Shanghai afternoon fix:  2: 15 am est (second fix/early  morning):$   1269.33

NY ACCESS PRICE: 1264.60 (AT THE EXACT SAME TIME)

HUGE SPREAD TODAY!!  5 dollars

Gold	Ounces
Withdrawals from Dealers Inventory in oz	NIL
Withdrawals from Customer Inventory in oz  nil	32.15 oz Manfra 1 KILOBAR
Deposits to the Dealer Inventory in oz	nil oz
Deposits to the Customer Inventory, in oz	66,456.117 oz BRINKS
No of oz served (contracts) today	618 notices  61,800 oz
No of oz to be served (notices)	75 contracts  7,500 oz
Total monthly oz gold served (contracts) so far this month	9163 contracts 916,300 oz 28.500 tonnes
Total accumulative withdrawals  of gold from the Dealers inventory this month	oz
Total accumulative withdrawal of gold from the Customer inventory this month	318,505.5 oz

We had 1 customer deposit;

i) Into Brinks:  66,456.117 oz

total customer deposits;66,456.117 oz

To calculate the initial total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (9163) x 100 oz or 916,300 oz, to which we add the difference between the open interest for the front month of OCT (693 contracts) minus the number of notices served upon today (618) x 100 oz per contract equals 916,300 oz, the number of ounces standing in this  NON active month of September.

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

today, we had 0 deposit into the dealer account:

total dealer deposit: nil oz

we had 0 dealer withdrawals:

 total dealer withdrawals: nil oz

 

 

END

Asian stocks and S&P futures fall modestly and European shares are little changed as traders digested the surprising reticence from yesterday’s ECB meeting and weighed earnings reports from companies including Microsoft, which soared to all time highs after beating non-GAAP estimates, and Daimler. The dollar jumped to 7 month highs, pressuring EM currencies and pushing the euro to its weakest level since March and below the Brexit lows, after Mario Draghi shut down talk of tapering, while the Yuan dropped to the lowest since 2010 after the PBOC cut the fixing by most since August; commodities declined on speculation U.S. monetary policy will diverge from stimulus measures in Europe and Asia.

Top corporate stories include BAT’s offer to buy the remaining stake in Reynolds American for $47 billion and speculation AT&T is discussing a takeover of Time Warner; NBC is doubling in bet in BuzzFeed by investing another $200 million.

S&P 500 Index futures signaled U.S. equities will pare this week’s advance and European stocks fluctuated while Japanese shares fell after the nation was struck by an earthquake. A gauge of commodities fell for a second day. The Bloomberg Dollar Spot Index headed for a third weekly gain after European Central Bank President Mario Draghi said Thursday that the authority’s bond-buying program will likely be tapered before it is halted, a hint that there will be an extension beyond the scheduled end-date of March 2017. Despite today’s muted tone, global stocks were set for their first weekly gain in four weeks.

“Weaning markets off easy monetary policy will be a delicate exercise for the ECB, and we think the bank is unlikely to remove its stimulus until inflation is solidly on track to 2 percent,” Andrew Bosomworth, managing director and portfolio manager at PIMCO, said in a note. “We thus view tapering as a topic for 2017 and beyond.”

The euro fell to its lowest since March after Draghi’s guarded appearance on Thursday, and was trading just under $1.09 on Friday morning. Speaking after the Governing Council left its stimulus strategy unchanged, Draghi said that “sometimes it’s important to say what we did not discuss.” The topics deemed out of bounds included future rate cuts, extending bond-buying and tapering the program — or even whether those topics will be on the December agenda.

Prospects for more stimulus contrast with Federal Reserve policy as officials weigh the case for its first interest-rate hike since 2015. Fed Governor Daniel Tarullo and San Francisco Fed President John Williams are scheduled to speak today.

“Anybody who had positioned for the risk that Draghi would signal a hard taper took their chips off that particular table,” said Ned Rumpeltin, the head of European currency strategy at Toronto Dominion Bank in London. “This also put emphasis back on the dollar. And the calendar over the next few weeks look dollar friendly.”

More troubling than the move in the Euro was the latest plunge in the yuan, whose lower fixing to 6.7558, down 5.8% Y/Y, was the biggest daily move since August, pushing the Chinese currency beyond Bloomberg’s year-end forecast of 6.75, CNH hit 6.7666- close to weakest since trading began in 2010.

S&P 500 Index futures were down 0.3%. General Electric Co. and McDonald’s Corp. are among American companies reporting results on Friday. Microsoft Corp. surged as much as 6.2% in after-hours trading after first-quarter sales and earnings topped analysts’ estimates.

The Stoxx Europe 600 Index was little changed near a two-week high. Daimler AG fell 2 percent after the automaker reported a 10 percent increase in third-quarter earnings and SAP SE was up 2 percent following the announcement of sales that topped estimates. Ericsson AB slid 2.2 percent following its first loss in almost four years. British American Tobacco Plc paced gains among retailers, rising 2.7 percent after offering to buy the stake it doesn’t already own in Reynolds American Inc. for $47 billion.

Japan’s Topix index slid 0.4 percent and the yen strengthened after a magnitude-6.6 earthquake struck western Japan. The nation’s earnings season ramps up next week, with more than 350 members of the equity gauge set to report results.

The yield on benchmark U.S. Treasuries due in a decade fell one basis point to 1.74 percent. It touched a four-month high of 1.81 percent this week as higher oil prices spurred speculation inflation will gather pace. That may boost the case for the Fed to raise rates. China’s 10-year bond yield fell two basis points to a record 2.64 percent. Demand for sovereign debt firmed this week as data showed industrial output missed estimates last month and a weakening yuan spurred concern about capital outflows.

“It’s still a matter of debate whether economic fundamentals have turned better,” said Luo Yunfeng, a fixed-income analyst at Essence Securities Co. in Beijing. “It’s possible that, some time next year, the economy might show some sort of weakness again.”

* * *

Bulletin Headline Summary from RanSquawk

• A rather uninspiring session so far in Europe with equities trading relatively flat as earnings continues to guide price action
• USD bull theme is largely in play, though EUFt/USD losses through 1.0900 have been slow and steady
• Looking ahead, highlights include Canadian CPI and Retail Sales, ECB’s Weidmann (Hawk) and Fed’s Tarullo (Voter, Dove) Speaks

Market Snapshot

• S&P 500 futures down 0.3% to 2130
• Stoxx 600 up less than 0.1% to 345
• FTSE 100 up less than 0.1% to 7033
• DAX up less than 0.1% to 10710
• German 10Yr yield up less than 1bp to 0.01%
• Italian 10Yr yield down less than 1bp to 1.36%
• Spanish 10Yr yield up less than 1bp to 1.11%
• S&P GSCI Index up less than 0.1% to 374.1
• MSCI Asia Pacific down 0.3% to 140
• Nikkei 225 down 0.3% to 17185
• Hang Seng closed
• Shanghai Composite up 0.2% to 3091
• S&P/ASX 200 down 0.2% to 5430
• US 10-yr yield down 1bp to 1.75%
• Dollar Index up 0.25% to 98.56
• WTI Crude futures up less than 0.1% to $50.67
• Brent Futures up 0.3% to $51.51
• Gold spot down less than 0.1% to $1,265
• Silver spot down 0.3% to $17.49

TOP NEWS:

• BAT Offers to Buy Rest of Reynolds American for $47 Billion: Deal would create world’s largest publicly traded tobacco co.
• AT&T Said to Discuss Takeover Idea in Time Warner Meetings: Executives said to have met in recent weeks for informal talks
• Shell Sells $1 Billion of Western Canada Assets to Tourmaline: Oil major follows Conoco, EOG in shedding Canadian assets
• Chesapeake Finds 4.5 Billion-Barrel Oil Field in Appalachia: Rome Trough field holds about 65 percent oil and gas liquids
• JPMorgan Facing Criticism on Valuation of Complex Bonds It Sold: Bank ignored fees when determining values, consultant says
• NBCUniversal Said to Near $200 Million Investment in BuzzFeed
• Microsoft Jumps as Sales, Profit Top Estimates on Cloud Demand
• PayPal’s Three-Year Forecast Eases Concern About Card Pacts
• Volvo Profit Falls as North American Truck Orders Plunge
• Daimler Quarterly Profit Rises 10% on Mercedes E-Class, SUVs
• Schlumberger Beats Estimates as U.S. Shale Helps Lead Recovery
• China to Surpass U.S. as World’s Largest Aviation Market by 2024

Asian stocks pared their biggest weekly advance in a month as health-care companies led losses and an earthquake in western Japan weighed on Tokyo equities. Hong Kong markets were shut due to a typhoon. Local markets traded in lackluster fashion following the weak US lead where declines in oil and losses in telecoms dragged sentiment lower. Nikkei 225 (-0.2%) was initially supported by a weaker JPY before reports of an earthquake in the region dragged the index into the red. ASX 200 (-0.2%) was held back by underperformance in healthcare after Healthscope warned of weaker revenue growth for hospitals, while oil and gold names were pressured by the declines in their respective commodities. Shanghai Comp. (+0.2%) traded choppy after property prices continued to soar which could increase the attractiveness of real asset investments over stocks, while a stronger PBoC liquidity injection and typhoon which kept Hong Kong markets closed for trade further added to the indecisiveness. 10yr JGBs saw uneventful trade with the BoJ absent from the market while Kuroda comments also failed to provide any new surprises. 9 out of 10 sectors fall with telcos, staples underperforming and materials, energy outperforming. “It’s likely the quake provided a reason for investors to sell ahead of the weekend,” with the index hovering around multi-month highs, said Shinichi Yamamoto, a senior strategist at Okasan Securities Co. in Tokyo. “Stocks appear to have managed to break out of their recent boxed-in range, and are likely to show solid performance next week as well.”

Top Asian News

• Yuan Weakens Beyond Year-End Estimates as PBOC Lowers Fixing: Currency traded offshore declines close to record low
• China Home Prices Rise in Fewer Cities Amid Tougher Curbs: Authorities in 21 cities have imposed curbs to cool prices
• China Resources Pharma Said to Raise $1.8 Billion From IPO: Drugmaker prices first-time share sale below midpoint of range
• Inflation Outlook Rises Everywhere But Japan in Test for BOJ: Japan’s 5-year inflation swap below 0.3%, versus 1.9% in U.S.
• Duterte Goodbye to U.S. Swelling Costs on $42 Billion Bonds: Middle finger curse of EU also sped up outflows from peso debt
• Hong Kong Cancels Stock Trading as Typhoon Haima Lashes City: Airport Authority says 689 flights canceled or delayed

In Europe, it has likewise been a rather uninspiring session so far with equities trading relatively flat as earnings continues to guide price action. IT names outperform this morning following Microsoft’s financial results beating expectations, consequently shares rose over 6% in after-market hours to surge past their dot.com peak, while European listed SAP are among the best performers after the tech giant upgraded their profit forecast. Elsewhere, British American Tobacco leads the FTSE 100 higher on the back of reports that they are to purchase the remaining stake in Reynold American for GBP 47BN. European stocks held on to their biggest weekly gain in a month amid deal activity and mixed earnings report after ECB chief yesterday pushed talks on bond-plan future to later meeting. 10 out of 19 Stoxx 600 sectors fall with autos, health care underperforming and basic resources, banks outperforming. 50% of Stoxx 600 members decline, 47% gain. The ECB “put a lot of pressure on themselves and on us for the December meeting,” said Holger Sandte, chief European analyst at Nordea Markets in Copenhagen. “Markets are pretty dependent on their drugs, so to get out is difficult. There’s a big communication challenge here.”

Top European News

• Draghi’s ‘Did Not Discuss’ Leaves Investors Filling Blanks: ECB chief pushes talks on bond-plan future to later meeting.
• Bombardier to Scrap 7,500 More Jobs as CEO Deepens Cost Cuts: Bellemare reduces employment for second time in eight months.
• Nissan Confronts Post-Brexit Reality With SUV Plant Decision: Britain’s top auto producer weighing whether to keep Qashqai.
• Deutsche Bank Shares Back to Level Before DOJ $14 Billion Demand: Shares traded at 13.10 euros before company confirmed request.
• Daimler Sees Growth Stalling on North America Truck Market Woes: Weak North America demand burdens Daimler’s trucks division
• Monte Paschi Heads for Best Week Ever With Fidentiis Skeptical: Monte Paschi climbs as much as 15%, extending this week’s rally to 54% as the Italian bank pressed ahead with plans to boost capital and sell non-performing loans.
• UBS’s Currency Trading Volume Hit Record as Pound Crashed: ‘We processed our highest volume of trades in a minute’: Hall Fed move, other central bank policy changes to boost trading

In FX, the Bloomberg dollar gauge added 0.2 percent. South Korea’s won was the worst performer among major currencies, sliding 0.7 percent. The euro dropped 0.5 percent to $1.0880, falling for the first time through the low recorded on June 24, when the outcome of Britain’s vote to leave the European Union was announced. Draghi’s non-committal stance leaves traders waiting until at least December for news about policy changes. China’s yuan fell as much as 0.2 percent to 6.7605 per dollar in Shanghai, weakening beyond the 6.75 level that it was forecast to reach by year-end. The onshore yuan has declined in all but one session this month as the People’s Bank of China allowed a drop past the 6.7 level that was previously seen as its line in the sand. In offshore trading, the currency was within 0.5 percent of the weakest level recorded since trading began in 2010.

In commodities, the Bloomberg Commodity Index extended the first weekly decline in a month,falling 0.2 percent as dollar strength made raw materials more expensive to buy in other countries. Crude oil was little changed at $50.64 a barrel in New York, following Thursday’s retreat from a 15-month high. Rosneft PJSC Chief Executive Officer Igor Sechin said Russia is capable of a substantial boost to production less than two weeks after President Vladimir Putin pledged support for international efforts to limit output. Nigeria also said Thursday that it cut the price of every type of crude it sells in an effort to boost its global oil market share.  Nickel fell 0.8 percent to $10,045 a ton in London having earlier touched the lowest price in two weeks. The metal came under pressure after China’s top stainless steel producer said it plans to cut output. Aluminum climbed for the first time in six days in London, trimming this week’s loss to 3.5 percent. Gold fell for a second day, dropping 0.2 percent to $1,263.73 an ounce, near its 200-day average, a measure watched by traders and analysts who use chart patterns to make price predictions.

DB’s Jim Reid concludes the overnight wrap

At a period of time in the current cycle where every other word spoken by central bankers gets debated to the nth degree, we instead find ourselves sitting here this morning mulling over what Draghi didn’t say at the ECB press conference yesterday. In one of the more dull ECB meetings in recent memory, Draghi has instead passed the baton on to December. The main takeaway was that Draghi confirmed that the ECB has not discussed tapering or extending the asset purchase program. Indeed there was no intention of using up the option to completely rule out tapering, or to openly pre-signal a QE extension. That said we don’t know what’s going on behind the scenes and it’s more than possible that his refusal to pre-commit to an extension is because he is trying to build a consensus on the council and that therefore the topic is being actively discussed.

Our European economists don’t think that Draghi’s refusal to pre-commit in terms of extending QE and excluding a tapering should be read as the Governing Council thinking about a gradual termination of the QE programme from March 2017. Importantly they note that staff working groups have not yet completed their analysis on how to best tackle the bond scarcity issue were QE to be extended so pre-signalling at the meeting yesterday would have perhaps been premature. They also note that there was some room for an implicitly dovish signal towards the end of the press conference. Draghi seemed to dismiss the idea that markets are becoming too complacent in expecting QE to run indefinitely. One could see this as validating current market pricing of a further extension of QE. In summary, our economists continue to believe that the ECB will announce an extension of the €80bn QE programme in December. The key though to make it credible is how to resolve the eligible bond problem.

On that subject, with today’s calendar fairly bare one event worth keeping an eye on is Portugal’s sovereign rating review by DBRS today. Draghi yesterday confirmed that Portugal’s debt would no longer become eligible to buy under the current QE programme in the event of a downgrade to junk today with Moody’s, Fitch and S&P already there. Earlier this month Portugal’s Finance Minister claimed that DRBS had a more positive assessment of the country’s fiscal efforts so that has somewhat tempered concerns.

Markets were fairly choppy at and around the ECB. As Draghi spoke the Stoxx 600 dipped and touched an intraday low of -0.84%. However by the end of the press conference the index had pared all of that move lower and in fact as the session crept towards the close it had edged into positive territory (+0.19%) by the time the closing bell sounded. European Banks in particular seemed to enjoy the fact that there were no shocks with the Stoxx 600 Banks index ending +1.26% for its third successive daily gain. That index has quietly gone about climbing over +27% from the lows back in July which compares to a gain of ‘just’ +8% for the broader index. Meanwhile, the Euro (-0.41%) was under a bit of pressure and has touched the lowest level since March in trading this morning while sovereign bond yields – with the exception of Portugal (+1.5bps) – were 1-4bps lower across the board.

As we moved into the US session the focus moved on from the ECB and over towards earnings which were on the whole a bit more disappointing. Following the strong results from the Banks, it was the telecom and tech sectors which underwhelmed with earnings reports from Verizon (shares down -2.48%) and eBay (shares down -10.76%) disappointing. That overshadowed better than expected numbers from American Express which sent shares up over 9% and the most in seven years. The S&P 500 (-0.14%) ended with a modest decline.

Also not helping sentiment was a reversal in Oil prices. WTI (-2.30%) undid most of the move higher on Wednesday to close back below $51/bbl. The leg lower for Oil was blamed on comments from the CEO of Rosneft – the largest Oil company in Russia – who said that Russia has the capacity to add up to 4m barrels a day if there’s demand and conditions allow for it. Staying with Oil, yesterday Schlumberger became the first of the big Oil companies to report in the US. Q3 results were mixed with earnings beating but revenues a slight miss. The big names report next week.

Switching our focus over to Asia this morning where it’s been a fairly directionless session to conclude the week. While the Nikkei (+0.29%) is up, the Shanghai Comp (-0.36%) has reversed earlier gains into the midday break while the Kospi (-0.40%) and ASX (-0.14%) have also edged lower. Markets in Hong Kong are still closed in anticipation of Typhoon Haima drawing closer. Datawise in Asia the focus has been on China. The September property prices data is out and it showed that new home prices (excluding government subsided housing) rose in 63 of the 70 cities last month. That’s down from 64 cities in August while prices dropped in 6 cities versus 4 in August, suggesting a cooling off. It’s worth also highlighting the move in the Chinese Yuan this morning. It’s currently down -0.18% after the fix was set weaker with the current 6.757 level the weakest in six years. Since Golden Week two weeks ago, the Yuan has depreciated on 8 of the last 10 days. Elsewhere this morning US equity index futures are down slightly despite Microsoft reporting better than expected Q3 numbers which sent shares up over 6% in extended trading.

Staying with the micro focus briefly, in a report this morning, our European equity strategists highlight that many investors have been scratching their heads about the continued strength of the European mining sector, which has outperformed by 90% since January despite renewed USD strength and copper price weakness. An important driver of the outperformance is the fact that 75% of the sector is listed in the UK, making mining a key beneficiary of the plunge in Sterling. Yet, our strategists are cautious on the sector, as the recent USD strength and the fading Chinese credit impulse point to around 15% downside for metal prices. Given that Sterling only matters when it moves sharply, it would most likely take a renewed bout of political crisis in the UK to offset the impact of softening metal prices.

Wrapping up what was a broadly decent day for economic data in the US yesterday. Existing home sales rose a bumper +3.2% mom last month, well exceeding expectations for just a +0.4% rise. Elsewhere the Philly Fed survey did fall 3.1pts at the headline to 9.7 however the market was forecasting for a bigger drop to 5.0. Also the underlying details showed much more improvement than the modest decline in the headline suggested. New orders (16.3 vs. 1.4 in the prior month) and shipments (15.3 vs. -8.8) in particular stood out while the number of employees also improved. Our US economists noted that the six-month outlook for capex also bounced by 12.6pts this month to 21.2. Elsewhere, the Conference Board’s leading index was up +0.2% mom last month as expected. Initial jobless claims rose 13k last week to 260k but there was some suggestion that this was impacted by Hurricane Matthew.

The focus data wise in Europe was once again in the UK. The latest retail sales numbers came across as fairly soft with sales flat MoM both excluding and including fuel. That compared to expectations for a +0.2% and +0.3% increase respectively. Sterling was slightly weaker (-0.25%) although the move lower came a few hours after that data.

As we glance over today’s calendar, it looks set to be a much quieter end to the week today for data. In fact with no releases due in the US the only prints we’ll get today will be the UK public sector net borrowing data for September, due out this morning and the October consumer confidence print for the Euro area this afternoon. Away from that, the Fed’s Tarullo will speak this afternoon (3.15pm BST) followed by Williams (7.30pm BST) later this evening. The EU leaders will also continue on with the summit in Brussels while the Bundesbank’s Weidmann and Italy’s Padoan are due to speak this morning. Away from the macro, earnings wise we’ve got nine S&P 500 companies due to report including McDonald’s and General Electric (both prior to the open).

For the past 11 days we have seen the yuan weaken against the dollar.  Last night we witnessed a huge devaluation of .35% to 6.7635 with the off shore yuan falling to 6.7740.

It is now obvious that China is again sending a message to Janet that she must not raise rates in the December meeting.  She paid attention last time China threw a tantrum

“Dear Janet”? – China Devalues Most Since August, Yuan Tumbles To Lowest Since Sept 2010

For the 10th day of the last 11, onshore yuan has weakened against the dollar. A 0.35% devaluation of the Yuan fix – the most since August – catching down to offshore Yuan’s weakness, suggests (for now) PBOC policy is ‘allowing’ the drop and perhaps sending yet another ‘turmoil-induing’ message to The Fed as their hawkishness grows.

Since the start of Golden Week, yuan has plunged…

Plunging Yuan back near pre-peg-break levels from Sept 2010…

Sending a message?

 

 

end

 

WOW!!  China is releasing a huge amount of USA treasuries.  Goldman Sachs states that Sept FX flows surged to 78 billion USA: total for the year so far a stunning 500 billion usa

(courtesy zero hedge)

China’s Capital Outflows Are Soaring Again: Goldman Finds Sept. FX Flows Surged To $78 Billion

If one looks at China’s reserve data released by the PBOC, one would be left with the impression that China’s capital outflows – the bogeyman that sent global risk assets tumbling in late 2015 and early 2016 –  have moderated notably in 2016 after the surge during the summer of 2015 and in early 2016. However, as we explained previously, the PBOC has a habit of hiding what is truly happening below the surface, using legitimate mechanisms such as forward contracts,as well as some less legitimate ones. So to get an accurate perspective of what is happening with China’s fund flows, one has to look at a monthly dataset provided by SAFE, which presents the capital flow data in a way that can’t be “fudged.”

As a reminder, according to PBOC official data, China’s currency reserves fell by $18.79 billion in September to $3.17 trillion. The drop was larger than the $11 billion fall estimated and followed a drop of $15.89 billion in August and was the largest monthly decline since May. However, in what will surely be a troubling sign to Yuan bulls, not to mention all those who believe another burst of Chinese capital outflows can destabilize the market (as China is forced to dump US denominated reserves), Goldman has found that the real outflow in September was vastly greater: more than 4 times the official number, and the highest since January, an indication that the capital outflows are once again picking up substantial pace.

As Goldman’s MK Tang writes in a note released overnight, his preferred gauge of FX flow (based on SAFE data) shows that FX outflows rose to US$78bn in September (from US$32bn in August). The particular gauge incorporates information on both onshore net FX demand by non-banks and cross-border RMB movements.

Here are the details from Goldman:”As in the last few months, we focus on two separate sets of SAFE data to gauge the underlying FX flow situation: one on onshore FX settlement, and the other on the cross-border movement of RMB.”

• According to the first SAFE dataset on onshore FX settlement, net FX demand by non-banks onshore in September was US$33.3bn (vs. US$4.6bn in August). This is composed of US$22bn via net outright spot transactions, and US$11.2bn via net freshly-entered forward transactions.
• The second SAFE dataset on cross-border RMB flows shows that net flow of RMB from onshore to offshore was large at US$44.7bn (vs. $27.7bn in August). As we have discussed previously, in our view, such cross-border flow of RMB could not be readily explained by market-driven factors and needs to be taken into account when measuring net FX flow.

As Goldman sums up its preferred gauge of underlying flow “indicates a net FX outflow of US$78bn in September (US$33bn from net FX demand onshore plus US$45bn in FX outflow routed through the CNH market).”

FX outflow picked up to US$78bn in September

Source: SAFE, Goldman Sachs Global Investment Research

Observing the vast discrepancy noted above, Goldman adds that besides today’s data, the PBOC had earlier released two other related FX data points for September: “one is the widely-followed FX reserves data (out on Oct 7), which fell US$27bn, after adjusted for our estimate on currency valuation effect. Another one is PBOC’s “position for FX purchase” (out on Oct 18), which captures PBOC’s net sales/purchases of FX. A difference between this data and FX reserves is that it is net of any valuation effects. This data suggest that PBOC sold about US$50bn in September–it is the biggest fall since January this year, and signaled large underlying FX outflow in September (there may be special factors such as FX transfers to other financial institutions to support their one-belt-one-road initiatives–we await further information, e.g., PBOC balance sheet data, to have a clearer idea about the possible size of these factors).”

It then makes it clear that today’s SAFE data confirm this signal; and indeed the measure suggests even faster underlying outflow than indicated by the data on the PBOC FX sales.

Goldman also notes that the difference between the position for FX purchase data and the FX reserve drop after adjusted for estimated currency valuation effect was particularly large in September (US$23bn, vs. monthly average of about US$10bn for Jan-Sep this year).

Cumulatively since the beginning of the year, the gap between our measure of underlying FX outflows and what is suggested by data on PBOC’s FX reserves or position for FX purchase is significant. Year-to-date through September, FX outflow according to our measure totaled roughly US$500bn, while implied FX sales suggested by reserve data and position for FX purchase were approximately US$200bn and US$300bn, respectively. Exhibit 1 shows our FX flow gauge.

Considering that as a result of the suddenly resurgent dollar, which overnight hit a 7 month high, and in turn led to the biggest drop in the Yuan since August, and the weakest print in the CNH since 2010, we are confident the outflows will only accelerate in October, and the complacency surrounding the biggest threat to China’s economy will be promptly crushed, potentially resulting in another “late 2015” episode in which the only thing that mattered to global stocks was the daily Yuan fixing and the monthly reserve flow report.

 

 

end

Germany’s largest potash producer has just seen their bonds reduced to junk.  The problem of course is that the ECB has bought huge amount of their bonds and now European taxpayers are now on the hook for this junk debt

European Taxpayers Now On The Hook For Junk Debt As ECB Bond-Buying Debacle Builds

The USA has encircled Mosul but left the west side open so the jihadists can exit freely to Raquaa.  Moscow is not thrilled with the antics of the uSA

US ‘Relocated’ ISIS Terrorists Out Of Iraq, Into Syria To Fight Assad

David Rosenberg is calling for a massive multi trillion helicopter money stimulus by all parties to kick start the global economy:

David Rosenberg Calls For A Multi-Trillion, “Helicopter Money” Stimulus Package

With the inherent weakness in US GDP and the rising probability of a recession (two weeks ago Bank of America modeled that the next recession would likely start roughly one year from now), Gluskin Sheff’s David Rosenberg thinks that with monetary options exhausted it will take a fiscal boost in the trillions of dollars to kickstart the economy. These issues were discussed in an extended interview with Real Vision TV, where the chief economist and strategist at Gluskin Sheff proposed some radical policies to engineer the growth needed in nominal income.

His ideas, some of which can be seen here in a clip of the interview, include helicopter money attached to a $2 trillion perpetual bond, massive infrastructure spending and measures to tackle the $1 trillion student debt load that has seriously hamstrung the economy.

Here are some of the interview highlights:

Doing the Same Thing Over Again and Expecting a Different Outcome

Whether the US will in fact experience the technical definition of a recession is a matter of fervent debate, with the odds something like 20%-30%, according to Rosenberg (60% according to Deutsche Bank), but with growth averaging around 1%, there is no doubt the economy is weak.

“There are some people saying a recession is here right now,” Rosenberg says, “I don’t think that we meet those conditions yet. But people say, well, look. Twelve months in a row of negative year on year industrial production, that’s never happened outside recession, check. We’ve had now going into six quarters of profit contraction, year over year. That’s only happened in the context of a recession, check. I mean, all that is true, but so much of this has been related to the oil shock that we had.”

Rosenberg’s problem with monetary policy, now in its 7th year of unorthodox experimentation, is that it has become a weak antidote to structural problems in the economy (even if it is still quite potent at boosting financial asets). Fiscal policy on the other hand, if constructed right, could be the answer due to its very powerful multiplier impact. “I can’t say that I know for sure, but it’s the old Einstein adage about the definition of insanity,” Rosenberg said. “And we’re finding that we’re really– if we’re not hitting the wall on monetary policy, we’re certainly seeing classic economics 101 of the law of diminishing returns.”

In terms of infrastructure spending, he said that one lesson from recent history and the Great Recession is that you’ve got to have the credibility to convince people that this is going to be permanent and not temporary, in terms of the impact on the economy. “So it can’t be transitory. It’s got to be very big. With interest rates as low as they are, there’s certainly the capacity. I mean, you’ve got a lot of governments around the world issuing 50 or 100-year bonds. So this is a once in a lifetime opportunity to borrow money.”

A Couple of Trillion Dollars of Helicopter Money

While companies have been taking advantage of these conditions to borrow money, the funds have not been invested in the real economy. Share buybacks have become more popular, while personal savings rates have increased amid the economic uncertainty. This all boils down to a big case for government spending, with monetary policy joining forces with fiscal policy in the form of helicopter money.

“What you do with helicopter money is you finance it off the central bank’s balance sheet because we’re talking doing something very dramatic to reflate the economy,” Rosenberg said. “It’s not a few hundred billion dollars. It’s a couple of trillion…I know I’ll get accused of bailing out the sinners, but, my lord, we’ve already done that. I mean, nobody went to jail.”

One of the things holding the economy back is the $1 trillion student debt load, which he said has left35% of males aged 18 to 34 living with mom and dad, not getting jobs and not becoming first time home buyers. Employment growth for the 65s and over is 7%, meanwhile, as the aging boomers have to work longer because they didn’t save enough for retirement.

“Helicopter money is QE plus where, say, the treasury issues a perpetual– call it, like, a century bond, a $2 trillion bond on the Fed’s balance sheet. And so when that bond matures, it’s, like, we’re all dead in the long run at that point. And then the Treasury can use that money to stimulate growth. ”

The beauty of this idea, according to Rosenberg is that you don’t have to go through Congress, with such difficulty in achieving corporate or personal tax reform.  “It would lead to a permanent increase in the monetary base. Inflation expectations would go up, which means that real interest rates would go negative. And the theory is that that would provide a bigger thrust towards getting what we all want, which is sustainable and accelerating nominal income growth.“

Real Risk of Fed Mistakes or Trump Trade War

Sustainable and accelerating nominal GDP is certainly what’s required while the risk persists that we could be shocked into recession, or the Fed could make a mistake in raising interest rates too aggressively.

“That’s what happened in December of last year. They raised rates 25 basis points, but the overall financial tightening, in terms of what it meant for the dollar or in credit spreads and the stock market, it was really, like, 75 basis points of tightening. And the next thing you know, the economy slows to stall speed.”

Another concern for investors is the prospect of a Trump presidency, bringing with it the potential start of a trade war. That could provide the sort of exogenous shock to cause the economy to go into recession, Rosenberg stated, noting that historically all the recessions in the post war period have been created by the Fed.

“The problem is that when you have the economy running on average 1% growth, or 1% plus, which is not a big cushion. And so, you know, it’s a complicated question to try and handicap a recession on us right now. There’s a lot of people out there that are convinced that a recession is coming.”

To watch the full interview with David Rosenberg, visit Real Vision TV.  You can access this and many more interviews with a free trial. 

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Oh, if Rosenberg’s idea gets traction – and execution –  which it will eventually, as we have said since our first days in 2009, buy lots and lots of gold.

Canada Walks Out Of European Trade Talks, “Deal Impossible”

With ‘trade’ at the center of any substantive differences between US presidential candidates, 1000s protesting ‘trade’ deals across Europe, ‘trade’ collapsing in China, and lame-duck Obama trying to push his ‘trade’ agenda, it is perhaps shocking that Canada’s trade minister walked out of talks to finalize a trade pact with the European Union, saying it now seems the bloc is incapable of reaching such agreements and that Canadian officials are returning home.

As Bloomberg reports, Chrystia Freeland spoke to reporters Friday after negotiations with the European Commission and the leadership of Wallonia collapsed. The French-speaking southern Belgian region is the holdout in approving the deal.

“It is evident to me, for Canada, the European Union is not capable right now to have an international agreement, even with a country that has European values like Canada,” Freeland told reporters in Namur, Belgium. Her spokesman, Alex Lawrence, confirmed by e-mail that she had walked out.

“Canada is disappointed. I am personally very disappointed. I worked very, very hard,” she said.

Freeland’s departure came as EU negotiators hastened across the Belgian countryside to quell domestic concerns over the pact as some EU leaders voiced skepticism about the likelihood of rescuing the agreement, which is backed by twenty-seven of the 28 EU nations.

At stake is an accord known as the Comprehensive Economic and Trade Agreement that the EU says would boost its economic output by about 12 billion euros ($13 billion) a year and expand EU-Canada trade by about a quarter. Any collapse of CETA, which took five years to negotiate, would take the steam out of a series of separate negotiations with the U.S., Japan and other countries as a wave of populist parties around the world challenge the benefits of free trade.

The breakdown threatens to scuttle the bloc’s first commercial accord with a fellow member of the Group of Seven leading industrialized countries. European Commission representatives were still huddling with Walloon diplomats in Namur after a leaders’ summit dispersed in Brussels where they discussed the deal, which requires unanimous support.

“All of us including the commission have been working hard on the Canada agreement,” European Commission President Jean-Claude Juncker said after the meeting in the Belgian capital. “I hope that we’ll be able to see an agreed settlement in a few days with the Walloons, our friends, because I believe this CETA agreement is the best agreement we have ever been able to negotiate to date.”

Estonian Prime Minister Taavi Roivas said after the leaders’ meeting that the EU’s “credibility as a union is at stake” and signaled the collapse of CETA would bury the separate European negotiations with the U.S. on the Transatlantic Trade and Investment Partnership.

“If Europe fails with CETA, it’s very difficult to imagine we can be successful with TTIP,” Roivas said. “This is very serious.”

Looks like Obama’s ‘gold standard’ legacy is not going well. And it makes one wonder if Canada are ‘idiots’ like every mainstream economist and media muppet proclaimed of Donald trump when he dared to question ‘Free-Trade’ agreements?

 

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This should cause oil production to rise;  the rig counts spike to 8 months high

 

This does not look too good:  heavily armed police are gathering outside the Ecuadorian Embassy in London.  They will no doubt go after Assange;

WikiLeaks Tweets “Heavily Armed Police” Gathering Outside The Ecuadorian Embassy In London

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And now on Nov 1, health premiums are set to skyrocket and this should blow up Obamacare

Obamacare Premiums Up 30% In TX, MS, KS; 50% In IL, AZ, PA; 93% In NM: When Does The Death Spiral Blow Up?

Submitted by Michael Shedlock via MishTalk.com,

Obamacare premiums are skyrocketing out of sight. A jump of a mere 30% looks like a good deal compared to jumps of over 50% in six states, and 93% in New Mexico.

Congratulations are in order for those living in a handful of states whose premiums only rose 20%.

The Wall Street Journal reports Rate Increases for Health Plans Pose Serious Test for Obama’s Signature Law.

Finalized rates for big health insurance plans around the country show the magnitude of the challenge facing the Obama administration as it seeks to stabilize the insurance market under the Affordable Care Act in its remaining weeks in office.

“The situation is serious,” said Alissa Fox, senior vice president of the Office of Policy and Representation for the Blue Cross Blue Shield Association. “The reason the premiums are where they are is that the people we are covering have serious conditions and they’re using a lot of medical services because of their chronic illnesses. That’s clear. And there’s not enough young, healthy people to balance out those costs.”

In Minnesota, for example, Blue Cross Blue Shield is pulling its preferred provider organization plans from the state’s online exchange, MNSure, and the narrow network product has been approved for an average rate increase of 55%.

Democratic Gov. Mark Dayton told local reporters that the law is “become unaffordable for many Minnesotans, a growing number with these rate hikes” and that federal and state action is necessary.

House Speaker Paul Ryan, a Wisconsin Republican, has gone further and said the insurance markets are already in a “death spiral,’” and that “we’re going to have to change this thing.”

The danger for insurers and supporters of the law now is that high prices and limited choices further deter low-risk people from signing up, and that the increases continue and become irreversible.

Approved Hikes

• Approved Hikes Just Under 20%: Colorado, Florida and Idaho
• Approved Hikes 20% to 29%: Connecticut, Georgia, Indiana, Kentucky, Maine, Maryland
• Approved Hikes 30% to 49%: Alabama, Delaware, Hawaii, Kansas, Mississippi, Texas
• Approved Hikes 50% to 92%: Arizona, Illinois, Montana, Oklahoma, Pennsylvania, Tennessee
• Approved hikes 93%: New Mexico

Just a Transition

President Obama calls this a “transition” because insurers aggressively priced too low to get healthy people to sign up.

It’s a transition all right, to hell, for those watching rates skyrocket.

Meanwhile, young and healthy millennials have decided it is ridiculous to overpay for healthcare with $5,000 deductibles to support chronically ill smokers with cancer.

Obvious Death Spiral

I have been writing about the Obamacare death spiral since the legislation first passed. Some are now just catching on.

Please consider Now, Even Democrats Can see the ObamaCare Death Spiral.

Another day, another Democrat finally owning up to the fact that ObamaCare is a disaster. And another state facing the implosion of its health insurance market.

Minnesota Gov. Mark Dayton — once one of the Affordable Care Act’s most enthusiastic champions — is the latest Democrat to publicly eat crow for that support.

With good reason: Tens of thousands of Minnesotans are losing their coverage next year. And premiums on individual plans — which enroll 250,000 North Star State residents — will rise an average 50 percent to 67 percent.

“The reality is the Affordable Care Act is no longer affordable for increasing numbers of people,” Dayton admitted last week, calling the situation in his state “an emergency.”

This just a week after former President Bill Clinton blasted ObamaCare as “the craziest thing in the world,” adding that “it doesn’t make sense.”

An S&P Global Ratings forecast warns that, for the first time since ObamaCare got rolling, participation in the program will actually shrink by up to 8 percent.

Ever-higher premiums are keeping younger, healthier Americans — the ones whose premiums were supposed to subsidize insurance for everyone else — away in droves.

And what President Obama intended as his signature domestic achievement is well on the way to becoming his biggest failure.

Obamacare About to Collapse

Rep. Michael Burgess M.D., Rep. Tom Price M.D., and Rep. Phil Roe M.D., all doctors, say ObamaCare is About to Collapse.

ObamaCare is collapsing. Its utter failures become more obvious by the day.

We all remember the promises of ObamaCare, chief among them that the “Affordable Care Act” would lower health care costs. The opposite has occurred.

In his 2008 campaign for president, then-candidate Sen. Barack Obama repeatedly promised to cut annual health insurance premiums by $2,500. When he took office in 2009, annual family premiums for employer-provided coverage, the most common of private insurance coverage, cost $13,375 according to Kaiser. In 2016, those premiums are $18,142. That’s an increase of $4,767.

Back in 2010 just before ObamaCare became law, President Obama’s Department of Health and Human Services forecast there would be 24.8 million individuals in the exchanges by 2016. The actual figure at the end of 2016 according to Avalere Health will be 10.1 million.

Not only are premiums skyrocketing, but individuals are also left with fewer choices in the ObamaCare exchanges.

The dwindling number of ObamaCare supporters repeatedly point to the fact that 20 million more Americans have coverage now than before ObamaCare.

The vast majority of those 20 million, however, have been dropped into a failing Medicaid program. Patients under our broken Medicaid system struggle to find doctors who see Medicaid patients.

It is a top-down system that has Washington dictating terms to the states that ignore the diverse needs of communities across this country. That is not a recipe for success, and studies have shown that Medicaid’s impact on the health status of enrollees is negligible.

Regardless, 31 states expanded their Medicaid programs under Obamacare. However, it is not going as promised. According to Dr. Brian Blase at the Mercatus Center, there are 50 percent more enrollees at a cost of 50 percent more per person than originally projected. These massive, unanticipated costs will only become more unaffordable in the coming years.

Those governors and state legislatures that rejected the Medicaid expansion have been vindicated.

Hillary Clinton’s solution is to double down on ObamaCare with more government involvement in health care. She believes the fundamentals of the law are sound and it simply needs more taxpayer subsidies.

Her other scheme is to add a so-called “public option” plan even though we’ve already seen the disastrous ObamaCare co-op experience – the original compromise to a public option in the ACA.

Finally, as if ObamaCare’s total collapse is not imminent enough, Clinton also wants to add illegal immigrants to ObamaCare at the same time that America’s veterans aren’t getting the care they deserve.

One column is not nearly enough space to chronicle all of ObamaCare’s failures. Additional dishonorable mentions include the president’s illegal bailouts of big health insurance companies, as well as a finding by the Government Accountability Office that 100 percent of their investigators with fake documents were able to fraudulently enroll in ObamaCare.

You can’t make this stuff up.

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Let us close out the week with this offering from Greg hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog)

 

MSM Lies for Hillary, Russia US Closer to War, Economic Update

By Greg Hunter On October 21, 2016 In Weekly News Wrap-Ups

The mainstream media (MSM) is totally lying to the public about everything from voter fraud to Wiki Leaks. There are many current examples of possible voter fraud such as the recent revelation by the Pew Center that 24 million U.S. voter registrations are “significantly inaccurate.” Pew Center also says there are 1.8 million dead people still on the voter rolls. The other part of the MSM lie is done by omission. The MSM is simply not covering major news stories that are negative to the Clinton campaign. I’ve said it before and I’ll say it again, this is pure fraud on shareholders and the public by so-called news organizations that are really functioning as Democrat propaganda shills.

The U.S. and Russia are moving closer to war. Now, it is reported that Russia is preparing 40 million of its people for nuclear war with training exercises. Russia is also threatening the U.S. with “painful” retaliation if tougher sanctions are imposed.

Another big-time money manager is warning of a stock market crash. Mohamed El-Erian is warning of “enormous risk” and says it’s better to be a seller of the stock market right now than a buyer.

Video Link

http://usawatchdog.com/weekly-news-wrap-up-10-21-16-greg- hunter/

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See you all on Monday

Have a great and safe weekend

Harvey