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I would like to thank you for your patience.
Gold: $1162.80 up $3.10
Silver: $15.67 unchanged
In the access market 5:15 pm
Gold $1164.00 (after spiking to 1173 at 3:30 pm est)
silver $15.71 (after spiking to 15.89)
Gold and silver had a good day today price wise.
The bankers came to work early yesterday in the access market knocking both metals down.
However throughout the night, gold rose nicely and then at 12 noon today, something spooked our bankers as gold rose to $1165 only to be repelled back to $1163.00 on closing. However late in the access market, gold again rose to $1173 upon which it was easy for our bankers to offer naked contracts and lower the price to $1164.00 at access closing time. Something is spooking our bankers!!
The gold comex today had a poor delivery day, registering 0 notices served for nil oz.
Silver registered 12 notices for 60,000 oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 255.02 tonnes for a loss of 48 tonnes over that period. .
In silver, the open interest rose considerably despite Monday’s fall in price. It looks like we have a few nervous shorts in silver racing against the clock to cover some of their shortfall!! The total silver OI remains extremely high with today’s reading at 170,351 contracts.
The big December silver OI contract lowered to 95,629 which is, as expected with a normal contraction as some of the paper longs move to March..
In gold we had another huge rise in OI despite yesterday’s fall in gold to the tune of 10.00 dollars. The total comex gold OI rests tonight quite elevated at 443,864 for a gain of 9,569 contracts.In two days we have had in excess of 26,000 OI increase at the gold comex. it looks like gold OI is catching up to its sister, silver!! The December gold OI rests tonight at 254,006 contracts which is also quite elevated for this time in the delivery cycle.
Today, we had a small withdrawal of gold Inventory at the GLD of 0.900 tonnes/ inventory rests tonight at 724.46 tonnes.
In silver, the SLV inventory had no change.
SLV’s inventory rests tonight at 344.888 million oz.
We have a few important stories to bring to your attention today…
Let’s head immediately to see the major data points for today.
First: GOFO rates: still deep in backwardation!!
All months basically moved deeper into backwardation and all months moved into the negative direction..
Now, the first 3 month GOFO rates moved deeply into the negative with the 6th month GOFO almost in backwardation.. On the 22nd of September the LBMA stated that they will not publish GOFO rates. However today we still received today’s GOFO rates.
It looks to me like these rates even though negative are still fully manipulated.
London good delivery bars are still quite scarce.
The backwardation in gold is incompatible with the raid on gold . It does not make any economic sense.
Nov 11 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
-.185% -0.1275% -0.0800% + .00500% + .1200%
Nov 10 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
–.135% + -.0875% +-.0575% +.0100 % + .1375%
Let us now head over to the comex and assess trading over there today,
Here are today’s comex results:
The total gold comex open interest rose by another humongous margin of 9,569 contracts from 434,295 up to 443,864 with gold down $10.00 yesterday. Yesterday I asked: ” is it possible that a sovereign is standing for gold metal? “. China and Russia certainly know the modus operandi of the criminal bankers and it sure looks like that they are absorbing contracts that is offered through proxies. The bankers seem quite confused as to the huge increase in oI for gold. The front delivery month is November and here the OI actually fell by 17 contracts We had 0 delivery notices filed on Monday so we lost 17 contracts or 1700 oz of additional gold ounces will not stand for the November contact delivery month. The big December contract month saw it’s Oi fall by 5,834 contracts down to 254,006. The estimated volume today was poor at 92,657. The confirmed volume yesterday was very good at 233,610. Strangely on this 9th day of notices, we had zero notices filed for nil oz.
And now for the silver comex results. The total OI rose strongly by 1,260 contracts from 169,091 up to 170,351 even though silver was down 3 cents yesterday. It seems that judging from gold’s OI, our banker friends got more nervous and they continue to cover their massive shortfall in silver. In ounces, this represents a total of 852 million oz or 121.6% of annual global supply. We are now in the non active silver contract month of November and here the OI rose by 21 contracts up to 122. We had 0 notices filed on yesterday so we gained 21 contract or we have an additional 105,000 oz will stand for the November contract month. The big December active contract month saw it’s OI fall by 5,336 contracts down to 95,629. The December contract month remains highly elevated for this time in the delivery cycle. In ounces the December contract is represented by 478 million oz or 68.2% of annual global production (production = 700 million oz – China). The estimated volume today was tiny at 21,831. The confirmed volume yesterday was huge at 63,233. We also had 12 notices filed today for 60,000 oz.
Data for the November delivery month.
November initial standings
|Withdrawals from Dealers Inventory in oz||398.80 (Scotia)|
|Withdrawals from Customer Inventory in oz||2668.45 oz(Scotia,)|
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||8037.500.000 oz (Scotia) 250 kilobars|
|No of oz served (contracts) today||0 contracts(nil oz)|
|No of oz to be served (notices)||26 contracts (2600 oz)|
|Total monthly oz gold served (contracts) so far this month||10 contracts (1000 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||80,623.1 oz|
Total accumulative withdrawal of gold from the Customer inventory this month
Today, we had 1 dealer transaction
i) Out of the dealer Scotia: 398.80 oz
total dealer withdrawal: 398.80 oz
total dealer deposit: nil oz
we had 1 customer withdrawals:
ii) Out of Scotia; 2668.45 oz
total customer withdrawals : 2668.45 oz
we had 1 customer deposits: and again we had one of our wonderful kilobar transactions
i) Into Scotia: 8,037.500 oz (250 kilobars)????
total customer deposits : 8037.500 oz
We had 0 adjustments:
Total Dealer inventory: 868,910.561 oz or 27.02 tonnes
Total gold inventory (dealer and customer) = 8.204 million oz. (255.17) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 48 tonnes have been net transferred out. We will be watching this closely!
Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped by JPMorgan customer account.
To calculate the total number of gold ounces standing for the November contract month, we take the total number of notices filed for the month (10) x 100 oz to which we add the difference between the OI for the front month of November (26) – the number of gold notices filed today (0) x 100 oz = the amount of gold oz standing for the November contract month.
Thus the initial standings:
10 (notices filed today x 100 oz + (26) OI for November – 0 (no of notices filed today) = 3600 oz or .1119 tonnes. We lost 1700 oz of gold standing for the November contract month.
November silver: initial standings
|Withdrawals from Dealers Inventory||nil oz (Scotia)|
|Withdrawals from Customer Inventory||148,847.65 oz
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||nil|
|No of oz served (contracts)||12 contracts (60,000 oz)|
|No of oz to be served (notices)||112 contracts (560,000 oz)|
|Total monthly oz silver served (contracts)||124 contracts (620,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||183,382.9. oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||4,052,986.8 oz|
Today, we had 0 deposits into the dealer account:
total dealer deposit: nil oz
we had 0 dealer withdrawal:
total dealer withdrawal: nil oz
We had 3 customer withdrawals:
i) Out of CNT: 13,360.64 oz
ii) Out of Delaware: 14,974.08
iii) Out of Scotia; 120,512.93 oz
total customer withdrawal 148,847.65 oz
We had 0 customer deposits:
total customer deposits: nil oz
we had 0 adjustment
Total dealer inventory: 66.200 million oz
Total of all silver inventory (dealer and customer) 179.628 million oz.
The total number of notices filed today is represented by 12 contracts or 60,000 oz. To calculate the number of silver ounces that will stand for delivery in November, we take the total number of notices filed for the month (124 ) x 5,000 oz to which we add the difference between the total OI for the front month of November(122) minus (the number of notices filed today (12) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 124 contracts x 5000 oz + (122) OI for the November contract month – 12 (the number of notices filed today) = amount standing or 1,180,000 oz of silver standing.
we gained 105,000 oz of silver standing.
It looks like China is still in a holding pattern ready to pounce when needed.
The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.
There is now evidence that the GLD and SLV are paper settling on the comex.
***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:
i) demand from paper gold shareholders
ii) demand from the bankers who then redeem for gold to send this gold onto China
vs no sellers of GLD paper.
And now the Gold inventory at the GLD:
Nov 11.2014: we lost another 0.900 tonnes of gold at the GLD/Inventory 724.46 tonnes
Nov 10. we lost another 1.79 tonnes of gold at the GLD/Inventory 725.36 tonnes
Nov 7 wow!! we lost another huge 5.68 tonnes of gold at the GLD/inventory 727.15 tonnes
Nov 6.2014: we had another huge withdrawal of 2.99 tonnes of gold. Inventory 732.83 tonnes
This gold is also heading to Shanghai. If I was a shareholder of GLD I would be quite concerned as there will be no real gold inventory left per outstanding shares.
Nov 5 we had another huge withdrawal of 3.000 tonnes of gold. This gold will be heading to Shanghai/GLD inventory 735.82 tonnes
Nov 4.2014: a huge withdrawal of 2.39 tonnes of gold/GLD inventory/738.82 tonnes
Nov 3.2014: no change in gold inventory at the GLD/741.21 tonnes
Oct 31.2014: no change in gold inventory at the GLD despite the raid/inventory at 741.21 tonnes
October 30.2014: we had another 1.2 tonnes of gold leave the GLD and heading to Shanghai/Inventory 741.21 tonnes
October 29.2014: we had another .99 tonnes of gold removed from the GLD/inventory 742.40 tonnes
Oct 28.2014: we had another withdrawal of exactly 2 tonnes of gold heading to Shanghai; Inventory 743.39 tonnes
Oct 27.2014: no change in gold inventory at the GLD/inventory 745.39 tonnes.
Oct 24.2014: a huge withdrawal of 4.48 tonnes of gold at the GLD/Inventory 745.39 tonnes. This gold is heading to friendly territory: namely Shanghai.
Oct 23.2014: no change in gold inventory at the GLD/Inventory at 749.87 tonnes.
Oct 22.2014: we lost another 2.1 tonnes of gold at the GLD. Inventory rests at 749.87 tonnes. This tonnage no doubt is off to Shanghai.
Oct 21.2014: no change in inventory/GLD inventory rests tonight at 751.96 tonnes.
Today, Nov 11. a small withdrawal of 0.900 tonnes gold inventory at the GLD
inventory: 724.46 tonnes.
The registered vaults at the GLD will eventually become a crime scene as real physical gold departs for eastern shores leaving behind paper obligations to the remaining shareholders. There is no doubt in my mind that GLD has nowhere near the gold that say they have and this will eventually lead to the default at the LBMA and then onto the comex in a heartbeat (same banks).
GLD gold: 724.46 tonnes.
And now for silver:
Nov 11.2014: no change in silver inventory at the SLV/inventory rests tonight at 344.888 million oz.
Nov 10/ we had an addition of 1.438 million oz of silver into inventory at the SLV/Inventory 344.888 million oz (again note the difference between gold and silver)
Nov 7/ 2014/no change in silver inventory/inventory rests at 343.45 million oz. (please note the difference between silver (SLV) and gold (GLD)
Nov 6.2014: no change in silver inventory/(as of 6 pm est) inventory rests at 343.45 million oz.
Nov 5 today, the total silver inventory drops of 2.074 million oz/SLV inventory: 343.45 million oz
Nov 4.2014: wow!! we had another addition of 1.151 million oz of silver inventory/SLV inventory rises to 345.524
Please note the difference between GLD and SLV. The GLD has physical gold to send on its way to Shanghai/SLV has no silver to offer to the participants to give to various players..
Nov 3.2014: this is good news: the “actual silver inventory” rose by 958,000 oz to 344.373 oz
(I guess there is no physical silver to raid from the SLV vaults:)
October 31.2014: despite the huge raids yesterday and today: no change in silver inventory at the SLV/inventory at 343.415 million oz
October 30.2014; no change in silver inventory at the SLV/inventory at 343.415 million oz
October 29.2014 no change in silver inventory at the SLV inventory/343.415 million oz
October 28.2014: no change in silver inventory at the SLV/Inventory at 343.415 million oz
Oct 27.2014: no change in silver inventory at the SLV
And now for our premiums to NAV for the funds I follow:
Note: Sprott silver fund now deeply into the positive to NAV
Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 9.4% percent to NAV in usa funds and Negative 9.5% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.7%
Percentage of fund in silver:37.70%
( Nov 11/2014)
2. Sprott silver fund (PSLV): Premium to NAV rises to positive 4.81% NAV (Nov 11/2014)
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.30% to NAV(Nov 11/2014)
Note: Sprott silver trust back hugely into positive territory at 4.81%.
Sprott physical gold trust is back in negative territory at -0.30%
Central fund of Canada’s is still in jail.
And now for your most important physical stories on gold and silver today:
Early gold trading form Europe early Tuesday morning:
(courtesy Goldcore/Mark O’Byrne)
New Currency Wars Cometh – Gold To Be “Last Man Standing”
Currency wars are set to warm up again, after Japan’s radical decision to further debase its currency through an intensification of already significant monetary easing. There was a palpable coldness from China’s Premier Xi Jinping as he greeted Japan’s President Abe at the APEC summit in Beijing.
Tensions are normally high between the two countries but are even more so in recent months.
War grievances run deep and are never far below the surface. Along with South Korea, these are the big industrial powers of Asia who are competing for a share of the shrinking export market.
China’s economy is slowing. Official figures suggest that growth has slowed to around 7%. Some analysts say it is as low as 5%. While Western countries would rejoice at such figures it must be remembered that in 2012 China’s growth in GDP was over 10%.
The decline has affected employment in China which is causing social tensions. The U.S. has put diplomatic pressure on China to not devalue its currency in recent years. So the Chinese resent Japan’s unsignaled and unilateral debasement of their currency, especially if it comes with the blessing of the U.S.
It would appear as though Japan’s actions were not taken at the behest of Japan’s financial elites, even though they stand to gain the most from QE in the short term – especially if the U.S. experience is anything to go by.
How China will respond remains to be seen. Recent renminbi currency swap deals with Canada and Qatar show the increasing risk posed to the dollar’s status as sole global reserve currency.
If and when the dollar falls out of favour as the preeminent reserve currency it’s ability to run large deficits for months on end will be greatly compromised.
The symbolism of the official photograph of the APEC summit could not be more clear. Symbolism is important to the Chinese.
In the photograph (see above) are Xi Jinping along with the leaders of Brunei, the Philippines, and Russian President Putin on the left hand side. Far to the right is Barack Obama. President Putin is at President Xi Jinping right hand.
China is emphasising it’s influence in East Asia and it’s good relations with Russia. The U.S. is presented as insignificant and ineffectual, at least in the affairs of East Asia.
Currency wars are set to intensify again. Indeed, Saxobank has warned of a new “full scale” currency war. We are in a full-blown currency war and the ECB will feel under pressure to take part in that,” said Nick Beecroft, non-executive chairman and senior markets consultant at Saxo Capital last week.
Chief Economist and CIO of Saxobank, Steen Jakobsen warned yesterday that there’s an increasing risk we will soon see a “significant paradigm shift” from China in its attitude to the strength of its currency. He says we’re about to see a full-scale currency war, notably between China and Japan, two of the world’s greatest exporting countries.
Whatever action China chooses with regard to positioning the yuan as reserve currency and using its gold reserves, it seems sure that the U.S. will not be consulted. It is likely that China has enough gold bullion to dethrone the dollar in the event of a dollar crisis or a wider international monetary crisis.
Volatility in the currency markets is likely to increase greatly. If the competitive devaluation of currencies accelerate, fiat currencies risk losing value versus gold. Indeed, in worst case scenarios some may revert to their intrinsic value – zero.
When the dust settles gold will be the last man standing as it cannot be created or destroyed by governments. It remains the best form of financial insurance.
Get Breaking News and Updates on the Gold Market Here
Today’s AM fix was USD 1,151.25, EUR 927.90 and GBP 726.43 per ounce.
Yesterday’s AM fix was USD 1,172.00, EUR 938.20 and GBP 737.25 per ounce.
Gold fell $25.90 or 1.14% to $1,149.40 per ounce yesterday and silver slipped $0.18 or 2.2% at $15.56 per ounce.
Gold remained firm near $1,150 an ounce as physical demand for gold bullion coins and bars especially from Chinese store of value buyers increased after yesterday’s weakness.
Spot gold was flat at $1,150.45 an ounce at 1021 GMT, while Comex U.S. gold futures for December delivery fell $9.90 an ounce to $1,149.90.
Silver slipped 0.3% at $15.51 an ounce. Spot platinum was down 0.2% at $1,190.24 an ounce, while spot palladium was down 0.2 percent at $757.35 an ounce. Spot palladium was down 0.2% at $757.35 an ounce.
(courtesy Dealbook/New York Times and special thanks to Robert H for sending this to us)
More Bank Settlements Coming in Widening Currency CasePhoto
Timothy Massad, chairman of the United States Commodity Futures Trading Commission.Credit Jonathan Ernst/Reuters
As authorities in the United States and Britain ready actions this week against giant banks suspected of manipulating the foreign currency market, both the number of government agencies involved and the cost of settling the cases continues to grow.
The banks learned on Monday that the Commodity Futures Trading Commissionin Washington was planning to announce its own settlements in the case, according to people briefed on the matter. That ended weeks of suspense over whether the agency would act in coordination with British authorities and American banking regulators. The agency is expected to level around $300 million in fines against each of the banks, the people said, with the worst offenders paying slightly more and marginal players somewhat less.
The trading commission, the Financial Conduct Authority of Britain and theOffice of the Comptroller of the Currency in Washington are planning to announce settlements early on Wednesday.
But as of late Monday, it was unclear how many banks the trading commission would act against. The agency has held settlement talks with the same six banks that are settling with the British regulator — Barclays, JPMorgan Chase,Citigroup, the Royal Bank of Scotland, UBS and HSBC — but hurdles remain. Some of the banks still need to receive approval from their boards before settling with the trading commission, the people said, and at least one bank continues to negotiate with the agency.The trading commission’s involvement in the case is a double-edged sword for the banks. A settlement with the agency would afford them the so-called global settlement they have long sought, providing closure on most of their civil legal exposure stemming from the foreign currency case.
But the trading commission is expected to impose tougher language in its settlement than its British counterparts. The American agency, the people briefed on the matter said, will accuse the banks of manipulating benchmarks for foreign currencies, the largest and yet least regulated market in the financial world, rather than simply not having in place systems or controls to prevent manipulation.
The trading commission’s role in the case — the first huge enforcement action under the agency’s new chairman, Timothy Massad, and enforcement director, Aitan Goelman — also raises the overall price tag of the deal. Its penalties would come on top of payouts to the Financial Conduct Authority, Britain’s financial watchdog, which plans to settle with all six banks this week for a total of about £1.2 billion, or $1.9 billion.
The Office of the Comptroller of the Currency, a banking regulator in Washington, is also planning to settle with some of the banks involved in the so-called global settlement. Separately, the comptroller’s office is poised to announce a settlement with Bank of America.
Over the last few weeks, the banks have been signaling that huge payouts were looming. Citigroup and Bank of America actually revised their previously reported earnings for the third quarter to take the settlements into account.
The series of settlements will close the first chapter of the foreign exchange investigation, which has rattled the banking world since it first came to light last year. The next phase of the case will most likely be more painful, as the focus shifts to criminal investigations and individual liability.
The Justice Department, which will sit out the first round of settlements, is investigating potential criminal misconduct among the players in the foreign currency market. Prosecutors are aiming to file a case against at least one bank by the end of the year, the people briefed on the matter said, and might ultimately indict several bank employees.
In the coming months, the trading commission and the F.C.A. of Britain will also switch gears, taking on the banks that are not yet involved in settlement talks. For example, Deutsche Bank, one of the biggest players in the foreign exchange market, will be a focus of the continuing inquiries.
The F.C.A. is expected to charge the banks with failing to have systems and controls in place to prevent misconduct in the foreign exchange market. Some banks may be charged with allowing bankers to front-run client activity in their personal accounts.
The investigation is reminiscent of accusations about manipulating the London interbank offered rate, or Libor, used as a benchmark for credit cards, student loans and other loans. The setting of the Libor rate was unregulated, posing a challenge for regulators who uncovered misconduct related to it.
In Britain, lawmakers in 2013 made it illegal to manipulate Libor, but failed to add any other benchmarks. Following a review of financial market practices, the British government may add other benchmarks under the umbrella of regulated activities and make manipulation of them illegal.
Nemat Shafik, the deputy governor of the Bank of England, which is conducting the review with the F.C.A. and the Treasury, said earlier this month that “Fixing these markets is essential to restore trust — among participants, and among the public.”
The foreign exchange scandal emerged after the financial crash and fueled anger toward the financial sector.
“The risk is that, as memories of recent enforcement actions fade, bad practices may re-emerge. Some say that may already be happening,” she said.
Not everyone seems optimistic about how things are going.
In a recent opinion column in The Financial Times newspaper, Richard Lambert, the founder of the Banking Standards Review, wrote that some banks were trying to root out problems and reform culture.
“But others still claim that the problem is to do with a few bad apples rather than anything more systemic, and are relying on occasional town hall meetings with employees and a lot of top-down instructions to shift behavior,” he wrote. “That will not deliver the fundamental change necessary.
(courtesy John Embry/Sprott Asset Management/Kingworldnews/Eric King)
Sprott’s Embry criticizes Randgold’s Bristow for claiming that gold is oversupplied
5:35p ET Monday, November 10, 2014
Dear Friend of GATA and Gold:
Sprott Asset Management’s John Embry tells King World News tonight that money without counterparty risk — gold and silver — will be the only reliable assets “when this whole massive Ponzi scheme in currencies, debt instruments, and other financial assets implodes.” Embry criticizes Randgold Resources CEO Mark Bristow for claiming that there is an oversupply of gold. An excerpt from Embry’s interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
If history repeats itself, Turk says, gold downdraft will end soon
10:35p ET Monday, November 10, 2014
Dear Friend of GATA and Gold:
Gold and silver demand demonstrated at the monetary metals conference in Munich last week was as strong as he has ever seen it, GoldMoney founder and GATA consultant James Turk tells King World News today, even as interest in mining companies couldn’t be lower. But Turk presents a chart suggesting that the downdraft in the gold price could be ending soon as history repeats itself. His interview is excerpted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
U.S. Mint plans to restart silver coin sales on Nov 17
The Mint suspended sales on Nov. 5 after running out of coins after a market rout pushed prices to 4-1/2-year lows.
Posted: Tuesday , 11 Nov 2014
NEW YORK (Reuters) –
The U.S. Mint said on Monday it expects to restart sales of American Eagle silver bullion coins on an allocation basis from Nov. 17.
The Mint suspended sales on Nov. 5 after running out of coins after a market rout pushed prices to 4-1/2-year lows, unleashing a flurry of retail buying.
In a statement to its biggest U.S. coin wholesalers, the Mint said it expects to have over 1 million 2014-dated silver coins available when they go back on sale.
It also said it expects to launch 2015 coins in early January as usual.
And now Bill Holter discusses the UBS et al banks involved in the admission of rigging on the precious metals:
(courtesy Bill Holter/Miles Franklin)
The “golden” cat is out of the bag!
And now for our more important paper stories
1. Stocks mostly up with Asian bourses with an extremely lower yen value to 115.89
2 Nikkei up 344 points or 2.05%
3. Europe stocks all up /Euro rises/ USA dollar index up at 87.87.
3b Japan 10 year yield at .49%/Japanese yen vs usa cross now at 115.89/
3c Nikkei now above 17,000
3d Abe goes all in with another QE/it is now all up to Japan to stimulate the world/will be known as the great Yen massacre!!!
3e The USA/Yen rate crosses back over the 115 barrier again last night as Abe hints on delay of sales tax and a snap election.
3fOil: WTI 77.07 Brent: 81.75 /RUSSIA and Nigeria deeply hurt with these low oil prices/also USA shale oil in trouble/Rouble and Nigerian currencies collapse and then rebound with sovereign intervention
3g/ Gold up/yen down; yen well above 115 to the dollar/
3h/ Japan is to buy the equivalent of 108 billion usa dollars worth of bonds per MONTH or $1.3 trillion
Japan’s GDP equals 5 trillion usa/thus bond purchases of 26% of GDP
3i 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 (see Von Greyerz)
3j ECB to start expanding its balance sheet. Should be positive for gold.
Japan and China relations improve at the APAC meeting. USA left in the dark.
3j Gold at $1157.00 dollars/ Silver: $15.61
4. USA 10 yr treasury bond at 2.36% early this morning.
5. Details Ransquawk/Bloomberg/Deutche bank/Jim Reid
(courtesy zero hedge)/your early morning trading
Yen Plunges To Fresh 7 Year Lows On New Reuters “Leak”
Submitted by Tyler Durden on 11/11/2014 06:58 -0500
With the bond market closed today due to Veteran’s Day and the correlation and momentum ignition algos about to go berserk without any parental supervision, it was only a matter of time before some “stray” flashing red headline first sent first carry pair of choice, i.e., the USDJPY, and subsequently its derivative, the E-mini, into the stratosphere. And sure enough, just before 3am Eastern, it was once again Reuters’ turn to leak, only this time not about the ECB but Japan, as usual citing an unnamed “government official close to Abe’s office”, that Prime Minister Shinzo Abe was likely to delay a planned sales tax increase. From Bloomberg:
- JAPAN MORE LIKELY TO DELAY SALES TAX INCREASE, REUTERS REPORTS
And from the source:
Japanese Prime Minister Shinzo Abe is likely to delay a planned increase in the nation’s sales tax, judging that the economic recovery remains too fragile to weather a further blow, a government official close to Abe’s office said on Tuesday.
The comment comes as momentum appears to be building for Abe to delay the painful measure and call a snap election, with major parties scrambling to prepare for a possible campaign.
“There’s a high probability that the consumption-tax hike will be delayed,” the person told Reuters. “It looks like the government will begin full-fledged consideration of this.”
Which of course is a repeat of what Reuters said 2 days ago but since it came on the weekend, and the momentum ignition algos were sleeping, the news was waster from a market ramping perspective. Today’s result on the other hand was an instant surge in the USDJPY, which shortly thereafter touched on 116.00 the highest level in 7 years, and is up now 200 pips since yesterday as the obliteration of Japan’s economy proceeds, in turn pushing European stocks, and shortly, the S&P, higher.
It also explains why the other key overnight headline was the following:
- JAPAN RULING PARTY LAWMAKERS SAID PREPARING FOR SNAP ELECTION
The reason for that is that as we reported yesterday, the Japanese population is becoming increasingly dissatisfied with living under a central-planning money-printing madman who is willing to destroy the entire country just so a few billionaires can become trillionaires (or quadrillionaires in Yen terms). This was further substantiated by the latest consumer confidence data out of Japan, which dropped to 38.9 in Oct., down 1 point, with the sub-indices for overall livelihood, employment, income growth and willingness to buy durable goods all falling. Arguably the reason why a snap election is positive for risk is that Abe would be re-elected in a landslide. That is possible, but only if Diebold is again put in charge of all the voting machine and a whole lot of hanging chads result Abe’s “reelection.”
Meanwhile, European equities traded in the green from the off-set with the broader macro moves for session being dictated by events in Japan. As RanSquawk repeats, overnight, the Nikkei 225 surged higher following reports that PM Abe could delay the beginning of the sales tax hike by 18 months, with the leader potentially set to cash in on his increased popularity (given that 2/3 of the Japanese public view a sales-tax hike in an unfavourable manner) by calling a snap-election. Such a delay would be positive for Japanese equities as it would not restrain consumption as some had feared and thus benefiting spending within the economy. The move saw a second wave ahead of the European open following further source comments that indicated that such a delay is likely, with this rhetoric closely followed up by comments from LDP lawmakers confirming the snap election preparations are in place, which subsequently saw the Nikkei 225 CME future rise higher to trade with gains of 1.9%. Since then PM Abe has been on the wires saying that he has made no such plans to call a snap election, although this announcement brought little in the way of a market reaction.
Elsewhere, following the resurgence in the USD-index following these moves, USD exerted further pressure on the commodities complex, with WTI breaking below yesterday’s lows and squeezing the precious metals complex, which has subsequently left materials and energy names, the sole underperformers in Europe. Furthermore on a stock specific basis for equities, telecom names are the notable outperforming sector, following Vodafone’s (+5.4%) earnings report which has seen their shares climb to the top of the European leaderboard this morning.
As a reminder today is US Veteran’s Day which means there will be no pit trade in Chicago, however NYSE and NYMEX will both be open for trade as usual. And since volume will be abysmal, and since the USDJPY has given the green light, we expect the S&P to hit Goldman’s year end target of 2050 with virtually no resistance.
More specifically open outcry for CME FX and Interest Rate products is closed, however CME Globex electronic trade for FX, Interest Rate, Commodities and Metals will be open as per normal
European shares rise with the telco and real estate sectors outperforming and basic resources, oil & gas underperforming. Japanese yen weakens to 7-year low on reports Abe likely to delay sales tax increase. Companies including Vodafone, CRH, Hochtief, AP Moeller-Maersk released results. The Spanish and Italian markets are the best-performing larger bourses, Swiss the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; U.K. yields increase.
Commodities decline, with natural gas, copper underperforming and corn outperforming. U.S. small business optimism due later.
- S&P 500 futures up 0.1% to 2036.4
- Stoxx 600 up 0.4% to 339
- US 10Yr yield little changed at 2.36%
- German 10Yr yield up 1bps to 0.85%
- MSCI Asia Pacific down 0.1% to 140.7
- Gold spot little changed at $1151.4/oz
Bulletin headline summary from RanSquawk and Bloomberg
- Speculation over a potential sales tax hike delay and calls for a snap election in Japan have boosted European equities from the get-go.
- This has subsequently seen USD/JPY touch its highest level since 2007, as such a move regarding the sale tax could be seen as a form of fiscal stimulus.
- Looking ahead, today’s session sees a lack of tier 1 releases, with volumes expected to be thin Stateside given the Veterans Day holiday.
Following the aforementioned developments in Japan, JPY has been placed under broad-based weakness, with USD/JPY breaking above 115.00 and touching 116.00 for the first time since 2007 as should PM Abe delay the sales tax hike then this could be perceived as a form of fiscal stimulus for the Japanese economy. Furthermore, RANsquawk sources also reported macro fund buying in the pair to hedge Nikkei 225 option positions, which were reported at the 17,250 level. Elsewhere in FX markets things remain relatively subdued with a lack of tier 1 data for the session and volumes due to be light given the Veterans Day Holiday in the US.
The commodities complex has once again been largely swayed by movements in the USD-index with WTI prices slipping below USD 77.00 and yesterday’s lows in early trade, while precious metals prices also felt the squeeze of the resurgence in the greenback. However, since then WTI prices have managed to climb back above USD 77.00 with a volumes thin and a lack of fundamental newsflow to dictate the state of play. Nonetheless, it is worth noting that Libya’s Hariga port is still closed with talks with protesters ongoing, according to an oil official. Elsewhere, NatGas futures are continuing to pullback from last week’s hefty gains, although fears continue to mount over the possibility of a particularly could inter in the US which could trigger a surge higher in prices. Finally, Copper has consolidated a break below USD 3.00 in combination with strength in the USD and as industrials in Asia underperformed.
DB’s Jim Reid concludes the overnight recap
Over the last couple of months there has been no shortage of things to write about on a daily basis but it seems we’ve hit a little lull. The post payroll week is always a bit light on data, which is compounded by the fact that we’re now past the ECB meeting. Today is Veteran’s Day holiday in the US so we’re likely to be on the quiet side even though equity markets are open. The next major events are likely to be the European inflation and Q3 GDP numbers on Thursday and Friday this week.
I’m hoping for a little run of quiet markets as yesterday we started work on our 2015 outlook after a few weeks of reading and preparation. Every year at this time I always think the next year’s outlook is the hardest ever. This time feels no different. In our 2014 outlook – “The Bubble-Taper Tightrope” we basically felt that if central banks pulled back too quickly we’d have big problems for markets and if they kept the taps fully on we’d likely end up with a bubble in many asset classes. We thought overall they would err on the side of easy policy. In reality central banks have indeed controlled this year but we’ve ended up muddling through rather than seeing a strong trend either way emerge. By the end of H1 we were starting to see a bias towards bubbles but the end of QE has helped stop this and the universally strong positive trend that we saw when QE3 was in full flow has been waning. However there are still doubts as to whether the Fed can raise rates in 2015 and markets have responded positively to this. The ECB has disappointed but is now starting to expand its balance sheet again after a two and a half year hiatus and the BoJ has recently stepped on the accelerator again. So in spite of the Fed fully tapering, its been a positive year for central bank liquidity overall. It would likely have been a bad year without it though. Its hard to escape from a similar conclusion for 2015 but let’s see what our work leads us to write over the next 3-4 weeks. Any thoughts or moments of inspirations vis-a-vis 2015 would be gratefully received. Feel free to drop us an email.
In the absence of market moving news-flow/data, yesterday’s price action was relatively subdued. The S&P 500 (+0.3%) was pretty much unchanged at 2,038 although this still marks the fourth consecutive day of new highs for the index. Both the S&P and Dow have rallied over 7% in the last three weeks, marking it as the best three week performance for both indices since October 2011. Away from equities however, US Treasuries were notably weaker although that came on the back of a strong performance last Friday. The curve bear-steepened led by underperformance in longer-dated bonds. A soft 3yr auction and what was perceived to be a hawkish research paper from the economists of San Francisco Fed were both cited as possible reasons for the UST weakness.
In terms of the 3yr auction yesterday, the bid-to-cover ratio of the new notes was recorded at 3.18 which compares with an average of 3.42 over the past ten auctions. The now off-the-run 3yr yields rose +4bp to 0.97% whilst 10yr rose 6bps to 2.36% to give back nearly all of last Friday’s gains. In reality the 10yr yield has been bound inside the 2.20-2.39% range since we normalised from the ‘flash-rally’ in mid-October. We have more Treasury auctions this week with a 10y note scheduled for Wednesday and 30y on Thursday so it will be interesting to see how these go. As for the San Francisco Fed paper, economists noted that both monetary and fiscal policy projections have been based on the view that declines in the long-run potential growth rate of the economy will in turn push down interest rates. In contrast, an examination of private sector professional forecasts and historical data provides little evidence of such a linkage which suggests a greater risk, that future interest rates may be higher than expected. We’re not convinced but time will tell.
Before we look at markets elsewhere, there was further Fedspeak overnight. Rosengren was quoted as having said that the Fed should ‘fight low inflation as vigorously as it would a too rapid-run up in prices or else risk the same sort of prolonged slow growth plaguing Japan and Europe. He also repeated his call for the Fed to remain patient in raising rates until there is more certainty, although he mentioned that there are a number of forces conspiring against that.
Moving on to markets it was a notably weaker session for Commodities yesterday. WTI and Brent shed 1.8% and 1.3% respectively to US$77.4/bbl and US$82.3/bbl. Gold (-2.3%) also paid back some of Friday’s gains to close at US$1151/oz. On the subject of Gold, there is a Swiss referendum scheduled at the end of the month in which voters will be asked whether or not the Swiss National Bank should increase its Gold reserves to 20% from 8% currently. Early opinion polls are generally mixed on the subject but it does come at a delicate time for policy making for the SNB. The Swiss Franc has rallied to within 0.2% of its 1.20 level versus the Euro after having appreciated about 2% YTD against the neighboring currency.
Switching tracks to Asia there has been some interesting headlines coming out of the APAC meeting in Beijing overnight. The notable story centers on the agreement signed by Russia and China with the former to supply gas to China marking the second such deal this year between the two nations. The deal is notable given that it would mean Russia should be able to reduce its dependence on Europe as a customer and instead focus on further boosting its strategic ties with China, particularly as this comes on the back of heightened tensions around the Ukraine and continued threats of sanctions from the US and EU. Elsewhere at the gathering, there was a notable public meeting between President Xi from China and Prime Minister Abe of Japan. The meeting marks the first time that the leaders have officially come together since 2012 with Abe commenting afterwards that ‘Japan and China made the first step in improving relations by going back to the original point of a strategic relationship of mutual benefit.’
Staying in the region and looking at markets, Chinese equities are flat after opening strongly whilst the Hang Seng is +0.5% following yesterday’s rally as investor sentiment received a boost post the announcement of the Shanghai-Hong Kong Connect. Meanwhile we’ve had trade data out of Japan. They reported a September current account surplus of JPY963bn yen (vs. JPY538bn expected), significantly higher than the JPY287bn surplus print we saw in August. The Nikkei has risen 2.1% following the results whilst bourses in the rest of Asia are generally trading firmer. Asian credit markets are also fairly resilient with benchmark names around 1bps tighter.
Before we look at the day ahead we’ll just wrap up the European market moves yesterday. The Stoxx 600 closed +0.7% whilst Main and Xover finished the day 2bps and 10bps tighter respectively. With limited news flow some solid corporate earnings reports appeared to offset a weaker industrial production print out of Italy (-0.9% mom vs. -0.2% mom expected). Bunds closed +2bps wider whilst 10y yields in Spain were 3bps tighter on the day, shrugging off any worries over a political backlash in Spain following the results in the informal non-binding Catalan referendum.
Looking ahead to today we’ve got a fairly light calendar in the region which isn’t surprising given the US holiday. The October small business optimism print is the only US release to look forward to. Outside of the US, we’ve got retail data due out of the UK and the wholesale price index print in German. On a quiet day like this maybe its also worth keeping an eye on any interesting snippets arising from the conclusion of the 2-day APEC leader’s summit in Beijing today.
Let’s see if these quieter markets continue
Russia Signs Deal With Iran To Build 8 Nuclear Power Units
Submitted by Tyler Durden on 11/11/2014 08:00 -0500
With this year’s APEC meeting in China having just barely concluded, where the biggest news was not the inability of the US to make any material headway in trans-Pacific trade (who needs trade when you have a printer?) or that China is “willing” to import even more NSA bugs courtesy of Cisco and Qualcomm, but Russia’s second “western” mega gas deal with China, as well as the following photo-op of course…
… and with the WSJ reporting that in the now year-old “nuclear”negotiations between the west and Iran, there has been no progress, it was once again Putin’s turn to turn the screws on the lame duck president following a report moments ago that Russia inked a deal to build eight nuclear power units in Iran, as a new partnership agreement, guaranteed by the IAEA.
First, this how the success of US defines “success” in its ongoing negotiations to curb Iran’s nuclear program:
Two days of exhaustive negotiations between U.S. Secretary of State John Kerry and his Iranian counterpart, Javad Zarif, in the Persian Gulf nation of Oman resulted in no significant breakthrough in forging a comprehensive agreement to curb Tehran’s nuclear program by a Nov. 24 diplomatic deadline, said senior U.S. and Iranian officials.
“Real gaps” remain between Washington and Tehran, said an American diplomat, in describing talks that seek to end a decade-long standoff over the future of Iran’s nuclear program.
Lower-level diplomacy between the U.S., Iran and other world powers continued on Tuesday in Muscat, as Mr. Kerry arrived in China to brief President Barack Obama on the status of the nuclear diplomacy.
“What we’ve said about this is that we may get there and we may not,” said a senior U.S. official who traveled with Mr. Kerry, referring to he prospects for a deal by late November. “I don’t think that anybody has said at any point recently that we are, quote-unquote ’on track’ to reach an agreement by the 24th.”
Iran’s second-highest official attending the Oman talks, Abbas Araghchi, described the talks as “tense” and said his negotiating team was committed to engaging in virtually round-the-clock talks to try and reach the deadline.
This was of course expected since nobody embodies US “success” better in recent years than Obama with perhaps the exception of John Kerry.
So as the US stumbles from one foreign policy debacle to another, this is what the Kremlin is doing. From RT:
Russia is to build eight nuclear power units in Iran, as a new partnership agreement, guaranteed by the IAEA, was signed in Moscow on Tuesday.
The head of the Rosatom, Sergey Kirienko, and the chief of the Atomic Energy Agency of Iran, Ali Akbar Salehi, signed a series of documents, promoting the links in the field of peaceful application of atomic energy between the countries, RIA Novosti reports.
According to the agreement, Russia is to construct eight pressurized water reactors “turn-key ready” in Iran. Four of them will be built at the Bushehr Nuclear Power Plant, also completed by Russia a year ago.
Besides, nuclear fuel for the future reactors will be provided by Russia during the whole life cycle of the new reactors. Spent fuel will be returned for processing and storage.
In other words, as the US does everything in its power to halt the spread of nuclear power in Iran (for peaceful purposes or otherwise) Tehran, in clear defiance of the US, just agreed with Russia to develop not one but 8 new nuclear reactors.
Confused: please refer to the picture at the top of this article for the clearest explanation possible.
This is huge!!
(courtesy zero hedge)
Petrodollar Panic? China Signs Currency Swap Deal With Qatar & Canada
Submitted by Tyler Durden on 11/10/2014 21:39 -0500
The march of global de-dollarization continues. In the last few days, China has signed direct currency agreements with Canada becoming North America’s first offshore RMB hub, which CBC reports analysts suggest “could double maybe even triple the level of Canadian trade between Canada and China,” impacting the need for Dollars.But that is not the week’s biggest Petrodollar precariousness news, as The Examiner reports, a new chink in the petrodollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petrodollar system. As Simon Black warns,“It’s happening… with increasing speed and frequency.”
Authorized by China’s central bank, the deal will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the U.S. dollar.
Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.
“It’s something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there,” said CBC’s Catherine Cullen, reporting from Beijing.
It’s happening. With increasing speed and frequency.
The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.
China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.
Moreover, just today, hot off the presses, thecentral banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia
This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.
And as Black notes, everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.
Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.
The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.
Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed.
Nothing goes up or down in a straight line. And given how volatile Europe and the global economy continue to be, the dollar may certainly be in for its surges and bumps in the coming months.
But over the long-term it’s glaringly obvious where this trend is going: the rest of the world no longer wants to rely on the US dollar, and they’re making it a reality whether the US likes it or not.
* * *
And now, no lesser oil-producing state than controversialQatar has signed an agreement too.. seemingly opening up the door to Petrodollar panic… (as The Examiner reports)
The petro-dollar system is the heart and soul of America’s domination over the global reserve currency, and their right to make all nations have to purchase U.S. dollars to be able to buy oil in the open market. Bound through an agreement with Saudi Arabia and OPEC in 1973, this de facto standard has lasted for over 41 years and has been the driving force behind America’s economic, political, and military power.
But on Nov. 3 a new chink in the petro-dollar system was forged as China signed an agreement with Qatar to begin direct currency swaps between the two nations using the Yuan, and establishing the foundation for new direct trade with the OPEC nation in the very heart of the petro-dollar system.
While this new agreement between China and Qatar is only for the equivalent of $5.7 billion over the next three years, Qatar becomes the 24th nation to open its Forex market to the Chinese currency, and solidifies acceptance of the Yuan as a viable option for the future in the Middle East.
China’s central bank announced Monday that it has signed a currency swap deal worth 35 billion yuan (about 5.7 billion US dollars) with the central bank of Qatar.
The three-year deal could be extended upon agreement by the two sides,said a statement on the website of the People’s Bank of China (PBOC).
Also on Monday, the two sides signed a memorandum of understanding on Renminbi clearing settlement in Doha. China agreed to extend the RMB Qualified Foreign Institutional Investor scheme to Qatar, with an initial quota of 30 billion yuan.
The deal marked a new step forward in financial cooperation between the two countries, and will facilitate bilateral trade and investment to help maintain regional financial stability, the statement said. – China Daily
It is perhaps no coincidence that the term for the new agreement is set for three years, and is within the exact time frame being predicted by the director of the Finance Institute under the Development Research Center of the State Council, Zhang Chenghui for the Renminbi to become fully convertible in the global financial system.
The need for new markets and a more stable trade currency in Qatar could be tied to a new report issued last week by French bank BNP Paribas which showed that petro-dollar recycling has fallen to its lowest levels in 18 years, signifying that even oil producing nations in the Middle East are finding it difficult to trust the U.S. dollar, and facilitate its use in trade due to its depreciation since the advent of the Federal Reserve’s massive QE programs.
Nearly every week now, China, Russia, or one of the BRICS nations are finalizing agreements that supersede the old system of dollar trade and reliance on the petro-dollar system. And as many countries begin to reject the dollar due to the exported inflation that is growing in nations that are relegated to having to hold them for global oil purchases, alternatives such as the Chinese Yuan will become a more viable option, especially now that the Asian power has taken over the top spot as the world’s biggest economy.
* * *
The demise of Petrodollar flows…
Ukraine Currency Crashes After Senior EU Official Says “The Ukrainians Are Manipulating Us”
Submitted by Tyler Durden on 11/11/2014 09:32 -0500
The much discussed tumble in the Russian ruble (or as Japan would call it “mission accomplished” if its was the Yen instead of the Ruble) may have stabilized somewhat, and judging by the Russian central bank’s response to no longer intervene in the FX corridor-setting market on a daily basis, Russia is hardly too concerned by the impact to the economy as a result of the beating its currency has taken, but where Putin may have brushed off the “speculative” attack on its currency for the time being, things for Russia’s western adversary, the Ukraine – the country whose economy is in a state of near terminal collapse and which unlike Russia doesn’t have massive raw materials to fall back on – are just starting to go bump in the night.
As has been the case for nearly a year, the Ukraine has been on life support by its “western allies” ever since theVictoria Nuland/US State Department/CIA catalyzed coupearly in the year. The problem is that those same “allies” now look like they have had enough of their “alliance” and are about to pull the “blank check” rug.
According to Reuters, nearly a year on from the first “EuroMaidan” protests that would topple the pro-Moscow president who had spurned an EU trade deal, some in Brussels are disillusioned by the experience of helping Ukraine. EU generosity in waiving import duties and funding gas supplies from Russia may be being abused, they say.
Corruption in Ukraine? Unpossible. But wait, it gets better:
Some in Ukraine’s elite may be colluding with Russia, even as fighting in the east has begun to escalate again.
If true, this will be the biggest stunt a Russian leader has pulled since Khruschev banging on the desk in the UN with his shoe.
And the punchline:
“The Ukrainians are manipulating the EU,” a senior EU official involved in negotiations told Reuters, saying the bloc was “waking up” to a need to better defend its own interests.
You mean those poor European taxpayers, raped for years to bail out insolvent Eurozone nations because, you know, “political capital”, are now directly and indirectly funding Putin’s extravagant habits?
“There may be, in certain sections of the Ukrainian government, an interest in colluding with the Russians and instrumentalizing to a certain extent the EU,” he added.
Such views are dismissed as “absolute nonsense” by Ukraine’s ambassador to the EU, Kostiantyn Yelisieiev. He condemned talk of secret deals between Kiev and Moscow to exploit Western fears for profit as part of “Russian propaganda” and said he had full confidence in continued cooperation with the European Union.
In public, there is solid EU support for the newly elected president and parliament in the face of Russian hostility – a position new European Commission President Jean-Claude Juncker will stress when he visits Kiev, perhaps as early as this month.
And there is unanimous, personal admiration among officials and diplomats for ordinary Ukrainians’ courage on the streets, and a will to help them consolidate democracy and prosperity.
Yet in private, endemic post-Soviet corruption, the power of business “oligarchs” and suspicions of lingering Ukrainian collaboration with supposed enemies in Moscow lead some in Brussels to question the future of current levels of EU backing.
“Maybe people fell for this ‘poor little Ukraine’ line,” one EU diplomat said. “But they’re not so naive. They’re waking up.”
Well, if they indeed are, it also means any future IMF, or US aid, to the Ukraine is over. And here comes the bailouter’s remorse:
Amid some regret at the way the EU’s drive to conclude its Association Agreement with Ukraine ended up provoking conflict with Russia, there is sympathy in Brussels for Poroshenko, the confectionery magnate and long-time minister elected to succeed the ousted, Moscow-backed Viktor Yanukovich six months ago.
“You can’t blame him for playing a weak hand as best he can in his own national interests,” one EU diplomat said of the man who was feted as guest of honor at an EU summit in June.
At the same time, there is a concern not to write blank cheques to Ukraine at a time of austerity at home.
Which may explain why the Ukraine economy just entered the endspiel part judging by what happened to its currency overnight.
USA/JAPAN YEN 115.89 up 1.10
GBP/USA 1.5859 up .0010
USA/CAN 1.1385 up .0015
This morning in Europe, the euro is slightly down, trading now just above 1.24 level at 1.2422 as Europe reacts to deflation. Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31.. The yen continues it’s mighty downfall as it is down this morning closing in Japan falling by a whopping 110 basis points to 115.89 yen to the dollar. The pound is slightly up this morning as it now trades well below the 1.59 level at 1.5859.
Early Tuesday morning USA 10 year bond yield: 2.36% !!! up 7 in basis points from Monday night/
The NIKKEI: Tuesday morning up 344 points or 2.05%
Trading from Europe and Asia:
1. Europe all in the green
2/ Asian bourses all in the green except Australia and Shanghai / Chinese bourses: Hang Sang in the green, Shanghai in the red, Australia in the red: /Nikkei (Japan) green/India’s Sensex in the green/
Gold early morning trading: $1157.00
Your closing Spanish 10 year government bond Tuesday/ down 2 in basis points in yield from Monday night.
Spanish 10 year bond yield: 2.10% !!!!!!
Your Thursday closing Italian 10 year bond yield: 2.34 %/ down 1 in basis points:
trading 24 basis points higher than Spain:
IMPORTANT CLOSES FOR TODAY
Closing currency crosses for Tuesday night/USA dollar index/USA 10 yr bond: currencies falling apart this afternoon
Euro/USA: 1.2495 up .0072!!!!!!
USA/Japan: 115.12 up .330
Great Britain/USA: 1.5941 up .0092
USA/Canada: 1.1318 down .0052
The euro rose in value during this afternoon’s session, and it was up by closing time , closing just below the 1.25 level to 1.2495. The yen was up during the afternoon session, but it lost 33 basis points on the day closing well above the 115 cross at 115.12. The British pound gained some ground during the afternoon session and was up on the day at 1.5941. The Canadian dollar was up considerably in the afternoon but was up on the day at 1.1318 to the dollar.
Currency wars at their finest today.
Your closing USA dollar index: 87.45 down 37 cents from last night.
your 10 year USA bond yield , up 1 in basis points on the day: 2.37%
European and Dow Jones stock index closes:
England FTSE up 16.15 or 0.24%
Paris CAC up 21.25 or 0.50%
German Dax up 17.16 or 0.18%
Spain’s Ibex up 65.80 or 0.64%
Italian FTSE-MIB down 3.07 or 0.02%
Nasdaq; up 8.94 or 0.19%
OIL: WTI 77.54
And now for your big USA stories
Today’s NY trading:
(courtesy zero hedge)
With Bond Traders Away… VIX-Buyers Will Play
As one would expect with half the market away, US equity volumes were terrible (but fiunnily enough not much worse than yesterday) with most major indices trading in a very tight range around unchanged. Overnight strength in stocks on the back of USDJPY’s momo ignition after Reuters headlines on Japan tax delays. Trannies, however, surged out of the gate, stalled into the European close, tumbled on oil weakness, then rallied back in the last hour – amid now news. Treasury futures were very quiet and went nowhere. The real story of the day was in the FX markets, which saw notable USD weakness led by EUR and AUD strength, and a late day rally in JPY (USDJPY tagged 116.00 stops then faded… that’s 8 handles in 9 days). The USD weakness – which started around the European close – sparked a rally in copper, gold, and silver (and gold miners surged). Oil prices tested cycle lows before also bouncing back in a v-shaped recovery to close higher. Despite early intraday record highs in Dow and S&P futures, they ended practically unchanged as VIX was notably divergent. Late-day panic-buying lifted the Dow (+0.007%), S&P, and Russell 2000 green.
Spot the US “holiday” in trading volume.. (Spoiler Alert, you can’t! Yesterday’s volume was just as shitty as today’s)
Notable decoupling between stocks and VIX today…(that started late yesterday)
Today’s cash market trading was very narrow ranged – except for Trannies…
Homebuilders were the big winners, because why not…
But notice the price action since Payrolls… with the huge relative spike in NKY from the overnight Reuters headlines…
Does the strength in financial stocks look sustainable? Because the credit market’s opinion of US financials remains less than exuberant (of course, yet another round of fines for FX rigging this time are due tomorrow)
The USD weakened notably, giving up all of yesterday’s gains back to unch on the week…
USDJPY tagged 116.00 stops then faded… (that’s 8 handles in 9 days) and NKY is still decoupled though beta was high today
The USD weakness today prompted commodity buying pressure (but we note oil prices initially dropped on the move before catching up)… this is commodity performance post-Payrolls…
Bonus Chart: BABA had its worst day since IPO…
As QE3 Ends, Fed Reserves Have Biggest Drop Since Start Of QE
While we understand the Fed’s desire to pass the monetization baton seamlessly from the end of QE3 in the US, to the expansion of QE in Japan first, and then the launch of public QE by the ECB, things may not be quite as smooth as desired . Because a quick glance at the latest Fed H.4.1 statement reveals something unexpected: in the past 4 weeks, the level of total reserves with Fed banks (i.e., excess reserves created by QE), have seen their biggest plunge since the launch of QE in March of 2009. As of November 5, the total amount of outstanding reserves tumbled to $2.561 trillion, down a whopping $188 billion in the past 4 week, well below the $2.8 trillion recorded in August, and at a level last seen in February 2014.
Yet when looking at the corresponding cash balances of banks, something which as we have shown in the past is directly driven by the total amount of systemic reserves, there is no comparable drop in total cash, as can be seen on the chart below.
Unexpectedly, the difference between total bank cash balances as reported weekly by the Fed’s H.8 statement, and the total amount of excess reserves has blown out the most observed under the Fed’s central planning regime starting in 2009.
Digging into the components reveals what most should expect: the cash balances of foreign banks operating in the US suddenly soared to a record high $1.537 trillion even as the cash of large domestic banks operating in the US tumbled to $1.1 trillion, accounting for almost the entire drop in Fed reserves! In fact, the total cash parked at foreign banks is greater than that located at domestic (large and small) banks by $100 billion, clost to the highest ever.
So what does this mean? There are several possible explanations:
- the drop in reserves could be simply a calendarization effect, as the Fed is unclear how to seasonally adjust total actual reserves at a time when QE3 has just ended and the Fed’s balance sheet is flat.
- there has indeed been a drop in reserves, as domestic banks proceed to finally do what the Fed has been begging them to do for 5 years: lend the cash out. Then again, since there has been a matched collapse in total bank deposits, sliding by over $50 billion in the past week to $10.253 trillion, this is hardly the case if only for now.
- as the reserve drop has moved through the domestic banking sector, foreign banks have seen their domestic cash replenishhed courtesy of offshore QE activity, be it by the BOJ or to a lesser extent, the ECB.
Realistically, what this means is still unclear, and ideally several more weeks have to pass to conclude if the reserve drop is merely just a one time, “calendar”, phenomenon. However, if the reserve drop is for real, and outside money is finally being converted into “inside”, then last night’s warning from Plosser may be quite relevant here:
- FED’S PLOSSER: FALLING BANK RESERVES COULD SPUR INFLATION
And since there are many trillions in reserves to go, the deflation that everyone is so concerned about may be, to use the Fed’s favorite word, “quite transitory” and could be just the catalyst that the Fed needs to proceed with rate hikes?
On the other hand, if domestic banks are forced to deplete cash at a time when they still can’t force loan creation to accelerate and offset the Fed’s money printing, then the next highly levered asset class to be liquidated in order to replenish cash reserves could very well be stocks themselves.
Former Goldman Banker Reveals The Path To The Next Depression And Stock Market Collapse
A funny thing happened on the way to the ‘end’ of the multi-trillion dollar bond buying program known as QE – the Fed chronicles. Aside from the shift to a globalization of QE via the European Central Bank (ECB) and Bank of Japan (BOJ) as I wrote about earlier, what lingers in the air of “post-taper” time is an absence of absence. For QE is not over. Instead, in the United States, the process has simply morphed from being predominantly executed by the Federal Reserve (Fed) to being executed by its major private bank members. Fed Chair, Janet Yellen, has failed to point this out in any of her speeches about the labor force, inflation, or inequality.
The financial system has failed and remains a threat to us all. Only cheap money and the artificial inflation of asset values can make it appear temporarily healthy. Yet, the Fed (and the Obama Administration) continue to perpetuate the illusion that making the cost of (printed) money zero by any means has had a positive effect on the population at large, when in fact, all that has occurred is a pass-the-debt-ponzi-scheme co-engineered by the Fed and big US bank beneficiaries. That debt, caught in the crossfires of this central-private bank arrangement, is still doing nothing for American citizens or the broader national or global economy.
The Fed is already the largest hedge fund in the world, with a book of $4.5 trillion of assets. These will plummet in value if rates rise. Cue the banks that are gearing up their own (still small in comparison, but give them time) role in this big bamboozle. By doing so, they too are amassing additional risk with respect to interest rates rising, on top of all their other risk that counts on leveraging cheap money.
Only the super naïve could possibly believe that the Fed and its key banks haven’t been in regular communication about this US Treasury security shell game. Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion.
Adding more fuel to the central-private bank collusion fire, is the fact that the Fed is a paying client of the JPM Chase. The banking behemoth is bagging fees for holding and executing transactions on the $1.7 trillion New York Fed’s QE mortgage portfolio, as brilliantly exposed by Pam Martens and Russ Martens.
Wouldn’t it be convenient if JPM Chase was also trading this massive mortgage book for its own profits? Or rather – why wouldn’t they be? Who’s going to stop them – the Fed? Besides, they hold more trading assets than any other US bank, so why not trade the Fed’s securities ostensibly purchased to help the public – recover?
According to call report data compiled by the extremely thorough website www.BankRegData.com, nearly 97% of all bank trading assets (including US Treasuries) are held by just 10 banks, led by JPM Chase with 43.80% and followed by Citigroup at 24.51% of all bank trading assets.
Last quarter, US Treasuries were the fastest growing form of security bought by banks, increasing by 26.3% or $72 billion over the prior quarter. As the Fed tapered, banks stepped in to do their part in the coordinated Fed-private bank QE game. In the past year, banks have added $185.8 billion of US Treasuries to their books, more than doubling their share of government debt.
Just seven banks comprised nearly all ($70.5 billion) of this quarterly increase: State Street Bank, Capital One, JPM Chase, Wells Fargo, Bank of America, Bank of NY Mellon and Citigroup. By the end of the third quarter of 2014, Citigroup, with $95 billion, was the largest holder of US Treasuries, followed by Bank of America at $54.8 billion and Wells Fargo at $37.8 billion from nearly zero at the start of 2014. Bank of NY Mellon holds $25.3 billion and JPM Chase holds $15 billion US Treasuries.
This increase in US Treasury holdings reflects another easy money element of our federally subsidized banking system. Banks take deposits from individuals for which they pay close to zero in interest, in fact, charge customers fees for keeping their money (courtesy of the Fed’s Zero-Interest-Rate policy.) They can turn that around to make a cool risk-free 2.3% by parking the money in 10-year US Treasuries. Why lend to Joe the Plumber, when the US government is providing such a great deal?
But, the recent timing here is key. Banks only started buying US Treasuries in earnest when the Fed announced its tapering plans. Thus, not only are they participants in the ZIRP game as recipients of cheap money, they are complicit in effecting monetary policy. As the data analyzed so expertly by Bill Moreland at www.BankRegData.com makes clear,there has been no taper. Thus, the publicized reason for tapering – better job and economic growth – is also bogus.
During the third quarter, Wells Fargo and Bank of America matched Fed purchases of US Treasuries, keeping the total amount of US Treasuries in QE land neutral. With such orchestration to keep rates down and the prices of US Treasury securities up, all the talk about whether the labor force is strengthening or inflation exists or not is mere show. Banks haven’t even propped up the labor market in their own industry. They chopped 11,400 jobs last quarter. In the past two years, they cut 57,236 jobs.
No one in either political party mentioned any of this during the mid-term elections. Yet, our political-financial system has gone from the dysfunctional to the failed to the surreal. Speculation, once left to individuals and investors, is now federally sponsored, subsidized and institutionalized. When this sham finally buckles and the next shoe falls and rates do eventually rise, the stock market will tank, liquidity will die, and the broader economy will plunge into a worse Depression than before. We are not there yet because of these coordinated moves and the political force behind them. But we are on a precarious path to that inevitability.
That is all for today
I will see you Wednesday night
bye for now