My website is now ready but we still have to add a little stuff to it. You can find my site at the following url:
http://www.harveyorganblog.com or www .harveyorgan.wordpress.com
I will continue to send the comex data down to my good friends at the Doctorsilvers website on a continual basis.
They provide the comex data. I also provide other pertinent data that may interest you. So if you wish you can view that part on my website.
Gold: $1196.60 down $0.50
Silver: $16.55 unchanged
In the access market 5:15 pm
The gold comex today had a fair delivery day, registering 4 notices served for 400 oz. Silver comex registered 2 notices for 10,000 oz.
A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 247.44 tonnes for a loss of 56 tonnes over that period. .
In silver, the open interest fell by 7,540 contracts despite Tuesday’s small rise in price ( 16 cents). For the past year, we have been witnessing liquidation of contracts despite the fact that it cost nothing to roll. This makes no sense and it smacks of cash settlements which are totally illegal. Since I have been following comex data, I have never witnessed such a massive liquidation in both gold and silver these past two days. The total silver OI still remains relatively high with today’s reading at 156,982 contracts. The big December silver OI contract lowered by 19,199 contracts down to 13,672 contracts which is quite normal. We have 1 more trading day which also corresponds to the first day notice. Our banker friends are still not sleeping well.
In gold we had a huge loss in OI even though we saw a small rise in price of gold to the tune of $1.60 yesterday. The total comex gold OI rests tonight at 388,141 for a loss of 51,306 contracts. The December gold OI rests tonight at 37,741 contracts. We witnessed a huge contraction of 55,654 contracts. It looks like we will have a huge number of oz standing in gold and in silver.
TRADING OF GOLD AND SILVER TODAY
In trading of gold and silver today, our two precious metals were doing nicely in the Asian trading zone last night. Gold hit its high spot right at London’s first fixing of gold (2 am est), with our ancient metal of kings registering a fix of $1200.65. Gold then swooned to $1193.40, its nadir for the day at 5 am well before the comex opening.It then climbed to 1198.50 at the second London fix and stayed around that area for the entire day. It is obvious that this being options expiry week for the OTC had a lot to do with trading today. Gold closed at the comex at $1196.60 and in the access market it closed at 1198.00
Silver performed much better than gold during last night’s trading. By London’s first fix the price of silver had already reached $16.61. The bankers did not particularly like the advance of silver as they tried to knock it down. At 4 am it hit its nadir at $16.56 and then started to advance. Silver hit its zenith at 10 am in the morning est(London’s second fix) at $16.68. From there it was one slow fall with silver settling at $16.62 at comex closing.
In the access market it finished at $16.50.
Remember that options expiry for OTC gold this Friday.
Today, we had a big loss of 2.09 tonnes of gold Inventory at the GLD / inventory rests tonight at 718.82 tonnes.
In silver, we no change in silver inventory:
SLV’s inventory rests tonight at 347.954 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:
all rates move again deeper into the negative and thus deeper into backwardation!!
Now, all the months of GOFO rates( one, two, three six month GOFO and one year) moved toward the negative with the mostly used 1 to 6 month rates deeper into the negative and thus in backwardation Even the one year rate is closing in on 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 26 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
-.33750% -0.24000% -0.1625% – .052500% + .065%
Nov 25 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
-.29750% -.2325% -.15333% -0433300% +.076670%
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 fell dramatically again by 51,306 contracts from 439,447 all the way down to 388,141 with gold up by $1.60 yesterday (at the comex close). If you would recall we had the front delivery month of November had 4 contracts outstanding. And true to form we did have 4 delivery notices filed today so we neither lost or gained any gold ounces standing for the November contract month. The big December contract month saw it’s Oi fall by a huge 55,654 contracts down to 37,741 . The non active January contract month rose by 180 contracts up to 488. The next big delivery month is February and here the OI remained relatively constant at 224,802 for a gain of only 240 contracts. Nobody rolled???. The estimated volume today was poor at 117,627 when you consider some had to roll . The confirmed volume yesterday was good at 360,872. On this 21th day of notices, we had 4 notices filed for 400 oz.
And now for the wild silver comex results. The total OI fell in sympathy to gold but not nearly as bad. Silver OI fell by 7,540 contracts from 164,522 down to 156,982 as silver was up by 17 cents yesterday. In ounces, the total OI represents a total of 785 million oz or 98.1% of annual global supply. We are now out of the non active silver contract month of November. If you recall we had 2 notices left to be served upon and that is exactly what we received. Therefore we neither gained nor lost any silver oz standing for the November contract month. The big December active contract month saw it’s OI fall by 19,199 contracts down to 13,672. The December contract month still remains highly elevated for this time in the delivery cycle. In ounces the December contract is represented by 68.3 million oz or 9.7% of annual global production (production = 700 million oz – China). The estimated volume today was fair at 34,355. The confirmed volume yesterday was humongous at volumes I have never seen: 127,676. We also had 2 notices filed today for 10,000 oz.
The first day notice for both metals will be on Friday, Nov 28.2014 the day after Thanksgiving. Options expiry as mentioned above was yesterday, but we still have OTC options that will expire on Friday. We thus have 1 more comex sessions before first day notice.
Data for the November delivery month.
November final standings
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||nil|
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||nil|
|No of oz served (contracts) today||4 contracts(400 oz)|
|No of oz to be served (notices)||off the board|
|Total monthly oz gold served (contracts) so far this month||1424 contracts (142,400 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 0 dealer transactions
total dealer withdrawal: nil oz
we had zero dealer deposits:
i) into Brinks: nil oz
total dealer deposit: nil oz
we had 0 customer withdrawal:
total withdrawal: nil oz
we had 0 customer deposit:
i) Into Scotia: nil oz
total customer deposits : nil oz
We had 1 adjustments:
i) Out ofHSBC:
97.39 oz was adjusted out of the customer and this landed into the dealer at HSBC:
Total Dealer inventory: 870,408.04 oz or 27.07 tonnes
Total gold inventory (dealer and customer) = 7.955 million oz. (247.44) tonnes)
Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 56 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 4 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) 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 (1424) x 100 oz to which we add the difference between the OI for the front month of November (4) – the number of gold notices filed today (4) x 100 oz = the amount of gold oz standing for the November contract month.
Thus the final standings:
142,400 (notices filed today x 100 oz + (4) OI for November – 4 (no of notices filed today)= 142,400 oz standing for the November contract month.(.429 tonnes)
we neither lost nor gained any gold oz standing for the November contract month.
This concludes the month of November for gold.
And now for silver
November silver: final standings
|Withdrawals from Dealers Inventory||nil oz|
|Withdrawals from Customer Inventory||100,124.635 oz
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||nil oz|
|No of oz served (contracts)||2 contracts (10,000 oz)|
|No of oz to be served (notices)||off the board|
|Total monthly oz silver served (contracts)||186 contracts 930,000 oz)|
|Total accumulative withdrawal of silver from the Dealers inventory this month||2,004,724.5 oz|
|Total accumulative withdrawal of silver from the Customer inventory this month||9,648,284.9 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 Scotia: 60,106.400 oz (one decimal )
ii) Out of Delaware: 10,072.235 oz
iii) Out of CNT: 29,946.000 oz ????
total customer withdrawal 100,124.635 oz
We had 0 customer deposits:
total customer deposits: nil oz
we had 0 adjustments
Total dealer inventory: 64.278 million oz
Total of all silver inventory (dealer and customer) 176.832 million oz.
The total number of notices filed today is represented by 2 contracts or 10,000 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 (186 ) x 5,000 oz to which we add the difference between the total OI for the front month of November (2) minus (the number of notices filed today (2) x 5,000 oz = the total number of silver oz standing so far in November.
Thus: 186 contracts x 5000 oz + (2) OI for the November contract month – 2 (the number of notices filed today) = 930,000 oz of silver that will stand.
We neither lost nor gained any silver ounces standing. This concludes the month of November
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 26.2014: we lost 2.09 tonnes of gold heading to India and or China/inventory at 718.82 tonnes
Nov 25.2014/no change in tonnage of gold inventory at the GLD/inventory at 720.91 tonnes
Nov 24.2015: no change in tonnage of gold inventory at the GLD/inventory at 720.91 tonnes
Nov 21.2014: no change in tonnage of gold inventory at the GLD/inventory 720.91 tonnes
Nov 20.2014; no changes in tonnage of gold at the GLD/tonnage 720.91 tonnes
Nov 19.2014: we lost 2.1 tonnes of gold/Inventory back to 720.91 tonnes. No doubt physical gold is heading to China.
Nov 18.2014: no change in inventory/ Inventory level 723.01 tonnes
Nov 17.2014; we had a huge addition of 2.39 tonnes of gold added to the GLF inventory/inventory rests tonight at 723.01 tonnes. They may be running out of metal to give China!!!
Nov 14. we had no change in gold inventory at the GLD/inventory 720.62 tonnes
nov 13. we lost another 2.05 tonnes of gold at the GLD/Inventory at 720.62 tonnes
Nov 12.2014; we lost another 1.79 tonnes of gold at the GLD/Inventory at 722.67 tonnes
This gold left the shores of England and landed in Shanghai.
Today, Nov 26 we lost 2.09 tonnes of gold inventory at the GLD
inventory: 718.82 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 : 718.82 tonnes.
And now for silver:
Nov 26.2014; no change in inventory/347.954 million oz
Nov 25.14 we had a loss of 1.342 million oz from the SLV/inventory 347.954 million oz
Nov 24.2014: no change in silver inventory at the SLV/Inventory 349.296 million oz
Nov 21.2014: no change in silver inventory at the SLV
Inventory: 349.296 million oz
Nov 20.2014; no change/inventory 349.296 million oz
Nov 19.2014: a huge addition of silver inventory to the tune of 2.396 million oz/inventory 349.296 million oz
Nov 18.2014; no change in silver inventory 346.90 million oz
Nov 17.2014 .SLV inventories remain constant tonight at 346.90 million oz
Nov 14.2014; wow!! we had an addition of 2.012 million oz into the SLV/inventory at 346.900 million oz
Nov 13. no change in silver inventory at the SLV/344.888 million oz.
Nov 12.2014: no change in silver inventory at the SLV/inventory rests tonight at 344.888 million oz. And please note that gold leaves GLD/silver does not. Why? there is no physical silver at the SLV..just paper obligations.
Nov 11.2014: no change in silver inventory at the SLV/inventory rests tonight at 344.888 million oz.
Nov 26.2014 no change in inventory/347.954 million oz.
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 11.3% percent to NAV in usa funds and Negative 11.5% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.0%
Percentage of fund in silver:38.40%
( Nov 26/2014)
2. Sprott silver fund (PSLV): Premium to NAV rises to positive 3.15% NAV (Nov 26/2014)
3. Sprott gold fund (PHYS): premium to NAV rises to negative -0.55% to NAV(Nov 26/2014)
Note: Sprott silver trust back hugely into positive territory at 2.72%.
Sprott physical gold trust is back in negative territory at -0.55%
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 from Europe early Wednesday morning:
(courtesy Goldcore/Mark O’Byrne)
Gold “Price” Spikes to $1,467.50/oz on Computer Glitch
Gold spiked higher in many price feeds overnight and was $270 higher or more than 22% higher to $1,467.50/oz at one stage in what appears to have been some form of computer glitch.
There was speculation that the price spike was due to a series of charting errors or misprints, a bad price feed or a computer glitch. Another example of how technology is a great enabler but can also be a great disabler.
Despite a very bullish backdrop of the Swiss gold referendum on Sunday, gold repatriation movements in Europe, Russian central bank gold buying and very robust Indian and Chinese demand, there was no breaking news that would justify such a dramatic uptick in gold.
The “usual suspects” were a fat finger trade by a large hedge fund or bank. This was quickly discounted as the price moved higher in a series of trades over a period of minutes rather than in one or two trades.
A classic example of this was the huge fat finger trade that brought Knight Securities to their knees. In 2012, US market-maker Knight Capital Group almost went bankrupt after it lost more than $450 million when its computers made erroneous orders that couldn’t be undone. The firm was later sold.
Another example of this was last month, when Japan’s stock markets crashed after a trading error caused more than $600 billion or £370 billion, (yes billion!) worth of orders to be made and then cancelled. An anonymous broker entered an over-the-counter trade for 42 ‘blue chip’ stocks before swiftly cancelling it.
Of note, was the fact that silver and the other precious metals did not see any movement despite the apparent surge in gold. Nor did other markets.
We had concerned clients on the phone early this morning wondering if a massive short squeeze had begun. Others wondered whether price manipulation was at play. Understandable concerns given events of recent weeks and months and the increasing lack of trust in large market participants and indeed in financial markets.
Having looked at it and spoke to data providers we believe that this was a computer glitch. It was not manipulation, a short squeeze, or a modern Chinese or Russian ‘Goldfinger’ sending a pointed message to Washington.
The problem may be related to one of the exchange’s trading engines. This is not the first time that something like this has happened. The CME halted trading for some futures contracts for more than 90 minutes on April 8 this year due to “technical issues.”
The nature of the “technical issues” were not disclosed.
Such “glitches” are becoming more frequent and larger in size and pose real risks to investors. It underlines the importance of owning physical gold and avoiding paper gold – especially leveraged paper and electronic gold which can be manipulated and subject to such errors.
It is also shows, financial markets are increasingly subject to technological vulnerability.
Intelligence agencies, governments and internet security experts have warned that a cyber war could see hackers, attempt to disable and take down financial markets and exchanges in a new form of warfare – financial warfare.
Security experts say China, Russia, the U.S. and other states are adept at and becoming more sophisticated at cyber espionage, cyber warfare and financial warfare.
There is no speculation that this latest glitch was cyber terrorism or war. However, it underlines the risk posed to financial markets and hence the importance of owning physical bullion coins and bars.
Get Breaking News and Updates On Gold Markets Here
Today’s AM fix was USD 1,195.75, EUR 960.67 and GBP 760.22 per ounce.
Yesterday’s AM fix was USD 1,202.25, EUR 966.59 and GBP 767.04 per ounce.
Spot gold closed slightly higher yesterday at $1,200.77/oz, as did spot silver at $16.68/oz.
In London late morning, spot gold was down 0.4% at $1,195.90 an ounce. Silver was down 0.4% at $16.64 an ounce, while platinum was up 0.4% t at $1,229.49 an ounce and palladium was up 1.4% at $807 an ounce.
Currency wars are set to deepen as central banks continue to attempt to weaken their currencies.
The ECB is talking about possibly beginning to buy sovereign bonds in early 2015. This is putting pressure on the euro and strengthening the U.S. dollar against the euro. While the BOE continues its extensive QE programme and the BOJ has embarked on a massive QE programme.
China’s net gold imports from Hong Kong reached a seven-month high in October, according to official Hong Kong data released yesterday. Shanghai Gold Exchange (SGE) premiums are running at $1 to $2 due to demand from buyers in Asia.
Bloomberg noted that gold-backed exchange-traded products (ETPs) dropped 1.1 metric tons to 1,616.7 tons as of yesterday, falling for the first time in three sessions and are approaching a five-year low. Weak hand, sentiment driven ETF owners are selling to allocate to equities and some ETF owners are opting for the safety of physical gold.
Gold has been rallying in November to date, advancing over 2%. We are surprised that it is not higher given the backdrop of the Swiss gold referendum, the gold repatriation movements and Russian, Indian and Chinese gold demand.
Smart money is accumulating bullion now in anticipation of higher prices in 2015 and in the coming years.
wow!!!: from India, a massive 102 tonnes of gold was imported during the first 15 days of November. It looks like these guys will import over 200 tonnes of gold metal.
And remember this: their 10% tax is still in existence.
We also have a massive smuggling operation going on and we have no official records of these transactions.
It is now a race between India and China who will have the greatest amount of gold demand. This will bankrupt the west.
(courtesy India times news agency)
NEW DELHI (Nov 26) — India imported about 102 tons of gold in the first half of November and the pace of purchase suggests import of the precious metal will surpass October’s record import of about 150 metric tons, a senior finance ministry official said today. –
John Hathaway discusses the strength of the uSA dollar and apparent weakness in gold along with the huge derivatives underwritten by major banks
a good read..
(courtesy John Hathaway,Tocqueville funds)
Tocqueville’s Hathaway examines comprehensive market manipulation by central banks
8:28a ET Wednesday, November 26, 2014
Dear Friend of GATA and Gold:
In his new letter for investors, Tocqueville Gold Fund manager John Hathaway focuses on market manipulation by central banks and their agent investment banks.
Hathaway writes: “A new generation of central bankers has transformed the staid portfolios of their predecessors — consisting of inactive pools of currency reserves and bullion — into hedge funds that trade derivatives, futures contracts, and instruments too exotic to comprehend. The Chicago Mercantile Exchange invites them to do so. In Exhibit 1 of a January 29 letter to the Commodity Futures Trading Commission, the CME Group offered special discounts to central banks “outside of the United States” to trade such un-central-bank items as stock index futures, foreign exchange, agricultural commodities, energy, and of course precious metals. It would appear that the CME has become an important interchange by which central bankers can tweak the financial markets to affect the thought process and behavior of the investor.”
Hathaway adds: “The modern-day central banker trades with counterparties that are giant commercial banks with derivative books of disturbing scale and complexity. It seems impossible that these commercial exposures could be constructed and maintained without the knowledge and complicity of the official sector. For example, Deutsche Bank, already a defendant in 1,000 lawsuits, claims derivative exposure that is 20 times the GDP of Germany and five times that of the entire eurozone. It is not a great leap to suggest that central-bank traders and their megabank opposites — spawn of the same gene pool, schooled in the same institutions, career paths intertwined, frequenters of the same conferences, and just a speed-dial away — are ideologically indistinguishable and intellectually and morally corrupt in equal proportion. We applaud the efforts of litigators and plaintiffs already in process and those in the wings, and look forward to the depositions and discoveries yet to come.”
Hathaway’s letter is titled “Monetary Techtonics” and it’s posted at the King World News blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
The following presentation from Grant Williams is an essential read to all.
It is long but very important as he explains how China has swallowed much of the world’s gold. He writes “in the future” discussing to his grandchild what happened in Nov/Dec 2014 that changed the world forever..
(courtesy Grant Williams/Hmmmm/GATA)
Grant Williams: How could it happen?
7p ET Tuesday, November 25, 2014
Dear Friend of GATA and Gold:
In the new edition of his “Things That Make You Go Hmmm. …” letter, Singapore fund manager Grant Williams writes some future history that regards GATA favorites Alasdair Macleod and Koos Jansen as prophets of a Chinese-engineered golden age — an age golden, at least, for those who heeded the prophets and got their gold in time. Williams’ letter is headlined “How Could It Happen?” and it’s posted at the Mauldin Economics Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
The Guardian discusses the Swiss Initiate
(courtesy The Guardian/GATA)
Guardian’s report on Swiss Gold Initiative quotes GATA consultant Koos Jansen
Fears That ‘Dangerous’ Switzerland Referendum Could Spark Gold Rush
By Kate Connolly
The Guardian, London
Tuesday, November 25, 2014
The Swiss like referendums: there were 11 last year and there have been nine more this year, on subjects ranging from who pays for abortions to whether the state should buy a certain type of new fighter aircraft.
This Sunday there are three more, but one has attracted more attention than most – because there are fears that if it wins majority support it could trigger a worldwide gold rush.
Five million Swiss voters are to decide on a proposal that would force the central bank to triple its gold reserves. The vote is being watched closely by financial markets and governments around the world. …
“Gold continues to trigger impetuous and irrational reactions in many people,” Sergio Rossi, professor of macroeconomics and monetary economics at Fribourg University, told the Swiss news agency SDA.
Others say it has rather emphasised the flaws in the monetary system. “It has shown just how unsustainable the debt-based monetary system we have is,” said Koos Jansen, an Amsterdam-based gold analyst for the Singaporean precious-metal dealer BullionStar.
“The Swiss initiative is merely part of a increasing global scramble toward gold and away from the endless printing of money. Huge movements of gold are going on right now. Recently the Dutch repatriated 122 tons, Germany is bringing home its gold from the US, while the BRIC countries are accumulating large quantities of it for their banks.
“While those behind the Swiss initiative have often been portrayed as crazy, they’re merely acting out of fear that their central bank is losing control of its monetary policy, and of the Swiss franc being sucked into this currency war and losing its value,” he said.
Switzerland left the gold standard only in 1999, the last country in the world to do so. “They regret what they did and want to get back to the safety of gold, especially in the current environment,” Jansen added. …
… For the remainder of the report:
another must read/view interview with John Embry of Sprott Asset Management and Kingworldnews/Eric King.
John discusses the huge amount of paper gold swamping the west. These shorts have been provided at sub 1200 dollar levels. This is like a powder keg ready to explode, driving the gold /silver price to astronomical levels
(courtesy John Embry/Kingworldnews/Eric King)
Central banks selling far more gold than is being mined, Embry tells KWN
6:30p ET Tuesday, November 25, 2014
Dear Friend of GATA and Gold:
Western central banks, Sprott Asset Management’s John Embry tells King World News today, are “selling infinitely more paper gold than is being dug out of the ground, and it’s being done specifically to hold down the price,” creating enormous short positions that could spark a strong increase in the price. But, Embry adds, “There aren’t any real markets in anything anymore.” An excerpt from the interview is posted at the KWN blog here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
You may find the following interesting!!
HSBC, Goldman Rigged Metals’ Prices for Years, Suit Says
Goldman Sachs Group Inc. (GS) and HSBC Holdings Plc (HSBA) were sued in New York over claims they conspired for eight years to manipulate prices for the precious metals platinum and palladium in what plaintiffs’ lawyers say is the first class-action lawsuit of its kind in the U.S.
Standard Bank Group Ltd. and a metals unit of BASF SE (BAS), the world’s largest chemical company, were also sued. The four companies used inside information about client purchases and sale orders to profit from price movements for the metals used in products ranging from jewelry to cars, according to a complaint filed today in Manhattan federal court.
The lawsuit by Modern Settings LLC, a jeweler that buys precious metals and derivatives set on their prices, claims the companies “were privy to and shared confidential, non-public information about client purchase and sale orders that allowed them to glean information about the direction” of prices.
Similar lawsuits have been filed this year in Manhattan accusing banks of rigging the benchmark price for gold. Authorities around the world are examining the gold market for signs of wrongdoing.
Regulators tightened scrutiny of benchmarks after uncovering price-rigging in interbank-loan rates and currencies. Silver became the first precious metal to change its traditional procedure in August, andIntercontinental Exchange Inc. (ICE) will run the replacement for the 95-year-old London gold fixing. A new mechanism for platinum and palladium starts Dec. 1.
Michael DuVally, a spokesman for Goldman Sachs, declined to comment on the lawsuit, as did HSBC spokeswoman Juanita Gutierrez in New York.
Standard Bank is based in Johannesburg. A message left at its Manhattan office wasn’t immediately returned, while BASF’s London-based metals unit couldn’t be reached.
The biggest uses of the metals are for jewelery and producing catalytic converters, which curb harmful emissions from vehicles, according to the complaint.
Carmakers’ use of platinum will climb 7.9 percent to a six-year high of 3.39 million ounces this year, and there will be “broad-based growth” next year, auto-catalysts producer Johnson Matthey Plc estimates.
Palladium auto usage will gain 4.9 percent this year to a record 7.3 million ounces. While demand will rise next year, it will likely be at a slower pace, the company predicted. Johnson Matthey makes about one-third of the world’s catalytic converters.
According to the complaint, the four companies participated in twice-daily conference calls to set global price benchmarks for platinum and palladium, which also affected derivative products based on the precious metals.
“This unlawful behavior allowed defendants to reap substantial profits, while non-insiders, which include plaintiffs and members of the class, were injured,” lawyers for New York-based Modern Settings said in the filing.
Modern Settings needs a judge’s approval before it can represent other buyers of the metals.
The gross demand for platinum and palladium last year was more than 8 million ounces and more than 9.6 million ounces, respectively, according to the complaint.
The case is Modern Settings LLC v. BASF Metals Ltd., 14-cv-09391, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Erik Larson in New York firstname.lastname@example.org
This is big: the Swiss Regulators are now going after traders for manipulation of metals. We want their emails so we can orchestrate a class action law suit.
Senior UBS FX, Metals Traders Among 11 Said to Face Swiss Probe
UBS AG (UBSN) co-chief currency dealer Niall O’Riordan is one of 11 individuals the Swiss finance regulator has told are under investigation as part of its currency-rigging case, people with knowledge of the matter said.
The Financial Market Supervisory Authority wrote to O’Riordan, Chris Vogelgesang, the bank’s former global co-head of foreign exchange and precious metals, and precious-metals trader Andre Flotron notifying them of possible enforcement action, said two people, who asked not to be identified because the letters are private. The investigation is ongoing and no findings of fault have been made against any of the individuals.
Finma said it started proceedings against 11 current and former employees on Nov. 12, when it joined U.K. and U.S. regulators in an $800 million settlement to their foreign-exchange manipulation probes. The regulator is considering measures such as a ban from the industry for as long as five years, as well as “naming and shaming” and profit seizure, according to another person.
O’Riordan was suspended last year. Flotron went on leave in early 2014, according to a person at the time. UBS announced in a Nov. 19, 2013, memo that Vogelgesang would step down and look for another role at the Zurich-based bank.
Former precious-metals trader Wolfgang Kajewski, currency trader Sven Schneider and structured-products trader Daniel Laager also got letters, one person said. Kajewski left the bank in 2013, according to his LinkedIn profile.
Attempts to reach the six men by phone, e-mail and through social media or their lawyers were unsuccessful.
Hana Dunn, a UBS spokeswoman, declined to comment on the status of any of its employees or on Finma’s investigation. Vinzenz Mathys, a spokesman for Bern, Switzerland-based Finma, declined to comment on the probe.
The regulator ordered UBS — the world’s fourth biggest currency dealer — to give up 134 million Swiss francs ($139 million) in profits this month after determining bank employees tried to rig foreign-exchange benchmarks and front-run precious metals orders. Finma’s action was part of $4.3 billion in penalties levied that day against six banks by the U.K. Financial Conduct Authority, the U.S. Commodity Futures Trading Commission and the Office of the Comptroller of the Currency.
Finma has now turned to focus on allegations individuals abused clients with practices such as front-running, excessive markups and deliberately triggering stop-loss orders, according to a letter seen by Bloomberg.
A stop-loss order is an instruction to buy or sell when a price reaches a certain level. Front-running is when a banker acts on advance knowledge of a client’s trade. Excessive markups on sales are also a focus of the U.S. Justice Department’s foreign-exchange investigation, people with knowledge of that probe have said.
Traders spoke openly of their attempts to manipulate benchmarks such as the 4 p.m. WM/Reuters fix, front run clients and “jamming some stops,” according to excerpts from group chats in the Finma decision. Another wrote “call me a legend! Front run legend.”
Finma’s investigation focused on UBS’s 14-person currency spot trading desk in Zurich between 2008 and 2013. Precious-metals spot trading was also done there. KPMG LLP led the probe for the regulator, according to two of the people.
“The desk supervisors ignored their monitoring duties,” Finma said in its report, enabling “the repeated conduct of a limited circle of persons acting against the clients’ interests.”
‘Not My Role’
One senior employee told the investigators that “my role is to run the desk and make money. Compliance is not my role.”
UBS still faces investigations by antitrust regulators in Switzerland, the U.S. and European Union, as well as a separate fraud probe by the Justice Department. The Swiss federal prosecutor is also investigating individuals connected to currency-rigging. The bank was first to notify U.S. and EU competition authorities, securing it leniency in those matters, people with knowledge of those cases have said.
The bank benefited from a 30 percent reduction by the FCA for settling early, and Finma said it was “substantially assisted by the thoroughness of UBS’s internal investigation.”
Citigroup Inc., Deutsche Bank AG, Barclays Plc and UBS are the four biggest foreign-exchange dealers in the world, according to a survey by Euromoney Institutional Investor Plc.
Bill Holter’s important message to us all:
(courtesy Bill Holter/Miles Franklin)
This past Thursday I was speaking with John Embry regarding the massive 80 ton sale of gold futures the day before in a tight 15 minute window. We talked about how egregious the suppression has become and the “scorched Earth” policy employed over the last couple of months. We both agreed this can only mean we are getting closer to something big (and very bad) happening very soon. The fact there is now no longer even any effort to “hide” the suppressive actions, wreaks of desperation. We both see this as a major “tell” and the further down the rabbit hole the markets are pushed, the closer we are to the system outright breaking. John and I over the years have agreed on so much and disagreed on so little, we seem to be “brothers from two different mothers”. Often times he will write something or vice versa and the other then needs to do a little bit of a re write so it doesn’t come across as plagiarized. I tell you this because when we spoke last Thursday, we almost simultaneously said “I’m going to write Happy Thanksgiving this week because this is probably the very last ‘normal’ one of our lifetimes”.
And now for the important paper stories for today:
Early Wednesday morning trading from Europe/Asia
1. Stocks mainly up on major Asian bourses with a higher yen value rising to 117.70
2 Nikkei down 24 points or 0.14%
3. Europe stocks all up (except Spain /Euro rises/ USA dollar index down at 87.92.
3b Japan 10 year yield at .44% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 117.70
3c Nikkei now above 17,000
3fOil: WTI 73.93 Brent: 78.32 /all eyes are focusing on oil prices. A drop to the mid 60′s would cause major defaults.
3g/ Gold up/yen up; yen just above 118 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 China set to offer stimulus to its struggling economy
3k Ferguson (St Louis) in turmoil after no indictment on grand jury
3l: USA 30 year bond rate drops below 3.00%
3m Gold at $1198.00 dollars/ Silver: $16.60
3n Bond yields plummet in European periphery/Spain’s 10 year bond yield at 1.966% , the lowest in 200 years.
4. USA 10 yr treasury bond at 2.25% early this morning.
5. Details: Ransquawk, Bloomberg/Deutsceh bank Jim Reid
(courtesy zero hedge/your early morning trading from Asia and Europe)
“Failed” Bund Auction At Record Low Yield And All Other Key Overnight Events
While there has been no global economic outlook cut today, or no further pre-revision hints of “decoupling” by the apartchiks at the US Bureau of Economic Analysis, both European and US equities are pointing at a higher open, because – you guessed it – there were more “suggestions” of “imminent” QE by a central bank, in this case it was again ECB’s Constancio dropping further hints over a potential ECB QE programme, something the ECB has become the undisputed world champion in.
To wit: ECB will “consider buying other assets, including sovereign bonds in the secondary market,” if the pace of evolution of its balance-sheet expansion judged not in line with expectations, Vice President Vitor Constancio says in text of speech in London. “In particular, during the first quarter of next year we will be able to gauge better” the impact of current stimulus. Further asset purchases “would be a pure monetary policy decision, buying accordingly to our capital key, within our mandate and our legal competence.” Sovereign QE transmission channels include “signaling and influencing inflation expectations, exploring spill-overs resulting from investors using the cash received to buy other assets, including foreign assets with influence on the exchange rate,” and “increasing credit to the real economy.”
What Constancio did not say is that while private QE, the type the ECB has been engaging in until now, is perfectly legal by the European framework, public QE has been repeatedly frowned upon by Germany and various constitutional courts, not to mention Article 123. But for now every ECB bluff succeeds in pushing both stocks higher and bond yields lower.
In fact, the constant ECB jawboning, and relentless central bank interventions over the past 6 years, led to this:
- GERMANY SELLS 10-YEAR BUNDS AT RECORD-LOW YIELD OF 0.74%
The punchline: this was another technically “failed” auction as it was uncovered, the 10th of the year, as there was not enough investor demand at this low yield, and so the Buba had to retain a whopping 18.8% – the most since May – with just €3.250Bn of the €4Bn target sold, after receiving €3.67Bn in bids.
But while the central bank domination of all capital markets is well-known, the week’s biggest event, the OPEC meeting, got a second glass of cold water after Russia yesterday failed to agree on a production cut, when Saudi Arabian Oil Minister Ali Al-Naimi tells reporters in Vienna, before tomorrow’s OPEC meeting that “No one should cut and mkt will stabilize itself.” What’s worse, the Saudi turned the tables on the US itself: “Why Saudi Arabia should cut? The U.S. is a big producer too now. Should they cut?” Well, it isn’t an OPEC member. But it’s good to see that Kerry’s “secret” agreement with the Saudis to crush Russia has backfired so spectacularly.
European equities trade mostly in the green in what has been a relatively choppy session so far. European stocks were provided some reprieve in the early stages of trade after EU’s Juncker said the EUR 315bln value for the EU’s investment programme is not an upper level and they could go beyond that level if investment fund works. However, this upside was relatively short-lived with a lack of further notable newsflow and participants seemingly shrugging off the latest ECB rhetoric with ECB’s Constancio saying the central bank may consider sovereign bond buying in Q1 of 2015. On a sector specific basis, utilities lead the way, with RWE (+3.8%) the notable outperformer amid expectations the Co. will maintain its dividend, while energy names drag stocks lower as hopes of a potential OPEC cut continue to abate. Elsewhere, despite coming off their best levels, T-notes edged higher throughout European trade supported by positive month end flows and solid US auctions this week ahead of the final 7yr offering.
Asian markets are somewhat mixed this morning although Chinese equities continue to extend their gains into year end, this is despite a fairly subdued consumer sentiment print in the region this morning (second lowest reading since September 2011, the lowest being last month). Indeed the Shanghai and Shenzhen Composite are up +0.6% and +0.2% overnight which puts them at around +22% and +32% this year on a local currency basis. Relative to other key regional bourses, the China rally has also placed it well ahead of most of the region YTD. Elsewhere in 2014 we have the Hang Seng (+2.4%), Nikkei (+6.8%), KOSPI (-1.4%), ASX 200 (+0.6%) and the Jakarta Composite (+19.6%). The winner so far though is India’s Sensex (+33.9%). Credit markets are a tad softer this morning with IG spreads generically 1-2bp wider in Asia as there’s little sign that supply is easing into December.
And while trading desks may be empty on the east coast as a result of a mini Nor’easter slamming the seaboard with several inches of snow, and volumes will be beyond abysmal – something which assures a new all time high close – there is an Olympic amount of eco data on the US docket: the highlight will likely be the durable goods report for October which should provide an update on the current state of quarterly capital spending. Elsewhere we will also keep an eye on personal consumption data as well as the core PCE deflator which is expected to increase 0.1%. Finally we will round off with the jobless claims data (which are outside the survey period for next week’s payrolls), University of Michigan confidence and new home sales. So plenty to keep an eye on throughout the day.
European shares stay higher though off intraday highs with the utilities and telco sectors outperforming and construction, travel & leisure underperforming. Saudi oil minister says no producer should cut output, oil will stabilize. The German and Dutch markets are the best- performing larger bourses, Swedish the worst. The euro is weaker against the dollar. Japanese 10yr bond yields fall; Greek yields increase. Commodities gain, with nickel, silver underperforming and wheat outperforming. U.S. Chicago purchasing manager, jobless claims, mortgage applications, Michigan confidence, new home sales, durable goods orders, pending home sales, personal income, personal spending due later.
- S&P 500 futures up 0.1% to 2069.4
- Stoxx 600 up 0.2% to 346.9
- US 10Yr yield up 0bps to 2.26%
- German 10Yr yield little changed at 0.75%
- MSCI Asia Pacific up 0.3% to 141.1
- Gold spot down 0.4% to $1196.1/oz
Bulletin Headline Summary from RanSquawk and Bloomberg
- European stocks enter the North American open in the green in what has been a relatively mixed session, while ECB’s Constancio drops further hints over a potential ECB QE programme.
- Energy prices ebb lower as the latest rhetoric from Saudi Arabia indicates that a supply cut tomorrow is increasingly unlikely.
- Looking ahead, today’s session sees a raft of tier 1 US data points with durable good, weekly jobs, personal income, PCE deflator, Chicago PMI, Univ. of Michigan, pending & new home sales, DoE inventories, and the EIA natural gas storage chance all due for release
- Treasuries steady before week’s auctions conclude with $29b 7Y notes; WI yield 1.980% vs 2.018% in October.
- 10Y and 30Y yields yesterday broke out of ranges in place since late Oct. after strong demand for 5Y auction, including indirect award that was second-highest on record
- U.S. bond markets closed for Thanksgiving tomorrow, followed by early close on Friday
- ECB will consider buying sovereign debt proportional to the size of each euro member’s economy if current stimulus proves insufficient, ECB Vice President Vitor Constancio said
- Germany’s borrowing costs fell to a record low at an auction of 10-year bunds; yields on euro zone bonds from Austria to Spain touched all-time lows yday
- Even if the ECB clears all the hurdles to enact a government- bond buying program, there will be one final obstacle: finding motivated sellers, as banks would earn less from the cash proceeds than from keeping euro-area sovereign debt, according to HSBC
- Democrats made a mistake by passing Obama’s health-care law in 2010 instead of first focusing more directly on helping the middle class, third-ranking U.S. Senate Democrat Charles Schumer said
- Obama’s threatened veto of a $400b-plus tax-break bill exposed a widening fault line within the Democratic Party
- The Justice Department is unlikely to be able to file federal charges in the shooting death of a black teenager in Missouri by a white police officer, according to former U.S. prosecutors, an outcome that is sure to frustrate civil- rights leaders and protesters
- Saudi Arabia’s oil minister said crude prices will stabilize while the UAE said OPEC will do what it takes to balance the market; Angola predicted the 12-nation group will reach a consensus when it meets tomorrow
- Sovereign yields mostly lower. Asian and European stocks mostly higher; U.S. equity-index futures gain. Brent crude gains, gold and copper lower
Overnight was relatively subdued with USD/JPY running into resistance at the 118.00 handle, with Japanese exporters also said to be on the offer. Furthermore, AUD staged a modest rebound off its 4yr lows overnight, however, these modest gains were erased during the European session after AUD/NZD moved below its 200DMA and the 1.0900 handle after triggering stops. This subsequently strengthened EUR/AUD alongside the comments from Juncker which provided EUR/USD with a modest boost. Elsewhere, GBP was relatively unphased by the second reading of Q3 UK GDP which came in-line. Furthermore, despite UK net trade contribution cutting 0.5pts off Q3 GDP, the services came in at its highest level since March.
In the commodity complex, WTI and Brent crude futures have ebbed lower as a supply cut announcement by OPEC tomorrow appears to be increasingly unlikely, with the more likely outcome to be that Saudi will urge member nations to stick more rigidly to the existing ceiling. This sentiment was further enhanced by comments from the Saudi oil minister who said Saudi, the US and others should not cut output. In metals markets, price action has been relatively tentative despite a data print error which showed a USD 250 rise in spot gold, with participants now looking ahead to key risk events.
* * *
DB’s Jim Reid concludes the overnight recap
Ahead of thanksgiving it almost feels like we’ll get a whole month of data today as Thanksgiving squeezes all the remainder of the week’s US data into today. We’ll go through it at the end but the US growth bulls got a boost yesterday from the latest Q3 GDP numbers, with the print being revised up to +3.9% from +3.5% previously. With regards to the details, our US colleagues noted that the mix in the revisions was very supportive of current quarter growth, which they continue to peg at 4.2%. Both consumption (revised up 40bps) and nonresidential fixed investment (revised up 160bps) were notable takeaways and elsewhere improving demand, as evidenced by final sales to private domestic purchasers which grew 3% last quarter and is up 3% over the last year – means that production has to rise meaningfully further. There will be a final revision to the print next month which they continue to see the possibility of it being revised up to over 4%.
Although markets were initially buoyed by the reading, a raft of data releases later in the day dampened sentiment somewhat and saw the S&P 500 pare back those initial gains to close -0.12% at the end of play. Energy stocks (-1.60%) were the notable laggard yesterday driven by another weak day in Oil. Brent and WTI both fell around 1.7% to close at $78.3/bbl and $74.1/bbl, respectively ahead of what is building up to be a key OPEC meeting tomorrow. Officials from Venezuela, Saudi Arabia, Mexico and Russia met during a pre-OPEC meeting yesterday but failed to reach consensus around supply amid weakening demand. The head of Rosneft was even quoted to have said that the current level of prices was not ‘critical’ (FT). Venezuelan Foreign Minister Rafael Ramirez told reporters after the talks that while all sides agreed current prices were “not good” for producing countries, no coordinated output cuts were reached yesterday. For the record Energy is the only S&P 500 sector that is in negative territory for the year (-3.2%). Health Care (+23.5%), IT (+18.7%) and Utilities (+18.5%) are the darlings this year.
Before we move on, DB’s Michael Lewis commented in his piece yesterday that although uncertainty exists around coordinated agreement and timing, an examination of oil market fundamentals suggests that a coordinated cut in OPEC production is inevitable based on supply and demand dynamics. Michael comments that the supply overhang which has emerged this year will not be reversed any time soon and that the current OPEC production implies the current surplus of 0.6mm/d expanding to 1.0mmb/d in 2015. He notes that a quota reduction of 1.0 mmb/d would be necessary to restore confidence to the market and help stabilise prices. He also mentions that over the past 20 years, an initial quota reduction by OPEC has averaged 1.1mmb/d and that outside of recessionary environments, OPEC actions have been successful in that prices have typically rallied by 8.5% over the subsequent three month period (implying a move back towards $87/bbl by Feb 2015 if history repeats).
Whilst Oil was a key driver yesterday the market also seemed particularly disappointed by a softer consumer conference reading, which fell to 88.7 from 94.1 in October and also below consensus of 96. In other releases, the Case-Shiller house price index recorded the first increase in 5 months in September (+0.34% v +0.30% expected). Elsewhere, the Richmond Fed manufacturing index fell short of consensus in November (4 v 16) which also marks its lowest reading since June. Treasuries had a strong day with the 10yr benchmark rallying some 5bps lower to close at 2.257%. A strong outcome at the US$35bn 5yr auction yesterday likely helped matters which saw the strongest foreign demand for the notes since December 2004.
Staying on core rates it is also worth noting that 10yr Bund yields went through the October 15th’s flight to quality all time closing lows of 0.756%. Indeed the 10yr Bund yield fell by 3bp to 0.748% yesterday. Its an impressive achievement as when we were at these levels in the stress of 6 weeks ago, Crossover closed at 401bp (now 334bp) and Stoxx 600 at 311 (now 346) so European Government bonds and even Bunds just keep on performing even with risk-on back in vogue. Obviously the prospect of ECB buying is increasingly being priced in. One thing that makes us slightly nervous of this trade continuing is that the experience of the US was that Treasuries tended to rally most between bouts of QE and not during. So will it be a case of “buy the rumour sell the fact” if and when QE happens? However Japan’s mega QE and still ultra low yields is a cautionary tale that the US experience isn’t necessarily a fool proof template but maybe the BoJ are buying far more of the JGB market than their peers thus really completely distorting the price. So there are a number of things to consider but it’s not a slam dunk that bunds will continue to be strong after QE.
In fact in the new ‘Koncept’ magazine from DB research yesterday there was an interesting article about how Germany might actually overheat going forward with the danger being that loose monetary policy becomes entrenched in order to help weaker Eurozone members. If they are right is 0.75% really the correct level for 10 year bunds?
Just wrapping up markets in Europe yesterday, Q3 GDP in Germany came in line with expectations of +0.1% for the quarter whilst we also noted a modest pickup in manufacturing (99 vs. 97 previously) and business (94 vs. 91 previously) confidence. Finally, there was further ECB chatter yesterday. This time coming from board member Noyer, who in contrast to comments from other members yesterday, was quoted on Bloomberg as saying that the ECB’s statement on balance sheet ‘should certainly be seen as a clear indication that further policy action, if necessary, will not be inhibited by any overall quantitative restraint or limit’.
Before we run over today’s calendar, Asian markets are somewhat mixed this morning although Chinese equities continue to extend their gains into year end, this is despite a fairly subdued consumer sentiment print in the region this morning (second lowest reading since September 2011, the lowest being last month). Indeed the Shanghai and Shenzhen Composite are up +0.6% and +0.2% overnight which puts them at around +22% and +32% this year on a local currency basis. Relative to other key regional bourses, the China rally has also placed it well ahead of most of the region YTD. Elsewhere in 2014 we have the Hang Seng (+2.4%), Nikkei (+6.8%), KOSPI (-1.4%), ASX 200 (+0.6%) and the Jakarta Composite (+19.6%). The winner so far though is India’s Sensex (+33.9%). Credit markets are a tad softer this morning with IG spreads generically 1-2bp wider in Asia as there’s little sign that supply is easing into December.
Looking at the day ahead, we kick off this morning in the UK with the second reading of Q3 GDP (expected at +0.7% qoq) and CBI reported sales for November. Before this in Europe, we will get consumer confidence readings out of both France and Italy as well as import price index data out of Germany. As well as this, the ECB’s Constancio will be speaking today. In the US the highlight will likely be the durable goods report for October which should provide an update on the current state of quarterly capital spending. Elsewhere we will also keep an eye on personal consumption data as well as the core PCE deflator which is expected to increase 0.1%. Finally we will round off with the jobless claims data (which are outside the survey period for next week’s payrolls), University of Michigan confidence and new home sales. So plenty to keep an eye on throughout the day.
We all know that the USA orchestrated the lowering of oil prices to crush Russia. The oil prices have now lowered to around $73.75 per barrel and that is hurting the shale/fracking extraction as many have costs of around $80.00 per barrel. If prices break down below 65.00 dollars per barrel many of the shale operators will go bust as they all have high yielding debt and cannot support themselves with lower oil prices
(courtesy zero hedge)
US “Secret” Deal With Saudis Backfires After Oil Minister Says US Should Cut First
Who could have seen this coming? With oil prices holding at 4-year lows, heavily pressuring around half of US shale production economics, the “secret” US deal (see here and here) with Saudi Arabia to crush Russia via oil over-supply in a slumping demand world appears to be backfiring rapidly for John Kerry and his strategery team. Capable of withstanding considerably lower prices for longer, Saudi Arabia’s oil minister Ali al-Naimi proclaimed “no one should cut production and the market will stabilize itself,” adding rather ominously (for the US economy and HY default rates), “Why should Saudi Arabia cut? The U.S. is a big producer too now. Should they cut?”
OPEC leader Saudi Arabia signaled on Wednesday it was unlikely to push for a major change in oil output at the producer group’s meeting this week, a day after Russia refused to cooperate in any production cut. Saudi Oil Minister Ali al-Naimi said he expected the oil market “to stabilize itself eventually.”
Iranian Oil Minister Bijan Zangeneh said some OPEC members, although not Iran itself, were gearing up for a battle over market share and insisted that non-OPEC producers needed to participate in any OPEC-led output cut.
“The most important thing for all of us is the unity and solidarity of OPEC, and in this situation I believe we need to have the contribution of non-OPEC producers for managing the market,” Zangeneh told reporters.
“Some OPEC members believe that this is the time where we need to defend market share … All the experts in the market believe we have oversupply in the market and next year we will have more oversupply,” he added.
Which led the Saudi Minister to comment…
“Why should Saudi Arabia cut? The U.S. is a big producer too now. Should they cut?”
* * *
And the reaction not good – 4-year lows
* * *
Here’s who faces problems…
* * *
With prices expected to drop to $60 on no cut, maybe the “unequivocally
good” news for the US economy from lower oil prices should be rethink.
You cannot have the stock market advance and then have the 30 yr bond yield below 3% .It just does not jive!! It closed today at 2.93%
(courtesy zero hedge)
“This Is Madness”
Despite near-record Treasury short speculative-positioning, 30Y Treasury yields just hit a 2.93% handle – in line with the yield at the Bullard lows in mid-October. The S&P 500 is 200 points higher…Discuss…
The S&P 500 is now trading 200 points rich to Treasury markets (or 30Y Treasury yields should be 55bps higher – despite world GDP expectations plunging as fast as oil prices)
As the S&P 500 has now closed above it 5-day moving-average for 28 days (today will be 29)…
This has never – ever – happened before in US equity markets.
Eur/USA 1.2461 down .0018
USA/JAPAN YEN 117.70 down .100
GBP/USA 1.5765 up .0047
USA/CAN 1.1268 up .0019
This morning in Europe, the euro down, trading now well above the 1.24 level at 1.2461 as Europe reacts to deflation and announcements of massive stimulation. In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. And now he wishes to give gift cards to poor people in order to spend. The yen continues to reverse like a yoyo as on Monday, Japan’s finance minister stated that the yen is fallen faster than it should. It finally settled in Japan up 10 basis points and settling below the 118 barrier to 117.70 yen to the dollar (heading towards 120). The pound is slightly up this morning as it now trades well below the 1.57 level at 1.5765.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation). The Canadian dollar is down again today trading at 1.1268 to the dollar.
Early Wednesday morning USA 10 year bond yield: 2.25% !!! flat in basis points from Tuesday night/
USA dollar index early Wednesday morning: 87.90 down 2 cents from Tuesday’s close
The NIKKEI: Wednesday morning down 24 points or 0.14% (Abe’s helicopter route to provide free cash)
Trading from Europe and Asia:
1. Europe all in the green except Spain
2/ Asian bourses mostly in the green except Japan / Chinese bourses: Hang Sang in the green, Shanghai in the green, Australia in the green: /Nikkei (Japan) red/India’s Sensex in the green/
Gold early morning trading: $1198.00
Closing Portuguese 10 year bond yield: 2.92% par in basis points on the day
Closing Japanese 10 year bond yield: .44% down 1 in basis points from Tuesday
Your closing Spanish 10 year government bond Wednesday/ up 6 in basis points in yield from Tuesday night.
Spanish 10 year bond yield: 1.98% !!!!!!
Your Tuesday closing Italian 10 year bond yield: 2.16% up 2 in basis points:
trading 18 basis points higher than Spain:
IMPORTANT CLOSES FOR TODAY
Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond:
Euro/USA: 1.2512 up .0012
USA/Japan: 117.80 flat
Great Britain/USA: 1.5795 up .0077
USA/Canada: 1.1235 down .0014
The euro rose in value during this afternoon’s session, and it is up by closing time , finishing just above the 1.25 level to 1.2512. The yen was up during the afternoon session, and it was flat in basis points on the day closing below the 118 cross at 117.80. The British pound gained more lost ground during the afternoon session and it was up on the day closing at 1.5795. The Canadian dollar was well up in the afternoon and was up on the day at 1.1235 to the dollar.
Currency wars at their finest today.
Your closing USA dollar index: 87.62 down 30 cents from Tuesday.
your 10 year USA bond yield , down 1 in basis points on the day: 2.24%!!!! (and the Dow is up???)
European and Dow Jones stock index closes:
England FTSE down 1.97 or 0.03%
Paris CAC down 8.89 or 0.20%
German Dax up 54.35 or 0.55%
Spain’s Ibex down 52.60 or 0.49%
Italian FTSE-MIB down 71.41 or 0.36%
The Dow: up 12.75 or .07%
Nasdaq; up 25.20 or 0.53%
OIL: WTI 73.71 !!!!!!!
And now for your big USA stories
Today’s NY trading:
Stocks Close At Recordest Highs Ensuring ‘Confident’ Black Friday, Despite Macro Massacre
The S&P 500 closed at new record-er-est highs (a record 29th day above the 5DMA) providing just the right amount of confidence-inspiring ‘wealth creation’ to ensure you spend, spend, spend this weekend all those gas price savings (despite 9 of 9 macro data misses today). Dow and Trannies underperformed today as Nasdaq surged on AAPL strength. The USDollar fell for the 3rd day (first time in a month) and Treasury yields tumbled (down 5-8bps on the week) near 18 month closing lows. VIX traded briefly with an 11 handle and lost its inversion (1st day in 6). Gold prices flatlined for the 3rd day (as EURCHF fell) ahead of the Swiss gold referendum this weekend. Oil tumbled to fresh 4-year lows as OPEC hinted at no cuts and copper slipped to fresh 4 year closing lows. Late-day shenanigans sent stocks ripping higher… in a totally rational manner.Turkey prices are at $1.67/lb and have been remarkably stable over the past few years.
- Mortgage Applications -4.3%
- Durable Goods Ex-Transports MISS -0.9% vs +0.5% Exp
- Initial Jobless Claims MISS 313k vs 288k Exp
- Personal Income MISS +0.2% vs +0.4% Exp
- Personal Spending MISS +0.2% vs +0.3% Exp
- Chicago PMI MISS 60.8 vs 63.0 Exp
- UMich Confidence MISS 88.8 vs 90.0 Exp
- Pending Home Sale MISS -1.1% vs +0.5% Exp
- New Home Sales MISS +0.7% vs +0.8% Exp
Which explains this..Another Death Cross… right?
What’s funny is how fucking predictable it has all become…
Rather oddly, S&P 500 e-mini liquidty was at its highest point since the Treasury yield flash crash with an hour to go… (h/t @NanexLLC)
Recorder-est 29th day in a row closing above its 5-day moving-average
On the day, Nasdaq won thanks to AAPL…
Thanks to a 3Sigma above VWAP ramp
Thanks to the ubiquitous VIX slam at 330ET
As AAPL passed $700 billion market cap and saw some chunky block orders in the late-day meltup…
But that was not enough – S&P futures melted up after the bell (after dumping into at the cash close) to intraday record highs…
Thanks to VIX being slammed…
On the week, the Dow (and less so the S&P) have flatlined as high beta muppetry surged…
Since the Bullard Lows, Trannies are up almost 20%…
The USD fell for the 3rd day in a row (for the first time in a month)
Treasury yields continue to tumble (down 5-8bps on the week) with 30Y closing below 2.95% – just shy of the lowest close since May 2013 (cough S&P at record highs cough)
Which means as a reminder…
as the week follows the same path…
Commodities… gold flat ahead of Swiss gold vote, copper and oil slipped to new 4-year closing lows…
Bonus Chart: Turkey prices have been oddly stable pre-Thanksgiving for the last few years (though down this year from 2013)
Bonus Bonus Chart: SDRL was monkey-hammered as the HY Shale Oil play canary in the coalmine just died…
Initial jobless claims rises now to above 300,000 which is at 3 month highs. This is the biggest miss in the last 11 months. The USA is faltering;
(courtesy zero hedge)
Initial Jobless Claims Spikes Above 300k To 3-Month Highs, Biggest Miss In 11 Months
Having trended gradually higher for the last 5 weeks (missing expectations for 4 of them), initial jobless claims printed an uncomfortable 313k (against expectations of a 288k print – the biggest miss in over 11 months) pushing to its worst level in 3 months. This is the biggest week-over-week rise in almost 4 months. Continuing claims hovers at 14-year lows and dropped this week to 2.316 million.
Perhaps worryingly, this rise in initial claims is considerably larger than the average shift for this time of year…
as Continuing Claims hits new 14-year lows
Durable orders drop the most. Cap expenditures the lowest since May.
Looks like the USA is faltering badly
(courtesy zero hedge)
Core Durable Orders Drop Most Since Polar Vortex, Core CapEx Lowest Since May
If yesterday the BEA provided the sugar high for Q3, with a GDP number that will be soon revised lower, then today’s economic barage has so far been a disaster, with both Initial Claims, Personal Income and Spending, and now core Durable goods and capital goods shipments and orders missing across the board.
While the headline Durable Goods number printed up 0.4%…
… this was entirely thanks to the usual volatile filler: transports. Excluding these, the Durable Goods ex-transports number dropped by a whopping -0.9%, far below the 0.5% increase expected, and the biggest drop since the December -1.8% tumble which was blamed on the Polar Vortex. It is unclear what the October tumble will be blamed on: the Ebola scare? The Bullard Bottom?
Worse, the long-awaited CapEx recovery will not be materializing one more month, after Non-defense Capital Goods orders ex-aircraft declined for a second month in a row, dropping -1.3%, the same drop as the previous month, suggesting that – as everyone knows by now – companies will be far more focused on spending on buybacks than on capex for quarters to come. In fact, the number was bad, at only $71.2 billion in orders, this was the lowest print since May.
UMich Confidence Misses By Most In 13 Months
Submitted by Tyler Durden on 11/26/2014 10:04 -0500
Following the Conference Board’s tumble in confidence, Bloomberg’s consumer comfort index surged this morning (rather aberrationally) to highs not seen since 2007. However, while UMich consumer confidence rose from last month to its highest since July 2007, it missed expectations by the most since October 2013. It would seem the survey respondents in UMich and Bloomberg confidence are stockholders, and Conference Board respondents are not… UMich data is dominated by a surge in current conditions with the outlook flat.
Rise but biggest miss since Oct 2013..
As confidence data diverge
The big Chicago PMI suffers a huge drop.
This is a nation wide manufacturing index:
(courtesy Chicago PMI/zero hedge)
Chicago PMI Suffers 4th Biggest Drop Since Lehman
Having surged to last October’s highs last month, Chicago PMI tumbled back to mediocrity in November, missing extrapolatedly exuberant expecatations by the most since July. As 60.8 (against 63.0 expectations) this is barely above the levels of Q1’s polar vortex as New Orders, Employment, and Production all fell (with only 2 components rising). This is the 4th largest MoM drop since Lehman but MNI remains confident that “the trend remains positive…”
Forecast range 60 – 68.9 from 46 economists surveyed
* Prices Paid rose compared to last month
* New Orders fell compared to last month
* Employment fell compared to last month
* Inventory rose compared to last month
* Supplier Deliveries fell compared to last month
* Production fell compared to last month
* Order Backlogs fell compared to last month
* Business activity has been positve for 12 months over the past year.
* Number of Components Rising: 2
Commenting on the Chicago Report, Philip Uglow, Chief Economist of MNI Indicators said, “Following the sharp rise in the Barometer to a one year high in October it wasn’t too surprising to see activity ease somewhat in November. Overall the trend remains firm and activity looks set to pick up in Q4 from Q3.“
* * *
Dave Kranzler of IRD talks about the poor homes sales numbers out today:
(courtesy Dave Kranzler/IRD)
Home Sales Pimp Larry Yun Caught In A Blatant Lie
Both new home sales and pending home sales for October missed Wall Street estimates and were overall disappointing. Pending home sales actually dropped. I’ll have more on this either tonight or tomorrow.
But I had to publicize the fact that NAR Chief Economist, Larry Yun, has lied about the data. With regard to an attempt to put positive “spin” on a bad pending home sales report, Yun said this: “…buyers entering the market this autumn are being lured by the increase in homes for sale and less competition from investors paying cash.”
Yun is trying to explain that less buyers are paying cash and that is stimulating mortgage-financed sales. Nothwithstanding the FACT that mortgage purchase applications are in a tailspin, here’s the cash vs. mortgage data for October’s existing home sales – direct from Yun’s report released last week: “All-cash sales were 27 percent of transactions in October, up from 24 percent in September…Individual investors, who account for many cash sales, purchased 15 percent of homes in October, up from 14 percent last month.” Yun’s spin on the negative pending home sales report is therefore a lie.
As I detailed in this article – LINK – the all-cash flipper purchases spiked up in October. The 1st time buyer who requires a mortgage stayed constant, which means the move-up buyer segment and the distressed buy-to-rent-to-sell segment dropped.
Larry, Sir Walter Scott has a comment for you: “Oh what a tangled web weave, when first we practice to deceive.”
I will leave you with Bill Holter’s discussion with Greg Hunter in case you missed it above:
(courtesy Greg Hunter/USAWatchdog/Bill Holter)
Gold is Kryptonite to the Dollar-Bill HolterBy Greg Hunter On November 26, 2014
By Greg Hunter’s USAWatchdog.com
Financial writer Bill Holter says the players in the gold markets are fearful. Why? Holter says, “The GOFO rates, or gold forward rates, in London are negative. They should never be negative, and they are more negative now than any time since 2001. That shows extreme tightness in the metals market. To me, it shows mistrust. It shows that people are saying I want my gold now. I don’t want gold in the future, I want it now. Negative GOFO rates should never happen.” Holter also says that the COMEX market is what he calls “corner-able.”
How much would it take to buy the entire deliverable gold and silver inventory? Holter says, “The way I would put it is it’s a ham sandwich without the ham or the cheese. You are talking about $1 billion would be enough to clean out COMEX gold registered category, and another billion dollars would clean out the silver inventory. It’s nothing. $2 billion dollars would clean the shelves dry.”
With reported fines being levied on banks for gold price rigging, it is clear the gold market is manipulated. Why manipulate prices of the yellow metal downward? Holter says, “Gold is kryptonite to the dollar. The reason why gold and silver prices are manipulated down is to hold up the value of the dollar. And thus, the value to the Treasury market which keeps interest rates down. It allows us to keep interest rates lower than we normally could.”
What would happen if Russia or China spent $2 billion to clean out COMEX? Holter says, “Russia could do that and China could do that. We would see the entire system implode. The question is do they want to do that. This whole scenario is about bleeding gold from the west. It’s about taking gold from the west and transporting it to the east. Do they want to blow up the game before they got their fill? Do they want to blow up the game before we run out of gold? No, they don’t. Is it this expiration that they are going to blow it up? I don’t know, but I do know the COMEX is killable. The question is have we run out of gold to deliver to China and also Russia?”
Holter says one of the overarching issues in global finance comes down to trust. Holter explains, “The Russians, Chinese and Indians are all acquiring gold. We have a Swiss referendum coming on Sunday. They want to repatriate their gold. This is about central banks not trusting central banks. Interesting enough, the leading party in the polls in France is talking about repatriating French gold. Why are there all these repatriations all of a sudden? The reason being is central banks are not trusting other central banks. It’s all about trust, and gold is trust. . . . It’s going to be the last man standing.”
Join Greg Hunter as he goes One-on-One with gold expert Bill Holter of Miles Franklin.
(There is much more in the video interview.)
That is all for today
I wish all our American friends a very happy
I will see you Friday night
bye for now