july 24/GLD loses another 4.48 tonnes of gold/SLV no changes/Two huge gold flash crashes last night/gold and silver rebound after the comex close/

Good evening Ladies and Gentlemen:

 

We are entering options expiry week.

Comex options expiry Tuesday, July 28.

LMBA options expiry:  noon London time July 31.2015

OTC options expiry: midnight July 31.2015

 

 

 

Here are the following closes for gold and silver today:

 

 

 

Gold:  $1085.60 down $8.40  (comex closing time)

Silver $14.48 down 20 cents.

In the access market 5:15 pm

Gold $1099.00

Silver:  $14.70

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 0 ounces . Silver saw 91 notices filed for 455,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 246.35 tonnes for a loss of 57 tonnes over that period.

In silver, the open interest rose by 787 contracts despite the fact that yesterday’s price was down by 4 cents and the gold price was pummeled (down $2.60 and down further in the access market).  The total silver OI continues to remain extremely high, with today’s reading at 190,384 contracts now at decade highs despite a record low price.  In ounces, the OI is represented by .951 billion oz or 135% 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 bankers contemplating falling off the roof due to silver’s refusal to buckle with respect to open interest.

In silver we had 91 notices served upon for 455,000 oz.

In gold, the total comex gold OI rests tonight at 455,312 for a gain of 3,587 contracts as gold was down $2.60 yesterday. We had 0 notices filed for nil oz  today.

We had another withdrawal in gold tonnage at the GLD to the tune of 4.48 tonnes/  thus the inventory rests tonight at 680.15 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 GLD 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 rests at 328.834 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 787 contracts up to 190,384 despite the fact that silver was down by 4 cents yesterday in another massive bear raid. We again must have had some shortcovering by the bankers as they feared something was brewing in the silver arena.  The OI for gold rose by 3,587 contracts up to 455,312 contracts as the price of gold was down by $2.60 yesterday.

(report Harvey)

2 Today, 2 important commentaries on Greece

(zero hedge, Bloomberg/)

3. Two gold flash crashes

(zero hedge/3 stories)

4. Gold trading overnight

(Goldcore/Mark O’Byrne/)

5 Michael Snyder on the imploding Chinese markets

(Michael Snyder)

6 Trading of equities/ New York

(zero hedge)

7 COT report

(Harvey)

 8 Oil drops into the 47 handle as rigs increase
(zero hedge/2 stories)
9 USA stories;
i) Capital One drops big time as reserves for losses increases dramatically.  A canary in a coal mine?
ii) Housing sector again in disarray
iii) USA Manufacturing PMI plummets
(zero hedge)
iv) USA junk bond business in trouble
(Dana Lyons)

plus other topics…

Here are today’s comex results:

The total gold comex open interest rose by 3587 contracts from 451,725 up to 455,312 despite the fact that gold was down $2.60 in price yesterday (at the comex close).  We are now in the next contract month of July and here the OI rose by 35 contracts to 154 contracts. We had 0 notices filed yesterday and thus we gained 37 gold contracts or an additional 3700 oz will stand in this non active delivery month of July. The next big delivery month is August and here the OI decreased by 30,062 contracts down to 153,730. We have one week before first day notice for the big August active gold contract. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 312,437. However today’s volume was aided by HFT traders. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 284,115 contracts. Today we had 0 notices filed for nil oz.

And now for the wild silver comex results. Silver OI rose by a considerable 787 contracts from 189,597 up to 190,384 despite the fact that the price of silver was down by 4 cents with respect to yesterday’s price. We continue to have our bankers pulling their hair out with the continued high silver OI as the world senses something is brewing in the silver arena. We are in the delivery month of July and here the OI rose by 94 contracts up to 246. We had 53 notices served upon yesterday and thus we gained 157 contracts or an additional 785,000 ounces of silver will  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 rise by 3 contracts up to 189. The next major active delivery month is September and here the OI fell by 873 contracts to 129,062. The estimated volume today was excellent at 52,638 contracts (just comex sales during regular business hours). The confirmed volume yesterday (regular plus access market) came in at 30,336 contracts which is fair in volume.  We had 91 notices filed for 455,000 oz.

July initial standing

July 24.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz   128.60 oz (Manfra)40 kilobars
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 192,803.55 oz (5972 kilobars)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices) 154 contracts (15,400 oz)
Total monthly oz gold served (contracts) so far this month 607 contracts(60,700 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 356,110.0   oz

Today, we had 0 dealer transactions

total Dealer withdrawals: nil  oz

we had 0 dealer deposits

total dealer deposit: zero

and the farce with respect to kilobars continues

we had 1 customer withdrawals

i) Out of Manfra:  128.6 oz  (4 kilobars)

 

total customer withdrawal: 128.6 oz

We had 0 customer deposits:

 

Total customer deposit: nil

We had 0 adjustments.

Today, 0 notices was issued from JPMorgan dealer account and 102 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 (607) x 100 oz  or 60,700 oz , to which we add the difference between the open interest for the front month of July (154) 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 (607) x 100 oz  or ounces + {OI for the front month (154) – the number of  notices served upon today (0) x 100 oz which equals 76,100  oz standing so far in this month of July (2.258 tonnes of gold).

we gained 37 contracts or an additional 3700 oz will stand in this non active delivery month of JULY.

Total dealer inventory 482,778.738 or 15.016 tonnes

Total gold inventory (dealer and customer) = 7,920,206.028 oz  or 246.35 tonnes

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 246.35 tonnes for a loss of 57 tonnes over that period.

end

 

And now for silver

July silver initial standings

July 24 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 301,268.454  oz (CNT, Delaware)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory 150,231.17 oz (HSBC)
No of oz served (contracts) 91 contracts  (455,000 oz)
No of oz to be served (notices) 155 contracts (755,000 oz)
Total monthly oz silver served (contracts) 3473 contracts (17,365,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil
Total accumulative withdrawal  of silver from the Customer inventory this month 8,501,699.2 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 HSBC:  150,231.17 oz

total customer deposit: 150,231.17 oz

We had 2 customer withdrawals:

i)Out of  Delaware: 2054.255 oz

ii) Out of CNT: 299,213.700 oz

total withdrawals from customer: 301,168.454  oz

we had 1  adjustment

From CNT:

 

 9925.300 oz leaves the customer and this lands into the dealer account at CNT

Total dealer inventory: 58.143 million oz

Total of all silver inventory (dealer and customer) 177.837 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 (3473) x 5,000 oz  = 17,365000 oz to which we add the difference between the open interest for the front month of July (246) and the number of notices served upon today (91) x 5000 oz equals the number of ounces standing.

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

3473 (notices served so far) + { OI for front month of July (246) -number of notices served upon today (91} x 5000 oz ,= 18,140,000 oz of silver standing for the July contract month.

 We  gained a whopping 785,000 oz.  Somebody was in great need of silver and gold today.

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 24.2015/we had another massive withdrawal of 4.48 tonnes of gold form the GLD/Inventory rests at 680.13 tonnes.

July 23.2015: we had another withdrawal of 2.68 tonnes of gold from the GLD/Inventory rests at 684.63 tonnes

july 22/another withdrawal of 2.38 tonnes of gold from the GLD/Inventory rests at 687.31

July 21.2015: a massive withdrawal of 6.56 tonnes of gold from the GLD.

Inventory rests at 689.69 tonnes.  China and Russia need their physical gold badly and they are drawing their physical from this facility.

July 2o.2015: no change in inventory

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 24 GLD : 680.13 tonnes

end

And now for silver (SLV)

July 24/no change in silver inventory/inventory rests tonight at 328.834 million oz

July 23.2015; no change in silver inventory/rests tonight at 328.834 million oz

july 22/no change in silver inventory/inventory rests at 328.834 million oz.

July 21.we had a massive addition of 1.241 million oz into the SLV/Inventory rests tonight at 328.834 million oz.

Please note the difference between gold and silver (GLD and SLV).  In GLD gold is being depleted and sent to the east.  In silver: no depletions, as I guess this vehicle cannot supply physical metal.

July 20/no change

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 24/2015:  tonight inventory rests at 328.834 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 9.4 percent to NAV usa funds and Negative 9.7% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.9%

Percentage of fund in silver:37.7%

cash .4%

( July 24/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to .31%!!!! NAV (July 24/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .61% to NAV(July 24/2015)

Note: Sprott silver trust back  into positive territory at  0.31%

Sprott physical gold trust is back into negative territory at -.61%

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

And now for our COT report:

First our gold COT

 

Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
187,720 159,441 46,943 189,676 211,260 424,339 417,644
Change from Prior Reporting Period
-3,294 16,251 -4,567 5,731 -21,154 -2,130 -9,470
Traders
135 137 81 60 55 235 238
 
Small Speculators  
Long Short Open Interest  
35,421 42,116 459,760  
-774 6,566 -2,904  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, July 21, 2015

Our large specs:

Those large specs who have been long in gold covered 3294 contracts of their longs.

Those large specs who have short in gold added a whopping 16,251 contracts to their short side.

Our commercials;

Those commercials that have been long in gold added 5731 contracts to their long side.

Those commercials that have been long in gold added a huge 5731 contracts to their long side.

Those commercials who have been short in gold covered a monstrous 21,154 contracts to their short side.

Our small specs:

 

Those small specs that have been long in gold pitched 774 contracts from their long side.

 

Those small specs that have been short in gold added 6566 contracts to their short side.

 

Conclusions;

This makes no sense! Commercials are very close to balancing their net short position with their long position

 

 

and from zero hedge:

 

in the subgrouping!!

 

This Has Never Happened To Gold Before

For the first time since records began, hedge funds are net short gold futures, according to CFTC data…

 

 

This is what happened the last time gold saw a ‘low’ net long position…

 

Is this why Gold is spiking this afternoon?

 

Squeeze…

 

Charts: Bloomberg

 

end

 

And now our silver COT:

Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
66,576 62,331 20,421 79,791 90,958
184 5,492 -1,210 3,845 -577
Traders
93 65 42 50 36
Small Speculators Open Interest Total
Long Short 190,226 Long Short
23,438 16,516 166,788 173,710
1,691 805 4,510 2,819 3,705
non reportable positions Positions as of: 165 124
Tuesday, July 21, 2015   © SilverSeek.com

Our large specs:

Those large specs that have been long in silver added 1691 contracts to their long side.

Those large specs that have been short in silver added 5492 contracts to their short side.

Our commercials;

Those commercials that have been long in silver added 3845 contracts to their long side.

Those commercials that have been short in silver covered 577 contracts from their short side.

Our small specs;
Those small specs that have been long in silver added a huge 6691 contracts to their long side.

Those small specs that have been short in silver added 805 contracts to their short side.

 

Conclusions;  strange data.

 

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

on gold and silver issues:

(courtesy/Mark O’Byrne/Goldcore)

 

Gold “Flash-Crashes” Again Amid Continued Commodity Liquidation As China Manufacturing Slumps To 15-Month Lows

As Bridgewater talks back its now widely discussed bearish position on fallout from China’s equity market collapse, Chinese stocks rose at the open (before fading after ugly manufacturing data). However, liquidations continue across the commodity complex in copper, gold, and silver. Though not on the scale to Sunday night’s collapse, the China open brought another ‘flash-crash’ in precious metals. All signs point to CCFD unwinds, and forced liquidations as under the surface something smells rotten in China, which has just been confirmed by the lowest Manufacturing PMI print in 15 months.

 

Gold flash crashed…

 

As we noted previously, while the actual selling reason was irrelevant, the target was clear: to breach the $1080 gold price which also happens to be the multi-decade channel support level.

 

As liquidations across the metals complex continue..

 

Scotiabank’s Guy Haselmann noted earlier…the plunging of the commodity complex is telling us that the China economy could be imploding. 

Problems stemming from China are spreading further into more sectors and markets (various high yield sectors, emerging markets, EM and commodity currencies).

 

As I wrote in my note Tuesday (Too Much of Everything), Zero interest rates have contributed to over-production, pressuring consumer prices lower.  Certainly, borrowing in the energy sector contributed to the over-supply of oil and look what has happened in that sector.   Now, weakening demand from China is accelerating the decent in most commodities.  Budgets of EM supplier-countries and commodity exporters are being materially impacted.

 

As commodities fall, the FOMC says that inflation targets are harder to obtain, leading to a self-perpetuating  belief that continued cheap money is needed. 

 

Yet, claims fell to the lowest level since 1973, housing is strong, and auto sales are back to almost 17mm units (etc).  Clearly, the Fed has gotten itself into a difficult position.   By not lifting-off and taking their medicine in 2014 – market imbalances today are now bigger and the consequences greater.

 

China is unfolding as the most important story of 2015 for markets. Stay alert.   Long-dated US Treasuries remain attractive and good place to hid.

*  *  *

It seems Guy may be on to something as Manufacturing just collapsed in China…

 

All that stimulus, all those “measures” and Chinese manufacturing collapses at the fastest rate in 15 months; and it appears bad news is bad news still in China…

 

Charts: Bloomberg

end

Last night we had two flash crashes:

 

Here is the first:

Gold “Flash-Crashes” Again Amid Continued Commodity Liquidation As China Manufacturing Slumps To 15-Month Lows

As Bridgewater talks back its now widely discussed bearish position on fallout from China’s equity market collapse, Chinese stocks rose at the open (before fading after ugly manufacturing data). However, liquidations continue across the commodity complex in copper, gold, and silver. Though not on the scale to Sunday night’s collapse, the China open brought another ‘flash-crash’ in precious metals. All signs point to CCFD unwinds, and forced liquidations as under the surface something smells rotten in China, which has just been confirmed by the lowest Manufacturing PMI print in 15 months.

 

Gold flash crashed…

 

As we noted previously, while the actual selling reason was irrelevant, the target was clear: to breach the $1080 gold price which also happens to be the multi-decade channel support level.

 

As liquidations across the metals complex continue..

 

Scotiabank’s Guy Haselmann noted earlier…the plunging of the commodity complex is telling us that the China economy could be imploding. 

 
 

Problems stemming from China are spreading further into more sectors and markets (various high yield sectors, emerging markets, EM and commodity currencies).

 

As I wrote in my note Tuesday (Too Much of Everything), Zero interest rates have contributed to over-production, pressuring consumer prices lower.  Certainly, borrowing in the energy sector contributed to the over-supply of oil and look what has happened in that sector.   Now, weakening demand from China is accelerating the decent in most commodities.  Budgets of EM supplier-countries and commodity exporters are being materially impacted.  

 

As commodities fall, the FOMC says that inflation targets are harder to obtain, leading to a self-perpetuating  belief that continued cheap money is needed. 

 

Yet, claims fell to the lowest level since 1973, housing is strong, and auto sales are back to almost 17mm units (etc).  Clearly, the Fed has gotten itself into a difficult position.   By not lifting-off and taking their medicine in 2014 – market imbalances today are now bigger and the consequences greater.

 

China is unfolding as the most important story of 2015 for markets. Stay alert.   Long-dated US Treasuries remain attractive and good place to hid.

*  *  *

It seems Guy may be on to something as Manufacturing just collapsed in China…

 

All that stimulus, all those “measures” and Chinese manufacturing collapses at the fastest rate in 15 months; and it appears bad news is bad news still in China…

 

Charts: Bloomberg

 

 

end

 

And then we had another crash:

 

 

(courtesy zero hedge_

 

30Y Yield Tumbles To 2-Month Lows, Gold Bounces After Double-Flash-Crash

Despite the glad-handing over Amazon’s results, the rest of the world appears less than impressed with the state of the status quo. Bond yields continue to plummet with 30Y yields at 2.95% – its lowest since the start of June. Gold saw a double-flash-crash overnight but is bouncing back for now – back above the key $1080 level. The Dow and S&P have given up gains and are back in the red and even Nasdaq is fading fast as Biogen and Amazon battle it out to affect the index…

Bond yields continue to tumble…

 

and gold has bounced back above the $1080 long term channel level..

 

and stocks are fading…

 

Charts: Bloomberg

 end
And late in the afternoon, zero hedge provides to the CFTC the criminal spoofing in the gold futures:
(courtesy zero hedge)

Dear CFTC: Here Is Today’s Illegal “Spoofing” In Gold Futures

The last time we presented unmistakable spoofing in gold futures on April 28 of this year, which happened just days after the CFTC came down on Nav Sarao as the scapegoat for the May 2010 flash crash in which he was accused of spoofing the E-mini future and as a result has been in prison ever since – it resulted,literally 2 days later, to the CME accusing Nassim Salim and Heet Khara of rigging the gold market using precisely this manipulative method.

The CME said on May 1:

[O]n multiple trade dates during the time period of March 1, 2015 through April 28, 2015, Salim engaged in a pattern of activity in which he repeatedly entered orders or layered multiple orders for Gold and Silver futures contracts without the intent to trade. Specifically, Salim entered these orders or layered multiple orders to encourage market participants to trade opposite his smaller orders resting on the opposite side of the book. After receiving a fill on his smaller orders, Salim would then cancel the resting order or layered multiple orders that he had entered on the opposite side of the order book.

 

Salim introduced Heet Khara (“Khara”), who is also the subject of a summary access denial action, to his first FCM and Salim had an account at the second FCM at which Khara traded in a disruptive manner. Further, it appears that on multiple occasions Salim and Khara coordinated efforts to engage in disruptive activity. In an example from April 28, 2015, Salim entered small-lot orders on one side of the market in Gold futures, after which Khara entered large orders on the opposite side. When Salim’s small orders were filled,Khara canceled the large orders. Salim has not responded to correspondence from the Exchange.

Since then there was little gold spoofing to note, perhaps because there was no need to spoof gold lower as a result of the sharp decline in gold prices, punctuated by last Sunday’s brutal bear raid which took place out of New York just before China opened on Monday morning, which halted the CME gold futures market not once but twice.

Until today.

Considering today’s price action, if one were asked whether today’s spoofing would take place on the bid or ask side, one would almost certainly be inclined to guess the “bid” considering the gradual rise in gold prices even as stocks are sliding.

One would be wrong.

As Nanex once again shows, having captured the exact “spoofing” moment, the action was all on the ask side, with a “spoofer” first representing a large sell order, and sending gold lower after 2:41pm, which remains on the order book, but which promptly vanishes once the actual price of gold crossed into the spoofer’s “ask” following a subsequent ramp at 4:51pm.

 

Was the intention of today’s spoofer to keep and push the price of gold under $1,100 and keep it there to avoid breakouts (where it remains since breaking above $1,100 briefly)? We don’t know with certainty but we are confident that both the CME and CFTC will get right on this and charge the guilty spoofer with the full extent of the anti-market manipulating law.

Or maybe prison cells and 100+ year sentences are only reserved for those who dare to spoof the S&P500 lower?

end

 

Then gold rebounds:

 

 

Gold Spikes Back Above $1100, Bitcoin Jumps

 

Gold is jumping after the overnight double flash-crash…testing back towards $1100…

 

Bitcoin is back up to pre-“Greece is Fixed” levels…

 

 

Charts: Bloomberg and Bitcoinwisdom

 

 

end

 

Chris Powell on our non existent journalism:

 

 

(courtesy Chris Powell/GATA)

 

Will financial journalism’s bear hunt lead to a dingy basement or to the BIS?

Section:

10:14p ET Thursday, July 23, 2015

Dear Friend of GATA and Gold:

Zero Hedge tonight mocks the purported search by mainstream financial news organizations for the instigator of Sunday night’s nuclear assault on the gold market, and concludes that the trail will lead either to some Indian guy trading out of the dingy basement of his parents’ home in a London suburb or to the luxurious offices of the Bank for International Settlements in Basel, Switzerland, the central bank of the central banks. Of course mainstream financial news organizations would sooner interview Kim Kardashian about the gold market than ever have to direct a critical question about gold to the BIS or any other central bank.

Zero Hedge’s commentary is headlined “The Hunt for the ‘Mystery’ Gold ‘Bear Raid’ Leader Begins” and it’s posted here:

http://www.zerohedge.com/news/2015-07-23/hunt-mystery-gold-bear-raid-lea…

But anyone who wants to know about the BIS doesn’t really have to question it much at all, as the documentation of its involvement in the gold market are on the public record already.

For at a BIS conference in Basel in June 2005, the director of the bank’s monetary and economic department, William R. White, declared that among the major objectives of central bank cooperation is “the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful”:

http://www.gata.org/node/4279

Every year, in its footnotes, the annual report of the BIS acknowledges that it functions largely as the gold broker for its member central banks and on their behalf deals in gold, gold futures, and gold swaps:

http://www.gata.org/node/12717

Its gold brokerage services for central banks, the BIS told a seminar for prospective central bank members in June 2008, include surreptitious interventions in the gold market:

http://www.gata.org/node/11012

In 1983 top officials of the BIS told the financial journalist Edward Jay Epstein, writing for Harper’s magazine, that secret interventions in the gold market were a major part of the bank’s work:

http://www.gata.org/node/8773

And in recent years CME Group, operator of the major futures exchanges in the United States, has offered discounts to central banks for their secret trading in all major futures contracts and has acknowledged that central banks and governments are among the exchange operator’s customers:

http://www.gata.org/node/14385

http://www.gata.org/node/14411

For journalistic purposes, all the basic research has been done and there is nothing left to do but call the BIS and its member central banks and routinely collect their refusals to comment about their secret trading in the futures markets. No one will have to call the Banque de France, for its director of market operations already has confirmed that the bank is trading gold secretly for its own account and for the accounts of other central banks and never explains what it’s doing:

http://www.gata.org/node/13373

http://www.gata.org/node/14716

http://www.gata.org/node/14954

This is why all analysis of the gold market is simply disinformation if it does not begin with four questions:

— Are central banks in the gold market surreptitiously or not?

— If central banks are in the gold market surreptitiously, is it just for fun — for example, to see which central bank’s trading desk can make the most money by cheating the most investors — or is it for policy purposes?

— If central banks are in the gold market for policy purposes, are these the traditional purposes of defeating a potentially competitive world reserve currency, or have these purposes expanded?

— If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy again?

Once again tonight this documentation will be sent to many major financial news organizations around the world. Of course it has been sent to them many times already and they have ignored it studiously. But if you are not yet completely demoralized about living on a planet that is quickly succumbing to totalitarianism, send this dispatch to some of them yourself and ask cordially why the documentation cited is not worthy of their inquiry. You just might shame somebody for the aspirations he had when he got into journalism. If you receive a response from anyone, please forward it to me. Maybe we can shame him some more.

Don’t be discouraged. This is the only planet we have; we have nowhere else to go. You can make a difference. Take it from James Russell Lowell:

We see dimly in the present what is small and what is great,
Slow of faith how weak an arm may turn the iron helm of fate.

We’ll press on in the morning.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

 

 

end

 

 

A must read…

 

(courtesy Bill Holter/Holter Sinclair collaboration)

 

$1.99 per pound Filet Mignon …and War!

 

After planning to take this week off for a little rest, market gyrations have changed the plan.  Initially next week I was going to pen a piece titled “Truth, Justice and no longer the American way”.  This will now wait a bit.
 This past Sunday night and Monday’s action in gold needs to be discussed of what I believe is now a rapidly moving big picture.  $2.7 billion worth of gold futures were sold in just 2 minutes Sundaynight.  As I have asked before, “who” could possibly “own” this much gold other than an official source?  The answer of course is nearly no one other than a very small handful of ETF’s.  In perspective, $2.7 billion worth of gold is roughly 3% of global production.  Said differently, it amounts to nearly 10 days worth of labor and production worldwide… sold in less than two minutes!
  Next, assuming there really is an entity that owns this much gold, “who” in their right mind would sell it in this fashion?  Who would sell so much and so rapidly concentrated in time as to knock the price down $50?  What trader would still have a job the following day if their own sale created a drop of four percent in the proceeds received?  Traders today fight over one thousandth of a percent, are we to believe a trader was willing to give up 4%?  Was this trader so “scared” that gold was going to dropMonday that he just “had to get out”?  No, it is obvious to even the most disingenuous, this was purely an “operation”, one meant to depress the price of gold at any cost.  In perspective, this trader by not spacing out the trade cost his “firm” $40 million if you only use the midpoint of the trade.  Will this be reflected in his year end bonus (sarcasm)?  As of today, finally, the hunt is on as to “whodunit”http://www.zerohedge.com/news/2015-07-23/hunt-mystery-gold-bear-raid-leader-begins ???
  In my opinion they may need to look to only two sources though only one is necessary.  In every trade there are two sides, the buyer and the seller.  Have you ever wondered “who” the buyer is in the middle of the night to such large sales?  What if it is principally only two houses who trade back and forth with each other and then flatten out over the course of the next few days?  In essence, if this is the case there is not really any risk because they would always be “flat” between each other.  I don’t know if we will ever find out “whodunit”.  This is certainly a possible scenario and one in a world where the rule of law has been revoked …certainly feasible.
  Switching over to silver, the low prices have again created havoc in the physical market.  Prior toSunday, the U.S. mint had already suspended sales of Silver Eagles.  This was done for one of only two possible reasons.  1. demand was so great they could not keep up with it or 2. they could not source physical silver to mint the coins.  This is exactly akin to Venezuela’s toilet paper shortage.  They have mandated a retail price below what it can be produced for and thus …manufacturers have stopped making it because they cannot earn a profit.  Simple!Another analogy would be a butcher who advertised $1.99 filet mignon.  Even if he had any to begin with, it would not last more than a few moments and you would be stuck slapping some $3.99 a pound hamburgers on your grill.
  As of now, coin dealers across the U.S. are on back order for nearly all silver products.  The premiums as in other similar previous instances have risen and product has been swept off the shelves.  What is the “real price” of silver you ask?  It is whatever you must pay to receive real metal.  As it stands now, COMEX paper prices and real physical prices are about 15-20% apart from each other.  In my opinion, should COMEX press prices further down, they risk exposing themselves as a fraud.  Already in July, some 3 million ounces have jumped queue and been demanded for immediate delivery.  In other words, COMEX is risking creating a “run” on physical metal which is 100% contrary to what low prices have been used for.  Low prices are the main tool used of “sentiment discouragement”, it very well may turn out that these low prices create a stampede into their laughably small inventory!
  From a broader perspective, what I believe we are seeing is simply one “skirmish” (but at the very core) in a global financial war between the West and the East.  We now know several other pieces to the puzzle.  China, the leader of the East is clearly economically slowing down as evidenced by many recent statistics, the container trade numbers being most recent;
 
Their stock market is imploding and capital flight is in the hundreds of billions.  Couple this with China dumping U.S. Treasury securities via their “Belgium accounts” and we have a better picture of the “financial war” being waged.
  As a theory, most believe the 600 tons of gold announced by China last week was the reason for the Sunday/Monday drop.  This I believe is correct but for 180 degree wrong reasons.  Many were shocked and disappointed at the number of only 600 tons.  It truly is laughable as it represents about 3 months worth of gold China currently imports and has been for over 5 years.  I believe they made this announcement for two reasons.  First, they needed to show more gold in order to be considered by the IMF for inclusion into the SDR this fall.  I also believe they wanted to show a lower number so as not to spook gold higher as they are clearly a buyer each month.  If you are a buyer, why press the price higher as long as you are receiving delivery?
  Going a step further and tying this all together we can see several things happening.  China is now witnessing an unprecedented capital outflow while the U.S. dollar has gotten stronger.  A strong U.S. dollar is textbook warfare against Russia and aimed at tightening the screws further both financially and economically. We have heard from Sergei Glayzev on several occasions, Russia/Mr. Putin plan on dropping a financial and moral “truth bomb” on the United States.  They will only be pushed so far, I believe some sort of data dump can be expected at any moment.
  If you look at this from the standpoint of “war”, these are all chess moves between those issuing a fake currency and those wanting to do real trade with real settlement.  Did the U.S. just “punish” China for being a gold buyer and making an announcement (even though miniscule)?  I think this can be looked at as the Western banks are short paper gold derivatives and long dollars whereas the East is long real metal and desirous of leaving the Western banking system behind.  There is no other reason China and Russia would have set up trade banks, clearing systems, currency hubs etc. all over the world if they did not expect to use them.  This is a war between the West wanting to prolong their own current fiat system and the East wanting to move away to one that is equitable to all involved.
  We are already in WW III.  It is because of and being waged in financial assets.  It is clear to me the U.S. is in panic mode and trying to break the long term bull trend in gold.  If the trend cannot be broken, the dollar will be zeroed out.  Unfortunately, both sides know this full well.  The military warnings of late from both Russia and China have become much louder and the actions and movements by the U.S. (staging in Turkey for Syrian raids for example) much more dangerous.  As I see it, the U.S. “needs” war to cover many dirty financial tracks.  China/Russia on the other hand may try to prevent war by releasing “the truth” and thus crippling the U.S. financially and thus the ability to wage aggression.  The problem as I see it is the world is too far along technologically and the days of having to pay and fund an army long term is behind us.  Now, “kicking the table over” is a simple as pushing a button.  Unfortunately, this may be the only remaining choice for the U.S. in the financial collapse I see coming.
  Let me finish with a couple of questions.  Who do you believe is more levered, the East or the West?  Yes, China is levered and unquestionably going to suffer short term during the unwind.  Xi Jinping said this himself.  Who has a financial system layered with trillions of dollars in derivatives?  Which direction has physical gold been flowing for at least a decade?  Finally, what is the “real” price of gold or silver?  Is it what the paper exchanges say?  Or is it what it actually costs to purchase …in size?  I believe we will find out all of these answers and many more over the next few months.  The entire world will be shocked to its core when nearly everything we have come to believe in turns out to have been a Hollywood production of “Wag the Dog”!  I pray there will be “options” available to the West, though deep down I know this is not the case.
Regards,  Bill Holter
Holter-Sinclair collaboration
Comments welcome!  bholter@hotmail.com
end

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

 

1 Chinese yuan vs USA dollar/yuan remains constant at  6.2095/Shanghai bourse: red and Hang Sang: red

2 Nikkei down 139.42 or 0.67%

3. Europe stocks mixed (slightly up/slightly down) /USA dollar index up to 97.40/Euro down to 1.0955

3b Japan 10 year bond yield: falls to 41% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.96

3c Nikkei still just above 20,000

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

3e WTI 48.65 and Brent:  55.12

3f Gold down /Yen down

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls to .73 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls to 20.23%/Greek stocks this morning:  still expect continual bank runs on Greek banks /

3j Greek 10 year bond yield falls to: 11.35%

3k Gold at $1079.30 /silver $14.47

3l USA vs Russian rouble; (Russian rouble down 6/10 in  roubles/dollar in value) 58.28,

3m oil into the 48 dollar handle for WTI and 55 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 .9616 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0519 well above 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 +.73%

3s The ELA rose another 900 million euros to 90.4 billion euros.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”. Greece votes again and agrees to more austerity even though 79% of the populace are against.

4. USA 10 year treasury bond at 2.27% early this morning. Thirty year rate above 3% at 2.97% / yield curve flatten/foreshadowing recession.

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

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

Commodity Clobbering Continues As Amazon Lifts Futures

After yesterday’s latest drop in stocks driven by “old economy” companies such as CAT, which sent the Dow Jones back to red for the year and the S&P fractionally unchanged, today has been a glaring example of the “new” vs “old” economy contrast, with futures propped up thanks to strong tech company earnings after the close, chief among which Amazon, which gained $40 billion in after hours trading and has now surpassed Walmart as the largest US retailer.

Ironically, AMZN’s beat was not due to its retail results but thanks to its ongoing AWS/cloud rollout which will continue as long as the second tech bubble rages on because while AMZN’s market cap may be bigger than WMT, whatever you do, don’t compare PE multiples.

Away from techs it has been a very different story, with the previously noted flash smash in gold, a near carbon copy of Sunday’s (un)precedented plunge, coupled with the tumble in copper as well as ongoing oil price drop this time catalyzed by the worst Chinese Caixin (now that Markit is out) manufacturing PMI in 15 months, together with European PMI misses across the board, most notably those out of Germany and France.

As a result Brent crude is little changed near 2-wk low after disappointing Chinese manufacturing data fueled demand concerns, adding to bearish sentiment in an oversupplied mkt. WTI up ~26c, trimming losses after yday falling to lowest since March 31 to close in bear mkt. Both Brent and WTI are set for 4th consecutive week of declines; this is the longest losing streak for Brent since Jan., for WTI since March.

Crude “made a move a little bit higher, but it’s not surprising to be turning around again following disappointing PMI data,” ABN Amro energy economist Hans van Cleef said. “Combined with the oversupply situation, this adds to the bearish sentiment.”

It wasn’t just crude: the entire commodity complex continues to get clobbered:

  • S&P GSCI Index down 0.3% to 389.8
  • Brent Futures down 0.4% to $55.1/bbl, WTI Futures up 0.3% to $48.6/bbl
  • LME 3m Copper down 0.3% to $5258/MT
  • LME 3m Nickel down 1.6% to $11250/MT
  • Wheat futures down 0.6% to 518.5 USd/bu

And while we covered China’s latest PMI disappointmentlast night, one which even managed to send the SHCOMP to a red close, it was Europe which confirmed that away from the “tech economy” things are once again relapsing and the global economy is poised for what appears to be another contraction.

The highlights:

  • EU Manufacturing PMI: 52.2, Exp. 52.5, Last 52.5
  • EU Services PMI: 53.8, Exp. 54.2, Last 54.4
  • EU Composite PMI: 53.7, Exp. 54.0, Last 54.2

Driven by Germany:

  • German Manufacturing PMI: 51.5, Exp. 51.9, Last 51.9
  • German Services PMI: 53.7, Exp. 54.0, Last 53.8
  • German Composite PMI: 53.4, Exp. 53.9, Last 53.7

And France:

  • French Manufacturing PMI: 49.6, Exp. 50.8, Last 50.8
  • French Services PMI: 52.0 Exp. 53.8, Last 54.1
  • French Composite PMI: 51.5  Exp. 53.5, Last 53.3

Visually:

 

A closer look at markets shows Asian equities which traded mostly lower following the weak close on Wall Street amid a bout of discouraging earnings, while a strong result from Amazon after-market, led to a recovery in NASDAQ futures . Sentiment in the Asia-Pac region was also dampened by Chinese manufacturing PMI printing a 15 month low which weighed on all indices, despite some suggestions the poor data supports calls for further measures from Chinese authorities. JGBs traded with minor gains supported by weakness across riskier assets, but came off its best levels after a poorly received enhanced liquidity auction where the b/c was the worst in 2 months. Caixin Chinese Manufacturing PMI (Jul P) M/M 48.2 vs. Exp. 49.7 (Prey. 49.4); 15-month lows.

In Europe, markets trade in positive territory heading into the North American crossover , (Euro Stoxx: %) as indices look to pare back some of the recent losses seen throughout the rest of the week. This comes as equities shrug off the worse than expected PMIs and fairly mixed high profile earnings, including Vodafone (+3.4%), Anglo American (+1.4%) and BASF (-3.2%).

Aftermarket yesterday saw Amazon.com Inc report Q2 EPS USD 0.19 vs. Exp. Loss/Shr 0.14 and Q2 sales USD 23.18bIn vs. Exp. USD 22.4b1n, with the Co. forecasting Q3 net sales at USD 23.3bIn-25.5bIn vs. Exp. USD 23.9bIn to trade higher by 18.5% premarket. Elsewhere, Visa, who make up 2.7% of the Dow, reported Q3 Adj. EPS USD 0.74 vs. Exp. USD 0.58 and Q3 revenue USD 3.52b1n vs. Exp. USD 3.36b1n to trade higher by 4.6% premarket. Today’s notable US earnings include AbbVie and Biogen.

USTs underperform German paper in early trade as they pare back some of yesterday’s gains and the stronger USD lifts rates across the US curve; with positive US data continuing to lift stocks compared to bonds . Bunds spending the session in positive territory on the back of the aforementioned weak Eurozone data, while volumes were particularly light and Gilts have outperformed during the European session with the yield curve on the short end flattening, as expectations for a BoE rate lift off were potentially dented after yesterday’s weak UK retail sales.

Today’s Manufacturing PMIs have largely disappointed , with the Chinese Caixin Manufacturing PMI printing a 15 month low to weigh on AUD, while European Manufacturing and Services PMIs have all printed lower than expected to weigh on EUR. AUD is also weighed on by comments from S&P after they affirmed Australia’s ratings at AAA with a stable outlook, but said the country could be downgraded if the budget does not improve as expected. Elsewhere, NZD weakened in sympathy with AUD, coupled with trade figures printing an unexpected deficit.

USD (+0.3%) has benefited from the weakness in its counterparts to pare back much of yesterday’s losses, with participants today looking out for US Manufacturing PMI preliminary reading and New Home Sales.

The main story remains commodities where recent weakness in commodity markets continues today with gold printing fresh five year lows and on track for its worst week since Octobe r, while WTI and Brent crude futures have ticked lower heading into the North American crossover with nothing particularly fundamental at play, as WTI remains below USD 49.00/bbl and Brent crude falls below USD 55.00/bbl for the first time since April.

In summary: European shares rise, though are off intraday highs, with the real estate and telco sectors outperforming and media, banks underperforming. Euro-area July composite PMI falls more than estimated. Chinese prelim. July manufacturing unexpectedly weakens; gold and copper fall to multi-year lows. The Italian and French markets are the best-performing larger bourses, Spanish the worst. The euro is weaker against the dollar. Irish 10yr bond yields fall; French yields decline. Commodities decline, with nickel, natural gas underperforming and WTI crude outperforming. U.S. Markit manufacturing PMI, new home sales due later.

Market Wrap

  • S&P 500 futures up 0.2% to 2102.5
  • Stoxx 600 up 0.2% to 399
  • US 10Yr yield little changed at 2.27%
  • German 10Yr yield down 3bps to 0.71%
  • MSCI Asia Pacific down 0.9% to 142.4
  • Gold spot down 0.8% to $1081.6/oz
  • 13 out of 19 Stoxx 600 sectors rise; real estate, telco outperform, media, banks underperform
  • Asian stocks fall with the ASX outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific down 0.9% to 142.4
  • Nikkei 225 down 0.7%, Hang Seng down 1.1%, Kospi down 0.9%, Shanghai Composite down 1.3%, ASX down 0.4%, Sensex down 0.9%
  • Anthem to Buy Cigna for $48.4b After Year of Talks
  • Japan’s Meiji Yasuda to Buy U.S. Insurer StanCorp for $5b
  • Euskaltel Agrees to Buy Spain’s R Cable in $1.3b Deal
  • Ladbrokes to Acquire Coral to Form U.K. Betting-Shop Giant

FX/BONDS

  • Euro down 0.36% to $1.0945
  • Dollar Index up 0.35% to 97.46
  • Italian 10Yr yield down 3bps to 1.87%
  • Spanish 10Yr yield down 4bps to 1.91%
  • French 10Yr yield down 4bps to 0.99%

COMMODITIES

  • S&P GSCI Index down 0.3% to 389.8
  • Brent Futures down 0.4% to $55.1/bbl, WTI Futures up 0.3% to $48.6/bbl
  • LME 3m Copper down 0.3% to $5258/MT
  • LME 3m Nickel down 1.6% to $11250/MT
  • Wheat futures down 0.6% to 518.5 USd/bu

Bulletin Headline summary from RanSquawk and Bloomberg

  • Treasury yields little changed overnight after declining yesterday; 30Y closed below 3% for first time since July 8 as WTI crude traded below $49/barrel.
  • A private gauge of Chinese manufacturing unexpectedly fell to the lowest in 15 months, reinforcing the need for further policy support in an economy that had seen signs of stabilization recently. Regional stocks fell
  • Greece’s three main official creditors are back in Athens and their arrival draws a line under the antagonism the Syriza government displayed in the afterglow of its election victory as PM Tsipras accepts the pain
  • The euro-area economy maintained a steady pace of growth at the start of the third quarter, weathering strains on confidence from the debt crisis in Greece
  • Ukrainian bonds rose for a fifth week as the government made an interest payment on time, showing negotiations toward a $19 billion debt restructuring are making progress
  • Japan’s debt is unsustainable and could climb to almost three times the size of its economy by 2030 unless the government does more to cut its budget, the IMF said
  • The good news for investors in the $3.6 trillion municipal market: only one bond issuer rated by Moody’s Investors Service defaulted during the past two years, the first time that’s happened since the late 1990s
  • Sovereign 10Y bond yields mostly lower, Greece rises ~10bps. European stocks higher, Asia lower; U.S.equity- index futures rise. Crude oil higher, copper and gold drop

 

DB’s Jim Reid completes the overnight event summary

Maybe we are not alone after all. Yesterday NASA announced the discovery of a planet in a far off solar system that is the most similar to ours that they have yet discovered. It has the glamorous name of Kepler-452b. If it is able to support life I hope they’ve had a more exciting week in markets than we have had here on Earth. Having said that, despite holiday season taking over a few themes are emerging after Greece and China continue to quieten down with the commodity slump and US result season being the main focus.

Oil yesterday entered into bear market territory for the second time in 2015 with WTI falling to $48.45/bbl and 22% off its recent highs on June 10th. Commodities elsewhere have also continued to fall. Gold closed 0.32% lower yesterday to a new five-year low of $1091/oz – the eighth daily decline in the last nine days – while there were fresh cycle lows for Copper, which tumbled 1.65% to a six-year low, Aluminum (-1.39%), Silver (-0.95%) and Platinum (-0.15%).

Combined with some disappointing top tier earnings releases yesterday, equity markets struggled across the board with the S&P 500 (-0.57%), Dow (-0.67%) and NASDAQ (-0.49%) all lower for the third consecutive session in the US while closer to home the Stoxx 600 fell 0.54% as peripheral bourses led the declines.

It was Caterpillar and Freeport-McMoran which stole much of the headlines in yesterday’s US earnings releases with their share prices tumbling 3.6% and 9.4% respectively. Despite Caterpillar’s Q2 earnings printing in line, investors latched onto the bleak outlook posted by the company which also saw full year sales forecast slashed. Caterpillar’s CEO noted in a statement that ‘while economic conditions in the US are modestly positive, the global economy remains relatively stagnant’ and that ‘many of the key industries we serve remain weak and we haven’t seen sustained signs of improvement’. It was a similar story for Freeport-McMoran meanwhile who posted a better than expected Q2 report (with a beat at the profit and revenue level) but warned of a struggling outlook for commodity prices and suggested the company may have to look at scaling back operations as a result.

Dow Chemical added to a weak day for commodity names following its earnings release with shares tumbling 4.6%, although it wasn’t all bad news with General Motors up nearly 4% on a slightly more positive outlook for sales in China and Amazon shares surging as much as 17% higher in after-market trading (pushing the company’s market cap beyond that of Wal-Mart) after an unexpectedly strong earnings beat.

Refreshing our beat/miss ratio for earnings season so far after yesterday’s bumper day for releases, we now have 171 S&P 500 companies having reported with the EPS beat level remaining at 77% (the same as earlier in the week) but with the sales beat edging a touch lower to 54%. Looking at a similar analysis for European companies and specifically the Stoxx 600, out of 92 companies to have reported, 64% have reported a beat at the EPS level but contrary to what we’ve seen in the US, 66% have actually reported a beat at the sales line.

Moving onto Asian, there’s broad weakness across most bourses this morning, following the lead from the US yesterday. The Nikkei (-0.64%), Hang Seng (-0.94%), Kospi (-0.82%) and ASX (-0.50%) have all fallen while it’s been a fairly volatile start for Chinese equities with bourses swinging between gains and losses. As we go to print the CSI 300 (+0.88%), Shanghai Comp (+1.07%) and Shenzhen (+1.46%) are back in positive territory however – the latter two bourses for the seventh consecutive session. Data in China this morning hasn’t been supportive however following the latest July flash manufacturing PMI which saw the indicator drop 1.2pts to 48.2 and below expectations of 49.7, the fifth straight monthly contraction and the lowest level since April 2014. There was better news in Japan however where the same indicator saw a 1.3pt rise to 51.4 (vs. 50.5 expected). Gold has slumped another 0.60% this morning, dragging other precious metals along with it although there’s been a modest rebound for WTI (+0.64%). S&P 500 futures are unchanged despite the positive surge in Amazon after the closing bell while Treasuries are also unchanged. Credit markets across Asia, Japan and Australia are 1-2bps wider.

Back to yesterday, it was a slightly busier day for data in the US headlined by a 26k drop in initial jobless claims last week to 255k (vs. 278k expected). The reading was in fact the lowest since November 1973 although a lot of the reasoning is being pointed towards an unwind of the early July surge as a result of auto retooling. The more normalized four-week average of 279k was down 4k from the last reading. The Chicago Fed’s National Activity index for June rose to 0.08 (vs. -0.05 expected) while the Conference Board’s leading index for the same month was also above market (+0.6% mom vs. +0.3% expected). There was some slight disappointment in the July Kansas City Fed manufacturing activity index which remained weak at -7 (vs. -5 expected). With US credit also weaker yesterday (CDX IG +1bps), along with a softer day for equities, 10y Treasury yields continued to grind lower, closing -5.6bps at 2.269%. Sovereign bond yields in Europe followed suit with 10y Bunds half a basis point lower at 0.740% and the periphery 4bps tighter. Meanwhile in the UK, despite more hawkish comments out of the BoE with MPC member McCafferty highlighting that wage growth including bonuses is slightly ahead of where BoE officials expected in the May inflation report, weak June retail sales (-0.2% mom vs. +0.4% expected) helped send the Pound down 0.63% and 1.12% versus the Dollar and Euro respectively.

On the subject of currencies, it’s worth pointing out that our FX strategists have put out an update on their bearish EUR/USD view. This view has been based on the belief of large-scale European capital outflows (what they call Euroglut) and the eventual prospect of Fed exit from ultra-accommodative policy. They think the European outflow story remains fully on track and as for the Fed they think the Fed’s re-investment policy on QE assets is a bigger deal than the timing of rate hikes. Nearly half a trillion dollars of their balance sheet matures in 2016, almost equivalent to a full QE program in reverse. This potential ‘QT’ is important to their view over time. Nearer term they continue to target parity by year-end. f

Before we run over today’s calendar, with the second parliamentary vote in Greece now behind us and news that the Creditors have returned to Athens ahead of talks of a third bailout package, Syriza-related headlines have certainly lessened of late and should be less of a factor in the near term. Some of this attention moved on yesterday to Italy and specifically the leader of Italy’s populist Five Star Movement Beppe Grillo. With polls for his party rising steadily since March and currently sitting at around 25% (according to the FT), Grillo yesterday said that Italy should abandon the Euro, calling it an ‘anti-democratic straitjacket’ and that Italy should ‘take back our monetary sovereign’. Speaking with regards to Greek PM Tsipras, Grillo said that the PM’s’ ‘refusal to exit the euro was his death sentence’ and that it ‘would be difficult to defend the interests of the Greek people worse than Tsipras did’. For now Italy is currently growing and Renzi’s popularity and effectiveness seems to be decent, so there is no real immediate issue. However extreme politics in Europe are still a huge threat over 2-5 years and we have to monitor any trends.

Looking at today’s calendar now, it’s set to be a slightly busier morning for European data with the flash July manufacturing, services and composite PMI’s for the Euro area and also regionally in Germany and France. We’ll also get the flash manufacturing reading for the US this afternoon while new home sales for June are also scheduled to be released. On the earnings front American Airlines is the notable release today.

 

end

 

The dreaded Troika are back.  Big question: how on earth are they going to solve the Greek banking dilemma.  It will be impossible to bail in the depositors as all semblance of any economy will be totally obliterated:

 

(courtesy zero hedge)

 

“The letter has been sent,” a Greek government official told MNI on Friday, referring to a formal (if begrudging) invite from Athens delivered to the IMF and the rest of the dreaded troika.

The trio – comprised of the IMF, the ECB, and the European Commission – was famously booted from Greece in late January by a rambunctious Yanis Varoufakis who proclaimed that Syriza, which had just swept to power on an anti-austerity platform, didn’t “plan to cooperate with that committee.”

Six months later and “that committee” has turned out to be quite a bit more resolute in its demands that Varoufakis (or perhaps anyone else for that matter) anticipated, as Syriza’s meteoric rise effectively sowed the seeds for its own destruction by emboldening like-minded parties across the periphery, effectively forcing the troika to harden its stance or risk a veritable rebellion against the EMU-wide push for fiscal discipline.

Earlier this year, a symbolic (and absurd) rebranding effort re-christened the trio “the institutions”, a name which creditors smugly adhered to until June 27 when, after PM Alexis Tsipras’ surprise referendum call forced Varoufakis to beat a hasty retreat from a Eurogroup meeting, Mario Draghi joked that at least finance ministers could go back to calling it the “troika”.

Now, a day after the Greek parliament legislated away its last shred of dignity (and sovereignty) by passing a second set of prior actions, the stage is set for the troika to return to Athens. Here’s Bloomberg with more:

Six months after former Finance Minister Yanis Varoufakis gave them the boot, Greece’s three main official creditors are sending representatives back to Athens within days, the European Commission said Friday. Their acceptance draws a line under the antagonism the Syriza government displayed in the afterglow of its election victory as Prime Minister Alexis Tsipras recognizes the pain required to save his country from economic calamity.

 

After tapping a 7 billion-euro ($7.7 billion) bridge loan to avoid defaulting on theEuropean Central Bank this month, Tsipras is racing to complete negotiations on a third bailout in five years before about 3.2 billion euros more comes due to the ECB on Aug. 20.

 

“We’re looking ahead to extraordinarily difficult negotiations,” said Ralph Brinkhaus, deputy parliamentary leader of German Chancellor Angela Merkel’s Christian Democratic-led bloc. “Further aid is therefore not automatic.”

 

To release the funds, Tsipras needs to get past the troika.

 

The troika’s presence in the Greek capital has often been met with throngs of angry protesters lamenting years of austerity that saw the economy contract by a quarter and unemployment soar to the highest in the European Union.

 

A man was arrested in 2013 for throwing coins at then IMF mission chief, Poul Thomsen, as he arrived at the Greek finance ministry. Now European department chief at the fund, Thomsen requires 24-hour bodyguard protection whenever he visits Athens, on the recommendation of police.

 

The European team works out of a bullet-proof office with double security doors outside the center of Athens where there are no EU flags or insignia to attract attention. The former head of the commission’s team in Athens was guarded by an armed, plain-clothes policeman.

 

Last year, a bomb exploded outside the IMF offices.

Bullet-proof offices, security details, and bombs tells you pretty much everything you need to know about the reception creditors’ technical teams are likely to receive upon their triumphant return to what is now effectively a conquered nation and it also helps to explain what exactly officials mean when they say that the start of formal negotiations has been delayed due to “logistical issues.” From Reuters:

Talks on tying up a new bailout deal for Greece failed to start on Friday as had been expected, with officials blaming security worries for delaying the negotiations with international creditors who are detested by many Greeks.

 

But representatives of Greece’s creditor institutions – the European Commission, the European Central Bank and IMF – said they cannot begin until the right location is found, given the talks’ sensitivity and the wide public anger about austerity policies imposed under the first two bailouts.

 

“There are some logistical issues to solve, notably security-wise,” a European Commission official said. “Several options are on the table,” the official said, without giving more details.

So essentially, the troika are still trying to decide on a suitable safe house.

Ultimately, Greece will need to wrap up negotiations by August 20, when another payment to the ECB comes due.

If talks are not concluded by then, Athens will likely look to tap the remainder of the funds in the EFSM in the form of a second bridge loan. As we’ve explained on too many occasions to count, the ECB must be paid – even if “payment” involves the creation of  still more circular funding schemes – so Mario Draghi has an excuse to preserve the ELA liquidity drip that’s keeping the Greek banking sector afloat.

In the coming days, we’ll see if the presence of those who must not be named and who have succeeded in transforming Greece into a vassal state of Brussels will be enough to spark renewed social instability and transform Syntagma Square into 1965-era Watts (or modern day Baltimore).

“Varoufakis [once] said that ‘motorcades’ of the creditors’ representatives moving around the Greek capital were humiliating,” Bloomberg notes.

While that may be true, we suppose motorcades arebetter than tanks.

end

 

This almost happened last week/it looks like civil war is close at hand:

 

(courtesy zero hedge)

Syriza “Rebels” Planned To Ransack Greek Mint, Seize Cash Reserves, Arrest Central Bank Governor

Earlier this week, in an FT op-ed, Eurointelligence’s Wolfgang Münchau said that in his estimation, an EMU exit remains the most likely outcome for Greece. The reason, Münchau explained, is that “[Greek PM Alexis] Tsipras ended up with another very lousy bailout deal. And this one suffers from the same fundamental flaws as its predecessors.” Münchau went on to describe, in vivid detail, how he believes a Grexit would unfold:

My own most likely Grexit scenario is a different one yet again. Donald Tusk, the president of the European Council, hinted at this in his interview with the Financial Times last week when he said that he felt “something revolutionary” in the air. He is on to something. The most probable scenario for me is Grexit through insurrection.

Whether he knew it when he penned those words or not, Münchau’s vision for Greece nearly unfolded just over a week ago when, according to FT, Syriza’s Left Platform (led by outspoken former Energy Minister Panayotis Lafazanis) met in at the Oscar hotel in a “shabby” downtown district of Athens and plotted to ransack the Greek mint, seize the country’s currency reserves, and arrest central bank chief Yannis Stournaras.

It’s not entirely clear from the piece what the conspirators – who FT makes sure to mention included “supporters of the late Venezuelan president Hugo Chávez” and “old-fashioned communists” – planned to do next, but it certainly seems likely that if what you’re about to read is true, Greece came dangerously close to civil war last Wednesday.

Via FT:

Arresting the central bank’s governor. Emptying its vaults. Appealing to Moscow for help.

 

These were the elements of a covert plan to return Greece to the drachma hatched by members of the Left Platform faction of Greece’s governing Syriza party.

 

They were discussed at a July 14 meeting at the Oscar Hotel in a shabby downtown district of Athens following an EU summit that saw Greece cave to its creditors, leaving many in the party feeling despondent and desperate.

 

The plans have come to light through interviews with participants in the meeting as well as senior Greek officials and sympathetic journalists who were waiting outside the gathering and briefed on the talks.

 

“Obviously it was a moment of high tension,” a Syriza activist said, describing the atmosphere as the meeting opened. “But you were also aware of a real revolutionary spirit in the room.”

 

Yet even hardline communists were taken aback when Mr Lafazanis proposed that the Syriza government should seize control of the Nomismatokopeion, the Greek mint, where the bulk of the country’s cash reserves are kept.

 

“Our plan is that we go for a national currency. This is what we should have done already. But we can do it now,” he said, according to people present at the meeting.

 

Mr Lafazanis said the reserves, which he claimed amounted to €22bn, would pay for pensions and public sector wages and also keep Greece supplied with food and fuel while preparations were made for launching a new drachma.

 

Meanwhile, the central bank would immediately lose its independence and be placed under government control. Its governor, Yannis Stournaras, would be arrested if, as expected, he opposed the move.

 

As the details of the Left Platform meeting have leaked out, some political opponents are demanding an accounting.

 

“Members of this government planned a trip to hell for Greeks,” said Stavros Theodorakis, leader of the pro-EU To Potami party. “They planned to raid the vaults of the people and invade the mint as if it were a Playmobil game. Alexis Tsipras must tell us the truth about what happened.”

While the plan might have seemed straightforward enough on paper, and likely sounded like a good idea in the heat of the moment (assuming the meeting happened when FT says it did, Tsipras had betrayed the referendum outcome and agreed to hand over the country’s sovereignty to Berlin less than 48 hours earlier), it turns out that simply seizing the physical bank notes in the vault and firing up Greece’s euro printing presses wasn’t actually a viable option. “Anyone who tried to buy something with [those euros] would be at risk of being arrested for forgery,” one unnamed ECB official told FT, rather flatly.

Recall that just days before Tsipras arrived in Brussels for his “mental waterboarding”, Lafazanis had enthusiastically laid out the plans for Greece’s partnership with Russia on Gazprom’s Turkish Stream pipeline, exclaiming in the process that “Greece is no one’s hostage” and that “the Greek people’s No vote is not going to become a humiliating Yes.”

(Follow me to the mint!)

Lafazanis, FT notes, “visited Moscow three times as Mr Tsipras’s envoy after Syriza came to power in January. In return for signing up to a new gas pipeline project, he hoped for at least €5bn in prepayments of gas transit fees, according to people briefed on the initiative. But the Russians rejected the deal the week before the EU summit.” Some reports have also suggested that Moscow backed out of a deal to provide Athens with a loan to launch the new drachma.

We’ll leave it to readers to digest the above and determine how close the Greek mint was to being commandeered by bloodthirsty (politically speaking that is) communists, but it’s worth noting that according to one bank official who spoke to FT, “it was all a fantasy.”

end

 

 

With China imploding last night, Michael Snyder comments on what is going on!

 

(courtesy Michael Snyder)

Copper, China And World Trade Are All Screaming That The Next Economic Crisis Is Here

Submitted by Michael Snyder via The Economic Collapse blog,

If you are looking for a “canary in a coal mine” type of warning for the entire global economy, you have a whole bunch to pick from right now.  “Dr. Copper” just hit a six year low, Morgan Stanley is warning that this could be the worst oil price crash in 45 years, the Chinese economy is suddenly stalling out, and world trade is falling at the fastest pace that we have seen since the last financial crisis.  In order not to see all of the signs that are pointing toward a global economic slowdown, you would have to be willingly blind.  In recent months, I have been writing article after article detailing how the exact same patterns that happened just before the stock market crash of 2008 are playing out once again.  We are watching a slow-motion train wreck unfold right before our eyes, and things are only going to get worse from here.

Copper is referred to as “Dr. Copper” because it does such an excellent job of indicating where economic conditions are heading next.  We saw this in 2008, when the price of copper started crashing big time in the months leading up to the stock market implosion.

Well, now copper is crashing again.  Just check out this chart.  The price of copper plunged again on Wednesday, and it is now the lowest that it has been since the last financial crisis.  Unfortunately, the forecast for the months ahead is not good.  The following is what Goldman Sachsis saying about copper…

“Though we have been bearish on copper on a 12-mo forward basis for the past two and a half years, we have maintained a more bullish medium to long-term stance on the assumption of Chinese copper demand growth of 4% per annum and a major slowing in supply growth around 2017/2018 … we substantially lower our short, medium, and long-term copper price forecasts, on the back of lower Chinese copper demand growth forecasts (we have been highlighting that the risk has been skewed to the downside for some time), increased conviction in copper supply growth over the next three years, and increased conviction in the outlook for mining cost deflation in dollar terms.”

It’s not just Copper though… Year-to-Date, commodities are ugly (except higher gas prices!!)

 

It is funny that Goldman mentioned China so prominently.  Even though China’s fake GDP figures say that everything is fine over there, other numbers are painting a very dismal picture.

For instance, Chinese electrical consumption in June grew at the slowest pace that we have seen in 30 years, and capital outflows from China have reached a level that is“frightening”

Robin Brooks at Goldman Sachs estimates that capital outflows topped $224bn in the second quarter, a level “beyond anything seen historically”.

 

The Chinese central bank (PBOC) is being forced to run down the country’s foreign reserves to defend the yuan. This intervention is becoming chronic. The volume is rising. Mr Brooks calculates that the authorities sold $48bn of bonds between March and June.

 

Charles Dumas at Lombard Street Research says capital outflows – when will we start calling it capital flight? – have reached $800bn over the past year. These are frighteningly large sums of money.

Just last month, the Chinese stock market started to crash, but the crash was interrupted when the Chinese government essentially declared a form of financial martial law.

And I don’t think that “financial martial law” is too strong of a term to use in this case.  Just consider the following excerpt from a recent article in the Telegraph

Half the shares traded in Shanghai and Shenzhen were suspended. New floats were halted. Some 300 corporate bosses were strong-armed into buying back their own shares. Police state tactics were used hunt down short sellers.

 

We know from a vivid account in Caixin magazine that China’s top brokers were shut in a room and ordered to hand over money for an orchestrated buying blitz. A target of 4,500 was set for the Shanghai Composite by Communist Party officials.

So a stock market crash was halted, but in doing so Chinese officials have essentially destroyed the second largest stock market in the world.  China’s financial markets have lost all legitimacy, and foreigners are going to be extremely hesitant to put any money into Chinese stocks from now on.

Meanwhile, there is no hiding the fact that trade activity in China and in most of the rest of the planet is slowing down.  In fact, world trade volume has now dropped by the most that we have seen since the last global recession.  The following comes from Zero Hedge

As goes the world, so goes America (according to 30 years of historical data), and so when world trade volumes drop over 2% (the biggest drop since 2009) in the last six months to the weakest since June 2014, the “US recession imminent” canary in the coalmine is drawing her last breath

 

World Trade Volume - Zero Hedge

 

As Wolf Street’s Wolf Richter adds, this isn’t stagnation or sluggish growth. This is the steepest and longest decline in world trade since the Financial Crisis. Unless a miracle happened in June, and miracles are becoming exceedingly scarce in this sector, world trade will have experienced its first back-to-back quarterly contraction since 2009.

As you probably noted in the chart above, a decline in world trade is almost always associated with a recession.

That was certainly the case back in 2008 and 2009.

Another similarity between the last crisis and what is happening now is a crash in the price of oil.

According to Business Insider, we have just officially entered a brand new bear market for oil…

Oil is officially in a bear market.

 

On Thursday, West Texas Intermediate crude oil futures fell more than 1% to settle near $48.55 per barrel in New York.

 

A bear market is roughly defined as a 20% drop from highs. Crude has now fallen by about 20% in the last six weeks.

So what does all of this mean?

All of these signs are indicating that another great economic crisis is here, and that a global financial implosion is just around the corner.

At this point, even many of the “bulls” are sounding the alarm.  For example, just consider what Henry Blodget of Business Insider is saying…

As regular readers know, for the past ~21 months I have been worrying out loud about US stock prices. Specifically, I have suggestedthat a decline of 30% to 50% would not be a surprise.

 

I haven’t predicted a crash. But I have said clearly that I think stocks will deliver returns that are way below average for the next seven to 10 years. And I certainly won’t be surprised to see stocks crash. So don’t say no one warned you!

For those that don’t know, Henry Blodget is definitely not a bear.  In fact, he is one of Wall Street’s biggest cheerleaders.

So for Blodget to suggest that we could see the stock market drop by half is a really big deal.

The closer that we get to this next crisis, the clearer that everything is becoming.

 end
As the Chinese economy swoons, Russia and the Chinese delay the development of the gas pipeline for now:
(courtesy zero hedge)

Russia, China Delay “Holy Grail” Gas Pipeline Sequel As China’s Economy Swoons

Last month in “PetroYuan Proliferation: Russia, China To Settle ‘Holy Grail’ Pipeline Sales In Renminbi,” we outlined how Moscow was set to deliver some 68 bcm/y in natural gas to China via the Power of Siberia line and the “Western Route”, or the “Altai” line. Here’s a quick recap:

In May, Chinese President Xi Jinping visited Moscow, where Gazprom Chief Executive Alexei Miller and China National Petroleum Corp Vice President Wang Dongjin signed a gas export deal which paves the way for 30 bcm/y to China via a new “Western Route.” Last year, the two countries ratified a “Holy Grail” gas deal for the delivery of up to 38 bcm/y over 30 years via an “Eastern Route.” Also known as the “Power of Siberia” pipeline, the Eastern route was billed as the largest fuel network in the world with a total contract value of around $400 billion. Once the two pipelines are operational, China will become the largest consumer of Russian natural gas.

 

Because Russia and China are set to settle gas (not to mention crude) sales in yuan, we argued that the consummation of the pipeline deals serves as further evidence of de-dollarization and the collapse of petrodollar mercantilism, the system that’s served to underwrite decades of dollar dominance.

And while data released since then shows that for the first time, Russia has surpassed Saudi Arabia as the largest supplier of oil to China (further supporting the idea that the petrodollar is rapidly losing ground to the “petroyuan”), it appears that China’s economic slowdown will delay the implementation of the Atlai deal – indefinitely. Here’s more from Vedomosti (Google translated):

Signing a contract with China for the supply of gas through the pipeline “Altai” (or “Power of Siberia – 2”) is delayed indefinitely, told “Vedomosti” two federal officials. The growth of the Chinese economy is slowing down, China is revising the energy balance, they explain.

 

Growth in demand for gas in China is slowing, while due to the fall in oil prices, China is becoming more accessible LNG, for example in Australia, says analyst “Sberbank CIB» Valery Nesterov.According to BP, when in 2012-2013. Gas consumption in China has grown by 12-13%, while in 2014 the increase was 8.5% and reached 185.5 billion cubic meters. m. In the first half of 2015 the growth was only 2%, says Nesterov, in this situation, “Gazprom” will not be able to get a high price of gas, “Altai”.

 

“Gazprom” CNPC offers a high price, explaining its high cost of construction of the “Altai”. China is ready to build a gas pipeline is cheaper and offers announced an open tender to his company can participate and construction costs become transparent, “- explains the President of the Russian-Chinese analytical center Sergei Sanakoyev,” Gazprom “refused, China is in no hurry.

The representative of “Gazprom” declined to comment.

 

China offered to supply material resources, equipment and manpower, he said in May, deputy chairman of “Gazprom” Vitaly Markelov. The need to attract them to our territory is not, was not and will not be assured in late June, Deputy CEO Alexander Medvedev.

The daily goes on to suggest that the deal may need to be negotiated at the highest level – that is, between Putin and Xi Jinping:

By the first contract “Gazprom” and CNPC agree themselves and could not (the negotiations were 10 years old), the document was signed only after the talks Russian President Vladimir Putin and Chinese President Xi Jinping, reminds one of the interlocutors “Vedomosti”. Most likely, and the second contract will also require political intervention, he said. 

And here’s more color from the Taiwan-based, pro-ChinaChina Times:

Despite strengthening political ties and military cooperation, the impasse on the gas deal suggests that the economic relationship between China and Russia is cooling, Duowei said.

 

On Wednesday, Chinese commerce ministry spokesperson Shen Danyang revealed that China’s foreign direct investment in Russia dropped 25% in the first half of 2015 year on year. Earlier this month, China’s General Administration of Customs released statistics that also suggested that trade between the two countries fell by 30.2% in the first six months of the year.

 

Additionally, the Moscow Times reported Thursday that weakened domestic and internal demand has seriously affected Gazprom’s natural gas production, which fell by a record 19% year on year in June and 12.9% over the first six months of 2015, while export volume also dropped by 8%. In recent years, Gazprom has accounted for nearly 20% of Moscow’s fiscal revenue and represented nearly 10% of Russia’s GDP.

How much of this represents a “cooling” of economic ties between Moscow and Beijing and how much is simply a consequence of falling Chinese demand (a pervasive problem at the heart of the global commodities downturn) remains to be seen, but it’s in both countries’ best interest to strengthen their energy partnership, especially in the face of mouting tensions with the West, which is why we wouldn’t be surprised to see the Altai line project back on track in relatively short order.

 

end

 

Rob Kirby discussing stuff with Dave Kranzler

 

(courtesy Rob Kirby/Dave Kranzler)

 

SoT Ep 44 – Rob Kirby: We Coming Into End Of Times

The gold smash going on right now reeks of desperation…the manipulation has become utterly in your face.  It tells me we’re getting close the end when you have the likes of John Hathaway and Ross Norman starting to talk the gospel of GATA. These guys over the years have literally sniveled at GATA and told us we were tinfoil hat conspiracy theorists.  And now these guys are reading out of the GATA book and that’s a mind-blower and this tells me this is close to blowing up.  – Rob Kirby, Shadow of Truth

I was chatting this morning with a close in NYC who I know going back to my days as a junk bond trader at Bankers Trust.  He works as a consultant to investment/hedge funds now and is extremely perceptive in his insights about what is going on in the financial markets.

I asked him what he’s hearing from some of the big hedge fund managers he calls on every week:

Everybody hopes they have a chair when the music stops and it will stop when this thing cracks it will crack hard.  Carl Icahn going after Larry Fink the way he did is a very big deal and it reflects the amount stress in the system when the big fish turn each other.

What’s remarkable to me is that gold has held up as well as it has.  The insiders are throwing multi-billion manipulation trades [Comex, LBMA, OTC derivatives] and yet there’s still a big bid for physical gold under the market…The one thing I’m sure of is that the “market” price we see of everything is not a market-clearing price.

What most people are missing is that Obamacare is a financial trainwreck.  Not only that you have two trillion in underfunded State pension funds – and that number doesn’t include private pension underfunding  – what are you going to do? let those people eat grass clippings and die?

There will be a mad scramble in the west by the elitists to grab what physical gold is left before the Comex completely defaults. It is quite possible, if not highly probable, that this final looting of GLD is part of that process.  – Rob Kirby

The Shadow of Truth podcast with Rob Kirby is a natural extension and elaboration of the comments from my friend in NYC.   This a highly engaging discussion about several topics connected to the precious metals market and how the blatant and non-stop outright Central Bank/western Government intervention in gold and silver trading directly reflects the fact that the western financial, economic and political systems – including and especially the United States – is on the verge of collapse:

I’ve grown weary with people writing me and asking for my opinion on Martin Armstrong. I have laid out the historical facts intermittently over time between this blog and the predecessor The Golden Truth.  People who follow and put in faith in Martin Armstrong have no knowledge of his background or any understanding of just how psychopathically corrupt this guy is.

end

 

Oil related stories:

oil rig counts surge and that lowers crude:

 

(courtesy zero hedge)

Crude Slips After Oil Rig Count Surges By Most In 15 Months

Total US rig count increased a somewhat stunning 19 last week to 876 – the highest since May. This is the biggest rise in rig count since August 2014. The oil rig count surged 21 to 659 – this is the biggest weekly rise since April 2014.

  • *U.S. TOTAL RIG COUNT UP 19 TO 876 , BAKER HUGHES SAYS
  • *U.S. OIL RIG COUNT UP 21 TO 659 , BAKER HUGHES SAYS

Louisiana (up 7) and Texas (up 8) saw the biggest increases.

 

The jump in total rig counts was big:

 

But oil rig counts surged by 21 – the most since April 2014.

 

The reaction – crude is sliding even further.

 

Charts: Bloomberg

 end
(courtesy zero hedge)

Crude Collapse Continues – WTI Trades $47 Handle, New 4-Month Lows, Credit Crashing

The crude collapse continues… and HY energy credit risk spikes above 950bps…

 

Another day another plunge…

 

Taking WTI back to 4-month lows…

 

Smashing Energy credit risk crashes back over 950bps…

 

Charts: Bloomberg

:
end

Your early morning currency, and interest rate moves

 

Euro/USA 1.0955 down .0032

USA/JAPAN YEN 123.96 up .087

GBP/USA 1.5492 down .0026

USA/CAN 1.3042 up .0022

Early this morning in Europe, the Euro fell by 32 basis points, trading now well above the 1.09 level at 1.0955; 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, and flash crashes. 

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 down again in Japan by 9 basis points and trading just below the 124 level to 123.96 yen to the dollar.

The pound was down this morning by 26 basis points as it now trades just below the 1.55 level at 1.5492, 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 still in the toilet, falling by 22 basis points at 1.3042 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: down 13942. or 0.67%

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

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

Gold very early morning trading: $1079.30

silver:$14.47

Early Friday morning USA 10 year bond yield: 2.27% !!!  par in basis points from Thursday night and it is trading just at  resistance at 2.27-2.32%

USA dollar index early Friday morning: 97.40 up 21 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: 2.51%  down 6 in basis points from Thursday

Closing Japanese 10 year bond yield: .41% !!! down 1 in basis points from Thursday/still very ominous

Your closing Spanish 10 year government bond, Friday, down 5 in basis points

Spanish 10 year bond yield: 1.90% !!!!!!

Your Friday closing Italian 10 year bond yield: 1.87% down 3 in basis points from Thursday: (very ominous)

trading 3 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: 1.0978 down .0009 ( Euro down 9 basis points)

USA/Japan: 123.71 down  .171 ( yen up 17 basis points)

Great Britain/USA: 1.5505 down .0013 (Pound down 13 basis points)

USA/Canada: 1.3065 up .0003 (Can dollar down 44 basis points)

The euro fell  today. It settled down 9 basis points against the dollar to 1.0978 as the dollar traded  northbound  today against most of the various major currencies. The yen was up by 17 basis points and closing well below the 124 cross at 123.71. The British pound was down  by 13 basis points, closing at 1.5505. The Canadian dollar was back in the toilet  again falling by 44 basis points closing at 1.3059.

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: 2.27% par in basis point from Thursday// (at the resistance level of 2.27-2.32%)/ominous

Your closing USA dollar index:

97.28 up 8 cents on the day

.

European and Dow Jones stock index closes:

 

England FTSE down 75.20 points or 1.13%

Paris CAC down 29.38 points or 0.58%

German Dax down 164.66 points or 0.07%

Spain’s Ibex down 132.60 points or 1.43%

Italian FTSE-MIB down 125.35 or 0.53%

 

The Dow down 163.39  or 0.92%

Nasdaq; down 57.78 or 1.12%

 

OIL: WTI 48.30 !!!!!!!

Brent:54.76!!!

Closing USA/Russian rouble cross: 58.40  down 1/2 rouble per dollar on the day

end

 

And now for your more important USA stories.

 

Your closing numbers from New York

Stocks Suffer Worst Week Of Year Amid Biotech Bloodbath, Commodity Carnage, & Bond Buying

This seemed appropriate…

But “everything was awesome”?

  • Russell 2000 -3.1% – worst week since Oct 2014 (Bullard)
  • Dow -2.8% – worst week since Dec 2014
  • S&P -2.1% – worst week since Jan 2015
  • Trannies -2.8% – worst week since Mar 2015
  • Nasdaq -2.2% – worst week since Mar 2015

 

Who is to blame for all this?

Leaving The Dow comfortably red year-to-date…

 

This is notable.. VIX was pressed notably lower into the close and stocks went nowhere – either Kevin Henry just lost his mojo OR traders are unwinding hedges and underlying exposures at the same time.. in other words – derisking in size!

 

The Nasdaq tumbled to its 50DMA, Small Caps broke below 50DMA & 100DMA, pressing 200DMA, S&P broke its 50DM And 100DMA, pushing towards its 200DMA, Dow smashed below its 200DMA, Trannies back near 9 month lows.

Ugly day…

 

Biotechs… worst week/day in 3 months

 

Buggered… 50 Biotech names (1/3rd) dropped over 4%

 

After Biogen was battered… down 22% (worst day since July 2008)

 

Treasury yields plunged on the week (except 2Y which inched higher)… 30Y yield’s biggest drop since March

 

The massive flattening in the yield curve (2s30s -27bps) is the biggest 2-week flattening since Sept 2011 (and biggest weekly drop since The Taper Tantrum)…

 

The Dollar has been relatively quiet for the last 3 days as AUD plunges and EUR strengthens…

 

Commodities were whacked all week but Friday afternoon saw gold & silver bid as Crude tumbled to 4-month lows…

 

Crude crashes for 4th week in a row… (down 20%)

 

Commodity carnage… year-to-date…(except higher gas prices!!)

 

On the week: Bonds good, Stocks bad, Gold ugly…

 

Charts: Bloomberg

the following is huge!!.  Is Capital one telling us that credit losses will soar for not only capital one but for all financial institutions?

a very important read..

(courtesy zero hedge)

Did The Canary In The Credit Coalmine Just Croak: Capital One Credit Loss Provisions Soar By 60%

Everyone knows Capital One’s trite soundbite: “What’s in your wallet?”

Overnight, the market found out what’s in Capital One’s balance sheet, and it didn’t like it one bit.

Yesterday, Capital One Financial reported earnings that fell well short of consensus: the $311 billion-company’s Q2 profit was $863 million, down 28% Y/Y. EPS was an ugly $1.50, $0.47 cents below the consensus estimate. Surprisingly this earnings plunge took place even as overall revenue rose 4% to $5.7 billion.

So what gives: a closer read through the numbers reveals that while average wages across the US are barely rising enough to cover inflation, Capital One felt the need to really incentivize its workfore with an increase in salaries and benefits 10 times higher than the national average, up 21%, to $1.4 billion, while marketing costs increased 16%, and professional-services fees grew 13%.

At the same time headcount increased 7%, to 47,500 even though COF concurrently took a $147 million charge for the restructuring its benefits plan “as a result of the realignment of our workforce.” COF did not provide details on the workforce changes that led to the charge.

End result: in moments, the stock wiped out all of its hard-earned gains for the year, and then some:

 

But the biggest shocker was something else found between COF’s top and bottom line: a surge in provisions for credit losses: at $1.1 billion this was a jump of 21% from Q1 and up a whopping 60% from the year prior. It was also the biggest credit loss provision the credit card company has taken since Q2 2012.

So the question: is this dramatic deterioration in COF’s loan book specific to the financial company which is nowhere near having a balance sheet big enough to mask its deteriorating loan book (or quality it for Too Big To Prosecute and/or Fail status), or is this a very loud, and very dead, canary in the credit coalmine, suggesting US consumers are suddenly unable to repay even their most basic purchases on credit?

As for Capital One, we wonder: “Is that a blowing up loan book in your wallet”? We hope to have the answer over the next several quarters, especially if as the Fed’s leak today suggested, a rate hike, which will lead to even greater credit losses, is imminent.

end
USA manufacturing PMI falters again, near 19 month lows as employment tumbles..and this is a recovery??
(courtesy PMI/zero hedge)

US Manufacturing PMI Hovers Near 19 Month Lows, Employment Tumbles Amid “Worrying Undercurrents”

Despite a very marginal improvement (from 53.6 to 53.8), Markit US Manufacturing PMI remains stubbornly stuck at 19-month lows, unable to bounce from the weathewr-strewn, port-strike-ridden weakness of Q1. As Markit notes, “a modest upturn in the headline manufacturing PMI belies some more
worrying undercurrents which point to potential weakness in coming
months,”
and the slump in unemployment index suggests things are not well at all…

 

The broad index is unable to get a lift…

 

as employment tumbled…

 

As Markit reports,

“A modest upturn in the headline manufacturing PMI belies some more worrying undercurrents which point to potential weakness in coming months.

 

“Companies saw output and order book growth regain a little momentum at the start of the third quarter, but the overall pace of expansion was nevertheless the second-weakest seen since the government shutdown of 2013.

 

“Manufacturing has been stuck in a lower gear in recent months compared to the strong expansion seen through much of last year, linked to weak exports and uncertainty about the economic outlook at home and abroad.

 

“Although export orders showed the first rise since February, the rise was only very modest, blamed by companies on the appreciation of the dollar and sluggish global demand.

 

“Disappointing order book growth has taken its toll on companies’ expansion plans. Not only did firms scale back their input buying compared to prior months, with July seeing the smallest increase since the start of last year, hiring has also been hit, with headcounts rising at the slowest rate for three months.

 

“Weak demand, as well as reduced import costs arising from the strong dollar, meanwhile also continued to help drive down inflationary pressures.

 

“The survey data therefore suggest there’s little to worry policymakers from an inflation perspective, and that the forward-looking indicators point to the manufacturing sector remaining in a relatively slow-growth phase.”

*  *  *

end

 

Looks like the housing sector just tanked:

(courtesy zero hedge)

There Goes The Housing “Recovery” Again: New Home Sales Plunge Most Since 2014

Despite exuberant existing home sales, new home sales crosses back below the 500k Maginot Line to 482k SAAR – the lowest since Nov 2014.

 

Once again, NARis back to its old tricks. Previous data was revised dramatically lower as June data missed expectations by the most in a year.

The West region saw new home sales collapse 17%.

 

Perhaps the slide in single-family home starts means something after all?

 

But the most unsustainable chart of all is the one showing the ever gaping divergence between actual volumes for houses and artificially high prices. It appears CYNK is not only a feature of the stock market, but the housing market as well.

end
Now we have Wall Street bankers being sued for treasury manipulation.
I wonder when we will see the words: “sued for gold manipulation”?
(courtesy zero hedge)

In Latest Market Rigging Scandal, Wall Street Now Sued For Treasury Market Manipulation

“Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies.”

 

“Traders at some of these primary dealers talked with counterparts at other banks via online chatrooms and swapped gossip.”

Sound familiar?

Those quotes are from a 61-page complaint filed in the Southern District of New York wherein Boston’s public sector pension fund accuses all US primary dealers (the cabal of usual suspect dealer banks that transact directly with Treasury and “have a special obligation to ensure the efficient function” of what was formerly the deepest, most liquid market on the planet) of colluding to manipulate the $12.5 trillion US Treasury market.

The alleged scheme (tipped here last month) was remarkably simple and involved precisely the same sort of conspiratorial, chatroom shenanigans employed by the very same banks who, at various times, have colluded to rig FX, gold, various -BORs, ISDAfix, and pretty much everything else.

In short, the banks simply conspired to keep the spread between the when issued price and the price at auction as wide as possible, thus inflating their profits at the expense of everyone else where “everyone else” includes institutional investors and hedge funds all the way down to retirees and Main Street in general. From the complaint:

Defendants employed a two-pronged scheme to manipulate the Treasury securities market. First, Defendants used electronic chatrooms, instant messaging, and other electronic and telephonic methods to exchange confidential customer information, coordinate trading strategies, and increase the bid-ask spread in the when-issued market to inflate prices of Treasury securities they sold to the Class. Second, Defendants used the same means to rig the Treasury auction bidding process to deflate prices at which they bought Treasury securities to cover their pre-auction sales. Recent reports confirm that traders at some of these primary dealers “talked with counterparts at other banks via online chatrooms” and “swapped gossip about clients’ Treasury orders.

 

By engaging in this unlawful conduct, Defendants maximized the spread not only for transactions in the when-issued market, but also between their buy (auction) price and sell (when-issued) price. 

And of course the collusion didn’t just affect the cash market but every market linked to Treasurys.

This conduct lined the pockets of Defendants while raising prices to investors trading Treasury securities in the when-issued market, investors trading Treasury security-based futures and options, and investors transacting in instruments benchmarked to the prices of Treasury securities determined at auction, including certain bonds and other asset- backed securities and interest rate swaps. 

 

Given the tight correlation between the Treasury securities prices in the spot market and futures markets, Defendants’ manipulation of the auction prices for Treasury securities also directly and proximately caused injury to individuals and entities that traded in Treasury futures and options on U.S. exchanges, including the Chicago Mercantile Exchange.

Amusingly, it appears as though the banks got caught when, in the wake of the LIBOR scandal, they began to rein in the collusion, after which the difference between the manipulated market and the real market was impossible to ignore.

Plaintiff’s experts further found that bid-ask yield spreads of Treasury securities in the when-issued market were higher in the period leading up to the revelation of the LIBOR scandal than they were after the scandal broke. Plaintiffs’ experts found the change in these spreads to be statistically significant.

These observations support the proposition that spreads before the LIBOR scandal revelation were artificially high and, following the public announcement of the scandal, returned to competitive levels, as several of the same Defendants involved in the LIBOR scandal engaged in substantially similar misconduct in the Treasury market. This price artificiality could only have been caused by Defendants’ collusive behavior in both the when-issued market and at the Treasury Department auctions.

And in case all of the above isn’t clear enough, here’s a step-by-step guide to rigging the Treasury market:

Similar to what DOJ discovered in connection with its criminal investigation into the FX market, Defendants’ employees also used electronic chatrooms and other media to share confidential order flow information and collude on the prices of Treasury security transactions in the when-issued market. Defendants used these same electronic means to collude with respect to their bidding strategies at Treasury Department auctions so that they could maximize their gains in auctioned Treasury securities. 

First, Defendants’ traders agreed to artificially inflate the prices of Treasury securities in the when-issued market through coordination of bid-ask spreads. Defendants communicated with each other during the when-issued market to ensure that prices of when- issued Treasury securities would stay at supracompetitive levels.

However, because Defendants are primary dealers—and thus were required to bid at Treasury Department auctions—Defendants, individually and collectively, generally maintained short positions in the when-issued market. Defendants needed to be able to cover these positions profitably. Thus, they needed to fix the prices at which they bought Treasury securities from the Treasury Department.

And that’s exactly what Defendants did.Defendants coordinated their bidding strategies at the Treasury Department auctions to artificially suppress the prices they would pay for their bids. This had the effect of benefiting the short positions they maintained in the when- issued market by allowing Defendants to cover their positions with low-cost Treasury securities purchased at auction. 

 

By artificially increasing the spread between prices of Treasury securities in the when-issued market and at auction, Defendants were able reap supracompetitive profits— essentially shorting (selling) Treasury securities artificially high in the when-issued market and then buying them at artificially low prices in the Treasury Department auction to cover their short positions. 

There you go. Buy low, sell high. Guaranteed. Every single time. Thank you, illegal collusion.

For those unfamiliar with the story behind the recent “guilty pleas” the DoJ extracted as part of Attorney General Loretta Lynch’s push to show how very serious the post-Holder Justice Department is about prosecuting Wall Street malfeasance, allow us to explain exactly how this will pan out. There will be fines, which will appear large to the public but which amount to a rounding error for the banks. Depending upon what concessions the SEC and various other regulators are willing to make regarding waivers for the accused, there may be a few tongue-in-cheek admissions of guilt which will be met with fanfare and congratulatory handshakes at the DoJ. And that will be that. Obviously no actual people will be punished.

And as for the Treasury market, well, it was cornered long ago by the Fed and HFT, which means it is now infintely more dangerous than it ever was when it was beholden to mortal manipulators and carbon-based conspirators.

On the bright side, we’ll likely get a look at a transcript detailing just what was said inside the Treasury rigging chatrooms, where we assume newbies were told to “sleep with one eye open” and where the mantra was likely some derivation of the Cartel creed “if you aint cheating, you aint trying.

Full complaint below.

Treasury Manipulation Complaint

 

end

 

Here is another sector ready to blow up:

(courtesy Dana Lyons)

Add Junk Bonds To The Growing Pile Of Concerns

Submitted by Dana Lyons,

This week’s Charts Of The Day and blog posts have had a heavy bearish bent to them. That isn’t by design. We just go where the data leads us and much of the data, in our view, is skewing to the bearish side for equities. Included in the concerning assortment of data are many examples of weakening stock market internals. That isn’t the only concern, however. As today’s Chart Of The Day illustrates,you can also add high yield, i.e., “junk”, bonds to the growing list. Junk bonds, as the name implies, represent the lesser credit-worthy entities in the space. Thus, they carry a higher yield that higher-grade bonds.

Because of their credit issues, these bonds often trade more closely with equities than they do with base interest rates. Occasionally, however, junk bonds and stocks will diverge with one another. Such a divergence is occurring at the moment. It is often suggested that when the bond and stock markets diverge, the bonds typically prove to be correct, i.e., the stock market usually ends up going the way of the bonds. Is there evidence to back that up? According to our research there is, at least following conditions similar to those at the present time. And, for stock bulls, that isn’t necessarily good news.

What are the conditions? Well, despite the tendency to move together, junk bonds are currently near recent lows while stocks remain near their highs. Specifically, junk bond rates (which move in the opposite direction as prices) closed at a 6-month high yesterday, as measured by the BofA Merrill Lynch US High Yield Master II Effective Yield. At the same time, as of yesterday the S&P 500 was within 1% of its 52-week high. This set of conditions has only been seen on 21 previous days going back to 1997.

 

image

 

As the chart markers indicate, the timing of the prior occasions meeting these conditions were not too too favorable for stocks. These were the dates of those occasions (many of them were clustered closely together):

  • June 30, 1998
  • January 10-19, 2000
  • March 16-27, 2000
  • November 17, 2005
  • July 3-9;27, 2007
  • September 24, 2014
  • December 5-9, 2014
  • July 22, 2015

You don’t have to be a market historian to notice several inauspicious dates in that list for stock investors. The fact is, except for the 2005 occurrence, it was a rough ride for the stock market, following each of the others, at least on some duration. Following the 1998 and earlier March 2000 and July 2007 events, the S&P 500 was able to stave off immediate harm for a few weeks before getting hammered. The other events exhibited weakness almost immediately. And even though the S&P 500 has since recovered following the events in September and December of last year, the index did suffer sharp losses in the subsequent weeks. In all, after 1 month, just 3 of the 21 occurrences saw the S&P 500 higher, and a median return of -4.1%.

The longer-term picture was just as bad, if not worse than the short-term. The jury is obviously still out on the 2014 events. Among the others, only after the 1998 and 2005 occurrences was the S&P 500 was able to post a gain 1 year later – or even 2 years later. The others, obviously marking cyclical tops, were all much lower. In all, these occurrences resulted in median 1-year losses of -17.2% and median 2-year losses of -23.6%. Here are the specific numbers:

image

 

The returns in junk bonds following these events were not much better. Already at 6-month highs in rates, high yield rates typically kept rising afterward. The continued rise was incredibly consistent as well. 3 days after the events, just 5 of the 21 occurrences saw high yield rates lower. And that was the best-performing time frame! From 4 days to 2 years later, no more than 4 of the dates saw a drop in rates. So, in terms of junk bonds, this signal was more of a beginning than an end. Here are the specific % changes in high yield rates:

image

 

We have laid out a litany of concerns this week related to the current ugly stock market internals.By some measures, the breadth has been the thinnest on record for the U.S. market. Even some of the stronger areas of the market are beginning to weaken. To that list of concerns, we can now add the action in the junk bond market. Historically, when junk bonds have shown an extreme negative divergence while stocks were near their 52-week highs, stocks have almost unanimously succumbed to weakness as well. And while at times, that weakness was only short or intermediate-term in nature, it also preceded the cyclical peaks in 2000 and 2007. If the current market is to follow those precedents you might find stocks in the scrap heap a year from now.

end

Let us wrap us this week as usual with Greg Hunter of USAWatchdog

 

(courtesy Greg Hunter/USAWatchdog)

Secrets in Iran Deal, National Security Compromised, MSM Ignores Planned Parenthood

By Greg Hunter On July 24, 2015

Secretary of State John Kerry defended the recent deal to curb Iran’s nuclear program. Critics say it’s weak, a bad deal and ramps up the arms race in the Middle East. If Congress does not vote to approve the deal, Kerry says,”We will have squandered the best chance we have to solve this problem through peaceful means.” Then, there is new news of secret side deals with the Iranians. Republicans say the Obama Administration will not release the details. Senator Tom Cotton says if parts of this deal are being kept secret, then “. . . What other elements may also be secret and entirely free from public scrutiny?” The House and Senate has 60 days to debate this bill, but most of the deal has already been approved by the UN. This has angered Republicans and Democrats alike. The big question is going to be whether or not Congress can override a veto that is surely coming when the House and Senate vote this down.

Meanwhile, the Iranians are publicly saying it will buy and sell weapons whenever and to whomever it wants. Iranian officials also say, “Iran will not adhere to any current restrictions of its arms trade.” Iran continues to taunt the U.S. and says, “Israel’s security will not be ensured whether there is a nuclear agreement or not.” This deal is being praised by the Obama Administration, but U.S. allies in the Middle East hate it. Sunni Arabs say this deal opens the “Gates of Evil.” There was already a conventional and nuclear arms race in the Middle East, but this deal has sent it into hyper-drive. This is going to speed the prospects of war in the Middle East.

The national security of the U.S. has possibly been compromised, according to the White House Office of Personnel Management. It’s reported that detailed information on more than 21 million past and present federal employees has been stolen in a yearlong hack attack. It is also reported that this huge leak could hurt the security in the U.S. especially in a time of war. Former CIA covert operative, Valerie Plame says this breach is “catastrophic to our national security.” My question is: Why doesn’t anyone ever get fired for doing a bad job in the federal government? This is classic incompetence at the very top.

The mainstream media looks like it is lying by omission with the huge charge that Planned Parenthood is selling fetal body parts and has been doing so for years. Planned Parenthood denies the accusations, but undercover video of high ranking Planned Parenthood doctors say otherwise. Two videos have been released so far by the pro-life group called Center for Medical Progress. This is a huge story, and there are many more hours of undercover videos with top decision making doctors that have yet to be released. It has criminal implications, tax implications, funding implications in Congress and potential upcoming lawsuits from clients who thought they were donating tissue when it appears it was being sold for profit by Planned Parenthood, which again, it denies. For the mainstream media to not cover this is “too stupid to be stupid.” My local paper has not covered it. It told me that it did not have the resources, but it subscribes to the Associated Press (AP). I asked if the non-coverage had political motivations because, in my opinion, this makes Planned Parenthood look like criminals and monsters, and liberal left leaning newspapers just did not like the narrative. I was hung up on. Also, this was the second week this story did NOT appear in the USA Today newspaper. It’s on USA Today’s website but not in a prominent place when I looked. You had to search for it. Once again, I asked if this was a lie by omission because of political motivation and received no response from USA Today. This is absolutely a huge story with huge implications and not covering it can only be a political decision because the far left does not like the narrative. Planned Parenthood looks to me like criminals and monsters that would make Nazi monster Joseph Mengele proud.

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

Video Link

http://usawatchdog.com/secrets-in-iran-deal-national-security-compromised-msm-ignores-planned-parenthood/

 

 

I will see you on Monday.

Have a great weekend

Harvey

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