July 17/A massive 11.25 tonnes of gold leaves the GLD/China officially raises its gold holdings by 404 tonnes to 1658 tonnes for one month:/Greece banks will not open on Monday/Athens is on fire due to forest fires/the Euro zone officially announces 7.5 billion euros of bridge loan/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1131.80 down $12.00  (comex closing time)

Silver $14.82 down 14 cents.

In the access market 5:15 pm

Gold $1134.00

Silver:  $14.84

 

First, here is an outline of what will be discussed tonight:

At the gold comex today, we had a poor delivery day, registering 0 notices for nil ounces . Silver saw 0 notices filed for nil oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 243.49 tonnes for a loss of 60 tonnes over that period.

 

In silver, the open interest rose by 685 contracts despite the fact that yesterday’s price was down by 7 cents.  The total silver OI continues to remain extremely high, with today’s reading at 187,659 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .938 billion oz or 132% of annual global silver production (ex Russia ex China). 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 as they continue to raid as basically they have no other alternative. Today again, we must have had banker shortcovering.

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

 

In gold, the total comex gold OI rests tonight at 474,057 for a gain of 3,337 contracts despite the fact that gold was down $3.40 yesterday. We had 0 notices filed for nil oz  today.

 

We had a massive withdrawal in gold tonnage at the GLD to the tune of 11.63 tonnes/  thus the inventory rests tonight at 696.25 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. I thought that 700 tonnes is the rock bottom inventory in gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold.  In silver, we had no change in inventory at the SLV / Inventory now rests at 327.593 million oz.

 

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

1. Today, we had the open interest in silver rise by 685 contracts to 187,659 despite the fact that  silver was down by 7 cents  yesterday. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena but it was to no avail. The OI for gold rose by another 3,337 contracts up to 474,057 contracts as the price of gold was down by $6.10 yesterday. Something big is going on behind the scenes as both silver and gold are being accumulated.

(report Harvey)

2 Today, 8 important commentaries on Greece

(zero hedge, Bloomberg/Reuters/)

3.  COT report

(Harvey)

 

4. Gold trading overnight

(Goldcore/Mark O’Byrne/)

 

(zero hedge)

5 Trading of equities/ New York

(zero hedge)

6  USA stories: U/ of Michigan consumer sentiment falters

7. Dave Kranzler IRD discusses trading today at the comex

(Dave Kranzler/IRD)

8.  Two oil related stories

(OilPrice.com/zero hedge)

9. China after 5 years raises it’s official reserves by 604 tonnes.

(zero hedge)

 

10. Alasdair Macleod discusses the fact that China may devalue the yuan against gold and not against the dollar.  They will state that this is because of its turmoil in the stock markets.

(Alasdair Macleod)

 

plus other topics…

 

 

Here are today’s comex results:

 

The total gold comex open interest rose by 3,337 contracts from 470,720  up to 474,057 despite the fact that gold was down $3.40 in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI rose by zero contracts to 158 contracts. We had 0 notices filed yesterday and thus we gained 0 contracts or an additional nil ounces will stand in this non active delivery month of July. The next big delivery month is August and here the OI decreased by 7,365 contracts down to 228,539.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 168,093. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 162,015 contracts. Today we had 0 notices filed for nil oz.

 

And now for the wild silver comex results. Silver OI rose by 685 contracts from 186,974 up to 187,659 despite the fact that the price of silver was down by 7 cents with respect to yesterday’s trading and now the OI is rising in total sympathy with gold. We continue to have our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver (and gold ) arena. The next delivery month is July and here the OI fell by 11 contracts down to 115. We had 10 notices served upon yesterday and thus we lost 1 contract or an additional 5,000 ounces of silver will not stand for delivery in this active month of July. This is the first time in quite some time that we have not lost any silver ounces standing immediately after first day notice. The August contract month saw it’s OI fall by 58 contracts down to 117. The next major active delivery month is September and here the OI rose by 166 contracts to 127,847. The estimated volume today was  poor at 23,130 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 34,868 contracts which is fair in volume.  We had 0 notices filed for nil oz.

July initial standing

July 17.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz 64,196.711  (Scotia, Manfra)  and includes 5 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 16,075.000 (Scotia)(500 kilobars)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices) 158 contracts 15,800 oz
Total monthly oz gold served (contracts) so far this month 412 contracts(41,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   203.60 oz
Total accumulative withdrawal of gold from the Customer inventory this month 288,163.4   oz

Today, we had 0 dealer transactions

 

total Dealer withdrawals: nil  oz

we had 0 dealer deposits

total dealer deposit: zero
we had 2 customer withdrawal

 

i) out of Scotia: 64,196.711 oz

ii) Out of Manfra:  160.75 oz  (5 kilobars)

total customer withdrawal: 64,357.461 oz

We had 1 customer deposit:

i) Into Scotia:  16,075.000 oz or 500 kilobars

 

Total customer deposit: 16,075.000 ounces

We had 0 adjustments.

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account

To calculate the total number of gold ounces standing for the July contract month, we take the total number of notices filed so far for the month (412) x 100 oz  or 41,200 oz , to which we add the difference between the open interest for the front month of July (158) and the number of notices served upon today (0) x 100 oz equals the number of ounces standing.

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

No of notices served so far (412) x 100 oz  or ounces + {OI for the front month (158) – the number of  notices served upon today (0) x 100 oz which equals 57,000  oz standing so far in this month of July (1.7729 tonnes of gold).

we neither gained nor lost any gold  ounces standing.

Total dealer inventory 482,778.738 or 15.016 tonnes

Total gold inventory (dealer and customer) = 7,828,512.94 oz  or 243.49 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 243.49 tonnes for a loss of 60 tonnes over that period.

end

 

And now for silver

July silver initial standings

July 17 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 116,978.120  oz (CNT, Delaware,Brinks,Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory  587,971.400 oz (JPM)
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 1155 contracts (575,000 oz)
Total monthly oz silver served (contracts) 3277 contracts (16,385,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 6,383,162.0 oz

Today, we had 0 deposits into the dealer account:

total dealer deposit: nil   oz

we had 0 dealer withdrawal:

total dealer withdrawal: nil  oz

 

We had 1 customer deposits:

i) Into JPMorgan:  587,971.400 oz

total customer deposit: 587,971.400 oz

We had 4 customer withdrawals:

i)Out of  CNT: 10,472.84 oz

ii) Out of Delaware:  980.700 oz

iii) Out of Brinks:  29,351.48 oz

iv) Scotia; 76,173.100 oz

 

total withdrawals from customer:  116,978.120  oz

we had 0  adjustments

 

Total dealer inventory: 58.96 million oz

Total of all silver inventory (dealer and customer) 178.879 million oz

The total number of notices filed today for the July contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in July, we take the total number of notices filed for the month so far at (3277) x 5,000 oz  = 16,385,000 oz to which we add the difference between the open interest for the front month of July (115) 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 July contract month:

3277 (notices served so far) + { OI for front month of July (115) -number of notices served upon today (0} x 5000 oz ,= 16,960,000 oz of silver standing for the July contract month.

We lost 5,000 ounces standing in this active delivery month of July. .

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

http://www.harveyorgan.wordpress.comorhttp://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:

July 17./a massive withdrawal of 11.63 tonnes  in gold tonnage tonight from the GLD/Inventory rests at 696.25 tonnes

July 16./we lost 1.19 tonnes of gold tonight/Inventory rests at 707.88 tonnes

July 15/no change in inventory/gold inventory rests tonight at 709.07 tonnes.

July 14.2015:no change in inventory/gold inventory rests at 709.07 tonnes

July 13.2015: a big inventory gain of 1.49 tonnes/Inventory rests tonight at 709.07 tonnes

July 10/ we had a big withdrawal of 2.07 tonnes of gold from the GLD/Inventory rests this weekend at 707.58 tonnes

July 9/ no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 8/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 7/ no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 6/no change in gold inventory at the GLD/Inventory at 709.65 tonnes

July 2/we had a huge withdrawal of inventory to the tune of 1.79 tonnes/rests tonight at 709.65 tonnes

 

 

July 17 GLD : 696.25 tonnes

end

 

And now for silver (SLV)

 

july 17.2015/no change in silver inventory tonight/inventory at 327.593 million oz

July 16./no change in silver inventory/rests tonight at 327.593 million oz

July 15./no change in silver inventory/rests tonight at 327.593 million oz/

July 14.2015: no change in silver inventory/rests tonight at 327.593 million oz.

July 13./an inventory gain of 1.051 million oz/Inventory rests at 327.593 million oz

july 10/no change in silver inventory at the SLV tonight/inventory 326.542 million oz/

July 9/ a huge increase in inventory at the SLV of 1.337 million oz. Inventory rests tonight at 326.542 million oz

July 8/no change in inventory at the SLV/rests at 325.205

July 7/no change in inventory at the SLV/rests at 325.205 tonnes

July 6/we have a slight inventory withdrawal which no doubt paid fees. we lost 137,000 oz/Inventory rests tonight at 325.205 million oz

July 2/ no change in inventory at the SLV/rests tonight at 325.342 million oz

 

 

July 17/2015:  tonight inventory rests at 327.593 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 10.3 percent to NAV usa funds and Negative 10.40% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 62.2%

Percentage of fund in silver:37.4%

cash .4%

( July 17/2015)

2. Sprott silver fund (PSLV): Premium to NAV falls to 1.58%!!!! NAV (July 17/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV falls to – .73% toNAV(July 17/2015

Note: Sprott silver trust back  into positive territory at  2.21%

Sprott physical gold trust is back into negative territory at -.73%

Central fund of Canada’s is still in jail.

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

SII.CN Sprott formally launches previously announced offers to CentralGoldTrust (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

 

At 3:30 the CME releases the COT report which gives us position levels of our major players.  This week is of particular interest due to the huge rise of OI in gold.  Silver’s OI has been high for quite some time.

First the GOLD COT

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
191,014 143,190 51,510 183,945 232,414 426,469 427,114
Change from Prior Reporting Period
-2,762 -138 3,504 11,393 7,273 12,135 10,639
Traders
137 102 88 62 54 241 217
 
Small Speculators  
Long Short Open Interest  
36,195 35,550 462,664  
-1,616 -120 10,519  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, July 14, 2015

Our large speculators:

Those large specs that have been long in gold pitched 2762 contracts from their long side.

Those large specs that have been short in gold covered a tiny 138 contracts.

Our commercials;

Those commercials that have been long in gold added a whopping 11,393 contracts to their long side.

 

Those commercials that have been short in gold added 7273 contracts to their short side.

 

Our small specs:

 

Those small specs that have been long in gold pitched 1616 contracts from their long side

Those small specs that have been short in gold covered a tiny 120 contracts form their short side.

 

Conclusions; the commercials go net long by 4120 contracts and gold falls?

 

end

 

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
66,392 56,839 21,631 75,946 91,535
-4,394 -7,154 -1,377 -2,212 -942
Traders
93 52 41 48 36
Small Speculators Open Interest Total
Long Short 185,716 Long Short
21,747 15,711 163,969 170,005
-3,393 -1,903 -11,376 -7,983 -9,473
non reportable positions Positions as of: 162 114
Tuesday, July 14, 2015   © Si

Our large speculators:

Those large specs that have been long in silver pitched a large 4394 contracts from their long side.

Those large specs that have been short in silver covered a huge 7154 contracts from their short side.

Our commercials:

Those commercials that have been long in silver pitched 2212 contracts from their long side.

Those commercials that have been short in silver covered 942 contracts from their short side.

 

Our small specs;

Those small specs that have been long in silver pitched 3393 contracts from their long side.

Those small specs that have been short in silver covered 1903 contracts from their short side.

Conclusions: commercials go net short by a tiny 1270 contracts.

Seems a few liquidated their shortfall positions.

 

 

 

And now for your overnight trading in gold and silver plus stories

on gold and silver issues:

(courtesy/Mark O’Byrne/Goldcore)

CHINA Boosts Gold Reserves 57%, Top Russian Reserves in First Disclosure Since ’09

Today’s AM LBMA Gold Price was USD 1,143.00, EUR 1,049.25 and GBP 730.68 per ounce.

Yesterday’s AM LBMA Gold Price was USD 1,145.10, EUR 1,050.12 and GBP 732.79  per ounce.

For the week, gold is marginally lower in dollars and pounds but has eked out gains in euros to above €1,050 an ounce.

Gold in USD – 1 Week


Yesterday, gold fell $4.20 to $1,144.10 an ounce and silver slipped $0.10 to $15.01 an ounce. Gold in Singapore for immediate delivery was flat and gold bullion in Switzerland was marginally lower.

Gold looks set for a fourth weekly loss, the longest retreat since February despite strong coin and bar demand – particularly in Germany and wider Europe and indeed in the U.S.

U.S. Mint gold bullion coin sales surpassed the January 2015 level yesterday and are currently at the highest level since January 2014.



Gold in EUR – 1 Week

China has announced a smaller than expected increase in its gold reserves. China’s gold reserves stood at 53.31 million fine troy ounces or 1,658 metric tonnes by the end of June, the People’s Bank of China announced today.

It was the first public adjustment to its reserve figures in more than six years. It last announced its reserve figure in April 2009, when the level was increased to 33.89 million troy ounces from 19.29 million troy ounces.



Chinese gold reserves increased by 57 percent and China’s holdings have now surpassed those of Russia to become the fifth-largest. The U.S. is believed to have the biggest reserves at 8,133.5 tons.

Gold is no longer used to back the trillions and trillions of paper and digital money of today, however it clearly remains money contrary to assertions to the contrary. Gold bullion remains a substantial part of central bank reserves in the U.S. and Europe. China became the world’s second-largest economy in 2010 and has stepped up efforts to internationalize its currency – the yuan.


This is the continuation of the trend of China positioning the yuan as global reserve currency and we would not be surprised if China begins to accumulate a minimum of 100 metric tonnes a month going forward.  The Chinese are pushing for full convertibility of the RMB and increasing their gold holdings will create confidence in the fledgling reserve currency and aid them in this regard.


Gold in GBP – 1 Week

The short term trend remains lower. Gold may be in the process of having  one last sell off and capitulation. The move lower this week may signal the start of that phase.

Good physical supply demand fundamentals and a very supportive macroeconomic backdrop are being ignored and the momentum driven and increasingly computer driven futures market is dominating and pushing prices lower again.

Concerns about a Fed interest rate increase are also weighing on the market. Although to an extent we would be surprised if that was not already priced into the gold market – as it has been very well flagged at this stage.

Silver for immediate delivery was flat at $15.04 an ounce, marginally lower for a fifth day. Spot platinum fell 0.6 percent to $1,008.51 an ounce, while palladium fell 1.1 percent to $625.95 an ounce.

Breaking News and Research Here

end

 

 

In a very big announcement, the Chinese government announces an increase “IN ONE MONTH” of 604 tonnes.  It’s new official tonnage is 1,658 tonnes.  The announcement by the government is goal oriented in that China want to see stability in its stock market.  Expect continue huge numbers released each month until its official holdings exactly equals its true state.

(courtesy zero hedge)

China Increases Gold Holdings By 57% “In One Month” In First Official Update Since 2009

Back in April we wrote that “The Mystery Of China’s Gold Holdings Is Coming To An End” as a result of China willingness to add the Yuan to the IMF’s SDR currency basket which would require the disclosure of China’s gold holding ahead of an IMF meeting on SDR composition which may be held in October.

By way of background, the reason why everyone has been so focused on Chinese official gold holdings is that there has been no official update to the gold inventory of the world’s biggest nation, which have been fixed at 33.89 million oz since April 2009, a little over 1000 tons. In other words, the PBOC’s gold inventory has been “unchanged” for over 6 years which is in stark contrast to the ravenous buying of physical gold China has been engaging in for the past 5 years.

As we further noted in April, “with China disclosing so little about its hoard, finding out how much the central bank has in its vaults is of increasing interest to traders. Confirmation of bigger holdings would signal the importance of the metal as a reserve asset and boost market sentiment, TD Securities’ Melek said. At a time when prices are languishing, the buying could give support, said Suki Cooper, director of commodities at Barclays Plc in New York.”

In a rare comment on gold, Yi Gang, the central bank’s deputy governor, said in March 2013 that the country could only invest as much as 2 percent of its foreign-exchange holdings in gold because the market was too small. The press office of the People’s Bank of China in Beijing didn’t respond to a fax seeking comment sent on April 14.

Well, the long awaited moment has finally arrived and this morning, after a 6 year delay when, China finally admitted that it had been misrepresenting its gold holdings for a very long time, when it announced that its gold holdings had increased from 38.89 million to 53.31 million troy ounces, a 57% increase “in one month.”

 

The amounts to a new grand total of 1658 metric tons, an increase of 604 tons from the 1054 reported last in 2009 and which according to the PBOC was also the May 2015 total.

What is surprising about this release are three things:

First, while we welcome some long overdue “transparency”, the number is well below official expectations. This is what Bloomberg said previously: “The People’s Bank of China may have tripled holdings of bullion since it last updated them in April 2009, to 3,510 metric tons, says Bloomberg Intelligence, based on trade data, domestic output and China Gold Association figures. A stockpile that big would be second only to the 8,133.5 tons in the U.S.”

Second, China has finally admitted that its official gold numbers were fabricated (alongside all other official data released from the communist country) as it is impossible the PBOC could have bought 600 tons of gold in the open market in June when the price of the yellow metal actually dropped by 2%.

Third, and perhaps most important, is the reasoning behind the increase. While in April it was expected that China will be focused on SDR acceptance of the Yuan, that was subsequently refuted when it became clear that the IMF has no intention of making such a decision any time soon.  So why make the disclosure?

  • PBOC SAYS GOLD RESERVE INCREASE AIMS TO ENSURE SECURITY

And from the PBOC:

Gold as a special asset, with multiple attributes financial and commodities, together with other assets to help regulate and optimize the overall risk-return characteristics of international reserves portfolio. From the perspective of long-term and strategic perspective, if necessary,dynamically adjusted international reserves portfolio allocation, safety, liquidity and increasing the value of international reserve assets.

In other words, China had to wait until its stock market was crashing to present the “systemic stability” bazooka: gold.

Because in revealing a surge in its gold holdings, the PBOC is hoping to finally provide that final missing link that will boost investor sentiment, and get people buying stocks all over again.

And now that the seal has been finally broken after so many years, and since today’s update indicates that Chinese gold numbers are clearly goal-seeked with a specific policy purpose – to boost confidence – we await for the PBOC to start leaking incremental gold holding data every month (and especially in months when the market crashes) which will bring us ever closer to what China’s true gold holdings are.

* * *

The SAFE’s full accompanying Q&A statement with reporters on its latest reserves is below (google translated):

People’s Bank of China, the State Administration of Foreign Exchange, the official answered reporters’ questions on China’s total foreign debts, foreign exchange reserves, gold reserves, etc.

 To further enhance the quality and transparency of foreign data, fully reflects the outcome of the internationalization of RMB recently, People’s Bank of China, the State Administration of Foreign Exchange SDDS according to IMF data (SDDS) announced the country’s foreign exchange reserves, gold reserves, and other data, corresponding adjustment of the caliber of external debt data, published a full-bore renminbi debt, including the debt included. People’s Bank of China, the State Administration of Foreign Exchange person in charge of related issues answered reporters’ questions.

First, what SDDS is?

A: SDDS namely IMF (IMF) Special Data Dissemination Standard of, is an international standard on countries’ economic and financial statistics published by IMF enacted in 1996, the English name Special Data Dissemination Standard, referred to as the SDDS.

In order to improve the transparency of the Member States of macroeconomic statistics, IMF has developed GDDS (GDDS) and Special Data Dissemination Standard (SDDS) two sets of data dissemination standards. Both the overall framework basically the same, but in actuality, SDDS for data coverage, publication frequency, timeliness released, data quality, and other aspects of the public can get more demanding. SDDS the countries need to adopt in accordance with the requirements of the standard, published data of the real economy, fiscal, monetary, foreign and socio-demographic and other five sectors.

Currently, there are 73 economies adopted SDDS, including all developed economies, as well as Russia, India, Brazil, South Africa and other major emerging market countries. GDDS country had been announced by macroeconomic data.

Second, why should the adoption of SDDS?

A: With the deepening of economic globalization, improve data quality, make up the data gaps and enhance data comparability and enhance data transparency become a consensus. China’s proactive response and internationally accepted data standards initiative, in November 2014, the Chairman Xi Jinping at the G20 summit in Brisbane officially announced that China will adopt the IMF Special Data Dissemination Standard (SDDS). After a series of technical preparations, the current standard conditions according to SDDS data published ripe.

Adopted SDDS, in line with our needs further reform and expand opening-up, help to improve the transparency of macroeconomic statistics, reliability and international comparability, promote the improvement of statistical methods; to further find out the macroeconomic real situation, as the country’s macroeconomic provide the basis for decision-making to prevent and defuse financial risks; conducive to China’s active participation in global economic cooperation, enhance the international community and public confidence in the domestic economy.

Three , according to the SDDS reserves data released specifically what?

A: The foreign exchange reserves, according to data released SDDS carried out, including the “official reserve assets” and “International Reserves and Foreign Currency Liquidity Data Template” in two parts. “Official Reserve Assets” includes the foreign exchange reserves, IMF reserve positions and special drawing rights (SDR), gold, other reserve assets of five projects, including “reserves” This project corresponds to the size of our country’s foreign exchange reserves in the past announced ; “International Reserves and Foreign Currency Liquidity Data Template” includes four tables of official reserve assets and other foreign currency assets, the predetermined short-term net outflow of foreign currency assets and foreign currency assets or net outflow of short-term, memos.

On the publishing frequency, two pieces of data are released monthly, including “official reserve assets” not later than the seventh day of general release of the data at the beginning of each month on month, “International Reserves and Foreign Currency Liquidity Data Template” general release in the end of each month data. Since this is the first release, we have also released two pieces of data, to facilitate your control, according to the corresponding time in the future will be published separately requirements.

On statistical methods, in full accordance with IMF to carry out uniform standards relevant statistics.

Fourth, the comparative size of foreign exchange reserves in the past released the recently released data which points?

A: There are three main aspects:

  • (1) This announcement is fully consistent with the country’s reserves of foreign exchange reserves in the past announced the size of caliber. The size of our country’s foreign exchange reserves in the past has been published in accordance with the relevant methods and standards of statistics in SDDS. As of the end of June 2015, China’s foreign exchange reserves of $ 3.69 trillion.
  • (2) new released other foreign currency assets. As of the end of June 2015, the Bank of other foreign currency assets of $ 232.9 billion.
  • (3) adjusted by the size of its gold reserves. As of the end of June 2015, the scale of China’s gold reserves to 53.32 million ounces (equivalent to 1,658 tons).

Five , gold reserves according to data released this time, compared with the scale of China’s gold reserves since the end of April 2009 increased by 604 tons. Why should our holdings of gold reserves?

A: The gold reserve has been an important element of international reserve diversification countries constituted the majority of the central bank’s international reserves have gold, country as well. Gold as a special asset, with multiple attributes financial and commodities, together with other assets to help regulate and optimize the overall risk-return characteristics of international reserves portfolio. From the perspective of long-term and strategic perspective, if necessary, dynamically adjusted international reserves portfolio allocation, safety, liquidity and increasing the value of international reserve assets.

Six , in recent years, international gold prices volatile, the current round of holdings of gold reserves is at what time what channel from holdings? Whether the future will continue to overweight?

A: With the prices of other commodities and financial assets, the international gold prices also ebb. Over the past few years, gold prices continued to rise to a record high, the gradual decline. Our asset-based valuation and price changes for gold analysis, under the premise of impact and influence in the right markets, at home and abroad through a variety of channels, this part of the gradual accumulation of gold reserves. Overweight channels including domestic miscellaneous gold purification, production Shouzhu, domestic and foreign market transactions and other means.

Gold has a special risk-return characteristics, at a particular time is a good investment products. But the capacity of the gold market is small compared with the scale of China’s foreign exchange reserves, if a large number of short-term foreign exchange reserves to buy gold, easily affect the market. At present,China has become the world’s largest gold producer, is also a big consumer of gold, “hidden gold to the people,” the situation has been happening. The need to continue and consider the future of private investment demand and international reserve asset allocation, flexible operation.

 

end

 

 

I think you will enjoy this story on bonds backed by gold coins, issued in 1875 and these bonds have not been redeemed.  The bonds were issued to pay for dung.

 

(courtesy zero hedge)

 

Peru Sued By Illinois Firm For Unpaid Guano Bonds

If you’ve followed the recent evolution of fixed income products, you’re well aware that when it comes to pooling assets and securitizing cash flows, pretty much anything goes. From subprime auto loans, to credit card receivables, to P2P debt, to PE home flipper loans, you name it and there’s a fixed income security for it.

Given the above, we were fairly certain that when it comes to bonds, nothing would surprise us in terms of debtors, creditors, and the underlying assets.

We were wrong.

As Bloomberg reports, Illinois-based MMA Consultants 1 Inc has filed suit in U.S. District Court in connection with money the firm says it is owed by The Republic of Peru for bonds issued in 1875. Here’s more:

Fourteen bonds the country issued in 1875 .. are now held by an Illinois firm that says it’s having a hard time redeeming them.

 

MMA said it sent three letters to Peru’s Minister of Economics and Finance requesting payment to no avail. The company is suing for breach of contract. It didn’t reveal in the lawsuit how it came by the bonds.

 

If that were the whole story, it wouldn’t be all that interesting. Fortunately, there’s more:

[The] bonds were issued to pay off debt to aU.S. guano consignment company.

 

Each bond promised a payoff of $1,000 “United States Gold coin” plus 7 percent interest a year, according to the complaint filed Thursday by MMA Consultants 1 Inc. in federal court in New York.

 

The bonds bear the signature of Don Manuel Freyre, who is described as the “Envoy Extraordinaire and Minister Plenipotentiary of Peru,” according to the complaint.

Because we cannot imagine what we could possible add that would make this any more amusing than it already is, we’ll simply leave you with the following summary:

MMA Consultants 1 is attempting to collect what, with interest, amounts to $182 million in gold coins from “Envoy Extraordinaire” Don Manuel Freyre, in connection with bonds Peru issued 140 years ago to pay off a debt to a seabird dung consignment company.

(Don Manuel Freyre, Envoy Extraordinaire)  

end

China may devalue its yuan against gold and not against the dollar:

 

(courtesy Alasdair Macleod)

Alasdair Macleod: Credit deflation and gold

Section:

9:17p ET Thursday, July 16, 2015

Dear Friend of GATA and Gold:

In his new commentary, “Credit Deflation and Gold,” GoldMoney research chief Alasdair Macleod predicts that China will be compelled to devalue its currency against gold rather than directly against the U.S. dollar. Such a revaluation, Macleod writes, “would be presented to the world as bound up with China’s domestic economic problems, instead of an act aimed at undermining the dollar’s reserve status — a solution that is less confrontational than outright disagreement with Western central banks over gold’s role in the international monetary order.”

“Credit Deflation and Gold” is posted at GoldMoney’s Internet site here:

https://www.goldmoney.com/research/analysis/credit-deflation-and-gold?gm…

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

 

end

Early this morning, silver was slammed with a huge 1.4 billion dollar  silver paper short

(courtesy zero hedge)

Silver Slammed As ‘Someone’ Dumps $1.4bn In ‘Paper’ Gold Futures

Following “good” Housing data, “bad” CPI data, and “ugly” wage growth data, someone decided to dump $1.4 billion notional in gold futures markets (sending silver plunging also)…

 

Sending the price to 2010 levels…

 

Some context…

 

We are sure the Chinese will be very pleased to back up the truck a little more.

end

And now your overnight trading in bourses, currencies, and interest rates from Europe and Asia:

 

1 Chinese yuan vs USA dollar/yuan weakens to 6.2094/Shanghai bourse green and Hang Sang: green

2 Nikkei closed up by 50. 80  points or 0.25%

3. Europe stocks mixed /USA dollar index down to 97.64/Euro down to 1.0879

3b Japan 10 year bond yield: falls to 43% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.06

3c Nikkei still just above 20,000

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

3e WTI 50.80 and Brent:  56.99

3f Gold up /Yen up

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 falls to .81 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls to 23.51%/Greek stocks this morning: stock exchange closed again/ still expect continual bank runs on Greek banks /Greek default to the IMF in full force/

3j Greek 10 year bond yield falls to: 11.60%

3k Gold at 1144.65 dollars/silver $15.01

3l USA vs Russian rouble; (Russian rouble up 15/100 in  roubles/dollar in value) 56.83,

3m oil into the 50 dollar handle for WTI and 56 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 .9592 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0433 well below the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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 closer to negativity at +.81%

3s The ELA is still frozen today at 88.6 billion euros.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes and agrees to more austerity even though 79% of the populace are against.

4. USA 10 year treasury bond at 2.34% early this morning. Thirty year rate above 3% at 3.09% / yield curve flatten/foreshadowing recession.

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

 

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

Futures Flat Ahead Of Greek Bridge Loan Approval

After weeks of overnight turbulence following every twist and turn in the Greek drama, this morning has seen a scarcity of mostly gap up (or NYSE-breaking “down”) moves, and S&P500 futures are unchanged as of this moment however the Nasdaq is looking set for another record high at the open after last night’s better than expected GOOG results which sent the stop higher by 11% of over $40 billion in market cap. We expect this not to last very long as the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs. More importantly: a red close on Friday is not exactly permitted by the central planners.

Light newsflow has failed to provide European equities with any substantial direction (Euro Stoxx: -0.1%). Market attention will be on today’s German parliamentary vote on Greek reforms which is said to conclude at around 1200BST/0600CDT and is widely expected to be approved: after all the ECB needs to be paid with money effectively from the ECB.

Bunds have outperformed their US counterparts during the European session, undertaking a bid tone this morning as some desks attribute the move to the aforementioned German vote, despite expectations for the vote to comfortably pass.

Asian equities traded mostly higher taking a positive lead from Wall Street , where the Nasdaq-100 reached 15-yr highs following strong earnings from Netflix and Google, with latter rising by 12% in after-market trade. Hang Seng (+1.0%) and Shanghai Comp. (+3.5%) outperformed following reports that China Securities Finance Co. won CNY 2trl worth of credit to support Chinese stocks. Nikkei-225 (+0.3%) rose, with the index now on course to post its best week since Nov’14. Finally, JGBs gained overnight with the BoJ conducting its large purchase program.

In FX, central bankers remain in focus heading into the final session of the week, as has been the case throughout the week, with GBP/USD the notable outperformer at one point rising by over 50 pips this morning as European participants react to further hawkish comments by BoE’s Carney from last night, who stated UK interest rates could rise “at the turn of this year”. As such, EUR/GBP has continued its recent decline reaching its lowest level since 2007.

Elsewhere, the USD-index resides in modest negative territory (-0.1%) to come off its recent highs which came on the back of hawkish comments from Fed’s Yellen in her semi-annual testimony to congress over the past 2 days.

In terms of Asian-Pacific currencies, USD/JPY broke above the 124.00 handle to trade at its highest level for almost a month, while NZD/USD came off its multi-year lows after finding support at the 0.6500 level, which provided some respite following the continued decline which saw the pair fall by over 2 points in the past 2 days.

In the commodity complex price action has been relatively subdued with the exception of copper and platinum, with the latter falling to 6.5 year lows after dipping below USD 1,000/oz. Copper futures slid after the crossover of its 50 and 100DMA, followed by the overlap of the 100 and 200DMA to exacerbate the move to the downside. While the energy complex has seen WTI (+USD 0.14) and Brent crude (+USD 0.02) reside in neutral territory which a lack of fundamental catalysts driving much direction in prices.

Looking ahead, today sees US CPI, housing starts, building permits and University of Michigan preliminary reading as well as comments from Fed’s Fischer and Canadian CPI.

Bulletin Headline Summary

  • GBP/USD is the notable outperformer as European participants react to last nights comments by BoE’s Carney.
  • The USD-index resides in modest negative territory to pare some of its Fed’s Yellen semi-annual testimony inspired gains.
  • US CPI, housing starts, building permits and University of Michigan preliminary reading, Canadian CPI and comments from Fed’s Fischer.
  • Treasury curve flattens in overnight trading sending 5/30 curve (+143bps) to its lowest level since June 16 ahead of today’s CPI release.
  • Flattening of 5/30 curve a reflection of lower commodity prices indicating lack of inflation and willingness by bond investors to set-up for a rate hike in September, ED&F Man head strategist Tom di Galoma says in note
  • Wherever you look, central bankers are moving markets with ECB support for Greece and stimulus measures spurring gains in bonds; signs Britain is moving closer to raising interest rates sending the pound to a seven-year high
  • It’s become more difficult to buy and sell securities as Greece’s financial crisis curbs risk taking and dealers scale back trading activity to meet regulations introduced since the financial crisis
  • China has created what amounts to a state-run margin trader with $483 billion of firepower, its latest effort to end a stock-market rout that threatens to drag down economic growth and erode confidence in the government
  • Bank of England Governor Mark Carney said the end of record- low interest rates is in sight and the time for such a move will become much clearer by the end of the year
  • The European Union’s 7 billion-euro ($7.6 billion) loan to keep Greece afloat until its full bailout is approved will have two layers of guarantees and will be finalized by midday in Brussels
  • Growing dissent in Chancellor Angela Merkel’s party bloc makes the lower-house vote on Friday the latest test of her struggle to persuade Germans that Greece is still worth helping
  • IMF’s Lagarde states Greece needs debt forgiveness
  • Sovereign 10Y bond yields mostly lower, led by Greek 10Y (-26bps). European stocks mixed, Asia rises, U.S. equity- index futures mixed. Crude oil, copper and gold fall

 

DB’s Jim Reid completes the overnight event recap

 

A combination of decent US earnings and more progress in Greece, including the news that EU Finance Ministers have agreed in principle to a bridge loan helped propel equity markets higher on both sides of the pond yesterday. Indeed in Europe the Stoxx 600 closed up +1.35%, a seventh consecutive daily gain and helping to cap its longest winning streak since January having rebounded 8.8% now off the early July lows. There were similar gains for the DAX (+1.53%), CAC (+1.47%), IBEX (+1.54%) and FTSE MIB (+1.67%) too. Over in the US the S&P 500 finished up +0.80% to take it back to within just 0.3% of its all-time high, while the NASDAQ (+1.26%) went one better to close at a record high as earnings out of Netflix and eBay helped cap a good day for equity bulls.

Before we dig deeper, with the exception of China it’s been a fairly subdued end to the week across bourses in Asia this morning. Chinese equities are on track to close the week on a positive note however with the Shanghai Comp (+1.37%), Shenzhen (+2.64%) and CSI 300 (+1.56%) all up. The Nikkei (+0.05%) and ASX (-0.02%) are more or less unchanged while the Kospi (-0.57%) has declined. Credit markets across Asia, Japan and Australia are around 2bps tighter while S&P 500 futures are flat. Meanwhile Treasuries are mostly unchanged this morning while the Dollar index has dropped back a touch (-0.2%).

Onto Greece now. On the back of the parliamentary approval late Wednesday night, at yesterday’s ECB meeting we saw the Governing Council approve a €900m increase to the ELA cap. The small increase largely endorsed the improving but fragile picture with our European colleagues expecting capital controls to remain until Q4 when the bank recapitalization has been completed but with the ECB continuing to review ELA within its rules. For now the bank holiday has been extended through July 19th. Away from the ELA update the other headline yesterday was the news that EU Finance Ministers have agreed in principle on a €7bn bridge loan for Greece from the EFSF which will be needed to help repay €3.5bn of bonds to the ECB on Monday. According to Bloomberg, the deal is expected to be announced formally today after national parliaments have approved the proposals (Bundestag is set to vote today). Meanwhile, there is yet to be any response from Tsipras with regards to a cabinet reshuffle following Wednesday’s vote although it’s possible that we hear at any moment. For now it certainly feels like headlines are abating and attention is slowly moving to events elsewhere.

Some of that attention is now turning to earnings in the US which were generally better than expected on the whole yesterday and helped support part of the better tone in markets. As well as the contributions from the aforementioned tech names, Citigroup, Intel (post market Wednesday), Philip Morris, Goldman Sachs and UnitedHealth all reported beats, although the latter two did see some weakness in the details which disappointed the market slightly. Google meanwhile reported after the closing bell, with results ahead of consensus and sending the share price 10% higher in aftermarket trading.

It’s still early days so far but of the 52 S&P 500 companies to have reported, 73% have beaten earnings expectations, although the split is more 50/50 at the top line while the stronger Dollar has continued to play out as a theme for a number of the corporates this reporting period.

Elsewhere, there was little new to report from Fed Yellen’s testimony in front of the Senate yesterday which largely reflected her speech on Wednesday, including that she favours tightening in a ‘prudent and gradual manner’.10y Treasuries did end the day more or less unchanged (-0.2bps) at 2.351% while the Dollar index firmed for a second consecutive session, closing +0.52%. In terms of the data flow in the US, initial jobless claims declined for the first time in four weeks, falling 15k to 281k (vs. 285k expected), the 19th consecutive week below 300k now. The NAHB housing market index was unchanged for July at 60 (vs. 59 expected), however the Philadelphia Fed business outlook dropped in July (5.7 vs. 12.0 expected) having bounced to 15.2 in June with both new orders and the employment index down.

Over in the Europe meanwhile 10y Bunds also had a quiet session, closing 0.5bps higher at 0.831%. Led by a tightening across the Greek curve, 10y yields in Spain (-3.7bps), Italy (-1.5bps) and Portugal (-1.5bps) all finished tighter. Credit markets also continued to rebound with Crossover and Main 11bps and 3bps tighter respectively. There were signs yesterday too of the primary market for European credit coming back to life having stalled with the volatility around Greece after a couple of decent sized bond issues yesterday.

Aside from the obvious focus on Greece, there was no change in the ECB’s monetary policy stance yesterday. The Governing Council reiterated their ability to use all instruments available within its mandate in the face of any material change in the outlook for price stability while Draghi said that ‘economic risks have been contained as a result of our monetary policy’ and the overall picture of the economy was largely seen as unchanged. On the data front, there were no revisions to the final Euro area CPI prints for June at either the headline (+0.2% yoy) or the core (+0.8% yoy). The May trade balance for the region showed a slightly smaller than expected surplus (€21.2bn vs. €22.0bn expected).

Staying on the Central Bank theme, the Bank of England’s Governor Carney was vocal once again, this time narrowing his time frame slightly saying that ‘the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of the year’. Carney also said that ‘interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historic averages’. The Governor did cite risks to the world outlook from Greece and China, saying that ‘we can expect the global economy to proceed at a solid, not spectacular pace’. His comments came post market close, with 10y Gilts earlier finishing 4bps tighter at 2.075%. Sterling saw a modest spike up following the comments, but pared those moves to finish down 0.19% versus the Dollar.

Looking at today’s calendar now, it’s a particularly quiet morning in Europe with no significant data due with the focus likely to be on further Greek developments and the Bundestag vote. It’s all eyes on the US this afternoon however where we get the June CPI report with our US colleagues expecting higher energy costs to help push the headline up +0.3% (in line with market) in the month. At the core, the market is looking for a +0.2% mom reading. Along with the inflation numbers, average weekly earnings are also expected along with housing starts, building permits and the July University of Michigan consumer sentiment print.

 

 

end

 

 

Iron ore hits six year lows:

 

(courtesy the Guardian//and special thanks to Robert H for sending this to us)

Steel ‘cheaper per tonne than cabbage’ in China as iron ore hits six-year low

http://www.theguardian.com/business/2015/jul/09/steel-cheaper-per-tonne-than-cabbage-in-china-as-iron-ore-hits-six-year-low

 

The commodity gets caught up in the fallout from China’s massive sharemarket plunge as prices in China plummet to their lowest level since May 2009

Iron ore prices have plunged to a fresh six-year low as the commodity gets caught up in the fallout from China’s massive sharemarket plunge, with steel now reportedly cheaper per tonne than cabbage.

Iron ore prices in China plummeted more than 10% to $US44.59 a tonne on Wednesday night, their lowest level since May 2009.

At that price, most Australian miners would be producing at a loss, with the exception of low-cost giants Rio Tinto and BHP Billiton.

Miners have already been under pressure on the stock market: Fortescue Metals slumped more than 6% on Wednesday, while BHP and Rio each lost more than 3%.

Iron ore prices hit a low of $US47 a tonne in April this year before recovering to rise above $US64 a tonne in June.

IG Markets strategist Evan Lucas said that the price of steel – of which iron ore is a key ingredient – in China was so weak it was “now cheaper per tonne than cabbage”.

While copper jumped as the US dollar slipped, oil prices were also on the slide, with US benchmark West Texas Intermediate falling 68 cents to US$51.65 a barrel on Wednesday, its fifth day of losses.

Many agricultural commodity prices were also weaker, including cotton and wheat.

The slide in iron ore comes as China’s share market remains in freefall, even in the face of the government’s extraordinary efforts to calm investors.

China has suspended trading in more than half of the country’s listed stocks, banned short selling and new listings, and enlisted the help of the major stock brokers through a 120bn yuan ($A26bn) stabilisation fund.

But the moves have so far failed to stop the bleeding and the Shanghai Composite Index, which has lost more than 30% in less than a month, dived another 5.9% on Wednesday.

 

end

 

The IMF continues to voice its concern that for Greece to be viable it needs debt relief. The IMF may not join in the next round of a Greek bailout and that would certainly pull Germany out as the Bundestag would not agree to loans unless the IMF is involved and participates.

The German plan is for a temporary “GREXIT”, with a controlled default and then reentry 5 years later.  The French Finance Minister, Sapin just shot that down:

 

“French Finance Minister Michel Sapin says says he’s “radically against” a plan evoked by Germany’s Finance Minister Wolfgang Schaeuble that Greece could be temporarily put out of the euro currency

 

Nothing can happen in Europe if France and Germany disagree,” he added.”

Greek Deal “Categorically Not Viable” Without Debt Relief, IMF Insists

If there were any questions about where the IMF stands on Greece’s debt sustainability they were answered earlier this week when an updated version of the Fund’s Greek debt sustainability analysis was “leaked” to Reuters on Tuesday morning. The document, which was made available on the Fund’s website later that day, said the country’s debt “can now only be made sustainable through relief measures that go far beyond what Europe has been willing to consider so far.” Recommendations for ameliorating the situation include “maturity extensions with grace periods up to 30 years, explicit annual transfers to the Greek budget or deep upfront haircuts.” “The choice between the various options is for Greece and its European partners to decide,” the Fund concluded.

The updated sustainability analysis was the latest suggestion from the IMF that its participation in a third Greek program was contingent upon debt relief for the Greeks – a conditionality that Christine Lagarde has threatened to stand by before but never entirely followed through on.

On Wednesday, the European Commission’s own report on the prospects for Greek debt was published and indeed it too showed Athens’ debt load to be entirely unsustainable without “re-profiling” although unsurprisingly, upfront haircuts and budget transfers were not listed as options.

Finally, on Thursday, German FinMin Wolfgang Schaeuble said he doubted if Greece’s problems could be solved without a “real haircut.” The problem, Schaeuble continued, is that a real haircut “is incompatible with membership in the currency union,” meaning the only way to make writedowns possible is for Greece to take the now famous “time-out” which Schaeuble still contends“would perhaps be the better way for Greece.”

Now, with German lawmakers debating the new Greek package, the IMF is digging in on the debt sustainability issue. Speaking to Europe1 radio on Friday, Christine Lagarde said the new Greek deal is “quite categorically not” viable without debt relief. In case that isn’t clear enough, here are the highlights from Dow Jones:

  • IMF’S LAGARDE: NO SOLUTION POSSIBLE FOR GREECE WITHOUT DEBT REDUCTION
  • IMF’S LAGARDE: GREEK DEBT COULD BECOME SUSTAINABLE WITH RESTRUCTURING

That said, Lagarde now seems resigned to the fact that Germany and its allies in the bloc simply are not going to consider a traditional haircut.

  • IMF’S LAGARDE: GREEK DEBT CAN BE SUSTAINABLE WITH MATURITY, RATE CHANGES
  • IMF’S LAGARDE: GREEK DEBT’S DIRECT HAIRCUT SEEMS EXCLUDED

Yes, it does “seem excluded,” but in case anyone wasn’t entirely clear on this issue, Angela Merkel can help:

  • MERKEL SAYS GERMANY WON’T AGREE TO DEBT CUT FOR GREECE

And here’s Bloomberg on Finland’s position:

Finland’s Prime Minister Juha Sipila on Thursday dismissed talk of debt reduction as “useless.”

Yes, “useless”, and almost as “useless” as the entire discussion around Greece’s funding needs because with the Greek economy in free fall, any estimate of what counts as “adequate” in terms of the size of a third bailout package is out of date the second it’s committed to paper and is ancient history by the time lawmakers across the currency bloc get around to deciding whether or not the Greek cause is worth still more taxpayer support.

All of the above helps to explain why Schaeuble would rather see the Greeks simply leave the currency union – that way, they could legally receive a debt haircut as a kind of parting gift and German taxpayers could be assured that this time truly is the last time.

And for all of the rhetoric out of Angela Merkel about the overarching goal being to keep Greece in the currency bloc, the real reason why Schaeuble’s plan is a non-starter (for now anyway) is rather simple (via Bloomberg):

French Finance Minister Michel Sapin says says he’s “radically against” a plan evoked by Germany’s Finance Minister Wolfgang Schaeuble that Greece could be temporarily put out of the euro currency

 

“Nothing can happen in Europe if France and Germany disagree,” he added.

Perhaps Yanis Varoufakis was right all along.

end
The Bundestag approves the negotiation for a third bailout by a wide margin even though there is a surge of no votes:
(courtesy zero hedge)

Germany Approves Third Greek Bailout By Wide Margin Despite Surge In “Nein” Votes

Following Wednesday’s Greek vote approving the draconian terms of the Third Greek bailout, the next biggest hurdle for the implementation of another round of Greek aid was Germany’s parliamentary vote whether to endorse the terms cobbled together over last weekend. Moments ago it did just that in a vote which had been widely expected to pass without complications, when 439 members of the lower house of parliament voted in favor Berlin to starting negotiations on a third bailout program for Greece, 119 voted against and 40 abstained. A total of 598 votes were cast.

The passage was assured when Chancellor Angela Merkel essentially gave German MPs an ultimatum, and called on German lawmakers on Friday to back negotiations for a third Greek bailout or face chaos, saying suggestions Athens might temporarily leave the euro wouldn’t work.

Schaeuble himself has suggested that Greece might be better off taking a “time-out” from the euro zone to sort out its daunting economic problems, although this morning he too said the vote must pass and Greece has a chance of success with the latest bailout package.

Nonetheless, the size of the ‘No’ vote was far larger than when German lawmakers voted on the extension of a second bailout package in February. On that occasion, 32 lawmakers voted ‘No.’

This unlocks the process on finalizing what the Third Greek bailout will look like and grants passage of the €7 billion Greek bridge loan, the bulk of whose proceeds will be used to repay the ECB and the IMF.

 

 end
Oh OH!! this is not good:  Greek banks that were suppose to open on Monday will not open.  Greek citizens are not happy!!
(courtesy zero hedge)

Greek Banks Will Not Re-Open Monday Even As Loan To Repay ECB Approved

The timing could not be worse from a visual perspective but within minutes of the Eurogroup confirming that they approved the €7.16 billion bridge loan (which will merely be recycled back to The ECB to ensure the appearance of normalcy continues), local reports note that the Greek finance ministry says banks will not re-open on Monday (as promised).

 

The elites get their money…

Eurogroup statement:

 

On 17 July 2015, the Council adopted a decision granting up to €7.16bn in short term financial assistance to Greece under the European Financial Stabilisation Mechanism (EFSM).

 

The loan will have a maximum maturity of three months and will be disbursed in up to two instalments. It will allow Greece to clear its arrears with the IMF and the Bank of Greece and to repay the ECB, until Greece would start receiving financing under a new programme from the European Stability Mechanism (ESM).

 

Longer term programme 

 

On 16 July the Eurogroup decided in principle to agree to a request made by Greece on 8 July 2015 for stability support over three years from the ESM. Once negotiated between the institutions and Greece and approved by the Eurogroup, the ESM assistance would be used, amongst other things, to repay the loan Greece receives under the EFSM.

 

Economic policy conditions 

 

The Council also adopted a decision approving a macro-economic adjustment programme setting out specific economic policy conditions attached to the financial assistance. The reforms undertaken by Greece are aimed at improving the sustainability of its public finances and the regulatory environment. Specifically, Greece was required to adopt legislation to reform its VAT and pension systems, strengthen the governance of the Hellenic Statistical Authority (ELSTAT), and implement by 15 July 2015 the relevant provisions of the Treaty on Stability, Coordination and Governance. The adjustment programme will be set out in a memorandum of understanding (MOU).

 

The financial assistance would be disbursed once the MOU and a loan facility agreement setting out in detail the financial terms have entered into force. Both are to be signed by the Commission and the Greek authorities.

 

Full safeguards for non-euro area member states 

 

A mechanism has been designed so as to ensure that non-euro area member states do not carry any risk. Under the decision, the exposure of non-euro area member states will be fully guaranteed by liquid collateral under legally binding arrangements. If Greece were unable repay the loan in accordance with its terms, any liabilities incurred by non-euro area member states would be immediately reimbursed.

 

Declaration on future use of the EFSM    

 

The Council and the Commission also adopted a joint declaration agreeing that “any future use of the EFSM Regulation or any other instrument of a similar nature, for the purpose of safeguarding the financial stability of a Member State whose currency is the euro, will be made conditional upon arrangements (via collateral, guarantees or equivalent measures) being in place which ensure that no financial (direct or indirect) liability will be incurred by the Member States which do not participate in the single currency. In order to reflect this principle, the Commission will make a proposal for the appropriate changes to the EFSM Regulation as soon as possible, which shall be agreed in any case before any other proposal for support under the EFSM Regulation is brought forward. Moreover, the Commission commits not bringing forward any proposal for the use of the EFSM without a mechanism for the protection of the Member States whose currency is not the euro being assured.”

 

EFSM

 

The EFSM provides financial assistance to EU member states in financial difficulties. It relies on funds raised by the Commission on the financial markets under an implicit EU budget guarantee.

Which will all go t pay off the creditors.

The people not so much…

  • *NATIONAL BANK OF GREECE: BANK HOLIDAY EXTENDED TO JULY 19
  • Greek Finance Ministry says banks will not re-open on Monday, local reports

 

Welcome to the new normal Europe.

 

end

One of the larger Greek banks saw its value plummet on the news and it is near it’s all time lows.  Actually, all Greek banks are worth zero:

(courtesy zero hedge)

“Mark It Zero” National Bank Of Greece Plunges Towards New Lows

Remember when Greece was fixed… when The ECB extended its ELA to Greek banks and bridge loans were provided to repay The ECB? As we noted previously, it seems Greek banks are a sell at any price and today’s continued crash in National Bank of Greece ADRs ahead of ‘supposedly’ a Greek bank re-opening on Monday, suggest “mark it zero” is coming soon to some knife-catchers’ portfolios.

 

 

As we wrote prevbiously,

We doubt that Greek savers will rush to put their money in the banks, and we think Draghi is taking a huge gamble by putting even more ELA into Greek banks just before the same banks will announce at any possible moment they are forced to liquidate existing shareholders. The popular outcry against the banking system once a bail in is confirmed, even if it does not involve depositors initially, will send shock waves through society and rekindle the bank run once more.

 

Ironically, the one thing that would help preserve confidence in the Greek banking system, is more transparency about the “performing” nature of Greek bank loans: if this amount has hit 50% (or more) on the total €210 billion of loans, then depositor haircuts become virtually inevitable – anything well below that and there would still be a modest cushion before bail-ins have to go up in the cap structure.

 

Which is also why we fear no transparency will be forthcoming and why we expect that people may be fooled once again into believing their savings are, well, safe only to find out the hard way they are anything but – a hard lesson that investors in insolvent Greek banks are about to learn first hand.

*  *  *

end
More and more commentators are voicing their concerns on German hegemony in Europe:
(courtesy Sputnik news)
German Exit or Grexit? German Hegemony Needs to End – Portuguese Newspaper

Once the euro was a “trump card” proposed to Germany by France and other members of the European Community to help it start the reunification after the fall of the Berlin Wall. Now, Germany has forgotten lessons of the past and is seeking to establish a hegemony in Europe and force other countries to follow its decisions, Politico wrote.

The 1990s were an important period in modern European history, when political leaders who had experienced at least one of the world wars initiated by Germany, sought to establish a peaceful and unified Europe. Their desire was to create a European Germany, not a German Europe, as it was stated in 1953 by the German writer Thomas Mann.

Politico’s author Gustavo Cardoso wrote in his article that European countries are now taking apart Greece’s financial difficulties and mistakes, but failed to prevent Germany from using its power, which makes Europe too German and Germany less European.

According to him, Germany’s hegemony is one of the main factors of the current crisis in Greece and in the EU as a whole. Germany has been imposing its preferences on the rest of Europe. However, instead of bringing stability, the German approach has contributed to the crisis and created an essentially unstable situation.In his article, Cardoso cited Hans Kundnani, author of the book “The Paradox of German Power”. According to Kundnani, events which have taken place since the beginning of the euro crisis in 2010, to a large extent can be explained by the transformation of national identity and the German economy, which occurred during the two decades between the reunification of the GDR and FRG and the euro crisis itself.

“In other words, Germany today, as in the period 1871-1945, is strong enough to try to impose its will, but at the same time is not strong enough to do it,” Cardoso wrote, referring to Kundnani.

However, as Germany’s exported rules do not work, one is increasingly facing the need to create new coalitions to try to resolve the existing conflict situation, and thus is forced to return to the dynamics of coalition building between the great powers in Europe before 1945.

Cardoso suggests that one needs a German referendum on the issue of membership in the Eurozone.  This would help to restart the European dynamics and induce the current Germany to return to a clear path of European integration, he wrote.

Read more: http://sputniknews.com/europe/20150713/1024572806.html#ixzz3gB0QfQjL

end
Athens is smoldering as fires and strong winds are forcing residents out of their homes. Greece has no money to fight this devastation as their economy continually contracts by the hour:
(courtesy zero hedge)

Greece Is Burning, Literally

Greece is burning, literally, as Athens residents fled their homes on Friday amid wildfires fanned by strong winds and high temperatures burned through woodland around the Greek capital, sending clouds of smoke billowing over the city. Greek PM Tsipras urged calm as more than 80 firefighters with 18 fire engines and three aircraft battled the flames… brings a whole new meaning to the term ‘firesale’…

 

 

 

The problems are mounting as new fires are igniting rapidly…

end
Ex IMF chief argues that it should be Germany leaving the Euro and not Greece:
(courtesy zero hedge)

Ex-IMF Chief: Germany Should Leave The Euro, Not Greece

Submitted by KeepTalkingGreece,

In her euro-hegemonic role Germany failed to properly handle the Greek Crisis. What economics have been whispering among themselves after the scandalous Brussels Agreement of July 13th is now on the public discussion. One of IMF’s former European bailouts official, Ashoka Mody made it very clear in his article on Bloomberg on Friday morning: It’s Germany not Greece that has to leave the eurozone.

Germany not Greece should Exit the Euro

“The latest round of wrangling between Greece and its European creditors has demonstrated yet again that countries with such disparate economies should never have entered a currency union. It would be better for all involved, though, if Germany rather than Greece were the first to exit.

 

After months of grueling negotiations, recriminations and reversals, it’s hard to see any winners. The deal Greece reached with its creditors — if it lasts – pursues the same economic strategy that has failed repeatedly to heal the country. Greeks will get more of the brutal belt-tightening that they voted against. The creditors will probably see even less of their money than they would with a package of reduced austerity and immediate debt relief.”

Now the idea of a member country exiting the eurozone is not a taboo anymore. But would Greece leave the euro, it will be “possible followed by Portugal and Italy in the subsequent years, the countries’ new currencies would fall sharply in value, leaving them unable to pay debts in euros, triggering cascading defaults. Although the currency depreciation would eventually make them more competitive, the economic pain would be prolonged and would inevitably extend beyond their borders.

“But if, however, Germany left the euro area […]  there really would be no losers,” Mody notes and explains his argument:

A German return to the deutsche mark would cause the value of the euro to fall immediately, giving countries in Europe’s periphery a much-needed boost in competitiveness. Italy and Portugal have about the same gross domestic product today as when the euro was introduced, and the Greek economy, having briefly soared, is now in danger of falling below its starting point. A weaker euro would give them a chance to jump-start growth. If, as would be likely, the Netherlands, Belgium, Austria and Finland followed Germany’s lead, perhaps to form a new currency bloc, the euro would depreciate even further.

The disruption from a German exit would be minor.

 

Perhaps the greatest gain would be political. Germany relishes the role of a hegemon in Europe, but it has proven unwilling to bear the cost. By playing the role of bully with a moral veneer, it is doing the region a disservice.” ( full article Bloomberg).

Ashoka Mody was an assistant director at the International Monetary Fund (IMF), responsible for some of the bailouts required during the euro crisis. In his time at the IMF, Mody was in charge of the IMF’s Article IV consultations with Germany – those are the institution’s regular check-ups on each country’s economy. He was also responsible for engineering the IMF’s contribution to Ireland’s bailout.

end

 

The ECB is very fearful of a Greek fallout.  Thus they execute secret credit lines to the Balkans:

(courtesy zero hedge)

Fearing Greek Fallout, ECB Extends “Secret” Credit Lines To Balkans

As discussions between Greece and its creditors deteriorated and pressure on the country’s banking sector mounted, some analysts began to look nervously towards Bulgaria and Romania where Greek banks control a substantial percentage of total banking assets.

The Monday following Greek PM Alexis Tsipras’ referendum call, yields on Bulgarian, Romanian, and Serbian bonds jumped, reflecting souring investor sentiment and the countries’ central banks quickly released statements aimed at calming the nerves of investors and, more importantly, of depositors.

As Morgan Stanley noted in May, the real risk  “is that depositors who have their money in Greek subsidiaries in Bulgaria, Romania and Serbia could suffer a confidence crisis and seek to withdraw their deposits.” The bank continued: “Although well capitalised and liquid, Greek subsidiaries in the SEE region may see difficulties providing enough cash if withdrawals are intense and become problematic. In case of a liquidity shortage, Greek subsidiaries in Bulgaria, Romania and Serbia would probably create the need for local authorities to step in.”

Shortly thereafter the “no contagion risk” myth collapsed entirely when Bloomberg reported that the ECB had stepped in to shield Bulgaria from any potential fallout from capital controls in Greece. “The ECB is set to extend a backstop facility to Bulgaria and is ready to assist other nations in the region to ward off contagion from Greece, according to people familiar with the situation. The ECB would provide access to its refinancing operations, offering euros to the banking system against eligible collateral,” Bloomberg said, citing unnamed officials.

Now, FT is out reporting that the ECB has extended “secret credit lines” to Bulgaria and Romania in order to forestall asset seizures. Here’s more:

The European Central Bank has introduced secret credit lines to Bulgaria and Romania as part of a broader effort to convince foreign regulators not to pull the plug on the local subsidiaries of Greek banks.

 

News of the behind-the-scenes support for the subsidiaries comes as ECB governors decide on Thursday whether to extend a €89bn lifeline in emergency eurozone funding to Greece’s beleaguered financial sector.

 

Greece’s Piraeus, National Bank of Greece, Eurobank and Alpha Bank all have substantial assets in central and eastern Europe. If those assets were seized by local regulators, the parent banks would take an immediate capital hit, dealing a potentially terminal blow to Greece’s domestic financial system, which is already hanging by a thread as the country battles to agree a new rescue package with international creditors.

 

“The fear is that if someone goes first, and pulls the plug, everyone will follow,” said a person familiar with the situation.

 

The person said the ECB had put in place special “swap” arrangements, or bilateral credit lines, with Romania and Bulgaria to reassure them that the Greek banks there would have funding support throughout the current crisis.

 

Similar swap lines, which enable foreign central banks to borrow from the ECB and relend that money locally, were used during the eurozone financial crisis, but were typically publicly announced.

So essentially, the ECB is now set to lend to Bulgaria and Romania in order to ensure that those countries’ regulators do not take any actions with regard to domestic subsidiaries of Greek banks that might serve to further destabilize the Greek banking sector as Europe scrambles to keep it afloat.

As a reminder, Kathimerini reported in April that the central banks of Albania, Bulgaria, Cyprus, Romania, Serbia, Turkey and the Former Yugoslav Republic of Macedonia had “all forced the subsidiaries of Greek banks operating in those countries to bring their exposure to Greek risk (bonds, treasury bills, deposits to Greek banks, loans etc.) down to zero in order to shield themselves and minimize the danger of contagion in case the negotiations between the Greek government and the eurozone do not bear fruit.” The ECB’s fear seems to be that “quarantines” could turn to “asset seizures” which could in turn further impair the balance sheets of the parent companies and introduce yet another element of uncertainty into already indeterminate discussions around recapitalizing Greece’s ailing banks.

And as for the idea that depositors in the Balkans aren’t at risk, we’ll close with the following excerpt from the FT article cited above:

The National Bank of Romania declined to comment specifically on the new funding line.It said its Greek banking offshoots are “sound”, adding that they could refuse to let shareholders withdraw deposits and could also raise liquidity from the local central bank if the situation worsened.

 

end

 

Oil related stories

More Job Losses Coming To U.S. Shale

Submitted by Gaurav Agnihotri via OilPrice.com,

With the recently concluded nuclear deal between Iran and the P5+1 countries, oil prices have already started heading downward on sentiments that Iran’s crude oil supply would further contribute to the already rising global supply glut. The economic crisis in Greece, OPEC’s high production levels and China’s market turmoil have created more pressure on oil prices, making a price rebound look highly unlikely in the near future.

So, with the prices of both Brent and WTI moving towards $50 per barrel, the short to medium-term outlook for oil remains mostly bearish. This is bad news for the U.S. shale sector which is already dealing with rising debt and the ever-increasing risk of default.

A recent Bloomberg report stated that U.S. driller’s debts stood at $235 billion at the end of first quarter of 2015, which is quite worrying. Does this mean that the U.S. oil sector is likely to witness a lot more layoffs than we have seen so far? Surprisingly, a recent IHS study had revealed that the U.S. shale sector has been boosting job creation in addition to supporting around 1.7 million jobs in U.S.

All this as the overall unemployment rate in U.S. has been declining since previous years. But with rising negative sentiment pertaining to oil prices, is U.S. the shale sector prepared to face one of its biggest tests yet? Will the industry be able to sustain another long period of low oil prices or will it once again resort to trimming its workforce?

Low oil prices will most likely result in more job losses

Since the oil price collapse of last year, we have seen how oil field services and drilling companies have slashed thousands of jobs in order to reduce costs and cut their operational spending. Some of the major oilfield companies like Schlumberger, Halliburton and Weatherford have already announced close to 20,000 layoffs as of February 2015.

Image Source

However, the markets turned bullish when oil prices were hovering in the range of $60 per barrel during the last two months, raising hopes that oil companies would be sending close to 150 drilling rigs back into operation.

Now that oil prices are again moving towards the $50 per barrel mark, high drilling costs make almost a third shale oil in the U.S. too expensive to produce. Even Goldman Sachs has admitted that the $50 per barrel oil price level would deter any kind of a drilling recovery in U.S. this year, as there would only be around 20 to 50 rigs returning to work by end of this December. In fact, analysts from Goldman predict WTI will fall to $45 a barrel by October this year.

“Oil rebalancing remains in its early stages with the current cash flow and funding mix stalling it, we believe that as fundamentals reassert themselves and we move past the seasonal peak in demand, oil prices will continue to sequentially decline,” said analysts from Goldman Sachs.

U.S. shale sector faces another challenge as hedges expire

The U.S. shale industry had been somewhat insulated from the effects of low oil prices in the past as companies had hedged their production. This meant that companies had fixed their future selling price in order to temporarily circumvent the ongoing volatility in the oil markets. Since most of the companies had hedged their production before the last oil price crash, they were well protected from the erratic oil price movements. However, the situation is quite different now as most of these hedges are about to expire. For small and medium shale companies that had hedged their production at $85 or $90 per barrel previously, having more of their production exposed to $50 per barrel prices will be painful.

What to expect over the coming months

The coming few months will prove challenging for the sector, and some small and medium U.S. producers may start missing their debt repayments or even file for bankruptcy. Quicksilver Resources and American Eagle Energy are two of the six U.S. based companies that have filed for bankruptcy in 2015 so far. Sabine Oil and Gas Corp. is the latest, and the biggest, U.S. producer to file for bankruptcy so far.

Even mergers and acquisitions have slowed down considerably for the U.S. oil and gas industry in 2015. If the present trend persists, companies will have no choice but to cut their workforces even further to remain competitive and reduce their rising overheads. If oil prices remain in the range of $50 per barrel for longer than expected, even big operators such as Exxon Mobil, Chevron and ConocoPhillips (who have so far not made any major layoffs) could start downsizing their workforce.

 

end

 

Oil gains on this news:

(courtesy zero hedge)

 

 

US Rig Count Decline Reaccelerates Back To Cycle Lows

Total US Rig Count dropped 6 this week to 857 – the lows of the cycle – after 3 weeks of very modest rises. Oil rig count also declined, after 2 weeks of increases, by 7 to 638. The initial move in prices was higher (as for now we are in topsy-turvy land for crude) but that is starting to fade.

  • *U.S. TOTAL RIG COUNT DOWN 6 TO 857 , BAKER HUGHES SAYS
  • *U.S. OIL RIG COUNT DOWN 7 TO 638, BAKER HUGHES SAYS

Rig count continues to track lagged crude perfectly…

 

Crude prices extended their gains immediately after but are fading back now…

 

Charts: Bloomberg

Your early morning currency, and interest rate moves

 

Euro/USA 1.0879 down .0003

USA/JAPAN YEN 124.06 down .106

GBP/USA 1.5602 down .0008

USA/CAN 1.2980 up .0013

This morning in Europe, the Euro fell again by a tiny 3 basis points, trading now just below the 1.09 level at 1.0879; 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,  an imminent  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 up again in Japan by 10 basis points and trading just above the 124 level to 124.06 yen to the dollar.

The pound was down  this morning by 8 basis points as it now trades just above the 1.56 level at 1.5602, 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 in the toilet again by 13 basis points at 1.2980 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).

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 : up 50.80 points or 0.25%

Trading from Europe and Asia:
1. Europe stocks  mixed

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

 

Gold very early morning trading: $1144.35

silver:$15.00

 

Early Friday morning USA 10 year bond yield: 2.34% !!!  down 2 in basis points from Thursday night and it is trading well above  resistance at 2.27-2.32%

USA dollar index early Friday morning: 97.64 down 3 cents from Thursday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Friday morning

And now for your closing numbers for Friday:

Closing Portuguese 10 year bond yield: 2.64%  down 4 in basis points from Thursday

Closing Japanese 10 year bond yield: .43% !!! down 2 in basis points from Thursday/still very ominous

 

Your closing Spanish 10 year government bond, Friday, down 4 in basis points

Spanish 10 year bond yield: 1.94% !!!!!!

 

Your Friday closing Italian 10 year bond yield: 1.92% down 7 in basis points from Thursday: (very ominous)

trading 2 basis point lower than Spain.

 

IMPORTANT CURRENCY CLOSES FOR TODAY

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

Euro/USA: 1.0854 down .0029 ( Euro down 29 basis points)

USA/Japan: 124.05 down  .097 ( yen up 10 basis points)

Great Britain/USA: 1.5614 up .0004 (Pound up 4 basis points)

USA/Canada: 1.2986 up .0019 (Can dollar down 19 basis points)

The euro fell considerably today. It settled down 29 basis points against the dollar to 1.0854 as the dollar traded  northbound  today against all the various major currencies. The yen was up by 10 basis points and closing just above the 124 cross at 124.05. The British pound was up a tiny 4 basis points, closing at 1.5614. The Canadian dollar went back into the toilet by another 19 basis points closing at 1.2986.

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: 2.34% down 1 in basis point from Thursday// (well above the resistance level of 2.27-2.32%)/ominous

Your closing USA dollar index:

97.82 up 16 cents on the day

.

European and Dow Jones stock index closes:

England FTSE down 21.370 points or 0.31%

Paris CAC up 2.89 points or 0.06%

German Dax down 43.34 points or 0.37%

Spain’s Ibex down 29.90 points or 0.26%

Italian FTSE-MIB down 17.73 or 0.07%

 

The Dow down 33.80  or 0.19%

Nasdaq; up 46.26 or 0.90%

 

OIL: WTI 50.87 !!!!!!!

Brent:57.10!!!

Closing USA/Russian rouble cross: 56.95  down 5/100 roubles per dollar on the day

And now for your more important USA stories.

 

Your closing numbers from New York

“Irrelevant” Greece ‘Deal’ Sparks Week-Long Stock And Bond Buying Frenzy

This old clip seems very appropriate… Full Throttle until around 2:00… everyone smiling as the ‘boat’ surges ever faster… then hubris gets its revenge…

 

Just as we said this morning…

We expect the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs.

 

And Volume just got worse and worse all week…

 

Some context that Greece doesn’t matter… On the week…

  • Nasdaq +4.1% to record highs – best week since Bullard bounce in October
  • S&P +2.3% – best week since March

Trannies and Small Caps disappointed on the week…

 

On the day – Nasdaq started off crazy right after the close as GOOG hit then just squeezed higher to fresh record highs… S&P unch, Dow down…

 

But Small Caps were ugly today…

 

But all the exuberance in Nasdaq is focused in an ever-shrinking number of names…

 

Note that once the short squeeze had ended there was no follow through at all in the major indices… and in fact shorts started gathering pace again…

 

Google had a day…

 

And Netflix had a week…

 

ETSY Soared because Goldman mentioned it in a Google call… and shorts got “Volkwagen’d”

 

  • VIX -28% – biggest drop since Jan 2013

  • Energy Stocks XLE -1.3% – down a record 11 straight weeks to Jan 2013 lows
  • Financial Stocks XLF +2.75% – best week since Feb
  • Greek Stocks (GREK) -8.2% – worst week since January

It is pretty clear who won and who lost from the Greek bailout…

  • China ASHR +0.37% – not exactly the ‘recovery’ that all that intervention hoped for
  • China FXI +0.17% – first gain in 4 weeks

  • 30Y TSY -11bps – best week since May

And where do rates go next? if the lagged correlation with crude holds up, considerably lower…

  • USD Index  +1.9% – best week since May
  • EURUSD -2.5% – worst week since May

JPY flatlined today… and thus so did stocks. But it has been a one way street for USD strength, everything else weakness this week…

And digging into the details a little more, your daily FX roundup (courtesy of ForexLive):

 

  • Silver -4.1% – down 8 of last 9 weeks
  • Gold -2.2% – down 7 of lats 9 weeks, worst week since March

 

Ugly for precious metals leaves them still massively outperforming Nasdaq since the dotcom bubble…

 

  • WTI Crude -4.3% – 5th losing week in a row…worst 3-week loss in 2015)

 

Charts: Bloomberg

A great commentary as to how socialism destroyed the finances in Puerto Rico.  More defaults are looming:

(courtesy zero hedge)

How Socialism Destroyed Puerto Rico, And Why More Defaults Are Looming

With Puerto Rico missing a payment on a bond overnight “due to non-appropriation of funds” but denying that this constitutes anything close to a default, the territory may be about to retake the limelight as Greece is now “fixed.”As MarketWatch reports,

The missed payment could have serious implications for holders of Puerto Rico bonds, “as the signal from breaking a seven-decade streak of bond payments may imply more defaults are looming,”Daniel Hanson, an analyst at Height Securities, said in a note.

 

Not all Puerto Rican bonds are created equal, being backed by different types of revenues, such as tax revenues, road tolls, electricity bills etc.

 

The first thing investors should do is “find out what revenue backs their bonds and whether their bonds are insured or not,”said Mary Talbutt, head of fixed income at Bryn Mawr Trust.

 

Approximately 30% of muni mutual funds have holdings in Puerto Rico, more than half of which are insured, according to a Charles Schwab Investment Management report. As for the revenue that backs the bonds, most exposure is with the sales-tax backed bonds, known as COFINA bonds from their Spanish-language acronym, and the general-obligation bonds, known as G.O. bonds, according to the report.

 

In that sense, investors that hold the PFC bonds are somewhat in a bind because “the language in PFC bonds makes payment dependent on appropriations from Puerto Rico’s legislature,” Hanson said.

 

This is the main difference between the PFC bonds and the G.O. bonds. The former require appropriation, while the latter are backed by the full faith and credit of the territory and their repayment is guaranteed by the constitution.

 

“The language… makes [the PFC bonds] a weaker credit relative to G.O. bonds. But a default is still a default,” said Andrew Gadlin, a research analyst at Odeon Capital Group.

 

This has investors worried about other types of bonds that face a repayment deadline, most notably those issued by the island’s Government Development Bank (GDB).

 

“The market is becoming more skeptical of the payments due August 1 on GDB debt, though the budget does set aside funds for paying these obligations,” Gadlin said.

And as Euro Pacific Capital’s Peter Schiff explains, this is far from over

While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency. But the damage done to the Puerto Rican economy by the United States has been far more debilitating than whatever damage the European Union has inflicted on Greece. In fact, the lessons we should be learning in Puerto Rico, most notably how socialistic labor and tax policies can devastate an economy, should serve as a wake up call to those advocating prescribing the same for the mainland.  
The U.S. has bombed the territory of Puerto Rico with five supposedly well-meaning, but economically devastating policies. It has:
  1. Exempted the Island’s government debt from all U.S. taxes in the Jones-Shaforth Act.
  2. Eliminated U.S. tax breaks for private sector investment with the expiration of section 936 of the U.S. Internal Revenue Code.
  3. Required the nation to abide by a restrictive trade arrangement.
  4. Made the Island subject to the U.S. minimum wage.
  5. Enabled Puerto Rico to offer generous welfare benefits relative to income.
While passage of such politically popular laws seems benign on the surface (and have allowed politicians to claim that their efforts have helped the poorest Puerto Ricans), in reality they have deepened the poverty of the very people the laws were supposedly designed to help. The lessons here are so obvious that only the most ardent supporters of government economic control can fail to comprehend them.
Tax-Free Debt
By exempting U.S. citizens from taxes on interest paid on Puerto Rican sovereign debt, Washington sought to help the Puerto Rican economy by making it easier and cheaper for the Island’s government to borrow from the mainland. As a result, Puerto Rican government bonds became a staple holding of many U.S. municipal bond funds. As with Fannie Mae and Freddie Mac bonds a decade ago, many investors believed that these Puerto Rican bonds had an implied U.S. government guarantee. This meant that the Puerto Rican government could borrow for far less than it could have without such a belief. However, this subsidy did not grow the Puerto Rican economy, but simply the size of the government, which had the perverse effect of stifling private sector growth.
In contrast to the tax-free income earned by Americans who buy Puerto Rican government bonds, those with the bad sense to lend to Puerto Rican businesses were taxed on the interest payments that they received. Businesses could have used the funds for actual capital investment (that could have increased the Island’s productivity), but instead the money flowed to the Government which used it to buy votes with generous public sector benefits that did nothing to grow the Island’s economy or put it in a better position to repay. That problem was left for future taxpayers who no politician seeking votes in the present cared about.
This dynamic is almost identical to what happened in Greece, where low borrowing costs, made possible by the strong euro currency and the implied backstop of the European Central Bank and the more solvent northern European nations, permitted the Greek government to borrow at far lower rates than its strained finances would have otherwise allowed.
Taxing Private Investment
Perversely, as the U.S. government made it easier for the Puerto Rican government to borrow, it made it harder for the private sector to do so. In 2006 the government ended a tax break that exempted corporate profits earned on private sector investment in Puerto Rico from U.S. taxes. As a result, U.S. businesses that had been making investments and hiring workers on the Island pulled up stakes and moved to more tax-friendly jurisdictions. The result was an erosion of the Island’s local tax base, just as more borrowing (made possible by triple tax-free government debt) obligated the remaining Puerto Rican taxpayers to greater future liabilities.
The Jones Act
The Jones Act, a 1920 law designed to protect the U.S. merchant marine from foreign competition, has had a devastating effect on Puerto Rico, and should be used as a cautionary tale to illustrate the dangers of trade barriers. Under the terms of this horrible law, foreign-flagged ships are prevented from carrying cargo between two U.S. ports. According to the law, Puerto Rico counts as a U.S. port. So a container ship bringing goods from China to the U.S. mainland is prevented from stopping in Puerto Rico on the way. Instead, the cargo must be dropped off at a mainland port, then reloaded onto an expensive U.S.-flagged ship, and transported back to Puerto Rico. As a result, shipping costs to and from Puerto Rico are the highest in the Caribbean. This reduces trade between Puerto Rico and the rest of the world. Since a large percentage of the finished goods used by Puerto Ricans are imported, the result is much higher consumer prices and fewer private sector jobs. Even though median incomes in Puerto Rico are just over half that of the poorest U.S. state, thanks to the Jones Act, the cost of living is actually higher than the average state.
The Federal Minimum Wage
In 1938 the Fair Labor Standards Act subjected Puerto Rico to a federal minimum wage, but it was not until 1983 that a 1974 act, which required that the Island match the mainland’s minimum wage, was fully phased in. The current Federal minimum wage of $7.25 per hour is 77% of Puerto Rico’s current median wage of $9.42. In contrast, the Federal minimum is only 43% of the U.S. median wage of almost $17 per hour (Bureau of Labor Statistics (BLS), May 2014). The U.S. minimum wage would have to be more than $13 per hour to match that Puerto Rico proportion. The disparity is greater when comparing minimum wage income to per capita income.
The imposition of an insupportably high minimum wage has meant that entry level jobs simply don’t exist in Puerto Rico. Unemployment is over 12% (BLS), and the labor force participation rate is about 43% (as opposed to 63% on the mainland) (The World Bank). A “success” by the Obama administration in raising the Federal minimum to $10 per hour would mean that the minimum wage in Puerto Rico would be higher than the current medium wage. Such a move would result in layoffs on the Island and another step down into the economic pit. I predict that it could bring on a crisis similar to the one created in the last decade in American Samoa when that Island’s economy was devastated by an unsustainable increase in the minimum wage.
It will be interesting to see if our progressive politicians will have enough forethought and mercy to exempt Puerto Rico from minimum wage increases. But to do so would force them to acknowledge the destructive nature of the law, an admission that they would take great pains to avoid.
Welfare   
In 2013 median income in Puerto Rico was just over half  that of the poorest state in the union (Mississippi) but welfare benefits are very similar. This means that the incentive to forgo public assistance in favor of a job is greatly reduced in Puerto Rico, as a larger percentage of those on public assistance would do better financially by turning down a low paying job. Because of these perverse incentives not to work, fewer than half of working age males are employed and 45% of the Island’s population lived below the federal poverty line (U.S. Census Bureau, American Community Survey Briefs issued Sep. 2014). According to a 2012 report by the New York Federal Reserve Bank, 40% of Island income consists of transfer payments, and 35% of the Island’s residents receive food stamps (Fox News Latino, 3/11/14).
In other words, Puerto Rico’s problems are strikingly similar to those of Greece. Its government spends chronically more than it raises in taxes, its economy is trapped in a regulatory morass, and its economic destiny is largely in the hands of others.
*  *  *
Puerto Rico’s economy and population have been shrinking for almost a decade, and debts have ballooned to about 100 per cent of its gross national product as the government took advantage of the tax exemption enjoyed by US municipal debt.
The Puerto Rico Electric Power Authority is already restructuring $9bn of bonds and loans.
By September 1 Puerto Rico is expected to deliver a plan for turning round its finances.Officials have called for patience from creditors about how its various bondholders will be treated.
Patience… indeed.
*  *  *
The solutions to Puerto Rico’s problems are simple, but, Peter Schiff warns, politically toxic for mainland politicians to acknowledge.
Puerto Rico must be allowed to declare bankruptcy, the Federal incentive for the Puerto Rican government to borrow money must be eliminated, Puerto Rico must be exempted from both the Jones Act and the Federal Minimum wage, and Federal welfare requirements must be reduced. Puerto Rico already has the huge advantages of being exempt from both the Federal Income Tax and Obamacare, so with a fresh start, free from oppressive debt and federal regulations, capitalism could quickly restore the prosperity socialism destroyed.
With the current incentives provided by Acts 20 and 22 (which basically exempt Puerto Rico-sourced income for new arrivals from local as well as federal income tax – see my report on America’s Tax Free Zone) and with some additional local free market labor reforms, in a generation it’s possible that Puerto Ricans could enjoy higher per capita incomes than citizens of any U.S. state.
If Washington really wanted to accelerate the process, it should exempt mainland residents from all income taxes, including the AMT, on Puerto Rico-sourced investment income, including dividends, capital gains, and interest related to capital investment.

end

University of Michigan sentiment drops again and misses by the most since 2006.  Remember confidence is what drives any economy!

(courtesy zero hedge/U. of Michigan sentiment)

UMich Consumer Sentiment Drops, Misses By Most Since 2006

Since January’s exuberant peak, UMich consumer sentiment has drifted lower. Expectations for July’s preliminary data was 96.0 but the 93.3 print is the biggest miss since 2006. Both current and future “hope” conditions dropped markedlywith details showing American sless certain about retirement, less confident about income growth outpacing inflation, and businesses considerably less confident.

 

 

 

Charts: bloomberg

end

Dave Kranzler on today’s trading:

(courtesy Dave Kranzler/IRD)

U.S. Financial Markets Have Lost All Credibility

The Fed no longer has credibility, and you can see that. The divergence between the futures markets and the Fed’s own projections about what they’re going to do about interest rates—this is a huge problem,” he told CNBC’s “Squawk Box.”  – Senator Pat Toomey on CNBC

Sorry Pat, the entire U.S. financial system has lost all credibilty.  While the economic condition of the United States continues to deteriorate rather quickly, the S&P 500 and Nasdaq continue to push insanely higher on a historically unprecedented tidal wave of printed money.

“Printed money” is electronic money that is created BOTH by the Fed’s electronic printing press AND the electronic printing press that creates debt certificates.  Why the latter? Because debt behaves like money until that debt is repaid.  Simply printing money to repay existing debt while printing enough to issue more debt is not the definition of “repayment.”   This process in fact forces even more “printed” electronic money into the system.

This is why the broad measures of the stock market are moving higher despite deteriorating real economic fundamentals and it’s why housing prices have soared, despite mediocre transaction volume and a recent influx of supply.  All of that printed money is going into paper financial assets.  After all, with the financialization of mortgages, the housing market itself has become “financialized.” Just ask the Fed, it’s injected $1.7 trillion of printed money into the housing market via financialized mortgage paper.

Today’s action on the Comex is emblematic of the complete loss of legitimacy of the U.S. financial markets.   Gold and silver were slammed hard when the housing starts and permits data was released at 8:30 a.m. EST – click to enlarge image:

COMEXGOLD

Here’s the problem with the highly questionable housing report: The big spike in housing starts occurred in multi-family units. Even if this this number is legitimate, the expansion in apartment buildings is occurring as a massive influx of rental buildings that have been in process over the last year are hitting the market.

In other words, the apartment rental building market is in the midst of a bubble that is bigger than the mid-2000’s bubble.  Not only can I confirm this fact in Denver – almost all new buildings, though not advertised, will give new tenants two free months as a move-in incentive – but I have been getting flooded with emails from readers from other large cities who are confirming the same dynamic in their area.  I will have a lot more on the housing market later.  What I have discovered is stunning.

If anything, the housing market data today should have received a very bearish response from the equity markets and a very bullish response from the gold and silver market.  Instead, the Fed is working overtime to prop up stocks and it dumped close to $350 million of paper gold onto the Comex in the span of one minute.

But not only was the housing market report bearish for the system, we learned right before that report that more layoffs are coming in the oil industry;  we learned right after that report that U of Michigan’s measure of consumer “confidence” dropped and missed Wall Street’s expectations by the most since 2006.

Furthermore, how can the price of silver be declining when the U.S. mint acknowledged last week that these is no supply for it to mint silver eagles?   This after huge spike in silver eagle sales in June.

So you see, Pat, its not just the Federal Reserve that has lost all credibility.  It’s the entire U.S. financial system.   The financial markets have become a complete fairytale.  In fact, the Fed lost all credibility back in 2012 when Ron Paul asked Ben Bernanke if gold was money, to which Bernanke replied, “no” after he uncontrollably flashed a facial expression which “tells” he’s about lie.  When further asked why Central Banks continue to buy and own gold, Bernanke flashed that “I’m about lie” expression again and stuttered, “out of tradition.”  Were we watching the modern version of “Fiddler On The Roof?”

At that split moment in time Bernanke’s hubris prevented him from responding with a credible answer. Anyone with any remaining shred of faith in Bernanke’s/the Fed’s credibility – his ethics, morals and spirituality – had their hopes nuked by hubris. It was perhaps the most fraudulent statement ever issued by a Central Banker.

After all, It sure seems like China, Russia and India are converting a lot of paper U.S. dollars into something that was summarily dismissed by the head of the Fed as being a “tradition.”

end

Things getting a little scary in California with respect to water and water rights:

California Water Wars Escalate: State Changes Law, Orders Farmers To Stop Pumping

“In the water world, the pre-1914 rights were considered to be gold,” exclaimed one water attorney, but as AP reports, it appears that ‘gold’ is being tested asCalifornia water regulators flexed their muscles by ordering a group of farmers to stop pumping from a branch of the San Joaquin River amid an escalating battle over how much power the state has to protect waterways that are drying up in the drought. As usual, governments do what they want with one almond farmer raging “I’ve made investments as a farmer based on the rule of law…Now, somebody’s changing the law that we depend on.” This is not abiout toi get any better asNBCNews reports, this drought is of historic proportions –the worst in over 100 years.

 

The current drought has averaged a reading of -3.67 over the last three years, nearly twice as bad as the second-driest stretch since 1900, which occurred in 1959.

 

Other studies using PDSI data drawn from tree-ring observations reaching even further back in time reveal similar findings. One such study from University of Minnesota and Woods Hole Oceanographic Institute researchers showed the current drought is California’s worst in at least 1,200 years.

And as AP reports, regulatords are changing the laws to address the problems…

The State Water Resources Control Board issued the cease and desist order Thursday against an irrigation district in California’s agriculture-rich Central Valley that it said had failed to obey a previous warning to stop pumping. Hefty fines could follow.

 

The action against the West Side Irrigation District in Tracy could be the first of many as farmers, cities and corporations dig in to protect water rights that were secured long before people began flooding the West and have remained all but immune from mandatory curtailments.

 

“I’ve made investments as a farmer based on the rule of law,” said David Phippen, an almond grower in the South San Joaquin Irrigation District. “Now, somebody’s changing the law that we depend on.”

 

Phippen said his grandfather paid a premium price in the 1930s for hundreds of acres because it came with nearly ironclad senior water rights.

 

Phippen said he takes those rights to the bank when he needs loans to replant almond orchards or install new irrigation lines. He fears that state officials are tampering with that time-tested system.

Several irrigation districts have filed unresolved legal challenges to stop the curtailments demanded by the state.

Among them is the West Side Irrigation District, which claimed a victory in a ruling last week by a Sacramento judge who said the state’s initial order to stop pumping amounted to an unconstitutional violation of due process rights by not allowing hearings on the cuts.

 

Superior Court Judge Shelleyanne Chang also indicated, however, that the water board can advise water rights holders to curtail use and fine them if the agency determines use exceeded the limit.

 

West Side is a small district with junior water rights, but the ruling also has implications for larger districts with senior rights.

 

West Side’s attorney Steven Herum said the order issued Thursday was prompted after the judge sided with his client.

 

“It is clear that the cease-and-desist order is retaliatory,” Herum said. “It’s intended to punish the district.”

Still the farmers face an uphill battle…

Buzz Thompson, a water rights expert at Stanford Law School, expects California to prevail in the fight to pursue its unprecedented water cuts because courts have consistently expanded its authority.

 

“It’s only when you get into a really serious drought that you finally face the question,” he said.

 

California is an anomaly among Western states in the way it treats water rights. Thompson said other states use widespread meters and remote sensors to measure consumption or don’t provide special status to those with property next to natural waterways.

 

“In any other state, this wouldn’t be a question,” he said.

 

California rights holders are going to have to abide by more strict measurement requirements starting next year after fighting several attempts to overhaul the rules for decades, said Andy Sawyer, a longtime attorney at the water board.

 

“They long thought it’s nobody else’s business,” said Lester Snow, executive director of the California Water Foundation, which advocates for better measurement of water consumption to improve management.

*  *  *

The Water Wars are just beginning and, it appears, with big oil still exempt, the small businessman and average joe face the costs…

 

 

 

end

 

 

 

Let us wrap up this week, courtesy of Greg Hunter of USAWatchdog

(courtesy Greg Hunter/USAWatchdog/)

Greek Deal Not a Deal, Iran Deal Not a Deal, Fed Rate Hike Coming, Trashing Trump Unfair

6By Greg Hunter’s USAWatchdog.com (7/17/15 WNW 199)

Two big deals were made this week, but they may not be deals just yet. I characterize the deal to curb Iran’s nuclear program as a deal between liars and cheaters. The cheater is Iran. They have cheated in the past on curbing their nuclear program. Just a few months ago, the UN accused Iran of cheating again. The liar is the Obama Administration. The lies by him and his administration are numerous. “You can keep your health plan.” “Obama Care is going to be cheaper.” Deserter “Bo Bergdahl served with distinction.” With the IRS scandal, “Not even a smidgen of corruption.”  The list of provable lies is very long (click here). So, when the President tries to defend his Iran nuke deal, lots of folks in both parties and our allies simply do not trust him. President Obama has not much “trust capital” left. I don’t want to get into the minutia of the Iran nuke deal, but even the President admitted that, yes, “Iran could cheat.” Trust is his biggest problem because Republicans, some Democrats, and all US Middle East allies do not trust President Obama, and thus, do not trust this deal. This deal is not going to make things more peaceful in the Middle East—far from it. It is also far from being a done deal.

The Greek debt deal is also far from being a done deal. I characterize this deal as collateral and control. The bankers want Greek assets now as part of the bailout deal, not bonds and promises to pay, but tangible collateral. The bankers also want control or veto power over the Greek Parliament. Yes, I know the Greek Parliament voted for the onerous terms set out by the bankers, but have you seen the rioting in Greece? This deal will not stand, and there are going to elections that will throw out everyone who voted to sell out the Greek people. Count on it. You know who else is not down with this nearly $100 billion scam? The Germans. This has exposed a deep division in Germany. Many there do not want to cough up another $100 billion for a third bailout. Of course, most of the money goes to propping up the insolvent banks in the EU, but this is far from a done deal, and even members of Angela Merkel’s own party are vehemently against it. Many prominent Germans and even the IMF say the debt needs to be cut, and some Greek debt needs to be written off altogether. If this is the case, many other heavily indebted EU countries will need a debt cut, and then you must ask what is going to happen to the value of all those bonds? (Hint: They do not go up in value, and keep in mind, they are being used as collateral.)

The Federal Reserve continues to say it is going to begin raising interest rates, and it could be as early as September. Fed Head Janet Yellen is a bit wishy washy on the timing. She told Congress this week that she worries about being “too early” and also worries about being “too late.” So, what is the real story? There are so many signs the real economy is not good. The latest comes from economist John Williams at ShadowStats.com. Williams says industrial production plunged this past week by 1.4%. Williams contends, “The last time it was this weak the U.S. economy was in collapse.” So, the Fed is not going to be able to raise rates, right? According to Greg Mannarino at TradersChoice.net that is dead wrong. He thinks the Fed needs to raise rates for it credibility and to take some steam out of a much overvalued stock market. Mannarino points out that Fed Head Yellen tried to do just that in early May when she herself said the market was “overvalued.” It didn’t work, and now she is going to have to raise rates. Is September the month? We will see.

Finally, Donald Trump has been getting a lot of grief for simply being a very unlikely front runner in the crowded GOP field. The MSM press is acting like an extension of the left wing of the Democratic Party. Republicans and Democrats are also taking shots at Trump, and I think it’s because they are all afraid of him. I think the attacks are unfair and show he’s doing something right.

Join Greg Hunter as he talks about these stories and more in the Weekly News Wrap-Up.

end

Well that about does it for tonight,

I will see you Monday night.

Harvey

>

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One comment

  1. The SLV actually added 1.241 million oz today. IMO GLD incurred a bit of Bankster hanky panky. They borrow shares (from GLD share holders with margin accounts) and instead of selling them short, they just redeem them for the metal. When the share holder eventually sells the shares the Bankster says here’s your paper dollars and the gold never has to be replaced. GLD doesn’t lend it’s gold, but stupid share holders will lend their shares for the privilege of gambling with leverage (read the fine print on your margin account agreement). Moral of the story is never hold GLD/SLV shares in a margin account as in a SHTF moment you may find yourself “MFGlobaled”.

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