August 10/China adds another 24 tonnes to its official reserves/gold breaks above 1100.00 and silver breaks through the 15 dollar barrier/at the comex 15.2 tonnes of dealer (registered gold) left to service 21.2 tonnes of gold standing/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1104.70 up $10.10   (comex closing time)

Silver $15.29 up 47 cents.

 

In the access market 5:15 pm

Gold $1104.50

Silver:  $15.28

 

 

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

 

At the gold comex today, we had a poor delivery day, registering 18 notices for 1800 ounces  Silver saw 0 notices for nil oz

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 232.45 tonnes for a loss of 70 tonnes over that period.

In silver, the open interest fell by 3,877 contracts despite the fact that silver was up 15 cents in price on Friday. The total silver OI continues to remain extremely high, with today’s reading at 179,186 contracts   In ounces, the OI is represented by .8968 billion oz or 128% 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.

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

In gold, the total comex gold OI rests tonight at 426,096. We had 18 notices filed for 1800 oz today.

We had no change in gold leaving the GLD today /  thus the inventory rests tonight at 667.93 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 changes in silver  inventory at the SLV, / Inventory rests at 326.209 million oz.

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

1. Today, we had the open interest in silver fell by 3,877 contracts down to 179,186 even though silver was up 15 cents in price on Friday. Again, we must have had some short covering.  The OI for gold fell by 3,773 contracts to 426,096 contracts despite the fact that  gold was up by $3.90 on Friday.  We still have a little over  21 tonnes of gold standing with only 15.206 tonnes of registered gold in the dealer vaults ready to satisfy that which stands.

(report Harvey)

 

2.Gold trading overnight, Goldcore

(/Mark OByrne)

3. Two stories today on Greece

(zero hedge/Patrick Barron (Mises Institute)

4. Another hedge fund implicated in Libor scandal

(zero hedge)

 

5 Trading of equities/ New York

(zero hedge)

6. Two oil related stories

(zero hedge/William Engdahl)

 

7.  USA commentary:

i) Craig Roberts on the USA economy.

ii) Household spending drops like a stone

(zero hedge)

 

8. Physical commentaries:

i) Greg Hunter interviews Bill Holter

ii) Lars Schall inverviews Peter Boeringher on the non repatriation of gold back to Germany.

iii/ Craig Hemke reports on an increase in gold reserves into China this month: a rise of 24 tonnes to 1683 tonnes

(TF Metals/Craig Hemke/(Turd Ferguson)

iv) Avery Goodman writes on the 7.1 tonnes of physical gold purchased by HSBC and Goldman Sachs after they tell their clients to sell gold

(Avery Goodman/Seekingalpha)

v) Dave Kranzler on the default of supplying 10 z silver bars by Provident

(3 commentaries/Dave Kranzler/IRD)

plus other commentaries….

 

 

The total gold comex open interest fell from 429,869 down to 426,096 for a loss of 3773 contracts despite the fact that  gold was up $3.90 on Friday. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter basically stopped its decline. What is interesting is that the LBMA gold is witnessing a 7.40 premium spot/next nearby month as gold is now in backwardation over there. We are now in the contract month of August and here the OI fell by 195 contracts falling to 3643 contracts. We had 4 notices filed upon on Friday and thus we lost a tiny 191 contracts or 19,100 additional ounces will not stand for delivery. The next delivery month is September and here the OI fell by 350 contracts down to 2292. The next active delivery month if October and here the OI fell by 699 contracts down to 25,819.  The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 92,328. The confirmed volume on yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 184,589 contracts. Today we had 18 notices filed for 400 oz.

And now for the wild silver comex results. Silver OI fell by 3877 contracts from 183,063 down to 179,186 despite the fact that silver was up in price by 15 cents on Friday .  We continue to have some short covering as our bankers pulling their hair out with respect to the continued high silver OI as the world senses something is brewing in the silver  arena. We are in the delivery month of August and here the OI fell by 2 contracts falling to 31. We had 0 delivery notice filed yesterday and thus we lost 2 contracts or an additional 10,000 ounces will not stand for delivery in this non active August contract month. The next major active delivery month is September and here the OI fell by 8,331 contracts to 101,515. The estimated volume today was fair at 31,229 contracts (just comex sales during regular business hours). The confirmed volume on Friday (regular plus access market) came in at 75,406 contracts which is excellent in volume.  We had 0 notices filed for nil oz.

 

August contract month: initial standing

August 10.2015

Gold

Ounces

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  32,352,217. oz (JPMorgan,Delaware)
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz 417.95 oz (Delaware)
No of oz served (contracts) today 18 contracts (1800 oz)
No of oz to be served (notices) 3635 contracts (363,500 oz)
Total monthly oz gold served (contracts) so far this month 3201 contracts(320,100 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 397,457.0   oz

Today, we had 0 dealer transactions

 

total Dealer withdrawals: nil  oz

 

we had 0 dealer deposits

total dealer deposit: zero

 

we had 2 customer withdrawals
i) Out of JPMorgan: another 32,150.000 oz  ( 1,000 kilobars) * in 2 days over 3,000 kilobars have left JPMorgan.
ii) Out Delaware:  302.217 oz

total customer withdrawal: 32,452.217  oz

We had 1 customer deposits:

i) Into Delaware: 417.95 oz  (13 kilobars)

 

Total customer deposit: 417.95 oz

We had 2  adjustment

 

i) out of Delaware: 1,383.800 oz was adjusted out of the customer and this landed into the dealer account of Delaware.

ii) Out of Scotia:  295.84 oz was adjusted out of the dealer and this landed into the customer account of Scotia

 

 

JPMorgan has 7.1966 tonnes left in its registered or dealer inventory.

(231,469.56 oz)

.

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 18 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 August contract month, we take the total number of notices filed so far for the month (3201) x 100 oz  or 320,100 oz , to which we add the difference between the open interest for the front month of August (3643) and the number of notices served upon today (18) x 100 oz equals the number of ounces standing

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

No of notices served so far (3201) x 100 oz  or ounces + {OI for the front month (3643) – the number of  notices served upon today (18) x 100 oz which equals 683,600 oz standing so far in this month of August (21.26 tonnes of gold).

Thus we have 21.26 tonnes of gold standing and only 15.206 tonnes of registered or dealer gold to service it.

We lost a tiny 19,100 ounces that will not stand for delivery in this active month of August.

Total dealer inventory 489,964.93 or 15.239 tonnes

Total gold inventory (dealer and customer) = 7,473,539.587

Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 232.45 tonnes for a loss of 70 tonnes over that period. The gold comex is bleeding gold.

 

end

 

And now for silver

August silver initial standings

August 10 2015:

Silver

Ounces

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 281,553.580  oz (Delaware, Scotia)
Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 31 contracts (155,000 oz)
Total monthly oz silver served (contracts) 45 contracts (225,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 85,818.47 oz
Total accumulative withdrawal  of silver from the Customer inventory this month 5,000,237.3 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 0 customer deposits:

 

 

total customer deposits:  nil  oz

 

We had 2 customer withdrawals:

i) Out of Delaware: 1003.82 oz

iii) Out of Scotia:  280,549.76 oz

 

total withdrawals from customer: 281,553.58  oz

 

we had 0  adjustments

Total dealer inventory: 55.829 million oz

Total of all silver inventory (dealer and customer) 172.100 million oz

The comex has been bleeding both gold and silver.

 

The total number of notices filed today for the August contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in August, we take the total number of notices filed for the month so far at (45) x 5,000 oz  = 225,000 oz to which we add the difference between the open interest for the front month of August (31) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.

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

45 (notices served so far)x 5000 oz + { OI for front month of August (31) -number of notices served upon today (0} x 5000 oz ,= 380,000 oz of silver standing for the August contract month.

we lost 2 contracts or an additional 10,000 ounces will not stand in this non active delivery month of August.

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:

August 10/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes

August 7./no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes

August 6/no change in gold inventory at the GLD/Inventory rests at 667.93 tonnes

August 5.we had a huge withdrawal of 4.77 tonnes from the GLD tonight/Inventory rests at 667.93 tonnes

August 4.2015: no change in inventory/rests tonight at 672.70 tonnes

August 3.2015: no change in inventory at the GLD./Inventory remains at 672.70 tonnes

July 29/no change in inventory/rests tonight at 680.13 tonnes

July 28/no change in inventory/rests tonight at 680.13 tonnes

July 27/no change in inventory/rests tonight at 680.13 tonnes

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.

 

 

August 10 GLD : 667.93 tonnes

 

end

 

And now SLV:

August 10: no changes in SLV inventory/rests tonight at 326.209 million oz.

August 7.no changes in SLV/Inventory rests this weekend at 326.209 million oz

August 6/no changes in SLV/inventory rests at 326.209 million oz

August 5/ a small withdrawal of 142,000 oz of inventory leaves the SLV/Inventory rests tonight at 326.209 million oz

 

August 4.2015: a small withdrawal of 476,000 oz of inventory at the SLV/Inventory rests at 326.351 million oz

August 3.2015; no change in inventory at the SLV/inventory remains at 326.829 million oz

July 29/no change in silver inventory/326.829 million oz

July 28/we had a huge withdrawal of 2.005 million oz from the SLV/Inventory rests at 326.829 oz

July 27/no change in silver inventory/inventory rests tonight at 328.834 million oz

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.

 

 

 

August 10/2015:  tonight inventory rests at 326.209 million oz

 

end

 

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

Sprott and Central Fund of Canada.
(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)

1. Central Fund of Canada: traded at Negative 10.3 percent to NAV usa funds and Negative 10.6% to NAV for Cdn funds!!!!!!!

Percentage of fund in gold 61.7%

Percentage of fund in silver:38.0%

cash .3%

( August 10/2015)

2. Sprott silver fund (PSLV): Premium to NAV rises to -0.75%!!!! NAV (August 10/2015) (silver must be in short supply)

3. Sprott gold fund (PHYS): premium to NAV rises to – .76% to NAV(July August10/2015)

Note: Sprott silver trust back  into negative territory at-  0.84%

Sprott physical gold trust is back into negative territory at -.75%

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 your overnight trading in gold and silver plus stories

on gold and silver issues:

 

(courtesy/Mark O’Byrne/Goldcore)

Gold’s Artificial Lows – Price Surge Coming

DAILY PRICES
Today’s Gold prices were USD 1,094.80, EUR 998.50 & GBP 707.74 per ounce.
Friday’s Gold prices were USD 1,091.35, EUR 998.99 & GBP 703.01 per ounce.
[LBMA AM prices]

Last week, gold and silver were mixed with gold marginally lower for the week – down 0.28% to $1,092.10 and silver up 0.4% to $14.77 per ounce.

 

Gold in USD - 1 Year

Gold in USD – 1 Year

This morning, gold is 0.1% higher to $1,096 per ounce. Silver is up 0.74% to $15.02 per ounce.

Platinum and palladium are 0.74% and 0.5% higher to $973 and $607 per ounce respectively.

Gold’s Artificial Lows – Price Surge Coming

  • With gold languishing near deep secular lows, its technicals look hopelessly broken
  • Sentiment is off-the-charts bearish, with traders universally convinced gold is doomed to spiral lower indefinitely

Goldfuture specs

  • But gold’s weakness this year is very deceiving, as it wasn’t the product of global fundamental supply-and-demand forces.
  • Extreme record shorting by American futures speculators spawned these artificial lows.
  • Gold’s imminent short-covering rally should be the largest ever, coming from record extremes.

Continue reading about Gold’s Artificial Lows

 

end

Do you expect anything less from these criminals?

a very important read

(courtesy Avery Goodman/seeking alpha)

Summary

  • On August 6, 2015, Goldman Sachs, which has issued very bearish forecasts on long-term gold prices, took delivery of a 3.2-ton purchase of physical gold.
  • On August 6, 2015, HSBC which also claims to be bearish, took delivery of a 3.9-ton purchase of physical gold.
  • In both cases, the purchases are registered as being for the benefit of the bank’s own house account, rather than the accounts of customers.
  • Investors should do as the banks do, not as they say.

On August 6, 2015, Goldman Sachs (NYSE:GS) and HSBC (NYSE:HSBC) took delivery of a sum total of 7.1 tons of physical gold. No, I have not made any typographical errors. And no, I am not talking about electronic paper claims. I am talking about shiny yellow metal stuff that you can touch and feel.

The gold bars were not purchased for bank clients. They were purchased for the banks themselves. How do I know this? They are designated by the exchange as being for delivery to the bank’s “house” accounts at COMEX, notto client accounts.

Goldman Sachs, alone, took 3.2 tons worth of physical gold bars. Yet, even as the firm builds its stockpile, Goldman tells clients not to do it. According to Goldman’s Jeffrey Currie, the long-term outlook for gold is bleak.

“In longer term, we definitely like playing this market on the short side. We think we are in a structural bear market, not only in gold, but across the commodity complex, as the individual commodity stories are reinforcing to one another, creating a negative feedback loop.”

In spite of the antics in the paper-gold market, we know the physical market is on fire. Demand will exceed known supplies by at least 1,350 tons in 2015. More in 2016. But, that won’t stop someone from setting up the paper market in order to buy from the physical market very cheaply. This is because the mysterious gold “supplier of last resort” will fill COMEX physical delivery demand, for the moment at least, no matter how high it rises, and no matter how low other supplies may be.

According to HSBC strategists, there has been a:

“drift towards Fed tightening and the associated USD strength, low global inflationary pressure, weak gold demand from India and China and market positioning and momentum.”

This statement was made a few days before we all learned about the 61% increase in gold importsto India in the period, April to May. As one of the biggest players in the import market in India, how could have HSBC strategists not known about that? HSBC executives were certainly savvy enough to authorize this huge purchase of physical gold for the bank.

They bought 3.9 metric tons at COMEX, no doubt at rock bottom prices, and it was just delivered into the bank’s house account. Note that we are NOT talking about paper-gold. Both bought physical gold bars! Apparently, top Goldman and HSBC executives are “gold bugs.” They do not, apparently, believe in the promises made by the gold trust (NYSEARCA:GLD), or at least they are not willing to use the trust’s shares as a substitute for hard metal bars.

Like Indian newlyweds, the banks buy gold trinkets hand over fist even as their “strategists” tell everyone it is a bad investment. Reports do indicate that the London market is caught in a historic backwardation, the likes of which have never been seen before in history. Arbitragers won’t sell gold now, in exchange for a forward or futures promise of delivery. That illustrates an extreme level of market tightness.

My previous articles covered the situation in London. The use of logic, reason, common sense, and newly released transcripts, previously classified, caused me to conclude that the US government is currently the gold “supplier of last resort.” You can find those articles here and here.

To summarize, COMEX is designated by the US Financial Stability Council as a “Financial Market Utility” (FMU). The Council was set up by the Dodd-Frank Act, and views any failure of this “too-big-to-fail” entity as likely to lead to widespread contagion in multiple markets. Thus, logically, the US Treasury is willing to, and is draining physical gold from the US gold reserve to bail it out.

Still, regardless of what the US government is doing, why would these two banks make such a huge long-term investment in physical gold bullion bars? Perhaps, we are seeing a “Big Long,” similar to the “Big Short” Goldman Sachs is known to have taken in 2006/07. There are many who believe that we are soon going to see the collapse of a worldwide bond bubble, just as we saw a worldwide collapse of real estate values back then.

Maybe, these banks know something. Top bank executives don’t appear to trust counter-party promises. For example, why not buy an equivalent amount of gold in the form of shares in a highly liquid, easily traded gold trust? HSBC is actually the custodian of the alleged gold bars inside GLD, so you would think they would view it just as good as gold? Apparently not…

Perhaps, then, the banks are filled with tinfoil-hat-wearing goldbugs? You have to wonder what they’re worried about, because they’re not buying paper-gold shares of (NYSEARCA:IAU) either. They are buying hard metal bars that they can fondle. Whatever is going on, it is a big deal because absolutely no onewho really believes long-term gold prices will stagnant or decline would buy 7.1 tons of physical metal.

Physical gold is a long-term investment, everywhere and always. They are not particularly hard to sell, especially now, but short-term trading would be much easier with paper-gold products like GLD or gold futures. Remember, vaults cost money, as do big men with big guns and the knowledge of how to use them. The banks are choosing to accumulate and hoard physical gold bars for a reason.

Senator Carl Levin, writing in a Congressional Report, used Goldman Sachs as an example of everything that went wrong in the banking system. According to him, before the subprime crisis, Goldman Sachs secretly built up a massive short position in credit default swaps, convincing customers to take the other side of the trade. The bank ended up paying a record fine of $500 million for one instance of the trade. However, overall, they profited to the tune of tens of billions of dollars.

Are Goldman and HSBC now creating a “Big Long” in gold. If not, what are they doing? But, if so, why are they taking delivery on a regulated exchange? By using a public exchange, the banks opened their activities to advance scrutiny. Why not buy physical gold the way they bought credit default swaps? Why not use secretive two-party transactions?

The answer is simple. It is impossible. Backwardation in London shows that arbitragers are ignoring potential profits. They don’t believe that a forward contract is reliable enough to return their metal. In contrast, COMEX now has an appearance of being backstopped by the US gold reserve, the “supplier of last resort” in the gold market. COMEX is designated as an FMU whose failure would lead to intermarket contagion.

The last place you want to be, when things “hit the fan,” is on the opposite side of a “Big Long” trade. That’s why, if you are now holding short positions, take your profits before it is too late. I discussed the details and various methods by which you can take a long-term position in gold here. To confirm the timing and size of Goldman Sachs’ and HSBC’s recent gold purchases, download this COMEX delivery report.

 

end

 

 

(courtesy Chris Powell/GATA)

 If gold is just a ‘pet rock,’ why are central banks so secretive about it?

Section:

10:47p ET Friday, August 7, 2015

Dear Friend of GATA and Gold:

“Let’s be honest about gold,” read the headline in The Wall Street Journal on Jason Zweig’s column July 17. “It’s a pet rock”:

http://blogs.wsj.com/moneybeat/2015/07/17/lets-be-honest-about-gold-its-…

Zweig wrote: “It is time to call owning gold what it is: an act of faith.”

And yet, as gold researcher and GATA consultant Ronan Manly pointed out today in a note to your secretary/treasurer, authorities even higher than The Wall Street Journal seem to have a different opinion.

Manly, who is always examining documentation about gold rather than merely pontificating about it as mainstream financial journalists do, called attention to contrary assertions on the Internet site of London Precious Metals Clearing Ltd. —

http://www.lpmcl.com/

— which manages the over-the-counter gold market in London, the largest in the world (at least for the time being).

In the “About Clearing” section of its Internet site, London Precious Metals Clearing Ltd. says:

“The six London bullion clearing members each maintain confidential secure vaulting facilities within central London locations, using either their own premises or those of a secure storage agent, which are used to process and store precious metals (mostly gold and silver), for both the member and those clients who require custodial storage (including some central banks). …

“[T]hese vaulting facilities enable the depositories to process large physical transactions with a high degree of confidentiality (essential given the sensitivity many governments and central banks place on gold transactions); also, these vaults provide the potential of some modest income from client storage requirements.

“There are close ties between the vault operations and the precious metal trading and sales team on physical movements, particularly when scheduling consignment stock deliveries, but also where key government or central bank physical transactions are being undertaken, which require sensitive and confidential handling, and often involve taking high-security precautions.”

The clearing association’s assertions raise a couple of questions:

1) Why are central banks and governments so sensitive and secretive about what are supposedly only pet rocks?

2) Are there any circumstances under which Zweig and The Wall Street Journal (and, for that matter, the rest of the mainstream financial news media) would be honest about gold?

Though readers of these dispatches must be tiring of hearing it, still it must be said and may have to be said for decades to come:

No analysis of the gold market is worth anything if it fails to address these 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?

Documentation responsive to these questions can be found here —

http://www.gata.org/node/14839

— but of course not yet in Zweig’s column or elsewhere in The Wall Street Journal, though the documentation has been delivered to the newspaper many times over many years, once even in person by your secretary/treasurer by appointment at the paper’s headquarters in New York. A few years before that, GATA even spent $264,000 to place a full-page advertisement in the newspaper to alert it and the nation to the rigging of the gold market:

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

(Boy, would your secretary/treasurer like to have that money back.)

So The Wall Street Journal knows very well what’s going on. Ironically the American newspaper that most purports to advocate free markets is a crucial accomplice to their subversion.

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

 

end

(courtesy bron Suchecki/Perth Mint/GATA)

Bron Suchecki: A very silly think to think about Comex

Section:

2:20p ET Saturday, August 8, 2015

Dear Friend of GATA and Gold:

Perth Mint research director Bron Suchecki today aims to clarify some assertions in this week’s report by Zero Hedge about gold available for delivery on the New York Commodities Exchange. Suchecki writes that the operator of the exchange, CME Group, isn’t bailing anyone out when gold is reclassified for delivery purposes in gold warehouses. Suchecki’s commentary is headlined “A Very Silly Thing to Think about Comex” and it’s posted at the Perth Mint’s Internet site here:

http://research.perthmint.com.au/2015/08/07/a-very-silly-thing-to-think-…

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

 

end

 

We were waiting for this to happen:

 

(courtesy Kathmandu Post/Nepal/GATA)

Banks obstruct supply as gold demand soars in Nepal

Section:

Gold in Short Supply as Buying Rush Continues

From the Kathmandu Post
Kathmandu, Nepal
Sunday, August 9, 2015

KATHMANDU — With bullion prices sliding to record lows, customers have been queuing up in front of dealers to buy gold to make jewellery. Traders said that although banks had started issuing gold from the last few days, demand outstrips supply. Falling prices and the onset of the festive season has fuelled the rush, said traders.

“Demand has soared three to four times compared to last month as prices have dropped significantly, but banks have not been issuing as much gold as is required,” said Nirmal Krishna Shrestha, proprietor of Gems Ornament Emporium at Bishal Bazaar, New Road. Only banks are authorized to import gold with the quota fixed at 15 kilograms daily. …

… For the remainder of the report:

http://www.ekantipur.com/the-kathmandu-post/2015/08/09/money/gold-in-sho…

 

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(courtesy Peter Boehringer/Lars Schall/GATA)

 

 

Bundesbank hasn’t secured Germany’s gold, repatriation campaign leader says

Section:

7:38p ET Sunday, August 9, 2015

Dear Friend of GATA and Gold:

On behalf of Matterhorn Asset Management, freelance journalist Lars Schall interviews the leader of Germany’s gold reserves repatriation campaign, Peter Boehringer, about gold’s role in the international financial system and the failure of Germany’s central bank, the Bundesbank, to secure and account for the nation’s gold reserves. The interview is 14 minutes long and is posted at Matterhorn Asset Management’s Internet site, Gold Switzerland, here:

https://goldswitzerland.com/peter-boeringer-bundesbank-argues-the-wrong-…

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

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Alasdair Macleod…

(courtesy Alasdair Macleod)

Alasdair Macleod: Gibson’s paradox — the consequences

Section:

11:51a Sunday, August 9, 2015

Dear Friend of GATA and Gold:

GoldMoney research director Alasdair Macleod has revisited the old correlation in economics between the general price level and interest rates, “Gibson’s paradox,” which economists long debated, or at least did before it seemed to break down in recent decades.

Macleod argues that the correlation would remain valid in free markets but has been nullified by the destruction by central banks of free markets for money, the seizure by central banks of control over interest rates, which are no longer set by savers and borrowers. This seizure, as might have been suggested to readers of these dispatches over the years, combined with surreptitious intervention by central banks in the gold market to suppress the price of the monetary metal, has distorted or destroyed all markets.

Macleod writes that central banks “have turned the principal objective of entrepreneurs from patient wealth creation through the accumulation of profits into ephemeral wealth creation through the accumulation of debt.”

Macleod’s study is headlined “Gibson’s Paradox: The Consequences” and is posted at GoldMoney’s Internet site here:

https://www.goldmoney.com/research/analysis/gibsons-paradox-the-conseque…

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

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Today, gold and silver are surging on huge volume.  Zero hedge discusses how the hedge funds are trapped:

(courtesy zero hedge)

Gold & Silver Are Surging On Heavy Volume

Hedgies are the most short ever… and Commercials are the least hedged in 14 years… and it appears rumors of PBOC buying along with dismal data from around the world has sparked a renewed awareness of another looming QE sending gold well north of $1100 and silver back above $15.

hedge funds aggregate net position has been short for the first time in history.

 

Commercial Hedgers are holding the lowest net short position in gold futures since the launch of the gold bull market in 2001.

 

And this happened… Silver looking for $15.44 (50DMA) as next test

 

As Bonner & Partners recently noted, the next silver bull market may have already started

Silver is down 7.1% this year.

Will this weakness persist? To find out, let’s look at the key factors in the silver market this year.

  • Like gold, silver fell as the U.S. dollar rose on the back of expectations that the Fed will hike rates.
  • World demand for physical silver fell 4% in 2014, largely due to a record 19.5% drop in investment demand.
  • Silver exchange-traded funds (ETFs) did not see big liquidations in 2014. ETF holdings grew by 1.4 million ounces and recorded their highest year-end level at 636 million ounces.

The first two factors helped push silver 19.9% lower last year. That’s more than gold or any other precious metal fell. Despite this, silver production rose 5% in 2014. That added to the pressure on prices.

08082015-DRE-Silver-Supply

Why did miners produce more silver when prices were falling? Because of:

  • By-product metal. Around 75% of the silver mined is a by-product at gold or base metal mines. These producers will keep mining silver, almost regardless of price.
  • Reduced cash costs. The primary silver producers have cut costs since they peaked in 2012. The main way miners do that is by boosting production to achieve economies of scale.
  • Bull market hangover. Precious metals were in a major bull market from 2001 to 2011. Producers built a lot of mines in response. Nobody wants to pull the plug on a new mine that’s losing money if they think prices will go higher.

That’s the backdrop. Now let’s look at this year’s fundamentals.

Supply and Demand Are Moving in the Right Direction

Silver mine output has risen for 12 consecutive years (silver mine supply is a little different, due to hedging, but also trending upward). This year could break this trend. Industry experts at GFMS forecast up to a 4% decline in silver output in 2015.Why? It’s not rocket science. There are now fewer major new mines under construction due to lower metals prices.

That leaves scrap supply. But scrap comes from jewelry, and sellers are price sensitive. People like to sell granny’s silver tea set when prices are up. We expect subdued scrap supply until silver heads much higher.

Investment demand – that’s us – is a big chunk of total silver demand: 18.4% as of the latest figures.

There was a big drop in investment demand last year: 19.5%. This tells us that most short-term investors and sellers have left the market. We don’t know any “silver bugs” who were selling. That means that today’s bullion is in stronger hands. And that means that any new buying will have a strong impact on prices.

But will there be buyers?

The Silver Institute expects more silver demand from investors this year. They say that the first half of 2015 sales of silver bars were the fifth highest on record.

Photovoltaics (PV) is another source of silver demand that many analysts expect to rise in 2015 and beyond. Global PV demand is set to increase by 30% in 2015, according to IHS analysts. China alone has plans to install 17 gigawatts of solar capacity by the end of the year.

The solar industry consumes a small amount of silver compared to jewelry and other electronics. Yet, if PV demand delivers in 2015, it will become the third-largest source of fabrication demand for silver.

Wild card: Tesla plans to put batteries big enough to power a house in every home. What happens if that takes root is anyone’s guess… but it will be big. Really big. And the impact on demand for silver would be just as huge.

Time to Get Bullish on Silver

Silver supply went into deficit during much of the big run-up from 2001 to 2011. That may happen again. The Silver Institute expects the silver supply deficit to grow to 57.7 million ounces in 2015. (Note that even if physical mine supply is up, net supply can be down if a lot of the mine supply was forward sold as hedges.) If the institute is right, it’ll be bullish for silver prices.

08082015-DRE-Silver-surpluses-and-deficits

We believe the dollar is grossly overvalued, and we are not alone. HSBC thinks the greenback’s rise since 2014 could be in its final stage. For the three months between April and June, the U.S. dollar fell against every developed-market currency (save for the yen and the New Zealand dollar).

Many investors seem convinced that the Fed will raise interest rates as soon as September. We view this as unlikely at this stage. Yes, tightening U.S. monetary policy would propel the dollar to new highs. But an even stronger dollar would mean slicing billions off the U.S. GDP, not exactly a desirable situation from the standpoint of the Fed given the sluggish growth of the economy. We think the Fed could delay raising rates until 2016. It might even stop talking about rate hikes indefinitely. Each delay, the dollar will get whacked, and that’s good for precious metals.

On the other hand, if the Fed does nudge rates higher this year, it would likely dampen the stock market. That would increase demand for silver and gold. This could push silver prices much higher, given the small size of the market.

Strong Silver Fundamentals for 2015

The gold-silver ratio (GSR) tells you how many ounces of silver you need to buy one ounce of gold. The record shows that the GSR often surges during a recession. (See the shaded areas on the chart below.)

08082015-DRE-Gold-silver-ratio-since-68

Silver is about 17 times more abundant than gold in the earth’s crust. Silver and gold prices were close to this ratio for most of history. These facts make many investors think that the GSR should be 17-to-1 and that eventually it will be.

They may be right, but we’ve never found the GSR to be a strong predictor of gold or silver prices. To us, the GSR “suggests a lot but proves nothing.”

The fundamentals are positive for silver in 2015: less mine supply, and the healthy demand we already see is bullish. The greater demand that’s possible could create a real supply crunch. As a result, we expect silver to hold on throughout 2015 and perhaps even increase faster than gold, if the whole precious metals sector turns positive this year.

As for guessing the future, we have no crystal ball. We can say that the case for 2015 as a win-win year for silver is backed by the numbers.

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Greg Hunter interview Bill Holter:
(courtesy Greg Hunter/Bill Holter)

The Ability to Prevent a Crash No Longer Exists -Bill Holter

By Greg Hunter On August 9, 2015 In Market Analysis 36 Comments

Financial writer and gold expert Bill Holter says the powers know that it physically can’t put off a financial crash much longer. Holter contends, “The system has gotten too big. The system has gotten bigger than the creators of the system, if you will. It is bigger than the sovereign governments collectively. It’s bigger than the central banks collectively. There’s too much debt. Too many sovereign governments have bumped up against debt saturation. In the U.S., we are over 100% debt to GDP. We are way over 100% debt to GDP if you include all debt. If you include all the off-book guarantees, Social Security, Medicare, Medicaid and all the other promises, we have blown up as far as debt to GDP ratios. So, the ability to prevent a crash no longer exists.”

For the people who think central banks can print money to infinity, Holter advises, “People have the belief in central banks because, to this point, it has worked. So, they extrapolate that it will always work. What they are not factoring in is many sovereign governments have reached debt saturation. In other words, many governments have gotten to the point of Greece or Puerto Rico. It can’t take more debt. The problem in Europe is the individual countries can’t print money. The U.S. can print money. The question is will foreigners accept what we print forever? The answer is no.”

Holter says the Fed will print more money. It will be forced to and it will not work the same as other money printing. Holter explains, “The next one, in my opinion, is going to be ‘QE Forced.’ It’s going to be forced on the Fed.”

The recent announcement the International Monetary Fund (IMF) will put off allowing the Chinese yuan to become part of the Special Drawing Rights (SDR) basket of currencies is a bad omen for the U.S. dollar. Holter thinks, “China being pushed off by the IMF until at least 2016 is a slap in China’s face. They publicly and officially requested to become part of the SDR. . . . The IMF, steered by the U.S., basically slapped them in the face. You’ve got to look at this as a financial war. This is a shot by the U.S. saying, no, we are not letting you in the club. It is inevitable that the Chinese currency will become part of the SDR or a reserve currency or ‘the’ reserve currency. It’s inevitable. The U.S. is trying to buy an extra year’s time, and it can’t.”

What can China do to retaliate? Holter says, “I think they have two potential moves. . . . The right time may be in a month or two during weakness in our markets. Remember, this was done by the IMF during very serious weakness in their markets. We kind of punched them on the way down. They have two real answers. They can tell the truth about how much gold they have. They can come out and say they have 10,000 tons or 15,000 or 20,000 tons or whatever it happens to be. The second is China has an awful lot of Treasuries. This is where I think they can force the Fed into monetizing their debt. They would be creating their own exit door. . . . Then, the Fed would have a big choice. Would the Fed buy them? There is your QE forced. Or, do they just let the interest rates go up and the bond market tank? It’s either option A or option B.”

Holter says, in the last year, there have been many big warnings from the Bank of International Settlements and the IMF about a coming financial calamity. Holter says, “I think they are trying to get out in front of this. I think they are telling the truth–the world is defenseless. The central banks, the sovereign Treasuries have fired all their bullets already, and they realize when this next crash comes, there’s nothing that can be done.”

Join Greg Hunter as he goes One-on-One with Bill Holter of JSMineset.com.

(There is much more in the video interview.)

Video Link

http://usawatchdog.com/t
he-ability-to-prevent-a-crash-no-longer-exists-bill-holter/

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As we promised you last month, China has raised its official reserves by 24 tonnes in this latest month.  Even though they have probably amassed greater than 10,000 tonnes, they will add anywhere from 24 to 30 tonnes per month until they reach their real official reserves or until they are included in the SDR’s.
(courtesy TFMetals Report/Craig Hemke/)

PBOC Gold Holdings Rise 1.5% In July

Last month, after finally giving the world an update on their gold reserves, the People’s Bank of China promised to begin giving monthly updates going forward. That did just that earlier today.

Thanks to our good friend and loyal Turdite, StevenBHorse, for bringing this to our immediate attention. The official PBOC announcement can be found here:

The official PBOC announcement can be found here:

http://www.safe.gov.cn/wps/portal/!ut/p/c5/04_SB8K8xLLM9MSSzPy8xBz9CP0os3gPZxdnX293QwP30FAnA8_AEBc3C1NjIxMjA6B8JE55dzMDArrDQfbhVhFsjFcebD5I3gAHcDTQ9_PIz03VL8iNMMgMSFcEAP5jfwo!/dl3/d3/L2dJQSEvUUt3QS9ZQnZ3LzZfSENEQ01LRzEwT085RTBJNkE1U1NDRzNMTDQ!/?WCM_GLOBAL_CONTEXT=/wps/wcm/connect/safe_web_store/state+administration+

If you dig into today’s update and compare it to last month’s numbers, you can determine the increase in the official PBOC gold holdings.

Back in July, The PBOC reported a total dollar value of gold holdings at about $62.397B. By using the other data supplied in the release, we were able to determine just how much gold they were claiming to have.

  • Value: $623.97 in $US100MM
  • Gold price: $1170.236

By doing some simple math, the world discovered that China’s updated gold holdings were about 53,320,000 ounces or roughly 1658.43 metric tonnes.

In today’s update, the total dollar value of the PBOC’s gold holdings fell to $59.238B. Ahh…but as we all know, the dollar price of gold fell sharply over the past month from the $1170.236 that the PBOC used in June to the $1095.38 used in July. The same calculation used last month yields the updated results.

  • Value: $592.38 in $US100MM
  • Gold price: $1095.38

This yields an updated total of gold holdings at 54,079,863 or 1682.71 metric tonnes.

Therefore, with it’s first monthly update…and the PBOC has promised to update their numbers every month going forward…the new total of PBOC gold holdings is 1682.71 metric tonnes. This is up 24.38 metric tonnes from June or about 1.5%.

We’ll be sure to watch these numbers every month, keeping in mind the words of Sun Tzu that “all war is based on deception”:

“Hence, when able to attack, we must seem unable; 

When using our forces, we must seem inactive; 

When we are near, we must make the enemy believe we are far away; 

When far away, we must make him believe we are

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This was brought to my attention on Friday night:

(courtesy Dave Kranzler/IRD)

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Then on Sunday;

 

(courtesy Dave Kranzler/IRD)

 

Is The Fractional Bullion Scheme Finally Beginning To Collapse?

August 9, 2015Financial Marketshttp://investmentresearchdynamics.com/author/admin/

We will not be receiving our shipment of RCM 10 oz Silver bars. This coupled with an internal inventory discrepancy has effected a few of our customer orders. We have been working diligently each day to secure RCM bars through various sources for our customers at any cost. Unfortunately, we were unable to fulfill some orders, including yours. – Email sent to Provident Metals customers who prepaid for silver bars which Provident had represented to be in Provident’s inventory

“Internal inventory discrepancy?” What other inventory discrepancies are occurring at Provident. What kind of “inventory discrepancies” are occurring at other bullion dealers. I can’t believe Provident sent notice of delivery default with a claim of inventory control issues.

empty-vault

Why not just admit the truth that the bullion dealer pre-sold bars that it was expecting to receive from the RCM and the RCM stopped production and ran out of supply before Provident received its full order allocation?

On the heels of Bullion Direct direct blowing up, this is another indicator that the fractional bullion system is beginning to collapse.

YTD silver eagle sales reported by the U.S. mint are running well ahead of 2014’s record sales pace. Gold eagle sales in July were up 456% from July 2014. I heard today that the RCM is now putting silver maple leafs on allocation. Retail demand for bullion is beginning to avalanche.

Gold sales in Malaysia were up 50% in July – LINK. South Korea is on track to import a record amount of gold in 2015 – LINK. Gold imports into India have accelerated well ahead of the biggest seasonal buying period, which begins in a few weeks. Deliveries into and withdrawals from the Shanghai Gold Exchange our occurring now at a record rate.

The Federal Reserve, in conjunction with the U.S. Government and the Central Banks and Governments of the EU, has chosen to push down the visible price of gold as much as possible primarily by flooding the market with the naked short-selling of paper gold. The motive behind this is to support and reinforce the highly artificial and uneconomic policies of zero interest rates and money printing in order to keep the U.S. and European economic systems from collapsing.

The unintended consequences of this operation are now starting to surface, not the least of which are several indicators which suggest that there is significant stress in the availability physical gold and silver in both the U.S. and London.

The capitulation is remarkable. I see it everywhere. However, I continue to believe that, in retrospect, this will be seen as the best buying opportunity in the history of gold and,especially, silver. – John Embry (from email exchange with John earlier this week)

http://mail.lemetropolecafe.com/Main/frmCompose.aspx?to=dkranzler62@gmail.com&popup=true

***

 

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And now today, on the same subject:

 

There’s A Supply Problem In The Silver Market

We’re seeing more buying interest than at any time since the 2008 financial crisis. If we see a further spike in demand, the whole supply chain could be cleaned out. – Money Metals Exchange LINK

I spent a lot of time discussing the Provident Metals situation with my friend on whom Provident defaulted on delivery of the 10 oz RCM bars.  It’s not Provident’s fault per se, other than the fact that they took his money for a bar that they represented as being in stock.  Instead, Provident was waiting for the delivery of the bar from the Royal Canadian Mint.

In the past after 2008, pre-selling silver that was presented as “in stock” but was on order from the U.S. or Canadian mint was not a problem.  Supply of silver blanks was adequate.  It’s not a problem til it’s a problem.  And now it appears to be a problem.

Provident made the situation worse for itself by using the old “the dog ate my homework” excuse when it stated that it had an internal inventory problem.  That excuse is an insult to the precious metals audience.   This segment of the market is not the CNBC audience.

An now we have unintended consequences of the U.S. Governments effort to drive physical gold and silver out of the system:

Public demand for gold and silver coins, rounds, and bars suddenly skyrocketed since mid-June – particularly among first-time customers – to multiples of earlier demand levels, according to Money Metals Exchange, a national precious metals dealer in the U.S.

From June 16 to July 31, Money Metals Exchange experienced a 135% surge in gold and silver sales over the prior 45-day period (which was representative of the early months of 2015). Since June 16, the number of first-time customers rose even more dramatically, with 365% more new purchasers than the prior period.  – ( Mac Slavo’s SHTFPlan.com as sourced from Silverdoctors.com)

Not only is retail mint demand spiking up to the extent that it’s depleting the ability of western mints to provide enough supply, but Indian demand for gold was unusually strong in July:

There is growing speculation that around 80 tonnes of gold may have been imported into India in July – though this will not be confirmed until the first official estimates are published mid-month.

If confirmed, the number would be nearly double initial market expectations of 40-50 tonnes. In July 2014, official estimates valued gold imports at $1.8 billion – which at the time equated to around 43 tonnes.  –Fastmarkets.com

Furthermore, massive deliveries continue to flow into the Shanghai Gold Exchange, as delivery volume Monday was “an immense” 85.5 tonnes, which followed Friday’s 45.6 tonnes (sourced from John Brimelows “Gold Jottings” report). As JB ominously states: “Something is happening in China.”

When I first started looking at the precious metals markets in 2001 – and all of the related geopolitical and economic issues connected to gold and silver, aka real money – I was intrigued by GATA’s assertion that eventually the demand for physical gold that was required to be delivered to the buyer’s possession would eventually blow up the paper gold/silver manipulation scheme.

While it’s taken a lot longer than any of us could have possibly predicted as I don’t think any of us foresaw that extreme degree of fraud and corruption that has been allowed to completely engulf the western political and financial systems, I believe that we are on the cusp of Bill Murphy’s “commercial signal failure.” This occurs when the bank manipulators are unable to fulfill paper gold and silver delivery obligations and the price of physical gold and silver completely disconnects from the fraudulent paper prices set on the Comex and the LBMA.

 

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

 

1 Chinese yuan vs USA dollar/yuan remains constant at  6.2096/Shanghai bourse: green and Hang Sang: red

2 Nikkei up 84.13 or 0.41%

3. Europe stocks mostly green  /USA dollar index up  97.89/Euro down to 1.0945

3b Japan 10 year bond yield: falls to 41% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.65

3c Nikkei still just above 20,000

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

3e WTI 43.88 and Brent:  48.89

3f Gold up  /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 up for WTI and up for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund slightly falls to .67 per cent. German bunds in negative yields from 4 years out.

Except Greece which sees its 2 year rate falls to 19.82%/Greek stocks this morning up by 1.28%:  still expect continual bank runs on Greek banks /

3j Greek 10 year bond yield rises to  : 11.89%

3k Gold at $1094.70 /silver $14.94

3l USA vs Russian rouble; (Russian rouble down 1/10 in  roubles/dollar) 64.26,

3m oil into the 43 dollar handle for WTI and 48 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 .9845 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0777 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 to +.67%

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 2.19% early this morning. Thirty year rate below 3% at 2.84% / yield curve flatten/foreshadowing recession.

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

 

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

Chinese Stocks Soar On Terrible Economic Data; US Futures Levitate; Brent Drops To 6 Month Lows

Following last week’s bad news for the economy (terrible ADP private payrolls, confirmed by a miss in the NFP) which also resulted in bad news for the market which suffered its worst week in years, many were focused on how the market would react to the latest battery of terrible economic news out of China which as we observed over the weekend reported abysmal trade data, and the worst plunge in Chinese factory prices in 6 years. We now know: the Shanghai Composite soared by 5%, rising to 3,928 and approaching the key 4000 level because the ongoing economic collapse led Pavlov’s dog to believe that much more easing is coming from the country which as we showed last night has literally thrown the kitchen sink at stabilizing the plunge in stocks.

And while China has adopted most US market manipulation practices, it had yet to levitate stocks on Merger hopes: this was just the catalyst in the overnight ramp. As Reuters reported, trading in major shipping stocks, including China Shipping Development, China Shipping Container Lines and China COSCO Holdings, was suspended on Monday pending announcements, adding to speculation they may be merged. It remains to be seen if any news will emerge or if the market regulators merely halted them just to create the illusion of an imminent merger. For now the “news pending” gimmick worked: the SHCOMP closed at the highs with 300 stocks ending at the 10% limit up.

Just to show how desperate China is to draw in mom and pop yet again, the Shanghai Securities News reported on Friday that “close to 300 China funds that oversee more than 1 trillion yuan ($161 billion) are waiting to enter the stock markets at any time” in the latest attempt by state media to coax investors back into the market after its recent 25-percent rout. Good luck.

Elsewhere in Asia, Asian equities trade largely firmer despite last Friday’s weak close after US NFP missed exp. but was strong enough to keep Sept. viable for Fed rate lift off. Nikkei 225 (+0.1 %) pared losses amid strong earnings from index heavyweight KDDI (+4%), while ASX 200 (+0.3%) was underpinned by strength in financials after big-4 NAB reported a 9% increase in profits. JGB’s rose amid tracking gains in UST’s coupled with the BoJ also conducting its large JGB purchase program

Stocks in Europe (Euro Stoxx: +0.3%) reside in positive territory this morning, however off their best levels after failing to hold onto initial gains, following the gains over in China which rallied for their biggest gain in a month amid speculation the government will accelerate mergers of state-owned enterprises. Also of note, there has been source reports that a third bailout package for Greece could be decided upon this week if an agreement in principal is reached by Tuesday and voted on in the Greek parliament on Thursday. This has seen upside in Greek banks, which trade among the best performers in Europe.

The FTSE-100 index (-0.65%) underperformed, as financials lead the way lower in the wake of reports that UK banks are bracing for a new wave of multibillion payouts linked to PPI, whereas UK materials are also weak after HSBC downgraded global materials to neutral from overweight.

In fixed income markets, Bunds have tracked movements in equities, initially opening lower amid equity strength before paring some of their early losses as equities came off their highs. T-Notes have been dragged lower in line with Bunds during the European morning ahead of the US coming to market with 3s, lOs and 30s for a total offering size of USD 64b1n later in the week.

And while Chinese stocks may have surged on terrible Chinese data, commodities have yet to follow through and earlier today crude oil futures touched multi-month lows after abysmal China trada data hurt sentiment across the commodities markets. Brent was down 19 cents at $48.42 a barrel at 0854 GMT, after touching $48.24 earlier in the session, the lowest in over six months. U.S. crude was down 18 cents at $43.69 after hitting an intraday low of $43.35 in Asian trading. Both benchmarks have been falling for six weeks, hampered by a supply glut.

“The market is more focused on the general Chinese data which is very weak … it seems that economic activity in China continues to slow down,” said Carsten Fritsch, an oil analyst at Commerzbank in Frankfurt.

“That is weighing on oil prices regardless of the fact that oil imports were very strong.”

As a result, the energy complex heads into the US session flat on the day in line with gold prices, which posted its 7th consecutive weekly loss on Friday, with marginal gains seen amid volatility in riskier assets on uncertainty regarding the timing of a Fed rate hike post-NFP. Copper prices are marginally lower following more weak data from China, which showed exports and imports declined larger than expected, while iron ore prices were also lower coinciding with weak rebar prices falling to 2% week lows.

Notable commodity stories from overnight:

  • CFTC said COMEX gold speculators decreased net short positions by 1,041 contracts to 10,293 contracts, COMEX silver speculators decreased net short positions by 2,121 contracts to 8,326 contracts and COMEX copper speculators increased net short positions by 7,801 contracts to 33,547 in week to August 4th. (RTRS)
  • UBS decreases its 1 month Gold forecast to USD 1,050 from USD 1,200, and 3 month forecast decreased to USD 1,125 from USD 1,170. Platinum 1 month forecast decreased from USD 1050 to USD 950. Silver 1 month forecast decreased to USD 14.0 from USD 15.50. (BBG)
  • ANZ forecast that gold will test USD 1,020 in the near future, citing short bets, and decreasing investor holdings. The bank forecasts Iron Ore at USD 50 per ton in the next few months, citing increased supply. (BBG)
  • Barclays have forecast that gold prices will drop to their lowest price this year in Q3. (BBG)
  • China July iron ore imports rose to 86.10mIn tons vs. Prey. 74.96m1n tons in June, steel products imports fell to 1.05mln tons vs. Prey. 1.17mln in June and steel products exports rose to 9.73m1n tons vs, Prey. 8.89m1n tons in June. Elsewhere, China copper imports were unchanged M/M at 350k tonnes. (RTRS)
  • Iron Ore’s recent gains will not be sustained, due to rising supply in H1, according to Morgan Stanley. Co. maintain their Q3 forecast of USD 50. (BBG)
    Citi have increased their forecast for

FX markets have seen strength in USD/JPY amid source reports that Japan’s Sumitomo Life are in talks to buy US insurer Symetra, who are valued at around USD 3.1 bin, as well as being bolstered by the latest Japanese trade balance figures, which printed at a narrower than expected surplus (558.6bIn vs. Exp. 785.9bIn Prey. 1880.9bIn).

Elsewhere, the USD-index heads into the North American crossover flat on the day ahead of expected comments from Fed’s Fischer and Lockhart, while AUD has underperformed today on the back of the lower than expected surplus and PPI in China.

There is no tier 1 macro news out of the US today, however many will be tuning in to listen to Fed’s Fischer interview on BLoomberg TV shortly after 7am Eastern.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Stocks in Europe (Euro Stoxx: +0.3%) reside in positive territory this morning, however off their best levels after failing to hold onto initial gains
  • Bunds have tracked movements in equities, initially opening lower amid equity strength before paring some of their early losses as equities came off their highs
  • Looking ahead, there is no tier 1 data during the US session, however participants will be looking out for comments by Fed’s Fischer and Lockhart
  • Treasury yields higher during overnight trading before today’s release of Fed’s Labor Market Conditions Index; U.S. Treasury to auction $64b of debt this week beginning with tomorrow’s $24b 3Y.
  • China’s leaders are increasingly relying on the central bank to help implement government programs aimed at shoring up growth in an adaptation of the quantitative easing policies executed by counterparts abroad
  • Benchmark U.S. 10-year yields fell 60bps even though China pared its U.S. debt holdings between March 2014 and May of this year by $180b, based on the most recent data available from the Treasury Department
  • A third Greek bailout won’t work and will only prolong the difficulties plaguing the euro area, according to Finnish FM Soini, but his party is ready to discuss another rescue package because allowing Greece to fail would only add to Europe’s costs, he said
  • Warnings of a liquidity crisis in the bond market are a myth created by Wall Street in hopes of repealing regulation, said Krishna Memani, the CIO of OppenheimerFunds
  • Ted Eliopoulos doesn’t fret over the meager 2.4% he earned last year for the $300 billion California Public Employees’ Retirement System even though it was a third of what was needed. Time, he says, is on his side
  • No IG or HY deals priced Friday. BofAML Corporate Master Index OAS widens +1 to new YTD wide 160; YTD low 129. High Yield Master II OAS +12 to 552, new YTD wide 549; YTD low 438
  • Sovereign 10Y bond yields mixed. Asian, European stocks mostly higher, U.S. equity-index futures rise. Crude oil, cooper and gold rise

 

DB’s Jim Reid concludes the overnight recap

 

It was a busy weekend for China too after we got the first of several important data releases this week. The numbers largely disappointed and have seemingly reignited the stimulus debate once again. To recap, yesterday saw the inflation numbers released and was highlighted by a weaker than expected July PPI print (-5.4% yoy vs. -5.0% expected), the lowest reading since October 2009 to mark the 40th straight monthly decline in producer prices. CPI (+1.6% yoy vs. +1.5% expected) did improve from June (+1.4%) however the increase was largely attributed to the already highlighted surge in pork prices and in any case was overshadowed by the PPI number. The data came hot on the heels of soft trade numbers on Saturday where we saw exports fall 8.3% yoy in July (vs. -1.5% expected) in US dollar terms. Imports printed more or less in line (-8.1% yoy vs. -8.0% expected), however the data was enough to see the trade surplus fall to $43bn, a drop of around $3.5bn from June.

It’s a mixed follow up in trading this morning. Equity bourses in China have a had a strong session, supported by the potential for more stimulus and also reports on Bloomberg of industrial M&A activity. The Shanghai Comp (+3.20%), Shenzhen (+2.92%) and CSI 300 (+2.86%) are all higher this morning. Elsewhere, the ASX (+0.62%) and Nikkei (+0.30%) are also off to strong starts while the Hang Seng (-0.30%) and Kospi (-0.36%) are both down. In the FX space, the Yen (-0.10%) is a touch lower after Japan reported a smaller than expected trade surplus (¥103bn vs. ¥120bn expected). The China sensitive AUD is -0.3% meanwhile. Elsewhere 10y Treasuries are 2bps higher in yield in while credit markets are broadly unchanged.

It’s set to be another reasonably heavy data week this week with US retail sales on Thursday one of the highlights. One event worth keeping an eye on today however, particularly in light of his comments last week, will be a session from the Fed’s Lockhart who is due to speak at a Q&A event at the Atlanta Press Club this evening (due 5.25pm BST). Will he pull back on last week’s remarks or reinforce them? It will be interesting to know whether Friday’s US payrolls report changed anyone’s view. The 215k reading print was just shy of expectations of 225k but with a cumulative 14k of upward revisions made to the prior two months. In fact the majority of the associated employment indicators printed broadly in line on Friday. The unemployment rate was unmoved at 5.3% while average hourly earnings came in as expected at +0.2% mom, helping to nudge the annualized rate up to 2.1% from 2.0%. There was a slight improvement in the broader U-6 unemployment rate, falling to 10.4% (down 0.1%) while average weekly hours ticked up 0.1 hours and above expectations to 34.6 hours.

Price action across Fed Funds contracts was fairly mixed following the data, although moves were relatively modest. The Dec15 contract edged up 1bp to 0.340% while the Dec16 (+1.5bps) rose slightly to 1.040%. The Dec17 contract on the other hand dropped 1bp to 1.645%. This was somewhat reflected in a flattening of the Treasury curve on Friday. 2y yields closed up 1.6bps higher in yield at 0.719% having reached an intraday high of 0.745% while 5y (-3.9bps), 10y (-5.9bps) and 30y (-7.2bps) yields fell to 1.572%, 2.163% and 2.819% respectively. The probability of a September move now has ticked up to 54% on the back of the data from 50% at Thursday’s close. Meanwhile, further pressure on Oil prices continues to help suppress yields further out the curve. WTI tumbled another 1.77% on Friday to close at $43.87/bbl (and has fallen another 0.5% this morning) to reach a fresh 5-month low as the latest Baker Hughes data showed that the number of oil rigs operating in the US rose for the third straight week. Brent (-1.84%) also closed lower on Friday at $48.61/bbl, finishing the week down 6.9% for the sixth consecutive weekly decline and the largest one-week decline since early March. Gold had a stronger session on Friday, closing +0.42% higher however Aluminum (-0.22%) and Copper (-0.23%) continue to trade weak. It was a choppy day for the Dollar, with the index initially rising 0.5% only to then pare those gains into the close and finish down 0.28%.

That weakness in Oil once again weighed on US equities on Friday. With energy stocks falling 1.86%, the S&P 500 ended the day -0.29% for its fifth daily decline in the last six sessions. The Dow (-0.27%) and NASDAQ (-0.26%) also ended the week on a down note. Earnings season is slowing down in the US now and updating our latest beat/miss earnings monitor with 444 S&P 500 companies now having reported, earnings beats have ticked down to 71% now, from 74% on Thursday while sales beats have remained unchanged at 49%.

Greece is creeping back onto our screens this morning with the news that we may see an accord struck between Greece and its Creditors this week. According to the FT, Greek officials have been the most positive about the likelihood of a deal, saying that something could be signed as soon as Tuesday and approved through parliament in Athens later this week. This would then allow for Eurogroup finance ministers to meet on Friday to approve the deal in time for European parliamentary approvals next week, potentially resulting in a deal in time for an ECB repayment on 20th August. The article does however suggest that Germany is still patiently holding out for more reforms from Athens and has argued that a two or three week bridging loan could be more appropriate than rushing a deal for now. Having reopened last week, the Greek stock market initially plunged 19% through the first three days of the week, only to bounce back 5% in the last two days of the week.

Wrapping up Thursday’s price action, there wasn’t a whole lot to report in the European session on Friday. Bond yields in the region generally followed the moves in the Treasury market with 10y Bunds closing down 4.7bps and similar maturity yields in the periphery closing 1-4bps lower. Data was largely weak meanwhile. German industrial production for June (-1.4% mom vs. +0.3% expected) was well below consensus, while manufacturing (-0.7% mom vs. +0.2% expected) and industrial (-0.1% mom vs. +0.2% expected) production readings in France were also soft. That helped support a weak day for European equities with the Stoxx 600 (-0.91%), DAX (-0.81%) and CAC (-0.72%) all down. Credit markets also weakened with Crossover closing 6bps wider, although the moves largely came post the US payrolls report with US credit selling off.

On the subject of credit, over the weekend we published our latest HY monthly and with markets winding down into the summer we take a look at some of the recent developing themes in the European HY market. With near-term concerns on Greece having abated the focus for the HY market has swiftly moved to the renewal of commodity price weakness with oil prices falling by more than 20%. We highlight how this has led to an underperformance of USD HY relative to EUR HY even when we look beyond the energy sector. In addition we also highlight that despite the improved performance for EUR HY in July BBs actually saw their first monthly outperformance of single-Bs this year and how this reflects, in our view, the continued need for single-name credit work for HY investors.

For now we maintain our constructive view on EUR HY but remain aware of potential headwinds. Even if Greece is no longer a major issue we still have Chinese growth concerns, the possibility of a negative spillover from the commodity led weakness in USD HY as well as whether the Fed will pull the trigger on rate hikes in September.

Moving onto the week ahead now. It’s a fairly quiet start to the week in the European timezone this morning with just Euro area investor confidence and French business sentiment readings due. Over in the US meanwhile the labour market conditions index for July is sole release this afternoon. Things pick up tomorrow as we start with the August ZEW survey readings for Germany and the Euro area. Italian CPI will also be due before we pass over to the US where we get the NFIB small business optimism survey, nonfarm productivity, unit labour costs and wholesale trade sales and inventories. We start in Asia on Wednesday where we’ll get more important data out of China with retail sales, industrial production and fixed asset investment all due. Over in Japan meanwhile we’ll get PPI, industrial production and capacity utilization. UK employment indicators and Euro area industrial production are the highlights in Europe before we get JOLTS job openings and the Monthly Budget Statement in the US. We’ve got a big day of data due on Thursday starting with the final CPI prints for Germany and France in the morning along with the ECB meeting minutes. US retail sales is the highlight across the pond on Thursday while initial jobless claims and the import price index are also expected. We close out the week on Friday in Europe with Q2 GDP for the Euro area and also for Germany and France. The final July CPI reading for the Euro area will also be closely watched. French employment indicators and UK construction output are also due. It’s a busy end to the week in the US on Friday with PPI, industrial and manufacturing production, capacity utilization and the University of Michigan consumer sentiment reading. As well as the data as already mentioned the Fed’s Lockhart will be due to speak again (today) while earnings seasons draws to close with Cisco and Macy’s the notable highlights.

end
And the real winner in the Greek crisis:  Germany!
(courtesy zero hedge)

And The Biggest Beneficiary Of The Greek Crisis Is…

While it was certainly no secret that Germany, the EMU’s bastion of prudent finances and sound money, was no fan of the fiscally irresponsible eurozone periphery going into 2015, the extent to which Berlin’s relationship with Athens and the Greek people deteriorated over the course of six months of bailout negotiations was truly remarkable.

To let former Greek Finance Minister Yanis Varoufakis tell it, the German finance ministry was determined to push Greece from the eurozone from the time Syriza swept to power in January on an anti-austerity platform, and while it was clear from the beginning that the ideological divide between Varoufakis and German FinMin Wolfgang Schaueble was likely unbridgeable, the relationship between the two eventually transformed Schaeuble into a symbol of repression for the Greek populace.

Tensions between the Greeks and the Germans eventually reached a boiling point when, in a farcical effort to extract war reparations Athens claims it’s still owed from World War II, Greece began showing looped video footage of the Nazi occupation to commuters on public transportation.

Germany would ultimately have the last laugh after Schaeuble and Angela Merkel extracted a humiliating set of concessions from Greek PM Alexis Tsipras and while it’s true that the German taxpayer is on the hook yet again for a Greek bailout, a new report argues that for all the sharp-tongued criticism and Grexit threats, it is none other than Germany that has benefited the most from the ongoing crisis in Greece. Here’s AFP:

Germany, which has taken a tough line on Greece, has profited from the country’s crisis to the tune of 100 billion euros ($109 billion), according to a new study Monday.

 

The sum represents money Germany saved through lower interest payments on funds the government borrowed amid investor “flights to safety”, the study said.

 

“These savings exceed the costs of the crisis — even if Greece were to default on its entire debt,” said the private, non-profit Leibniz Institute of Economic Research in its paper. “Germany has clearly benefited from the Greek crisis.”

 

When investors are faced with turmoil, they typically seek a safe haven for their money, and export champion Germany “disproportionately benefited” from that during the debt crisis, it said.

 

“Every time financial markets faced negative news on Greece in recent years, interest rates on German government bonds fell, and every time there was good news, they rose.”

 

Germany, the eurozone’s effective paymaster, has demanded fiscal discipline and tough economic reforms in Greece in return for consenting to new aid from international creditors.

 

Finance Minister Wolfgang Schaeuble has opposed a Greek debt write-down while pointing to his own government’s balanced budget.

 

The institute, however, argued that the balanced budget was possible in large part only because of Germany’s interest savings amid the Greek debt crisis.

 

The estimated 100 billion euros Germany had saved since 2010 accounted for over three percent of GDP, said the institute based in the eastern city of Halle.

 

Germany’s share of the international rescue packages for Greece, including a new loan being negotiated now, came to around 90 billion euros, said the institute.

 

“Even if Greece doesn’t pay back a single cent, the German public purse has benefited financially from the crisis,” said the institute.

Could this be the ultimate irony in the entire Greek tragicomedy: that after all is said and done, the crisis-wracked perihpery’s pain was indeed Germany’s gain, as Berlin’s borrowing costs plummeted, allowing the country to balance its budget for the first time in four and a half decades while the eurozone’s struggling debtor states were forced to live hand-to-mouth? Have a look at the following chart and decide for yourself:

end
The Austrian School thought on how to solve the Greek crisis”
(courtesy Patrick Baron/via Mises Institute)

Four Economic Myths That Perpetuate The Euro Crisis

Submitted by Patrick Barron via The Mises Institute,

Too much of the commentary about the Greek crisis has focused on whether or not Greece should drop the euro and not enough on the structural problems arising out of decades of socialism. Meanwhile, the Greek government has borrowed more money than the Greek people can possibly repay, and debased money will not make this fact disappear. On the contrary, more easy money will cause even more harm.

The best thing that Europe and Greece can do for itself right now is to confront some of the economic fallacies that have long driven the debate over Greece, the euro, austerity, and debt. Here are four fallacies that are among the most damaging:

1. The Euro Is Too Strong a Currency for Greece

 

This statement usually is accompanied by a reference to Greek productivity being lower than that of the northern tier EU countries. The logic, such as it is, states that the euro is not a suitable currency for countries with vastly different levels of productivity. This is followed by a recommendation that Greece leave the European Monetary Union and reinstate the drachma. The National Bank of Greece then would set a very low exchange rate between the drachma and the euro, making Greek products more competitive.

 

Well, there is a semester’s worth of economic fallacies embedded in this chain of logic. A currency is an indirect medium of exchange. Two countries with different levels of productivity can use the same medium of exchange just as two individuals can. You may pay the kid next door to mow your lawn with dollars that you earned in a highly skilled and highly compensated profession. Yet you both use dollars. There is no reason that the Greeks and the Germans cannot use the same currency. In the age of the gold standard, national currencies were defined by their exchange rates to gold and were redeemable in specie; therefore, in effect, all countries were using the same currency — gold.

 

2. Debasing the Currency Will Help the Greeks Export Their Way to Recovery

 

Correlated to the above fallacy is the notion that debasing the currency will aid the Greek economy by the stimulative effects of an increase in exports. The idea is that the Greeks can give more drachma for the currency of its trading partners, making Greek exports cheaper in terms of the foreign currency. Increased exports will stimulate the entire economy. But currency debasement merely causes a transfer of wealth within the monopolized currency zone.

 

However, the Cantillon Effect tells us that the early receivers of the newly printed money benefit by their ability to purchase resources at existing prices. The losers are those furthest removed from the initial increase in spending, such as pensioners. They will find that their money doesn’t buy as much, due to price increases that are an inevitable consequence of an increase in money spending. Eventually, the exporters find that the cost of their resources has risen, at which point they demand another round of money debasement in order to prop up foreign sales and avoid business losses. They will be forced to pay more for their factors of production and must raise prices in local currency terms. In order to avoid losing sales they need their foreign buyers to receive more local currency so that their goods do not increase in price in foreign currency terms. This policy masks real structural problems. It is not a currency problem.

 

3. Instituting One’s Own Currency Will Enable Government To Avoid Unpopular Spending Cuts

 

In other words, debasing the currency is a way to avoid the dreaded austerity monster. Governments would have the people believe that there are sufficient real resources to redistribute from the wealthy to alleviate all poverty. It is assumed that the wealthy have nefariously confiscated the people’s wealth, and redistributing it along socialist lines will result in plenty for all. The socialist “plenty for all” slogan has been around a long time and has yet to prove its worth in alleviating poverty.

 

4. A Currency Must Be Backed by a Political Power with Taxing Authority

 

Milton Friedman has been quoted as saying years ago, in reference to the formation of the European Monetary System, that a monetary union needed a fiscal union. Italy’s finance minister, Pier Carlo Padoan, was quoted in theFinancial Times of London on July 27, 2015, as saying that the only way to defend the euro was to move “straight towards political union.”

 

Of course, both men refer to fiat money (i.e., money imposed by the state and backed by nothing except the legal tender laws of a monopolized currency zone). Real money — sound money — is a commodity that has been found by the market as the most useful intermediate means of exchange. Sound money arises out of the market process and is part and parcel of the market itself. Sound money is discovered by the market and is used willingly by cooperating parties. No one is forced to use sound money. Parties using sound money enjoy the protection of the rule of law. Counterfeiters are prosecuted. Bankers who fail to deliver specie upon presentment of money substitutes, such as money certificates, and bank drafts are prosecuted, too. The best monetary systems are private, because they must operate under the rule of law. The worst monetary systems are run by governments, because governments exempt themselves from the rule of law.

The Greeks (and Europe) Need Monetary Freedom

Dropping the euro will not solve Greece’s problems, nor would such a move remove the many structural problems underlying the European monetary union. An adherence to these economic fallacies has encouraged a belief that a few adjustments can fix the Greek-euro situation.

But, it is telling that in poll after poll, the Greeks themselves show that, although they do not desire austerity, they also do not wish to abandon the euro. They know that such a move will allow the government to destroy what little wealth remains in the country. The Greeks see the euro, with all its flaws, to be superior to a reinstated drachma. In fact, the best alternative for Greece right now is to allow free competition in currencies which would allow the Greek people to trade in whatever currencies they deem most desirable. At the same time, Greece should welcome and protect, via the rule of law, the establishment of private monies.

But the fundamental problem of the euro remains, and we must remember that the Greek government itself responded rationally to the structure of the European Union and the European Monetary Union. It borrowed heavily at low rates of interest from willing lenders. It accepted all the newly printed euros so eagerly offered by these flawed organizations’ various funds. It is not the only country to do so, merely the first in which the adverse consequences of the EU’s flawed structure became apparent. There will be others and the adverse consequences will be greater.

end

It just does not end…the Hedge fund that hired the master mind manipulator of Libor from Deutsche bank is now implicated in another Libor suit:

(courtesy zerohedge)

Hedge Fund That Hired “Master Manipulator” From Deutsche Bank Implicated In LIBOR Suit

In many ways, Christian Bittar has come to personify the global effort to manipulate the world’s most important benchmark rates. Regular readers will remember Christian as the Deutsche Bank prop trader we first introduced in 2012 and who we later noted was dismissedfrom the German lender only to be hired at BlueCrest Capital Management. Here’s our six-point summary from 2013:

  1. Deutsche tells an internal prop trader to “do everything legally and by the book or else.”
  2. Bittar colludes with virtually everyone else under the sun to generate billions in profits;
  3. Bittar makes tens if not hundreds of millions of bonuses for himself;
  4. Finally, DB no longer can hide the deception and claws back a portion of Bittar’s bonuses, while washing its hands of the full affair;
  5. He went to work for BlueCrest Capital Management LLP, Europe’s third- biggest hedge fund with $30 billion under management.

But that wouldn’t be the end of it.

Earlier this year, after Deutsche Bank agreed to pay $2.5 billion to settle rate rigging charges, we got a look at exactly what Bittar said on the way to fixing the fixes (so to speak). You can view some of the highlights here.

Finally, when WSJ released the full text of a letter sent to Deutsche Bank by German financial watchdog BaFin, we got an in depth look at the relationship between Bittar and former CEO Anshu Jain. Unsurprisingly, Bittar’s lucrative trading activities at the bank made him a star in the eyes of upper management.

Now, none other than Bittar’s post-Deutsche Bank employer BlueCrest is being sued along with the usual suspect banks for conspiring to rig the Swiss franc LIBOR rate. The allegations appear to stem from the documents which were made available when Deutsche Bank settled with US regulators earlier this year. BlueCrest is the only hedge fund named.

From the complaint:

On April 23, 2015, the NYSDFS revealed that BlueCrest conspired with Defendant Deutsche Bank to manipulate Swiss franc LIBOR for its financial benefit, requesting that Deutsche Bank make a false 1 month Swiss franc LIBOR submission on February 10, 2005. Upon information and belief, that request was sent via electronic communication to a Deutsche Bank Swiss franc LIBOR-based derivatives trader and/or Swiss franc LIBOR submitter located in New York.

 

Defendant BlueCrest has deep connections to the Contributor Bank Defendants, including several individual traders directly involved in the manipulation of LIBOR. In addition to being funded in part by Defendant JPMorgan, BlueCrest hired Deutsche Bank master manipulator Christian Bittar after he was publicly fired by Deutsche Bank for his involvement in various rate-rigging schemes.

So there you have it. Precisely what we said more than three years ago has been proven to be unequivocally (and usurprisingly) true.

To wit (ca. 7/18/2012):

The bankers who were allegedly involved in Libor manipulation in some capacity in their previous lives working for banks, decided to quietly depart under mutually acceptable conditions and find new lives, still trading Libor and IR derivatives, in some of the best known, and even less regulated, hedge funds and private banks.

 

Our question then is the following: while much has been said about Lieborgate as being purely associated with the 16 BBA USD fixing member banks, just who else made money, and [are others in the financial community] about to be exposed for having profits far more from Lieborgate than any of the BBA member banks?

 

Because if the stigmatized traders were accepted with open arms at various hedge funds, one would think there may, just may have been, some quid pro quo in the past (for those who have worked in the financial industry this needs no further explanation).

Bluecrest Lawsuit

 

end

 

As I have stated recently the next “Argentina” in the defaulting game will be Brazil:

(courtesy zero hedge)

Brazil’s President Dilma Rousseff Approval Rating Crashes To 8% – Worst Since Military Dictatorship

With the economy imploding, currency collapsing, andcredit risk soaring, it is perhaps no surprise that just under a year since she was re-elected, Brazil’s President Dilma Rousseff is now Brazil’s most unpopular democratically elected president since a military dictatorship ended in 1985, with an approval rating of just 8%. In a recent poll, 71% said they disapprove of the way Rousseff is doing her job… and two-thirds would like to see her impeached.

Via The Digital Journal,

Dilma Rousseff is now Brazil’s most unpopular democratically elected president since a military dictatorship ended in 1985, says a poll out Thursday that put her approval rating at eight percent.

 

Seventy-one percent of those questioned in the Datafolha survey said they disapprove of the way Rousseff is doing her job, up six points since June. Her approval rating is down from 10 percent.

 

And two-thirds would like to see her impeached.

 

Rousseff, the successor of wildly popular former president Luiz Inacio Lula da Silva, faces widespread anger over corruption, a stagnant economy and growing unemployment.

 

Her numbers are worse than those of Fernando Collor de Mello, who resigned in 1992 over corruption allegations. Right before he stepped down he had an approval rating of nine percent and disapproval of 68 percent.

 

“Dilma has thus become the president with the worst approval rating among all those elected directly since the return of democracy,” said the web site of the newspaper Folha de Sao Paulo, which belongs to the same group as Datafolha.

 

Datafolha began conducting national polls during the rule of Collor. In 1990 he became the first democratically elected president since the end of the military regime.

 

His predecessor, Jose Sarney, took power in 1985 as vice president under Tancredo Neves. Neves had been elected president by congress after 21 years of military rule, but died before he could assume office.

 

Rousseff began her second term in January after winning re-election by a thin margin, and things are already looking grim.

As we previously noted, the WSJ adds, Rousseff is facing a combination of negative factors, of which the depressionary economy is just one: “The county’s economy is expected to contract by around 1.8% this year, according to a central bank survey of private sector bank economists. Annual inflation stands at 9.25%, well above the central bank’s tolerance band of 2.5% to 6.5%. And the poor economic conditions are raising fears among Brazilians that they could lose their jobs.”

Then there is corruption:

Meanwhile, a continuing investigation surrounding state-run oil company Petróleo Brasileiro SA, or Petrobras, is also weighing on Ms. Rousseff’s approval rating, though she hasn’t been accused of any wrongdoing and has denied involvement in the scandal. Petrobras has said it is cooperating with the investigation.

 

Earlier this week, federal police arrested José Dirceu, a former minister of ex-President Luiz Inácio Lula da Silva, on allegations that he received bribes from former Petrobras executives. A lawyer representing Mr. Dirceu said he denies any wrongdoing.

 

Mr. da Silva, who handpicked Ms. Rousseff as his party’s candidate to succeed him, hasn’t been implicated in the Petrobras scandal.

Worse, like in Greece, Brazil’s ruling coalition is now fracturing, when yesterday two parties broke from President Dilma Rousseff’s ruling coalition, further eroding support for her measures to shore up the country’s fiscal accounts.

This happened after the lower house approved in a first round vote a constitutional amendment by 445 against 16 votes granting salary increases to police chiefs, prosecutors and government attorneys. The bill still needs to pass a second round vote before going to the Senate.

 

Earlier, leaders of the Brazilian Labor Party and the Democratic Labor Party, or PTB and PDT, said they would act independently and no longer participate in meetings of the ruling coalition. The parties together have 44 out of 513 seats in the Chamber.

But Brazil’s biggest concern, the one from which all of its other problems stem, is China. Unless the country that was the driver of Brazil’s commodity export golden age returns to its place as Brazil’s most important trading partner, no matter what fiscal or monetary policies Brazil implements, the domestic politics, already ugly, are set to get worse.

And as everyone knows by now, China has its own spate of problems to deal with, with Brazil’s commodity export troubles far on the back burner.

Which is why expect more credit market participants to notice the depressionary developments in brazil, and as the country’s CDS continue to blow out, many will start asking themselves: is Brazil the next Argentina?

 

 end

The real story behind what happened to oil during the year and how it fell dramatically from over 100 dollars per barrel to today’s 48 dollars.

(courtesy William Engdahl)

US’s Saudi Oil Deal from Win-Win to Mega-Loose

453534545Who would’ve thought it would come to this? Certainly not the Obama Administration, and their brilliant geo-political think-tank neo-conservative strategists. John Kerry’s brilliant “win-win” proposal of last September during his September 11 Jeddah meeting with ailing Saudi King Abdullah was simple: Do a rerun of the highly successful State Department-Saudi deal in 1986 when Washington persuaded the Saudis to flood the world market at a time of over-supply in order to collapse oil prices worldwide, a kind of “oil shock in reverse.” In 1986 was successful in helping to break the back of a faltering Soviet Union highly dependent on dollar oil export revenues for maintaining its grip on power.

So, though it was not made public, Kerry and Abdullah agreed on September 11, 2014 that the Saudis would use their oil muscle to bring Putin’s Russia to their knees today.

It seemed brilliant at the time no doubt.

On the following day, 12 September 2014, the US Treasury’s aptly-named Office of Terrorism and Financial Intelligence, headed by Treasury Under-Secretary David S. Cohen, announced new sanctions against Russia’s energy giants Gazprom, Gazprom Neft, Lukoil, Surgutneftgas and Rosneft. It forbid US oil companies to participate with the Russian companies in joint ventures for oil or gas offshore or in the Arctic.

Then, just as the ruble was rapidly falling and Russian major corporations were scrambling for dollars for their year-end settlements, a collapse of world oil prices would end Putin’s reign. That was clearly the thinking of the hollowed-out souls who pass for statesmen in Washington today. Victoria Nuland was jubilant, praising the precision new financial warfare weapon at David Cohen’s Treasury financial terrorism unit.

In July, 2014 West Texas Intermediate, the benchmark price for US domestic oil pricing, traded at $101 a barrel. The shale oil bonanza was booming, making the US into a major oil player for the first time since the 1970’s.

When WTI hit $46 at the beginning of January this year, suddenly things looked different. Washington realized they had shot themselves in the foot.

They realized that the over-indebted US shale oil industry was about to collapse under the falling oil price. Behind the scenes Washington and Wall Street colluded to artificially stabilize what then was an impending chain-reaction bankruptcy collapse in the US shale oil industry. As a result oil prices began a slow rise, hitting $53 in February. The Wall Street and Washington propaganda mills began talking about the end of falling oil prices. By May prices had crept up to $62 and almost everyone was convinced oil recovery was in process. How wrong they were.

Saudis not happy

Since that September 11 Kerry-Abdullah meeting (curious date to pick, given the climate of suspicion that the Bush family is covering up involvement of the Saudis in or around the events of September 11, 2001), the Saudis have a new ageing King, Absolute Monarch and Custodian of the Two Holy Mosques, King Salman, replacing the since deceased old ageing King, Abdullah. However, the Oil Minister remains unchanged—79-year-old Ali al-Naimi. It was al-Naimi who reportedly saw the golden opportunity in the Kerry proposal to use the chance to at the same time kill off the growing market challenge from the rising output of the unconventional USA shale oil industry. Al-Naimi has said repeatedly that he is determined to eliminate the US shale oil “disturbance” to Saudi domination of world oil markets.

Not only are the Saudis unhappy with the US shale oil intrusion on their oily Kingdom. They are more than upset with the recent deal the Obama Administration made with Iran that will likely lead in several months to lifting Iran economic sanctions. In fact the Saudis are beside themselves with rage against Washington, so much so that they have openly admitted an alliance with arch foe, Israel, to combat what they see as the Iran growing dominance in the region—in Syria, in Lebanon, in Iraq.

This has all added up to an iron Saudi determination, aided by close Gulf Arab allies, to further crash oil prices until the expected wave of shale oil company bankruptcies—that was halted in January by Washington and Wall Street manipulations—finishes off the US shale oil competition. That day may come soon, but with unintended consequences for the entire global financial system at a time such consequences can ill be afforded.

According to a recent report by Wall Street bank, Morgan Stanley, a major player in crude oil markets, OPEC oil producers have been aggressively increasing oil supply on the already glutted world market with no hint of a letup. In its report Morgan Stanley noted with visible alarm, “OPEC has added 1.5 million barrels/day to global supply in the last four months alone…the oil market is currently 800,000 barrels/day oversupplied. This suggests that the current oversupply in the oil market is fully due to OPEC’s production increase since February alone.”

The Wall Street bank report adds the disconcerting note, “We anticipated that OPEC would not cut, but we didn’t foresee such a sharp increase.” In short, Washington has completely lost its strategic leverage over Saudi Arabia, a Kingdom that had been considered a Washington vassal ever since FDR’s deal to bring US oil majors in on an exclusive basis in 1945.

That breakdown in US-Saudi communication adds a new dimension to the recent June 18 high-level visit to St. Petersburg by Muhammad bin Salman, the Saudi Deputy Crown Prince and Defense Minister and son of King Salman, to meet President Vladimir Putin. The meeting was carefully prepared by both sides as the two discussed up to $10 billion of trade deals including Russian construction of peaceful nuclear power reactors in the Kingdom and supplying of advanced Russian military equipment and Saudi investment in Russia in agriculture, medicine, logistics, retail and real estate. Saudi Arabia today is the world’s largest oil producer and Russia a close second. A Saudi-Russian alliance on whatever level was hardly in the strategy book of the Washington State Department planners.…Oh shit!

Now that OPEC oil glut the Saudis have created has cracked the shaky US effort to push oil prices back up. The price fall is being further fueled by fears that the Iran deal will add even more to the glut, and that the world’s second largest oil importer, China, may cut back imports or at least not increase them as their economy slows down. The oil market time bomb detonated in the last week of June. The US price of WTI oil went from $60 a barrel then, a level at which at least many shale oil producers can stay afloat a bit longer, to $49 on July 29, a drop of more than 18% in four weeks, tendency down.

Morgan Stanley sounded loud alarm bells, stating that if the trend of recent weeks continues, “this downturn would be more severe than that in 1986. As there was no sharp downturn in the 15 years before that, the current downturn could be the worst of the last 45+ years. If this were to be the case, there would be nothing in our experience that would be a guide to the next phases of this cycle…In fact, there may be nothing in analyzable history.”

‘October Surprise’

October is the next key point for bank decisions to roll-over US shale company loans or to keep extending credit on the (until now) hope that prices will slowly recover. If as strongly hinted, the Federal Reserve hikes US interest rates in September for the first time in the eight years since the global financial crisis erupted in the US real estate market in 2007, the highly-indebted US shale oil producers face disaster of a new scale. Until the past few weeks the volume of US shale oil production has remained at the maximum as shale producers desperately try to maximize cash flow, ironically, laying the seeds of the oil glut globally that will be their demise.

The reason US shale oil companies have been able to continue in business since last November and not declare bankruptcy is the ongoing Federal Reserve zero interest rate policy that leads banks and other investors to look for higher interest rates in the so-called “High Yield” bond market.

Back in the 1980’s when they were first created by Michael Millken and his fraudsters at Drexel Burnham Lambert, Wall Street appropriately called them “junk bonds” because when times got bad, like now for Shale companies, they turned into junk. A recent UBS bank report states, “the overall High-Yield market has doubled in size; sectors that witnessed more buoyant issuance in recent years, like energy and metals mining, have seen debt outstanding triple or quadruple.”

Assuming that the most recent downturn in WTI oil prices continues week after week into October, there well could be a panic run to sell billions of dollars of those High-Yield, high-risk junk bonds. As one investment analyst notes, “when the retail crowd finally does head for the exits en masse, fund managers will be forced to come face to face with illiquid secondary corporate credit markets where a lack of market depth…has the potential to spark a fire sale.”

The problem is that this time, unlike in 2008, the Federal Reserve has no room to act. Interest rates are already near zero and the Fed has bought trillions of dollars of bank bad debt to prevent a chain-reaction US bank panic.

One option that is not being discussed at all in Washington would be for Congress to repeal the disastrous 1913 Federal Reserve Act that gave control of our nation’s money to a gang of private bankers, and to create a public National Bank, owned completely by the United States Government, that could issue credit and sell Federal debt without the intermediaries of corrupt Wall Street bankers as the Constitution intended. At the same time they could completely nationalize the six or seven “Too Big To Fail” banks behind the entire financial mess that is destroying the foundations of the United States and by extension of the role of the dollar as world reserve currency, of most of the world.

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University
First appeared: http://journal-neo.org/2015/08/08/us-s-saudi-oil-deal-from-win-win-to-mega-loose/

 

end

 

Just look at what Norway will be forced to do because of the low oil prices

(courtesy zero hedge)

 

The World’s Largest Sovereign Wealth Fund Is About To Become A Seller

When last we checked in with Norway, the country’s sovereign wealth fund – the largest in the world- was busy going full tin foil hat fringe blog, blasting monetary policy’s iron grip on asset prices and bemoaning the presence of parasitic HFTs and increasingly fragmented markets which conspire to cost institutional investors and those they represent billions.

That was in April. Back in March, we highlighted the tough predicament the country faces in terms of combatting a housing bubble while simultaneously coping with plunging crude prices. We summed up the situation as follows: the country is truly backed into a corner, ease too much and the housing bubble becomes even more unsustainable, don’t ease enough and the oil-dependent economy gets it. Unsurprisingly, things haven’t changed much since then. Here’s FT on the housing bubble:

In Norway, apartment prices have rocketed more than sevenfold since 1992. But despite worries about how the falling oil price is hurting the Norwegian economy the cost of housing has continued to gallop ahead, with a record number of dwellings sold in June.

 

Anecdotal evidence backs this up. The former home of the Soviet spy Rudolf Abel in an Oslo suburb sold for NKr6.1m ($750,000) this year, well above the NKr4.2m asking price.

 

“This market is so hot now. Low interest rates just allow people to bid more and more — and that is what they are doing,” one Oslo estate agent said.

 

Norway has cut rates twice since December to a record low of 1 per cent. “There is no doubt that house prices and debt levels are the main risks to this strategy,” said a Scandinavian central bank official.

 


 

Authorities are trying to take stabilisation measures but analysts query whether they are sufficient. [Meanwhile], Norway’s government is aiming to toughen up lending rules.

And just last week, the sovereign wealth fund had the following to say about market structure and the “speed race to zero”:

The evolving role of exchanges should be evaluated in the context of increased market structure complexity. This complexity is due partly to a technological arms race amongst market participants and trading venues, partly to unintended consequences arising from regulations. The competitive and highly fragmented landscape that has emerged has challenged exchanges to maintain their central role in the price discovery process, and has forced asset managers like ourselves to adapt in how we source liquidity in these markets. 

 

There is a risk of speed race to zero: investments both by exchanges – to cope with ever-increasing message flow, and by broker-dealers and market-makers/HFTs – to keep up in the speed race, have the potential to impose negative externalities on all market participants7. These externalities have the result of transferring an increasing portion of the profits from intermediation to entities outside the financial sector. For example, we are following the current speed race amongst microwave data-link providers with interest and believe that they are able to earn increasingly super-normal profits, to the detriment of all financial market participants. We support efforts to remove complexity that leads to this form of overinvestment. 

Meanwhile, as Bloomberg reports, persistently low crude prices have pushed up unemployment to an 11-year high and although Prime Minister Erna Solberg told reporters in Oslo on Monday that “the Norwegian economy has a very sound foundation,” it appears as though the country may end up taking the “historic step” of tapping into its sovereign wealth fund. Here’s Bloomberg:

Here are a few ways it’s harder for Norway to deal with plunging oil prices than a global financial meltdown. 

 

1. Norway is heavily reliant on oil

 

As a key driver for growth in Norway, it was largely its oil wealth that kept the nation afloat during the financial crisis. But with its key sector in trouble, there are few other industries for the nation to look to for growth.

 

 

2. The petroleum boom was about to end, anyway

 

Oil is losing value just as investments in the petroleum industry are heading to the lowest level since 2000. To cope with the shift, companies such as Statoil ASA started restraining spending more than six months before Brent crude started to tumble.

 

3. Norway might have to dip into its savings

 

If the government has to withdraw money from its $875 billion sovereign wealth fund, it will be a historical step.It’s either that, or heavily rein in fiscal spending at a time when the country needs it most. The state’s spending could start to outstrip income from oil, which it pours into its wealth fund for future generations.

 

So as with Saudi Arabia and every other exporter who has been forced to drawn down their FX reserves amid crude’s painful plunge, Norway may look to tap its mammoth wealth fund to help make ends meet. As noted above, it’s either that, or risk fiscal retrenchment in the face of a flagging economy – as we’ve seen with Greece, that is typically a bad idea.

Interestingly, the fund holds around a half trillion in equities. We wonder who will take the hit if the country does indeed decide to start liquidating.

 

end

Your early Monday morning currency, and interest rate moves

Euro/USA 1.0945 down .0018

USA/JAPAN YEN 124.68 up .589

GBP/USA 1.5494 up .0043

USA/CAN 1.3139 up .0025

Early this Monday morning in Europe, the Euro fell by 18 basis points, trading now just above the 1.09 level at 1.0945; 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 49 basis points and trading just above the 124 level to 124.65 yen to the dollar.

The pound was up this morning by 43 basis points as it now trades just below the 1.55 level at 1.5494, 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 continues to occupy the toilet as it fell by 25 basis points at 1.3139 to the dollar. (Harper called an election for Oct 19)

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 Monday morning: up by 84.13 or 0.41%

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

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

Gold very early morning trading: $1095.70

silver:$14.94

Early Monday morning USA 10 year bond yield: 2.19% !!! down 4 in basis points from Friday night and it is trading below resistance at 2.27-2.32%

USA dollar index early Monday morning: 97.89 up 30 cents from Friday’s close. (Resistance will be at a DXY of 100)

 

This ends the early morning numbers, Monday morning

And now for your closing numbers for Monday night:

Closing Portuguese 10 year bond yield: 2.41% down 4 in basis points from Friday

Closing Japanese 10 year bond yield: .41% !! down 1 in basis points from Friday

Your closing Spanish 10 year government bond, Monday, down 2 in basis points

Spanish 10 year bond yield: 1.97% !!!!!!

Your Monday closing Italian 10 year bond yield: 1.83% par in basis points from Friday:

trading 14 basis point lower than Spain.

IMPORTANT CURRENCY CLOSES FOR MONDAY

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

Euro/USA: 1.1014 up .0053 (Euro up 53 basis points)

USA/Japan: 124.61 up .447 (Yen down 45 basis points)

Great Britain/USA: 1.5590 down .0139 (Pound up 139 basis points

USA/Canada: 1.3010 down .0103 (Canadian dollar up 103 basis points)

This afternoon, the Euro rose by 53 basis points to trade at 1.1014. The Yen fell to 124.61 for a loss of 45 basis points. The pound rose 139 basis points, trading at 1.5590. The Canadian dollar finally escaped the dungeon rising by 103 basis points to 1.3010.

Your closing 10 yr USA bond yield: 2.23% up 6 in basis point from Friday// ( just below the resistance level of 2.27-2.32%)/

Your closing USA dollar index:

97.18 down 42 cents on the day

.

European and Dow Jones stock index closes:

England FTSE up 17.73 points or 0.26%

Paris CAC up 40.66 points or 0.79%

German Dax up 113.95 points or 0.99%

Spain’s Ibex up 133.50 points or 1.19%

Italian FTSE-MIB up 261.44 or 1.10%

 

The Dow up 24179. or 1.39%

Nasdaq; up 55.27 or 1.10%

 

OIL: WTI 44.88 !!!!!!!

Brent:50.44!!!

 

Closing USA/Russian rouble cross: 62.79 up 1 rouble per dollar on the day

 

And now for your more important USA stories.

Your closing numbers from New York

 

Stocks Volumelessly Surge On Biggest Short Squeeze Of The Year

Today was very reminiscent of last Wednesday’s NO REASON meltup… and that did not work out so well… So this seemed appropriate

 

Today was the biggest short squeeze of 2015…

 

No volume – you hear that!!

 

Stocks did what stocks do – because as Bob Pisani said “a rally was overdue” – S&P 500 pushed back above its 50- and 100-DMA having bounced off the 200DMA on Friday…Nasdaq surges off 50DMA…

 

The S&P 500 retraced all of last week’s losses today…

 

Because… AAPL…? Best day since January

 

Small Caps – Russell 2000 – made it back above its 200DMA at 1221…but then fell back…

 

Today’s surge in The Dow managed to stave off the death cross (note: a close at or below 16950 would have triggered it) and avoided the 8th day in a row of losses which would have stumped Pisani…

 

VIX was managed down to close to a 11 handle once again…

 

Credit markets were not playing along fully…

 

With energy credit risk surging well above 1000bps…but energy stocks don’t care today.!!

 

As the energy sector outperformed…

 

Treasury yields bled higher from the early morning… biggest yield spike in a month… very notable steepening today…

 

The dollar was monkey-hammered as Lockhart forgot to say “September” – biggest drop in 2 weeks… notice swissy weakness early which sponsored the equity rally in the US for a while…

 

And Goldman notes we posted a bearish key reversal on Friday…

 

Commodities surged with Copper and Crude jumping and gold and silver surging on hopes of China QE… or PBOC buying rumors… or algos gone manic…

 

Crude’s chaos today…

 

Don’t get too excited in Copper as Goldman warns this is abunce in a downtrend…

 

Silver had its best day in 3 months… Gold’s best day in 2 months…

 

Charts: Bloomberg

end

Today the dollar was dumped due to Lockhart failing to mention September in his speech today:

 

 

(courtesy zero hedge)

Dollar Dumped As Fed’s Lockhart Fails To Mention Word “September”

A scan through Fed’s Lockhart’s speech and it is quite apparent that he said absolutely nothing new whatsover. But, seemingly because he failed to mention the word “September,” frantic FX algos have sold Dollars and bought everything else as hype hope shifts to December… Just a reminder, this is the same Fed that says a 25bps rate hike is irrelevant and priced in…

 

end
When this happens you can be assured that a recession is upon us;
(courtesy zero hedge)

This Wasn’t Supposed To Happen: Household Spending Expectations Crash

One of the biggest drivers of the so-called recovery (in addition to the Fed’s $4.5 trillion balance sheet levitating te S&P500 and the offshore bank accounts of 1% of the US population) has been the US consumer: that tireless spending horse who through thick, thin, recession and depression is expected to take his entire paycheck, and then some tacking on a few extra dollars of debt, and spend it on worthless trinkets.

Sure enough, for the past 8 years, said consumer has done just that and with the help of the endless hopium and Kool-Aid dispensed by the administration (who can forget Tim Geithner’s August 2010 op-ed “Welcome to the Recovery“), and by the political and financial propaganda media, spent, spent and then spent some more hoping that “this time it will be different.”

This all came to a screeching halt earlier today when courtesy of the latest New York Fed Survey of Consumer Expectations, we learned that the US consumer has finally tapped out.  Households reported that they expected to increase their spending by just 3.5% in the next year, a major drop from the 4.3% the month before. This was the lowest reading in series history.

Worse, when adjusting for household inflation expectations, which have been relatively flat if modestly declining around 3%, real spending intentions, when adjusted for inflation, just crashed to a barely positive 0.5%, down over 60% from the prior month. This too was the lowest print in series history.

 

Think America’s poor have finally revolted, and refuse to spend any more? Think again: the biggest culprit in the collapse in spending intentions was the middle class (those making between $50 and $100K) but mostly the wealthy, those with incomes over $100K. It was the latter whose spending expectations dropped to, you guessed it, the lowest in series history.

Needless to say, this was not supposed to happen.

Worse, in an economy where 70% of the GDP is in the hands of consumer spending, a collapse in spending intentions to multi-year low levels means just one thing: recession.

The only silver lining is that since the source of this data is the Fed itself, then Yellen will surely be aware of the dramatic shift taking place within the biggest drive of US economic growth. Which is why for all those wondering just what caused today’s market surge which was driven not by China’s collapsing economy, but by the realization that the Fed will not only not hike in September, but probably won’t hike in December, or ever, just look at the first chart above.

Source: NY Fed

 

 

end

 

 

Dr Craig Roberts on the state of the USA economy:

(courtesy Craig Roberts)

The US Economy Continues Its Collapse — Paul Craig Roberts

The US Economy Continues Its Collapse

Paul Craig Roberts

Do you remember when real reporters existed? Those were the days before the Clinton regime concentrated the media into a few hands and turned the media into a Ministry of Propaganda, a tool of Big Brother. The false reality in which Americans live extends into economic life. Last Friday’s employment report was a continuation of a long string of bad news spun into good news. The media repeats two numbers as if they mean something—the monthly payroll jobs gains and the unemployment rate—and ignores the numbers that show the continuing multi-year decline in employment opportunities while the economy is allegedly recovering.

The so-called recovery is based on the U.3 measure of the unemployment rate. This measure does not include any unemployed person who has become discouraged from the inability to find a job and has not looked for a job in four weeks. The U.3 measure of unemployment only includes the still hopeful who think they will find a job.

The government has a second official measure of unemployment, U.6. This measure, seldom reported, includes among the unemployed those who have been discouraged for less than one year. This official measure is double the 5.3% U.3 measure. What does it mean that the unemployment rate is over 10% after six years of alleged economic recovery?

In 1994 the Clinton regime stopped counting long-term discouraged workers as unemployed. Clinton wanted his economy to look better than Reagan’s, so he ceased counting the long-term discouraged workers that were part of Reagan’s unemployment rate. John Williams (shadowstats.com) continues to measure the long-term discouraged with the official methodology of that time, and when these unemployed are included, the US rate of unemployment as of July 2015 is 23%, several times higher than during the recession with which Fed chairman Paul Volcker greeted the Reagan presidency.

An unemployment rate of 23% gives economic recovery a new meaning. It has been eighty-five years since the Great Depression, and the US economy is in economic recovery with an unemployment rate close to that of the Great Depression.

The labor force participation rate has declined over the “recovery” that allegedly began in June 2009 and continues today. This is highly unusual. Normally, as an economy recovers jobs rebound, and people flock into the labor force. Based on what he was told by his economic advisors, President Obama attributed the decline in the participation rate to baby boomers taking retirement. In actual fact, over the so-called recovery, job growth has been primarily among those 55 years of age and older. For example, all of the July payroll jobs gains were accounted for by those 55 and older. Those Americans of prime working age (25 to 54 years old) lost 131,000 jobs in July.

Over the previous year (July 2014 — July 2015), those in the age group 55 and older gained 1,554,000 jobs. Youth, 16-18 and 20-24, lost 887,000 and 489,000 jobs.

Today there are 4,000,000 fewer jobs for Americans aged 25 to 54 than in December 2007. From 2009 to 2013, Americans in this age group were down 6,000,000 jobs. Those years of alleged economic recovery apparently bypassed Americans of prime working age.

As of July 2015, the US has 27,265,000 people with part-time jobs, of whom 6,300,000 or 23% are working part-time because they cannot find full time jobs. There are 7,124,000 Americans who hold multiple part-time jobs in order to make ends meet, an increase of 337,000 from a year ago.

The young cannot form households on the basis of part-time jobs, but retirees take these jobs in order to provide the missing income on their savings from the Federal Reserve’s zero interest rate policy, which is keyed toward supporting the balance sheets of a handful of giant banks, whose executives control the US Treasury and Federal Reserve. With so many manufacturing and tradable professional skill jobs, such as software engineering, offshored to China and India, professional careers are disappearing in the US.

The most lucrative jobs in America involve running Wall Street scams, lobbying for private interest groups, for which former members of the House, Senate, and executive branch are preferred, and producing schemes for the enrichment of think-tank donors, which, masquerading as public policy, can become law.

The claimed payroll jobs for July are in the usual categories familiar to us month after month year after year. They are domestic service jobs—waitresses and bartenders, retail clerks, transportation, warehousing, finance and insurance, health care and social assistance. Nothing to export in order to pay for massive imports. With scant growth in real median family incomes, as savings are drawn down and credit used up, even the sales part of the economy will falter.

Clearly, this is not an economy that has a future.

But you would never know that from listening to the financial media or reading the New York Times business section or the Wall Street Journal.

When I was a Wall Street Journal editor, the deplorable condition of the US economy would have been front page news.

 

end

 

See you tomorrow night

harvey

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