June 3.2015:GLD falls by a huge 4.18 tonnes to 709.89/Small withdrawal of silver from SLV/First Majestic Silver Corp CEO complains to the CFTC on price manipulation/Greece must decide today to give in or default/Rebels from Eastern Ukraine attack Ukraine/ISM service PMI from USA falters today/Trade deficit narrows on lower imports/

Good evening Ladies and Gentlemen:

 

Here are the following closes for gold and silver today:

Gold:  $1184.70 down $9.40 (comex closing time)

Silver $16.46 down 32  cents (comex closing time)

 

In the access market 5:15 pm

Gold $1185.10

Silver: $16.52

 

Gold/Silver trading: see kitco charts on the right side of the commentary

 

Following is a brief outline on gold and silver comex figures for today:

At the gold comex today, we had a fair delivery day, registering  74 notices serviced for 7,400 oz.  Silver comex filed with 0 notices for nil oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 245.25 tonnes for a loss of 57 tonnes over that period.

 

In silver, the open interest rose by 164 contracts despite the fact that Tuesday’s silver price was up by only  2 cents.   The total silver OI continues to remain extremely high with today’s reading at 178,343 contracts maintaining itself near multi-year highs despite a record low price. This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end.

In silver we had 0 notices served upon for nil oz.

 

In gold,  the total comex gold OI rests tonight at 398,724 for a gain of 268 contracts as gold was up $5.80 on Tuesday. We had 74 notices filed for 7400 oz.

 

Late last night, we had a huge change in gold inventory at the GLD, a whopping 4.18 tonnes, thus the inventory rests tonight at 709.89 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold.

 

In silver, /we had a small withdrawal of 138,000 oz in silver inventory at the SLV/Inventory rests at 318.175 million oz

 

We have a few important stories to bring to your attention today…

1. Today,  had the open interest in silver rise by 164 contracts despite the fact that silver was up in price by 2 cents yesterday.  The OI for gold rose by 268 contracts up to 398,724 contracts as the price of gold was up by $5.80 yesterday. We again witness the collapse in the front month OI for no apparent reason.

(report Harvey)

2,Today we have 3 major commentaries on Greece. The ECB raises ELA by .5 billion euros to 80.7 billion euros.

(zero hedge )

3.  Another major bust in China coming: Hanergy Group

(zero hedge)

4.  First Majestic Silver Corp President and CEO, Keith Neumeyer, writes a letter to the CFTC complaining of manipulation in the precious metals. The letter was written in the same format as Ted Butler’s letter.

(First Majestic Silver Corp/zero hedge.GATA)

5. The rebels from Eastern Ukraine are on the offensive against Ukraine.

(zero hedge)

6. German bunds spike upwards to .80%.  All European peripheral bonds also rise in yield/spells trouble for underwriters of derivatives

(zero hedge)

7. Regulators in 11 countries forcing bail in provisions

(Reuters/Dave Kranzler IRD)

8. ISM services uSA (Markit) falters.

(zero hedge)

9. Private ADP: a little bounce but still lower than 2014

(ADP)

10. Precious metals trading overnight from Asia/Europe

(Goldcore)

11. Trading from Asia and Europe overnight

(zero hedge)

12. Trading of equities/ New York

(zero hedge)

13. Trade deficit narrows.  However lower imports as the consumer is just not spending

(zero hedge)

 

we have these plus other stories to bring your way tonight. But first……..

 

let us now head over to the comex and assess trading over there today.

Here are today’s comex results:

The total gold comex open interest rose by 268 contracts from 398,456 up to 398,724 as gold was up by $5.80 yesterday (at the comex close). For at least the past 18 months, we have been witnessing a total contraction of open interest in an active precious metals month once we  enter first day notice as well as the dumping of front month open interest, and today the tradition continues. We are now in the big active delivery contract month of June.  Here the OI fell by 3026 contracts down to 2062. We had 2,468 notices served upon yesterday.  Thus we lost 558 contracts or an additional 55,800 oz will not stand for delivery.  No doubt, again, we had a huge number of cash settlements.  The next contract month is July and here the OI rose by 13 contracts up to 480.  The next big delivery month after June will be August and here the OI rose by 2,852 contracts  to 261,572. No doubt that the cash settled June contracts, having been bought out for fiat, rolled into August. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 64,243. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day) was poor at 117,282 contracts. Today we had 74 notices filed for 7400 oz.

And now for the wild silver comex results.  Silver OI rose by 164 contracts from 178,179 up to 178,343 despite the fact that the price of silver was up  in price by only 2 cents, with respect to Tuesday’s trading.  The front non active  delivery month of June saw it’s OI rise by 0 contracts remaining at 33. We had 0 contracts delivered upon yesterday.  Thus we neither gained nor lost any silver contracts standing in this non active June contract month. The estimated volume today was good at 37,967 contracts (just comex sales during regular business hours. The confirmed volume yesterday (regular plus access market) came in at 50,776 contracts which is very good in volume. We had 0 notices filed for nil oz today.

June initial standing

June 3.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz    nil
Withdrawals from Customer Inventory in oz  2,339.907 oz (Brinks HSBC) includes 5 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  nil
No of oz served (contracts) today 74 contracts (7400 oz)
No of oz to be served (notices) 1988 contracts (198,800 oz)
Total monthly oz gold served (contracts) so far this month 2588 contracts(258,800 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month nil
Total accumulative withdrawal of gold from the Customer inventory this month  19,785.5 oz

Today, we had 0 dealer transactions

total Dealer withdrawals: nil oz

 

we had 0 dealer deposit

total dealer deposit: nil oz
we had 2 customer withdrawals

i) Out of Brinks 160.75 oz (5 kilobars)

ii) Out of HSBC:  2179.157 oz

total customer withdrawal: 2,339.907 oz

 

We had 0 customer deposits:

 

Total customer deposit: nil oz

 

We had 0  adjustment:

 

Today, 74 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 2468 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 422 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the May contract month, we take the total number of notices filed so far for the month (2588) x 100 oz  or 258,800 oz , to which we add the difference between the open interest for the front month of June (2062) and the number of notice served upon today (74) x 100 oz equals the number of ounces standing.

Thus the initial standings for gold for the June contract month:

No of notices served so far (2588) x 100 oz  or ounces + {OI for the front month (2062) – the number of  notices served upon today (74) x 100 oz which equals 457,600 oz standing so far in this month of June (14.233 tonnes of gold).  Thus we have 14.233 tonnes of gold standing and only 17.04 tonnes of registered or for sale gold is available:

 

Total dealer inventory 547,860.327 or 17.04 tonnes

Total gold inventory (dealer and customer) = 7,885,008.557 (245.25 tonnes)

 

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 245.25 tonnes for a loss of 57 tonnes over that period.

 

end

 

And now for silver

June silver initial standings

June 3 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 577,959.75 oz (Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  1,196,312.56 oz (Scotia,CNT)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 33 contracts(165,000 oz)
Total monthly oz silver served (contracts) 199 contracts (995,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 114,943.6
Total accumulative withdrawal  of silver from the Customer inventory this month 642,007.8 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

 

we had 0 dealer withdrawals:

 

total dealer withdrawal: nil oz

 

We had 2 customer deposits:

i) Into Delaware;  2966.900 oz

ii) Into CNT 595,608.5 oz

ii) Into Scotia: 600,704.06 oz

total customer deposit: 1,196,312.56  oz

 

We had 3 customer withdrawals:

i) Out of Brinks: 3000.38 oz

ii) out of Delaware: 14,824.072 oz

iii) Out of HSBC: 499,241.69 oz

total withdrawals from customer;  577,959.75 oz

 

we had 0 adjustments

 

Total dealer inventory: 58.189 million oz

Total of all silver inventory (dealer and customer) 180.408 million oz

The total number of notices filed today is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in June, we take the total number of notices filed for the month so far at (199) x 5,000 oz  = 995,000 oz to which we add the difference between the open interest for the front month of June (33) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.

Thus the initial standings for silver for the June contract month:

199 (notices served so far) + { OI for front month of June (33) -number of notices served upon today (0} x 5000 oz = 1,160,000 oz of silver standing for the June contract month.

we neither gained nor lost any silver contracts that  will stand for delivery in this month of June.

for those wishing to see the rest of data today see:

http://www.harveyorgan.wordpress.com orhttp://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:

June 3/late last night: a huge withdrawal of 4.18 tonnes. Tonight’s inventory rests at 709.89

 

June 2/no change in gold inventory at the GLD/Inventory rests at 714.07 tonnes

June 1/ we had a huge withdrawal of 1.79 tonnes of gold from the GLD/Inventory rests tonight at 714.07 tonnes

May 29/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

May 28/ no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 27: no changes in gold inventory at the GLD/Inventory rests at 715.86 tonnes

may 26.2015/we had a slight addition of .600 tonnes of gold to the GLD inventory/inventory rests at 715.86 tonnes

May 22.2015: no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 21./no changes in gold inventory at the GLD/Inventory rests at 715.26 tonnes

May 20./we had another withdrawal of 2.98 tonnes of gold leaving the GLD. Inventory rests tonight at 715.26 tonnes

May 19/no changes in gold inventory at the GLD/Inventory at 718.24 tonnes

June 3 GLD : 709.89  tonnes.

 

end

 

And now for silver (SLV)

June 3/ we had a small withdrawal of 138,000 oz of silver inventory/Inventory rests at 318.175 million oz

June 2/ we had a huge addition of 1.243 million oz of silver inventory at the SLV./Inventory rests at 318.313 million oz

June 1/no change in inventory at the SLV/Inventory rests at 317.07 million oz

May 29/no changes in inventory at the SLV/Inventory rests at 317.07 million oz

May 28/a small deposit of 143,000 oz of silver added to the SLV/Inventory rests at 317.070 million oz

May 27/we had another 1.003 million oz withdrawn from the SLV/Inventory rests tonight at 316.927 million oz

May 26.2015: no change in SLV /Inventory rests at 317.93 million oz

May 22.2015: no changes in SLV/Inventory rests at 317.93 million oz

May 21.no changes at the SLV/Inventory rests at 317.93 million oz

May 20/no changes at the SLV. Inventory rests at 317.93 million oz/

 

June 3/2015: a small withdrawal of 138,000 oz of inventory/SLV inventory at 318.175 million oz/

 

end

 

And now for our premiums to NAV for the funds I follow:

 

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 7.9% percent to NAV in usa funds and Negative 8.0% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 60.9%

Percentage of fund in silver:38.7%

cash .4%

( June 3/2015)

 

2. Sprott silver fund (PSLV): Premium to NAV rises to-0.02%!!!!! NAV (June 3/2015)

3. Sprott gold fund (PHYS): premium to NAV falls to -33% to NAV(June 3/2015

Note: Sprott silver trust back  into negative territory at -0.02%.

Sprott physical gold trust is back into negative territory at -.33%

Central fund of Canada’s is still in jail.

 

Last week Sprott formally launches its offer for Central Trust gold and Silver Bullion trust:

SII.CN Sprott formally launches previously announced offers to Central GoldTrust (GTU.UT.CN) and Silver Bullion Trust (SBT.UT.CN) unitholders (C$2.64)
Sprott Asset Management has formally commenced its offers to acquire all of the outstanding units of Central GoldTrust and Silver Bullion Trust, respectively, on a NAV to NAV exchange basis.
Note company announced its intent to make the offer on 23-Apr-15 Based on the NAV per unit of Sprott Physical Gold Trust $9.98 and Central GoldTrust $44.36 on 22-May, a unitholder would receive 4.45 Sprott Physical Gold Trust units for each Central GoldTrust unit tendered in the Offer.
Based on the NAV per unit of Sprott Physical Silver Trust $6.66 and Silver Bullion Trust $10.00 on 22-May, a unitholder would receive 1.50 Sprott Physical Silver Trust units for each Silver Bullion Trust unit tendered in the Offer.
* * * * *

end

 

Early morning trading from Asia and Europe last night:

 

Gold and silver trading from Europe overnight/and important physical

stories

 

(courtesy Mark O’Byrne/Goldcore)

Bail-Ins Coming – EU Gives Countries Two Months To Adopt Rules

 

– 11 countries face legal action if bail-in rules are not enacted within two months
– Bail-in legislation aims at removing state responsibility when banks collapse
– Rules place burden on creditors – among whom depositors are counted
– Austria abolished bank deposit guarantee in April
– “Bail-in regimes” coming globally

goldcore_chart3_18-05-15
The European Commission has ordered 11 EU countries to enact the Bank Recovery and Resolution Directive (BRRD) within two months or be hauled before the EU Court of Justice, according to a report from Reuters on Friday.

The news was not covered in other media despite the importantrisks and ramifications for depositors and savers throughout the EU and indeed internationally.

The article “EU regulators tell 11 countries to adopt bank bail-in rules” reported how 11 countries are under pressure from the EC and had yet “to fall in line”. The countries were Bulgaria, the Czech Republic, Lithuania, Malta, Poland, Romania, Sweden, Luxembourg, the Netherlands, France and Italy.

France and Italy are two countries who are regarded as having particularly fragile banking systems.

The rules, known as the Bank Recovery and Resolution Directive (BRRD), aim ostensibly, to shield taxpayers from the fall out of another banking crisis. Should such a crisis erupt governments will not be obliged to prop up the banks. At any rate most countries are far too deeply indebted to play such a role.

Instead, the burden is being placed on the creditors. As Reuters put it,

The rules seek to shield taxpayers from having to bail out troubled lenders, forcing creditors and shareholders to contribute to the rescue in a process known as “bail-in”.

However, if recent events in Austria are anything to go by, creditors now also include depositors of banks. In April, Austria enacted legislation which removed government liability for all bank deposits.

Until then, the state would protect deposits of ordinary people and companies up to a value of €100,000. In its place a bank deposit insurance fund is being set up. This fund appears inadequate to protect savers’ deposits in the event of any kind of bank failure. We covered the story in more detail here.

Each country will enact its own version of the BRRD. How vulnerable savers are in specific countries is difficult to tell at this time. The drive towards a cashless economy which has accelerated in recent months makes deposit holders and savers ever more vulnerable.

This bail-in legislation which is being driven by the BIS through the Bank of England, ECB, Federal Reserve and Federal Deposit Insurance Corporation (FDIC)  appears designed to protect banks by allowing them to confiscate deposits to prop them up rather than the noble stated objective – “to shield taxpayers”.

Those who hold deposits in our banks are also taxpayers and have already paid tax in order to earn the money that is on deposit.

Allowing for the confiscation of deposits is a retrograde step and may be the last straw for an already enfeebled western banking system. It will also be very deflationary as a primary source of capital and demand – from companies and consumers – is confiscated.

goldcore_chart1_03-06-15
Cyprus was devastated by bail-ins and has shown little sign of recovery.

Central banks claim to be attempting to avert deflation with QE and negative interest rates and not simply bailing out and aiding overly indebted banks.

However, the bail-in of deposits would again place the interests of banks over those of taxpayers and depositors. It would be very deflationary and could be the tipping point which pushes economies into a recession and depression.

However, the key insight from Cyprus and the coming move from bail-out regimes to bail-in regimes, is that a precedent has now been created in terms of deposit confiscation. Therefore, simply having deposits in a bank is no longer the safest way to save, protect capital and conservatively grow wealth.

Conservative wealth management, asset diversification and wealth preservation will again become important and gold will again have an important role to play in order to protect, preserve and grow wealth in the coming bail-in era.

Must-read Guides:
Protecting Your Savings In The Coming Bail-In Era
From Bail-Outs To Bail-Ins: Risks and Ramifications –  Includes 60 Safest Banks In the World

MARKET UPDATE

Today’s  AM LBMA Gold Price was USD 1,186.60, EUR 1,067.23 and GBP 777.60 per ounce.
Yesterday’s AM LBMA Gold Price was USD 1,188.75, EUR 1,083.17  and GBP 779.91 per ounce.

Gold climbed $4.10 or 0.34 percent yesterday to $1,193.40 an ounce. Silver rose $0.06 or 0.36 percent to $16.80 an ounce.

Gold in GBP - 1 Week

Gold in Singapore for immediate delivery edged down 0.2 percent to $1,191.40 an ounce near the end of the day,  whilegold in Switzerland ticked marginally higher.

Gold rallied a bit yesterday on the news of weak U.S. factory orders and a feeble U.S. dollar and falling stock markets, while the market looked for closure in the Greek debt negotiations.

News that Greece outlined an agreement to deliver to the Athens government strengthened the euro and saw the dollar come under pressure.

Top gold ETF holdings were seen at a five year low yesterday. SPDR Gold Trust, the world’s largest gold  exchange-traded fund, said its holdings fell 0.59 percent to 709.89 tonnes on Tuesday, the lowest since January.

Holdings of all gold ETFs are close to their lowest in nearly six years showing the very poor sentiment towards gold.

The current holding pattern on the gold price continues. The non farm payrolls number on Friday will be keenly watched for signs about how bad the slowdown in the U.S. is.

In late morning trading gold bullion is down 0.43 percent at $1,188.43 an ounce. Silver is off 0.76 percent at $16.64 an ounce and platinum is down 0.12 percent at $1,111.67 an ounce.

Breaking News and Research Here

 

end

(courtesy Times of India)

 

Traders may get cash-settled gold and silver futures on Indian commodity exchange

Section:

By Ram Sahga
The Times of India
Wednesday, June 3, 2015

http://economictimes.indiatimes.com/markets/stocks/news/traders-may-get-…

MUMBAI — Domestic punters and hedgers in gold and silver futures might soon be able to play similar contracts that are traded on CME Group, the world’s largest derivatives marketplace, but denominated in rupees on the Multi-Commodity Exchange (MCX), the country’s largest commodity bourse, subject to regulatory approval.

Unlike existing gold and silver contracts that are compulsorily settled at the average of three days’ spot price in Ahmedabad, the new contracts will be cash settled at the CME relevant rate multiplied by the rupee exchange rate, said two persons aware of the development. “This will be helpful to those who don’t want delivery but just to hedge or speculate. Approval of Forward Markets Commission, or FMC, is awaited,” they added.

On MCX the kilo gold contract is settled once in two months. The contract enters the delivery period on the first of the expiry month while delivery takes place on the fifth. However, once the contract enters delivery period, the margin to trade jumps to 25 per cent of open position, which is substantial, leading to many hedgers and punters simply rolling over their positions or squaring off pre-delivery. In the new contract, this might not be the case since it is cash-settled.”Clients in such case will not be forced to roll over or cut out their positions before delivery period,” said one of them cited earlier.MCX has an agreement in place with CME for using its benchmark prices in metals and energy contracts. The new contracts would be similar to Gold Hedge launched by MCX rival NCDEX in January 2014 to raise its turnover by diversifying into non-farm products. However, gold hedge, as per data for May, seldom crosses Rs.100 crore turnover on the predominantly farm futures bourse.MCX, on the other hand, recorded turnover of Rs.4,000-5,000 crore a day in gold over the same period. Gold is also delivered on MCX. In April, 445 kilos valued at Rs.117 crore was delivered on MCX.”The thinking is that these contracts will gain better traction on MCX which is a metals and energy bourse where maximum trading in bullion futures happens here,” said the other person.
end
(courtesy New York Sun/GATA)

New York Sun: Jeb Bush on the dollar and currency manipulation

Section:

From The New York Sun
Tuesday, June 2, 2015

We were just sitting down at the typewriter to tap out an editorial on the failure of any of the Republican contenders to address the crisis in respect of the dollar when an email hit our screen from the editor of the Future of Capitalism about the remarks over the weekend by Jeb Bush. The former governor of Florida was making an appearance at WMUR-TV in New Hampshire when he was asked whether, as Future of Capitalism characterized the question, “foreign currency manipulation had put American manufacturers at a disadvantage.”

Mr. Bush responded that there might be some manipulation by foreigners. But, he added, You can make a case that in the last few years, given our monetary policy, we’ve been manipulating our currency. We’ve never had a time where our central bank is just printing money like nobody’s business. And that depreciates our currency. It lowers our interest rates and depreciates our currency.”

Mr. Bush acknowledged that there exist some protections against foreign currency manipulation already and noted that an eventual trade pact may yet add more. …

… For the remainder of the commentary:

http://www.nysun.com/editorials/jeb-bush-on-the-dollar/89177/

end

 

 

A biggy silver mining company takes heed to ted Butler’s letter and slams the CFTC:

(courtesy,GATA/ zero hedge/First Majestic Silver Corp)

First Majestic Silver CEO complains to CFTC about market manipulation

Section:

10:37a ET Wednesday, June 3, 2015

Dear Friend of GATA and Gold:

Keith N. Neumeyer, president and CEO of First Majestic Silver, just about the only executive in the monetary metals mining industry who complains openly about market manipulation that suppresses the price of gold and silver, has heeded market analyst Ted Butler’s latest call to write to the U.S. Commodity Futures Trading Commission, a call noted by GATA last week:

http://www.gata.org/node/15406

Neumeyer’s letter is posted in PDF format at GATA’s Internet site here —

http://www.gata.org/files/FirstMajesticLetterCFTC-06-01-2015.pdf

— and investors in the monetary metals mining industry who are not hopelessly demoralized might do well to bring it to the attention of the companies in which they have invested.

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

 

end

 

One Of The World’s Largest Silver Miners Slams The CFTC About Silver Market Manipulation

It has long been known to silver market watchers that when it comes to the price of paper silver, there has long been a chronic and extremely concentrated shorting presence at the Comex, one which the CFTC has persistently refused to address even though it consistently surpasses the proposed limits on derivative positions. Now, at long last, a Canadian silver miner, First Majestic Silver Corp., has decided to take the CFTC to task.

In a letter penned by Ted Butler to CFTC Chairman Tim Massad (who recently replaced former Goldmanite andfuture US Treasury Secretary, Gary Gensler), Keith Neumeyer, CEO of First Majestic, became the first primary silver producer to vocally highlight some of the questionable activity reported weekly in the CFTC’s Commitment of Traders report, specifically the “record position change of more than 28,200 net contracts of COMEX silver futures” the equivalent of 141 million ounces of silver and 61 days of world mine production. Incidentally, this was first observed here one week ago.

Neumeyer observes accurately that the “big changes in positions on the COMEX are by speculators and commercials acting as speculators and not by those engaged in bona fide hedging” and comments that “such massive speculation in COMEX silver futures may not be in keeping with the spirit and intent of commodity law andmay suggest something is wrong with the price discovery process, since real producers and consumers of silver don’t appear to be represented.

Neumeyer concludes that such moves in the futures market “appear from the outside to be manipulated practices by a concentration of players.”

Don’t hold your breath for a response, however. Recall that less than two years ago, under the aegis of Bart Chilton who is currently a handsomely paid lobbyist at DLA Piper on behalf of the HFT lobby after spending years bashing them while at the CFTC, the commodity regulatorclosed its “investigation” concerning manipulation in the silver market, without finding anything:

CFTC Closes Investigation Concerning the Silver Markets

Washington, DC – The Commodity Futures Trading Commission (CFTC or Commission)Division of Enforcement has closed the investigation that was publicly confirmed in September 2008 concerning silver markets. The Division of Enforcement is not recommending charges to the Commission in that investigation. For law enforcement and confidentiality reasons, the CFTC only rarely comments publicly on whether it has opened or closed any particular investigation.Nonetheless, given that this particular investigation was confirmed in September 2008, the CFTC deemed it appropriate to inform the public that the investigation is no longer ongoing. Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets.

Curiously, this investigation took place during a time when the CFTC, as it publicly admitted recently never even looked at spoofing activity in the precious metals markets, which also explains why two days ago, another Indian scapegoat (the third in a row after Navinder Saraoand Nasim Salim), one Himanshu Kalra was busted for spoofing gold and silver in the period between March 1, 2012 and October 31, 2012a span of time which was covered by the CFTC’s grand silver manipulation which concluded in September 2013, and yet which the CFTC completely failed to notice.

And yes, in a non-banana republic, a regulator so humiliated would be forced to at least reopen its “investigation” and admit that it was wrong and has missed glaring examples of market rigging, but in the US that won’t happen.

Which is also why while we salute First Majestic with this first public appeal by a corporation to the CFTC to stop the rigging in the silver market, we have absolute certainty that this too complaint will promptly end up in Mr. Massad trash never to be heard from again.

end

We brought this to your attention yesterday, but it is worth repeating;

(courtesy Epoch Times/and special thanks to Robert H for sending this to us)

 

Europe Was First, Now a US State Wants Control Over Its Gold

end

 

And now overnight trading in stocks and currency in Europe and Asia

 

1 Chinese yuan vs USA dollar/yuan strengthens to 6.1980/Shanghai bourse red and Hang Sang: green

2 Nikkei closed down by 69.68  points or .34%

3. Europe stocks all in the green/USA dollar index up to 96.20/Euro falls to 1.1020/

3b Japan 10 year bond yield: huge rise to .47% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.78/very ominous

3c Nikkei still just above 20,000

3d USA/Yen rate now well above the 124 barrier this morning

3e WTI 59.93 and Brent:  64.09

3f Gold down/Yen down

3gJapan is to buy the equivalent of 108 billion uSA dollars worth of bond per month or $1.3 trillion. Japan’s GDP equals 5 trillion usa.

Japan to buy 100% of all new Japanese debt and by 2018 they will have 25% of all Japanese debt. Fifty percent of Japanese budget financed with debt.

3h Oil down for WTI and down for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to 71 basis points. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate fall  to 22.17%/Greek stocks up 3.82%/ still expect continual bank runs on Greek banks /Greek default inevitable/

3j Greek 10 year bond yield falls to: 11.20%

3k Gold at 1191.00 dollars/silver $16.65

3l USA vs Russian rouble; (Russian rouble falls 1/5  rouble/dollar in value) 53.41 , the rouble is still the best acting currency this year!!

3m oil into the 59 dollar handle for WTI and 64 handle for Brent/Saudi Arabia increases production to drive out competition.

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation. This can spell financial disaster for the rest of the world/China may be forced to do QE!!

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9360 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0409 well below the floor set by the Swiss Finance Minister.

3p Britain’s serious fraud squad investigating the Bank of England/

3r the 4 year German bund remains in negative territory with the 10 year moving still near negativity at +.71/

3s Six weeks ago, the ECB increased the ELA to Greece by another large 2.0 billion euros.Four weeks ago, they raised it another 1.1 billion and then two weeks ago they raised it another tiny 200 million euros to a maximum of 80.2 billion euros. Last week, the limit was not raised. Today, the ECB raised the ELA by 1/2 billion euros to 80.7 billion euros.The ELA is used to replace depositors fleeing the Greek banking system. The bank runs are increasing exponentially. The ECB is contemplating cutting off the ELA which would be a death sentence to Greece and they are as well considering a 50% haircut to all Greek sovereign collateral which will totally wipe out the entire Gr. banking and financial sector.

3t Greece  paid the 700 million plus payment to the IMF last Wednesday but with IMF reserve funds.  It must be paid back in on June 9.

3 u. If the ECB cuts off Greece’s ELA they would have very little money left to function. So far, they have decided not to cut the ELA

4. USA 10 year treasury bond at 2.28% early this morning. Thirty year rate just above 3% at 3.03% / yield curve flatten/foreshadowing recession.

 

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

 

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

Futures Rise, Bund Rout Pauses On “Cautious Optimism” Ahead Of Greek Endgame

With the Greek IMF payment just 48 hours away, and Europe having submitted its best and final offer to Greece in a battle of “deal proposals”, today Greek PM Tsipras will meet with European Commission President Juncker to discuss the recently submitted reform proposals by the Greek premier. However, a Greek government spokesman says that Greek PM Tsipras will not meet Eurogroup’s Dijsselbloem despite several reports suggesting that they would do so later today. Last night it was reported that the EU, ECB, IMF agreed on terms for a cash-for-reform plan to be presented to Greece. However, a senior EU official has said that they are concerned that the stringent measures of the proposal could be met with rejection by Greece.

As a result, European markets, which have been following the Greek drama closely, are mixed, as are US equity futures. Price action in Europe thus far has taken place in a considerably more confined range than in recent days with participants pausing for breath ahead of upcoming key risk events. Equities currently trade with no sustained direction with a modest bout of underperformance in the FTSE 100 with miners leading the way lower for the index amid softness in metals markets.

More importantly in the European bond market after yesterday’s latest historic one-day rout, Bunds have managed to temporarily halt their recent decline after trading relatively sideways as attention turns towards the upcoming ECB press conference.

Indeed, it is not only Greece on the calendar today but so is the ECB’s monthly press conference. According to SocGen, with deflation fears largely averted, expect no policy action from Mario Draghi in just over two hours and only small adjustments to staff projections. Most of the interesting points are likely to emerge during the press conference (in which reporters will be screened far more carefully this time), with questions focused on the solvency of Greek banks (especially in case of the potential impairment of Greek public debt), the ECB’s communication policy (following the recent Cœuré incident), reasons for the bond sell-off, the inflation outllok, coming after the higher than expected May printings, and possibly views on exit strategies for the ECB.

In FX markets, the main mover this morning has been GBP, with GBP/USD falling over a point in the wake of the latest Service PMI number from the UK which fell way short of expectations (56.5 vs. Exp. 59.2). Elsewhere, AUD has held onto its
gains on the back of a stellar Australian Q1 GDP report, which showed the fast growth pace in a year (GDP SA (Q1) Q/Q 0.9% vs. Exp. 0.7% (Prev. 0.5%). EUR/USD currently trades relatively unchanged as participants await any response by either Greece or their European counterparts on the latest set of proposals.

In the commodity complex, WTI and Brent crude futures have continued to drift lower after breaking below the USD 61/bbl level with the latest API crude oil inventories pointed to a second consecutive build in oil stockpiles (+1.8mln vs. Prev. +1.268mln). Furthermore, according to a senior OPEC delegate, the cartel are in agreement to maintain their current  production target at Friday’s meeting. According to Bloomberg, OPEC touted prospect of raising their production in future months, years. Prices started the day lower after API yday reported crude inventory increase.

In metals markets, both spot gold and silver have seen a modest pullback of  yesterday’s steep gains in the wake of the weaker USD.

In summary: European shares remain mixed with the retail and personal & household sectors outperforming and basic resources, oil & gas underperforming. Greek PM heads to Brussels to hear details for final proposal from creditors. Euro-zone May services, composite PMI ahead of estimates as was French, German services PMI; U.K., Spain, Italy services PMI below ests. OECD cuts global growth forecast. The German and Swiss markets are the best-performing larger bourses, Italian the worst. The euro is weaker against the dollar. Japanese 10yr bond yields rise; Italian yields decline. Commodities decline, with Brent crude, WTI crude underperforming and zinc outperforming. U.S. ISM non-manufacturing, trade balance, mortgage applications, ADP employment change, Markit U.S. composite PMI, Markit U.S. services PMI due later.

Market Wrap

  • S&P 500 futures up 0.2% to 2111
  • Stoxx 600 up 0.1% to 396.9
  • US 10Yr yield up 1bps to 2.27%
  • German 10Yr yield up 0bps to 0.72%
  • MSCI Asia Pacific down 0.3% to 150.1
  • Gold spot down 0.4% to $1188.7/oz
  • Eurostoxx 50 +0.3%, FTSE 100 -0%, CAC 40 +0.2%, DAX +0.4%, IBEX -0.2%, FTSEMIB -0.3%, SMI +0.4%
  • Asian stocks fall with the Hang Seng outperforming and the Sensex underperforming; MSCI Asia Pacific down 0.3% to 150.1
  • Nikkei 225 down 0.3%, Hang Seng up 0.7%, Kospi down 0.7%, Shanghai Composite down 0%, ASX down 0.9%, Sensex down 1.1%
  • Euro down 0.26% to $1.1122
  • Dollar Index up 0.38% to 96.2
  • Italian 10Yr yield down 11bps to 2.01%
  • Spanish 10Yr yield down 11bps to 1.98%
  • French 10Yr yield down 2bps to 1%
  • S&P GSCI Index down 1.4% to 437.3
  • Brent Futures down 2.3% to $64/bbl, WTI Futures down 2.2% to $59.9/bbl
  • LME 3m Copper down 0.5% to $6010/MT
  • LME 3m Nickel down 1% to $12920/MT
  • Wheat futures down 0.2% to 511.5 USd/bu

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Price action in Europe has been relatively muted thus far compared to recent sessions as participants await
    upcoming key risk events
  • GBP leads the way lower for FX markets following weak services PMI, while EUR is steady ahead of potential
    updates surrounding Greece
  • Looking ahead, today sees the release of US Services PMI, ECB Rate Decision, US ADP Employment Change,
    Trade Balance, ISM Non-Manf., DoE Crude Inventories
  • Treasuries decline, 10Y yield near YTD closing high as markets wait for Greece developments; ADP Employment for May due today, est. +200k with payrolls dGreek PM Tsipras will be told the details of a final proposal from creditors to break a stalemate over a financial lifeline as his country runs out of options to avert a default
  • German officials, who spoke on condition of anonymity, said their government was skeptical that a deal can be struck before the G-7 summit in Bavaria on June 7
  • ECB to announce its interest-rate decision at 7:45am New York time, with Draghi press conference 45 minutes later amid tighter security after a protester disrupted the last such event in April
  • U.K. services expanded at the slowest pace in five months in May, according to a Markit index of business activity; a separate report showed euro-area services also slowed
  • The PBOC, which has failed to bring down long-term borrowing costs amid a focus on influencing seven-day borrowing  costs, is now seen to be shifting its attention to lending facilities ranging from three months to five years
  • The OECD cut its global growth forecast, saying investment is lagging and risks including a possible Greek default are hurting confidence
  • Sovereign 10Y bond yields mixed. Asian stocks lower, European stocks mixed, U.S. equity-index futures decline. Crude oil, copper and gold lower

 

DB’s Jim Reid concludes the overnight recap

 

If we carry on this week’s Government bond sell-off then next year we’ll be inviting Government borrowers to our HY conference. Indeed yesterday Craig led the EMR on the topic of Monday’s bond market sell-off but the reality is that the last 24 hours has seen even sharper global moves led by Bunds after a higher than expected European inflation print which overshadowed mixed US data. Indeed, following a beat at both the headline (+0.3% yoy vs. +0.2% expected) and core (+0.9% yoy vs. +0.7% expected) – the latter in particular up from +0.6% in April and at the highest level since August last year – 10y Bunds yields soared +17.3bps higher in yield to eventually close at 0.712% and only just off the highs of around 3 weeks ago. 4y Bunds closed 5.3bps higher meanwhile at -0.038%, taking them back towards positive territory for the first time since mid-December. The move in the 10y yesterday was in fact bigger than any during the sell-off through end-April to mid-May and culminated in the largest one-day move higher in yield since August 2012. The inflation data is probably enough to ease any lingering deflationary concerns, but it’s unlikely to be sufficient to force the ECB into any QE tapering . Today’s ECB meeting may well shed some more light on Draghi’s current thinking but we expect him to stick to his guns (whilst potentially going into more detail on the front-loading of asset purchases) in the press conference this afternoon.

As well as the move higher in Bunds, 10y yields in France (+16.0bps), Sweden (+13.0bps) and Netherlands (+16.9bps) all saw similar moves higher in yield, while in the periphery Spain, Italy and Portugal ended +11.8bps, +14.7bps and +10.5bps higher respectively. The data, along with some headlines out of Greece that Creditors are set to present Greece with a reforms proposal, helped the Euro rally +2.05% against the Dollar, the biggest uptick in 10 weeks.

The moves in European bonds appeared to filter through into the Treasury market as the 10y benchmark in particular closed +8.3bps higher in yield despite some soft data and relatively dovish comments from the Fed’s Brainard. On the data front, the ISM NY for May declined 4.1bps to 54.0 (vs. 58.0 expected) while the June reading for the IBD/TIPP economic optimism index was also a miss (48.1 vs. 49.8 expected). Softer than expected factory orders also attracted some attention as the -0.4% mom reading for April came in lower than the -0.1% expected. The ex-transportation print remained unchanged for the month. Vehicle sales made for slightly better reading later in the afternoon however with the 17.7m SAAR print up from 16.5m last month.

The Fed’s Brainard offered a slightly dovish tone yesterday, saying that ‘it would be difficult, based on the data available today, to dismiss the possibility of a more significant drag on the economy that anticipated from foreign crosscurrents’. She did go on to say that although a case for liftoff may not be immediate, ‘it is coming into view’ and that there is value in ‘watchful waiting’. Despite the soft data and relatively dovish Fedspeak, Fed Funds expectations rose for a second consecutive day with the Dec16 and Dec17 contracts +1bp and +5bps respectively. There was no change in the Dec15 contract.

The Greece saga rumbles on in the background meanwhile. It was the various headlines announcing that Greece’s Creditors have drafted a list of proposals which they are set to present to Greece today that marked an important development, seemingly putting the ball firmly in Greece’s court. A senior EU official was quoted as saying that the draft ‘covers all key policy areas and reflects the discussions of recent weeks’. The list is set to be discussed with PM Tsipras today who is due to meet EC President Juncker in Brussels this evening. The move countered the news that Greece had submitted its own list to European leaders prior to their meeting in Berlin on Monday night, which according to Greek press Ekathimerini quoted sources as saying that the proposal was too vague and lacking detail. Tsipras had been noted as saying that ‘Greece is the one that submits the plan’ in comments yesterday and that ‘this is our main, non-negotiable position’. Dutch Finance Minister Dijsselbloem was typically more defiant however, saying that ‘there is a misunderstanding that we should meet halfway’. The hope now will be for a political deal to be reached by Friday which in turn will allow a comprehensive staff-level agreement to be finalised in the coming weeks. In the mean time however, there still remains the risk of non-payment of the IMF loan due Friday with a Greek government official saying that Athens would only make the payment if there was an agreement with creditors. Greek 10y yields closed 9bps tighter yesterday, although Greek equities declined 2.47%.

Bond markets in Asia this morning appear to be following much of the lead from Europe yesterday with 10y yields in Australia (+15.1bps), Japan (+1.9bps), South Korea (+5.0bps) and Singapore (+5.7bps) all climbing higher. It’s more of a mixed picture in equity markets this morning however where the Hang Seng (+0.74%) has firmed, while the Nikkei (-0.33%), Shanghai Comp (-1.02%) and ASX (-0.96%) have dropped. Data wise, there were some positive indicators out of China where the official May services PMI reading rose 0.6pts to 53.5, the fourth consecutive monthly increase and highest level since December. That, combined with the manufacturing reading earlier this week means the composite has still fallen slightly to 51.2 (from 51.3). Over in Japan meanwhile, the services PMI print has risen 0.2pts to 51.5, meaning the composite has now increased to 51.6, from 50.7 in April. In Australia, the AUD (+0.3%) has extended gains for a second consecutive day meanwhile after a higher than expected Q1 GDP reading (+2.3% yoy vs. +2.1% expected) for the region.

Back to China quickly, yesterday our China Chief Economist Zhiwei Zhang noted that the PBoC once again loosened policy further, this time through its lending facility by offering at least Rmb 1tn of pledged supplementary lending (PSL) to China Development Bank. Despite the move, Zhiwei continues to expect another interest rate cut in June and another in Q3, as well as a RRR cut in Q3.

Running over the remainder of market moves yesterday, the move higher in bond yields helped support a weakening of utility stocks in the US which in turn sent the S&P 500 (-0.10%) and Dow (-0.16%) lower. The softer data encouraged a weak day for the Dollar as the DXY ended 1.52% lower, although in reality this was largely dictated by the rally in the Euro. In Europe there was a similar weakness in equity markets as the Stoxx 600 (-1.03%), DAX (-0.94%) and CAC (-0.41%) all declined. Credit markets were more resilient however as Crossover ended 6bps tighter. In terms of the remaining data flow in Europe, April’s Euro area PPI was softer than expected (-0.1% mom vs. +0.1% expected) while there was no change in German unemployment, coming in as expected at 6.4%. UK mortgage approvals (68.1k vs. 63.5k expected) and net consumer credit (1.2bn vs. 1.0bn) were above consensus.

Looking at today’s’ calendar now, we get more PMI releases in Europe where we get the final May services and composite readings for the Euro-area as well as regionally. Euro area unemployment data and retail sales will also be due while we also get the OECD economic outlook and of course the ECB meeting and associated press conference from Draghi in the early afternoon. In terms of data in the US this afternoon, we’ll also see the final PMI services and composite prints along with the ISM non-manufacturing, April trade balance (important for Q2 GDP) and the ADP employment change reading (which will be an important precursor ahead of payrolls on Friday). The Fed is also due to release the Beige Book this afternoon while the Fed’s Evans is due to speak.

 

end

 

Overnight in China:

the next big stock to bite the dust will be  Hanergy Group

(courtesy zero hedge)

Chinese Stocks Stumble As Hanergy Debt Debacle Looms Over All The 500%-Club

If one sentence sums up the farce that the hyper-speculative ponzifest that is the 500% club in China it is“Hanergy Group was basically using the listed company as a means to produce collateral in the form of shares that it could then pledge to secure financing.” While the stock has been cut in half, lenders remain mired in opacity as they try to figure out, asBloomberg reports, which of Chinese billionaire Li Hejun’s many creditors risk losing every yuan they put into his company?Shenzhen and CHINEXT indices are lower out of the gate today after a 14% and 18% surge in the last 2 days as a group of 11 lenders (ranging from large banks to small asset managers) ask for a meeting to discuss various loans with various Hanergy entities… andwhatever they find in Hanergy is bound to have been repeated manifold across China’s manic markets.

The surge is over… for now…

As investors grow a little weary of “the opacity about parent finances and billings,” in Hanergy and across numerous other names we are sure.As Bloomberg reports, a plethora of Chinese lenders are exposed to Hanergy Thin Film Power Group Ltd. and its parent company, including Industrial and Commercial Bank of China, which is owed tens of millions of dollars.

“The interesting thing with Hanergy is that so much is happening with the parent company that investors know nothing about,” said Charles Yonts, an analyst with CLSA Asia-Pacific Markets in Hong Kong. “The opacity about parent finances and billings is extraordinary.”

A Bloomberg examination of debt held by Hanergy Thin Film and its closely held parent, Hanergy Holding Group Ltd., show Li has tapped a variety of financing sources since the Hong Kong unit’s stock started surging last year. They include policy-bank lending, short-term loans from online lenders with interest rates of more than 10 percent and partnerships with local governments.

Lenders also include China Everbright Bank, China Minsheng Bank, two of the companies set up to manage Chinese banks’ bad assets; and Harvest Fund Management Co., one of the country’s biggest fund managers with assets of more than $55 billion.

Local governments have also provided money. Hanergy entered separate financing deals with governments in Sichuan, Shandong and Hebei.

Hanergy pledged ownership stakes in a hydropower station in southern China to four trust companies, a guarantee company and a subsidiary of Harvest Fund Management in exchange for credit. It also guaranteed more than 100 million yuan in loans from online microfinancer Itouzi, and took 18.5 million yuan in loans from another microfinancer, Jimubox, according to the two lenders’ websites.

Hanergy Group has given no public accounting of all its debt or the debt scattered among its units. In its 2014 full-year results, Hanergy Thin Film reported debt of 4.4 billion yuan ($710 million).

Li, who holds a 73 percent stake in Hanergy Thin Film, has also used shares as collateral to secure loans. In its 2013 annual report, Hanergy said it pledged 5.1 billion shares to four financial companies.

“Hanergy Group was basically using the listed company as a means to produce collateral in the form of shares that it could then pledge to secure financing,”said Francis Lun, chief executive officer of Geo Securities Ltd. in Hong Kong.

*  *  *

end

 

Late last night from Europe

(courtesy zero hedge)

Greece Faces Moment Of Truth: Troika To Present Final Offer On Wednesday

Tuesday was an interesting day for negotiations between Athens and creditors. Recall that after venting his frustrations in a lengthy op-ed over the weekend, Greek PM Alexis Tsipras submitted what he called a “realistic plan for an agreement” ahead of an emergency meeting in Berlin between French President Francois Hollande, German Chancellor Angela Merkel, ECB chief Mario Draghi, and European Commission President Jean-Claude Juncker.

That meeting ended without any indication of concrete progress suggesting the group was either not impressed with what Tsipras had proposed or simply didn’t care and spent their time discussing a final, take it or leave it deal to send to Athens.

By Tuesday morning it was clear that the troika was well on the way to drafting their own proposal. Fed up with Greece, the institutions had apparently decided to simply draft an agreement on their terms and place on X on the line where Tsipras needed to sign if he wanted to avert a default in three days.

The troika acknowledged that the deal they were crafting would be a tough sell to the radical members of Syriza and thus would be difficult for Tsipras to get through parliament, setting up what we have predicted all along: an imminent government reshuffle.

The fact that the draft deal will contain language that forces Tsipras to concede at least a portion of Syriza’s campaign promises was later confirmed when Eurogroup President Jeroen Dijsselbloem was quoted as sayingcreditors would “not meet Greece halfway.”

Reuters is out with the latest, which serves as further confirmation that Tsipras will now be forced into concessions and the troika will have succeeded in using financial leverage to effect what will almost invariably be a government shakeup in Athens.

Via Reuters:

Greece’s creditors on Tuesday drafted the broad lines of an agreement to put to the leftist government in Athens in a bid to conclude four months of acrimonious negotiations and release aid before the cash-strapped country runs out of money…

 

“It covers all key policy areas and reflects the discussions of recent weeks. It will be discussed with (Greek Prime Minister Alexis) Tsipras tomorrow,” a senior EU official said.

 

Another official said German Chancellor Angela Merkel and French President Francois Hollande would put the plan to Tsipras by telephone within hours to try to secure his acceptance…

 

Tsipras, who has vowed not to surrender to more austerity, tried to pre-empt a take-it-or-leave-it offer by the creditors, sending what he called a comprehensive reform proposal to Brussels on Monday before they could complete their version.

 

Euro zone officials branded the Greek text insufficient and said it was not formally on the table.

 

The Greek leader faces a backlash from his own supporters if he has to accept cuts in pensions and job protection to avert a default and keep Greece in the euro zone.

 

Despite defiant rhetoric and face-saving efforts, he seems likely to have to swallow painful pension and labor reforms, facing the choice between putting them to parliament at the risk of a revolt in his Syriza party, or calling a snap referendum.

Reuters also suggests that Greece will likely not make a €300 million payment due to the IMF on Friday if Tsipras does not accept the proposal:

A Greek government official said Athens would make a 300 million euro ($329.58 million) repayment to the IMF on Friday as due if there was an agreement with the creditors,hinting it might otherwise withhold the money without saying so explicitly.

 

“If we judge that a deal has been sealed, then we will make the June 5 payment normally,” the official said, adding that the money would be transferred even if a preliminary agreement had not yet been approved by Eurogroup finance ministers.

It appears we will know within the next 48 hours the extent to which Tsipras was forced by creditors to abandon Greek voters in order to save them from economic catastrophe.
end
Then this news this morning.  The ECB raises the ELA by 1/2 billion euros to 80.7 billion euros:
(courtesy zero hedge)

Greece Admits It Will Not Make IMF Payment On Friday, No Deal Expected Wednesday

For days, Greek officials have been insistent that the country will make a €300 million payment to the IMF this Friday and thus avoid a default.

Last month, we heard the same rhetoric out of Athens and as it turns out, the government had prearranged an end-around whereby Greece tapped its IMF SDR reserves to stay current. In other words, the IMF paid itself. We suspected that some similar arrangement might be in the offing this month when economy minister George Stathakis said bundling June’s payments would not be necessary because Greece was looking at a “technical solution” to make the June 5 payment.

On Tuesday evening we noted that some Greek officials seemed to be suggesting that the “technical solution” was simply a veiled reference to securing a deal that would allow the country to use a portion of its aid disbursement to pay the Fund at the end of the week. That now appears to have been confirmed with a Syriza spokesman saying that if Tsipras does not ink a deal in the next 48 hours, Greece will miss Friday’s payment.

Via Reuters:

Greece will not make a June 5 repayment to the International Monetary Fund if there is no prospect of an aid-for-reforms deal with its international creditors soon, the spokesman for the ruling Syriza party’s lawmakers said on Wednesday.

The payment of 300 million euros ($335 million) is the first of four this month totaling 1.6 billion euros from a country that depends on foreign aid to stay afloat.

Greece owes a total of about 320 billion euros, of which about 65 percent to euro zone governments and the IMF, and about 8.7 percent to the European Central Bank.

On Tuesday, Greece’s creditors drafted the broad outlines of an agreement to put to the leftist government in Athens in a bid to conclude four months of negotiations and release aid before the country runs out of money.

“If there is no prospect of a deal by Friday or Monday, I don’t know by when exactly, we will not pay,” Nikos Filis told Mega TV.

At this juncture there’s no hope of an actual payment on Friday. Discussions between Tsipras and creditors will likely stretch into the weekend and even if an agreement were struck yesterday, passing the terms through parliament is bound to be an arduous process. Bundling the payments or arrears pending a government shakeout seems to be the most likely scenario. As for an actual default, as mentioned previously, that is to a certain extent a judgement call by the IMF and can ultimately be delayed for at least 30 days at the Fund’s discretion.

Speaking of deal “prospects”, PM Alexis Tsipras will meet with European Commission President Jean-Claude Juncker to discuss Greece’s proposal which Tsipras submitted on Monday evening. Tsipras says Greece “had no feedback on its proposal”, confirming what we said yesterday: creditors seemingly did not care about the Greek draft because Hollande, Merkel, Draghi, and Junker apparently agreed on Monday that the troika would simply pen a final proposal for Tsipras and let him know where he needed to sign.

As for the troika’s draft agreement, Dutch PM Mark Rutte confirms what we already knew: the issues are pension reform, fiscal belt-tightening, and VAT.

Via Bloomberg:

“The discussion we’re focusing on is reforms in pensions, labor market and fiscal consolidation and

these seem to be the three, next to the value-added tax discussions, three or four of the main topics,” Dutch Prime Minister Mark Rutte says in an interview with Bloomberg Television.

“The new government can take out certain measures and put in place other proposals as long as when you add them up, the results are still the same in terms of the macro- economic numbers and the fiscal impact as in the previous agreement”

For all the optimists out there, we’ll leave you with the following from Spanish FinMin Luis de Guindos:

“[You] can check in [to the euro] but not check out. [I’m] totally sure [Greece will get deal].” 

end
The German Vice Chancellor warns of gigantic consequences if the Greek talks fail and Greece defaults.  He is right:  massive derivatives will bring down the banks:
(courtesy zero hedge)

As Hope Lifts Athens Stocks, German Vice Chancelleor Warns Of “Gigantic Consequences” If Greek Talks Fail

Despite all the reassurances by various leaders that any Grexit or Greek bankruptcy would be ‘contained’, Sigmar Gabriel – vice-chancellor and economic minister of Germany’s SPD party – unleashed some uncomfortable truthiness yesterday. With Greek stocks up almost 5% today as hope springs eternal, Gabriel warned of nothing less than “gigantic consequences” for Europe in case of a Greek bankruptcy.

 

Speaking on Germany’s N24 TV, Gabriel exclaimed:

“It is good that Germany and France try again to find a solution then the political consequences of a Greek bankruptcy would be gigantic for eurozone. I believe that many people have the impression that it’s better to make a painful break now than draw out the agony, but if a stone is out of Europe then Europe’s union would be very differnt.”

With ultimate being thrown like plates in a Greek restaurant, we suspect – despite the rip-roaring rally…

 

…that this is anything but contained, even if Tspiras folds in the short-term.

h/t @KeepTalkingGreece

 

end

Early this morning, the rebels from Eastern Ukraine attack Ukraine. The Russian rouble tanks as does their stock exchange.

(courtesy zero hedge)

Russian Ruble Tumbles To 2-Month Lows, Stocks Drop Following “Large-Scale” Rebel Offensive In Ukraine

The Ruble just hit 54/USD – its weakest since early April – as IFX reports a “large-scale” rebel offensive in eastern Ukraine involving 10 tanks and around 1000 troops. Ukraine’s military has redeployed troops to halt this rebel offensive and has informed its international partners on the re-deployment which leaves The Minsk Accord hanging by a thread. Ironically Ukraine bonds had earlier jumped to 3-month highs on optimism surrounding restructuring that haircuts would not be as severe, but the reignition of tensions in the country have taken the shine of that exuberance.

  • *MICEX EXTENDS LOSSES, DROPS 1.2% AFTER IFX REPORT ON UKRAINE
  • *RUBLE SINKS 2.2% AFTER IFX REPORT OF REBEL OFFENSIVE IN UKRAINE

The Ruble is tumbling…

 

And MICEX is being sold…

 

As Bloomberg notes,

  • *INTERFAX CITES GENERAL STAFF OF UKRAINE ARMED FORCES ON ATTACK
  • *UKRAINE SAYS REBELS STARTED LARGE-SCALE OFFENSIVE IN EAST: IFX
  • *UKRAINE SAYS REBEL OFFENSIVE INVOLVES 1,000 TROOPS, TANKS: IFX
  • *UKRAINE SAYS ARTILLERY RE-DEPLOYED TO HALT REBEL OFFENSIVE: IFX
  • *UKRAINE SAYS REBEL OFFENSIVE STARTED NEAR MARYINKA IN EAST: IFX

Offensive by pro-Russian insurgents near Donetsk-region town of Maryinka involves up to 1,000 troops, more than 10 tanks and howitzers, General Staff of Ukraine’s armed forces says in statement on Facebook.

To counter attack, Ukraine re-deployed and used artillery that was previously pulled back

Ukraine says it informed international partners on artillery re-deployment

*  *  *

 

end

 

Today, the entire bond yields cratered.  The German 10 year bund rose to a yield of .80% from yesterday’s close of .71%.  The huge rise in yields no doubt has set off massive derivative losses.  Yields on Europe’s periphery (Spain, Italy and Portugal) also rose in yield  (see below). Japan’s 10 year bond yield rose from .43 % to .48%.

(courtesy zero hedge)

Bunds Crater Most This Century

It appears Draghi’s comments are not what the market wanted to hear.Bunds have crashed over 30bps in the last 2 days… the biggest 2-day spike since Oct 1998…

Carnage…

 

 

Biggest 2-day spike since 1998!

 

xYesterday, we noted.. June 2/12:52

zero hedge:Today’s bund sell off bullish!!

Today it appears not.Charts: Bloomberg

end

 

Words of warning from Graham Summers/Phoenix Research Capital

(courtesy Graham Summers/Phoenix Research Capital)

 

More and More Countries Join the War on Cash…

The War on Cash is now going into hyper-drive.

In the last 24 months, Canada, Cyprus, New Zealand, the US, the UK, and now Germany have all implemented legislation that would allow them to first FREEZE and then SEIZE bank assets during the next crisis.

These moves will be sold as “for the public’s good,” when they happen. But the reality is that it’s all about stopping people from moving their capital into actual physical cash.

The whole template for this was set out in Cyprus in 2013. The quick timeline for what happened in Cyprus is as follows:

·      June 25, 2012: Cyprus formally requests a bailout from the EU.

·      November 24, 2012: Cyprus announces it has reached an agreement with the EU the bailout process once Cyprus banks are examined by EU officials (ballpark estimate of capital needed is €17.5 billion).

·      February 25, 2013: Democratic Rally candidate Nicos Anastasiades wins Cypriot election defeating his opponent, an anti-austerity Communist.

·      March 16 2013: Cyprus announces the terms of its bail-in: a 6.75% confiscation of accounts under €100,000 and 9.9% for accounts larger than €100,000… a bank holiday is announced.

·      March 17 2013: emergency session of Parliament to vote on bailout/bail-in is postponed.

·      March 18 2013: Bank holiday extended until March 21 2013.

·      March 19 2013: Cyprus parliament rejects bail-in bill.

·      March 20 2013: Bank holiday extended until March 26 2013.

·      March 24 2013: Cash limits of €100 in withdrawals begin for largest banks in Cyprus.

·      March 25 2013: Bail-in deal agreed upon. Those depositors with over €100,000 either lose 40% of their money (Bank of Cyprus) or lose 60% (Laiki).

The most important thing I want you to focus on is how lies and propaganda were spread for months leading up to the collapse. Then in the space of a single weekend, the whole mess came unhinged and accounts were frozen.

One weekend. The process was not gradual. It was sudden and it was total: once it began in earnest, the banks were closed and you couldn’t get your money out (more on this in a moment).

There were no warnings that this was coming because everyone at the top of the financial food chain are highly incentivized to keep quiet about this. Central Banks, Bank CEOs, politicians… all of these people are focused primarily on maintaining CONFIDENCE in the system, NOT on fixing the system’s problems. Indeed, they cannot even openly discuss the system’s problems because it would quickly reveal that they are a primary cause of them.

For that reason, you will never and I repeat NEVER see a Central banker, Bank CEO, or politician admit openly what is happening in the financial system. Even middle managers and lower level employees won’t talk about it because A) they don’t know the truth concerning their institutions or B) they could be fired for warning others.

Please take a few minutes to digest what I’m telling you here. You will not be warned of the risks to your wealth by anyone in a position of power in the political financial hierarchy (with the exception of folks like Ron Paul who are usually marginalized by the media).

With that in mind, now is a good time to prepare for systemic risk. I cannot forecast precisely when things will get as ugly as they did in Cyprus for the financial system as a whole (no one can).

However, the clear signals are clear that the Feds are preparing for something big. The Treasury Department has ordered survival kits for the Big Banks’ employees… and the NY Fed is expanding its satellite office in Chicago in case something major happens that forces the market to collapse.

Indeed, we’ve uncovered a secret document outlining how the Feds plan to take hold of savings during the next round of the crisis to stop individuals from getting their money out.

end

 

For those of you who think that bail ins will not happen, guess again

(courtesy Dave Kranzler/IRD)

EU Regulators Order 11 Countries To Adopt Bail-In Rules

If there is a risk in a bank, our first question should be:  “Ok, what are you the bank going to do about that? What can you do to recapitalise yourself?”  If the bank can’t do it, then we’ll talk to the shareholders and the bondholders. We’ll ask them to contribute in recapitalising the bank.  And if necessary the uninsured deposit holders:  “What can you do in order to save your own banks?” – Jeroen Dijsselbloem, President of the Board of Directors of the European Stability Mechanism,  March 26, 2013

The bail-ins are coming.  Reuters reported today that European Commission today gave France, Italy and nine other EU countries two months to adopt bank bail-in regulations or face legal action – LINK

The move to require bank bail-ins originated at the BIS – Bank for International Settlements beginning in 2008.   In 2011, the Financial Stability Board (FSB) – a sub-committee of the BIS – drafted the boilerplate model for big bank bail-ins:  Key Attributes of Effective Resolution Regimes for Financial Institutions.

The objective of an effective resolution regime is to make feasible the resolution of financial institutions without severe systemic disruption and without exposing taxpayers to loss, while protecting vital economicfunctions through mechanisms which make it possible for shareholders and unsecured and uninsured creditors to absorb losses in a manner that respects the hierarchy of claims in liquidation.

The bank rescue model as drafted lays out a complete systematic procedure for the rescuing and restructuring of any financial institution considered “SIFI” – a Systematically Important Financial Institution.  In layman terms this translates into “Too Big To Fail.” This model was endorsed by the G20 at Summit in 2011.

The “model” requires that funds required for a bail-in to prevent a TBTF from collapsing would first be taken from unsecured creditors.  This is primarily any depositor money in excess of the amount insured by the Government.  Incredibly, and this has been ratified by legislation in the United States, holders of derivative securities of the collapsing bank are considered super-secured.  In other words, those stakeholders in the banks would be the last to suffer any losses resulting from the restructuring of an insolvent bank.

In the United States there is over $4 trillion in depositor cash in excess of the amount covered by the FDIC sitting in banks.

Make no mistake about this, bail-in legislation is coming to the U.S.  In fact, a $1.1 trillion spending Bill passed by Congress and signed by Obama on December 16, 2014 contained specific provisions drafted (and paid for) by Citibank which ensured that big bank OTC derivatives holdings will be covered by the FDIC (i.e. taxpayer).  This is a back-door way of making the next taxpayer bailout of the big banks a legal requirement.

Anyone who keeps any cash in a bank is either completely ignorant of the ways in which that money can be “confiscated” or just completely brain-dead.  I suppose there could be a strong element of denial involved as well.  Big bank balance sheets are in far worse shape than they were in 2008, especially once you peel away all of the accounting shenanigans and include the off-balance-sheet ticking bombs.   It’s not a question of “IF” – It’s a question of “WHEN.”

We can ignore reality, but we cannot ignore consequences of ignoring reality.  – Ayn Rand

 

end

 

Oil related stories:

Yesterday API inventories rise, today DOE inventories fall.  However production well up spells trouble for our WTI price of oil

(courtesy zero hedge)

 

WTI Crude Pumps-And-Dumps As Increased Production Trumps Surprise Inventory Draw

Following last night’s inventory build report from API, expectations adjusted to a 818k build for the DOE data this morning. However, for the 5th week in a row, DOE reported a draw (this time of 1.95 million barrels).  WTI Crude had rallied into the data but was still in the red from yesterday’s close and spiked on the inventory news. However, once the machines had a chance to see that production rose once again – to a new cycle record – prices began to slide….

 

5th weekly inventory draw…

 

But another jump in production to new cycle record highs…

 

 

and prices are now lower…

 

Charts: Bloomberg

end

Your more important currency crosses early Wednesday morning:

 

Euro/USA 1.1120 down .0027

USA/JAPAN YEN 124.43 up .378

GBP/USA 1.5282 down .0052

USA/CAN 1.2451 up .0038

This morning in Europe, the Euro fell by a small 27 basis points, trading now just above the 1.11 level at 1.1120; Europe is still reacting to deflation, announcements of massive stimulation, a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, a possible default of Greece and the Ukraine, rising peripheral bond yields.

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31. The yen continues to trade in yoyo fashion as this morning it settled dow again in Japan by 38 basis points and trading well above the 124 level to 124.43 yen to the dollar.

The pound was down this morning as it now trades well below the 1.53 level at 1.5282, still very worried about the health of Barclay’s Bank and the FX/precious metals criminal investigation/Dec 12 a new separate criminal investigation on gold, silver and oil manipulation.

The Canadian dollar is down by 38 basis points at 1.2443 to the dollar.

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies

2, the Nikkei average vs gold carry trade (still ongoing)

3. Short Swiss franc/long assets (European housing/Nikkei etc. This has partly blown up (see Hypo bank failure). Swiss franc is now 1.0328 to the Euro, trading well above the floor 1.05. This will continue to create havoc with the Hypo bank failure.

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this morning : down 69.68 points or 0.34%

Trading from Europe and Asia:
1. Europe stocks mostly in the green

2/ Asian bourses mostly in the red … Chinese bourses: Hang Sang green (massive bubble forming) ,Shanghai in the red (massive bubble ready to burst), Australia in the red: /Nikkei (Japan) red/India’s Sensex in the red/

Gold very early morning trading: $1188.60

silver:$16.63

Early Wednesday morning USA 10 year bond yield: 2.28% !!! up 1 in basis points from Tuesday night and it is trading under resistance at 2.27-2.32%.

 

USA dollar index early Wednesday morning: 96.20 up 36 cents from Monday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Wednesday morning

And now for your closing numbers for Wednesday:

 

Closing Portuguese 10 year bond yield: 2.88 up 4 in basis points from Tuesday (getting ominous)

Closing Japanese 10 year bond yield: .48% !!! up 5 in basis points from Tuesday/(getting ominous)

Your closing Spanish 10 year government bond, Wednesday, up 5 points in yield (very ominous)

Spanish 10 year bond yield: 2.14% !!!!!!

 

Your Wednesday closing Italian 10 year bond yield: 2.18% up 5 in basis points from Tuesday: (very ominous)

trading 4 basis point higher than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

 

Closing currency crosses for Wednesday night/USA dollar index/USA 10 yr bond: 4 pm

Euro/USA: 1.1255 up .0108 ( Euro up 108 basis points)

USA/Japan: 124.34 up  .286 ( yen up 29 basis points)

Great Britain/USA: 1.5320 down .0013 (Pound down 13 basis points)

USA/Canada: 1.2458 up .0042 (Can dollar down 42 basis points)

The euro rose smartly again today. It settled up 108 basis points against the dollar to 1.1255 as the dollar collapsed against some of the various major currencies . The yen was down 29 basis points and closing just above the 124 cross at 124.34. The British pound lost tiny  ground today, 13 basis points, closing at 1.5320. The Canadian dollar lost some ground against the USA dollar,42 basis points closing at 1.2458.

As explained above, the short dollar carry trade is being unwound, the yen carry trade , the Nikkei/gold carry trade, and finally the long dollar/short Swiss franc carry trade are all being unwound and these reversals are causing massive derivative losses. And as such these massive derivative losses is the powder keg that will destroy the entire financial system. The losses on the oil front and huge losses on the USA dollar will no doubt produce many dead bodies.

 

Your closing 10 yr USA bond yield: 2.37% up 11 in basis point from Wednesday/ spells trouble ahead/ (well above  the resistance level of 2.27-2.32%)/

 

Your closing USA dollar index:

95.45 down 38 cents on the day.

 

European and Dow Jones stock index closes:

 

England FTSE up 22.19 points or 0.32%

Paris CAC up 29.71 points or 0.59%

German Dax up 90.82 points or 0.80%

Spain’s Ibex down 3.80 points or 0.030%

Italian FTSE-MIB up 32.67.49 or 0.14%

 

The Dow up 64.33  or 0.36%

Nasdaq; up 20.44  or 0.40%

 

OIL: WTI 59.62 !!!!!!!

Brent:63.49!!!!

 

Closing USA/Russian rouble cross: 54.25  down 2 1/4 roubles per dollar on the day.(due to Eastern Ukraine conflict)

 

end

 

And now for your more important USA stories.

 

NY trading for today:

 

Bonds Down, Dollar Down, Crude Down, Service Economy Down… Stocks Up

If The Fed/ECB’s plans were to shake out some of the extreme positioning in markets, it is succeeding but they are losing grip on any control of this chaos… (apart that is for the mickey mouse equity markets)

For the 3rd day in a row, stocks exhibited a similar pattern…

But once again the story of the day was the utter carnage in the FX and bond markets…

US Treasury yields are up 20-24bps this week with more carnaging happening after ECB’s Draghi mentioned inflation forecasts and expects more volatility

This leaves US Treasury yields all higher post-QE3

Side note – what exactly is going to happen to mortage apps after this collapse?

Bunds were crushed… 10Y Yields hit 89.7bps! up 42bps from Monday lows! German bond yields are now the highest since Oct 2014

The Dollar was clubbed like a baby seal once again all on tyhe back of EUR strength…

EURUSD has risen by almost 3% (almost 400 pips) in the last 2 days – the biggest surge since March 2009!

And this time the commodity markets also suffered…

With Crude very unhappy about the opngoing rise in production (no matter how many times CNBC proclaimed the inventory draw)…

But stocks just “stayed the course” with Trannies outperforming on the day…

A glance at futures shows the volatility that the day-session masks…

Since Friday, all indices are now greem…

As Stocks and Bonds decouple further…

Charts: Bloomberg

Bonus Chart: Some context since the end of Jan…

Bonus Bonus Chart: JPMorgan reports Clients have not been this net short Treasuries since 2006…

 end

Today, the ISM services index plunges to 13 month lows.  This confirms Markit’s PMI services index which also missed expectations. No doubt that the USA economy is faltering terribly;

 

(courtesy ISM/zero hedge)

ISM Services Plunges To 13 Month Lows As Post-Weather Bounceback Fades

But the post-weather bounce? Markit’s Services PMI in May missed expectations and dropped for the 2nd month in a row to its lowest since January. This notched the Composite PMI also down to its lowest since Jan, leaving Markit warning “the US economy has lost some momentum after an initial bounce-back from weather-related weakness at the start of the year.” Worst still, ISM Services thenprinted a notably disappointing 55.7 (against 57.0 expectations) – its weakest since April 2014. The breakdown shows weakness across the board with prices rising. Finally, we note that an incredible 75 of 79 ‘qualified’ economists had an ISM Services estimate that was too high… extrapolated hope springs eternal until it is smashed on the shores of reality.

Services PMI – Bounce…dead…

 

Commenting on the PMI data, Chris Williamson, Chief Economist at Markit said:

 

Slowing service sector growth adds to signs that the US economy has lost some momentum after an initial bounce-back from weather-related weakness at the start of the year.

 

“May’s PMI data showed service sector activity rising to a slightly smaller degree than signalled by the flash reading. Alongside the slowdown in manufacturing, the services PMI points to the weakest pace of US economic growth since January.

 

“While the survey still supports the view that GDP growth looks set to recover after the 0.7% rate of decline seen in the first quarter, the softness of the data raises big question marks for policymakers over the strength of the rebound and whether the economy is losing momentum as it heads into the summer.

 

The strong dollar is clearly hurting, with new orders growth deteriorating in both manufacturing and services. On the other hand, order books growth remained strong enough to encourage firms to take on staff in increasing numbers in May, leading to the largest rise in employment for almost a year. With the job market gains pushing the economy towards full employment, policymakers may consider rate hikes appropriate even in the face of slower growth.”

Then ISM Services collapsed…

 

and the breakdown shows weakness across the board with prices rising.

 

Blame for the weakness runs the gamut:

  • Avian influenza is causing major issues within the poultry industry. Uncertainty has caused us to adopt a ‘hand-to-mouth’ procurement strategy.” (Agriculture, Forestry, Fishing & Hunting)
  • “In most regions, the construction business is picking-up. Weather conditions have helped with this pick-up.” (Construction)
  • “Generally everything remains the same, slight increase towards offshore alternatives starting to pick up speed.” (Finance & Insurance)
  • “Moderate recovery continues with all signs pointing to rebound in the fourth quarter.” (Educational Services)
  • “Current level of new orders is still flat. Expecting uptick in the near future.” (Professional, Scientific & Technical Services)
  • “Increased retail sales; stronger housing market; increased employment.” (Public Administration)
  • “Business steady, little or no change. Annual year-over-year growth approximately three percent.” (Retail Trade)
  • “As expendable income continues to be available [due to] lower gas prices, our business continues to increase. The port congestion is hampering deliveries and is keeping inventories at a lower level than desired on imports.” (Wholesale Trade)

 

Charts: Bloomberg

 
end
I did not have much faith in the private ADP employment report. It did report a little bounce but still the employment is weaker this year. Manufacturing continues to lose jobs.  On Friday, the BLS reports on the entire job scene;
(ADP/zero hedge)

ADP Employment Bounces, Still Weaker Than All Of 2014, 3rd Monthly Decline In Manufacturing Jobs

Having fallen for 5 straight months (and missed expectations for the last 4), much to the ‘recovery meme’ chagrin of Mark Zandi and his fellow extrapolators, May’s 201k print (against expectations of 200k) was a modest bounce that will be seen as heralding the post-weather recovery. At 201k, ADP job change remains below every month of 2014 aside from January. Led by small business – which gained 122k of the 201k jobs, we note that large firms 500-999 employees actually saw jobs being shed. Furthermore, Service-providing jobs dominated with 192 of 201k jobs coming from that segment of the economy and just 9k growth in goods producing with manufacturing dropping 5k. Zandi’s helpful remarks provide the narrative, “I think the economy is doing much better than the data shows and when it is all revised will show strong growth.” Brilliant.

 

A modest bouince but the 3rd monthly decline in manufacturiong jobs…

 

Via ADP

 

And some more charts:

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

And some more charts:

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

Change in Nonfarm Private Employment

<br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br />
        ADP National Employment Report: Private Sector Employment Increased by 201,000 Jobs in May<br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br />

 end
On Friday we will get our Non Farm Payrolls.  Dave Kranzler cautions us to ignore “a huge gain” in jobs because they use the fictitious plug, the Birth/Death model to add non existent jobs to the USA economy…
Dave explains…
(courtesy Dave Kranzler/IRD)

The Birth-Death Model Plug Theory Predicts New All-Time SPX High Friday

THERE’S NO B.S. LIKE THE BLS – decide what you want you want the non-farm payroll headline number to be and then use the Birth-Death model “plug” function to make that number happen.  – Investment Research Dynamics

The first Friday of the month means it’s the Government’s Bureau of Labor Statistics turn to dazzle us with a statistical magic show.  With 1st quarter GDP now revised into negative territory and the economic statistics reported for April and May showing even more economic contraction occurring in the first two months of Q2, the BLS statisticians will be forced to push the Birth-Dead plug number to a farcical extreme.

In fact, my bet is that on Friday the S&P 500 will scream to a new all-time high on an impressive “beat” of the consensus May payroll estimates that will have been fueled by a huge Birth-Death plug number.

My friend and colleague Mark Kellstrom has penned another amusing commentary about the Freak Show otherwise known as Non-Farm Payroll Friday:

It’s That Time of the Month Again:  May Non-Farm Payrolls

For the 9,000 (or how ever many are left) viewers, the debate by CNBC “experts” over their Non-farm Payroll forecasts minutes before the release of the numbers on Friday morning can provide exciting theater.  Viewers are treated to Steve Liesman’s detailed analysis used to back into an “estimate” based on a complex econometric model tracking monthly stats of all shapes and sizes.  For the rest of us, the exercise is a waste of time and as laughable as anything found on the comedy channel:  Watch Steve Liesman Bite The Head Off Of A Chicken

This Friday, June 5th, we get this ritual of the absurd again with the release of the May Non-Farm Payrolls and Unemployment data from the Bureau of Labor Statistics (BLS).  Estimates for May seem to vary around the +/-220,000 jobs “created” number and if we go with MarketWatch, the consensus estimate is 210,000, down from 223,000 previously.  Like the April NFP reported in May, Commentators have to be nervous eyeballing another month and another raft of soft economic data releases—the “expert” calls may surely be for a miss.

However, once again, if theory holds, the May Non-Farm Payrolls report will beat consensus expectations with no problem.  In fact, if 210k is the consensus hurdle, a beat on the high side may be an easy slam dunk.  History shows that the BLS “Birth Death” plug model will “add” – i.e. fictitiously create – at least 205,000 jobs this month.  So unless the BLS actually “marks to market” the true number of oil patch jobs lost during May (a lot more than the supposed paltry 3,000 oil patch jobs lost in April), then count on another BLS “beat”….much cheerleading…..and a 1Q negative GDP print sent well into the rear view mirror.

BD Plug

 

end

 

 

The USA trade deficit shrinks, but the drop in imports is a sign that the economy is tapping out.
(courtesy zero hedge)

Trade Deficit Shrinks 19% In April Driven By Drop In Imports

After March’s six-year high disastrous kitchen-sink trade deficit revised down to -$51.4 billion, April saw a bounce back to just $40.9 billion deficit (considerably lower deficit than the $44 billion expectation). The imporvment was driven by a big shift in imports – dropping 3.3% (after a 6.5% jump in March) as exports rose just 1% (which is still the most in 2015).

 

 

Charts: Bloomberg

end
Let us close tonight’s commentary with this discussion on gold and silver with  Dave Morgan and Greg Hunter
(courtesy David Morgan/Greg Hunter/USAWatchdog)

Panic Exit Out of Currencies & Into Gold & Silver-David Morgan

4_jpgBy Greg Hunter’s USAWatchdog.com

Finance and economic writer David Morgan thinks the global economy very likely could take a sudden turn for the worst.  Morgan says, “There is going to be a panic buy into the metals, and there is only so much to go around. . . . The way things have gone from the 2008 financial crisis until now have only gotten worse. . . . I don’t think we are going to have a hyperinflation, but what I do believe is there will be a panic exit out of currencies.That event will cause people to run for the most trusted money that exists, and that is gold and silver.  The other thing is you cannot have currency anymore.  That is a double edged sword because if you can’t have currency anymore . . . people will think if I can’t have currency anymore, guess what I can have?  Gold and silver, and they can’t get around that. . . .People that can think will go to the money of all time, and that is gold and silver.”

What could cause a sudden panic?  Morgan speculates, “One is some event in the bond market that people don’t see and most likely it is the U.S. bond market, but it could be in the Yen. . . .  Japan is so illiquid, and they have gone to basically the hyperinflation route that it is only a question of time and could start there.  It could start anywhere.  There is a bunch a kindling all over the bond markets, all over the debt markets all over the world, and one match could light it off.  I really don’t know where it is going to start, but I do know history teaches us that once the confidence is lost, you can’t get it.  That’s what this game is all about.”

Earlier this year, Morgan said he thought there could be another economic meltdown this fall, and he’s not backing off.  Morgan explains, “Part of it is the seven year cycle in the stock market, and seasonality plays strongly in both the metals and stock market.  September/October is the time frame where you get a falloff.  The stock market is so overvalued it has no relationship with physical reality.  The physical economy does not match what stock prices are at all–not even close. . . . The mainstream media keeps saying things are good, and all people have to do is look out their window.  There is a trigger mechanism and it’s what I call financial survival instinct. . . . You cannot stop reality.  The reality is we are in a debt based economic system in a scenario that has never happened before. . . . When this thing busts, it will make the 1930’s look like a warm-up parade because it will not be centered in Europe and the United States.  It will be China.  It will be India. It will be Australia, Europe, the United States, Canada, Mexico and South America.  It is going to be everybody.”  Morgan goes on to point out, “It’s all about trust, and now these big banks don’t trust each other, and that was the same problem in 2008.  They did not want to accept each other’s paper because they didn’t trust it.”

On the gold price, Morgan says, “If you look at the ‘true money supply’ . . . and basically, the true money supply is the money in checking accounts and savings accounts . . . then, you take that and divide it by the amount of gold the U.S. Treasury says we have, which I question, and you come out with $10,000 an ounce gold, and that is without any credit being available.”

Join Greg Hunter as he goes One-on-One with David Morgan of TheMorganReport.com.

(There is much more in the interview.)

After the Interview: 

end.

 

Well that about does it for tonight
I will see you tomorrow night
Harvey
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