible plans has increased consumer direct health-care costs and further chipped away at our discretionary dollars. Health-care spending in the U.S. is $3.3 trillion, and just 3 percent of that figure is almost $100 billion.

 

Then there are soft, hard-to-quantify factors. Millennials and millennial-want-to-be generations (speaking for myself here) don’t really care about clothes as much as we may have 10 years ago.

 

All this brings us to a hard and sad reality: The U.S. is over-retailed. We simply have too many stores. Americans have four or five times more square footage per capita than other developed countries. This bloated square footage was created for a different consumer, the one who in in the ’90s and ’00s was borrowing money against her house and spending it at her local shopping mall.

But the bottom line, as we noted previously, is that America’s malls, retail stores, and fast-food restaurants are hugely overbuilt.

 

 

END

 

Dick’s CEO claims that the retail industry is now in panic mode as they cut prices to stay alive

 

(courtesy zerohedge)

Dick’s CEO: “The Retail Industry Is In Panic Mode”

With Dick’s stock crashing after reporting dreadful results this morning, in which both comp sales and EPS missed as the company slashed its full year guidance below even the lowest sellside forecast (it now sees full year EPS of $2.80 to $3.00, below the previous guidance of $3.65 to $3.75 and the Wall Street estimate of $3.62 ), the management team had no reason to hold back on today’s earnings call, and luckily – unlike many other retailers who still hold out hope that the worst is behind them – it did not, for an unvarnished look into the retail space.

Confirming just how little pricing power retailers have, CEO Ed Stack said “we have conducted extensive consumer research, and the customers have told us they feel our prices are not competitive in today’s environment” in which everyone is slashing price to capture market share, and as a result the company is “intentionally joining this battle, and we will aggressively be promoting our business to drive market share to our stores and online.”

Stack said he observed heavier promotions and price cuts particularly on athletic apparel, electronics, and hunting, fishing and camping gear which started as early as Father’s Day. “We started to see this happening a little bit before Father’s Day, and it continued to be very promotional, not only from retailers but also from some of the brands on a direct-to-consumer basis.”

Having no other choice, Dicks has joined the battle of the “deep discounters”, and has also launched a “best price guarantee” in which it promises customers that if they find a lower price on a product, Dick’s will match it. Of course, by doing so, the retailer assures that both Dick’s and its peers margins and net income shrink even more in the coming quarters.

Another major concern on the call – and to management – was the recent partnership between Amazon and Nike. Asked “how can you ensure that your positioning is still differentiated from that of the Amazon offering” the CEO responded: “We’ll see how this goes. They’ve been transparent talking to us about this test, and I suspect it will probably go well, and then Nike will decide what they want to do about it and how they want to handle the balance of the market. Our relationship with Nike has been – has always been very good. It continues to be very good. We continue to work with them on shops, on our footwear decks and exclusive products. They are a strategic vendor of ours and we’ve got great relationship and what we’re going to test and what they’ll do ultimately we’ll deal with that when it happens.”

Speaking to CNBC, SW Retail Advisors’ Stacey Widlitz said that “Dick’s is another example of Amazon becoming the new middleman… Here we go down the gross margin rabbit hole just in time for the holidays.”

Of course, if Nike ultimately decides to go exclusively with Amazon at least Dick’s terminal suffering will be greatly shortened. Meanwhile, as the call went on, there was the following striking admission by the CEO:

There’s a lot of people right now, I think, in retail and in this industry in panic mode. There’s been a difficult environment. I think people, I’m not going to speculate what they’re thinking, but they seem to be in panic mode with how they’re pricing product, and we think it’s going to continue to be promotional and at times, irrational going forward.

* * *

Just in case the message was not clear the first time, there was more panic: “People need to get rid of the inventory, and then some people are panicked as to what’s going to happen with their business from a growth standpoint.

* * *

And then, to top it off,  just a little more: “What’s going on in the marketplace right now is that it’s just very promotional, almost panicked in some cases, I think, especially in the hunt, fish categories. There’s a lot of inventory in the pipeline, and people need to move it out, and it’s going to continue to be promotional until this inventory gets moved out of the pipeline”

* * *

Finally, one can’t possibly use the word “panic” 4 times in a conference call without also adding the occasional “perfect storm”, and sure enough:

“So I think it’s just a perfect storm right now in retail, and I think sporting goods is in the center of it right now. There’ll be further consolidation. We’re seeing Gander Mountain closing right now. We’ll see what happens with some other retailers, but it’s a perfect storm right now. We’re not particularly happy that we’re in it.”

Meanwhile, as the legacy retail sector implodes and as US households drown under a record amount of debt (the two may be connected), the Fed is confused why credit card defaults as mysteriously surging at a time when the US economy is supposed to be recovering

end

 

The CBO states that if Trump does not pay the Obamacare subsidies in 2018, then premiums will surge around 20% per year and worse: Trump will be blamed

 

(courtesy zerohedge)

CBO Blames Trump: Sees 20% Surge In 2018 Obamacare Premiums If Subsidies Removed

At the request of Nancy Pelosi, the Congressional Budget Office has just released a study intended to better understand the potential economic impacts that would result from the cancellation of taxpayer funded Obamacare subsidies (a.k.a. “cost-sharing reductions” or “CSRs”).  The report is entitled “The Effects of Terminating Payments for Cost-Sharing Reductions,” and, among other things finds that cutting CSRs would cause a 20% spike in Obamacare premiums in 2018 and result in a $194 billion increase in the deficit from 2017 through 2026.

Here are the highlights:

– The fraction of people living in areas with no insurers offering nongroup plans would be greater during the next two years and about the same starting in 2020;

 

– Gross premiums for silver plans offered through the marketplaces would be 20 percent higher in 2018 and 25 percent higher by 2020—boosting the amount of premium tax credits according to the statutory formula;

 

– Most people would pay net premiums (after accounting for premium tax credits) for nongroup insurance throughout the next decade that were similar to or less than what they would pay otherwise—although the share of people facing slight increases would be higher during the next two years;

 

– Federal deficits would increase by $6 billion in 2018, $21 billion in 2020, and $26 billion in 2026; and ? The number of people uninsured would be slightly higher in 2018 but slightly lower starting in 2020.

Or, put more simply…if Trump decides to cut taxpayer-funded subsidies for a completely failed Obama-era piece of legislation then all future premium hikes are his fault

While Obama has yet to offer an official statement on the CBO’s report, we imagine it would go something like this:

 

Of course, according to data from the Department of Health and Human Servicesthe average individual purchaser of health insurance across the United States saw their premiums increase from $232 per month in 2013 to $476 per month in 2017, a ‘modest’ increase of over 100% in just a few years.

Ironically, that equates to a constantly annualized growth rate of exactly 20% per year.

 

Said another way, the CBO predicts that, without the benefit of taxpayer subsidies, Obamacare premiums would increase in 2018 at the exact same rate they’ve increased for each of the past 4 years…except they managed to find a convenient excuse for the continued collapse of a failed policy and a scapegoat…President Trump.

Well played, Nancy…well played.

 

The full report from the CBO can be read here:

 

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you Wednesday night

Harvey.


August 14/3rd consecutive raid attempt by our bankers failed with respect to gold and silver/Open interest in silver continues to fall despite the rise in price which indicates banker capitulation/GLD STOPS ITS BLEEDING OF GOLD ANS INVENTORIES RISE BY...

Mon, 08/14/2017 - 19:03

GOLD: $1284.70  DOWN $3.10

Silver: $17.14  up 6 cent(s)

Closing access prices:

Gold $1282.20

silver: $17.08

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1292.87 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1287.85

PREMIUM FIRST FIX:  $5.02

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1290.15

NY GOLD PRICE AT THE EXACT SAME TIME: $1285.70

Premium of Shanghai 2nd fix/NY:$4.45

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1281.10

NY PRICING AT THE EXACT SAME TIME: $1281.95 

LONDON SECOND GOLD FIX  10 AM: $1282.30

NY PRICING AT THE EXACT SAME TIME. $1282.30 

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 34 NOTICE(S) FOR  3400  OZ.

TOTAL NOTICES SO FAR: 4521 FOR 452,100 OZ (14.062 TONNES) 

For silver: AUGUST  20 NOTICES FILED TODAY FOR 100,000  OZ/ Total number of notices filed so far this month: 830 for 4,150,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

 

 

Today, the bankers tried to raid both gold and silver for the third consecutive day and failed again.  The open interest in silver continues to fall despite a rise in price and it sure looks like banker capitulation as they try to extricate themselves from their mess. Another good indicator of trouble for our bankers is that the bleeding of gold has stopped  (physical gold supplying Eastern countries e.g. China, Russia and Turkey). Today 4.14 tonnes of gold was added to inventories. SLV showed no gain or loss of silver inventory.

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest SURPRISINGLY FELL BY A HUGE  4967 contracts from 194,445 down to 189,478 DESPITE THE  RISE IN THE PRICE THAT SILVER TOOK WITH RESPECT TO FRIDAY’S TRADING (UP 4 CENT(S) AND THE FAILED RAID. SIMPLE EXPLANATION: THE BANKERS HAVE CAPITULATED….THEY ARE TRYING TO COVER THEIR SHORTFALL AT HIGHER AND HIGHER PRICES. THE BANKERS ARE HAVING EXTREME DIFFICULTY IN SUPPLYING ADDITIONAL SHORT PAPER AND LONGS CONTINUE TO ADVANCE TAKING ON THE BANKER SHORTS. THE BATTLE OF WATERLOO WILL BE FAST APPROACHING 

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.947 BILLION TO BE EXACT or 135% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 20 NOTICE(S) FOR 100,000  OZ OF SILVER

In gold, the open interest ROSE by A CONSIDERABLE 5,002 WITH the RISE in price of gold ($4.10 GAIN ON FRIDAY.)  The new OI for the gold complex rests at 480,915.  IN COMPLETE CONTRAST TO SILVER, THE BANKERS SUPPLIED THE MASSIVE AMOUNT OF PAPER SHORT GOLD WHICH WAS GOBBLED UP BY THE LONGS.  THE NEWBIE SPEC SHORTS HAVE NO DOUBT COVERED THEIR SHORT POSITION BY NOW.  I WROTE THE FOLLOWING TO MY FRIENDS OVER THE WEEKEND: “WE MUST BE COGNIZANT OF ANOTHER RAID THIS COMING WEEK AS THE OI FOR GOLD IS EXTREMELY HIGH AND THE NOOSE IS AROUND THEIR NECKS IN SILVER.”  THE CROOKS DID NOT TAKE LONG TO INITIATE ANOTHER RAID TODAY

we had: 34 notice(s) filed upon for 3400 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, a big change in gold inventory: a deposit of 4.14 tonnes into the GLD

Inventory rests tonight: 791.01 tonnes

 

IN THE LAST 21 TRADING DAYS: GLD SHEDS 45.96 TONNES YET GOLD IS HIGHER BY $45.85 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 335.825 MILLION OZ

end

.

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

1. Today, we had the open interest in silver FALL BY  4,967 contracts from 194,445 DOWN TO 189,478 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787). THE FALL IN OPEN INTEREST WAS ACCOMPANIED BY A SMALL RISE IN PRICE AND FOR THE FIRST TIME WE ARE WITNESSING BANKER CAPITULATION.  BANKERS ARE LOATHE TO SUPPLY NEW SHORT PAPER AND THE LONGS CONTINUE TO ENTER THE ARENA PURCHASING WHATEVER SILVER THEY CAN AND WILLING TO TAKE ON OUR CROOKED BANKERS. 

(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 28.92 POINTS OR 0.90%   / /Hang Sang CLOSED UP 366.72 POINTS OR 1.36% The Nikkei closed DOWN 192.64 POINTS OR .98%/Australia’s all ordinaires CLOSED UP 0.61%/Chinese yuan (ONSHORE) closed DOWN at 6.6720/Oil DOWN to 48.49 dollars per barrel for WTI and 51.72 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6874 yuan to the dollar vs 6.6720 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

North Korea states that its army is “on standby” waiting for an order to attack

( zero hedge)

ii)China announces today that it will halt all imports of coal, iron ore, iron and seafoods from North Korea beginning today. These are the dominant importing items from North Korea and it will cripple the nation. It seems that Trump’s threat of tariffs against China is working.

( zero hedge)

 

b) REPORT ON JAPAN c) REPORT ON CHINA

i)Saturday:

Trump warns Xi that on  the USA will initiate tariffs and begin the trade war against China

( zero hedge)

ii)Monday China slams Trump’s trade war as Xi states that it is basically a distraction from their “domestic turmoil” ( zero hedge)

iii)Overnight, a Chinese bank suffers a rare bank run on rumours.  The bank in question: Linshang Bank denied it has troubles( zero hedge)

iv)Overnight, Chinese macro data misses on all fronts:  retail sales, industrial production and fixed asset investment. It did not matter as their stock market ignored the reports

 

( zero hedge)

v)This is a huge red flag for those believing that the global economy is booming and a red flag for crude oil bulls.  The demand side for Chinese oil refining tumbles badly

 

( zero hedge)

4. EUROPEAN AFFAIRS 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS 6 .GLOBAL ISSUES

UKRAINE/NORTH KOREA

 

My goodness, this is shocking:  USA “ally” Ukraine is the source of North Korean Missile engines.  It also questions the huge donations given by Ukraine donors to the Clinton foundation.

 

(courtesy zero hedge)

7. OIL ISSUES 8. EMERGING MARKET 9.   PHYSICAL MARKETS

i)SATURDAY:

bitcoin spikes to over $3800.00 per coin.

( zerohedge)

ii)SUNDAY:

NOW OVER $4,000.00 PER COIN

( zerohedge)

iii)A must see interview:  Ronan Manly interviewed by Real Vision. They talk about the fractional reserve market for gold (Ponzi) and how their is considerable danger to investors holding exchange traded funds

 

(Ronan Manly/Bullion star/Real Vision/Pal)

iv)The Wall Street Journal still is not ready to write about how gold is rigged, swapped etc.

( Chris Powell/GATA)

v)It did not take long for people to scam individuals.  In London scam artists were arrested after cold calling individuals to buy fake cryptocurrencies

( London’s Telegraph/GATA)

vi)China’s domestic gold market

bullionstar/Ronan Manly)

vii) Reuters reports that India’s gold imports are rebounding in number due to many factors including a good monsoon.

( Reuters/GATA)

viii)GATA Chairman interviewed by Goldseek

 

( GATA/Bill Murphy/Chris Powell)

10. USA Stories

i)The rout in retail continues as JCPenny tumbles

 

( Mish Shedlock/Mishtalk)

ii)USA quietly launches a crackdown on cryptocurrencies

( zero hedge)

iii)After CEO, Ken Frazier resigns from the President’s manufacturing advisory board for lack of response to the Charlottesville riots on the weekend, Trump responds by attacking the pharmaceutical giant for ripping off the public with high drug prices.

 

( zero hedge)

iv)The real truth behind the USA  S and P earnings:

 

( Wolf Richter/WolfStreet.com)

v)A terrific commentary from Dave Kranzler of IRD as he highlights things that I have been signalling to you:  higher student debt, higher auto loans and higher credit card debt:  the consumer is buried in debt:

 

( Dave Kranzler/IRD)

vi)The clowns are at it again:  Dudley warns that his fellow clowns will probably hike rates and begin to drawdown on it’s balance sheet.

No way!! unless he wishes to throw the uSA into an economic tailspin as they remove liquidity

 

(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 5002  CONTRACTS UP to an OI level of 480,915 WITH THE RISE IN THE PRICE OF GOLD ($4.10 with FRIDAY’S trading). NEWBIE LONGS ENTERED THE ARENA ESPECIALLY NOTICING THE FAILED RAID ON FRIDAY.  THE BANKERS CONTINUE TO SUPPLY THE SHORT PAPER. NEWBIE SPEC SHORTS ARE NOW COMPLETELY OUT OF THEIR POSITIONS. THE HUGE RISE IN OPEN INTEREST WILL BE ADDITIONAL FODDER FOR THE CROOKS TO RAID IN THE COMING WEEK.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 6 contract(s) to stand at 1256 contracts. We had 19 notices filed on FRIDAY so we GAINED 13 contracts or an additional 1300 oz will stand at the comex and 0 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI GAIN 63 contracts UP to 1585.

The next active contract month is Oct and here we saw a GAIN of 167 contracts UP to 50,206.

The very big active December contract month saw it’s OI GAIN 3,323 contracts up to 374,468.

We had 34 notice(s) filed upon today for   3400 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI SURPRISINGLY FELL BY 4967 CONTRACTS FROM 194,445 DOWN TO 189,478 DESPITE FRIDAY’S SMALL SIZED 4 CENT GAIN . THERE IS NO QUESTION THAT WE ARE HAVING CONTINUAL BANKER CAPITULATION AS THEIR HUGE SHORTS IN SILVER IS CHOKING THEM TO DEATH. I HAVE WARNED YOU, THE NOOSE IS GETTING TIGHTER AROUND OUR FRIENDLY BANKERS’ NECKS. NO DOUBT THAT THE HUGE DELAY IN  SILVER DELIVERIES (IN LONDON) ACCOMPANIED WITH THE HUGE GLOBAL DEMAND FOR SILVER IS FINALLY WEIGHING IN ON OUR CROOKS.  NEWBIE SPEC LONGS ENTERED THE SILVER COMPLEX ON FRIDAY WITNESSING THE FAILED RAID. ON THE SUPPLY SIDE: THE BANKERS WERE JUST PLAIN LOATHE TO SUPPLY THE NECESSARY PAPER.  THUS A HUGE DECLINE IN SILVER OI WITH A SMALL SIZED RISE IN PRICE.

We are now in the next big non active silver contract month of August and here the OI  FELL BY 41 contracts DOWN TO 119. We had 88 notice(s) filed yesterday.  Thus we GAINED 47 contract(s) or an additional 235,000 oz will stand for delivery in this non active month of August and zero EFP’s were issued for the August contract month.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 8779 contacts down to 103.727.  The next non active contract month for silver after September is October and here the OI gained 13 contacts up TO 96. After October, the big active contract month is December and here the OI GAINED by 3,560 contracts UP to 74,734 contracts.

We had 20 notice(s) filed for 100,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

 

FRIDAY’S confirmed volume was 278,960

 

 

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 14/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   2025.45 oz SCOTIA 63 KILOBARS Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  32.15 oz BRINKS 1 KILOBAR No of oz served (contracts) today   34 notice(s) 3400 OZ No of oz to be served (notices) 1222 contracts (122,200 oz) Total monthly oz gold served (contracts) so far this month 4521 notices 452,100 oz 14.062 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   19,750.2  oz Today we HAD  2 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 1  customer deposit(s): i) Into Brinks: 32.15 oz  (one kilobar) total customer deposits;  32.15  oz We had 1 customer withdrawal(s)  i) Out of Scotia:  2025.45 oz (63 kilobars) total customer withdrawals;  2025.45 oz  we had 0 adjustment(s)   For AUGUST:

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 34  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4521) x 100 oz or 452,100 oz, to which we add the difference between the open interest for the front month of AUGUST (1256 contracts) minus the number of notices served upon today (34) x 100 oz per contract equals 574,300  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4521) x 100 oz  or ounces + {(1256)OI for the front month  minus the number of  notices served upon today (34) x 100 oz which equals 574,300 oz standing in this  active delivery month of AUGUST  (17.863 tonnes)  we GAINED 13 contracts or an additional 1300 oz will stand for delivery and 0 EFP’s for August were issued. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,510.492 or 23.59 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,632,167.752 or 268.49 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.49 tonnes for a  loss of 34  tonnes over that period.  Since August 8/2016 we have lost 85 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 12 MONTHS  85 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 14 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 745,723.963 oz Brinks Delaware Scotia Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  877,391.270 oz Brinks Scotia No of oz served today (contracts) 20 CONTRACT(S) (100,000 OZ) No of oz to be served (notices) 99 contracts ( 495,000 oz) Total monthly oz silver served (contracts) 830 contracts (4,150,000 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 2,056,136.4 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 3 customer withdrawal(s): ii) out of Brinks: 1,000.000 oz ??? ii) out of Delaware:  3038.483 oz iii) out of Scotia: 741,685.48 oz TOTAL CUSTOMER WITHDRAWALS:  745,723.963 oz We had 2 Customer deposit(s):  i) Into Brinks:  235,300.328 oz ii) Into Scotia:  642,090.95 ***deposits into JPMorgan have stopped  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: 877,391.270 oz    we had 0 adjustment(s) The total number of notices filed today for the AUGUST. contract month is represented by 20 contract(s) for 100,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 830 x 5,000 oz  = 4,150,000 oz to which we add the difference between the open interest for the front month of AUGUST (119) and the number of notices served upon today (20) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  830 (notices served so far)x 5000 oz  + OI for front month of AUGUST(119 ) -number of notices served upon today (20)x 5000 oz  equals  4,650,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 47 contracts or an additional 235,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month. At this point in the delivery cycle last year on August 15/2016 we had 108,939 contracts standing vs this yr at 104,335. Last yr on the first day notice for the Sept silver contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex FRIDAY’s  confirmed volume was 108,994 contracts which is OUT OF THIS WORLD FRIDAY’S CONFIRMED VOLUME OF 108 994 CONTRACTS WHICH EQUATES TO 544 MILLION OZ OF SILVER OR 78% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.348 million (close to record low inventory   Total number of dealer and customer silver:   216.113 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 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 7.1% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.6% Percentage of fund in silver:37.4% cash .+0.0%( August 14/2017)  2. Sprott silver fund (PSLV): STOCK   NAV FALLS TO +0.11% (August 14/2017)  3. Sprott gold fund (PHYS): premium to NAV FALLS TO -0.56% to NAV  (August 14/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.11/Sprott physical gold trust is back into NEGATIVE/ territory at -0.56%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 14/this is good!!: a gain of 4.14 tonnes of gold into the GLD inventory/the removal of GLD gone to the east has now stopped probably because there is no physical to send/inventory rests at 791.01 tonnes

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 14 /2017/ Inventory rests tonight at 791.01 tonnes *IN LAST 212 TRADING DAYS: 158.87 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 150 TRADING DAYS: A NET  1.44 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY. *FROM FEB 1/2017: A NET  18.25 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 14./no change in silver inventory/inventory rests at 335.825 million/

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

August 14.2017:

 Inventory 335.825  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.29%
  • 12 Month MM GOFO + 1.46%
  • 30 day trend

end

 

SATURDAY: bitcoin spikes to over $3800.00 per coin.

(courtesy zerohedge)

Bitcoin Spikes Over $3800 As Institutional Investor Interest Soars

Bitcoin is now up over 45% since the fork on August 1st, notably spiking this week (to a record high over $3800) as US-North Korea tensions escalated and both Fidelity (retail) and Goldman (institutional) noted investor interest in cryptocurrencies is soaring.

Fidelity announced Wednesday that it started allowing clients to view bitcoin and other cryptocurrencies on its website, a rare move for an established institution.

Hadley Stern, senior vice president at Fidelity Labs, said “the big story is you can transfer value through software and software alone. This is a huge societal breakthrough.”

 

And regardless of whether bitcoin will survive, it could be like the Napster of blockchain technology, Stern said, where it is the first of its kind but the next products, in this case Spotify and Apple Music, get better and better.

 

“I do think [cryptocurrencies] will make things, whether it’s bitcoin or something else, faster and cheaper and create new products and services that we can’t even imagine,” Stern said.

 

While some critics are skeptical of how bitcoin is used, Stern said that banning the cryptocurrency would be like banning the web or open internet protocols.

 

“Whether governments like it or not, it’s here to stay,”he said.

And as we noted earlier in the week, Goldman Sachs wrote in a note that it is becoming more difficult for institutional investors to ignore Bitcoin and the cryptocurrency market.

The debate has shifted from the legitimacy of the ‘fiat of the internet’ to how fast new entrants are raising funds.

 

The hype cycle is in full effect with Bitcoin, the first, largest and most widely recognized cryptocurrency up almost 200% YTD (v 11% for the S&P 500) and a host of other emerging ‘altcoins’ growing in scope and presence (witness the growth of Ethereum).

 

Whether or not you believe in the merit of investing in cryptocurrencies (you know who you are) real dollars are at work here and warrant watching especially in light of the growing world of initial coin offerings (ICOs) and fundraising that now exceeds Internet Angel and Seed investing.

 

And with the fork out of the way, it seems that demand is having an impact…

Aditionally, as CoinTelegraph reportsBitcoin could pass $100,000 by February 2021; a Harvard academic has said announcing Bitcoin is the first digital currency to follow Moore’s Law. In emailed comments, investor Dennis Porto said that after analyzing Bitcoin’s performance, it was the “first” currency to follow the digital technology rule.

“Moore’s law specifically applied to the number of transistors on a circuit but can be applied to any digital technology,” Porto wrote. “Any technology that is growing exponentially (i.e., ‘following Moore’s law’) has a doubling time.”

Porto makes the assertion that Bitcoin price has de facto doubled every eight months since its inception.

“This poses a unique opportunity for investors,” he added, something which was well-received in social media circles.

While multiple well-known commentators have contributed their opinions on how much one Bitcoin will cost in the next five or 10 years, $100,000 by 2021 is at the bolder end of the spectrum.

 

This week, Max Keiser repeated his faith in Bitcoin reaching $5,000 in the coming months.

While Bitcoin is surging, Bitcoin Cash is sliding, falling to 4th largest virtual currency by market cap…

 

But Ethereum – which we noted previously appeared to be acting like a World War III indicator – continues to surge well above $300…

 

END

 

SUNDAY: NOW OVER $4,000.00 PER COIN

(courtesy zerohedge)

Bitcoin Blows Through $4000 As Asian Demand Soars

While many of the largest cryptocurrencies are fading modestly this morning, Bitcoin is holding on to dramatic gains which saw the largest virtual currency spike to as high as $4190 as Yen, Yuan, and Won trading activity dominated volumes.

Bitcoin Cash remains in 4th place overall by market cap but Bitcoin is the only currency higher among the top 5 this morning.

 

Soaring past $4000…

 

As CoinTelegraph reports, the trading of Bitcoin in Japanese yen has accounted for almost 46 percent of total trade volume worldwide.The trading of Bitcoin in US dollar accounted for around 25 percent, while the trading of Bitcoin in South Korean won and Chinese yuan accounted for approximately 12 percent each.

Additionally, anticipated demand is being priced in after VanEck filed for an ‘active strategy’ Bitcoin ETF:

The Fund seeks to achieve its investment objective by investing, under normal circumstances, in U.S. exchange-traded bitcoin-linked derivative instruments (“Bitcoin Instruments”) and pooled investment vehicles and exchange-traded products that provide exposure to bitcoin (together with Bitcoin Instruments, “Bitcoin Investments”).

 

The Fund is an actively managed exchange-traded fund (“ETF”) and should not be confused with one that is designed to track the performance of a specified index.

 

The Fund’s strategy seeks to provide total return byactively managing the Fund’s investments in Bitcoin Investments.

Bitcoin’s solid performance in early August reflected that of gold’s amidst the selloff in stocks and bonds around the world due to the growing apprehensions over North Korea’s nuclear threat.

And the latest moves this weekend in the crypto world suggest gold will open well north of $1300 tonight.

 

end

A must see interview:  Ronan Manly interviewed by Real Vision. They talk about the fractional reserve market for gold (Ponzi) and how their is considerable danger to investors holding exchange traded funds

 

(Ronan Manly/Bullion star/Real Vision/Pal)

Bullion Star’s Ronan Manly interviewed by Real Vision about fractional-reserve gold

Submitted by cpowell on Fri, 2017-08-11 13:08. Section: 

9:08a ET Friday, August 11, 2017

Dear Friend of GATA and Gold:

Bullion Star’s Ronan Manly has been interviewed by Real Vision about the fractional-reserve nature of the gold market and risks to exchange-traded funds in gold. The interview is 20 minutes long and can be viewed at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/bullionstar-presentation-r…

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

 

 

END

 

The Wall Street Journal still is not ready to write about how gold is rigged, swapped etc.

(courtesy Chris Powell/GATA)

  Wall Street Journal still isn’t ready to question central banking

Submitted by cpowell on Fri, 2017-08-11 16:36. Section: 

12:42p ET Friday, August 11, 2017

Dear Friend of GATA and Gold:

The Wall Street Journal’s feeble attempt this week to acknowledge the issue of gold market rigging by the U.S. government at least landed on the newspaper’s front page today. You can see its display at the lower left side of the page here:

http://www.gata.org/files/WallStreetJournalFrontPage-08-11-2017.jpg

The report signifies that the situation with gold has become crazy enough that it now can be discussed in polite company. The report also signifies that no one who wants to maintain respectability can yet pose the right specific questions to anyone in authority. Even former U.S. Rep. Ron Paul, hero of limited government and sound money, always declined to pose the right specific questions to the right people despite his long membership on the House Financial Services Committee, during which he often got a few minutes to confront Federal Reserve and Treasury Department officials but much preferred to make speeches instead.

Note how artfully the Journal’s report was written and edited. It’s posted at GATA’s internet site here:

http://www.gata.org/node/17562

Through comments by experts associated with GATA’s work and views — Bullion Star’s Ronan Manly, Sprott Asset Management’s John Embry, GoldMoney’s James Turk, futures market analyst James McShirley, and Peter Boehringer, founder of the movement in Germany to repatriate that country’s gold — the report cites complaints and suspicion that the U.S. government is involved with other central banks in leasing and swapping gold to control the monetary metal’s price.

As it pursued the issue, the Journal was given documentation of this by GATA, including:

— Federal Reserve Board member Kevin M. Warsh’s letter to GATA’s lawyer in 2009 admitting the Fed’s participation in gold swaps:

http://www.gata.org/node/7819

— Warsh’s own essay in the Journal in 2011 in which he asserted that “policy makers are finding it tempting to pursue ‘financial repression’ — suppressing market prices that they don’t like”:

http://www.gata.org/node/10839

— The secret March 1999 report of the staff of the International Monetary Fund confirming that central banks conceal their gold leasing and swapping to facilitate their surreptitious interventions in the currency markets:

http://www.gata.org/node/12016

— And New York Federal Reserve Bank President William Dudley’s videotaped refusal in March 2016 to answer in public a question about gold leasing and swapping by the Fed:

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

But having given voice to these complaints and suspicion, the Journal declined to question any Federal Reserve or Treasury Department official about them. This violated the most elementary principle of journalism — to report all sides of a story, especially when someone in the story has been criticized or accused.

Of course the Fed and Treasury don’t want to tell their side here, and in fairness to the Journal it must be acknowledged that just giving voice to complaints about central banking is politically incorrect in the extreme. Committing actual journalism against central banking would be treason to the elite that controls the powerful realm from which the Journal takes its very name.

After all, as was explained by the assistant to the prime minister in “Yes, Prime Minister,” the BBC’s brilliant comedy series of some years ago, “The only way to understand the press is to remember that they pander to their readers’ prejudices”:

https://www.youtube.com/watch?v=DGscoaUWW2M

Defective as it is, the Journal’s report will reach a wide audience and spread suspicion. The report was linked for a few hours on the Drudge Report internet site.

But it may be a while before The Wall Street Journal thinks that its readers are ready to be told that the market economy the newspaper long has purported to defend has become a predatory illusion, and longer still before the newspaper is ready to admit that it knowingly has helped to sustain this illusion.

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

* * *

end

It did not take long for people to scam individuals.  In London scam artists were arrested after cold calling individuals to buy fake cryptocurrencies

(courtesy London’s Telegraph/GATA)

 

Police shut down scam ‘cryptocurrency boiler room’ in London financial distrct

Submitted by cpowell on Fri, 2017-08-11 18:39. Section: 

By Cara McGoogan
The Telegraph, London
Friday, August 11, 2017

Police have shut down a fraudulent cryptocurrency business in the City of London after it was found to be cold calling investors and attempting to sell them fake online money.

Fraudsters allegedly set up the business in London’s square mile in an attempt to legitimise their activity persuading victims to invest in a fictional cryptocurrency.

The City of London Police arrested a man on Wednesday on suspicion of helping to set up the scam call centre, or “boiler room,” on Old Broad Street, which is around the corner from the Bank of England.

The man is accused of trying to entice victims to invest in a fictional cryptocurrency, the police said. …

… For the remainder of the report:

http://www.telegraph.co.uk/technology/2017/08/11/police-shut-scam-crypto…

 

END

China’s domestic gold market

bullionstar/Ronan Manly)

 

Bullion Star’s primer on China’s domestic gold market

Submitted by cpowell on Sun, 2017-08-13 17:26. Section: 

1:27p ET Sunday, August 13, 2017

Dear Friend of GATA and Gold:

Bullion Star this weekend published its primer on the Chinese domestic gold market, the world’s largest physical gold market and perhaps the gold market most controlled by government. The primer is headlined “Mechanics of the Chinese Domestic Gold Market” and it’s posted here:

https://www.bullionstar.com/gold-university/the-mechanics-of-the-chinese…

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

 

 

END

 

 

Reuters reports that India’s gold imports are rebounding in number due to many factors including a good monsoon.

(courtesy Reuters/GATA)

 

 

 

India’s gold imports rebound on restocking, good monsoon, top refiner says

Submitted by cpowell on Sun, 2017-08-13 17:35. Section: 

By Rajendra Jadhav
Reuters
Sunday, August 13, 2017

PANAJI, India — India’s gold imports are likely to jump by a third in 2017 to 750 tonnes on restocking by jewellers and as good monsoon rainfall is expected to boost demand in rural areas during the upcoming festive season, a leading refiner told Reuters.

Higher imports by the world’s second biggest consumer will support global prices, which are trading near their highest level in two months, but could widen the country’s trade deficit.

“Demand and imports are normalising after taking a hit last year. Jewellers are restocking after destocking last year,” said Rajesh Khosla, managing director of MMTC-PAMP India, the country’s biggest refinery. …

… For the remainder of the report:

https://in.reuters.com/article/india-gold-imports-idINKBN1AT053

END

 

GATA Chairman interviewed by Goldseek

 

(courtesy GATA/Bill Murphy/Chris Powell)_

On GoldSeek Radio, GATA Chairman Murphy looks for key to gold’s next rise

Submitted by cpowell on Mon, 2017-08-14 00:00. Section: 

8p ET Sunday, August 13, 2017

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy is interviewed today by GoldSeek Radio’s Chris Waltzek about what it will take to push the monetary metals into a new bull market. The interview is eight minutes long and begins at the 17:15 mark here:

http://news.goldseek.com/radio/1502684603.php

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

 

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

1 Chinese yuan vs USA dollar/yuan WEAKER 6.6720 (DEVALUATION SOUTHBOUND   /OFFSHORE YUAN MOVES WEAKER TO ONSHORE AT   6.6874/ Shanghai bourse CLOSED UP 28.82 POINTS OR 0.90%  / HANG SANG CLOSED UP 366.72 POINTS OR 1/36% 

2. Nikkei closed DOWN 192.64 POINTS OR .98%    /USA: YEN RISES TO 109.72

3. Europe stocks OPENED DEEPLY IN THE GREEN     ( /USA dollar index RISES TO  93.38/Euro DOWN to 1.1794

3b Japan 10 year bond yield: FALLS  TO  +.058%/ GOVERNMENT INTERVENTION    !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 114.34/ 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::  48.49 and Brent: 51.72

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  +.425%/Italian 10 yr bond yield UP  to 2.045%    

3j Greek 10 year bond yield FALLS to  : 5.55???  

3k Gold at $1280.50  silver at:16.97 (8:15 am est)   SILVER BELOW  RESISTANCE AT $18.50 

3l USA vs Russian rouble; (Russian rouble UP 3/100 in  roubles/dollar) 59.81-

3m oil into the 48 dollar handle for WTI and 51 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 GOOD SIZED DEVALUATION SOUTHBOUND 

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.72 DESTROYING JAPANESE CITIZENS WITH HIGHER FOOD INFLATION

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning  0.9689 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1427 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN VOTES AFFIRMATIVE BREXIT/LOWER PARLIAMENT APPROVES BREXIT COMMENCEMENT/ARTICLE 50 COMMENCES MARCH 29/2017 

3r the 10 Year German bund now POSITIVE territory with the 10 year FALLING to  +0.425%

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 2.220% early this morning. Thirty year rate  at 2.816% /POLICY ERROR)GETTING DANGEROUSLY HIGH

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

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

VIX Tumbles, S&P Futures, Global Stocks Rebound Sharply As Korea Fears Fade  

The VIX tumbled by nearly 3 vols, down to 13.10 last, or over 18% lower and global stocks and S&P futures rebounded sharply on Monday as tensions over an imminent conflict with Pyongyang receded after U.S. officials played down the likelihood of a nuclear conflict with North Korea, recovering from fears of a U.S.-North Korea nuclear standoff drove them to the biggest weekly losses of 2017, while the dollar too rose off four-month lows it had hit against the yen.

As DB summarizes the latest events in the ongoing N.Korean crisis, this could be a pivotal week in the stand-off as last week Kim Jong-un did say that they would be ready to attack Guam by “mid-August” which if we are being literal is this week. However a lack of much news on the story over the weekend is surely a positive for now. Indeed the CIA’s director Pompeo tried to calm nerves by speaking to Fox news on Sunday, noting that “…I’ve seen no intelligence that would indicate that we’re in (the cusp of a nuclear war) today…” and would not be surprised if NK tested another missile. Further, national security adviser McMaster also said there’s no indication war will break out. Perhaps these comments were a response to Trump’s comments on Friday that “military solutions are…locked and loaded, should NK act unwisely…”.

European shares bounced after falling nearly 3% last week, with the STOXX 600 up 0.7% following on from a 0.9 percent jump in MSCI’s index of Asia-Pacific shares outside Japan. The Stoxx Europe 600 Index headed for its first gain in four days, tracking increases across markets including South Korea. As the chart below shows, Still, Europe may be due for a pullback: the MSCI Europe Index hasn’t had a 10% correction in more than a year.

Gains were led by bounces in Australia, Hong Kong and South Korea while the MSCI world index rose 0.2%. That said, as the following chart from Cantillon Consulting shows, the MSCI world index is finally testing the support of the channel established during the Trump reflation move: it either snaps or rebounds to new highs.

Japan failed to partake in the region’s gains however, slipping 1 percent to three-month lows despite an impressive GDP print showing robust 1.1% Q2 growth in Japan (more below), driven by worries over the potential impact of the yen’s recent surge against the dollar. Japanese investors also repatriated cash held overseas, keeping the USDJPY below 110. The dollar rose 0.5 percent to 109.70 after slipping to 108.720 on Friday, its weakest since April 20. Against a basket of currencies it firmed 0.2 percent, rising off last week’s 10-day lows .

“As long as the geopolitics ease, we look for dollar/yen to gradually grind higher, back above the 110.00 level, along with gently rising U.S. yields,” ING Bank analysts told clients.

“The risk aversion has stabilized and investors have gotten used to the North Korea situation a little bit – as long as it doesn’t escalate further,” said Daniel Lenz, a strategist at DZ Bank in Frankfurt.

That said, expectations of an all clear may be premature: North Korea’s Liberation Day celebration on Tuesday to mark the end of Japanese rule could see tensions rise again, markets are relieved that the weekend had passed without more rhetoric. This may be reflect in the ongoing surge in bitcoin, which jumped for the second consecutive weekend, and hit a new all time high above $4,200 this morning.

In overnight data, Japan printed the strongest GDP in over two years, after the economy was said to have grown at a 4% annualized rate in Q2, a 6th consecutive quarter of growth. Meanwhile, economic data out of China disappointed across the board as Chinese retail sales and industrial production for July missed estimates.

South Korea’s won led a rebound in most Asian emerging-market currencies after several top U.S. national security officials said a nuclear war with North Korea wasn’t imminent. The MSCI Asia index ex Japan advanced for the first time in four days amid steady sovereign bonds. “With the geopolitical concerns surrounding North Korea appearing to stabilize a little, we could see the USD/Asia complex be fairly range-bound today with a slight downward bias,” said Julian Wee, a senior market strategist at National Australia Bank in Singapore. Japan’s yen weakened, after rallying the most since May last week on haven demand. Gold halted its advance amid the efforts by U.S. officials to soothe the escalating tensions on the Korean peninsula.  Bloomberg Dollar Spot Index jumps 0.23%, first gain in three days

In China, the yuan gave up earlier gains with the offshore exchange rate falling most in six weeks as the dollar jumps and the People’s Bank of China sets a weaker-than-expected daily reference rate. The CNY dropped 0.05%, erasing an advance of as much as 0.16%, to 6.6700 per dollar, after the PBOC strengthened the yuan reference rate 0.06% to 6.6601, weaker than Mizuho Bank’s est. of 6.6573 and Nomura’s 6.6562.

In rates, 10-year TSY yields inched higher after falling on Friday to six-week lows following data showing that U.S. consumer prices rose just 0.1 percent last month, below economists’ forecast of a 0.2% gain. Euro zone bond yields also rose, with investors interpreting the robust Japanese data as a sign that the global economy is indeed on the mend. While Japan is not expected to dismantle its stimulus program any time soon, analysts reckon that signs of global recovery gives euro zone and U.S. central banks a reason to start rolling back some of their asset purchases. The yield on Germany’s 10-year government bond was up 4.5 bps to 0.43%, a move mirrored by most other euro zone debt.

Commodities trading was mixed overnight with safe-haven gold (-0.2%) pulling back from 9-week highs amid the improved risk sentiment. Demand for copper was subdued alongside weaker iron ore prices after Chinese Industrial Production data for July missed expectations, while WTI was quiet overnight with prices unchanged during Asia trade. Crude prices seeing a modest move lower, however prices are still up significantly from last week’s gains with Brent remaining above $52. Much like fixed income, gold and silver prices are bearing the brunt of a more risk on environment. Libya’s top oil field is said to drop on security threats.

Bulletin Headline Summary from RanSquawk

  • Equities in the Green
  • Brexit Whispers Once Again Begin

Market Snapshot

  • S&P 500 futures up 0.6% to 2,454.30
  • VIX down 2.94 to 13.10, -18.33%
  • STOXX Europe 600 up 0.8% to 375.08
  • MSCI ASIA down 0.1% to 158.25
  • MSCIA Asia ex Japan up 0.8% to 520.33
  • Nikkei down 1% to 19,537.10
  • Topix down 1.1% to 1,599.06
  • Hang Seng Index up 1.4% to 27,250.23
  • Shanghai Composite up 0.9% to 3,237.36
  • Sensex up 0.9% to 31,494.28
  • Australia S&P/ASX 200 up 0.7% to 5,730.41
  • Kospi up 0.6% to 2,334.22
  • German 10Y yield rises 4bps to 0.42%
  • Euro down 0.2% to 1.1803 per US$
  • US 10Y yield rises 2bps to 2.21
  • Italian 10Y yield falls 1bp to 2.02%
  • Spanish 10Y yield fell 2bps to 1.44%
  • Gold spot down 0.6% to $1,281.92
  • U.S. Dollar Index up 0.3% to 93.32

Top Overnight News

  • Two top U.S. national security officials sought to assuage fears of imminent nuclear war with North Korea following days of heightened rhetoric by President Donald Trump, as America’s top general prepares to meet with South Korea’s leader
  • Patrick Drahi’s Altice NV is considering asking Canada Pension Plan Investment Board and BC Partners to help fund a potential bid to buy cable broadcaster Charter Communications Inc.
  • JPMorgan Chase & Co. is proposing to charge as little as $10,000 a year for equity research, the lowest price to emerge so far, as the Wall Street giant seeks to grab market share when a European ban on free analysis for clients is imposed
  • Venezuela will defend itself from the “madness” of Donald Trump, its defense minister said, a day after the U.S. president said he’s considering a military option in response to the escalating political and economic crisis in the oil-producing nation
  • The pros who make their living forecasting the economy overwhelmingly expect President Donald Trump and his fellow Republicans to push through tax cuts in time for next year’s congressional elections
  • Rovio Entertainment Oy is planning an initial public offering as early as next month that could value the maker of the Angry Birds mobile games and movie at about $2 billion
  • Angry Birds Maker Is Said to Plan IPO at $2 Billion Value
  • Toshiba Chip Sale Talks Are Said to Stall On Payment Timing
  • Cathay ‘Begging With Golden Bowl’ to Win Back Chinese Fliers
  • Alibaba and Tencent Looking Riskier And Placing Bigger Bets
  • Stada Appeals to Hedge Funds to Push Through Bain, Cinven Bid
  • MGM Resorts Bets on Wealthier Masses to Catch Up in Macau
  • Survival of Brokers’ Morning Notes in Balance as MiFID Looms
  • China Economy Loses Momentum as Factory Output, Investment Slow
  • China July industrial output 6.4% vs 7.1% est; retail sales 10.4% vs 10.8% est; fixed-asset investment 8.3% vs 8.6% est
  • Japan 2Q GDP 1.0% vs 0.6% est; y/y 4.0% vs 2.5% est; business spending 2.4% vs 1.2% est; private consumption 0.9% vs 0.5% est
  • RBA’s Kent says interest rates unlikely to rise any time soon; RBA will be cautious when time to normalize
  • New Zealand 2Q retail sales 2.0% vs 0.7% estimate
  • Macri candidates leading key provinces in Argentina’s primaries

Asian equity markets traded mostly higher following the rebound of US stocks last Friday on Wall Street where the NASDAQ outperformed amid tech strength, while a miss on CPI dampened prospects of a December Fed hike. The improvement in risk sentiment was also supported as some geopolitical concerns abated which saw ASX 200 (+0.7%) and KOSPI (+0.6%) positive throughout the session, however Nikkei 225 (-0.8%) bucked the trend despite strong GDP numbers, as Friday’s Asian session losses caught up with the index on its return from a long weekend. Elsewhere, Hang Seng (+1.2%) and Shanghai Comp (+0.4%) were positive following a firm liquidity operation by the PBoC, although gains in the mainland bourse were capped as Industrial Production and Retail Sales data added to the recent trend of disappointing Chinese data releases. Finally, 10yr JGBs traded flat as participants mulled over strong GDP numbers and losses in Japanese stocks, with demand also dampened from a lack of a Rinban announcement by the BoJ.
Japanese GDP (Q2 P) Q/Q 1.0% vs. Exp. 0.6% (Prey. 0.3%). Japanese GDP Annualized (Q2 P) 4.0% vs. Exp. 2.5% (Prey. 1.0%);

Chinese data reported overnight was weak across the board:

  • Chinese Industrial Production (Jul) Y/Y 6.4% vs. Exp. 7.1% (Prey. 7.6%).
  • Chinese Industrial Production YTD (Jul) Y/Y 6.8% vs. Exp. 6.9% (Prey. 6.9%).
  • Chinese Retail Sales (Jul) Y/Y 10.4% vs. Exp. 10.8% (Prey. 11.0%).
  • Chinese Retail Sales YTD (Jul) Y/Y 10.4% vs. Exp. 10.5% (Prey. 10.4%)

PBoC injected CNY 110bln in 7-day reverse repos and CNY 100bln in 14-day reverse repos. PBoC set CNY mid-point at 6.6601 (Prey. 6.6642) According to the China Commerce Ministry, China is to ban some imports from North Korea based on US resolution, the ban is to include imports of Iron ore, Coal, Lead and seafood (effective Tuesday August 15th)

Top Asian News

  • Hong Kong Stock Exchange Trading Hall to Close in October: SCMP
  • Alibaba, Tencent, Telstra Options Overprice Earnings-Day Moves
  • Gold Giant Gains to Record as India’s Tax Shift Seen as Plus
  • HSBC Lowers USD/SGD Forecast With MAS Seen Tightening in April
  • Sunac Is Said to Consider Strategic Investor for Leshi: Caixin

A relief rally in Europe to begin the week with much of the gains stemming from financials, while RWE is making solid gains after strong earnings results. Elsewhere, Danone are among the best performers this morning following reports that Kraft and Coke are seen as possible buyers for the company. Demand for riskier assets amid the quiet newsflow over tensions on the Korean peninsula has subsequently hampered EGBs. German curve has been bear steepening this morning, while peripheral spreads are slightly tighter. UK Chancellor Hammond and Trade Minister Fox stated that the Brexit transition period will be limited and will be intended to avert a cliff edge. The ministers also added that the transition period cannot be an alternate path for staying in the EU. Markets have been unfazed by the speech, with the indecision and uncertainty continuing to be evident in sterling.

Top European News

  • Hammond, Fox Say Transition Won’t Be Back Door to Staying in EU
  • Pandora Shares Fall; Carnegie Says FY Guidance Is ‘Stretched’
  • Draghi Gets Help From Euro Zone’s Northerners Wanting More Pay
  • London’s Big Ben Bell to Fall Silent Next Week for Four Years
  • Merkel’s Election Rivals Roll Out the Big Guns to Narrow Gap
  • Allianz Looks to Buy Bunds After ECB Gives Tapering Steer
  • Brace for Pound Turbulence as Economics and Politics Collide

In currencies, as newsflow covering the spat between North Korea and the US simmers down, the USD index has been trading at better levels against the Yen which has pressured major pairs. In turn, EUR tripped through 1.18 to hover near session lows. Poor data out of China damped AUD, as Chinese Industrial Production and Retail Sales missed across the board. As the data was digested, AUD/USD came off best levels, and trades around session lows, through 0.79 once again. A clear break through 0.7840 is needed to indicate any clear change of direction. Yen has seen some unwinding of the risk off positions taken throughout last week’s trade, amid the growing geopolitical tensions. USD/JPY’s June’s low just through 109.00 saw some bids waiting, as the pair has come off best levels, with bulls likely to look to test 110.00.  The pound has seen rangebound trade throughout the Asian session despite Brexit commentary emerging from the woodworks once again. Comments from UK Chancellor Hammond and Trade Minister Fox stated that the Brexit transition period will be limited and will be intended to avert a cliff edge. The ministers also added that the transition period cannot be an alternate path for staying in the EU. Markets have been unfazed by the speech, with the indecision and uncertainty continuing to be evident in sterling.

In commodities, trading was mixed overnight with safe-haven gold (-0.2%) mildly pulling back from 9-week highs amid an improvement in global risk sentiment. Conversely, demand for copper was subdued alongside weaker iron ore prices after Chinese Industrial Production data for July missed expectations, while WTI quiet overnight with prices unchanged during Asia trade. Crude prices seeing a modest move lower, however prices are still up significantly from last week’s gains with Brent remaining above USD 52. Much like fixed income, gold and silver prices are bearing the brunt of a more risk on environment. Libya’s top oil field is said to drop on security threats.

On today’s calendar there is no major economic data and no Fed speakers

DB’s Jim Reid concludes the overnight wrap

Hopefully you all had a good weekend? Mine involved picking up our new car and having to deal with epic meltdown tantrums. On Saturday we took Maisie to the swings where she couldn’t stop smiling and laughing. She was so so happy. We then said it was time to go home and the response was to throw herself on the floor and roll about in pain like a diving footballer looking for a penalty, scream and shout, cry at the top of her voice and basically embarrass us. The same thing happened the following day at the first of her friends to have a second birthday party. She had a wonderful time and wouldn’t stop giggling for two hours. Everybody remarked what a credit to us she was. Then when she was told we had to leave the humiliation of us as parents began. The only thing that calmed her down on both days was her new favourite TV show Peter Rabbit!! TV is becoming our saviour as bad parents……… until we turn it off and then the tantrums start again!!!!

Markets were obviously in semi tantrum mode over the course of the last seven days. This time last week we suggested how it was likely we would now be in for a summer lull for a couple of weeks and that it was set to be extremely quiet. We went on to say that if anything was guaranteed to ensure that something would blow up then it was that comment. So we were half right! To be fair in July the one thing that we raised that we thought could break the summer calm was that Mr Trump might look to distract from his legislative difficulties so far and up the ante against Korea. Tensions have been bubbling for a few weeks. It was impossible to predict the timing and a big risk to position for it but it was an observable risk. However it does take two to tango and Kim Jong-un has been highly provocative of late.

This could be a pivotal week in the stand-off as last week Kim Jong-un did say that they would be ready to attack Guam by “mid-August” which if we are being literal is this week. However a lack of much news on the story over the weekend is surely a positive for now. Indeed the CIA’s director Pompeo tried to calm nerves by speaking to Fox news on Sunday, noting that “…I’ve seen no intelligence that would indicate that we’re in (the cusp of a nuclear war) today…” and would not be surprised if NK tested another missile. Further, national security adviser McMaster also said there’s no indication war will break out. Perhaps these comments were a response to Trump’s comments on Friday that “military solutions are…locked and loaded, should NK act unwisely…”. On this whole episode I’m not sure what it is about Augusts. In my career, this month has often created volatility from nowhere. With people on holiday thin trading can certainly exacerbate market wobbles. Interestingly the WSJ over the weekend discussed how North Korean provocations haven’t had much impact on markets in the past. They examined 80 international incidents involving their nuclear program since 1993 and their impact on financial markets. They suggested that there hasn’t been much of a risk off in response to nuclear escalations. I suppose the reality is that its noise and bluster until it isn’t. In the last 20 years it’s been mostly noise and then diplomacy. The worry that markets might have at the moment is that the Trump administration could be unpredictable relative to his predecessors. With his popularity low and legislative failures hurting then it’s possible to envisage a scenario where he reacts more aggressively than earlier presidents.

So far the sell-off has been relatively measured it’s just that in the context of very very calm markets recently it’s still been a bit of a shock. In our list of global assets we regularly review, Silver (+4.9%) and Gold (+2.4%) were the best performers last week. Gilts (+1.1% – the longest duration govt bond market), Bunds (0.6%) and Treasuries (+0.5%) were also towards the top of the leader board and showing pretty strong weekly numbers for fixed income. In terms of equities the highlights were the Nikkei (-1.1% but closed Friday), S&P 500 (-1.4%), FTSE (-2.1%), DAX (-2.3%), FTSE-MIB (-2.7%) and the IBEX (-3.5%). Note that European Banks (-4.0%) were one of the worse performers mostly responding to the drop in yields. Diving down more specifically on this for 10 year yields we saw Bunds -8bps, Gilts, -8bps, UST -6bps, OATs -6bps, Spain flat and Italy +4bps. In credit the sell-off was fairly measured with Crossover +11bps, iTraxx Europe +3bps, Sen Fins +2bps and US CDX IG +2bps on the week. Overall these type of moves wouldn’t normally merit a specific mention but in the low vol world they have shaken things up a bit. We’d also note the VIX rose 55% last week from 10.0 to 15.51 but off the week’s (and year’s) highs of 16.04. Thursday  actually saw the highest volume day ever for VIX options.

For equities so far the moves haven’t been that large. In today’s PDF we reproduce a table from DB’s Binky Chadha looking at major geo-political events and US market sell-off. So spreading the net wider than just North Korea and also at actual events rather than aggressive rhetoric. He highlights 28 such events since the start of WWII and suggests that the average behaviour of the S&P 500 around geopolitical events is of a sharp short-lived selloff with 1) a median sell off of -5.7%, 2) 3 weeks to find a bottom, 3) Another 3 weeks to recover to prior levels and 4) Significantly higher markets 3 months (+6.5%) and 12 months (+13%) on.

This morning, Asian markets were broadly higher as new escalations in the conflict is good news for now. Japan’s preliminary 2Q GDP beat expectations at 1% qoq (vs. 0.6% expected) and 4% yoy (vs. 2.5% yoy), but the Nikkei fell 0.8%, partly reflecting a catch up effect as last Friday was a holiday. Also, our Japanese economist believe the 2Q trends appears too good to be sustained, partly as major leading indicators of investment appear to have already peaked. Elsewhere, Chinese data was softer than expectations, with the July IP at 6.4% yoy (vs. 7.1%, 7.6% previous) and retail sales at 10.4% yoy (vs. 10.8%). Chinese markets have dipped a little after the news, but have continued to strengthen afterwards, with the Hang Seng up 1.2% and Chinese bourses up 0.4% to 1.7% as we type. The Kospi is up 0.7% and the Won up 0.4%.

Onto Friday’s US July inflation numbers, which missed for the fifth consecutive month. Headline inflation was lower than expected at 0.1 % mom (vs. 0.2%) and 1.7% yoy (vs. 1.8%), but core inflation was in line at 1.7% yoy. DB’s Luzzetti argued there were some outliers and saw some tentative signs of an improving underlying trend (medical services inflation). Even so, the team acknowledge that it is difficult to dismiss the string of recent soft inflation prints. Looking ahead, core CPI inflation is still expected to remain near recent levels in yoy terms through 2017, but on a mom basis, DB expects a rebound through year end, which if it occurs would support a Dec 17 rate hike. However that hike must be more in doubt at the moment.

Elsewhere, the Dallas Fed’s Kaplan said that whilst he was a strong advocate of the two recent rate hikes, “I at this stage want to see continued evidence – or more evidence – that we’re making progress on reaching our inflation objective, …I’m willing to be patient”. According to Bloomberg’s implied probability function, the chance of a rate hike in Dec 17 has fallen from ~38% to ~26% post the CPI data and Fed speeches.

Elsewhere, in an attempt to get Brexit talks back on track. The UK government plans to issue three discussion papers ahead of the next round of talks on 28th August. The papers could set out proposals for Northern Ireland and borders with Ireland, continuity on the availability of goods and confidentially & access to official documents after Brexit.

Before we take a look at today’s calendar, we wrap up with other data releases from Friday. In the US, there was the aforementioned CPI stats. Over in Europe, the final July inflation readings for Germany and France was released, both had no change relative to their flash readings. For Germany, it was 0.4% mom and 1.5% yoy, and for France, it was -0.4% mom and 0.8% yoy.

To the week ahead now. Today starts with the Eurozone’s industrial production (IP) stats for June. Onto Tuesday, Japan’s final reading for June IP and capacity utilisation stats as well as German’s preliminary 2Q GDP stats will be due early in the morning. Then UK’s July CPI, PPI and retail price index are due. Over in the US, there will be quite a lot of data, including: July retail sales, import / export price index for July, empire manufacturing stats, NAHB housing market index and US foreign net transactions for June. Turning to Wednesday, the Eurozone and Italy’s preliminary 2Q GDP stats are due. Then for UK, we have the July jobless claims and claimant count rate and the June ILO unemployment data. Across the pond, we get the FOMC meeting minutes along with the July housing starts and MBA mortgage applications stats. For Thursday, Japan’s July trade balance, exports/ imports data along with France’s ILO unemployment rate will be out early in the morning. Then the Eurozone’s July CPI and UK’s July retail sales are due. In the US, quite a lot of data again, including: July IP, conference board US leading index, the Philadelphia Fed business outlook survey, initial jobless claims and continuing claims stats. Finally on Friday, Germany’s PPI will be due early in the morning. Follow by the Eurozone’s June current account stats and construction output data. In the US, various University of Michigan sentiment index are also due

 END 3. ASIAN AFFAIRS

i)Late SUNDAY night/MONDAY morning: Shanghai closed UP 28.92 POINTS OR 0.90%   / /Hang Sang CLOSED UP 366.72 POINTS OR 1.36% The Nikkei closed DOWN 192.64 POINTS OR .98%/Australia’s all ordinaires CLOSED UP 0.61%/Chinese yuan (ONSHORE) closed DOWN at 6.6720/Oil DOWN to 48.49 dollars per barrel for WTI and 51.72 for Brent. Stocks in Europe OPENED DEEPLY IN THE GREEN , Offshore yuan trades  6.6874 yuan to the dollar vs 6.6720 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN WEAKER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS MUCH WEAKER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS NOT HAPPY TODAY 

3a)THAILAND/SOUTH KOREA/NORTH KOREA

NORTH KOREA/USA

North Korea states that its army is “on standby” waiting for an order to attack

(courtesy zero hedge)

.

North Korea Says Army Is “On Standby Waiting For An Order Of Attack”

Global markets are closed for the weekend, so we will need to wait until tomorrow evening to see how investors react to the latest back-and-forth between the North Korean government and President Donald Trump. In North Korea’s latest salvo in its war of words, a state-run newspaper declared in an editorial that the country’s Paektusan army is now “on standby to launch fire into its [the US’s] mainland, waiting for an order of final attack.”

The comments follow a Friday report from KBS World Radio, the official international broadcasting station of South Korea (which is owned by the Korean Broadcasting System), that “North Korean authorities have dispatched emergency standby orders to the leaders of the ruling Workers’ Party committees and civil defense units.”

Here’s more from Fox News:

“North Korea took its turn Saturday in the country’s escalating, back-and-fourth with President Trump, with the state-run newspaper saying leader Kim Jung Un’s revolutionary army is “capable of fighting any war the U.S. wants.”

The assertion was made in an editorial that also states the Paektusan army is now “on the standby to launch fire into its mainland, waiting for an order of final attack.”

 

The editorial also argues that the United States ‘finds itself in an ever worsening dilemma, being thrown into the grip of extreme security unrest by the DPRK. This is tragicomedy of its own making. … If the Trump administration does not want the American empire to meet its tragic doom in its tenure, they had better talk and act properly.’”

Late last week, in a response to domestic criticism about Trump’s bellicose commentary, the president said that his rhetoric concerning North Korea – particularly his now infamous promise to respond with “fire and fury and…power” if North Korean leader Kim Jong Un continues to threaten the US – may not have been “tough enough.”

* * *

Fox also reported that Chinese leader Xi Jinping pleaded with Trump to tone down his rhetoric during a Friday night phone call with the US president.

“During Trump’s phone conversation Friday with Xi, the Chinese leader also requested that the U.S. and North Korea tone down their recent rhetoric and avoid actions that could worsen tensions between the two nations, Chinese Central Television reported.

 

‘At present, the relevant parties must maintain restraint and avoid words and deeds that would exacerbate the tension on the Korean Peninsula,’ Xi was quoted as saying.”

As we noted last night, it doesn’t look like Xi was able to sweet-talk Trump into once again delaying an investigation into China’s trade practices that many expect will lead to an all-out trade war between the world’s two largest economies. China is North Korea’s only major benefactor, and is responsible for 90% of the country’s foreign trade. Trump’s decision comes despite an IMF warning last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. We also have noted the tendency, throughout history, for trade wars to blossom into the real thing…

Indeed, it seems that relations between the two world powers are deteriorating once again even after Trump praised China for signing off on the latest round of UN Security Council sanctions against the North – which are expected to reduce North Korea’s exports by more than $1 billion.

But despite Xi’s repeated jawboning and half-hearted promises to act, China has so far been reluctant to take meaningful action to curb North Korea’s nuclear program. Now any effort would probably be too little, too late, as the US and Japan now believe the North has developed a nuclear warhead small enough to fit inside on of its ICBMs. This newfound capability could allow the North to deliver a nuclear payload to the US mainland – a fact that was not lost on global markets this week.

The escalating tensions between NK and the US – particularly Kim Jong Un’s threat to launch a missile at Guam, a US island territory in the Pacific – helped keep the S&P 500 below its 50DMA for the longest stretch since April

…and the Chinese VIX to its highest level of the year.

On Monday, we will learn if US investors are sufficiently terrified to dump stocks…or if “buy-the-f**king-all-out-nuclear-war-dip becomes the mantra of the day.

end

 

China announces today that it will halt all imports of coal, iron ore, iron and seafoods from North Korea beginning today. These are the dominant importing items from North Korea and it will cripple the nation. It seems that Trump’s threat of tariffs against China is working.

(courtesy zero hedge)

 

 

China Bans Coal, Lead, Iron Imports From North Korea

China’s Ministry of Commerce said that Beijing will halt imports of coal, iron, iron ore and seafood from North Korea starting on Tuesday, cutting an important economic lifeline for the Pyongyang regime, as it implemented a package of sanctions passed by the United Nations Security Council on August 6.

China accounts for roughly 90% of North Korean trade but moved earlier in February to suspend North Korea’s coal imports until the end of the year. Coal normally accounts for about half of North Korea’s exports, but despite the coal ban, overall trade between the two countries remained healthy according to WaPo.

Last month China announced that imports from North Korea fell to $880 million in the six months that ended in June, down 13% from a year earlier. Notably, China’s coal imports from North Korea dropped precipitously, with only 2.7 million tons being shipped in the first half of 2017, down 75 percent from 2016. But a 29 percent spike in Chinese exports to North Korea — North Korea bought $1.67 billion worth of Chinese products in the first six months of the year — helped push total trade between the two countries up 10 percent between January and June, compared with the same period last year.

While the latest move to halt imports of iron, iron ore, lead and lead ore, and seafood products will put significantly more pressure on Pyongyang, it is unlikely to be enough to convince Pyongyang to abandon its nuclear program, which it sees as essential to its own survival, experts say.

The announcement comes after days of increasingly bellicose rhetoric between President Trump and North Korean leader Kim Jong-un, which however appears to have moderated somewhat in the past 48 hours when contrary to some expectations, there were no escalations – and no missile or nuclear tests by North Korea – over the weekend. Last weekend, the UN Security Council approved tough sanctions against Pyongyang with analysts estimating that the action could cost North Korea US$1 billion in foreign revenue a year. The sanctions were in response to North Korea’s two intercontinental ballistic missile tests last month, which Kim boasted could now strike any part of the United States.

Indicating China’s reluctance to implement the sanctions, Chinese Foreign Minister Wang Yi said in a regional forum last week that his country would pay a price for implementing the sanctions, given China’s traditional economic ties with North Korea.

On Monday Beijing also warned the Trump administration not to split the international coalition over North Korea by provoking a trade war between China and the United States. The warning comes as President Trump is expected to sign an executive memorandum Monday afternoon instructing his top trade negotiator to launch an investigation into Chinese intellectual property violations, a move that could eventually result in severe trade penalties.  In China, these proposed measures were seen as an attempt to put pressure on Beijing to act more strongly against North Korea, and at the same time an attempt to shift the blame for the world’s failure to rein in Pyongyang’s nuclear and missile programs onto China alone.

 end b) REPORT ON JAPAN

end

c) REPORT ON CHINA

Saturday:

Trump warns Xi that on  the USA will initiate tariffs and begin the trade war against China

(courtesy zero hedge)

Trump Warns Xi: Trade War With China Begins Monday

As if there weren’t enough geopolitical stress points in the world to fill a lifetime of “sleepy, vacationy” Augusts, late on Friday night President Trump spoke to Chinese President Xi Jinping and told him that he’s preparing to order an investigation into Chinese trade practices next week, according to NBC. Politico confirms that Trump is ready to launch a new trade crackdown on China next week, citing an administration official, a step that Trump delayed two weeks ago under the guidance of his new Chief of Staff Gen. Kelly, but now appears imminent. It is also an escalation which most analysts agree will launch a trade war between Washington and Beijing.

As Politico details, Trump on Monday will call for an investigation into China over allegations that the nation violated U.S. intellectual property rights and forced technology transfers, the official said. While it’s unclear how much detail Trump will get into in the announcement, administration officials expect U.S. Trade Representative Robert Lighthizer to open an investigation against China under Section 301 of the Trade Act of 1974. The ordering of the investigation will not immediately impose sanctions but could lead to steep tariffs on Chinese goods. Trump has expressed frustration in recent months over what he sees as China’s unfair trade policies.

As we discussed two weeks ago, Trump had planned to launch the trade investigation more than a week ago, but he delayed the move in favor of securing China’s support for expanded U.N. sanctions against North Korea, the senior administration official said.

The pending announcement also comes amid heightened tension between the United States and China, even after the Trump administration scored a victory in persuading Beijing to sign onto new United Nations sanctions on North Korea. Still, Trump has delayed trade action before, amid pressure from business groups and major trading partners:

Two Commerce Department reports examining whether to restrict steel and aluminum imports on national security grounds were expected by the end of June but have been bottled up in an internal review. Trading partners raised threats of retaliation and domestic steel users complained of being hurt by price increases and restricted supply.

The trade investigation will immediately strain relations between the U.S. and China as the two countries wrestle with the unpredictable situation over North Korea.  Should Trump follow through, the move will lay the groundwork for Trump to impose tariffs against Chinese imports, which will mark a significant escalation in his efforts to reshape the trade relationship between the world’s two largest economies. In other words, even if there is now conventional war announced with either North Korea or Venezuela, Trump’s next step is to launch a trade war against China.

“The United States government can, and does, work with countries to address serious concerns such as North Korea while also pursuing measures to address economic concerns, such as the theft of U.S. intellectual property,” a U.S. National Security Council official said.

It wasn’t immediately clear how China would react to the move.

When reports of the potential trade investigation first emerged more than a week ago, China’s Commerce Ministry stressed the importance of U.S.-China trade ties and of resolving differences “through dialogue and consultation.”

 

“We would like to emphasize that the Chinese government has always attached importance to intellectual property protection,” a spokesman said. “The results are there for all to see.”

Trump, who has been residing at his golf club in Bedminster, New Jersey, for the past week, plans to return to Washington on Monday to officially announce the trade investigation. The decision will not only take action against alleged Chinese violations of U.S. companies’ intellectual property rights, but could also be perceived as an attempt by the U.S. government to crank up the pressure on Beijing to rein in North Korea. “I think China can do a lot more,” Trump told reporters on Thursday. “And I think China will do a lot more.”

As CNN adds, the trade investigation is expected to be only one part of a multi-pronged push by the Trump administration to counter perceived Chinese trade abuses.  The administration has been eyeing other moves to rebalance the U.S.-China trading relationship. But analysts have cautioned that Trump faces a huge challenge in his desire to significantly reduce the U.S. trade deficit with China, which last year stood at more than $300 billion. “Protection measures against some specific items, such as steel and aluminum, may gain political favors, but are not likely to be of much help to rebalance trade,” economists at the Institute of International Finance wrote in a research note this week.

* * *

Meanwhile, as we reported previouslyChina state media signaled the nation would hit back immediately against any trade measures, as it has done in past episodesThis time around, the need to project strength domestically is compounded by the looming twice-a-decade leadership reshuffle that may further entrench President Xi Jinping’s power.

Chinese officials have mulled stemming U.S. imports should retaliation be necessary. Under a draft plan, soybeans have been singled out as the top product that can be dialed back, according to people familiar with the matter. Autos, aircraft and rare-earth commodities have also been identified as potential categories for restriction, the people said.

Still, Trump’s offensive comes at a very sensitive time for Beijing: just weeks ahead of the 19th Party Congress, when Xi Jinping wants everything in his economy to be perfect. “Ahead of the 19th Party Congress, the last thing that China will want is a trade war,” said Callum Henderson, a managing director for Asia-Pacific at Eurasia Group in Singapore. “It is also important that Beijing does not look weak in this context. As such, expect a cautious, proportional response.”

Of course, ultimately the big question – as Bloomberg puts it – is whether the Trump administration is willing to risk a trade war as it ups the ante. The IMF warned last month that “inward-looking” policies could derail a global recovery that has so far been resilient to raising tensions over trade. The problem, for both the US and China, is that as Trump gets increasingly more focused on distracting from his numerous domestic scandals, he is likely to take ever more drastic action in the foreign arena, whether that means “hot war” with North Korea, or trade war with China.

“So far, it’s all been posturing, with little action,”’ said Scott Kennedy, a U.S.-China expert at the Center for Strategic and International Studies in Washington. “Pressure is building to do something, so the U.S. doesn’t look like a complete paper tiger.”

And while we await the formal announcement on Monday and China’s retaliation, below again is a breakdown of the biggest US state winners and losers if and when trade war with China breaks out, from “Winners And Losers When Trade War Breaks Out Between The US And China

* * *

Who stands to lose – and win – if the U.S. takes aim at the unbalanced trade relationship with China? With total bilateral trade of more than half a trillion dollars a year, the list of potential losers is very long as Bloomberg analyzed recently. The most notable examples include:

  • U.S. companies such as Apple Inc., which assemble their products in China for sale in the U.S., and those tapping demand in China’s expanding consumer market.
  • U.S. agricultural and transport-equipment firms, which meet China’s demand for soy beans and aircraft.
  • Manufacturing firms from the U.S. that import intermediate products from China as an input into their production process.
  • Retailers including Wal-Mart Stores Inc. and the U.S. consumers that benefit from low-price imported consumer electronics, clothes and furniture.
  • Other trade partners caught in the crossfire of poorly-targeted tariffs. On steel, for example, U.S. direct imports from China account for less than 3% of the total — below Vietnam.

And while conventional wisdom is that the US has a chronic trade deficit with China – it does – the U.S. also runs a nearly $17 billion trade surplus with China for agricultural products. China consumes about half of U.S. soybean exports, America’s second largest planted field crop. Soybean farms are mostly located in the the upper Midwest (Illinois, Iowa, Indiana, Minnesota and Nebraska). The volumes are so significant that a spike in soybean exports was a noticeable contributor to GDP growth in the second half of last year as readers may recall. China is also a major buyer of U.S. aircraft, perhaps the only areas of manufacturing where the U.S. retains a competitive edge (though not for much longer). The U.S. also has an $8 billion dollar trade surplus with China in the transportation equipment category.

U.S. Trade Balance With China by Product

How about geographically?

It may come as a surprise that on a state-by-state basis, eight U.S. states are running surpluses with China, six of which supported Trump in last year’s presidential election, including West Virginia. In 2016, Louisiana registered the largest surplus, at 2.9% of the state’s GDP. Louisiana’s exports to China are likely inflated given that 60% of U.S. soybean exports are shipped through the Gulf coast. Washington state was second at 1.6% of GDP, largely due to aerospace exports.

Tennessee maintains the largest trade deficit with China at 6.5% of GDP, meaning tariff-induced increases in the price of imports could have the biggest impact on this state.

The biggest losers? Mississippi, Georgia, Illinois and  California, all of which maintain deficits at more than 3% of GDP.

For the sake of brevity, we will not discuss another, more troubling, aspect of conventional wisdom, namely that trade wars almost inevitably lead to real wars. Aside for the US military industrial complex, there are no winners there.

end China slams Trump’s trade war as Xi states that it is basically a distraction from their “domestic turmoil” (courtesy zero hedge) China Slams Trump’s “Trade War” Announcement, Says It Is A Distraction From “Domestic Turmoil” In The U.S.

Today at 3pm, President Trump will sign a memo addressing “China’s laws, policies, practices, and actions related to intellectual property, innovation, and technology” effectively launching the first shot in what many predict will blossom into an all-out trade war with China. As discussed over the weekend, administration officials said Saturday that memo will direct U.S. Trade Representative Robert Lighthizer to consider investigating China over its IP policies, especially the practice of forcing U.S. companies operating in China to transfer technological know-how.

Predictably, China is not happy. In an editorial published in the China Daily, the government lashed out at Trump, warning him thatby “politicizing” trade, he risks “exacerbating” the US’s “economic woes,” and “poisoning” the relationship between the world’s two largest economies.

Here’s Reuters:

“In an editorial, the official China Daily said it was critical the Trump administration doesn’t make a rash decision it will regret.

 

“Given Trump’s transactional approach to foreign affairs, it is impossible to look at the matter without taking into account his increasing disappointment at what he deems as China’s failure to bring into line the Democratic People’s Republic of Korea,” the English-language paper said.

 

‘But instead of advancing the United States’ interests, politicizing trade will only acerbate the country’s economic woes, and poison the overall China-U.S. relationship.’”

For those who’ve been too busy enjoying their August vacation to keep track of all the international conflicts flaring up around the globe, Trump is preparing to order US Trade Representative Robert Lighthizer to launch an investigation under section 301 of the Trade Act of 1974. The law, which was commonly used during the Reagan administration, has fallen into disuse since the launch of the WTO. It has more recently been used as a tool by trade unions.  The investigation should pave the way for the US to take potentially aggressive retaliatory actions against China, such as imposing tariffs on Chinese imports or rescinding licenses for Chinese companies wanting to do business in the US.

During the campaign, Trump’s rhetoric about “punishing” the Chinese for their unfair trade practices helped differentiate his message from milquetoast centrists like “low energy” Jeb Bush. But after triumphing over Hillary Clinton, and subsequently filling his administration with Goldman Sachs alumni like Gary Cohn, the president appeared to change his mind. However, according to media reports, he had yet another change of heart earlier this summer, when he started siding with Steve Bannon and the anti-globalist contingent of his advisers during discussions about trade.  

And after initially delaying the investigation two weeks ago on the advice of his new chief of staff, General John Kelly, it appears Trump is finally ready to disrupt one of the world’s most complex bilateral trade relationships. The editorial also pushed back against the notion that China is somehow responsible for Pyongyang’s actions.

“The China Daily said it was unfair for Trump to put the burden on China for dissuading Pyongyang from its actions.

 

‘By trying to incriminate Beijing as an accomplice in the DPRK’s nuclear adventure and blame it for a failure that is essentially a failure of all stakeholders, Trump risks making the serious mistake of splitting up the international coalition that is the means to resolve the issue peacefully,’ it said.

 

‘Hopefully Trump will find another path. Things will become even more difficult if Beijing and Washington are pitted against each other.’”

The move against China over trade was also seen here as an attempt to distract attention away from Trump’s domestic problems. “Bashing China cannot solve U.S. economic problems, experts say,” the state-run Xinhua news agency proclaimed. The nationalist Global Times newspaper even tried to link developments to violence and “racial hatred” that broke out in Charlottesville at the weekend.

The source of “global instability may not be North Korea’s nuclear ambitions nor Europe’s regufee crisis, but the chaos in the US,” it wrote. “The public is also concerned that Trump is using international disputes to divert public attention away from the domestic turmoil.”

* * *

That said, the argument that China doesn’t bear some responsibility for the North’s actions is refuted by simple economic staitstics.  China is North Korea’s most prominent benefactor, and its economic support has been a lifeline to the North’s government; without it, the Kim regime probably would’ve collapsed decades ago. China is responsible for 90% of North Korea’s foreign trade.

Last month China announced that imports from North Korea fell to $880 million in the six months that ended in June, down 13 percent from a year earlier. Notably, China’s coal imports from North Korea dropped precipitously, with only 2.7 million tons being shipped in the first half of 2017, down 75 percent from 2016. But a 29 percent spike in Chinese exports to North Korea — North Korea bought $1.67 billion worth of Chinese products in the first six months of the year — helped push total trade between the two countries up 10 percent between January and June, compared with the same period last year

China also harbors North Korea laborers whose remittances are another crucial source of foreign currency for the North’s economy. According to a recent poll, nearly two-thirds of US voters believe China should take a leading role in the de-nuclearization of the Korean peninsula.

As we wait for Trump to give the order, the only question left is will the US and China reach a last-minute deal to once again delay the investigation. It’s not out of the question: President Xi Jingping is hoping to tighten his grip on power at this fall’s National Congress of the Communist Party. In the meantime, maintaining economic stability remains paramount.

end

 

Overnight, a Chinese bank suffers a rare bank run on rumours.  The bank in question: Linshang Bank denied it has troubles

(courtesy zero hedge)

Chinese Bank Suffers ‘Rare’ Bank Run, Police Arrest “Rumor-Spreaders”

Chinese police questioned 27 people, detained 12 and “severely” reprimanded 15, over the spreading of gossip about Linshang Bank – a lender with 61 billion yuan ($9.1 billion) in deposits – which caused a rare bank run in Eastern China.

The South China Morning Post reports that a few disgruntled employees at Shandong Sanwei Oil Group, an agricultural processing company, were unhappy after they were placed on leave when production lines were closed at the firm.

The employees spread a rumour that the firm was collapsing with billions of yuan in unpaid loans and that it might also bring down Linshang Bank, the report added.

 

The rumour spread quickly among residents, triggering a run on the local branch of the bank, according to the article. At one point more than 500 depositors gathered outside the branch demanding to withdraw their money.

The bank said in a brief statement on its website that the spate of withdrawals at one of its branches in Linyi in Shandong province on Monday was caused by “a few individuals spreading rumours” that the bank was in trouble.

The lender urged the public “not to believe in or spread rumours to jointly maintain good financial order”.

“In the face of rumors, we hope the public reacts rationally, does not believe in rumors, does not rumor-monger, to avoid harming their own interests.”

 An official in the bank’s general affairs office told the South China Morning Post on Thursday the situation was now back to normal. A clerk at the bank’s Bancheng branch also said normal operations had resumed.

“Our branch managers have been explaining to our clients … and most clients left the branch without withdrawing money after they knew it was just untrue gossip,” the clerk said.

As SCMP notes,regional banks in less developed areas are regarded as the weak links in China’s financial system as lenders often give large loans to local enterprises and may expose themselves to greater risks if local economic growth slows.

A rumour that a rural lender in Sheyang county in Jiangsu province had run out of money three years ago triggered a three-day run on the bank, which forced it to place stacks of cash behind teller windows to ease depositors’ panic.

While bank runs in China are unusual, the rapidity of this run (from gossip to deposit demands) makes us wonder just how fragile confidence must be among the average Jao. As a reminder, China’s central bank launched a deposit insurance system in May 2015, adopting Western-style protection for depositors. The maximum payout level is set at 500,000 yuan per depositor for each bank.

 

 

END

 

Overnight, Chinese macro data misses on all fronts:  retail sales, industrial production and fixed asset investment. It did not matter as their stock market ignored the reports

 

(courtesy zero hedge)

 

 

China Macro Data Misses Across The Board In July, Worst Since 2016

Confirming the credit impulse peak is passed (June’s surprise beats), China’s July macro-economic data is ugly. Retail Sales, Industrial Production, and Fixed Asset Investment all fell and missed notably. For now the reaction is absolutely nothing…

National Bureau of Statistics reports some ugly data for July:

  • China July Industrial Output MISS Rises 6.4% Y/y; Est. 7.1% (range 6.5%-8.7%, 37 economists)
  • Fixed-asset investment excluding rural households MISS up 8.3% y/y in Jan.-July; est. 8.6% (range 8.4%-9.3%, 35 economists)
  • July retail sales MISS rose 10.4% y/y; est. 10.8% y/y (range 9.5%-11.5%, 37 economists)

China data is the weakest since 2016…

We wonder just how bad it will get…

For now there is zero reaction anywhere as it appears traders are numb to global nuclear war concerns, epic Japanese growth, and dismal Chinese data.

 

 

end

 

This is a huge red flag for those believing that the global economy is booming and a red flag for crude oil bulls.  The demand side for Chinese oil refining tumbles badly

 

(courtesy zero hedge)

 

Big Red Flag For Crude Bulls: Chinese Oil Refining Tumbles Most In Three Years As Fuel Demand Slides

Slowly but surely, what we have claimed for the past year – that it is the demand side of the oil equation, not the supply, and especially the “Chinese wildcard” that is the critical factor in setting prices – is starting to emerge and be factored in by markets. And so, just days after we posted “Another Red Flag For Oil? China’s Crude Imports Slump To 7-Month Low” arguably catalyzed by the increasingly full Chinese Strategic Petroleum Reserve, overnight we got another major red flag – once again out of China – when Bloomberg reported that China’s oil refining dropped the most in three years for the month of July, while crude output retreated from the highest this year, “as the world’s largest consumer showed signs of losing momentum.”

According to Bloomberg calculations based on NBS data released on Monday, as shown in the chart below oil processing in July dropped 4.4 percent from the previous month to about 10.76 million barrels a day. While daily refining output typically falls from June to July on maintenance, last month’s fall was the biggest seasonal decline since 2014. Crude oil output fell 3% to 3.84 million barrels a day.

Separate data from industry consultant SCI99 revealed that state refineries in northwest and southern China at the end of July cut runs to 66.9% and 64.68% of capacity, respectively, the lowest since 2014, while independent refiners, known as teapots, were operating at around 58.78% near the lowest since May 5.

The news has pressured oil prices lower all morning despite a generally risk on tone across global equities.

“We’ve been drifting lower in the morning and now are reclaiming some of those losses,” says Ole Hansen, head of commodity strategy at Saxo Bank. “There’s not a lot to get your teeth into today” Hansen said adding that “Libya could have had a bit more a positive impact on a day where we hadn’t had the Chinese product demand news”

The sharp slowdown in Chinese refining comes amid news that the pace of China’s economic expansion slowed last month, as broader data Monday showed factory output and investment moderated amid the government’s push to cool the property sector and reduce leverage. Official figures last week showed crude imports also fell in July, slipping to the lowest in six months, while net product exports jumped 19 percent.

A weaker macro economy has to some extent also affected fuel demand,” Li Li, an analyst with Shanghai-based commodities researcher ICIS-China told Bloomberg. “Runs are low because teapots have done some additional maintenance as they run down stocks and they also lowered runs amid stringent environmental checks.

As Bloomberg reported last month, the world’s largest refiner, state-run China Petroleum & Chemical Copr. known as Sinopec, will process about 1 million metric tons a month (about 240,000 barrels a day) less than it previously planned over June to August because of weaker fuel demand growth and competition from teapots.

Suggesting that the weakness is broad based, and not simply a one-time event, Bloomberg also notes that China is on pace to produce the least amount of crude since 2009, even as its three biggest oil companies aim to raise combined spending for the first time in four years after the country’s crude production fell at a record pace in 2016. That contrasts with a surge in natural gas production, which is being encouraged by the President Xi Jinping’s government as an alternative to coal. Crude output from January to July averaged about 3.9 million barrels a day, down about 173,000 barrels a day, according to Bloomberg calculations. The International Energy Agency forecasts full-year output may drop by 150,000 barrels a day.

Some additional details revealed in the latest set of data:

  • Total crude production in July was down 2.9 percent from the same month last year at 16.25 million metric tons.
  • Production in the first seven months of the year totaled 112.79 million tons, down 4.8 percent from same period last year.
  • Natural gas output in July rose 14.7 percent year-on-year to 11.7 billion cubic meters.
  • Natural gas output in the first seven months is up 8.8 percent to 85.8 billion cubic meters.
  • Oil refining in July totaled 45.5 million tons, a 0.4 percent year-on-year rise.
  • Refining in the first seven months is up 2.9 percent at 320.71 million tons.

Finally, slamming the longer-term outlook for oil was none other than the world’s (formerly) biggest oil bull, Andy Hall – who as reported last week is shutting down his flagship commodities fund – saying in his August 1 letter that oil market fundamentals for 2018 “have deteriorated”, and adding that OPEC’s talk of extending oil production cuts is a “sign of weakness, not of strength”, while noting that U.S. shale firms can “profitably hedge” extra 2018 output at current prices.

4. EUROPEAN AFFAIRS

end

5. RUSSIA AND MIDDLE EASTERN AFFAIRS

Russia

6 .GLOBAL ISSUES

UKRAINE/NORTH KOREA

 

My goodness, this is shocking:  USA “ally” Ukraine is the source of North Korean Missile engines.  It also questions the huge donations given by Ukraine donors to the Clinton foundation.

 

(courtesy zero hedge)

 

NYT Shocking Report: US “Ally” Ukraine Is Source Of North Korean Missile Engines

When the US State Department supported Ukraine domestic forces and nationalist elements to stage a successful and deadly coup against then pro-Russian president Viktor Yanukovych in 2014, the outcome was supposed to be a nation that is a undisputed US ally and persistent threat, distraction and non-NATO opponent to bordering Russia. Instead, it now appears that it has been Ukraine which was, as the NYT writes, the secret behind the success of North Korea’s ballistic missile program.

Specifically, in a blockbuster report this morning, the NYT alleges that North Korea has been making black-market purchases of powerful rocket engines from a Ukrainian factory citing “expert analysis being published Monday and classified assessments by American intelligence agencies.”

The studies may solve the mystery of how North Korea began succeeding so suddenly after a string of fiery missile failures, some of which may have been caused by American sabotage of its supply chains and cyberattacks on its launches. After those failures, the North changed designs and suppliers in the past two years, according to a new study by Michael Elleman, a missile expert at the International Institute for Strategic Studies.

According to the report, analysts who studied photographs of Kim Jong-un, inspecting the new rocket motors concluded that they derive from designs that once powered the Soviet Union’s missile fleet. “The engines were so powerful that a single missile could hurl 10 thermonuclear warheads between continents.”

Since the alleged engines have been linked to only a few former Soviet sites, government investigators and experts have focused their inquiries on a missile factory in Dnipro, Ukraine, on the edge of the territory where Russia is fighting a low-level war to break off part of Ukraine. During the Cold War, the factory made the deadliest missiles in the Soviet arsenal, including the giant SS-18. It remained one of Russia’s primary producers of missiles even after Ukraine gained independence.


Ukraine President Poroshenko visiting the Yuzhmash plant in Dnipro in 2014

However, after the 2014 coup which ousted Ukraine’s pro-Russian president, Viktor Yanukovych, the state-owned factory, known as Yuzhmash, has fallen on hard times. The Russians canceled upgrades of their nuclear fleet.

“The factory is underused, awash in unpaid bills and low morale. Experts believe it is the most likely source of the engines that in July powered the two ICBM tests, which were the first to suggest that North Korea has the range, if not necessarily the accuracy or warhead technology, to threaten American cities.

In other words, it is America’s latest Eastern European “ally” that is behind what is rapidly emerging as a potential nuclear threat that can blanket as much as half of the continental US.

“It’s likely that these engines came from Ukraine — probably illicitly,” Elleman told the NYT in an interview. “The big question is how many they have and whether the Ukrainians are helping them now. I’m very worried.”

Bolstering his conclusion, he added, was a finding by United Nations investigators that North Korea tried six years ago to steal missile secrets from the Ukrainian complex. Two North Koreans were caught, and a U.N. report said the information they tried to steal was focused on advanced “missile systems, liquid-propellant engines, spacecraft and missile fuel supply systems.” Investigators now believe that, amid the chaos of post-revolutionary Ukraine, Pyongyang tried again.

Considering Ukraine is a close US ally – just ask John McCain – maybe a phone call to current Ukraine president, oligarch billionaire Poroshenko, should suffice?

To be sure, the factory itself would never admit this stunning allegation: last month, Yuzhmash denied reports that the factory complex was struggling for survival and selling its technologies abroad, in particular to China. Its website says the company does not, has not and will not participate in “the transfer of potentially dangerous technologies outside Ukraine.”

Making matters worse of the US “allies” in Ukraine, American investigators do not believe that denial, though they say there is no evidence that the government of President Petro O. Poroshenko, who recently visited the White House, had any knowledge or control over what was happening inside the complex.

The obvious implication here is that – if accurate – Ukraine had been working with North Korea for years, well into the administration of Barack Obama, the same president under whom the Ukraine coup was greenlight, which would also suggest that the current North Korean crisis is explicitly a consequence of Obama’s foreign policies.

Which is why we read the following amusing disclaime in the NYT: “How the Russian-designed engines, called the RD-250, got to North Korea is still a mystery.

Furthermore, Elleman told the NYT that the fact that the powerful engines did get to North Korea, despite a raft of United Nations sanctions, suggests a broad intelligence failure involving the many nations that monitor Pyongyang. Failure or perhaps just US intel closing its eyes to what Ukraine may be doing through the back door.

The NYT writes that “it is unclear who is responsible for selling the rockets and the design knowledge, and intelligence officials have differing theories about the details. But Mr. Elleman makes a strong circumstantial case that would implicate the deteriorating factory complex and its underemployed engineers. “I feel for those guys,” said Mr. Elleman, who visited the factory repeatedly a decade ago while working on federal projects to curb weapon threats. “They don’t want to do bad things.”

One can only imagine what Elleman would “feel for those guys” if the factory turned out to be Russian, or Chinese.

Describing North Korea’s long history of smuggling rocket technology over the decades – mostly from the former USSR – the NYT writes that eventually, the North turned to an alternative font of engine secrets — the Yuzhmash plant in Ukraine, as well as its design bureau, Yuzhnoye. The team’s engines were potentially easier to copy because they were designed not for cramped submarines but roomier land-based missiles. That simplified the engineering.

Economically, the plant and design bureau faced new headwinds after Russia in early 2014 invaded and annexed Crimea, a part of Ukraine. Relations between the two nations turned icy, and Moscow withdrew plans to have Yuzhmash make new versions of the SS-18 missile. In July 2014, a report for the Carnegie Endowment for International Peace warned that such economic upset could put Ukrainian missile and atomic experts “out of work and could expose their crucial know-how to rogue regimes and proliferators.”

It was right: The first clues that a Ukrainian engine had fallen into North Korean hands came in September when Mr. Kim supervised a ground test of a new rocket engine that analysts called the biggest and most powerful to date. Norbert Brügge, a German analyst, reported that photos of the engine firing revealed strong similarities between it and the RD-250, a Yuzhmash model.

Alarms rang louder after a second ground firing of the North’s new engine, in March, and its powering of the flight in May of a new intermediate-range missile, the Hwasong-12. It broke the North’s record for missile distance. Its high trajectory, if leveled out, translated into about 2,800 miles, or far enough to fly beyond the American military base at Guam.

 

On June 1, Mr. Elleman struck an apprehensive note. He argued that the potent engine clearly hailed from “a different manufacturer than all the other engines that we’ve seen.”

 

Mr. Elleman said the North’s diversification into a new line of missile engines was important because it undermined the West’s assumptions about the nation’s missile prowess: “We could be in for surprises.”

 

That is exactly what happened. The first of the North’s two tests in July of a new missile, the Hwasong-14, went a distance sufficient to threaten Alaska, surprising the intelligence community. The second went far enough to reach the West Coast, and perhaps Denver or Chicago.

If the NYT report is accurate, perhaps it is time to re-evaluate the logic behind ongoing US support of Ukraine: as a reminder, two weeks ago the WSJ reported that Pentagon and State Department officials have devised plans to hit Russia where it hurts the most, and supply Ukraine with antitank missiles and other weaponry, and are now seeking White House approval at a time when ties between Moscow and Washington are as bad as during any point under the Obama administration. In light of the news that Ukraine may be responsible for weaponizing the biggest nuclear threat to the US, perhaps it might not be a bad idea to “delay” or maybe even this deadly support for Ukraine, even if it means an outpouring of fury from neo-cons like John McCain.

* * *

Finally, in light of the above, perhaps it is time to re-address the following article from March 2015: “Clinton Foundation’s Deep Financial Ties to Ukrainian Oligarch Revealed” which based on a WSJ report, showed that more than any other nation, it was Ukraine donors that were the most generous, especially the Victor Pinchuk foundation: “Between 2009 and 2013, including when Mrs. Clinton was secretary of state, the Clinton Foundation received at least $8.6 million from the Victor Pinchuk Foundation, according to that foundation, which is based in Kiev, Ukraine. It was created by Mr. Pinchuk, whose fortune stems from a pipe-making company. He served two terms as an elected member of the Ukrainian Parliament and is a proponent of closer ties between Ukraine and the European Union.”

As the WSJ reported at the time:

In 2008, Mr. Pinchuk made a five-year, $29 million commitment to the Clinton Global Initiative, a wing of the foundation that coordinates charitable projects and funding for them but doesn’t handle the money. The pledge was to fund a program to train future Ukrainian leaders and professionals “to modernize Ukraine,” according to the Clinton Foundation. Several alumni are current members of the Ukrainian Parliament.

 

The Pinchuk foundation said its donations were intended to help to make Ukraine “a successful, free, modern country based on European values.” It said that if Mr. Pinchuk was lobbying the State Department about Ukraine, “this cannot be seen as anything but a good thing.”

end

 

CANADA/USA

 

This will not be good for Canada as there seems to be no progress in the uSA/Canada timber trade war

 

(courtesy zerohedge)

Canadian Lumber Stocks Tumble On Report US-Canada Timber Trade War To Escalate

Canadian lumber stocks are diving this morning following a report from BMO analyst Mark Wilde who writes that “prospects for a near-term settlement of the U.S./Canadian lumber dispute have faded“, prompting him to downgrade the main players in the space. The report has sent the stocks of West Frasier Timber (WFT), Canfor (CFP) and Interfor (IFP) as much as 6%, 4.6% and 6.2% lower, respectively.

What prompted the bold call? As the BMO analyst notes, “our sources report little substantive negotiation between Canadian and U.S. interests and little real movement in positions. Moreover, there appears to be internal divisions on both sides of the border.

These include differences between U.S. Commerce Secretary, Wilbur Ross, and U.S. Trade Representative, Robert Lighthizer. Ross is reportedly more inclined to take a deal, while the USTR is apparently taking a firmer line in negotiations. There also appear to be differences amongst members of the U.S. Lumber Coalition.

 

On the Canadian side, the divisions are mainly between the East and the West. Large, low-cost Western Canadian producers are more inclined to take a harder approach, pursuing litigation and paying countervailing (CVD)/anti-dumping (ADD) duties in the interim.

So with no near-term resolution to the ongoing lumber dispute between the two NAFTA neighbors, the alternative is a steadily progressing trade war. As a result, as Wilde writes, “we anticipate a period of  countervailing and anti-dumping duties on Canadian lumber imports as well as continued litigation around those duties.” As regards the 3 abovementioned stocks, the analyst notes that at current stock price levels, “we think the big risk is downside disappointments. Thus, we are downgrading West Fraser, Canfor, and Interfor to Market Perform. We are also downgrading Weyerhaeuser and Rayonier ratings to Market Perform. The key issue in timber is continued soft pricing on southern sawlogs. We are not making any changes to our price targets.

Finally, here are the summary highlights from the BMO report which, if accurate, suggest that even as Trump prepares to launch trade war with China, the ongoing “lumber war” with Canada is set to get worse before it gets better.

  • Comments by high-ranking Canadian government officials and some U.S. corporate executives have fed hopes that a negotiated settlement is close at hand. Our sources report little substantive negotiation between Canadian and U.S. interests and little real movement in positions. Moreover, internal divisions exist on both sides of the border. On the U.S. side, there appear to be differences between U.S. Commerce Secretary, Wilbur Ross, and U.S. Trade Representative, Robert Lighthizer, as well as amongst members of the U.S. Lumber Coalition. On the Canadian side, the divisions are between Eastern and Western Canada.
  • Continued uncertainty on the trade issue isn’t good for lumber stocks. Moreover, the combination of continued countervailing and anti-dumping duties during 2018 and a strengthening Canadian dollar are both apt to put pressure on FY18 earnings estimates. In our view, it’s hard to see the stocks pushing much higher in the near term in the face of that headwind. For that reason, we are downgrading West Fraser, Canfor, and Interfor to Market Perform from Outperform.
  • To be clear, we aren’t arguing the cycle is over for lumber producers. The “medium term” looks much more constructive. Over the next three-five years, we think the combination of reduced lumber supplies from Canada, improving lumber demand, and continued low southern sawlog prices could produce a period of abnormally rich margins for southern sawmills. We may be entering something of a Golden Age for southern sawmills. The three largest Canadian lumber producers have been increasing the proportion of their production in the southern U.S. and should benefit from the sawlog cost/lumber price arbitrage.
  • The timeline on recovery in southern sawlog prices remains unclear. A decade of subpar demand and improving forest productivity has created significant inventory build in southern plantation forests. That “overhang” has southern sawlog prices at ~60% of 2005 levels – in nominal terms – and threatens to dampen/delay a recovery in sawtimber pricing across many parts of the south. Indeed, after a modest price recovery, southern sawlog prices have declined for the past seven quarters. In private conversations, we’re encountering an increasing sense of caution – and even, skepticism – about the recovery among timber investment professionals. As such, we are downgrading WY and RYN to Market Perform from Outperform.
7. OIL ISSUES  END 8. EMERGING MARKET

VENEZUELA

end

end

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

Euro/USA   1.1794 DOWN .0026/REACTING TO  + huge Deutsche bank problems + USA election:/TRUMP HEALTH CARE DEFEAT//ITALIAN REFERENDUM DEFEAT/AND NOW ECB TAPERING BOND PURCHASES/ /USA RISING INTEREST RATES AGAIN/EUROPE BOURSES ALL IN THE GREEN 

USA/JAPAN YEN 109.72 UP 0.548(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/   HELICOPTER MONEY  ON THE TABLE AND DECISION ON SEPT 21 DISAPPOINTS WITH STIMULUS/OPERATION REVERSE TWIST/LABOUR PARTY LOSES IN LOCAL ELECTIONS

GBP/USA 1.2975 DOWN .0032 (Brexit  March 29/ 2017/ARTICLE 50 SIGNED

THERESA MAY FORMS A NEW GOVERNMENT/STARTS BREXIT TALKS

USA/CAN 1.2701 UP .0028 (CANADA WORRIED ABOUT TRADE WITH THE USA WITH TRUMP ELECTION/ITALIAN EXIT AND GREXIT FROM EU/TRUMP INITIATES LUMBER TARIFFS ON CANADA)

Early THIS MONDAY morning in Europe, the Euro FELL by 26 basis points, trading now ABOVE the important 1.08 level  FALLING to 1.1794; Europe is still reacting to Gr Britain HARD BREXIT,deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRP, and now the Italian referendum defeat AND NOW THE ECB TAPERING OF ITS PURCHASES/ THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE AND NOW THE HUGE PROBLEMS FACING TOO BIG TO FAIL DEUTSCHE BANK + THE ELECTION OF TRUMP IN THE USA+ TRUMP HEALTH CARE BILL DEFEAT AND MONTE DEI PASCHI NATIONALIZATION / Last night the Shanghai composite CLOSED  UP 28.92 POINTS OR 0.90%     / Hang Sang  CLOSED UP 366.72 POINTS OR 1.56% /AUSTRALIA  CLOSED UP 0.61% / EUROPEAN BOURSES OPENED  DEEPLY IN THE GREEN 

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

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

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

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

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

The NIKKEI: this MONDAY morning CLOSED DOWN 192.64 POINTS OR .98%

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

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 366.72 POINTS OR 1.36%  / SHANGHAI CLOSED UP 28.92 POINTS OR 0.90%   /Australia BOURSE CLOSED UP 0.61% /Nikkei (Japan)CLOSED DOWN 192.64  POINTS OR 0.98%   / INDIA’S SENSEX IN THE GREEN

Gold very early morning trading: 1279.45

silver:$16.96

Early MONDAY morning USA 10 year bond yield: 2.220% !!!  UP 3   IN POINTS from FRIDAY night in basis points and it is trading JUST BELOW resistance at 2.27-2.32%.

 The 30 yr bond yield  2.816, UP 3  IN BASIS POINTS  from TUESDAY night.

USA dollar index early MONDAY morning: 93.38 UP 31  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: 2.809% DOWN 5 in basis point(s) yield from FRIDAY 

JAPANESE BOND YIELD: +.058%  DOWN 1/2   in   basis point yield from FRIDAY/JAPAN losing control of its yield curve

SPANISH 10 YR BOND YIELD: 1.436% DOWN 2   IN basis point yield from FRIDAY 

ITALIAN 10 YR BOND YIELD: 2.020 DOWN 2 POINTS  in basis point yield from FRIDAY 

the Italian 10 yr bond yield is trading 59 points HIGHER than Spain.

GERMAN 10 YR BOND YIELD: +.407% UP 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/5:00 PM 

Euro/USA 1.1786 DOWN .0033 (Euro DOWN 33 Basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/

USA/Japan: 109.48 UP 0.312(Yen DOWN 31 basis points/ 

Great Britain/USA 1.2976 DOWN  0.0030( POUND DOWN 30 BASIS POINTS)

USA/Canada 1.2699 UP .0025 (Canadian dollar DOWN 25 basis points AS OIL FELL TO $48.43

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This afternoon, the Euro was DOWN  by 33 basis points to trade at 1.1786

The Yen FELL to 109.48 for a LOSS of 31  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 BY 30  basis points, trading at 1.2976/ 

The Canadian dollar FELL by 31 basis points to 1.2699,  WITH WTI OIL FALLING TO :  $48.43

The USA/Yuan closed at 6.6712/ the 10 yr Japanese bond yield closed at +.058%  DOWN 1/2 IN  BASIS POINTS / yield/ 

Your closing 10 yr USA bond yield UP 2  IN basis points from FRIDAY at 2.206% //trading well ABOVE the resistance level of 2.27-2.32%) very problematic  USA 30 yr bond yield: 2.798 UP 1 in basis points on the day /

Your closing USA dollar index, 93.37  UP 30 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 43.93 POINTS OR 0.60%
German Dax :CLOSED UP 151.06 POINTS OR 1.26%
Paris Cac  CLOSED UP 60.75 POINTS OR 1.20% 
Spain IBEX CLOSED UP  178.30 POINTS OR 1.73%

Italian MIB: CLOSED UP 368.09 POINTS/OR 1.72%

The Dow closed UP 135.39 OR 0.62%

NASDAQ WAS closed UP 83.68  POINTS OR 1.34%  4.00 PM EST

WTI Oil price;  48.43 at 1:00 pm; 

Brent Oil: 51.31 1:00 EST

USA /RUSSIAN ROUBLE CROSS:  59.66 DOWN 18/100 ROUBLES/DOLLAR (ROUBLE HIGHER BY 18 BASIS PTS)

TODAY THE GERMAN YIELD RISES TO  +0.407%  FOR THE 10 YR BOND  4.PM EST 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 5:00 PM:$47.50

BRENT: $50.64

USA 10 YR BOND YIELD: 2.224%  (ANYTHING HIGHER THAN 2.70% BLOWS UP THE GLOBE)

USA 30 YR BOND YIELD: 2.8120%

EURO/USA DOLLAR CROSS:  1.1782 down .0038

USA/JAPANESE YEN:109.72  UP  0.0546

USA DOLLAR INDEX: 93.43  up 36  cent(s) 

The British pound at 5 pm: Great Britain Pound/USA: 1.2963 : down 43 POINTS FROM LAST NIGHT  

Canadian dollar: 1.2726 UP 52 BASIS pts 

German 10 yr bond yield at 5 pm: +0.407%

END

And now your more important USA stories which will influence the price of gold/silver TRADING IN GRAPH FORM FOR THE DAY Stocks, Dollar Bounce On Relief World Did Not End This Weekend

The world did not come to an end this weekend and that’s all the excuse markets needed to squeeze higher again…

 

World did not end – yay! Buy Stocks, Dump Gold…

 

But bonds and bullion remain the winners since Trump spoke last week…

 

December rate-hike odds bounced higher today but remain well below levels before CPI/PPI hit last week…

 

Trannies and Small Caps were panic bid but one glance at the chart below and its clear that The Dow and S&P went nowhere from the gap higher open…

 

All the indices remain red post-“fire-and fury”…

 

The S&P bounced back above its 50DMA but Small Caps remain below theirs…

 

Financials and Tech outperformed (though notably drifted only marginally higher from the opening gap) and Energy underperformed as oil lagged…

 

FANG Stocks retraced half the “Fire & Fury” losses then faded…

 

VIX was clubbed back down towards its 200DMA (at 11.99) but failed to make it…

 

Another quick rip and dip in vol…

 

VXX (VIX ETF) tumbled back below its 50DMA..

 

Treasury yields remain below last week highs but were marginally higher on the day, thanks to comments from The Fed’s Dudley on balance sheet normalization…

 

However, 30Y yields never even made it back to Friday’s highs…

 

The Dollar Index rallied on the day…erasing the post-CPI plunge thanks to Dudley’s comments…

 

With all the majors weaker against the greenback…

 

We wonder if this is the start of 2016 deja vu all over again…

 

Gold sank modestly lower after failing to tag $1300 into Friday’s close…

 

Ugly day for WTI Crude…

 

Finally, don’t worry America – FED’S DUDLEY SAYS ASSET PRICES CONSISTENT WITH ECONOMY’S PERFORMANCE…

hhmm.

end

The rout in retail continues as JCPenny tumbles

 

(courtesy Mish Shedlock/Mishtalk)

 

Retail Rout Returns (But Don’t Blame Amazon)

Authored by Mike Shedlock via MishTalk.com,

JCPenney announced a $62 million dollar loss for the quarter. With the announcement, its share price plunged 16% breaking the $4 barrier for the first time. Stocks under $5 are considered “penny” stocks.

This was the worst week for Retailers since Dec 2016…

Please consider JCPenney Nosedives to All-Time Low on Big Loss.

Yup. JCPenney is now a penny stock — a Wall Street term for a company trading under $5. JCPenney (JCP) said it lost $62 million in its second quarter. That’s more than a year ago. The retailer also said that same store sales — a measure of how well stores open at least a year are doing — fell more than 1% during the quarter.

 

JCPenney is the latest department store chain to announce dismal results. Macy’s (M), Kohl’s (KSS) and Dillard’s (DDS) all reported a decline in same store sales on Thursday as they struggle to compete against Amazon (AMZN, Tech30) and Walmart (WMT).

 

The massive shift in the retail landscape has led many chains to shut down underperforming stores.

 

JCPenney is one of them, announcing earlier this year it would be closing 138 stores. JCPenney wound up delaying the closings by a month though after consumers rushed to many of the stores to take advantage of the massive liquidation sales.

 

Ellison also said during the analyst call that JCPenney expects many retailers to ramp up promotions and discounts to try and lure shoppers into their stores. The CEO warned these sales may be even more aggressive than “what we’ve traditionally seen.”

Don’t Blame Amazon

Amazon is not to blame, but Amazon sure does not help either.

Retail is massively overbuilt. That’s the big problem. And it’s not just the box retailers. The fast food restaurants are all cannibalizing each other’s sales too.

Vitaliy Katsenelson accurately states It’s not just Amazon’s fault. Changing consumer habits are killing old retail biz

Retail stocks have been annihilated recently, despite the economy eking out growth. The fundamentals of the retail business look horrible: Sales are stagnating and profitability is getting worse with every passing quarter.

 

Jeff Bezos and Amazon get most of the credit, but this credit is misplaced. Today, online sales represent only 8.5 percent of total retail sales. Amazon, at $80 billion in sales, accounts only for 1.5 percent of total U.S. retail sales, which at the end of 2016 were around $5.5 trillion. Though it is human nature to look for the simplest explanation, in truth, the confluence of a half-dozen unrelated developments is responsible for weak retail sales.

 

Our consumption needs and preferences have changed significantly. Ten years ago we spent a pittance on cellphones. Today Apple sells roughly $100 billion worth of i-goods in the U.S., and about two-thirds of those sales are iPhones.

 

Consumer income has not changed much since 2006, thus over the last 10 years $190 billion in consumer spending was diverted toward mobile phones. Between phones and their services, this is $340 billion that will not be spent on T-shirts and shoes.

 

But we are not done. The combination of mid-single-digit health-care inflation and the proliferation of high-deductible plans has increased consumer direct health-care costs and further chipped away at our discretionary dollars. Health-care spending in the U.S. is $3.3 trillion, and just 3 percent of that figure is almost $100 billion.

 

Then there are soft, hard-to-quantify factors. Millennials and millennial-want-to-be generations (speaking for myself here) don’t really care about clothes as much as we may have 10 years ago.

 

All this brings us to a hard and sad reality: The U.S. is over-retailed. We simply have too many stores. Americans have four or five times more square footage per capita than other developed countries. This bloated square footage was created for a different consumer, the one who in in the ’90s and ’00s was borrowing money against her house and spending it at her local shopping mall.

Hugely Overbuilt

Malls, retail stores, and fast food restaurants are all hugely overbuilt. Analysts still have not put 2 and 2 together on what this means.

It’s the overbuilding of all kinds of retail and fast food stores that has provided the high job growth, low wage growth environment that we are in.

You can blame (or thank) the Fed for that, depending on your view.

Regardless, the expansion will come to an end at some point. And when it does, the Fed governors will not know what hit them.

Lowering interest rates further will not do a thing for the economy in this overbuilt setup, once the turn takes place.

end

USA quietly launches a crackdown on cryptocurrencies

(courtesy zero hedge)

 

US Launches Quiet Crackdown On Cryptocurrencies

While all eyes were distracted with the Trump-demeaning headlines of the foreign sanctions bill, few spotted the hidden mandate that foreign governments monitor cryptocurrency circulations as a measure to combat “illicit finance trends” in an effort to “combat terrorism.”

As Coinivore reports, the bill requires the governments to develop a “national security strategy” to combat the “financing of terrorism and related forms of illicit finance.”

Governments will be further required to monitor “data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies.”

According to the bill, an initial draft strategy is expected to come before Congress within the next year, and will see input from U.S. financial regulators, the Department of Homeland Security, and the State Department.

The bill calls for:

“[A] discussion of and data regarding trends in illicit finance, including evolving forms of value transfer such as so-called cryptocurrencies, other methods that are computer, telecommunications, or internet-based, cybercrime, or any other threats that the Secretary may choose to identify.”

Interestingly enough, Coindesk reports, “the new bill echoes another submitted in May as part of a wider Department of Homeland Security legislative package.” That measure, as CoinDesk reported at the timecalls for research into the potential use of cryptocurrencies by terrorists. 

Like the DHS bill, the new sanctions law doesn’t constitute a shift in policy, but rather indicates that Congress is taking steps to explore the issue more closely.

Just more examples of the U.S. government trying to impose its will upon other nations and citizens who never lived there, as witnessed with the arrest of Alexander Vinnik in Greece, BTC-E’s alleged CEO according to the Department Of Justice.

 

end

 

After CEO, Ken Frazier resigns from the President’s manufacturing advisory board for lack of response to the Charlottesville riots on the weekend, Trump responds by attacking the pharmaceutical giant for ripping off the public with high drug prices.

 

(courtesy zero hedge)

Furious Trump Responds To Merck CEO: Attacks “Ripoff” Drug Prices

Well that didn’t take long.

Seconds after the resignation of Merck CEO Kenneth C. Frazier from the president’s Manufacturing Council:

“I am resigning from the President’s American Manufacturing Council.

 

Our country’s strength stems from its diversity and the contributions made by men and women of different faiths, races, sexual orientations and political beliefs.

 

America’s leaders must honor our fundamental values by clearly rejecting expressions of hatred, bigotry and group supremacy, which run counter to the American ideal that all people are created equal.

 

As CEO of Merck and as a matter of personal conscience, I feel a responsibility to take a stand against intolerance and extremism.”

President Trump has responded, via Twitter, to the resignation (and lambasting) of Merck CEO Ken Frazier

Donald J. Trump 

@realDonaldTrump

Now that Ken Frazier of Merck Pharma has resigned from President’s Manufacturing Council,he will have more time to LOWER RIPOFF DRUG PRICES!

And now we have the news cycle narrative for today.

The first reaction is in…

Carl Quintanilla 

@carlquintanilla

“How can you abide by this?” – @andrewrsorkin, on CEOs on POTUS’s manufacturing council, now that POTUS has responded to Merck

@CNBC

Who will be next to leave?

Here’s the full list of members on the new manufacturing council:

  • Andrew Liveris, The Dow Chemical Company
  • Bill Brown, Harris Corporation
  • Michael Dell, Dell Technologies
  • John Ferriola, Nucor Corporation
  • Jeff Fettig, Whirlpool Corporation
  • Mark Fields, Ford Motor Company
  • Ken Frazier, Merck & Co., Inc.
  • Alex Gorsky, Johnson & Johnson
  • Greg Hayes, United Technologies Corp.
  • Marillyn Hewson, Lockheed Martin Corporation
  • Jeff Immelt, General Electric
  • Jim Kamsickas, Dana Inc.
  • Klaus Kleinfleld, Arconic
  • Brian Krzanich, Intel Corporation
  • Rich Kyle, The Timken Company
  • Thea Lee, AFL-CIO
  • Mario Longhi, U.S. Steel
  • Denise Morrison, Campbell Soup Company
  • Dennis Muilenburg, Boeing
  • Elon Musk, Tesla
  • Doug Oberhelman, Caterpillar
  • Scott Paul, Alliance for American Manufacturing
  • Kevin Plank, Under Armour
  • Michael Polk, Newell Brands
  • Mark Sutton, International Paper
  • Inge Thulin, 3M
  • Richard Trumka, AFL-CIO
  • Wendel Weeks, Corning

end

 

The real truth behind the USA  S and P earnings:

 

(courtesy Wolf Richter/WolfStreet.com)

 

Stock Market Warning Siren Is Blaring

Authored by Wolf Richter via WolfStreet.com,

Are we blinded yet by the brilliance of corporate earnings?

“Adjusted” earnings growth is 10.2% year-over-year in the second quarter, according to FactSet, based on the 91% of the companies in the S&P 500 that have reported results. The energy sector was a key driver, with 332% “adjusted” earnings growth from the oil-bust levels of a year ago.

The sectors with double-digit earnings growth: information technology (14.7%), utilities (10.8%), and financials (10.3%). The rest were single digit. Earnings in the consumer discretionary sector declined.

Revenues grew 5.1%, also led by the energy sector. At the beginning of Q2 last year, the WTI grade of crude oil traded at $35 a barrel. In Q2 this year, WTI ranged from $42 to $53 a barrel.

So the Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else. The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations.

Aggregate earnings per share (EPS) for the S&P 500 companies on a trailing 12-months basis rose for the second quarter in a row.

 

That’s the foundation of the Wall Street hype.

 

But here’s the thing with these EPS: they’re now back where they had been in… May 2014.

Yep. More than three years of earnings stagnation. No growth whatsoever, even for “adjusted” earnings. In fact, on a trailing 12-month basis, aggregate EPS of the S&P 500 companies are down about 5% from their peak in Q4 2014. And yet, over the same three-plus years of total earnings stagnation, the S&P 500 index has soared 34%.

This chart shows those “adjusted” earnings per share for the S&P 500 companies (black line) and the S&P 500 index (blue line). Chart via FactSet (click to enlarge). I marked August 2012 as the point five years ago, and May 2014:

And these are not earnings under the Generally Accepted Accounting Principles (GAAP). FactSet uses “adjusted” earnings for its analyses. These are the earnings with the bad stuff “adjusted” out of them by management to manipulate earnings into the most favorable light. Not all companies report “adjusted” earnings. Some only report GAAP earnings and live with the consequences. But others put adjusted earnings into the foreground, and that’s what Wall Street dishes up.

Since August 2012, the trailing 12-month “adjusted” earnings per share of the companies in the S&P 500 index rose just 12% in total. About the rate of inflation – nothing more. Over the same five years, the S&P 500 Index soared 72%.

And there’s another thing: these earnings per share are heavily influenced by the share count. Companies have been on a huge borrowing binge over these years, fueled by historically low interest rates, and a big part of that borrowed money wasn’t used to create new things, expand, invest, or invent, but to buy back their own shares. This type of financial engineering lowered the share count, and thus artificially increased earnings per share. Growth in EPS due to financial engineering is fake earnings growth.

This is the peculiar situation of today: On average, these companies have stagnating earnings per share propped up by “adjusting” these earnings and by financial engineering. The price-earnings multiple (P/E ratio) for stagnating companies should be low. In January 2012, the P/E ratio for the companies in the S&P 500 index was 14.9. And that was high. As of Friday, the aggregate P/E ratio is 24.3:

But look what happened. The P/E ratio peaked in March at 26.6. Since then, the S&P 500 has ticked up 3% and earnings have risen to this glorious level Wall Street has been hyping and the P/E ratio has come down a wee tiny bit…. back to where it had been in the fall of 2016.

In the five-year picture, earnings per share – however doctored they’d been – expanded just 12%. But share prices skyrocketed 73%. And thus the P/E ratio soared. These phases of “multiple expansion” are part of the stock market’s boom and bust cycle. They’re invariably followed by periods of multiple contraction.

Multiple contraction doesn’t stop at the average long-run P/E ratio but falls far below it, because that’s how the long-run average P/E ratio is formed: by periods far above the average (right now) and by periods far below the average. In the past, this type of multiple contraction from the top of the range to the lower end of the range – the process of “reversion to the mean” – offered some hair-raising rides for the stock market overall and for ludicrously overvalued stocks in particular, with many money-losing companies not making it to the next phase.

No one knows the date when this process kicks off in earnest, though everyone wants to know it so they can scurry out of the way beforehand. But when enough folks are trying to scurry out of the way, they’ll will precipitate the beginning of that process. That’s always how it happens.

The last big enthusiastic buyer, China, is leaving the party. Read…  This Hits the Wheezing Commercial Real Estate Bubble at Worst Possible Time

end

 

 

Another widespread fraud with respect to Wells Fargo.  This time they have scammed mortgage borrowers out of $43.00 per month for unrequested and pointless “home warranty service” insurance from American Home Shield

(courtesy of Boing/Boing)

and special thanks to Robert H for sending this to us

 

ANOTHER FRAUD AT WELLS FARGO

 

 

 

It’s been a whole day since we learned about another example of systematic, widespread fraud by America’s largest bank Wells Fargo (ripping off small merchants with credit card fees), so it’s definitely time to learn about another one: scamming mortgage borrowers out of $43/month for an unrequested and pointless “home warranty service” from American Home Shield, a billion-dollar scam-factory that considers you a customer if you throw away its junk-mail instead of ticking the “no” box and sending it back.

$43/month gets you pretty much nothing: people who tried to actually use their AHS insurance found it impossible to get them to actually do anything in exchange for this money.

Here’s a quick Wells Fargo fraud scorecard: stealing thousand of cars with fraudulent repos; defrauding mortgage borrowersblackballing whistelblowerscreating 2,000,000+ fraudulent accounts, and stealing millions with fraudulent fees and penalties.

Starting at least in 2009, Wells Fargo and AHS entered into a marketing and payment processing agreement. Wells allowed AHS to solicit their mortgage customers to buy home warranty service, through phone calls, junk mail, and inserts in monthly mortgage statements. Wells would then collect the monthly payments for AHS as an additional charge to the mortgage.

According to one borrower from Newark, New Jersey, AHS claimed its junk mail constituted a “binding contract” that automatically finalized if borrowers didn’t reply to turn it down. “No signature, no affirmation and YET it is considered a BINDING CONTRACT??” the borrower wrote.

 

END

 

A terrific commentary from Dave Kranzler of IRD as he highlights things that I have been signalling to you:  higher student debt, higher auto loans and higher credit card debt:  the consumer is buried in debt:

 

(courtesy Dave Kranzler/IRD)

Household Debt At Record Level – Bigger Than China’s GDP

August 14, 2017Financial MarketsHousing MarketMarket ManipulationU.S. Economy

The economy continues to grow weaker despite all of the Fed, Wall St. and media propaganda to the contrary. The economy is growing weaker due to the deteriorating financial condition of the consumer, which is by far the biggest driver of GDP in the United States. The only way the policy-makers can avoid a systemic collapse is “helicopter” money printing, in which printed cash or digital currency credits is, in some manner, distributed to the populace.

The Fed reported that non-revolving consumer debt (not including mortgage debt) hit $2.6 trillion at the end of the first quarter. Student loans outstanding hit a record $1.44 trillion. Recall that at least 40% of this debt is in some form of delinquency, default or “approved” non-pay status. Auto loans hit a record $1.2 trillion. Of this, at the very least  30% is subprime. A meaningful portion of the auto debt is of such poor credit quality when it’s issued that it is not even rated. Credit card debt is now over $1 trillion dollars and at a record level. The average outstanding balance per capita is $9600 per card for those who don’t pay in full at the end of the month.  Just counting the households with credit card debt  balances, the average balance per household is $16,000.  The average household auto loan balance for all households with a car loan is over $29,000.

The data shows a consumer that is buried in debt and will likely begin to default at an accelerating rate this year. In fact, I’d call these statistics an impending economic and financial disaster. Credit card companies are already warning about credit charge-offs. Synchrony (which issues credit cards for Amazon and Walmart) reported that its credit card charge-offs would rise at least 5% in 2017. Capital One (Question: “What’s in your wallet?” – Answer: “Not money”) reported that credit card charge-offs soared 28% year over year for Q1.  Synchrony, Capital One and Discover combined increased their Q1 provision for bad loans by 36% over last year’s provisions taken.

The monthly consumer credit report last week showed a $12.4 billion increase over May. A $16 billion increase was expected by Wall St. Keep in mind that every month of credit expansion is another new all-time high in consumer debt. Credit card debt outstanding increased by $4.1 billion, which is troubling for two reasons. First, it’s likely that financial firms are lending to less than qualified borrowers, as evidenced by the rising credit card delinquency and charge-off rates. Second, given the declining household real disposable income and savings rate, it’s likely that households are using credit card debt to pay for non-discretionary expenses. The smaller than expected increase in credit is being attributed primarily to slower growth in auto loans.

Speaking of the auto industry, Bloomberg reported last week that auto dealers, in a desperate bid to increase sales and reduce inventory, cut prices on new cars and trucks in July by the most since March 2009. It also reported that used car prices dropped 4.1%. This graph from Meridian Macro Researchcaptures the rapid deterioration auto sales (click to enlarge):

The chart shows rate of change in motor vehicle freight carload volume on a year over year basis vs. per capita auto sales. As you can see, the last time these two metrics were showing negative growth (a decline) and heading lower was 2008. The entire “boom” in auto sales since the “cash for clunkers” program, which ran from July 2009 to November 2009, has been artificially created by a massive expansion in Government- enabled credit and Fed money printing. The impending crash in the auto industry is unavoidable unless the Government resorts to outright “helicopter” money printing (i.e. giving cash directly to households rather than to the banks).

One of the best barometers of consumer financial health is restaurant sales, which are entirely dependent on the relative level of household disposable income that can be allocated to non- discretionary expenditures. Black Box Intelligence’s monthly restaurant industry snapshot,  released Thursday,  showed another monthly decline in restaurant sales and traffic – this one steeper than the past couple of months. I believe this is the 17th successive monthly year-over-year decline. Comp sales (year over year for July) were down 2.8% and comp traffic dropped 4.7%. The latter is more significant, as it better represents actual sales volume because dollar sales are boosted by price inflation. In contrast to these Real World numbers, the BLS reported in its employment report for July that the restaurant industry created 57,000 new jobs. This is not just flagrant misrepresentation of reality for propaganda purposes, it’s outright fraud.

In terms of specifics with the July restaurant numbers, sales declined in 183 of the 195 markets covered by the Black Box Intelligence survey. The worst region was the midwest, where sales declined 3.6% and traffic dropped 5.2%. The best region was California, with sales down 0.7% (price inflation) and traffic down 3.6%. Not surprisingly, the fine dining category outperformed the other industry segments, as it reflects the growing disparity in income and wealth between the upper 1% and the rest. The quick service segment turned in the worst performance.

The above analysis was excerpted from the Short Seller’s Journal, which is dedicated to digging truth out from the Government, Fed and  financial media propaganda.  Contrary to the message conveyed by the stock market’s inexorable climb higher, the average U.S. household, along with the Government at all levels (Federal to local municipal), is on the ropes financially and economically.  The Short Seller’s Journal exposes this reality.   Hundreds of stocks are plumbing 52-week and all-time lows. The Short Seller’s Journal helps you find these stocks before they plunge and take advantage of the most overvalued and most inefficiently-priced stock market in history.   You can find out more here:   Short Seller’s Journal information.

***

end

 

The clowns are at it again:  Dudley warns that his fellow clowns will probably hike rates and begin to drawdown on it’s balance sheet.

No way!! unless he wishes to throw the uSA into an economic tailspin as they remove liquidity

 

(courtesy zerohedge)

 

Dudley Warns “Market’s Rate Hike Expectations Are Unreasonable” Sending Yields, Dec. Odds Higher

One day after the 5th consecutive miss in US CPI, NY Fed President William Dudley threw currency and eurodollar traders for another loop when he said on Monday that it was not “unreasonable” to think that the central bank would begin trimming its balance sheet in September and sees another rate hike this year – supposedly in December – should economic data hold up, ignoring the message sent from monthly inflation reports.

In an interview with the AP, Dudely warned that “the expectations of market participants are unreasonable,” when asked if the expectation of the Fed reducing its bond holdings in September was accurate. The news sent the dollar and yields higher, pushing the 10Y from 2.2050% briefly to 2.2230%, although the move was subsequently faded. The news also sent December rate hike odds modestly higher on the day, up to 33% from 25% earlier, after Dudley said that he expects another rate rise as long as economic data meets his expectations. “I would expect — I would be in favor of doing another rate hike later this year.”

Despite the lack of inflation, Dudley expanded “my outlook for the economy hasn’t changed materially since the beginning of the year. Continue to look for growths around 2%, slightly above trend, growth sufficient to continue to tighten the labor market. I did not raise my growth forecast after the Election because of the prospect of fiscal stimulus because I felt that there was a lot of uncertainty about how big it would be, what its composition would be, and when it would actually take effect. So, I always viewed it as a risk to the forecast. In other words, an upside risk to the forecast, but I never put it into my baseline forecast.”

Pressed on inflation, the NY Fed president said “the reason why inflation won’t get up to 2% very quickly on a year-over-year basis is because we’ve had these very low inflation readings over the last 4 or 5 months. So it’s going to take time for those to sort of drop out of the year-over-year calculation.”

“Now the reason why I think you’d want to continue to gradually remove monetary policy accommodation, even with inflation somewhat below target, is that 1) monetary policy is still accommodative, so the level of short-term rates is pretty low, and 2) and this is probably even more important, financial conditions have been easing rather than tightening. So despite the fact that we’ve raised short-term interest rates, financial conditions are easier today than they were a year ago.”

Some more highlights from his interview transcript, courtesy of Bloomberg:

“The stock market’s up, credit spreads have narrowed, the dollar has weakened, and those have more than offset the effects of somewhat higher short-term rates and the very modest increases that we’ve seen in longer-term yields.

 

On December hike odds, Dudley said that “If it (data) evolves in line with my expectations, I would expect — I would be in favor of doing another rate hike later this year.”

 

“I think that if the economy continues to grow above trend, and the labor market continues to tighten, I do think we’ll get to the point where that will lead to higher wages and that will show up in terms of higher inflation.”

 

“Now, the question is at what level of the unemployment rate will that all take place? So, if there are these secular forces that are pushing inflation lower, perhaps we can actually go to a somewhat lower unemployment rate. I would actually view — rather than people wringing their hands that this is so awful that inflation is low, it actually might be a good thing because it could allow you to run the economy at a little bit higher level of resource utilization, which I think … people get employed, they get job skills, they’d be able to build their human capital over time. (00:07:29) The productive capacity of the US economy would be greater — all those things would be good things.”

There was also the amusing, token take on the stock market as reflective of the current state of the economy:

“My own view is that — I’m not particularly concerned about where our asset prices are today for a couple of reasons. The main one is that I think that the asset prices are pretty consistent with what we’re seeing in terms of the actual performance of the economy.”

Which of course, is a “fake news”:

Dudley also spoke on balance sheet reduction:

“And second of all, we can obviously announce the start of the program but delay the actual start date. So I think that — I don’t think the debt limit will have big impact on our decision about whether to start or not start the balance sheet normalization process…  It’s one of the reasons why the reinvestment process, phasing that down, is going to happen very gradually, that we’re not just going to stop abruptly because we want to make sure that the adjustments are small, the model is gentle, and don’t have a big consequence for financial statements.So far I would say that the market reaction has been extraordinarily mild. As expectations have gone from relatively low probability that we’re going to start this to a very high probability that we’re going to start this relatively soon. And so that makes me more confident that when we start, it’s not going to have a big consequence for financial statements.”

Finally, on whether Gary Cohn will replace Janet Yellen:

“I don’t want to evaluate the various candidates for the Federal Reserve, except to say that I think Gary is a reasonable candidate. He knows a lot about financial markets. He knows lots about the financial system. I don’t think you have to have a PhD in Economics, which I have, to be a Chair of the Fed or Governor or a President of one of the Federal Reserve Banks.

end

 

WELL THAT ABOUT DOES IT FOR TONIGHT

I will see you Tuesday night

Harvey.


August 11/COT report shows bankers capitulating in silver/gold rises $4.10 and silver up 4 cents/gold and silver withstand another attack by bankers today/Rhetoric increases between North Korea and the uSA/China refuses to advance the idea of a regime...

Fri, 08/11/2017 - 19:01

GOLD: $1287.80  UP $4.10

Silver: $17.08  up 4 cent(s)

Closing access prices:

Gold $1289.50

silver: $17.11

SHANGHAI GOLD FIX:  FIRST FIX  10 15 PM EST  (2:15 SHANGHAI LOCAL TIME)

SECOND FIX:  2:15 AM EST  (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1288.86 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME:  $1284.30

PREMIUM FIRST FIX:  $4.56

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

SECOND SHANGHAI GOLD FIX: $1291.86

NY GOLD PRICE AT THE EXACT SAME TIME: $1288.40

Premium of Shanghai 2nd fix/NY:$3.46

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

LONDON FIRST GOLD FIX:  5:30 am est  $1288.30

NY PRICING AT THE EXACT SAME TIME: $1288.40 

LONDON SECOND GOLD FIX  10 AM: $1286.10

NY PRICING AT THE EXACT SAME TIME. $1287.10 

For comex gold: AUGUST/

NOTICES FILINGS TODAY FOR APRIL CONTRACT MONTH: 19 NOTICE(S) FOR  1900  OZ.

TOTAL NOTICES SO FAR: 4487 FOR 448700 OZ (13.956 TONNES) 

For silver: AUGUST  88 NOTICES FILED TODAY FOR 44,000  OZ/ Total number of notices filed so far this month: 810 for 4,050,000 oz

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

end

 

Today, the bankers tried to raid both gold and silver.  They like Friday’s especially once London officially closes because they do not have to worry about physical demand for another 48 hrs starting on Monday. Once again their attack was rebuffed.  Also extremely encouraging is the COT for silver which saw bankers start to unload their massive shortfall

Let us have a look at the data for today

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

In silver, the total open interest SURPRISINGLY FELL BY  687 contracts from 195,132 DOWN TO 194,445 DESPITE THE HUGE RISE IN THE PRICE THAT SILVER TOOK WITH RESPECT TO YESTERDAY’S TRADING (UP 21 CENT(S). SIMPLE EXPLANATION: THE BANKERS HAVE CAPITULATED..THEY ARE TRYING TO COVER THEIR SHORTFALL AT HIGHER AND HIGHER PRICES. THE BANKERS ARE LOATHER TO SUPPLY ADDITIONAL SHORT PAPER AND LONGS ARE COMING IN LIKE GANG BUSTERS.

 In ounces, the OI is still represented by just UNDER 1 BILLION oz i.e.  0.972 BILLION TO BE EXACT or 139% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 88 NOTICE(S) FOR 440,000  OZ OF SILVER

In gold, the open interest ROSE by A CONSIDERABLE 11,516 WITH the RISE in price of gold ($10.70 GAIN ON YESTERDAY.)  The new OI for the gold complex rests at 475,913.  IN COMPLETE CONTRAST TO SILVER, THE BANKERS SUPPLIED THE MASSIVE AMOUNT OF PAPER SHORT GOLD WHICH WAS GOBBLED UP BY THE LONGS.  THE NEWBIE SPEC SHORTS HAVE NO DOUBT COVERED THEIR POSITION. NO WONDER A RAID WAS CALLED UPON BY THE ELITE TO ROB THE NEWBIE LONGS.

we had: 19 notice(s) filed upon for 1900 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, no changes in gold inventory:

Inventory rests tonight: 786.87 tonnes

 

(from Tuesday through Thursday we lost .17 tonnes which paid for fees)

IN THE LAST 21 TRADING DAYS: GLD SHEDS 50.1 TONNES YET GOLD IS HIGHER BY $48.95 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 335.825 MILLION OZ BUT WE LOST 3.781 MILLION OZ FROM TUESDAY THROUGH TO THURSDAY.

end

.

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

1. Today, we had the open interest in silver FALL BY  687 contracts from 195,132 UP TO 194,445 (AND now A LITTLE FURTHER FROM THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787). THE FALL IN OPEN INTEREST WAS ACCOMPANIED BY A HUGE RISE IN PRICE AND FOR THE FIRST TIME WE ARE WITNESSING BANKER CAPITULATION.  BANKERS ARE LOATHE TO SUPPLY NEW SHORT PAPER AND THE LONGS CONTINUE TO ENTER THE ARENA PURCHASING WHATEVER SILVER THEY CAN. 

(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 THURSDAY night/FRIDAY morning: Shanghai closed DOWN 53.21 POINTS OR 1.63%   / /Hang Sang CLOSED DOWN 560.49 POINTS OR 2.04% The Nikkei closed DOWN 8.97 POINTS OR .05%/Australia’s all ordinaires CLOSED DOWN 1.15%/Chinese yuan (ONSHORE) closed UP at 6.6651/Oil DOWN to 48.36 dollars per barrel for WTI and 51.68 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED , Offshore yuan trades  6.6784 yuan to the dollar vs 6.7201 for onshore yuan. NOW THE OFFSHORE IS WEAKER  TO THE ONSHORE YUAN/ ONSHORE YUAN STRONGER (TO THE DOLLAR)  AND THE OFFSHORE YUAN IS STRONGER TO THE DOLLAR AND THIS IS COUPLED WITH THE SLIGHTLY STRONGER DOLLAR. CHINA IS  HAPPY TODAY

3a)THAILAND/SOUTH KOREA/NORTH KOREA

i)NORTH KOREA//USA

Tuesday:

Japan presents a paper suggesting that North Korea might be in possession of a miniature nuclear warhead and that would be deadly to the world.

( zerohedge)

ii)THURSDAY NIGHT

 

North Korea responds to Trump as he vows to mercilessly wipe out “provocateurs”. He also states that the USA will suffer its final doom.

I personally do not feel that they have the capability of reaching Guam or for that matter any part of the USA.  I may be wrong but all their equipment is from the 1970’s or 1960’s.

However, I agree that it is nerve-racking

 

 

( zerohedge)

iii)THURSDAY NIGHT

The Pentagon plan for a pre-emptive strike on North Korea: use non nuclear B1 bombers

(courtesy zerohedge)

iv)FRIDAY AFTERNOON

North Korea issues emergency standby orders to its civil defense units:

 

(courtesy zero hedge)

b) REPORT ON JAPAN c) REPORT ON CHINA

THIS IS NOT WHAT THE WORLD WANTS TO HEAR:

China will resist regime change in North Korea

( zero hedge)

4. EUROPEAN AFFAIRS

SPAIN

First it was Greece, receiving a multitude of migrants through Turkey. Then it was Italy who this year has received the bulk of new migrants floating across the Med.  Now it is Spain..

( zero hedge) 5. RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)Russia/USA

Funny!!  The Press is love this:  Trump thanks Putin for kicking out 755 diplomats and the uSA will save a lot of money

( zero hedge)

ii)Russia and China’s plan to defuse the Korean crisis.  North Korea would suspend all new ballistic missile tests and the the USA South Korea would suspend large scale naval exercises. Not sure the USA would go for this as they could not trust the North Koreans

( zerohedge)

 

6 .GLOBAL ISSUES 7. OIL ISSUES

i)This is something that i have been worrying about:  China importing less imports as its SPDR oil is filled to the brim and cannot take on any more oil

( Paraskova/Oil Price.com)

ii)Rig counts rise by only but production will increases.  We have highlighted this to you in the past:  just because rig count increases fall to zero, it doesn’t stop USA production..it rise for about a year and then peters out.

( zerohedge) 8. EMERGING MARKET

 

9.   PHYSICAL MARKETS

i)This is a good commentary from Mike Norman.  I read this on Wednesday and it is worth repeating for those who did not see it.  He says correctly that continual sanctions by the uSA destroys the use of the USA dollar and by definition is the noose that kills off the uSA dollar

 

( Mike Norman/The Street.com/GATA)

ii)Ron Paul describes in detail how the uSA stabilization fund rigs the price of gold

 

( Ron Paul/GATA)

iii)Craig Hemke states that the bullion banks are still capping gold and silver prices.  This time I will have to disagree with him on silver.  Gold yes but silver is their Achilles heel

 

( Craig Hemke/TFMetals)

iv)The Wall Street Journal is now asking questions about the gold at the Federal Reserve Bank of NY. Interesting enough the uSA only has about 500 tonnes of official gold held there.  Most of the uSA gold is stored at Fort Knox Ky., some at West Point NY and the remainder at NORAD under the mountain in Colorado.

 

( Chris Powell/GATA)

v)John Embry correctly states that the cryptos are revealing inflation simply because the bankers have not figured out yet how to short them

 

( John Embry/GATA)

vi)If gold was not manipulated, this is what is should be trading around today: $3500.00

( zero hedge)

10. USA Stories

i)From Tuesday:  the Uber effect whacks Avis

( zero hedge)

ii)And  now UBER itself is in a mess as its largest shareholder has declared a state of emergency( Bloomberg)

iii)This is not what Janet wants to see:  consume prices disappoint for the 5th month in a row. But most importantly she needs to see a rise in wage inflation, and it is just not happening for her.  It will be difficult to raise rates

 

( zero  hedge)

iv)Now Mueller is going after Manafort’s family in the hope that the lower rung on the ladder will supply information to charge the higher levels on the ladder:

( zero hedge)

v)Then finally, the laid back Republicans strike back as they demand an open hearing with respect to the on goings of Mueller

( zerohedge)

vi)This is interesting:  the judge handling the freedom of information case against the state department has now ordered the said State Dept. to search for  Hillary’s Benghazi emails

( zero hedge)

vii a)This is not what Janet wants to see:  consume prices disappoint for the 5th month in a row. But most importantly she needs to see a rise in wage inflation, and it is just not happening for her.  It will be difficult to raise rates

( zero  hedge)

vii)  b  And with the 5th consecutive miss, Goldman Sachs cuts its odds for a rate hike. The uSA cannot get wage inflation(courtesy zerohedge)

Let us head over to the comex:

The total gold comex open interest ROSE BY A HUGE 11,516  CONTRACTS UP to an OI level of 475,913 WITH THE HUGE RISE IN THE PRICE OF GOLD ($10.70 with YESTERDAY’S trading). NEWBIE LONGS ENTERED THE ARENA WITH THE BANKERS SUPPLYING THE PAPER. NEWBIE SPEC SHORTS ARE NOW COMPLETELY OUT OF THEIR POSITIONS. THE HUGE RISE IN OPEN INTEREST WAS FODDER FOR THE CROOKS TO RAID TODAY.

We are now in the contract month of August and it is the 3rd best of the delivery months after December and June.

The active August contract LOST 12 contract(s) to stand at 1262 contracts. We had 106 notices filed upon YESTERDAY so we GAINED 94 contracts or an additional 9400 oz will stand at the comex and 0 EFP’s were issued which entitles the long holder to a fiat bonus plus a futures contract and most probably that would be a London based forward.

The non active September contract month saw it’s OI LOSE 178 contracts DOWN to 1522.

The next active contract month is Oct and here we saw a GAIN of 2535 contracts UP to 50,039.

The very big active December contract month saw it’s OI GAIN 9,239 contracts up to 371,145.

We had 19 notice(s) filed upon today for   1900 oz

For those keeping score: in the upcoming front delivery month of August:

LAST YEAR WE HAD A MONSTROUS 44.7 TONNES OF GOLD INITIALLY.  BY THE CONCLUSION OF THE AUGUST CONTRACT MONTH 44.358 TONNES STOOD FOR DELIVERY.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx And now for the wild silver comex results.  Total silver OI FELL BY 687 contracts FROM 195,132 DOWN TO 194,445 WITH YESTERDAY’S GOOD SIZED 21 CENT GAIN . THERE IS NO QUESTION THAT WE ARE HAVING BANKER CAPITULATION AS THE HUGE TOTAL SILVER COMEX OPEN INTEREST HAS FINALLY CHOKED THEM TO DEATH.  AS I HAVE WARNED YOU, THE NOOSE IS AROUND OUR BANKERS’ NECKS AND SOMETHING HAPPENED IN THE SILVER ARENA FORCING THEM TO COVER AS FAST AS THEIR FEET COULD CARRY THEM.  NEWBIE SPEC LONGS ENTERED THE SILVER COMPLEX AND ON THE SUPPLY SIDE: MANY WERE JUST PLAIN LOATHE TO SUPPLY THE NECESSARY PAPER.  THUS A SMALL DECLINE IN SILVER OI BUT A GOOD SIZED RISE IN PRICE.

We are now in the next big non active silver contract month of August and here the OI  ROSE BY 68 contracts UP TO 160. We had 77 notice(s) filed yesterday.  Thus we GAINED 134 contract(s) or an additional 725,000 oz will stand for delivery in this non active month of August and zero EFP’s were issued for the August contract month.

The next active contract month is September (and the last active month until December) saw it’s OI fall by 3838 contacts down to 112,506.  The next non active contract month for silver after September is October and here the OI gained 10  contacts up TO 83. After October, the big active contract month is December and here the OI GAINED by 2798 contracts UP to 71,174 contracts.

We had 88 notice(s) filed for 440,000 oz for the AUGUST 2017 contract

VOLUMES: for the gold comex

Today the estimated volume was 174,618 contracts which is FAIR/

FRIDAY’S confirmed volume was 284,321 contracts  which is EXCELLENT

volumes on gold are STILL HIGHER THAN NORMAL!

Initial standings for AUGUST

 August 11/2017.

Gold Ounces Withdrawals from Dealers Inventory in oz   nil Withdrawals from Customer Inventory in oz   32.15 oz BRINKS 1 KILOBAR Deposits to the Dealer Inventory in oz   oz Deposits to the Customer Inventory, in oz  nil oz No of oz served (contracts) today   19 notice(s) 1900 OZ No of oz to be served (notices) 1243 contracts (124,300 oz) Total monthly oz gold served (contracts) so far this month 4487 notices 448.700 oz 13.596 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   17,714.65  oz Today we HAD  1 kilobar transaction(s)/  total dealer deposits: nil oz We had nil dealer withdrawals: total dealer withdrawals:  0 oz we had 0  customer deposit(s): total customer deposits;nil  oz We had 0 customer withdrawal(s) total customer withdrawals;  nil oz  we had 0 adjustment(s)   For AUGUST:

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 19  contract(s)  of which 0 notices were stopped (received) by j.P. Morgan dealer and 0 notice(s) was (were) stopped/ Received) by j.P.Morgan customer account.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx To calculate the initial total number of gold ounces standing for the AUGUST. contract month, we take the total number of notices filed so far for the month (4487) x 100 oz or 448,700 oz, to which we add the difference between the open interest for the front month of AUGUST (1262 contracts) minus the number of notices served upon today (19) x 100 oz per contract equals 573,000  oz, the number of ounces standing in this active month of AUGUST.   Thus the INITIAL standings for gold for the AUGUST contract month: No of notices served so far (4487) x 100 oz  or ounces + {(1262)OI for the front month  minus the number of  notices served upon today (19) x 100 oz which equals 573,000 oz standing in this  active delivery month of AUGUST  (17.822 tonnes)  we GAINED 94 contracts or an additional 9400 oz will stand for delivery and 0 EFP’s for August were issued. xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Total dealer inventory 758,510.492 or 23.59 tonnes  (dealer gold continues to disappear) Total gold inventory (dealer and customer) = 8,634,161.10 or 268.55 tonnes    Over a year ago the comex had 303 tonnes of total gold. Today the total inventory rests at 268.55 tonnes for a  loss of 33  tonnes over that period.  Since August 8/2016 we have lost 84 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 12 MONTHS  84 NET TONNES HAS LEFT THE COMEX. end And now for silver AND NOW THE AUGUST DELIVERY MONTH   August initial standings  August 11 2017 Silver Ounces Withdrawals from Dealers Inventory  nil Withdrawals from Customer Inventory 883,411.490 oz Brinks Delaware Scotia Deposits to the Dealer Inventory nil  oz Deposits to the Customer Inventory  1,162,096.134 oz CNT Scotia No of oz served today (contracts) 88 CONTRACT(S) (440,000 OZ) No of oz to be served (notices) 72 contracts ( 360,000 oz) Total monthly oz silver served (contracts) 810 contracts (4,050,000 oz) Total accumulative withdrawal of silver from the Dealers inventory this month  NIL oz Total accumulative withdrawal  of silver from the Customer inventory this month 2,056,136.4 oz today, we had  0 deposit(s) into the dealer account: total dealer deposit: nil   oz we had 0 dealer withdrawals: total dealer withdrawals: NIL oz we had 3 customer withdrawal(s): ii) out of Brinks: 235,300.33 oz ii) out of Delaware:  6020.21 oz iii) out of Scotia: 642,090.955 oz TOTAL CUSTOMER WITHDRAWALS:  883,411.490 oz We had 2 Customer deposit(s):  i) Into CNT:  600,445.094 oz ii) Into JPMorgan:  561,651.04 ***deposits into JPMorgan have resumed  again In the month of March and February, JPMorgan stopped (received) almost all of the comex silver contracts. why is JPMorgan bringing in so much silver??? why is this not criminal in that they are also the massive short in silver total customer deposits: 1,162,096.134 oz    we had 0 adjustment(s) The total number of notices filed today for the AUGUST. contract month is represented by 88 contract(s) for 440,000 oz. To calculate the number of silver ounces that will stand for delivery in AUGUST., we take the total number of notices filed for the month so far at 810 x 5,000 oz  = 4,050,000 oz to which we add the difference between the open interest for the front month of AUGUST (160) and the number of notices served upon today (88) x 5000 oz equals the number of ounces standing  

 

.   Thus the INITIAL standings for silver for the AUGUST contract month:  810 (notices served so far)x 5000 oz  + OI for front month of AUGUST(160 ) -number of notices served upon today (88)x 5000 oz  equals  4,410,000 oz  of silver standing for the AUGUST contract month. This is extremely high for a non active delivery month. Silver is being constantly demanded at the silver comex and we witness again the amount of silver increases daily right from the get go. We GAINED ANOTHER 134 contracts or an additional 725,000 oz wishes to stand for delivery in this non active month of August and  0 EFP’s were issued for the silver August month.  At this point in the delivery cycle last year on August 11/2016 we had 119,476 contracts standing vs this yr at 113,151. Last yr on the first day notice for the Sept contract we had 17.070 million oz stand for delivery. By month end:  16.075 million oz/         Volumes: for silver comex Today the estimated volume was 65,877 which is EXCELLENT FRIDAY’s  confirmed volume was 126,255 contracts which is OUT OF THIS WORLD YESTERDAY’S CONFIRMED VOLUME OF 126,255 CONTRACTS WHICH EQUATES TO 632 MILLION OZ OF SILVER OR 90% OF ANNUAL GLOBAL PRODUCTION OF SILVER EX CHINA EX RUSSIA). IN OUR HEARINGS THE COMMISSIONERS STRESSED THAT THE OPEN INTEREST SHOULD BE AROUND 3% OF THE MARKET.   Total dealer silver:  38.348 million (close to record low inventory   Total number of dealer and customer silver:   215.981 million oz The record level of silver open interest is 234,787 contracts set on April 21./2017  with the price at that day at  $18.42 The previous record was 224,540 contracts with the price at that time of $20.44 end NPV for Sprott and Central Fund of Canada

 

1. Central Fund of Canada: traded at Negative 6.7 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!!  Percentage of fund in gold 62.5% Percentage of fund in silver:37.5% cash .+0.0%( August 11/2017)  2. Sprott silver fund (PSLV): STOCK   NAV RISES TO +0.18% (August 11/2017)  3. Sprott gold fund (PHYS): premium to NAV RISES TO -0.32% to NAV  (August 11/2017 ) Note: Sprott silver trust back  into POSITIVE territory at +0.18/Sprott physical gold trust is back into NEGATIVE/ territory at -0.32%/Central fund of Canada’s is still in jail  but being rescued by Sprott.

Sprott’s hostile 3.1 billion bid to take over Central Fund of Canada

(courtesy Sprott/GATA)

Sprott makes hostile $3.1 billion bid for Central Fund of Canada

Submitted by cpowell on Thu, 2017-03-09 01:19. Section: Daily Dispatches

From the Canadian Press
via Canadian Broadcasting Corp. News, Toronto
Wednesday, March 8, 2017

http://www.cbc.ca/news/canada/calgary/sprott-takeover-bid-central-fund-c…

Toronto-based Sprott Inc. said Wednesday it’s making an all-share hostile takeover bid worth $3.1 billion US for rival bullion holder Central Fund of Canada Ltd.

The money-management firm has filed an application with the Court of Queen’s Bench of Alberta seeking to allow shareholders of Calgary-based Central Fund to swap their shares for ones in a newly-formed trust that would be substantially similar to Sprott’s existing precious metal holding entities.

The company is going through the courts after its efforts to strike a friendly deal were rebuffed by the Spicer family that controls Central Fund, said Sprott spokesman Glen Williams.

“They weren’t interested in having those discussions,” Williams said.

 Sprott is using the courts to try to give holders of the 252 million non-voting class A shares a say in takeover bids, which Central Fund explicitly states they have no right to participate in. That voting right is reserved for the 40,000 common shares outstanding, which the family of J.C. Stefan Spicer, chairman and CEO of Central Fund, control.

If successful through the courts, Sprott would then need the support of two-thirds of shareholder votes to close the takeover deal, but there’s no guarantee they will make it that far.

“It is unusual to go this route,” said Williams. “There’s no specific precedent where this has worked.”

Sprott did have success last year in taking over Central GoldTrust, a similar fund that was controlled by the Spicer family, after securing support from more than 96 percent of shareholder votes cast.

The firm says Central Fund’s shares are trading at a discount to net asset value and a takeover by Sprott could unlock US$304 million in shareholder value.

Central Fund did not have any immediate comment on the unsolicited offer. Williams said Sprott had not yet heard from Central Fund on the proposal but that some shareholders had already contacted them to voice their support.

Sprott’s existing precious metal holding companies are designed to allow investors to own gold and other metals without having to worry about taking care of the physical bullion.

end

And now the Gold inventory at the GLD

August 11/no change in gold inventory/Inventory rests at 786.87 tonnes

August 7/no changes in gold inventory at the GLD/Inventory rests at 787.14 tonnes

AUGUST 4/ANOTHER LOSS OF 4.48 TONNES OF GOLD FROM GLD INVENTORY/INVENTORY RESTS AT 787.14 TONNES.THIS IS A HUGE CRIME SCENE!!

August 3/no change in gold inventory at the GLD/Inventory rests at 791.88 tonnes

August 2/NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

Aug 1/NO CHANGE IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 31/NO CHANGES AT THE GLD/INVENTORY RESTS AT 791.88 TONNES

July 28/ANOTHER MASSIVE WITHDRAWAL OF 3.54 TONNES OF GOLD WITH GOLD UP $9.15/INVENTORY RESTS AT 791.88 TONNES

July 27/LATE LAST NIGHT, A HUGE WITHDRAWAL OF 5.03 TONNES WITH GOLD UP $10.45 ON THE DAY/INVENTORY RESTS AT 795.42 TONNES

July 26/NO CHANGE IN GLD INVENTORY WITH GOLD DOWN $2.55/INVENTORY RESTS AT 800.45 TONNES

July 25/A MASSIVE 9.17 TONNES OF GOLD WITHDRAWN FROM THE GLD/INVENTORY RESTS AT 800.45 TONNES

July 24/A massive 9.62 tonnes withdrawal and yet the price remains constant (down only 25 cents)..inventory drops to 809.62 tonnes

July 21/with gold up $8.75 again, we had no changes in gold inventory at the GLD/inventory rests at 816.13 tonnes

July 20/WITH GOLD UP AGAIN TODAY ($3.50) WE HAD NO CHANGES IN GOLD INVENTORY AT THE GLD/INVENTORY RESTS AT 816.13 TONNES

jULY 19/STRANGE!! AGAIN WITH GOLD UP $0.50 WE HAD ANOTHER HUGE 5.32 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 816.13 TONNES  THIS GOLD IS HEADING TO SHANGHAI

July 18/STRANGE AGAIN/WITH GOLD UP $7.50 WE HAD ANOTHER HUGE 5.62 TONNES WITHDRAWAL FROM THE GLD/INVENTORY RESTS AT 821.45 TONNES

July 17/strange again! with gold up $4.20 we had another huge withdrawal of 1.77 tonnes/inventory rests at 827.07 tonnes

July 14/strange@!!with gold up $12.00 today, we had a huge withdrawal of 3.55 tonnes/inventory rests at 828.84 tonnes

July 13/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

JULY 12/no change in gold inventory at the GLD/inventory rests at 832.39 tonnes

July 11/strange!@! we had a big withdrawal of 2.96 tonnes despite gold’s advance today/inventory rests tonight at 832.39 tonnes

July 10/no changes in gold inventory at the GLD/inventory rests at 835.35 tonnes

July 7/a massive withdrawal of 5.32 tonnes of paper gold were removed and this was used in the attack today/inventory rests at 835.35 tonnes

July 6/no changes in tonnage at the GLD/Inventory rests at 840.67 tonnes

July 5/A MASSIVE 5.62 TONNES OF GOLD LEFT THE GLD AND NO DOUBT WAS USED IN THE RAID THIS MORNING/INVENTORY REST

July 3/ A MASSIVE 7.37 TONNES OF GOLD LEAVE THE GLD/INVENTORY RESTS AT 846.29 TONNES

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx August 11 /2017/ Inventory rests tonight at 786.87 tonnes *IN LAST 211 TRADING DAYS: 163.01 NET TONNES HAVE BEEN REMOVED FROM THE GLD *LAST 149 TRADING DAYS: A NET  5.58 TONNES HAVE NOW BEEN WITHDRAWN FROM  GLD INVENTORY. *FROM FEB 1/2017: A NET  22.39 TONNES HAVE BEEN WITHDRAWN.

end

Now the SLV Inventory

August 11/no change in silver inventory tonight.  However we lost 3,781 million oz from Tuesday through Thursday. Inventory rests at 335.825 million oz/

August 7/no change in silver inventory at the SLV/Inventory rests at 339.606 million oz

AUGUST 4/A WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 339.606 MILLION OZ

August 3/A WITHDRAWAL OF 1,181,000 OZ FROM THE SLV/INVENTOR RESTS AT 340.551 MILLION OZ/

August 2/NO CHANGES IN SILVER INVENTORY AT THE SLV

INVENTORY RESTS AT 341.732 MILLION OZ/

August 1/A HUGE WITHDRAWAL OF 945,000 OZ/INVENTORY RESTS AT 341.732 MILLION OZ/

July 31/no change in silver inventory at the SLV/inventory rests at 342.677 million oz

July 28/ A HUGE WITHDRAWAL OF 1.15 MILLION OZ OF SILVER LEAVES THE SLV DESPITE SILVER BEING UP 11 CENTS TODAY/INVENTORY RESTS AT  342.677 MILLION OZ

July 27/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ WITH SILVER UP 13 CENTS TODAY.

July 26/NO CHANGE IN SILVER INVENTORY/INVENTORY RESTS AT 343.812 MILLION OZ

July 25/A MASSIVE 3.309 MILLION OZ OF INVENTORY WITHDRAWN FROM THE SLV DESPITE SILVER’S 10 CENT RISE TODAY.

July 24/no change in silver inventory despite its 4 cent drop/inventory remains at 347.121 million oz

July 21/STRANGE! WITH SILVER UP AGAIN TODAY (11 CENTS), NO CHANGE IN SILVER INVENTORY AT THE SLV/inventory 347.121 million oz/

July 20/STRANGE! WITH SILVER UP AGAIN TODAY, THE SLV INVENTORY LOWERS BY 945,000 OZ/INVENTORY RESTS AT 347.121 MILLION OZ/

July 19/NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 348.066 MILLION OZ

July 18/a huge 946,000 oz withdrawal from the SLV despite silver’s 16 cent gain!

Inventory rests at 348.066 million oz

July 17/no change in silver inventory at the SLV/Inventory rests at 349.012 million oz

July 14/no change in silver inventory/inventory rests at 349.012 million oz/

July 13/no change in silver inventory/inventory at the SLV rests at 349.012 million oz/

JULY 12/another massive 1.986 million oz of silver added into the SLV/inventory rests at 349.012 million oz/the last 3 days saw 7.281 million oz added into the SV

July 11/ANOTHER MASSIVE INCREASE OF 2.364 MILLION OZ into the SLV inventory/inventory rests at 347.026 million oz

July 10/ A HUGE INCREASE OF 2.931 MILLION OZ OF SILVER DESPITE THE EARLY HIT ON SILVER THIS MORNING/INVENTORY RESTS AT 344.662 MILLION OZ.

July 7/Strange: no change in inventory (compare that with gold) Inventory rests at 341.731 million oz

July 6/ANOTHER MASSIVE DEPOSIT OF 2.126 MILLION OZ INTO THE SLV INVENTORY/INVENTORY RESTS AT 341.731 MILLION OZ.

July 5/STRANGE! NO CHANGE IN SILVER INVENTORY AT THE SLV/INVENTORY RESTS AT 339.605 MILLION OZ

July 3/strange! with the huge whacking of silver we got an increase of 379,000 oz into inventory.

August 11.2017:

 Inventory 335.825  million oz end
  • 6 Month MM GOFO

    Indicative gold forward offer rate for a 6 month duration

    + 1.33%
  • 12 Month MM GOFO + 1.48%
  • 30 day trend

end

At 3:30 we receive the COT report which gives up position levels of our major players.  This report gives levels as of August 8.  You will recall last week that the commercials went deeply short.  let us see what these crooks did this week:

 

Gold COT Report – Futures Large Speculators Commercial Total Long Short Spreading Long Short Long Short 246,377 97,540 36,408 125,168 284,679 407,953 418,627 Change from Prior Reporting Period 6,611 -12,554 -3,589 -1,723 14,403 1,299 -1,740 Traders 152 94 79 57 56 241 201   Small Speculators   Long Short Open Interest   40,774 30,100 448,727   -1,281 1,758 18   non reportable positions Change from the previous reporting period COT Gold Report – Positions as of Tuesday, August 8, 2017 LARGE SPECULATORS

Our large speculators that have been long in gold added a large 6611 contracts to their long side

Our large specs that have been short in gold covered a huge 12,554  contracts from their short side (something which I highlighted to you on Monday and Tuesday)

Specs go net long by 19,000 contracts.

COMMERCIALS

Our crooked commercials who are long in gold pitched 1723 contracts from their long side

the commercials who are short in gold added a whopping 14,403 contracts to their short side  (while gold was rising and we indicated this to you throughout the week)

commercials go net short by 16000 contracts

 

SMALL SPECULATORS  Our small specs who have been long in gold pitched 1281 contracts from their long side Our small specs who have been short in gold added 1758 contracts to their short side. Conclusions: recipe for a raid as the commercials go net short by 16,000 contracts.  they tried today but failed.

END

 

AND NOW FOR OUR SILVER COT

I got this one right.

you will recall that I told you the bankers despite being net short last week, that they were having trouble covering.  I told you that this week’s COT would be important to see if the bankers would start to capitulate.  They did!!

LARGE SPECULATORS

those large specs  that have been long in silver pitched 914 contracts from their long side (at higher prices)

those large specs that have been short in silver covered 4019 contracts from their short side.

large specs go net long by 3100  contracts.

 

 

 

COMMERCIALS

those commercials that have been long in silver pitched 1320 contracts from their long side

those commercials that have been short capitulated and covered 1426 contracts.  The covering started in earnest last Wednesday so you will witness in flashing lights that the next COT report will show increased capitulation

commercials go net long by 100 contracts.

 

SMALL SPECULATORS

 

Our small specs that have been long in silver pitched 443 contracts from their long side  (at higher prices)

Our small specs that have been short in silver  added 2765 contract to their short side and these guys got buried. They probably covered yesterday and today.

Conclusions: bullish/banker capitulation commenced.

Major gold/silver trading/commentaries for FRIDAY

GOLDCORE/BLOG/MARK O’BYRNE.

GOLD/SILVER

Gold Up 2%, Silver 5% In Week – Gundlach, Gartman and Dalio Positive On Gold By Mark O’Byrne August 11, 2017 0 Comments

Gold Up 2.3%, Silver 5.3% In Week – Gundlach, Gartman and Dalio Positive On Gold

– Gold is up 2.3% this week and silver has surged nearly 5.3% as stocks sell off on geopolitical risk
– Billionaire fund managers and commodities experts increasingly positive on gold
– Risks are rising, and everybody should put 5% to 10% of their assets in gold – Dalio
– Dalio’s Bridgewater, world’s largest hedge fund, warned clients that geopolitical risks are rising
– ‘Gold is about break out on the upside strongly’ – commodities expert Gartman
– Gartman believes right now investors should have 10% to 15% allocation to gold
– “The stock market looks a little vulnerable. The geopolitical circumstances are getting worse and worse” – Gartman
– Run up in gold prices is far from over due to economic risks – Gartman
– Gold’s chart has ‘one of the most bullish’ patterns – Billionaire bond guru Gundlach
– Gold up 6.3% and silver 8.2% in 30 days and look on verge of major move higher

Market Performance – One Week (Finviz)



Gold in USD – 30 Days

Gold in USD – 30 Days


See below for Business Insider UK article on Gundlach, CNBC article on Gartman and Business Insider on Dalio’s views on gold

News and Commentary

Gold ends at 2-month high: Risk aversion is back on (MarketWatch.com)

Stocks Drop Most Since May, Bonds Rally on Tension (Bloomberg.com)

GUNDLACH: Gold’s chart has ‘one of the most bullish’ patterns around (BusinessInsider.com)

Dalio Recommends Gold as Hedge Against Rising Political Risk (Bloomberg.com)

‘Gold is about break out on the upside strongly,’ Dennis Gartman says (CNBC.com)

 Source: Bloomberg.com

Everybody Needs To Put 5% to 10% of Their Money In Gold (BusinessInsider.com)

These 7 billionaires are worried about a stock-market correction (MarketWatch.com)

Sanctions will destroy the dollar (TheStreet.com)

Bitcoin Debate between Keiser and Schiff (Youtube.com)

Decade after financial crisis, World is still hooked on debt that caused it (Telegraph.co.uk)

Related Content
“Do You Own Gold?” Ray Dalio at CFR: “Oh Yeah, I Do”
Gold Selling “Malevolent Force”? – Dennis Gartman
Gold Is Undervalued – Leading Money Managers

Gold Prices (LBMA AM)

11 Aug: USD 1,288.30, GBP 993.67 & EUR 1,096.47 per ounce
10 Aug: USD 1,278.90, GBP 985.39 & EUR 1,091.67 per ounce
09 Aug: USD 1,267.95, GBP 974.80 & EUR 1,079.79 per ounce
08 Aug: USD 1,261.45, GBP 967.78 & EUR 1,068.20 per ounce
07 Aug: USD 1,257.55, GBP 963.41 & EUR 1,065.90 per ounce
04 Aug: USD 1,269.30, GBP 964.92 & EUR 1,068.37 per ounce
03 Aug: USD 1,261.80, GBP 952.41 & EUR 1,064.96 per ounce

Silver Prices (LBMA)

10 Aug: USD 17.08, GBP 13.14 & EUR 14.57 per ounce
09 Aug: USD 16.59, GBP 12.76 & EUR 14.14 per ounce
08 Aug: USD 16.39, GBP 12.57 & EUR 13.87 per ounce
07 Aug: USD 16.13, GBP 12.35 & EUR 13.67 per ounce
04 Aug: USD 16.70, GBP 12.71 & EUR 14.07 per ounce
03 Aug: USD 16.47, GBP 12.50 & EUR 13.91 per ounce
02 Aug: USD 16.67, GBP 12.60 & EUR 14.09 per ounce


Recent Market Updates

– Great Disaster Looms as Technology Disrupts White Collar Workers
– Gold Sees Safe Haven Gains On Trump “Fire and Fury” Threat
– Silver Mining Production Plummets 27% At Top Four Silver Miners
– Gold Consolidates On 2.5% Gain In July After Dollar Has 5th Monthly Decline
– Gold Coins and Bars See Demand Rise of 11% in H2, 2017
– Greenspan Warns Stagflation Like 1970s “Not Good For Asset Prices”
– What Investors Can Learn From the Japanese Art of Kintsukuroi
– Bitcoin, ICO Risk Versus Immutable Gold and Silver
– This Is Why Shrinkflation Is Making You Poor
– Gold A Good Store Of Value – Protect From $217 Trillion Global Debt Bubble
– Why Surging UK Household Debt Will Cause The Next Crisis
– Gold Seasonal Sweet Spot – August and September – Coming
– Commercial Property Market In Dublin Is Inflated and May Burst Again

end

 

 

This is a good commentary from Mike Norman.  I read this on Wednesday and it is worth repeating for those who did not see it.  He says correctly that continual sanctions by the uSA destroys the use of the USA dollar and by definition is the noose that kills off the uSA dollar

 

(courtesy Mike Norman/The Street.com)

 

Mike Norman: Sanctions will destroy the dollar

Submitted by cpowell on Wed, 2017-08-09 00:35. Section: 

By Mike Norman
TheStreet.com, New York
Tuesday, August 8, 2017

The United States has been on a sanctions spree.

Sanctions on Russia. Sanctions on North Korea. Sanctions on Iran. Sanctions on Syria. Sanctions on Venezuela. Sanctions proposed against China. Sanctions even obliquely placed on our allies in Europe as a result of sanctions on Russia.

Sanctions, sanctions, sanctions.

Our leaders are stupid. They cannot see beyond their ill-conceived sanctions, which in most cases are illegal and violate the norms and rules of international trade.

The United States is increasingly using sanctions as a form of warfare. When we can’t attack militarily, we use sanctions. In many cases the result is the same as bombing supply lines only without the bombs. It’s a form of soft warfare that targets a country’s economy and its ability to transact business and safeguard its financial wealth in today’s dollar-based economy.

Do you know what the result of these sanctions will be? The dollar will get crushed.

Something like 80 percent of all international transactions take place in dollars. The global financial system rests on a dollar architecture. That includes funds transfer, clearing, payments, etc. There’s a special unit set up in the Treasury Department that is the war room where such measures are designed and meted out — just like any war room where military tactics and strategies are implemented to defeat an enemy.

How long do you think the rest of the world will operate under such a risk — a risk that at any moment if you fall out of favor with the fools in Washington, your entire economy and lifeline to the world’s financial system can be shut down? …

… For the remainder of the commentary:

http://realmoney.thestreet.com/articles/08/08/2017/sanctions-will-destro…

end

 

Ron Paul describes in detail how the uSA stabilization fund rigs the price of gold

 

(courtesy Ron Paul)

U.S. Exchange Stabilization Fund rigs gold price, ex-U.S. Rep. Ron Paul says

Submitted by cpowell on Wed, 2017-08-09 17:11. Section: 

1:10p ET Wednesday, August 9, 2017

Dear Friend of GATA and Gold:

Former U.S. Rep. Ron Paul, R-Texas, this week tells Wall Street for Main Street’s Jason Burack that the United States uses its Treasury Department’s Exchange Stabilization Fund to manipulate currency markets and suppress the price of gold. Central banking, Paul says, can’t afford to let free markets set the gold price. The interview is 25 minutes long and can be heard at YouTube here:

https://www.youtube.com/watch?v=3SPiHhuLdFY&feature=youtu.be

The discussion about gold price suppression begins at the 13:50 mark.

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

END

 

Craig Hemke states that the bullion banks are still capping gold and silver prices.  This time I will have to disagree with him on silver.  Gold yes but silver is their Achilles heel

 

(courtesy Craig Hemke/TFMetals)

 

TF Metals Report: Bullion banks still sell as much paper as needed to cap prices

Submitted by cpowell on Thu, 2017-08-10 12:54. Section: 

8:55a ET Thursday, August 10, 2017

Dear Friend of GATA and Gold:

Bullion banks continue to sell any many gold and silver futures contracts as necessary to keep monetary metals prices under control, the TF Metals Report concludes today after reviewing recent trader positioning reports. The banks, the report says, seem not to be afraid of anything in the monetary metals markets and nothing seems to have changed. The report is headlined “Same As It Ever Was” and it’s posted here:

https://www.tfmetalsreport.com/blog/8494/same-it-ever-was

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

 

END

 

The Wall Street Journal is now asking questions about the gold at the Federal Reserve Bank of NY. Interesting enough the uSA only has about 500 tonnes of official gold held there.  Most of the uSA gold is stored at Fort Knox Ky., some at West Point NY and the remainder at NORAD under the mountain in Colorado.

 

(courtesy Chris Powell/GATA)

FLASH: Wall Street Journal acknowledges gold leasing and swaps question …

Submitted by cpowell on Fri, 2017-08-11 00:51. Section: 

… but never actually puts it comprehensively to any Federal Reserve or Treasury Department official.

* * *

In the report appended here the newspaper gets a Fed official to say that the Fed does not lease the gold of other nations. Well, of course not. But do those other nations lease or swap gold, or did they? And does the U.S. government lease or swap gold, or did it? If so, why?

The president of the Federal Reserve Bank of New York, William Dudley, was asked that question in public last year and ran away from it as fast as he could. It’s on video:

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

Over the last year and a half GATA gave The Wall Street Journal introductions to everyone quoted in the article below except for U.S. Sen. Rand Paul and his father, former U.S. Rep. Ron Paul. GATA also provided the newspaper with enormous documentation about surreptitious intervention in the gold market by central banks and governments. Yet somehow GATA itself isn’t mentioned here.

In any case maybe this is at least a start with mainstream financial news organizations, considering that all such major organizations have been given the same documentation by GATA over the years and ours remains a planet where gratitude will always remain rarer than gold. After all, as Gandhi is supposed to have said — or was it Alfred E. Neuman? — “First they ignore you, then they laugh at you, then they fight you, and then they go back to ignoring you, snickering that everybody really knew all along what you were trying to tell them.”

* * *

The Fed Has 6,200 Tons of Gold in a Manhattan Basement — Or Does It?

The Central Bank Provides Limited Inventory Information and Won’t Let Outsiders Count the Bars, Prompting Skeptics to Pounce

By Katy Burne
The Wall Street Journal
Thursday, August 10, 2017

https://www.wsj.com/articles/the-fed-has-6-200-tons-of-gold-in-a-manhatt…

Eighty feet below the streets of lower Manhattan, a Federal Reserve vault protected by armed guards contains about 6,200 tons of gold.

Or doesn’t.

The Fed tells visitors its basement vault holds the world’s biggest official gold stash and values it at $240 billion to $260 billion.

But “no one at all can be sure the gold is really there except Fed employees with access,” said Ronan Manly, a precious-metals analyst at gold dealer BullionStar in Singapore. If it is all there, he said, the central bank has “never in its history provided any proof.”

Mr. Manly is among gold aficionados who wonder if the bank is hiding something about what it’s hiding.

Other theorists suspect the gold beneath the New York Fed’s headquarters at 33 Liberty St. may be gold-plated fakes. Some conspiracy-minded investors think the Fed has been secretly leasing out the gold to manipulate prices.

“There has to have been a central bank spewing their gold into the market,” said John Embry, an investment strategist for Sprott Asset Management in Toronto until 2014 who once managed its gold fund.

“The gold price didn’t act right” during the time he was watching it and the likely explanation for the movement was Fed action, said Mr. Embry.

Fed officials have heard theories about their gold holdings for many years and don’t think much of them. After this article was published, a Fed spokeswoman said the Fed doesn’t own any of the gold housed at the New York Fed, which “does not use it in any way for any purposes including loaning or leasing it out.”

The Fed has been selective in giving details about the contents of the vault and in the past has said it can’t comment on individual customer accounts due to confidentiality agreements.

Former Fed Chairman Alan Greenspan said in a July interview: “When you deposit your funds in a bank, should that bank make your account balances available to whoever asks?”

Seeking a better glimpse inside the vault and at Fed procedures and records, The Wall Street Journal filed Freedom-of-Information requests with the New York Fed. Among the Journal’s findings, from a heavily redacted tour-guide manual provided by the Fed: Tour guides are informed that “visitors are excitable” and should be asked to “please keep their voices down.”

Three Fed staffers must be present when gold is moved or a compartment opened, even to change a lightbulb, and no attempts have been made to break in, documents state.

New York Fed President William Dudley told a March gathering in Queens, N.Y., that the fictional raid by drilling through from a subway tunnel in the 1995 movie “Die Hard With a Vengeance” was far-fetched.

The Fed gives some information about the vault on a website and offers tours. A guide on one tour gave some details: Inside is enough oxygen for a person to survive 72 hours, should someone get trapped; custodians wear magnesium shoe covers to help prevent injuries, should they drop 27-pound bars; the Fed charges $1.75 a bar to move gold but nothing to store it; most of the gold is owned by foreign governments.

Along with the foreign gold, the Fed’s Manhattan vault holds about 5% of America’s roughly $11 billion in gold reserves and coin, valued at the statutory rate of $42.22 per fine troy ounce, according to the U.S. Mint. The U.S. government keeps the rest in Denver, Fort Knox, Ky., and West Point, N.Y.

Elaborate theories build on what the Fed doesn’t say about goings-on in its vault’s 122 compartments.

It doesn’t report when bars enter or leave and doesn’t let in outsiders—other than auditors and account holders—to count the bars or review records.

Visitors on vault tours see only a display sample and can’t verify bars up close.

“All you see is the front row of gold bars,” said James Turk, co-founder of Goldmoney, a gold custodian. “There’s no way of knowing how deep the chamber is or how many rows there are.”

Mr. Turk, based in London, believes much of the gold has been “hypothecated,” or lent out to other parties, and then rehypothecated, or lent to multiple parties at once. In doing so, he says, “central banks actually own less gold than people believe.”

Some gold bugs—investors bullish on the yellow metal—think the Fed secretly lends it out to suppress prices, partly to protect the dollar’s value. In theory, the Fed can feed gold into the market through swaps with other countries.

James McShirley, who owns Sulphur Lumber in Sulphur Springs, Ind., and has traded gold, believes investment banks, probably as agents for the Fed, act to lower prices when gold futures gain 1%. “It’s totally logical that in addition to maintaining artificially low interest rates,” he said, “it would be imperative to keep gold suppressed as an inflationary barometer.”

Then there’s the purity question. Mr. Turk said there are “questions in gold circles as to what’s in an actual bar.” One theory, he said: They could be gold-plated tungsten, which would weigh almost the same.

“I think the gold they have there is real gold,” he said, “but until you do random sampling you don’t know for certain.”

In a 2012 audit of U.S. gold at the Fed’s vault, the U.S. Mint and the Treasury’s Office of Inspector General sent 367 samples to an independent lab for testing. All but three samples came back within 0.13% of the purity recorded by the government, within standard industry tolerance, according to the Mint and Treasury.

Since then, annual government audits of the Fed’s vault have inspected only the locks and joint seals on the compartments to check they haven’t been tampered with, a Mint spokesman said.

That isn’t enough, said Peter Boehringer, founder of the German Precious Metals Society. The problem, he said, is the “complete lack of a transparent, full, independent, external audit in the Fed´s vaults by a sworn-in auditor.”

New legislation, nicknamed the “Audit the Fed” bill, could allow the Government Accountability Office to audit the Fed’s vault, said a spokesman for the bill’s Senate sponsor, Rand Paul (R., Ky.). GAO lawyers wouldn’t speculate on the bill’s reach. Mr. Paul’s spokesman said the Senator has arranged a personal visit to Fort Knox this fall.

Former U.S. Rep. Ron Paul, the senator’s father, has been outspoken about what he says is taxpayers’ need for more transparency about gold from the Fed. “Even if you could walk into that vault and se