dec 3/GLD constant again/silver loses 2.73 million oz/gold and silver rise/Koos Jansen reveals that European central banks desperately trying to convert unallocated gold into allocated gold/Bill Holter comments on the 3 outside day reversals in gold/silver/Ruble falters badly/Russian 10 year bond yield hovers near 11%/

My website is now ready     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: $1208.50. up $9.30
Silver: $16.36  down $0.05

In the access market 5:15 pm

Gold $1210.00
silver $16.43

 

 

The gold comex today had a poor delivery  day, registering 8   notices served for 800 oz.  Silver comex registered 110 notices for 550,000 oz.

 

 

A few months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 246.30 tonnes for a loss of 57 tonnes over that period.

 

 

In silver, the open interest fell by a huge 2296 contracts with Tuesday’s loss in price of $0.14.  Looks like some of the shorts are vacating the arena. For the past year, we have been witnessing massive 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.  The total silver OI still  remains relatively high with today’s reading  at 148,422 contracts. The big December silver OI contract lowered by 198 contracts down to 728 contracts.

 

 

In gold we had a huge loss in OI with the loss in price of gold yesterday to the tune of $18.80.  The total comex gold  OI rests tonight  at 368,121  for a  loss  of 3908 contracts. The December gold OI rests tonight at 2249 contracts losing 1360 contracts.

 

 

TRADING OF GOLD AND SILVER TODAY

GOLD

Gold straddled the 1200 dollar mark at midnight as the bankers were adamant to not let gold pass this important mark in the sand.  Obviously the bankers have huge toxic derivatives underwritten at these levels.

However by 3 am (London first fix) gold traded at $1208.40.  Then immediately the bankers went to work knocking the metal back down to exactly 1200 dollars again.  It then rose to $1213.00 by the 2nd London fix at 10 am and then it settled as indicated above (comex closing and access market close)

 

 

 

Silver

Silver was much more volatile and the bankers were intent on knocking this precious metal down despite gold being higher  Generally this is a signal that an attack will be coming forth tomorrow.

 

At 12 midnight, silver was trading at $16.29.  By London’s first fix it hit $16.41.  However instead of faltering it rose to $16.55 by 4 am and that is when the bankers went to work.  They knocked silver down to $16.43 by comex opening time upon which  silver again rebounded to $16.56 by the 2nd London fix.  Then it was downhill (and opposite gold) finishing as indicated above.  So watch for another attack from our criminal bankers.

 

 

Today, we had no change in tonnage of gold Inventory at the GLD / inventory rests tonight at  720.02 tonnes.

In silver, we had a huge decrease in silver inventory of 2.73 million oz:

SLV’s inventory  rests tonight at 347.427 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 moved closer to the positive but still in backwardation!!

Now, all the months of GOFO rates( one, two, three  six month GOFO remain negative but moved closer to the positive needle.  They must have found a few bars to lease.  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.

 

Dec 3 2014

1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate

-2850.%         – 217500  -%        –16000   -%   –. 03  .%          + 065%

Dec 2 2014:

-..3825%           -.2800%       -,2050 %         -.04%    +.035%

 

 

end

 

 

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  again  by 3,908 contracts from 372,025  all the way down to 368,121  with gold down by $18.80 yesterday (at the comex close). We are now into the  big December contract month where the number of OI standing for the gold metal registers 2249 contracts for a loss of 1360 contracts.  We had 1150 delivery notices yesterday so we lost 210 contracts or   21,000 oz of gold standing for the December contract month.  The non active January contract month fell by 160 contracts down to 666.  The next big delivery month is February and here the OI fell to 232,811 contracts for a loss of 3467 contracts. The  estimated volume today was poor at 76,187 .  The confirmed volume yesterday was fair at 180,780 with the help of high frequency traders.    We  had 8  notices filed for 800 oz .

And now for the wild silver comex results.    Silver OI  surprisingly fell by 2296   contracts from  150,718 down to 148,422   as  silver was down by $0.14 yesterday.   I do believe we lost a few more bankers.    The big December active contract month saw it’s OI fall by 198  contracts down to 728 contracts. We had 174 notices served upon for Tuesday’s delivery.  Thus we lost 24 contracts or  120,000 oz will not stand.  The  estimated volume today was poor at 21,173.  The confirmed volume yesterday  was huge at 69,449. We also had 110 notices filed  today for 550,000 oz today.

December initial standings

 

Dec 3.2014

Gold

Ounces

Withdrawals from Dealers Inventory in oz nil
Withdrawals from Customer Inventory in oz 4524.725 oz (Manfra nd Scotia) including 3300.000 oz Scotia not divisible by 32.15
Deposits to the Dealer Inventory in oz nil oz
Deposits to the Customer Inventory, in oz 32, 000.000 oz HSBC???not divisible by 32.15
No of oz served (contracts) today 8 contracts(800  oz)
No of oz to be served (notices) 2241 contracts ( 224,100 oz)
Total monthly oz gold served (contracts) so far this month  1849 contracts  (184,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month

Total accumulative withdrawal of gold from the Customer inventory this month

 74,489.125  oz

Today, we had 0 dealer transactions

total dealer withdrawal:  nil   oz

we had 0 dealer deposits:

total dealer deposit:  nil oz

we had 2 customer withdrawal

i) Out of Manfra: 1224.725 oz

ii) Out of Scotia: 3300.000 oz  (not kilobars as not divisble by 32.15)

 

total customer withdrawal:  4524.725 oz

we had 1 customer deposit:

i) Into Scotia;  32,000.000 oz perfectly round number and not kilobars as not divisible by 32.15 oz

total customer deposits : 32,000.000 oz

We had 1 adjustments:

i) Out of HSBC:

We had 96.46 oz  ??? removed from the dealer HSBC and this landed into the customer account of HSBC. a touch over 3 kilobars!!

 

Total dealer inventory:  871,232.762 oz or 27.098 tonnes

Total gold inventory (dealer and customer) =  7.981 million oz. (246.30) tonnes)

Several weeks ago we had total gold inventory of 303 tonnes, so during this short time period 57 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 8 contracts  of  which 5 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 December contract month, we take the total number of notices filed for the month (1849) x 100 oz to which we add the difference between the OI for the front month of December (2249) – the number of gold notices filed today (8)  x 100 oz  =  the amount of gold oz standing for the December contract month.

Thus the  initial standings:

1849  (notices filed for the month x 100 oz + (2249) OI for November – 8 (# of notices filed today equals 409,000 oz  standing for the December contract month or 12.72 tonnes)

we lost 210 contracts 21,000 oz standing.

This initiates the month of December for gold.

And now for silver

Dec 3/2014:

 December silver: initial standings

Silver

Ounces

Withdrawals from Dealers Inventory 551,073.54 oz CNT
Withdrawals from Customer Inventory 1,262,003.37 oz(Delaware,Brinks,CNT,Scotia)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 601,057.1 oz (Delaware,JPM)
No of oz served (contracts) 110 contracts  (550,000 oz)
No of oz to be served (notices) 618 contracts (3,090,000 oz)
Total monthly oz silver served (contracts) 2415 contracts (12,075,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month  1,163,562.6  oz
Total accumulative withdrawal  of silver from the Customer inventory this month  1,264,984.6  oz

Today, we had 0 deposits into the dealer account:

 total dealer deposit: nil oz

we had 1 dealer withdrawal:

i) Out of CNT:  551,073.54 oz

total  dealer withdrawal: 551,073.54  oz

We had 4 customer withdrawal:

i) Out of Delaware:  1029.9 oz (one decimal)

ii) Out of Brinks:  600,072.55 oz

iii) Out of CNT:  600,000.55  oz

iv) out of Scotia:  60,900.37 oz

total customer withdrawal  1,262,003.37  oz

We had 2 customer deposits:

i) Into Delaware: 985.100 oz,  (one decimal)

ii) Into JPMorgan: 600,072.600 oz

total customer deposits: 601,057.100 oz   oz

we had 1 adjustment

i) Out of the CNT vault:

387,344.25 oz was adjusted out of the customer account and into the dealer account at CNT

Total dealer inventory:  64.535 million oz

Total of all silver inventory (dealer and customer)   176.763 million oz.

The total number of notices filed today is represented by 110 contracts or 550,000 oz.  To calculate the number of silver ounces that will stand for delivery in December, we take the total number of notices filed for the month (2415 ) x 5,000 oz to which we add the difference between the total OI for the front month of December (728) minus  (the number of notices filed today (110) x 5,000 oz =   the total number of silver oz standing so far in November.

Thus:  2415 contracts x 5000 oz  +  (728) OI for the November contract month – 110 (the number of notices filed today)  =15,165,000 oz of silver that will stand for delivery in December.

we lost 120,000  oz standing.

For those wishing to see data on the currencies and bourse closings you can see it on my site

athttp://www.harveyorgan.wordpress.com or http://www.harveyorganblog.com

 

 

end



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:

Dec 3 no change in tonnage/720.02 tonnes/

December 2/2014; wow!! we had a huge addition of 2.39 tonnes of gold /Inventory 720.02 tonnes

December 1.2014: no change in gold inventory at GLD

Nov 28.2014: a loss  in inventory of 1.19 tonnes/tonnage 717.63 tonnes

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.

 

Today, December 3  no change in inventory at GLD.

inventory: 720.03 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 :  720.03 tonnes.

 

 

end

 

 

And now for silver:

 

dec 3. we lost 2.73 million oz of silver/inventory 347.427 million oz and back where we were on Dec 1.2014.

 

dec 2 wow@!!@ a huge addition of 2.20 million oz of silver/inventory 350.158 million oz.

December 1: no change in inventory/347.954 million oz

Nov 28.2014: no change in inventory/347.954 million oz

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

 

December 3.2014 a huge loss 2.73 million oz brings it back to levels two days ago.

 

 

 

end

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 9.8% percent to NAV in usa funds and Negative   9.7% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold  61.6%

Percentage of fund in silver:37.90%

cash .5%


( December 3/2014)   

2. Sprott silver fund (PSLV): Premium to NAV  rises to positive 3.35% NAV (Dec 3/2014)  

3. Sprott gold fund (PHYS): premium to NAV  rises to negative -0.33% to NAV(Dec 3/2014) 

Note: Sprott silver trust back hugely into positive territory at 3.35%.

Sprott physical gold trust is back in negative territory at  -0.33%

Central fund of Canada’s is still in jail.

 

 

 

end

 

 

 

 

 

And now for your most important physical stories on gold and silver today:

 

 

Early gold trading from Europe early Wednesday morning:

London Property Bubble Primed To Burst – Consequences For UK Economy and Sterling

Published in Market Update  Precious Metals  on 3 December 2014

By Mark O’Byrne

The ongoing slump in oil prices looks set to take their toll on London’s “super prime” property markets with attendant consequences for the rest of the London property market. Foreign money that had been flooding into the UK from a whole array of international sources and parking in London real estate is drying up.


City AM

These sources included Chinese billionaires and U.S. beneficiaries of the Fed’s QE largesse and Russian and Middle-East energy tycoons.

Western sanctions on Russia have led to a shuddering hault to Russian money entering the UK.  Since Xi Jinping came to power in China in November 2012 there has been a crack-down on corruption in China and the amount of Chinese cash being funnelled through tax-havens and into London property has been greatly reduced. The Fed’s QE has come to an end, for now at least, so U.S. sources of capital have waned.

Now the plummeting oil price is leading to a drop in demand from wealthy Middle Eastern elites. Many Gulf States are having difficulty financing their social programs due to the very low price of oil. Control over their countries restless populations is becoming more tenuous. So providing “bread and circuses” is a higher priority than pet investment projects in the UK.

The loss of these investment flows to the UK is creating a perfect storm for a crash in “super prime” property.

According to a report from City AM – citing statistics from Halifax and Britain’s ONS – since 2009 certain sectors of the British property market have fallen by as much as 20% (most of Scotland and Wales and parts of northern and south-western England) while others (in pockets of central London) have risen by as much as 61%.

The median UK wage is £22,044. This sum of money would currently buy 2 square meters of real estate in the plushest London boroughs of Kensington or Chelsea. Spreading out from the centre to Brent, Merton, Greenwich or Waltham Forest the same sum will yield slightly more space at between 5 and 6 square meters. On the other end of the spectrum – in parts of Wales, such as Merthyr Tydfil, the median wage would acquire 24 meters squared.

Central London has generally seen a rise in prices of between 40% and 60% in the last six years. Southern England has mainly seen rises of between and 15% and 30%. Whereas south west England has seen declines of around 4% in the same timeframe – with West Devon losing 13% of it’s property values.

In Wales there have been modest declines in some areas (1 -5%) and more severe in others (down 10% in Swansea) with some others showing a rise in price. Most of northern England has seen declines in price or in some clusters such as around Manchester or York seeing slight rises.

The consequences of these high prices on the working people of Britain have been harsh. The Telegraph reports today that a person in their mid-twenties in the UK can expect to pay £66,800 in rent by the time they are thirty.

On Sunday night Channel 4 aired a documentary on the current bubble showing miserable properties with asking prices ten times greater than the median wage. The Guardian reports today that the “young” are moving out of London in droves.

Clearly, the average British worker is being squeezed just to put a roof over his head.

Today the Telegraph reports that, “Borrowing on credit cards and demand for personal loans increased by 6.4pc in October compared with a year earlier, according to the Bank of England, representing the fastest annual increase since July 2006.”

Sky news report that, “households with a single breadwinner spent more than they earned last year.”

The British taxpayer is mired in debt and struggling to make ends meet. So neither the British public nor foreign investors look likely to buoy the vastly overvalued London property market in the coming months.

It is worth remembering that many of the reasons cited for London’s extraordinary house price growth were also cited in Dublin prior to the crash.

A housing correction or crash will likely lead to more negative equity among London property buyers and the many British mortgage-holders who are struggling. The nascent recovery in the national UK property market would be snuffed out.

This may lead to defaults and further stress on the fragile banking system. It also has ramifications for sterling and UK gilts, both of which are likely to come under pressure.

As always, holding allocated and segregated gold as insurance is strongly advised, particularly to our UK clients.

Get Breaking News and Updates On Gold Markets Here

MARKET UPDATE
Today’s AM fix was USD 1,203.25, EUR 975.24 and GBP 768.95 per ounce.
Yesterday’s AM fix was USD 1,197.00, EUR 962.68 and GBP 761.60  per ounce.

Gold fell $14.30 or 1.18% to $1,198.30 per ounce yesterday. Silver slipped $0.02 or 0.12% to $16.45 per ounce.

The gold price hovered above $1,200 per ounce in early morning London trading, with no clear immediate catalyst  to move prices up or down for now.

Silver at $16.40 is trading within a tight 36 cent intraday range. In the PGMs, which have been strengthened following good U.S. car sales yesterday, platinum was $7 up at $1,219/1,225, while palladium was also up $7 at $806/811.

Spot gold was last seen up 0.2% or $3.10 at $1,200.50/1,201.30 per ounce after reaching a high of $1,208.50, despite the dollar being firm. Some gold buyers see the recent price action as indicative of a possible bottom and are dollar cost averaging into position in anticipation of gains in 2015.

Due to fears that Russia will fall into a recession this year, currency wars and the strength of the US dollar, the Russian Central Bank was forced to intervene to stem the decline of the plummeting ruble.  The ruble hit record lows at 54.87 to the dollar and the Russian Central bank was forced to sell off $700 million of foreign currency reserves earlier this week.

The plummeting ruble is likely to lead to an even greater increase in the Bank of Russia’s demand for gold and exacerbate the already tight physical gold market.

Investors will look for guidance from the U.S. non farm payrolls number for November which comes out on Friday. A weaker than expected number after disappointing retail sales this week would lead to a safe haven bid. A better than expected number, would likely see traders sell positions or go short.

With stocks continuing to reach new record highs and the Dow Jones Industrial Average at 17,800, gold, after its 40% fall, looks better value versus stocks today. The Dow Gold ratio is now at 15 (Dow at 17,800 and gold at $1,200/oz – see chart above) which is quite high from a historical perspective. We expect a reversion to the mean in the coming years and the ratio to fall below 5 as gold outperforms U.S. stocks.

 

 

 

end

 

Good news for our Liberty (silver) dollar founder:

 

(courtesy GATA)

Liberty Dollar founder avoids imprisonment in sentencing

Section:

11:30p GMT Tuesday, December 2, 2014

Dear Friend of GATA and Gold:

We have it only through a reliable intermediary that Liberty Dollar founder Bernard von Not Haus, oonvicted rather strangely almost four years ago of counterfeiting for issuing silver coins worth more than the originals they were supposed to be imitating, received a lenient sentence today from Judge Richard Voorhees in U.S. District Court for the Western District of North Carolina — six months of home confinement and three years of probation.

It’s said that the judge observed that von Not Haus’ motivation with the Liberty Dollar was philosophical rather than criminal. It’s also said that the judge ordered the federal government to return to its owners the millions of dollars of metal held by Liberty Dollar for its clients.

A lawyer representing GATA appeared in court today to argue for leniency for von Not Haus.

More as it becomes available.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

 

 

now a further update:

 

(courtesy GATA)

 

Judge in Liberty Dollar case orders some metal forfeited and some returned

Section:

5:22p GMT Wednesday, December 3, 2014

Dear Friend of GATA and Gold:

The judge in the Liberty Dollar case in U.S. District Court for the Western District of North Carolina, Richard Voorhees, yesterday ordered some of the Liberty Dollar’s coinage and metal forfeited to the U.S. government and some silver deposited by Liberty Dollar founder Bernard von NotHaus’ mother returned to her. The judge also recommended that the U.S. Treasury Department consider applications from Liberty Dollar customers for return of their metal if the customers claim not to have been participating in a counterfeiting scheme. The judge’s forfeiture order is posted in PDF format here:

http://www.gata.org/files/VonNotHausForfeitureOrder-12-2-2014.pdf

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

Get a load of this!!!

 

(courtesy Pam Martens/Wall Street Journal)

 

Pam Martens: JPMorgan rushed to hire trader who advertised market-rigging ability

Section:

By Pam Martens
Wall Street on Parade
Wednesday, December 3, 2014

On April 29, 2010, at 7:47 in the evening, Francis Dunleavy, the head of Principal Investing within the JPMorgan Commodities Group, fired off a terse email to a colleague, Rob Cauthen. The email read: “Please get him in ASAP.”

The man Dunleavy wanted to be interviewed “ASAP” was John Howard Bartholomew, a young man who had just obtained his law degree from George Washington University two years prior. But it wasn’t his law degree that Bartholomew decided to feature at the very top of the resume he sent to JPMorgan; it was that while working at Southern California Edison in Power Procurement, he had “identified a flaw in the market mechanism Bid Cost Recovery that is causing the CAISO” — the California grid operator — “to misallocate millions of dollars.” Bartholomew goes on to brag in his resume that he had “showed how units in reliability areas can increase profits by 400 percent.”

The internal emails at JPMorgan and Bartholomew’s resume are now marked as Exhibit 76 in a two-year investigation conducted by the U.S. Senate’s Permanent Subcommittee on Investigations into Wall Street’s vast ownership of physical commodities and rigging of commodity markets. Senator Carl Levin, the Chair of the Subcommittee, had this to say about the resume at a hearing conducted on November 21:

“There’s two things that I find incredible about this. First, that anyone would advertise in a resume that they know about a flaw in the system — signaling that they’re ready and willing to exploit that flaw. And second, that somebody would hire the person sending that signal.”

JPMorgan not only hired Bartholomew, according to the Senate’s findings, but within three months from the date of the email to Dunleavy, “Bartholomew began to develop manipulative bidding strategies focused on CAISO’s make-whole mechanism, called Bid Cost Recovery or BCR payments.” By early September the strategy to game the system was put into play. By October the JPMorgan unit was estimating that the strategy “could produce profits of between $1.5 and $2 billion through 2018.” …

For the remainder of the report:

http://wallstreetonparade.com/2014/12/jpmorgan-rushed-to-hire-trader-who..

 

end

 

 

 

 

(courtesy GATA)

 

 

 

 

More documentation of secret futures market trading by central banks

Section:

6:54p GMT Wednesday, December 3, 2014

Dear Friend of GATA and Gold:

The man who has blown the whistle on the secret and comprehensive U.S. futures market trading by central banks, Eric Scott Hunsader, founder of the market data company Nanex in Winnetka, Illinois, reports via Twitter today that CME Group, operator of the major U.S. futures exchanges, has extended by a year, to the end of 2015, the discount trading rates it offers to central banks, CME Group’s Central Bank Incentive Program:

https://twitter.com/nanexllc/status/540164875717464065/photo/1

Presumably the document disclosing the extension has been filed with the U.S. Commodity Futures Trading Commission, like the earlier filing about the program, dated January 29 this year and posted here —

http://www.cftc.gov/stellent/groups/public/@rulesandproducts/documents/i…

— and for safety’s sake at GATA’s Internet site here —

http://www.gata.org/files/CMEGlobexCentralBankIncentiveProgram.pdf

— though your secretary/treasurer has not yet been able to locate it.

But the CME Group’s own Internet site does carry an informational page about the trading program for central banks —

http://www.cmegroup.com/company/membership/files/cbip-faq-dec-2013.pdf

http://www.gata.org/files/CMEGroupCentralBankIncentiveProgramFAQ.pdf

— and an application form:

http://www.cmegroup.com/company/membership/files/cbip-application-form.p…

http://www.gata.org/files/CMEGroupCentralBankIncentiveProgramApplication…

The latter two documents show that central banks may trade futures directly with CME Group exchanges or may trade through CME Group clearing members, the latter option of course allowing some potentially profitable front-running of central bank trades.

The CME Group’s January 29 filing about the Central Bank Incentive Program asserts that “the resulting increase in liquidity” in the futures contracts “benefits all participant segments in the market.”

“Liquidity”? Trade against a central bank, an entity empowered to create infinite money, and potentially you trade against an ocean. No ordinary market participants can trade against that. Rather, secret trading by central banks in all major futures markets is the destruction of all markets.

Note especially that this secret trading in futures markets by central banks still does not seem to have been reported by any mainstream financial news organization.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

end

 

The following is a must read and John Hathaway is perfectly correct..our two major derivative players, JPmorgan and Deutsche bank have huge problems dealing with their massive derivative underwriting:

 

(courtesy John Hathaway,Kingworldnews/Eric King)

 

 

 

 

Link between paper gold and real metal is stretched to the limit, Hathaway tells KWN

Section:

11:45p GMT Tuesday, December 2, 2014

Dear Friend of GATA and Gold:

Tocqueville Gold Fund manager John Hathaway grows more radical by the hour, sounding a lot like Hinde Capital CEO Ben Davies in an interview today with King World News, remarking that “we are reaching an inflection point” where trends will reverse “and investors will start to lose confidence in financial assets, the Fed, and central banks in general.”

“The physical market is incredibly tight and you can see this in gold lease rates, GOFO, and that kind of thing,” Hathaway says. “That tells me that the link between paper and physical gold is being stretched to the limit and perhaps to a breaking point as bullion banks scramble to find metal to cover their shorts.”

Thanks to KWN for steadfastly giving voice to those who would oppose the Evil Empire. To be defeated it needs only to be exposed.

Hathaway’s interview is excerpted at the KWN blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2014/12/2_Ha…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

 

 

end

 

 

 

The following is a huge commentary from Koos Jansen.  The Eurosystem is now changing its accounting of gold and from now on gold that is not allocated will have a separate classification called  unallocated gold or gold receivables.

Europe is racing against the clock turning all of its unallocated gold into allocated gold.  Koos also comments that the gold stored in the USA is still “allocated” as it has bar codes and weights.  Maybe this is the reason that many European nations are trying to repatriate as fast as they can. Also the revelation from Holland is that the 122.5 tonnes of gold was not leased out in London.

 

 

 

(courtesy Koos Jansen)

 

 

Posted on 3 Dec 2014 by

Eurosystem Increasing Allocated Official Gold Reserves

The Eurosystem is expressing an increasing interest in gold.

One of the commenters on this blog, Arend Lammertink, notified me of official gold reserves data disclosed on the websites of the Dutch central bank (DNB) and the German central bank (Bundesbank). At DNB we can find a sheet that shows the Dutch central bank started separating its gold holdings from one category (gold, and gold receivables), to more detailed categories in May 2014.

Screen Shot 2014-12-02 at 2.29.55 PM
Source: DNB

The row goudbaren means ‘gold bullion’ and niet ge-alloceerde goudrekeningen means ‘unallocated gold accounts’. The white rows represent the value, the weight is disclosed in millions of fine troy ounces; The Netherlands holds 612.5 tonnes in total, fully allocated and nothing is leased since 2008 (same as Germany).

Over at the site of the Bundesbank the same information is published from 18 of the 28 member states of the European Union that use the euro currency (The Eurosystem). The Bundesbank (BuBa) publishes the fine troy ounces of the official gold reserves of the Eurosystem in ‘Gold bullion’ and ‘Unallocated gold accounts’. If we add up both categories the outcome for all countries equals the Official Gold Reserves disclosed by the World Gold Council. Concluding ‘Gold bullion’ is allocated (and obviously unallocated is unallocated).

From BuBa:

The application of the sixth edition of the Balance of Payments and International Investment Position Manual (BPM6) is binding for EU member states by virtue of a regulation adopted by the European Commission. Moreover, the reporting requirements of Eurosystem NCBs vis-à-vis the European Central Bank are stipulated in a guideline.

From the guideline Changes in the methodology and classifications of the balance of payments and the international investment position:  

With regard to reserve assets, gold transactions and positions will in the future be subdivided into gold bullion, which includes gold bars and allocated gold accounts, and gold receivables, to which no specific gold holdings are assigned.

The unallocated gold accounts of the Eurosystem relate to gold to which no specific gold holdings are assigned.

Eurosystem Official Gold Reserves Allocation, October 2014
The ECB holds 22 % (109 tonnes) of its gold reserves in unallocated accounts.

The data demonstrates most of the Eurosystem official gold reserves are allocated and since January 2014 (which is as far as the more detailed data goes back) the unallocated gold reserves are declining as we can see in the next chart.

Eurosystem Total Official Gold Reserves (10,787 tonnes)

Unfortunately we do not know what happened prior to 2014.

Note, allocated does not mean the gold is located on own soil, but is does mean the gold is assigned to specific gold holdings, including bar numbers, wether stored on own soil or stored abroad. Unallocated gold relates to gold held without a claim on specified bar numbers, often these unallocated accounts are used for easy trading.

Two good descriptions of unallocated gold accounts from the LBMA:

To take the analogy of simple currency bank accounts, precious metal bars, of any form, may be drawn down, or allocated, from an unallocated account in just the same way that bank notes with specific unique numbers may be drawn out of a bank checking account.

As you might know bank accounts are fractionally backed.

UNALLOCATED ACCOUNT: An account where specific bars are not set aside and the customer has a general entitlement to the metal. This is the most convenient, cheapest and most commonly used method of holding metal. The holder is an unsecured creditor.

The fact the Eurosystem discloses the ratio between its allocated and unallocated gold and, more important, the fact that the portion of allocated gold is far greater and increasing, tells me the Eurosystem is allocating as much gold as they can. Add to that the Germans are currently repatriating over 600 tonnes of their allocated gold from the US and France, and The Netherlands has just repatriated 123 tonnes of its allocated gold from the US. Will the rest of the Eurosystem follow to repatriate their gold from abroad?

The Eurosystem is surely up to something with its gold. This can only be seen in advance of a reform of the international monetary system. As Jean-Claude Trichet, former president of the European Central Bank, stated on a financial forum in Beijing at the end of October 2014:

The global economy and global finance is at the turning point in a way… New rules have been discussed not only inside the advanced economies, but with all emerging economies, including the most important emerging economies, namely, China.

On behalf of China the General Manager of the Precious Metals Department at ICBC (the largest bank in China and the world), Zhou Ming, stated on the LBMA Forum in Singapore in June 2014:

  1. International gold prices will return to rational levels after shooting high.
  2. With the status of the US dollar as the international reserve currency is shaky, a new global currency setup is being conceived.
  3. Uncertain changes will happen to gold’s traditional dollar-pricing so the US dollar’s influence on gold pricing needs to be re-evaluated.
  4. With the rise of Asian economies, China and India will continue to be the world’s pillars of physical gold demand.
  5. Gold has not only moved from West to East but will continue to move to the East.

So, China and Europe are embracing gold prior to the replacement of the US dollar as the world reserve currency. I truly wonder what will replace the US dollar.-

Koos Jansen
E-mail Koos Jansen on: koos.jansen@bullionstar.com

 

 

 

end

 

 

 

Von Greyerz discusses how they lost the Swiss referendum:

 

(courtesy Lawrence Williams/Mineweb/Egon Von Greyerz)

 

Harsh words on Swiss gold referendum from von Greyerz

Egon von Greyerz had some harsh words to say about the conduct of the SNB during the recent referendum.

 Author: Lawrence Williams
Posted: Wednesday , 03 Dec 2014

LONDON (MINEWEB) –

Maybe he would be classified as a sore loser but Egon von Greyerz, of Matterhorn Asset Management, and one of the leading lights behind the unsuccessful Yes campaign in the recent Swiss Gold Referendum, may have a point regarding the tactics used by the Swiss establishment to secure victory.

“We were beaten squarely, but not fairly,” he commented at Mines & Money London on Tuesday.

He pointed to examples of the unprecedented campaign by the Swiss National Bank (the country’s central bank) to derail the Yes campaign. How the leader of the Swiss Gold initiative was prevented from appearing in a debate on the referendum on Swiss TV and that the Yes campaign was blocked from receiving donations via PayPal. This was quite apart from appearances by the head of the Swiss National Bank in the Swiss media almost daily to generate opposition to the proposal by someone who normally shuns any kind of publicity.

He pointed out that Switzerland was the biggest seller of Central Bank gold in recent years (sold down from 40% of its foreign reserves in 1999) and scathingly referred to it now as being more of a hedge fund than a Central Bank given its reserves have so little gold backing in percentage terms – even compared with much of the rest of Europe. According to the IMF, the proportion of gold in Swiss reserves nowadays is only 7.5% compared with over 60% for Germany, Italy and France, over 70% for Portugal and over 50% for the Netherlands. Even the UK, which was castigated for the selling of half its gold reserves at the gold price bottom, has a higher proportion of gold in its foreign reserves than Switzerland at 11%. For comparison, 71.6% of the USA’s foreign reserves are still officially held in gold.

Von Greyerz is a firm believer that gold is underpriced at the moment – primarily because it is now so out of sync with the huge amounts of debt built up by governments around the world and the huge amount of money printing to preserve the perception that economies are stable to positive by keeping interest rates at or near zero. 

He is pessimistic on the state of the global economy and the ongoing value of the dollar, which he feels is due for a very large fall as are other weak currencies like the euro, while the value of gold will remain relatively constant – so as the dollar, euro and ultimately all fiat currencies fall gold will appear to rise correspondingly. It is a wealth preserver in the face of currency debilitation. He is looking for a dramatic reset ahead – while this is unlikely to happen overnight, longer term he feels it is inevitable.

Interestingly von Greyerz was introduced as a speaker at Mines & Money by Bo Polny who is a firm believer in the cyclical pattern followed by the markets. Polny is credited with picking recent gold price tops and bottoms almost to the dollar and he is currently in firm agreement with Elliott Wave analyst Peter Goodburn that gold, and other precious metals are due for a huge upturn in dollar terms in the near future as the general stock markets collapse. They are overdue for a mega crash after a run of several upwards years brought on by artificial monetary stimulation, he reckons. He is thus calling for $2,000 gold as soon as next year.

So Mines & Money is, as usual, coming up with a diverse range of views on the likely direction of commodity prices – with a strong slate of speakers commenting specifically on gold. Views are from analysts who feel that gold will remain weak or range bound well into the next year or two to those, like Polny, von Greyerz, Boeckver and others l who see an inevitable sharp upturn ahead, perhaps coupled with a dramatic fall in general equities.

 

 

Trading pattern has changed …drastic​ally!

 

 

 

Gold and silver have now had three “outside reversal” days to the upside within the last three weeks.  Those who follow the precious metals were absolutely shocked (after being shell shocked) to see this type of action the first time in many a moon…not to mention a “three’fer”!  For those of you who don’t know what an “outside reversal day” is, let me briefly explain.  It is the “outside” part which is important and without it, the “reversal” part is much less meaningful.  For this to occur, trading for the day must be both lower and higher than any trades performed the previous day.  In other words, the “bar” on the chart must totally engulf the action of the previous day and then close in the opposite direction of the previous momentum.  Outside reversal days are very rare in any market.  One of these may only occur once in a year’s time or even longer.  The important thing to understand is when you do see a reversal day and accompanied by big volume, the “trend” is probably changing!

  That said, “charts” in today’s marketplace are not what they once were.  There was a time when charts were very reliable, this changed many years ago.  I say “changed” because if you go back to 1988, President Reagan by executive order created the “working group on financial markets” as a result of the ’87 crash…otherwise known as the “plunge protection team” to prevent stock market crashes.  Initially, this may have been a good idea with “good intentions”.  The problem is this, the “PPT” has morphed into something out of the old USSR which tries to “manage” everything, everywhere, ALWAYS!  This obviously changes the value of charts, if they can be “painted” (they are), then they don’t show a true picture, rather, they show a picture those doing the painting want you to see.
  Yes, I am sure some will call me a conspiratorial nut job for saying that all markets are manipulated all the time, they are!  I don’t even have anything to prove, the banks and brokers have already done this for you by paying fines for “rigging” in nearly every market.  Why would they pay these fines if they were innocent?  Please don’t tell me because of the “nuisance factor”, $30 billion+ in fines is a little more than a “nuisance”!  In my opinion, these fines have been paid for two reasons, one more important than the other.  First, these firms do not want to admit guilt.  If they actually did admit guilt they could be shut out of various markets as admission of guilt in many cases by law requires them to cease and desist on various exchanges.  The is a very important factor …but not THE important factor.  THE important factor is the process called “discovery” where the firm (or firms) in question must open their books or pull their pants down so to speak and allow outside attorneys to see nearly everything.  “Discovery” allows outside lawyers to see the books, ALL the books, of the firm that a judge allows.  In other words, much, if not ALL of the dirt becomes visible!  You do see the problems this may raise?  The process of “discovery” means you can see what firm A was doing …AND “who” they were doing it with!  Confidence in our “free and fair” markets would evaporate and the game we call everyday life would end.  Can you imagine what would have happened were Enron’s records not destroyed one day in 2001?  In any case, if you do not believe markets are manipulated every day by now, then please stop reading because there is nothing I can say to enlighten you.
  Now, back to the precious metals.  We have now had three outside reversal days within three weeks and on VERY HIGH VOLUME!  Normally just one outside day would suffice but we have had three.  Normally the outside day would be a very good signal that the trend has changed, I do not doubt this is the case now.  What I do doubt is the reasoning behind what has happened.  I believe the outside days have occurred because of “front running”.  Gold and silver “prices” have been forced to levels where it is not profitable to mine in many cases.  These low prices have also created far more demand than normally would be for the other side of the equation.  Gold and silver have been in a supply demand deficit for years which has been exacerbated by the price suppression.  In other words, “price” was not allowed to rise to ration demand and entice new supply.  There is a giant problem though, it’s called “mathematics”.  If there has been a supply/demand deficit then where has the deficit been funded from?  Yes, you got it, Western central bank vaults.
  I believe we have seen these outside day reversals because someone, somewhere, “knows something” or at least think they do.   Someone (the Chinese and others) have done the math and can “smell” the bottom of the barrel.  Maybe this bottom of the barrel is being exposed by the hugely negative GOFO rates or backwardation?  Maybe someone has tried to make a big purchase and can’t do it …or cannot do it without a big premium?
  As I wrote a couple of days ago, “price” will affect both supply and demand.  I believe what this current change in trading activity points to is “price” has now affected supply and demand TOO MUCH!  I believe we will look back at these three reversal days as a very big inflection point.  The future action I now anticipate is an outright explosion upward in price as the physical market takes the pricing ability away from the paper markets.  Gold and silver are very different “animals” compared to stocks, bonds, other commodities and even other currencies.  Gold and silver are “money” and carry with them more “emotion” than any other asset class.  Hard money advocates are more passionate regarding the metals than anything else.  The naysayers are more dispassionate (hateful of) gold and silver than anything else.  Governments and central banks are obviously more disdainful of gold and silver than anything else because the metals are a direct (and real) competitor (understand THREAT) to their “product”.
  I mention this “emotion” factor because this is at the heart of the argument.  Gold and silver cannot be allowed out of control …otherwise “confidence” in the status quo will be shaken to destruction.  One other “emotion” factor is that “man” always wants something he cannot have.  In fact, I would say that man will sometimes want something he cannot have even more than something he needs but this is arguable.  The game over these past years has been to depress gold and silver prices in order to display them as poor choices and plentiful in supply.  This has allowed interest rates to trade far lower than they otherwise would be.  Artificially low interest rates have aided the central banks in their numerous “reflation” exercises.  The problem now is supply in the physical market has become very tight and pressing prices lower are no longer scaring any more apples to fall from the tree.  In other words, those who would be scared out of their positions have mostly sold. Now, lower prices are only acting to bring more and more value investors into the market and increasing demand.  The “fulcrum” (price) must be moved to create a balance as it has been incorrectly placed for many years.  I believe the old saying “there is no fever like gold fever” is about to surface.  So I now wait patiently for the upside explosion as something has changed very drastically in the trading patterns.  Though Mother Nature can be mocked via leverage for a spell, her laws can be ignored for only so long because there is such a thing as the real world with a real supply and demand equation!  Bill Holter

 

end

 

 

 

And now for the important paper stories for today:

Early Wednesday morning trading from Europe/Asia

1. Stocks mostly up on major  Asian bourses     with a  lower yen  value rising to 119.39 ( Moody’s lowering of its investment grade)

1b Chinese yuan vs USA dollar  (yuan slightly strengthens) to 6.14897 (potential for another rate cut)

2 Nikkei up 57  points or 0.32%

3. Europe stocks all up except London, France  /Euro falls/ USA dollar index up to 88.86./

3b Japan 10 year yield at .45% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 117.70

3c  Nikkei now above 17,000

3e  The USA/Yen rate comes above the 119 barrier

3fOil:  WTI  67.13  Brent:   70.63 /all eyes are focusing on oil prices.  A drop to the mid 60′s would cause major defaults.

3g/ Gold up/yen down;

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 ruble slides to record lows again (54.80- rubles to the dollar) as brent and WTI fall again

3k Russian 10 yr bond yield:  10.76% up 15 basis points.

3l  :Ukraine nuclear accident

3m Gold at $1206.00 dollars/ Silver: $16.45

3n  European PMI bad but not a disaster/

4.  USA 10 yr treasury bond at 2.26% early this morning.
5. Details: Ransquawk, Bloomberg/Deutsceh bank Jim Reid

 

 

 

 

(courtesy zero hedge/your early morning trading from Asia and Europe)

 

 

 

Today’s Market-Boosting Disappointing Economic News Brought To Your Courtesy Of Euroarea’s Service PMIs

Those wondering why European stocks are higher but off earlier highs, the answer is simple: the latest Service ISM was bad but it wasn’t a complete disaster. And while RanSquawk notes that “the particularly disappointing slew of Eurozone Service PMI’s from France and Spain capped any potential upside seen across the European indices” stocks are clearly green on hopes Europe’s ongoing economic devastation accelerates enough for the ECB to finally start buying Stoxx 600 and various other penny stocks, which in turn magically “trickles down” to Europe’s record youth unemployment.

This is what happened, in Goldman’s words: the November Euro area final composite PMI came in at 51.1, 0.3pt below the flash (and Consensus) estimate. Relative to October, the composite PMI fell by 0.9pt. The weaker final composite PMI was driven by flash/final downward revisions to the German manufacturing PMI and the French services PMI. Today’s data also showed some improvement in the Italian services PMI, and a deterioration in its Spanish counterpart.

November’s final manufacturing PMI (published on Monday) came in 0.3pt below the flash reading. This was driven by a downward revision (0.5pt) to the manufacturing PMI in Germany (the French manufacturing PMI flash/final revision was positive). The final Euro area services PMI for November was 0.2pt below the flash, with the flash/final downward revision driven by the French services PMI (revised down 0.9pt).

With these revisions, relative to October, the Euro area composite PMI fell by 0.9pt (to 51.1), reflecting a 0.5pt decline in the manufacturing PMI (to 50.1) and a 1.2pt decline in the services PMI (to 51.1). The breakdown of forward-looking components was mixed. New manufacturing orders fell by 0.8pt to 48.7, while stocks edged down by 0.9pt on the month, leaving the orders-to-stocks ratio stable. The forward-looking elements of the services PMI showed ‘incoming business’ declining by another 1.1pt, while the ‘business expectations’ subcomponent rose by 2.4pt.

The Composite PMIs declined across all major countries on the month, except in Italy. The abrupt fall in the German composite PMI (by 2.2pt to 51.7) owed to sizable 2.3pt and 1.9pt declines in the services and manufacturing PMIs respectively. In France, the 0.4pt fall in the composite PMI (to a weak 47.9) was driven by a similar-sized contraction in the services PMI. The Spanish services PMI eased notably by 3.2pt to 52.7 (Cons: 55.2), leading to a 1.7pt decline in the composite PMI (to 53.8). By contrast, in Italy, while the manufacturing component was unchanged on the month (at 49.0), the services PMI recorded a 1.0pt expansion (to 51.8, Cons: 50.2), driving the composite PMI 0.9 up to 51.2.

* * *

In terms of fixed income, the Bund remains relatively unchanged but has since ebbed higher alongside the weak European data releases with some analysts also noting volumes rolling into the next contract ahead of the upcoming expiry on the 8th Dec.

In terms of the day ahead, we have ADP employment change today (consensus +222K) ahead of the all important payrolls on Friday. The US non-manufacturing ISM and the Fed’s Beige Book are the other key releases for today. On Fedspeak we have both Plosser and Brainard lined up for today. In Europe we will kick the day off with a host of services and composite PMI prints with final figures for Germany, France and the Euro-area. We will also get preliminary readings out of Spain, Italy and the UK.

To summarize:

European shares trade mixed, off earlier highs, with the basic resources and health-care sectors outperforming and oil & gas, food & beverage underperforming. Ruble touches record-low for fifth straight day. Euro-area services and manufacturing grew less than initially estimated last month. Italian 10-year yields dropped below 2% for first time. U.K. budget statement later. The Spanish and Swedish markets are the best-performing larger bourses, U.K. the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Spanish yields decline. Commodities gain, with wheat, natural gas underperforming and WTI crude outperforming.  U.S. ISM non-manufacturing, mortgage applications, ADP employment change, nonfarm productivity, unit labor costs, composite PMI, services PMI due later.

Market Wrap

  • S&P 500 futures down 0.1% to 2064.1
  • Stoxx 600 up 0.4% to 348.8
  • US 10Yr yield down 0bps to 2.29%
  • German 10Yr yield up 0bps to 0.74%
  • MSCI Asia Pacific down 0.2% to 139.8
  • Gold spot up 0.5% to $1204.2/oz

Bulletin Headline Summary from RanSquawk and Bloomberg:

  • European equities trade mostly in the green, although this morning’s slew of Eurozone service PMIs have done little to restore faith in the area’s growth prospects.
  • Treasuries steady before ADP report provides first look at November payrolls, est +222k; 10Y yields have risen almost 13bps this week amid $33.8b in IG issuance.
  • Euro-area services and manufacturing grew less than initially estimated last month, leaving the economy facing near- stagnation as the ECB, which meets tomorrow, considers its options on further stimulus
  • Russia’s economic pain worsened as a measure of services dropped to the lowest point since May 2009 and the central bank attempted to stem the ruble’s biggest slide in 16 years
  • Kaisa Group Holdings Ltd. halted trading in Hong Kong after the real estate developer was blocked from selling some units in the southern Chinese city of Shenzhen, sending its stock down the most in more than a year; co.’s 2017 and 2020 bonds tumbled
  • China’s services PMI rose to 53.9 last month from 53.8 in October while HSBC/Markit’s services gauge climbed to 53 from 52.9
  • Growth at U.K. service companies expanded faster than economists forecast last month as new business improved
  • Fed officials are signaling more confidence in the economy that moves them nearer to raising interest rates, and are stressing the liftoff is linked to data rather than dates to avoid unsettling markets
  • Sovereign yields fall. Asian, European stocks gain, U.S. equity-index futures fall. Brent crude and gold rise, copper falls
  • Looking ahead, today’s session sees the release of the US ADP employment
    change figure, ISM non-manf. Composite, DoE oil inventories, BoC rate
    decision and potential comments from Fed’s Plosser, Brainard and
    Fischer.

In FX markets, the USD-index continues yesterday’s strengthening theme now trading at its highest level since March 2009. Moreover, EUR/USD continued its recent descent following the disappointing Spanish and French Service PMI data with the pair breaching below the Nov. 24th & 7th reaching its lowest levels since Aug. 2012. In addition, the pair has seen some further weakness with UBS cutting their 2015 year-end EUR/USD call to 1.1500 from 1.2000, suggesting that QE from the ECB may came in March 2015. Furthermore, the RUB once again printed record lows vs. USD, however, the pair stages a fast-money move lower, with nothing fundamental behind the move, although the usual talk of central bank intervention has been doing the rounds.

COMMODITIES

In terms of the commodity complex, WTI and Brent crude futures enter the North American crossover in the green in a continuation of the move seen following yesterday’s API inventories which revealed a 6.5mln bbl drawn-down in stockpiles vs. last week’s build of 2.8mln. However, in the aftermath of last week’s OPEC decision, the Kuwait oil minister has been on the wires saying Kuwait will not sacrifice its interest to cut oil output, according to minister and it is pointless for OPEC to cut output while others increase. In terms of precious metals markets, commentary remains relatively light with price action largely dictated by movements in the USD-index after it made a technical break above 88.71, which has subsequently seen spot gold extend its move above the USD 1,200/oz level.

* * *

DB’s Jim Reid Concludes the overnight recap

All in all yesterday turned out to be a rather positive day for risk assets despite the retracement of Monday’s rally in Oil. Risk sentiment was supported by the better-than-expected auto sales for November along with what was also viewed to be a reasonably decent day for US economic releases. We’ll briefly touch on these below but in terms of specific market moves yesterday was the first up day for the S&P 500 (+0.64%) since Thanksgiving and also a fresh high for the Dow (+0.58%). Interestingly, Energy (+1.33%) was the best performing S&P 500 sector despite the weakness in Oil. As for Oil, yesterday saw WTI (-3.1%) and Brent (-2.7%) give back bulk of Monday’s gains to finish the day at around $66.9/bbl and $70.5/bbl, respectively.

Moving on to the fixed income side of things it was a reasonably firm day for Credit as well. Certainly an active day for US primary markets as investors absorbed US$12.5bn from 6 different issuers although more than half of those volumes from the TMT space. Away from new issues, IG secondary spreads were somewhat mixed (+/-2bps) although the CDX IG did manage to close just over half a basis point tighter on the day. US Treasuries weakened across the curve which saw the 10yr yield rise +6bps higher to 2.292%. The decent tone for risky assets probably didn’t help the performance in rates but investors were also reacting to comments from Fed’s Vice Chair Fischer yesterday.

Indeed speaking at a WSJ event yesterday, Fischer signaled that the FOMC is closer to removing the ‘considerable time’ language from its guidance. Although to be fair he also emphasised that policy tightening is still very much data dependent and particularly on labour market conditions as well as inflation. The next FOMC meeting on the 16-17 December will be the next key event for rate watchers but we can’t help to think that as far as inflation is concerned lower energy prices is probably giving global policy makers some breathing room for now.

Taking a brief look at the data flow, the US construction spending surprised to the upside in October (+1.1% mom vs +0.6% consensus), supported by the expected pickup in residential construction and also an improvement in government spending. The NY ISM manufacturing also came in at an impressive 62.4 versus 55.0 expected by the market. The top tier automakers in the US reported better-than-expected November sales, which points towards a seasonally adjusted annual rate (SAAR) of 17.2million light vehicles. This was ahead of what the market was looking for (16.7million) and also marks the strongest performance since 2003 (per Reuters).

It was interesting to see that lower gasoline price was cited as one of the drivers behind the auto sales strength in November. So there are sectors that are seemingly benefitting from lower cost of fuel after all but the collateral damage is still very much being felt by others such as the oil drillers. Per the FT, Schlumberger is cutting back its fleet for offshore geological surveys and taking an $800m writedown on the value of its ships. This apparently marks the first significant cutback in the industry following the recent sell off in Oil.

The company also plans to cut jobs as oil related capex is expected to slow. On a similar theme but away from Oil, the weakness in commodities has also prompted Vale focus to sell off 30-40% of its base metals business. The company said that the base metal division will probably be listed in Canada next year (where Vale’s nickel assets are concentrated) and the IPO timing could be after August 2015.

Back to markets, Asian equities are coming off their earlier highs as we type although most North Asian bourses are still in the green. The Shanghai Composite is now flat after having been up as much as 2% earlier following modest gains in China’s services sector data. The official non-manufacturing PMI rose to 53.9 in November from 53.8 in October. The HSBC variant rose to 53 from 52.9 from October. Away from China, the Nikkei is also now flat although the KOSPI and ASX is still 0.2% and +0.7%, respectively. Australia’s disappointing GDP report drove the AUD to a four year low (83.98 as we type). Asia IG credit spreads are firmer on the day with cash spreads 1-2bp tighter across most benchmark names.

Taking a quick look at Europe the Stoxx 600 (+0.50%) also had a decent day with similar gains seen in energy stocks. Credit spreads were modestly firmer with Xover closing some 4bps tighter. There was however no respite for the Russian Ruble. The currency lost another 4.5% against the US Dollar (to 53.97) to extend its most severe decline since 1998 when the country defaulted on its internal debt. The moves also coincided with a GDP downgrade from Russia’s deputy economy minister Alexei Vedez. He now expects Russian GDP to contract 0.8% next year versus a previously forecasted growth rate of 1.2%. Staying on Russia, Eastern European countries have also reacted negatively towards Russia’s decision to terminate its US$50bn South Stream Gas project. So with the weakness in the currency, flow on impact on the economy and ongoing geopolitical developments we suspect Russian headlines will likely linger well into the new year.

Wrapping up Europe and perhaps flagging another potential Q1 market driver next year, Greece’s Syriza leader Alexis Tsipras yesterday reiterated his promise to exit the bailout should he be elected. He went on to say that Greece’s access to bond markets is being hindered by high debt levels and as a result a debt haircut is needed. The comments came after discussions between Athens and Troika arriving at a standstill and with time running out before the 8th December Eurogroup meeting.

In terms of the day ahead, we have ADP employment change today ahead of the all important payrolls on Friday. For the record our US economists have a slightly more bullish view than consensus on ADP (240k v 222k expected by the market). The US non-manufacturing ISM and the Fed’s Beige Book are the other key releases for today. On Fedspeak we have both Plosser and Brainard lined up for today. In Europe we will kick the day off with a host of services and composite PMI prints with final figures for Germany, France and the Euro-area. We will also get preliminary readings out of Spain, Italy and the UK.

 

 

end
An accident occurred at a nuclear power plant in the Ukraine.  We have few details:
(courtesy zero hedge)

Accident Took Place At Ukraine Nuclear Power Plant, Prime Minister Reveals

Several days ago we heard rumors, unsubstantiated, of an accident at Ukraine’s Zaporozhye nuclear power plant,Europe’s largest and the 5th biggest in the world. Considering Ukraine’s history with nuclear accidents, and resultant panics, we decided it would be prudent to wait for an official confirmation before proceeding with a report. We got the confirmation about an hour ago, when Ukraine’s new/old Prime Minister Arseny Yatseniuk, or “Yats” as his puppetmaster Victoria Nuland likes to call him, said “on Wednesday an accident had occurred at the Zaporizhye nuclear power plant (NPP) in south-east Ukraine and called on the energy minister to hold a news conference.”

A “minor” accident that is, which remains a rather nebulous term on the continuum of nuclear power plant “malfunctions.” So minor, in fact, the PM waited almost a week before revealing it to the world.

From Reuters:

“I know that an accident has occurred at the Zaporizhye NPP,” Yatseniuk said, asking new energy minister Volodymyr Demchyshyn to make clear when the problem would be resolved and what steps would be taken to restore normal power supply across Ukraine.

News agency Interfax Ukraine said the problem had occurred at bloc No 3 – a 1,000-megawatt reactor – and the resulting lack of output had worsened the power crisis in the country. Interfax added that the bloc was expected to come back on stream on Dec. 5.

Just like Fukushima is expected to come back on line in a few years ago.

So is this just another Chernobyl? According to Ukraine, “the radioactive meltdown is contained.” RT has more:

“There is no threat … there are no problems with the reactors,” Ukraine’s Energy Minister Volodymyr Demchyshyn said at briefing, adding the accident affected the power output system and “in no way” was linked to power production itself.

The incident was not made public until Wednesday, when PM Yatsenyuk asked the energy minister to report on what happened and how the ministry is handling the situation.

The accident left several dozen towns and villages without electricity, Russian media reported, citing local officials.

Of course, there is no way to actually know what is happening on the ground as the NPP is located close enough to the “fog of war”, that its status, and updates thereof, could merely be part of the fog of war. That said, if there is an unspoken message here by Ukraine, which recently handed over its gold to unknown “Western” interests, and suddenly feels neglected by its western allies (as its central bank head is about to find out personally), it is targeted directly at the IMF: “hand over more loans, or the nuclear power plant gets it.”

 

 

 end
 Tuesday evening:
the ruble is now trading at 54.78 to the dollar as the Russian economy falters due to the low price of oil:
(courtesy Bloomberg)
Ruble Slides as Russia Slowdown Signs Fuel Worst Rout Since 1998
 
 

The ruble extended its worst rout in 16 years as a slump in Russian business activity showed the economic slowdown is worsening, undermining central bank attempts to shore up the currency.

The ruble sank 1.7 percent to 54.78 versus the dollar by 11:01 a.m. in Moscow, after touching a record-low for a fifth straight day. The currency has fallen 18 percent in the past seven days, the most since October 1998. The Bank of Russia said today it sold $700 million on Dec. 1, its first intervention since moving to a free float almost a month ago.

Russia’s economic crisis, exacerbated by U.S. and European sanctions over the conflict in Ukraine, is hurting the people and companies that provide services, with data today showing business activity dropped to the lowest since May 2009 in November. The country is on the brink of a recession as oil’s 39 percent tumble since a 2014 peak in June cuts into budget revenue, about half of which comes from oil and gas industries.

“We saw an unbelievable drop in the ruble yesterday,” Artem Roschin, a foreign-exchange dealer at Aljba Alliance in Moscow, said by phone. “We’re following oil which means everything for the Russian economy and the budget. The oil-price outlook is pretty grim and it’s likely to fall further.”

While the ruble trimmed losses of as much as 6.6 percent on the day of the intervention, it has since resumed retreats to record lows, sliding 4.9 percent against the dollar yesterday.

Not Sufficient

Russia last sold foreign currency to settle on Nov. 10, when the central bank announced it was eliminating the remnants of a mechanism whereby it intervened each time the ruble broke out of a set trading band. That policy, which enabled speculators to profit from taking short positions on the currency and betting on further drops, led the central bank to spend $30 billion on interventions in October alone.

“Interventions of $700 million weren’t sufficient to disrupt the speculative activity,” Anna Bogdyukevich, an economist at ZAO UniCredit Bank, said by e-mail. “I don’t exclude that the central bank will infrequently intervene with rather large amounts of foreign currency.”

When they abandoned the free float, Policy makers reserved the right to sell foreign currency unannounced if it deems there’s a threat to the nation’s financial stability.

Russia’s reserves have fallen about $90 billion this year as the central bank sold dollars and euros to help shore up the ruble. The nation’s economy is at risk of entering its first recession since 2009 next quarter, succumbing to penalties imposed over the conflict in Ukraine as the plummeting ruble stokes inflation and the slump in oil prices erodes export revenue.

‘Some Panic’

Brent crude rose 0.4 percent to $70.85 a barrel today, having dropped 12.7 percent last week as OPEC, the cartel that supplies about 40 percent of the world’s crude, left its oil-output target unchanged on Nov. 27.

The Economy Ministry yesterday estimated gross domestic product will shrink 0.8 percent next year, the first government acknowledgment of the looming crisis, while a former central banker spoke of “some panic” in the financial system.

The Russia Services Business Activity Index fell to 44.5 in November, the lowest since May 2009. The yield on the government’s 10-year ruble bonds rose nine basis points to 10.90 percent, the highest level in five years.

The dollar’s 14-day relative-strength index against the ruble was at 83.9, the most since Oct. 29. A reading above 70 suggests to some traders that a reversal may be imminent.

To contact the reporter on this story: Ksenia Galouchko in Moscow at kgalouchko1@bloomberg.net

 

 

end

 

 

 

Wednesday morning:

 

(courtesy zero hedge)

 

 

Russian Central Bank Defends Record Low 55 Level, Bonds Tumble

 

 

Since the top in oil in June, crude has dropped around 37%… and so has the Russian Ruble. Monday saw the Russian Central Bank (rumored) to intervene to protect the 54 Ruble to the USDollar level. Yesterday saw weakness resume as oil prices slipped and today it appears 55 is the new line in the sand as the USDRUB was smashed 2 handles lower earlier today (only to begin selling off once again since). Russian 10Y bond yields are leaking higher however, +20bps to break the 11% line in the sand.

 

Russia appears to be tracking crude almost perfectly…

 

It appears the Russian Central Bank is active again today…

 

as Bond yields are surging

 

Charts: Bloomberg

 

end

 

 

 

My goodness, the Swedish Government falls!!

 

(courtesy zero hedge)

 

 

 

 

Swedish Government Falls

 

 

An hour ago, Swedish Prime Minister Stefan Loefven failed to get enough government votes to support his latest budget, despite threats he may resign if the budget did not win majority support. This follows after Sweden’s Democrats, the third-largest party, “plunged the Nordic nation into a crisis” yesterday after vowing to oppose any government budget that promoted immigration. Loefven, 57, in late night talks with the four-party Alliance opposition was then unable to reach any agreement on a way forward for his budget of tax increases and higher welfare spending.

Cited by Bloomberg, Loefven said that “There was no will to have a dialog on the budget issue” – which sounds about as “compromising” as Barack Obama. He may now go down in history as Sweden’s shortest-serving premier in about 80 years, having taken control in September elections. The coalition’s proposal was rejected in a formal vote today in parliament, as the Sweden Democrats voted for the Alliance budget.

The former union boss led the Social Democrats back into power by ousting Fredrik Reinfeldt’s center-right coalition in September elections. The premier said last night he will also explore the option of resubmitting his budget to the finance committee in parliament. Another option is for snap elections to be called for the first time since 1958.

While for now Loefven has not resigned, the latter option is precisely what he picked. Follow the key BBG headlines from a just concluded press briefing by the prime minister:

  • SWEDISH PM LOEFVEN SAYS SWEDEN IN SERIOUS SITUATION
  • SWEDISH PM LOEFVEN SAYS WON’T ACCEPT NEW POLITICAL SITUATION
  • SWEDISH PRIME MINISTER LOEFVEN CALLS FOR NEW ELECTION IN 2015
  • SWEDISH PM SAYS NEW ELECTION TO BE HELD ON MARCH 22
  • SWEDISH GOVT: WILL NEVER ALLOW SWEDEN DEMS TO DICTATE RULES
  • SWEDISH PM LOEFVEN WON’T SEEK ANY FURTHER TALKS WITH OPPOSITION

and last but not least:

  • SWEDISH PM LOEFVEN SAYS WILL CONTINUE TO TAKE RESPONSIBILITY

How idealistic. We give him a few days before he too succumbs to the siren song of “Get to work Mr. Chairman“, the same song that has made a complete mockery out of America’s own legislative branch.

 

 

 

end

 

Venezuela will be the first country to default and their death is imminent

 

 

 

 

 

(courtesy zero hedge)

 

 

 

 

Venezuela Default Risk Surges To Jan 2009 Highs

 

 

 

Venezuela CDS is surging once again this morning, even as oil prices stabilize on the day, to its highest since January 2009 as traders increase hedges or speculation that the nation will be forced to default on its bonds. Current prices imply around an 85% chance of default (likely not helped by President Maduro’s insistence that all is well and that he will try to destrout the black market for dollars that implies a massive devaluation is afoot for the Bolivar)

Highest default risk since Jan 2009…

 

And it appears since 2008, Venezuela has become entirely dependent on the ticks in oil prices…

 

Charts: Bloomberg

 

 

end

 

Oil retreats as Saudi Arabia suggests that oil will settle at around 60 dollars per barrel

 

(courtesy zero hedge)

 

 

Crude Slides After Saudis Suggest Oil Stabilizes Around $60

Just when industry experts were eying zee stabilittee in oil prices in the last 12 hours, this happens…

*SAUDI ARABIA SAID TO SEE OIL AROUND $60/BARREL: WSJ

And crude oil prices begin to dip once again.

 

As The Wall Street Journal reports,

Oil may stabilize around $60/barrel, WSJ reports, citing unidentified people familiar.

 

Suggests Saudis won’t push for supply cuts in near-term, even if oil prices fall further

*  *  *

And the reraction…

 end
Part iii of the systemic risk that will cause a financial nightmare due to the fall in oil
(courtesy Smith/Two Minds Blog)

The Oil-Drenched Black Swan, Part 3: Multiple Risks, Multiple Unknowns

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

It is these unforeseeable and uncontrollable consequences that are poised to wreak havoc on the global financial system.

Here’s the thing about risk: it bursts out of whatever is deemed “safe.” It wasn’t accidental that the Global Financial Meltdown originated in home mortgages; it was the perceived safety of the mortgage market that attracted all the speculative debt and leverage.
The authorities (those few who weren’t bribed to look the other way) were caught off-guard by this explosion of risk in a presumably “safe” market, but this was entirely predictable: this is the nature of systemic risk.
Since 2009, central state/bank authorities have backstopped the private banking sector and the sovereign debt market with everything they’ve got. The Federal Reserve alone threw something on the order of $23 trillion in guarantees, loans and backstops at the private banking sector, and the other central banks have thrown trillions of yuan, yen and euros to shore up the banking sector and sovereign debt.
They did this because they identified the banking sector and sovereign debt as the sources of systemic risk. Now that they’ve effectively shored up these two risk-laden sectors with the full weight of the central state and bank, they presume the systemic risk has been eradicated.
They could not be more wrong. As I often note, risk cannot be disappeared, it can only be masked or transferred. The systemic risk will not manifest in the heavily protected banking sector or the sovereign debt market–risk will break out of sectors that are considered ‘safe”–like oil.
Yesterday, I described how The Financialization of Oil has followed much the same path as the financialization of home mortgages in the 2000s: a “safe” sector has been piled high with highly profitable and highly risky debt and leverage.
Once the narrow base of collateral shrinks (as it has in oil), the inverted pyramid of debt and leverage collapses, distributing losses that then trigger defaults as the dominoes fall.
What are the risks that result from the drop in oil prices? We can identify four right off the top:
1. Financial market turmoil. Right now, the extent of the losses created by oil’s sharp decline have yet to become visible. Everyone holding the losses is scrambling to hide them and sell positions to limit the losses. The full consequences of losses and defaults will only become public in the weeks and months ahead.
Those who think the losses are confined to the oil patch and lenders are mistaken. How many hedge funds and pension/mutual funds own oil stocks or oil-related bonds, loans and instruments?
2. Currency market turmoil. Venezuela is the leading candidate for currency collapse resulting from the drop in oil prices. Russia’s currency (ruble) is already in a free-fall, and though some may blame Western sanctions, the real driver is the collapse in oil revenues.
3. Geopolitical conflicts. History suggests that declining oil revenues tend to spark geopolitical conflicts as those losing revenue seek scapegoats in other oil exporters who refuse to cut production to support higher prices.
There are a host of other reasons for geopolitical conflicts to arise out of oil’s price decline. Stronger rivals may seek to exploit the weakened state of oil-exporting competitors. Oil exporters might seek to trim supply by disrupting rivals’ production via fomenting domestic unrest. The temptation to invade and conquer rises in parallel with desperation.
4. The unknown unknowns and the rising odds of miscalculation. As I noted in The Oil-Drenched Black Swan, Part 1, the The Smith Uncertainty Principle expresses the multiple ways risk can manifest:
“Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences.”
The highlighted passage echoes the impact of Black Swans and Donald Rumsfeld’s famous encapsulation of the risks implicit in the unknown:

“Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

Psychoanalytic philosopher Slavoj Žižek noted that there is a fourth categorythe unknown known: what we know that we intentionally refuse to acknowledge that we know.
I think this is an ontological (intrinsic) source of risk: we know our activities and choices are piling up risk, but we refuse to acknowledge this because we do not want to deal with the consequences of all that risk accumulating.
This is the root of Chuck Prince’s famous line about dancing (i.e. pursuing reckless financial speculations) as long as the music is playing (“As long as the music is playing, you’ve got to get up and dance.”): everyone engaged in speculation knows the risks are piling up, but to avoid having to exit the game, they deny knowledge of the risks that are visibly piling up.
Then when the house of cards predictably collapses, they can plead ignorance.
The Power of Black Swans lie in the unanticipated consequences of the unknown unknowns. Some of the consequences of lower oil prices are known, but some are unknown. It is these unforeseeable and uncontrollable consequences that are poised to wreak havoc on the global financial system.
end

The following is a must read. Bruce Krasting tackles the key currency crosses:

 

USA/Yen

Euro/Swiss Franc
Euro vs USA

 

and discusses its ramifications of penetrating above the key 120 levels

 

(courtesy Bruce Krasting)

Closing in on One Twenty

 

 

Bruce Krasting's picture

 

 

 

Three major FX pairs are closing in on rates where the big figures start with 120. The ones that have my interest are:

USDJPY = 119.40

EURCHF =1.2030

EURUSD = 1.2335

 

USDJPY looks like it wants to cross 120 in a matter of hours. The question is what happens when it does. My guess is that the folks at the Bank of Japan don’t want the dollar/yen to rise much above the 120 level for the time being. The Abe snap election is just ten trading days away. An element of the election is the central bank’s policy of weakening the currency. Japanese voters understand FX rates; they know they are paying more for imports and paying a ton more when they travel abroad. If the BoJ wants buy some votes by micro managing the FX rate with a temporary “lid” on USDJPY it certainly could. We shall see soon enough.

But assume that Abe gets his vote of confidence on 12/14. What does that mean? Adios 120. Another 20 big figures to 140 is a reasonable estimate. Another big move up in USDJPY will be the fuel for a currency war. Korea and China will not just sit back and let it happen.

 

EURCHF is a wild card (it might be a Black Swan). The head of the Swiss National Bank, Thomas Jordon, was drinking Kirschwasser after his big win on the gold vote last weekend. The vote was 4-1 in his favor! But where is the EURCHF today? 13 measly ticks above the close before the key vote. This lousy bounce from that vote? And Jordon felt it was necessary to issue an unusual Sunday SNB Press Statement that reaffirmed the SNB’s commitment to “Do what it takes” including negative interests rates and unlimited intervention to support the 1.20 peg

I, for one, believe Mr. Jordon. I think he’s willing to write an enormous check to back up his promise. I think he has enough ammo to hold the Alamo for a while longer. But I never believed that “Unlimited” was a realistic description of the powers of the Swiss Central Bank.

If Mr. Jordan’s phone starts ringing over the next few months, and he’s forced to put in bids for $250B Euros, he might have to blink. A 50% increase in reserves in a short period of time would force the unpleasant question, “What does unlimited really mean?”

I put a break of EURCHF 1.20 as a low probability. But, on the other hand, a 1/4 Trillion Euros is not all that much money these days – so this has fireworks potential. What is at stake is not just the Swiss peg promise. If the SNB adjusts the peg to a dirty float, then the market would, in a matter of seconds, redirect its sights on Mr. Draghi’s promise of “Anything”. This scenario may be unlikely, but it’s a bad road to go. What could trigger a move on the SNB? A weak Euro would be the ticket to this show. How likely is that? Very!

 

At 1.2330 the EURUSD seems miles away from a break through 1.200. I think it could happen by Christmas. The best reason I can give for this is that all of the ‘Deciders’ (especially Draghi) want it to happen. We’ll see if the markets give Draghi what he really wants for a Yule celebration. The problem comes shortly thereafter when the talk runs, “We blasted through 1.20, the next stop is 1.10, better get in now or miss it!”

 

These potential breaks of the One Twenty levels are milestones that will trigger more volatility. They are somewhat correlated as a major driver of this is the weak Yen. A cheap Yen puts pressure on the Euro, and that will influence CHF demand.

 

There is a factor in this that has me wondering. What is the status of the FX Interbank market? Is it solid?

There are thousands of FX players, but the top 50 financial institutions make up most of the volume. The big guys are market makers, the rest of the actors are price takers. Where do the top 20 players in the FX market stand today?

Many of the top spot traders have been fired or forced to resign. Others have seen the light and moved on to greener pastures. Trading desks have been thinned, position limits cut. Prop trading has been cut back. Robots do most of the pricing. Auditors look at every trade. Compliance types are peering over shoulders. All communications are monitored. I’m concerned that the ‘Second String’ is manning the desks.

Put that together and ask, “Is this weakened system able to absorb a spike in one-directional volume? Will it step up and keep order? Or will it back off and allow volatility to roar? “

We’ll find out when the One Twenties get crossed.

 

 

rclock-01-20_34394_lg

 

end

 

 

 

Your more important currency crosses early Wednesday morning:

Eur/USA 1.2334 down .0053

USA/JAPAN YEN  119.39  up  .200

GBP/USA  1.5676 up .0027

USA/CAN  1.1385   down .0014

This morning in  Europe, the euro is down, trading now well below the  1.24 level at 1.2334 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.   It finally settled  in Japan down 20  basis points and settling now above the 119 barrier to  119.39 yen to the dollar (heading towards 120).  The pound is well up  this morning as it now trades just below  the 1.57 level at 1.5676.(very worried about the health of Barclays Bank and the FX/precious metals criminal investigation).  The Canadian dollar is up again today trading at 1.1385 to the dollar.

 Early Wednesday morning USA 10 year bond yield:  2.29% !!!  up 1  in  basis points from Tuesday night/

USA dollar index early Wednesday morning:  88.85 up 21 cents from Tuesday’s close

The NIKKEI: Wednesday morning up 57 points or 0.32% (Abe’s helicopter route to provide free cash)

Trading from Europe and Asia:
1. Europe  all in the green except London and Paris

2/    Asian bourses mostly in the green except India and Hang Sang      Chinese bourses: Hang Sang  in the red, Shanghai in the green,  Australia in the green:  /Nikkei (Japan) green/India’s Sensex in the red/

Gold early morning trading:  $1203.00

silver:$16.40

 

 

Closing Portuguese 10 year bond yield:  2.78% down 3  in basis points from Monday

 Closing Japanese 10 year bond yield:  .44% !!! up 2  in basis points from Tuesday

Your closing Spanish 10 year government bond Wednesday down 2   in basis points in yield from Tuesday night.

Spanish 10 year bond yield:  1.83% !!!!!!

Your Tuesday closing Italian 10 year bond yield:  1.98% down 3 in basis points from Tuesday:

trading 15 basis points higher than Spain:

 IMPORTANT CLOSES FOR TODAY

Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond:

Euro/USA:  1.2305  down  .0078

USA/Japan:  119.79 up .580

Great Britain/USA:  1.5697  up .0060

USA/Canada:  1.1367 down .0040

The euro fell in value during this afternoon’s  session,  and it is down by closing time , finishing just below the 1.24 level to 1.2305.  The yen was down  during the afternoon session, and it was down a huge 58 basis points on the day closing above the 119 cross at 119.79.   The British pound gained some  ground   during the afternoon session and it was up on the day closing  at 1.5697.  The Canadian dollar was well up  in the afternoon and was down on the day at 1.1367 to the dollar.

Currency wars at their finest today.

Your closing USA dollar index:   88.95  up 31 cents  from Tuesday.

your 10 year USA bond yield , up 2   in basis points on the day: 2.30%!!!!

European and Dow Jones stock index closes:

England FTSE  down 25.47 or 0.35%

Paris CAC  down 4.00  or 0.09%

German Dax up 3.56 or 0.08%

Spain’s Ibex up  37.71 or  0.38%

Italian FTSE-MIB up  197.74    or 1.00%

The Dow:up 33.07 or .18%

Nasdaq; up 18.66   or 0.38%

OIL:  WTI 67.38  !!!!!!!

Brent: 69.98!!!!

end

 

 

And now for your big USA stories

Today’s NY trading:

 

 

end

 

 

 

Not good for the USA shale industry:

 

 

 

 

(courtesy zero hedge)

 

 

 

 

 

New US Oil Well Permits Collapse 40% In November, Fed Still “Not Worried”?

 

Houston, we have a problem-er. With a third of S&P 500 capital expenditure due from the imploding energy sector (and with over 20% of the high-yield market dominated by these names), paying attention to any inflection point in the US oil-producers is critical as they have been gung-ho “unequivocally good” expanders even as oil prices began to fall. So, when Reuters reports a drop of almost 40 percent in new well permits issued across the United States in November, even The Fed’s Stan Fischer might start to question his lower oil prices are “a phenomenon that’s making everybody better off,” may warrant a rethink. New permits, which indicate what drilling rigs will be doing 60-90 days in the future, showed steep declines for the first time this year across the top three U.S. onshore fields: the Permian Basin and Eagle Ford in Texas and North Dakota’s Bakken shale.

end
Retail sales in the USA not good.
 (courtesy zero hedge)

Stocks Up, Bonds Up, USDollar Up, Gold Up, Oil Up Ahead Of Draghi’s Possible Let-Down

 

 

An utter VIXnado (below 12.25 in the last 30 mins) sparked a late-day buying panic in stocks ahead of tomorrow’s all-hopeful ECB meeting (because nothing makes more sense than lifting all protection ahead of a potentially massive market event) although the last few minutes closed weak. On the day high beta Trannies (despite higher oil) and Small Caps surged once again (as the market ignored PMI and ADP and loved ISM) as Monday’s ‘excessive’ selling of “most shorted” names has been face-ripped back the last 2 days.Treasury yields at the long-end fell back today after 2 days higher (with 30Y back below 3.0%) but <7Y were 0-2bps higher. The dollar roseonce again as EUR dropped to 1.2301 (-17 handles from Draghi’s first hint). Depsite USD strength, gold (over $1210) and oil (over $67) pushed higher but silver and copper slipped. In summary, buy back all your hedges, buy stocks, buy bonds, buy dollars, buy gold, buy oil, bye bye sanity.

 

 

“Most Shorted” stocks have been squeeze at both opens today and yesterday…

 

We hope everyone enjoyed today’s efficient market algo freakiness around munchtime….

As VIX was monkey-hammered lower today… (because nothing makes more sense than lifting all protection ahead of a potentially massive market event) but coul dnot sustain it into the close

 

 

Which pushed stocks to record-er highs (for Dow and S&P) with s weak close

 

and Trannies and Small Caps higher on the week

 

Treasury yields fell today (bonds were bought)

 

As The Dollar surged once again (on EUR weakness ahead of tomorrow)

 

EURUSD down 17 handles since Draghi hinted at QE… at 1.2301

 

Despite USD Strength, oil and gold gained on the day (silver and copper did not) but since OPEC’s initial leak, oil is down around 12% and Gold up around 1%

 

Charts: Bloomberg

 

end

 

Retails sales is certainly getting off to a slow start:

(courtesy zero hedge)

 

“Clearly A Negative Signal”: BofA Shows Thanksgiving Spending Was Biggest Dud Since Lehman

First it was Shoppertrak, then it was the National Retail Federation, then it was IBM, and now, with its own set of internal data, here is Bank of America slamming the door shut on US retail spending as a source of Q4 growth, and proving once and for all that the extended Thanksgiving-weekend, and the start to US holiday spending season, was the biggest dud since Lehman.

From BofA:

The BAC internal data showed a sluggish start to the holiday shopping season. Spending on BAC credit and debit cards over Thanksgiving and Black Friday declined 1.6% yoy. In order to restrict the sample to holiday-related spending, we are measuring “core control” sales, which nets out food services, gasoline, building materials and autos, making it a comparable sample to the Census Bureau’s data. While not as dismal as the 11% yoy decline reported by the National Retail Federation (NRF), our data supports the weak anecdotes.

This is how the data looks in context, courtesy of Goldman. As we said: biggest dud since Lehman.

Of course, it wouldn’t be a conflicted sell-side firm whose year end bonus is dependent on boosting confidence in a global pyramid scheme if BofA didn’t provide at least some silver lining. Which it did.

Although this is clearly a negative signal, it does not mean the overall holiday shopping season will be a bust, in our view. As Chart 1 shows, the NRF data has no correlation (actually an inverse relationship) with overall holiday sales from the Census Bureau. The BAC data historically have a better fit, since it measures actual sales unlike the surveys, but it still has fairly low forecasting power. There are a few reasons to advise caution when interpreting Black Friday sales. For one, measuring sales over a two-day period is naturally noisy, but particularly since retailers adjust the promotion schedule over the years. As we show in Chart 2, the promotions start earlier each year making the “door buster” deals of Black Friday less appealing. Moreover, the shift toward online shopping provides greater access to sales and incentives, also taking the focus away from Black Friday. The bottom line is that while we tempered our optimism, we still look for holiday sales to increase this year given the improving economic backdrop.

Well, at least BofA didn’t use the NRF’s idiotic “the economy is too strong for shopper to need a deal” excuse. As for the spin: yes, there is still hope. Because otherwise how would one explain spending slumping to recessionary levels at a time when the Departments of Truth would have everyone believe unemployment is the lowest in nearly a decade, while GDP is supposedly growing at a pace not seen since in years (the real story of America’s “adjusted” GDP was explained here).

 

 

end

 

The private ADP report a big employment miss:

 

(courtesy ADP)

 

 

 

ADP Employment Misses, Worst November In 4 Years

 

Following 2 months of improving growth and beats after a mid-year slump, ADP Employment in November dropped to 208k (from an upward revised 233k in Oct even as September was revised lower from 225K to 213K) missing expectations of 222k by the most since August.November has historically seen a significant bump higher in employment but 2014 saw a drop (the first since 2008) with the lowest November print since 2010.

ADP job growth slipped and missed:

 

Worst November since 2010, first drop in November since 2008

 

Some more charts:

Monthly change in ADP payroll:

 

ADP vs BLS:

 

Employment by Company Size

Employment by Selected Industry

 

From the report:

Payrolls for businesses with 49 or fewer employees increased by 101,000 jobs in November, down slightly from 103,000 in October. Job growth was down significantly over the month for medium-sized firms. Employment among companies with 50-499 employees rose by 65,000, well below October’s increase of 122,000. Employment at large companies – those with 500 or more employees – saw a rebound from 7,000 the previous month to 42,000 jobs added in November. Companies with 500-999 employees added 10,000 jobs, down from October’s 14,000. However, this drop was more than offset by the addition of 32,000 jobs by companies with over 1,000 employees.

 

Goods-producing employment rose by 32,000 jobs in November, down from 46,000 jobs gained in October. The construction industry added 17,000 jobs over the month, well below last month’s gain of 27,000. Meanwhile, manufacturing added 11,000 jobs in November, down slightly from October’s 13,000.

 

Service-providing employment rose by 176,000 jobs in November, down from 187,000 in October. The ADP National Employment Report indicates that professional/business services contributed 37,000 jobs in November. Expansion in trade/transportation/utilities grew by 49,000, just above October’s 48,000. The 5,000 new jobs added in financial activities was below last month’s 6,000.

 

“November continued to show solid job growth above 200,000,” said Carlos Rodriguez, president and chief executive officer of ADP. “Small businesses continued to drive job gains adding almost half the total for the month.”

And the ADP’s biggest value added: the infographic.


end
Let us close tonight with this interview with legendary John Williams of shadowstats.com and Greg Hunter of USAWatchdog
(courtesy John Williams/USAWatchdog/Greg Hunter)

3.9% GDP Nonsense-Dollar Turns Sharply Soon-John Williams

 

By Greg Hunter’s USAWatchdog.com

Economist John Williams is not buying the recent 3.9% GDP upward revision. Williams explains, “No one I know thinks we are growing at 3.9% other than they are trying to sell a bill of goods to the markets, specifically the currency markets. 3.9% is nonsense. You had 4.6% growth in the second quarter and 3.9% in the third.  Here you had two quarters at close to 4%, and we have not seen anything like that since 2003.  This is the strongest economy we have seen in 11 years, and I can tell you Main Street USA is not seeing that. . . . If you understate inflation, which the government does, you overstate inflation adjusted growth, and that is probably the biggest problem in the GDP report.”

Recently, the U.S. deficit passed the $18 trillion mark, but using honest accounting, Williams says the debt picture is much worse, “Using generally accepted accounting principles with expenses and obligations, what you are seeing is the actual deficit. Instead of being half a trillion dollars last year, it was more like $6 trillion in the same length of time.  The gross federal debt right now is $18 trillion.  If you add on the unfunded liabilities such as Social Security and Medicare, you are approaching $100 trillion in terms of total federal obligation.  There is just no way that can be covered. . . . The government, long term, is bankrupt.”

That brings us to the U.S. dollar. Williams says, “Right now, we have a big distortion in the market, and that is the strength of the U.S. dollar. I contend the dollar should be getting much weaker, and indeed it’s going to turn very sharply very soon, and that will be an approximate trigger for a major upturn in inflation. The reason the dollar is strong right now . . . the U.S. economy is booming, if you believe the statistics.  Main Street USA doesn’t believe the statistics.  The rest of the world is in recession, and guess what?  We’re in recession too.  We’re just not reporting the numbers as accurately as the rest of the world.”

Williams has revised and pushed back his hyperinflation forecast to begin in 2015 and not this year. Williams, now, expects a big upturn in the price of gold and oil next year.  Williams explains, “The issue remains the dollar.  What is distorted in the system right now is the dollar’s strength.  It’s the strongest it’s been in some time.  It’s over stated for multiple reasons ranging from outright manipulation to overstatement of economic growth and other games that have been played.  That’s going to reverse shortly.  As the dollar sells off, you will see inflation pick up.  Part of the reason why oil is where it is now and part of the reason why gold is where it is now is because of the dollar’s strength.”

So, what about the future? We start with the not-too-distant past of six years ago.  Williams says, “We are still living in the throes of the panic of 2008.  What the central banks did at that time, specifically the Fed and the Treasury, was to take actions to push all the issues into the future.  They didn’t do anything to solve the basic problem.  The banking system is still in trouble.  It is far from solvent, far from normal.   You don’t have regular bank lending.  If you had regular bank lending, the economy would really be much stronger.  It’s not.”  Williams goes on to say, “People outside the United States know America is in trouble, and they know the dollar is in trouble.  It’s not going to take much to trigger a reversal of the current circumstances.  It could be an unusually weak economic statistic, and believe me, those are coming.”

Join Greg Hunter as he goes One-on-One with John Williams, founder of Shadowstats.com.

(There is much more in the video interview.)

 

Video Link

http://usawatchdog.com/3-9-gdp-nonsense-dollar-turns-sharply-soon-john-williams/

 

 

 

end

 

 

 

 

That is all for today

I will see you Thursday night

bye for now

Harvey,

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3 comments

  1. Congratulations Harvey! You are back in the saddle, and puttin’ it to the Man. I guess not even the banksters, and google can keep a good man down!

    Like

    1. Harvey, in case you did not notice, your website is running on GMT(Greenwich Mean Time). This is the same as London, so it may be a Bankster/LBMA plot!

      Like

  2. Right here is the right site for anybody who wishes to understand this topic.
    You understand so much its almost hard to argue with you (not
    that I actually would want to…HaHa). You definitely put a
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    Like

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