Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1153.10 up $24.90 (comex closing time)
Silver $15.52 up 34 cents.
In the access market 5:15 pm
In the access market yesterday, gold broke above the huge resistance at $1130.00. As physical gold continues to travel eastbound, the backwardation of gold in both the LMBA and the comex(indicating scarcity) set in motion today for the gold price to break well above the 1130 dollar level. You will recall that $1130 was the price that the bankers raided in November for 50.00 dollar loss. It was a daunting wall to climb but finally gold pierced that level much to the chagrin of our bankers. We now head for the 1200 dollar level!
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a poor delivery day, registering 0 notice for 100 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 227.43 tonnes for a loss of 75 tonnes over that period.
In silver, the open interest tumbled by 3895 contracts despite the fact that silver was up in price by 31 cents yesterday.Something really spooked our shorts as they ran to the hills to cover. The total silver OI now rests at 169,650 contracts In ounces, the OI is still represented by .848 billion oz or 121% of annual global silver production (ex Russia ex China).
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rests tonight at 437,618. We had 0 notice filed for nil oz today.
We had a huge addition of 3.57 tonnes at the GLD today / thus the inventory rests tonight at 675.44 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 tune of / Inventory rests at 324.968 million oz.
We have a few important stories to bring to your attention today…
1. Today, we had the open interest in silver fall by 3895 contracts down to 169,650 despite the fact that silver was up by 31 cents in price with respect to yesterday’s trading. The OI for gold rose by 4,890 contracts to 437,618 contracts as gold was up by $11.00 yesterday. We still have 16.643 tonnes of gold standing with only 14.78 tonnes of registered gold in the dealer vaults ready to satisfy that which stands.
2.Gold trading overnight, Goldcore
3. One story on China where last night the country had considerable rain and now toxic cyanide seems to be surfacing
4, Greece calls for an election
5. The Turkish lira plunges to all time lows as this country is in total turmoil
6 Trading of equities/ New York
7. One oil related stories, including a very important showing the fragility of 5 oil producing nations
(Nick Cunningham/Oil Price.com)
8.Today, 3 countries in peril tonight
(3 stories/zero hedge)
9. In the agreement Iran is allowed to self inspect
(what a complete farce)
9. USA stories:
- Philly Mfg index falters
- Conference board of leading indicators falters again
- Initial jobless claims rise
- Bellwether Caterpillar reports a 32 consecutive decline in monthly sales.
i) Gold/silver surge today
Let us head over and see the comex results for today.
August contract month:
|Withdrawals from Dealers Inventory in oz||nil|
|Withdrawals from Customer Inventory in oz||5883.45 oz (Manfra.Scotia
|Deposits to the Dealer Inventory in oz||nil|
|Deposits to the Customer Inventory, in oz||nil|
|No of oz served (contracts) today||0 contract (nil oz)|
|No of oz to be served (notices)||1525 contracts (152,500 oz)|
|Total monthly oz gold served (contracts) so far this month||3826 contracts(382,600 oz)|
|Total accumulative withdrawals of gold from the Dealers inventory this month||nil|
|Total accumulative withdrawal of gold from the Customer inventory this month||558,823.6 oz|
Total customer deposit: nil oz
JPMorgan has 7.1966 tonnes left in its registered or dealer inventory. (231,469.56 oz) and only 741,358.273 oz in its customer (eligible) account or 23.05 tonnes
We lost 122 contracts or an additional 12,200 ounces will not stand for delivery. Thus we have 16.643 tonnes of gold standing and only 14.78 tonnes of registered or dealer gold to service it. Today, again, we must have had considerable cash settlements.
August silver initial standings
August 20 2015:
|Withdrawals from Dealers Inventory||nil|
|Withdrawals from Customer Inventory||10,828.300 oz (Brinks, Delaware)|
|Deposits to the Dealer Inventory||nil|
|Deposits to the Customer Inventory||125,440.910 oz (Delaware,CNT)|
|No of oz served (contracts)||0 contracts (nil oz)|
|No of oz to be served (notices)||16 contracts (80,000 oz)|
|Total monthly oz silver served (contracts)||59 contracts (295,000 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||7,559,380.5 oz|
total dealer deposit: nil oz
Today, we had 0 deposits into the dealer account:
total customer deposits: 125.440.910 oz
total withdrawals from customer: 10,828.300 oz
we neither lost nor gained any silver ounces standing in this non delivery month of August.
August 12./ a huge deposit of 4.18 tonnes of gold into the GLD/Inventory rests at 671.87 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
And now SLV:
August 20.2015:/no changes in inventory at the SLV/Inventory rests tonight at 324.698 million oz
August 19/no changes in inventory at the SLV/Inventory rests tonight at 324.698 million oz
August 18.2015: no changes in inventory at the SLV/Inventory rests tonight at 324.968 million oz
August 17.2015: no changes in inventory at the SLV/Inventory rests tonight at 324.968 million oz.
August 14/no changes in inventory at the SLV/Inventory rests at 324.968 million oz.
August 13.2013: a huge withdrawal of 1.241 million oz/Inventory rests tonight at 324.968 million oz
August 12.2015: no change in SLV inventory/rests tonight at 326.209 million oz.
August 11./ 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
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. * * * * *
Gold: Best defence in a genuine currency war, says Frisby
Every investment needs a good story if it’s going to fly.
“The internet is going to change the world”, drove the dotcom bubble. “They’re not building any more land,” drove buy-to-let. “The Chinese want the things we take for granted – and there are just so many of them,” drove commodities.
One of the reasons for gold’s demise is that its story lost its magic. It no longer seemed relevant.
I’ve said before that gold needs a new narrative. I didn’t think it would come so quickly.
But I think one may be starting to form.
The big financial story of last week was China’s repeated devaluation of the yuan. In just about every related article – and in many of the headlines – the phrase ‘currency wars’ has appeared. It’s all over the papers, TV and the internet.
Read the full article by Dominic Frisby on MoneyWeek here.
Today’s gold prices: USD 1,137.95, EUR 1,019.80 and GBP 7128,54 per ounce.
Yesterday’s gold prices: USD 1,123.20, EUR 1,017.71 and GBP 716.90 per ounce.
Yesterday, gold finished trading with a gain of 1.34% or $15.00, closing at $1,132.70/oz. Silver rose 2.55% or $0.38, closing at $15.26/oz.
Gold climbs to 5-week high as Sept Fed hike hopes fizzle – Reuters
Gold Holds Gains After Biggest Advance in Three Months on FOMC – Bloomberg
Asian shares slide; dollar loses edge on Fed minutes – Reuters
Vietnam devalues dong to protect exports, offset China’s yuan action – Reuters
Cash-Strapped Venezuela May Sell Gold Reserves, Citigroup Says – Bloomberg
Gold: the best defence in a genuine currency war? – MoneyWeek
Video: Threat to Bitcoin with Its “Y2K” Moment – Bloomberg
HSBC expects gold price to be up 10% by the end of 2015 – GoldSeek
Doug Casey on Why You Should Go to Africa Instead of College – Casey Research
World Skills winners show university not the only way to a brilliant career – David McWilliams
Click on News and Commentary
The following was brought to your attention yesterday but it is worth repeating:
(courtesy Wiseman/Associated Press/GATA)
IMF decides China must wait to join exclusive currency club
Submitted by cpowell on Thu, 2015-08-20 11:13. Section: Daily Dispatches
By Paul Wiseman
via Yahoo News
Wednesday, August 20, 2015
WASHINGTON — China must wait until at least next year to join an exclusive club of the world’s top currencies, the International Monetary Fund said Wednesday.
The IMF’s board voted to leave unchanged until Sept. 30, 2016 a basket of currencies used in IMF operations. China, world’s second-biggest economy, had wanted the IMF to include its currency, the yuan, in the basket along with the U.S. dollar, euro, British pound, and Japanese yen starting Jan. 1.
Unlike the other currencies, the yuan does not trade freely. China sets a daily target and lets the yuan trade 2 percent higher or lower. Last week, Beijing devalued the yuan and said it would give market forces more say in determining the exchange rate — a move the IMF praised as a step in the right direction. …
… For the remainder of the report:
As I promised you yesterday, $1130 gold was a key resistance level. Once this level was penetrated it was game over for our bankers. The fun begins;
(courtesy zero hedge)
Gold Surges Above Key Technical Level, Silver Regains Last Week’s Losses
Gold has filled the gap from the mid-July China crash and broken above its 50-day moving average for the first time since June. Silver is surging once again this morning reoundtripping to last week’s pre-flush highs…as The US Dollar limps lower.
Gold breaks above the 50DMA for first time since June…
Recovering all of the flash crash losses…
And Silver roundtrips from last week’s plunge…
John Lee: Another Chinese devaluation indicated
Submitted by cpowell on Thu, 2015-08-20 11:39. Section: Daily Dispatches
7:38a ET Thursday, August 20, 2015
Dear Friend of GATA and Gold:
Mining entrepreneur John Lee, who travels to China often, notes a decline in China’s foreign exchange reserves and wonders if a run on the Chinese currency has begun and if an even bigger devaluation is in the offing. Lee’s analysis is headlined “RMB Devaluation, Chinese Foreign Reserve, and Gold Price” and it’s posted at Prophecy Development’s Internet site here:
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
The court orders silver and gold coins must be returned to its original owners. The judge ruled that only contraband could be withheld.
(courtesy Coin World/GATA)
Feds to return Liberty Dollars seized in 2007
Submitted by cpowell on Thu, 2015-08-20 16:31. Section: Daily Dispatches
By Paul Gilkes
Coin World, Sidney, Ohio
Wednesday, August 19, 2015
Millions of dollars’ worth of silver, gold, platinum, and copper Liberty Dollar medallions and related property seized by federal authorities in 2007 will be returned to their owners, according to court documents.
The return of that property, however, is being delayed until all petitions filed seeking return of the property have been completely processed and any appeals finalized.
In documents filed Aug. 14 in U.S. District Court for the Western District of North Carolina in Statesville by Acting U.S. Attorney Jill Westemoreland Rose, 265 of the 302 petitions filed for the return of property were approved. …
… For the remainder of the report:
1 Chinese yuan vs USA dollar/yuan rises slightly this time to 6.3875/Shanghai bourse: red and Hang Sang: red
Surprisingly, last week, officially, China added another 19 tonnes of gold to its official reserves now totaling 1677.
2 Nikkei down 189.11 or 0.94%
3. Europe stocks all in the red /USA dollar index down to 96.21/Euro down to 1.1177
3b Japan 10 year bond yield: lowers at .365% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 124.34
3c Nikkei still just above 20,000
3d USA/Yen rate now just below the 124 barrier this morning
3e WTI 40.69 and Brent: 46.40
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 down for WTI and down for Brent this morning
3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund slightly falls badly to .594 per cent. German bunds in negative yields from 4 years out. (the 5 yr bund is trading at 0% rate)
Except Greece which sees its 2 year rate rises to 11.13%/Greek stocks this morning down by 2.83%: still expect continual bank runs on Greek banks /
3j Greek 10 year bond yield rises to : 9.33%
3k Gold at $1138.19 /silver $15.40
3l USA vs Russian rouble; (Russian rouble d0wn 9/10 in roubles/dollar) 67.49,
3m oil into the 40 dollar handle for WTI and 46 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 forced to do QE!! as it lowers its yuan value to the dollar.
30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9632 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0765 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 +.595%
3s The ELA lowers to 89.7 billion euros, a reduction of .7 billion euros for Greece. 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 2.09% early this morning. Thirty year rate below 3% at 2.777% / yield curve flatten/foreshadowing recession.
5. Details Ransquawk, Bloomberg, Deutsche bank/Jim Reid.
(courtesy Jim Reid/Bloomberg/Deutsche bank/zero hedge)
Dazed And Confused: Futures Tumble Below 200 DMA, Oil Near $40, Soaring Treasurys Signal Deflationary Deluge
It is unclear what precipitated it (some blamed China concerns, fears of rate hikes, commodity weakness, technical picture deterioration although it’s all just goalseeking guesswork) but overnight S&P futures followed yesterday’s unexpected slide following what were explicitly dovish Fed minutes, and took another sharp leg lower down by almost 20 points, set to open below the 200 DMA again, as the dazed and confused investing world reacts to what both the Treasury and Oil market signal is a deflationary deluge. Indeed, oil is about to trade under $40 while the 10Y Treasury was last seen trading at 2.07%. Incidentally, the last time oil was here in March of 2009, the Fed was about to unleash QE 1. This time, so called experts are debating if the Fed will hike rates in one month or three.
Not helping matters was China’s national plunge protection team, after Chinese shares fell over 3% and the Shanghai Composite closed a mere eight points above its 200-day moving average. This happens the same day China’s central bank injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash and drove a key money-market rate to a four-month high. Ironically the “targeted” liquidity injections actually dampened expectations of further monetary easing.
According to Bloomberg, the People’s Bank of China pumped a net 150 billion yuan ($23 billion) into the financial system this week, data compiled by Bloomberg show. That’s the most since before the Chinese New Year holiday, when seasonal demand for cash spikes. The authorities are providing another 170 billion yuan through loans and an auction of deposits. Yuan purchases risk driving borrowing costs higher at a time of slowing economic growth unless the monetary authority releases additional cash.
“Front-end rates have been edging up, likely resulting from tighter liquidity conditions amid intervention,” said Frances Cheung, head of Asia ex-Japan rates strategy at Societe Generale SA in Hong Kong. “The PBOC needs to step up its open-market operations to offset the liquidity withdrawal on the foreign-exchange side.”
And there again is another unintended consequence of central planning as the PBOC now scrambles to fight the consequences of its own actions.
Perhaps sensing that the micromanagement of markets is failing and central banks everywhere are rapidly losing control, Asian equity markets were a sea of red and traded in negative territory following the weak lead from Wall Street as the slump in the energy complex and concerns over China continues to weigh on global sentiment. Subsequently, energy names dragged the Nikkei 225 (-0.9%) and ASX 200 (-1.7%) lower amid the tumble in crude prices. Japan’s Topix fell 1.5% and is now down 4.6% from the multi year high it achieved just eight trading days ago. The MSCI Emerging Market Index fell to its lowest close since October 2011.
There was also speculation in Chinese press that China may set an average GDP target of 6.5% for the 2016-2020 period. Hang Seng (-1.7%) had seen technical selling as the index entered bear market territory having fallen 20% from its April peak and approaches a ‘death cross’ for the 1st time in a year with the 50 DMA in close proximity to breaching below the 200DMA. JGBs rose amid spill-over buying in USTs and weakness in Japanese equities.
Dovish interpretation of the FOMC minutes failed to lift investor sentiment , which instead remained depressed as market participants focused on the ever growing risks stemming from China. As a result, stocks in Europe (Euro Stoxx: -0.9%) traded lower since the get-go, with energy names underperforming on the sector breakdown amid the ongoing slump on energy and base metals. The downside price action in futures markets also saw the e-mini S&P break below the 200 DMA at 2064. High profile US earnings today include Salesorce.com, Gap and HP.
Also of note, a Greek Finance Ministry official has stated that Greece have repaid EUR 3.4bIn owed to the ECB after receiving EUR 13bIn in the first tranche of their ESM funding following the bailout approval, while Greek press suggests PM Tsipras is to meet with key advisers at 1400 local time (1200BST) and will then decide when to go for early elections after rumours in Greece that Tsipras could hold a snap election on September 13th or 20th.
In fixed income, weakness in equities has filtered through to strengthen core fixed income products with Bund Sep’15 futures higher by around 40 ticks heading into the North American crossover. As such the lower yields led to unfavourable rate flows, which together with less than impressive UK retail sales (Inc Auto Fuel (Jul) M/M 0.10% vs. Exp. 0.40%) weighed on GBP, which in turn has underperformed its major peer. This, together with the consequent re-pricing of Fed rate lift-off expectations following the FOMC minutes, saw EUR/USD trade firmer.
Moving to FX, the focus remained on commodity linked (AUD,CAD, etc) and EM currencies (TRY, KTZ, etc) which continued to come under pressure on the back of the ongoing rout in energy and base metals markets, with the price volatility rising following the recent CNY devaluation by the PBOC. On that note, the FT noted that the capital outflow from EM states stands at around USD 1trl over the past 13 months.
On that note, the ongoing reluctance by the Turkish central bank to counter the weakness in TRY, together with the ongoing political and geo-political concerns saw Turkish Lira (TRY) fall to its weakest level on record vs. USD to 2.9853. Also, the Kazakhstan Tenge (KZT) was the notable underperformer (lower by 28% vs. the USD) after the Kazakh central bank free floated its currency overnight.
Elsewhere, the South Korean Security Council is convened at the moment with military at the highest alert level following an exchange of Artillery fire at the border with North Korea, which comes after 2 South Korean soldiers were injured on North Korean Land mines at the border earlier in August and in retaliation to this, South Korea began announcing propaganda over the border using loud-speakers.
The energy complex has seen continued weakness throughout the Asian and European sessions with WTI Sep’15 futures firmly below the USD 41/bbl handle ahead of the expiry at 1930BST/1330CDT. Also of note, today sees the EIA NatGas storage change, which is expected at 59. Elsewhere, metals have seen strength on the back of the FOMC minutes and USD weakness, with gold printing its highest level in 5 weeks.
Going forward, market participants will get to digest the release of the
latest US weekly jobs report, Philadelphia Fed and existing home sales.
In summary: European shares remain close to intraday lows with the financial services and personal & household sectors underperforming and basic resources, retail outperforming. Kazakhstan’s Tenge falls 23% to all-time low against the dollar as country scraps FX rate band. PBOC injects most funds since Feb. amid yuan intervention. Turkish lira weakens past 3 per dollar for first time, rand weakens past 13 per dollar for first time since Dec. 2001. Oil extends decline from lowest close in more than 6 years. Fed minutes yesterday showed officials still concerned by low inflation, probability of a rate hike next month has fallen, futures show. U.K. retail sales in line with estimates. The Italian and Dutch markets are the worst-performing larger bourses, the U.K. the best. The euro is stronger against the dollar. German 10yr bond yields fall; French yields decline. Commodities decline, with Brent crude, WTI crude underperforming and zinc outperforming. U.S. jobless claims, continuing claims, Bloomberg consumer comfort, Bloomberg economic expectations, Philadelphia Fed index, existing home sales, leading index due later.
- S&P 500 futures down 0.7% to 2059.2
- Stoxx 600 down 1.2% to 376.9
- US 10Yr yield down 3bps to 2.1%
- German 10Yr yield down 4bps to 0.58%
- MSCI Asia Pacific down 1.6% to 133.9
- Gold spot up 0.5% to $1139.7/oz
- Eurostoxx 50 -1%, FTSE 100 -0.4%, CAC 40 -0.9%, DAX -0.9%, IBEX -0.8%, FTSEMIB -1.4%, SMI -0.7%
- Asian stocks fall with the Nikkei outperforming and the Shanghai Composite underperforming; MSCI Asia Pacific down 1.6% to 133.9
- Nikkei 225 down 0.9%, Hang Seng down 1.8%, Kospi down 1.3%, Shanghai Composite down 3.4%, ASX down 1.7%, Sensex down 1.2%
- 1 out of 10 sectors rise with telcos, health care outperforming and energy, materials underperforming
- Euro up 0.4% to $1.1165
- Dollar Index down 0.08% to 96.28
- Italian 10Yr yield down 4bps to 1.77%
- Spanish 10Yr yield down 5bps to 1.94%
- French 10Yr yield down 4bps to 0.93%
- S&P GSCI Index down 0.7% to 352.4
- Brent Futures down 1.5% to $46.4/bbl, WTI Futures down 1.2% to $40.3/bbl
- LME 3m Copper up 1.6% to $5072.5/MT
- LME 3m Nickel up 0.2% to $10445/MT
- Wheat futures up 0.3% to 501.5 USd/bu
Bulletin Headline Summary from RanSquawk and Bloomberg
- Dovish interpretation of the FOMC minutes failed to lift investor sentiment, which instead remained depressed as market participants focused on the ever growing risks stemming from China to weigh on equities
- Unfavourable rate flows and less than impressive UK retail saw GBP underperform its major counterparts
- Going forward, highlights include US weekly jobs report, Philadelphia Fed, existing home sales and EIA natural gas storage change data as well as earnings from Salesforce.com, Gap and HP
- Treasuries gain amid global equity rout, further losses in oi;
- Kazakhstan became the latest country to abandon control of its currency, tenge plunges 23% after country shifted to a free float.
- PBOC injected the most funds in open-market operations since February as intervention to prop up the yuan strained the supply of cash and drove a key money-market rate to a four- month high
- The Shanghai Composite dropped 3.4% to 3,664.29, lowest level since Aug. 6; about 17% of mainland-listed shares remain halted
- North Korea fired a rocket at a South Korean border position, prompting Seoul’s forces to unleash an artillery barrage across the demilitarized zone dividing the two countries
- When it comes to using a private server for her e-mails when she was secretary of state, Hillary Clinton “didn’t really think it through,” according to her communications director
- Sovereign 10Y bond yields lower. Asian and European stocks fall, U.S. equity-index futures drop.Crude oil lower, gold and copper rise
DB’s Jim Reid completes the overnight recap
Markets are also slightly lost, upset and confused at the moment with a slightly lower US CPI and a dovish set of Fed minutes setting up a sharp re-pricing of the front end of the US curve last night with 2yr notes falling 6.1bps to 0.659% and the probability of a September hike falling to 38% from 48% 24 hours earlier and 54% at its recent peak on August 7th. 10yr yields also saw a decent move lower yesterday, falling 6.7bps to 2.126% and back to down to the lowest closing yield since May 29th. The minutes briefly helped reverse a 1% loss in US equities after another weak European session (Stoxx 600 -1.76%) but it ended back down nearer to its session lows at the close (-0.83%).
EM woes and continued falls in Oil continue to hit sentiment. Interestingly the Fed’s minutes refer to the July 28-29th meeting before the Chinese devaluation and associated more recent EM troubles. Oil is also down over 15% since they last met. Even with what they knew then it would be hard pressed to say that the committee had high conviction that September was the right month to start the hiking cycle. The minutes said that “Almost all members” indicated that “they would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term,”. Added to that was the comment that ‘it was noted that considerable uncertainty remained about when wages might begin to accelerate and whether that development might translate into increased price inflation’. This certainly feels more dovish to how the market interpreted the statement when it originally came out. Despite that, without committing to timing the Fed are still clearly keeping options open and the hawks will point towards the statement that most participants ‘judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point’.
Despite the recent Yuan devaluation coming after the latest Fed meeting, there was still some mention of the risks to the US economy from a slowdown in China growth, while the slump in the stock market was played down with regards to any impact on growth. Staying with China, this morning the Shanghai Comp is heading into the midday break down 0.40% while the Shenzhen is up 0.37%, both having recovered from earlier deeper declines. Although as we repeatedly have to say, please watch the last couple of hours of trading. Yesterday saw the Shanghai Comp completely reverse the 3% losses as we went to print to close up 1.23%.
Markets are broadly weaker elsewhere in Asia this morning. The Nikkei (-1.06%), Hang Seng (-1.25%), Kospi (-0.63%) and ASX (-1.26%) are all down as we type. Meanwhile, in the FX space the reaction to the PBoC Yuan moves continues and shortly after we saw the State Bank of Vietnam move yesterday to devalue the Dong, Kazakhstan followed suit by allowing the Kazakh Tenge to devalue nearly 4.5% yesterday before going one step further this morning by announcing that they are to scrap the ER band for the currency and instead move to a free-float, with the currency tumbling a further 20% as a result. Aside from a slight decline for the Malaysian Ringgit (-0.14%), moves have been fairly muted in Asian FX markets this morning with the onshore Yuan (+0.1%) a tad firmer despite the news that the IMF has said that it will keep its current benchmark currency basket frozen until the end of September 2016, making October 2016 the earliest possible date for the Yuan to be considered in its SDR basket.
Back to yesterday’s US inflation data. Headline CPI rose +0.1% mom during July, a tad behind market expectations for a +0.2% rise, but enough to nudge up the annualized rate as expected to +0.2% yoy. The monthly core print also disappointed slightly (0.1% mom vs. +0.2% expected) but was enough to keep the annualized rate unchanged as expected at +1.8% yoy. The 3-month annualized rate did however drop to 1.8% from 2.3% in June. Combined with the FOMC minutes the Dollar index dipped 0.70% yesterday and brought to a halt four previous days of gains.
Equity markets struggled to latch onto any momentum yesterday and that was largely as a result of another hugely weak day in the Oil space. WTI closed the session down 4.27% to finish at $40.80/bbl, the lowest settlement since 2nd March 2009. Meanwhile Brent finished down 3.38% at $47.16/bbl after previous day hopes that we may see a decline in US stockpiles was given a dent after the EIA reported that crude supplies rose 2.62m barrels last week. Both have declined another half a percent this morning. Elsewhere Copper (-0.79%) closed down below $5000/tn for the first time since July 2009 at $4995/tn although it was a better session for Aluminum (+0.16%), Zinc (+1.25%) and Gold (+1.45%) – the latter bouncing on the back of the US dataflow and FOMC minutes.
The pressure on EM continues and that’s certainly been evident in the huge selloffs in their currencies as well as the outflows which we touched on 24 hours ago. Yesterday we also saw the MSCI EM index tumble a further 0.90%, a fall of nearly 7% MTD now after declines of 7.3%, 3.2%, and 4.2% in July, June and May respectively with the index now creeping in on the 2011 lows.
Closer to home yesterday we finally got the news that the Euro area finance ministers have signed off on the Greek bailout following yesterday’s parliamentary approvals from Germany and Netherlands. As a result, it’s expected that Greece will receive its first tranche from the ESM today, in turn allowing the nation to pay off its ECB debt repayment. Headlines around Greece have certainly abated of late after dominating for much of the year, but there’s still plenty of political risk on the horizon and while we are unsure of the potential timing of any snap election, an autumn time-frame is looking realistic, so one to keep an eye on.
Taking a look at today’s calendar now, its set to be another morning dominated by data out of the UK where we get July retail sales along with August CBI business trends data. Over in the US this afternoon, the early release is initial jobless claims before we then follow up with existing home sales, the Philly Fed business outlook (which will be important in light of the weak NY Fed manufacturing survey earlier this week) and finally the Conference Board’s leading index. Fedspeak wise we’ve got the San Francisco Fed President Williams due to speak.
We told you this would happen:
(courtesy zero hedge)
“Mystery” Cyanide Foam Covers Streets In China After Tianjin Storms As “Massive Fish Die-Off” Photographed
On Wednesday evening we noted that China, in what looks like an attempt to discourage investigative reports into Communist Party culpability for the explosion at Tianjin which killed more than a hundred people and injured more than 700 last week, revealed the previously unnamed majority shareholders of Tianjin International Ruihai Logistics.
The two men – a Mr. Yu and a Mr. Dong – have Party ties and admitted to using their political connections to skirt restrictions on the storage and handling of hazardous chemicals like sodium cyanide.
That admission isn’t likely to satisfy the Chinese public, which is looking for the head (figuratively speaking we hope) of someone higher up in the party, as scapegoating a few locals with tenuous Party ties doesn’t seem to constitute the type of wholesale, rigorous investigation that would indicate Beijing is serious about getting to the bottom of how 700 tonnes of toxic chemicals ended up being stored at a facility that was only licensed to warehouse a fraction of that total.
In any event, the “cyanide thunderstorms” we warned were rolling into the area have now blanketed Tianjin in a “mysterious” white foam.The images are below.
And as The South China Morning Post reports, some claimed the rain had burned their skin and lips, which would be consistent with a text message purported to have emanated from the American Embassy (which immediately denied its authenticity) advising workers to “avoid ALL contact” between their skin and any rain:
Some residents and journalists near the blast site in Tianjin experienced skin burns as rain hit the Binhai New Area on Tuesday.
Amid fears the rain could spark toxic reactions with chemicals at the site – in particular with hundreds of tonnes of sodium cyanide – an official urged the public to “stay far away”.
As the rain progressed, an unusual white foam emerged on roads near the blast site. A journalist for Caixin reported feeling burns on the lips and arms after being exposed to the rain.
As for the official explanation for why the streets in Tianjin are now running white with what might very well be an extremely toxic, cyanide-laced foam, Tianjin’s environmental monitoring center says it’s “a normal phenomenon when rain falls, and similar things have occurred before.”
And in case that wasn’t enough of a punchline for you, here’s a look at what happened after no chemicals were detected in the seawater around the blast site:
Greek PM Alexis Tsipras To Resign; New Elections Set For September 20
- GREEK PM TO HAND IN RESIGNATION TO PRESIDENT LATER ON THURSDAY -GOVT OFFICIALS
Update: Local media is reporting that Greeks will indeed head back to the polls next month, as Tsipras will call for new elections.
- GREECE TO HOLD ELECTIONS ON SEPTEMBER 20 – MEGA TV
- GREEK PM TO MAKE A STATEMENT ON ELECTIONS ON THURSDAY – GOVT OFFICIAL
* * *
As Greece struggled to seal the deal on its latest bailout agreement with creditors, it became abundantly clear that embattled PM Alexis Tsipras was going to have a difficult time preserving his coalition government.
In short, the Syriza defections were mounting with each passing parliamentary vote and Tsipras was forced to rely on opposition lawmakers for support.
Realizing that implementing the bailout would be all but impossible considering the extraordinarily fractious political environment and lacking the support necessary to win a confidence vote, it looks as though Tsipras will call for new elections as early as today now that the country has made a critical payment to the ECB.Here’s The Telegraph:
Hello and welcome to live coverage of Greece’s political crisis, where it seems that Alexis Tsipras is on the verge of calling a snap on the same day his country managed to secure its first bail-out cash from international creditors in over a year.
Greek state broadcaster ERT is reporting that the embattled prime minister will announce the vote later today. The PM has been meeting with government officials this afternoon and could resign from office having called the vote. September 13 and 20 have been touted as possible dates.
The 41-year-old Syriza leader remains the most popular politician in the country, despite presiding over six months of ill-tempered talks with creditors in which he was forced to capitulate when faced with the threat of a euro exit.
“Anything is possible” Earlier today, a Greek government official told reporters that “everything is possible,” when asked whether Tsipras could announce elections today.
According to Greek media, the PM has been holed up with his aides and officials in the Maximos Mansion in Athens deciding on what his next move will be.
Needless to say, political turmoil and the social instability that will invariably accompany it are precisely what Greek stocks, bonds, and banks (not to mention fragile world markets on edge after the yuan devaluation) do not need, and it looks as though someone is getting nervous…
And Greek 2s are not happy as yields spike 130bps…
And the rest of the peripheral European bond markets are contagiously pushing wider…
Because everything is fixed:
- MERKEL SAYS GREEK BAILOUT APPROVAL ENDS ‘UNCERTAINTIES’
Iran Allowed To “Self-Inspect” Its Nuclear Sites By “Remarkably Naive And Reckless” UN
Given that self-regulation worked so well in the financial services industry, The United Nations, according to AP,has decided to allow Iran to use its own inspectors to investigate a site accused of being used to develop nuclear bombs. While the Obama administration was“confident in the agency’s technical plans for investigating the possible military dimensions of Iran’s former program,” John Cornyn of Texas, the second-ranking Republican senator, said of the ‘secret agreement’ – since The UN normally does this work itself – “trusting Iran to inspect its own nuclear site and report to the U.N. in an open and transparent way is remarkably naive and incredibly reckless.”
Iran will be allowed to use its own inspectors to investigate a site it has been accused of using to develop nuclear arms, operating under a secret agreement with the U.N. agency that normally carries out such work, according to a document seen by The Associated Press.
The revelation on Wednesday newly riled Republican lawmakers in the U.S. who have been severely critical of a broader agreement to limit Iran’s future nuclear programs, signed by the Obama administration, Iran and five world powers in July. Those critics have complained that the wider deal is unwisely built on trust of the Iranians, while the administration has insisted it depends on reliable inspections.
A skeptical House Speaker John Boehner said,“President Obama boasts his deal includes ‘unprecedented verification.’ He claims it’s not built on trust. But the administration’s briefings on these side deals have been totally insufficient – and it still isn’t clear whether anyone at the White House has seen the final documents.”
The newly disclosed side agreement, for an investigation of the Parchin nuclear site by the U.N.’s International Atomic Energy Agency, is linked to persistent allegations that Iran has worked on atomic weapons. That investigation is part of the overarching nuclear-limits deal.
Evidence of the inspections concession is sure to increase pressure from U.S. congressional opponents before a Senate vote of disapproval on the overall agreement in early September.
John Cornyn of Texas, the second-ranking Republican senator, said, “Trusting Iran to inspect its own nuclear site and report to the U.N. in an open and transparent way is remarkably naive and incredibly reckless. This revelation only reinforces the deep-seated concerns the American people have about the agreement.”
And it gets worse…
The document seen by the AP is a draft that one official familiar with its contents said doesn’t differ substantially from the final version. He demanded anonymity because he wasn’t authorized to discuss the issue in public.
The document is labeled “separate arrangement II,” indicating there is another confidential agreement between Iran and the IAEA governing the agency’s probe of the nuclear weapons allegations.
Iran is to provide agency experts with photos and videos of locations the IAEA says are linked to the alleged weapons work, “taking into account military concerns.”
That wording suggests that — beyond being barred from physically visiting the site — the agency won’t get photo or video information from areas Iran says are off-limits because they have military significance.
While the document says the IAEA “will ensure the technical authenticity” of Iran’s inspection, it does not say how.
* * *
What could possibly go wrong?
We brought to your attention the troubles inside Kazakhstan. Last night the country’s currency crashes 25% after the peg was abandoned:
(courtesy zero hedge)
Currency Wars Continue As Kazakh Currency Crashes 25% After Peg Abandoned
On Tuesday we remarked on the increasingly perilous plight of yet another country whose economy has come under increased pressure from plunging oil prices and China’s move to devalue the yuan: Kazakhstan.
Just one day after allowing the tenge to fall sharply in the interbank market and no longer able to take the pain from falling crude prices, the country moved to a free float for the tenge overnight, causing the currency to plunge by a quarter.
The move is clearly a desperate attempt to preserve export competitiveness in the face of a falling rouble and a devalued yuan. This is the third time the country’s central bank has devalued the currency since 1999 – the last time was in February of 2014.
Although central bank governor Kairat Kelimbetov put on a brave face and very rationally explained that “this is not a devaluation, this is a transition to a freely floating rate when the market itself determines a balanced exchange rate on the basis of demand and offer,” it’s quite clear that the situation for the country’s exporters had become dire and bringing the tenge more inline with moves seen in the currencies of China and Russia (Kazakhstan’s top trading partners) was probably long overdue. Here’s Bloomberg:
The central Asian nation, which counts Russia and China as its top trading partners, said it was switching to a free float, triggering a 23 percent slide in the tenge to a record 257.21 per dollar. Following the shock yuan devaluation last week, a gauge of 20 developing-nation exchange rates capped its longest slump since 2000, and losses continued this week as Vietnam devalued the dong and currencies from Russia to Turkey fell at least 3 percent.
Kazakhstan is central Asia’s biggest crude exporter and the country’s raw material producers have suffered since Russia stopped managing the ruble last November. In addition to the 55 percent slide in oil in the past year, the yuan move, elevated pressure on the nation’s peg by forcing countries that rely on Russia and China for trade to seek ways to stay competitive.
The ruble has slumped 46 percent in the past 12 months, versus a 7.6 percent weakening for the tenge before today’s switch. Kazakh business association Atameken and the chief executive officer of ArcelorMittal’s local unit were among business leaders complaining that the price differential had diminished the competitiveness of locally made products from steel to grains and coal.
The “move follows a huge loss of competitiveness, as key trade partner Russia has allowed the ruble to depreciate significantly as commodity prices slumped,” Tom Levinson, the chief foreign-exchange and rates strategist at Sberbank CIB in Moscow, said by e-mail. The yuan’s depreciation “may be an additional factor,” he said.
Yes, it very well “may be an additional factor” and the longer the crude plunge persists the more pressure they’ll be although as Citi notes, the move may have overshot depending on how you look at it. “REER-based analysis implies only about a 15% depreciation to 226, although a return to a more ‘fair’ value against the RUB necessitates a larger move to around 267,” the bank’s FX strategists say.
So the race to the bottom is on, the only question now is what other hard-hit countries already suffering from the global commodities slump and the threat that the Fed might one day stop bluffing will China’s FX bombshell push over the edge in the weeks and months ahead.
* * *
More color from Citi:
Kazakshtan has taken a bolder approach to currency determination by fully scrapping the existing currency band. Earlier In July the central bank had widened the currency corridor of the USDKZT to 170-198 from 170-188. The USDKZT fell to 254 in early trading.
The move breaks the more statist approach to currency determination, although it is consistent with the broader strategy of allowing more currency flexibility against the backdrop of slumping commodity prices
In May the National Bank of Kazakhstan had announced its intention to gradually loosen its grip on the tenge and move to inflation targeting in order to better address adverse global macroeconomic shocks, including slower growth in key trading partners and less favorable commodity prices. More recently, China currency devaluation and the renewed downward pressure on oil prices may have served as the trigger behind the current move to allow the tenge to depreciate further in our view.
With the continued selloff in oil, the KZT will likely remain under pressure in the near future. Moreover, the FX could also suffer from the likely new round of dollarization after the shift. All of this, we think could push the KZT weaker than our projected KZT250/$ level in the near future. Moreover, after several rounds of dollarization in the past few years, we think that the potential for further local FX demand will likely be limited, as a much weaker KZT could start to trigger the reversal of FX positions. Therefore, we think that with a strong one-off move today, a large part of KZT weakness could already be priced in.
From Deutsche Bank:
In our view, the move of Kazakh authorities towards weaker tenge was in part expected by the market given both February 2014 20% depreciation did not account for the decline in oil prices over 2H14 and 2015, while the widening of the exchange rate band in July 2015 did not provide enough space to accommodate the pressures. At the same time, earlier this year the authorities declared a possibility for further exchange rate depreciation in case oil prices declined to the levels below USD50/bbl.
The move towards inflation targeting is likely to support the country’s production activity with its non-oil export segment heavily relying on the Russian market, therefore it may prop up the growth in the country and help fiscal sector to accommodate external pressures in case they continue to mount (Kazakh President Nursultan Nazarbaev stated yesterday that the country should be prepared for USD30-40/bbl). Given the more flexible approach to the exchange rate and our base case scenario of oil prices reaching the level of USD62/bbl by the end of the year, we revise our 2015 year end forecast form KZT/USD213 to KZT/USD225.
In 1994 China devalued its yuan and the effective devaluation was 7%. They expect China to eventually devalue by 10% which would put last week’s devaluation worse than in 1994.
Bank of America is very concerned..why?
- The devaluation comes in the midst of Chinese deflation
- China is still growing in its exports although it is getting less of a bigger export pie.
- The rest of Asia has sluggish exports
thus…greater risk to our financial globe:
(courtesy Bank of America/zero hedge)
Echoes Of 1997: China Devaluation “Rekindles” Asian Crisis Memories, BofA Warns
In “Currency Carnage: Gross Warns On ‘Fakers And Breakers’; Morgan Stanley Tells Asia To Watch Its REER,” we outlined which Asia ex-Japan economies faced the biggest risk from China’s decision to devalue the yuan.
Broadly speaking, a weaker yuan will likely cause regional economies to suffer a loss of export competitiveness in combination with decreased demand for their products on the mainland.
Even before the latest shot across the bow in the escalating global currency wars, EM FX was beset by falling commodity prices, stumbling Chinese demand, and a looming Fed hike.
Now, the situation is immeasurably worse.
We got a preview of what is perhaps in store when, on Tuesday, Indonesia reported that trade had collapsed in July, while Friday’s meltdown in the ringgit as well as Malaysian stocks and bonds underscored just how fragile the situation has become. And while, as Barclays notes, “estimating the global effects China has via the exchange rate and growth remains a rough exercise,” more than a few observers believe the effect may be to spark a Asian Financial Crisis redux.
For their part, BofAML has endeavored to compare last week’s move to the 1994 renminbi devaluation, on the way to drawing comparisons between what happened in 1997 and what may unfold in the months ahead.
“On 1 Jan 1994, China unified its exchange rate by bringing the official in line with swap market rate, devaluing the RMB official rate by nearly 50% (from 5.8 to 8.7 RMB/USD),” BofA reminds us, adding that because only a fifth of transactions occurred at the official rate, the effect was a devaluation on the order of 7%. Because the bank (and they aren’t alone here) ultimately sees the yuan weakening by 10% against the dollar this time around, “the magnitude of devaluation [will] effectively be larger than the 1994 move.”
As for the fallout, BofA is “concerned about the competitive impact from China’s devaluation on rest of Asia, as the devaluation comes on top of  China’s deflation;  China’s growing market share in key third markets; and  Asia’s sluggish exports.” As the following charts and subsequent commentary make clear, China was already taking share and now, that dynamic could accelerate and demand, already depressed, could be reduced further by the weaker yuan:
China’s market share of US and EU’s imports was already expanding, pre- devaluation (Chart 5 & Chart 6). China was already eating into rest of Asia’s market share, even with an anchored RMB. China’s market share of both US and Europe’s imports generally rose strongly from 2000 – 2010, before moderating during the GFC but has since picked up. China now accounts for about 20% of US imports and 7% of Europe’s imports. In contrast, ASEAN’s share of US imports has declined to 4.4% over 2011-14 from 7% in 2000, before recovering to about 5% in the first half of this year.
In Europe, ASEAN’s share has declined to about 1.8% in 2008 from 2.6% in 2000, before picking up to about 2.4% this year. The IMF Regional Outlook also highlights that China, a major player in Asian supply chains, is capturing an increasingly larger part of the chain as domestically sourced intermediates (from either locally owned producers or subsidiaries of foreign firms) increasingly replaced imported intermediate goods. China’s “on-shoring” is thus one more reason why rest of Asia’s exports is struggling.
Northeast Asia economies will likely face greater competitive pressures from China’s devaluation given stronger trade linkages and overlapping exports. Trade links with China are highest for the Northeast Asian economies: Taiwan (16% of GDP) and Korea (10%). More than a quarter of exports from Korea and Taiwan are destined for China. China’s lower tech exports also compete more closely with Korea and Taiwan. Almost a fifth of Japan’s exports are for China. For Southeast Asia, only 10% of exports go to China, with Malaysia and Singapore having a larger share. But ASEAN commodity exporters (Indo, Mal and Thai) will also be hit if China’s devaluation reduces import demand and intensifies the deflationary pressures on commodity prices.
BofAML’s conclusion is that China’s devaluation has added “another layer of risk and uncertainty for the rest of Asia, on top of the looming Fed funds rate hike cycle.”
“Asia,” the bank’s FX strategy team continues, “is already not in a good place (compared to past Fed rate hike episodes), as exports are contracting, domestic demand is sluggish and monetary policy is out of sync with the Fed,” which means that between the weaker RMB and a Fed that will eventually have to try and prove that contrary to what the St. Louis Fed’s Stephen Williamson says, an exit from ZIRP is actually possible, a 1997 replay may indeed be in the cards.
This is not what Draghi wished for: Quantitative easing has not provided the necessary inflation for the EU!!
(courtesy zero hedge)
Draghi Failed: European Inflation Expectations Slide To Pre-QE Level
On March 9th 2015, ex-Goldman Sachs’er Mario Draghi unleashed his long awaiated bond buying program with the premise that it would fix everything… Well, it hasn’t!!
Short-term inflation swaps have swung negative once again…
And across the spectrum risk is higher…
It appears, Mr. Draghi, your “whatever it takes” was simply not enough! And remember – this Q€ was front-loaded!!
Turkish credit default swaps rise to its highest levels in quite some time indicating a greater chance of a default. The civil war there has sent the Turkish lira plummeting to almost 3.0 to one usa dollar:
(courtesy zero hedge)
Turkey On The Brink As Calls For Martial Law, Civil War Send Lira Plunging Again
For anyone who might have missed it, Turkey is quickly descending into chaos on all fronts.
The lira is putting to new lows against the dollar on a daily basis as confidence suffers from a worsening political crisis which began in June when AKP lost its parliamentary majority for the first time in over a decade throwing President Recep Tayyip Erdogan’s plan to transform the country’s political system into an executive presidency into doubt. Not one to give up easily (especially when it comes to consolidating his power), Erdogan proceeded to launch an ad hoc military offensive against the PKK in an attempt to undermine support for the pro-Kurdish HDP ahead of new elections which, thanks to the willful obstruction of the coalition formation process, are now virtually inevitable.
Turkey’s central bank hasn’t helped matters and the lira legged lower on Wednesday after it was made clear that a rate hike was not in the cards until Fed liftoff is official.
Citi has taken a look at the situation and determined that in fact, the lira is the most vulnerable of all EM currencies they track:
We believe it is going to be difficult for the local markets angle of the EM asset class, in this important (potential) transition of monetary policy in the US, and also taking into account any potential move by the ECB in 2016 (away from a QE stance). That prompted us to revisit our FX vulnerability model. In the model, we look into EMFX from three angles: 1) the macro vulnerability aspect (focused on BoP dynamics, FX reserve metrics, portfolio flows and CDS); 2) interest rate coverage (measured by 1y1y forward real rates, current implied yields and bond yield premium after hedging costs); and 3) our assessment of positioning by real money investors and leveraged accounts in the several EM currencies. TRY, BRL, ZAR, MXN and MYR rank high in terms of aggregate vulnerability.
While Morgan Stanley is calling for an emergency rate hike:
What can the CBT do? Given the rapid deprecation in TRY, the CBT could be in a dilemma to decide on the next step. Recent market development could push the CBT to deliver another emergency rate hike, as it did in January 2014. Our economists see the increasing risk of emergency rate hikes of 200bp on the lending rate (upper band). The market dynamic surrounding TRY has become more disorderly with TRY weakening in a low liquidity environment and without any implicit catalyst. This suggests a sharp deterioration in domestic confidence in the exchange rate, extending from investors to corporates and households ? such a dynamic has historically preluded some form of policy response, as we analysed above. While the underlying macro and political factors that have driven USD/TRY to current levels remain in place, and domestic security risks can certainly increase ahead of early elections, we are also more cognisant of the risk of a policy response amid oversold technical conditions on TRY. While real policy rates are positive, they are clearly not high enough to stabilise the currency, and the risk of an increase in rates has risen. We doubt any measures involving the sale of USD will be seen as credible and/or have much impact, as was the case in early 2014.
And then further from Citi:
On the hard currency front, USD leverage in selected economies is sparking once again fears of any systemic implications. It is true to say markets are still far away from a systemic trigger (serious USD funding issues), but we believe it is also correct to adjust CDS (and hard currency spreads in general) higher in curves of economies more dependent on USD funding. Indonesia, Brazil and Turkey are economies that could suffer more (in different magnitudes of course) from a continuous tightening of USD funding conditions. This is the underpinning factor behind our long Turkey CDS position.
And speaking of CDS, well it’s blowing out to its widest level in three years:
Meanwhile, violence between Ankara and the PKK has escalated (and why wouldn’t it, considering that’s the whole idea for Erdogan). As Bloomberg reports, “assailants tossed a grenade at a guard post at Istanbul’s Dolmabahce Palace [on Wednesday] and then opened fire, setting off a gun battle in the center of Turkey’s largest city.” Later, 8 soldiers were killed by a roadside bomb in southeastern Turkey’s Siirt province – the attack was blamed on the PKK.
Now, Nationalist Movement Party leader Devlet Bahçeli – who, you’ll recall, likened Erdogan to Hitler and Stalin last week – has called for martial law and insists that new elections will lead directly to civil war. Here’s Hurriyet:
As the escalation of violence in the country has raised a sense of insecurity among its citizens, Turkey’s nationalist party leader has called for a declaration of martial law.
“Under today’s conditions, as terror has reached its peak point, the National Security Council [MGK] should hold an emergency meeting,” said Nationalist Movement Party (MHP) leader Devlet Bahçeli, in a written statement late on Aug. 19.
His statement was released just hours after the Turkish Armed Forces (TSK) announced earlier on Aug. 19 that militants from the outlawed Kurdistan Workers’ Party (PKK) had killed eight soldiers with a roadside bomb in the southeastern Anatolian province of Siirt.
“In line with Article 122 of the constitution, it is obligatory to definitely secure a section of our country with martial law measures in a way that would include cities and towns [which have been a] scene to violence and horror,” Bahçeli said.
“Under today’s conditions and environment in Turkey, holding an election may light the fuse of a civil war.In this regard, the repetition of elections should definitely be reviewed,” he also said.
Responding by phone, senior AKP lawmaker Ahmet Aydin told Bloomberg that “it’s not necessary and not right to call for martial law in Turkey’s southeast, and a repeat election should be held as soon as possible to eliminate political uncertainity.”
Yes, to “eliminate political uncertainty.” And to eliminate political opposition as well.
It’s once again worth noting that this is the type of regime – one which is willing to sacrifice its people and economic and financial stability – for the sake of subverting the democratic process and executing brutal power grabs.
As bad as that sounds just remember, it’s all part of the plan to defeat ISIS.
* * *
And meanwhile, “nothing to see here, move along”:
- DAVUTOGLU SAYS NO NEED FOR CONCERN ON LIRA WEAKENING
Summing it all up:
Depression Tracker: Unemployment Soars In Latin America’s Most Important Economy
If there’s anything Brazil certainly does not need, it’s more bad news.
The country is, in many ways, a symbol of the great EM unwind catalyzed by falling commodity prices, plunging currencies, reduced demand from China, a looming Fed hike, and, most recently, a yuan devaluation, with the latter being particularly painful for Brazil:
As we’ve documented extensively, the situation is made immeasurably worse by political instability. President Dilma Rousseff is “enjoying” an approval rating of just 8% as the public calls for her impeachment amid allegations of fiscal book cooking and corruption at Petrobras where she was Chairwoman from 2003 until 2010.
The economic news – which was already bad enough between a harrowing bout of staglflaton and dual deficits on the fiscal and current accounts – just got a lot worse as unemployment spiked to 7.5%, well ahead of consensus and the worst in five years. Here’s FT:
Here’s another economic snapshot of Brazil that is probably not going to do much to help lift President Dilma Rousseff’s approval ratings.
Unemployment in Latin America’s largest economy rose for the seven straight month, hitting 7.5 per cent in July.
That’s up from 6.9 per cent in June and much worse than the 7 per cent the market had forecast and the highest since May 2010.
The real fell by as much as 0.8 per cent in early morning trading.
The jump in unemployment – the biggest in five months – is the latest sign of the country’s deepening economic malaise.
Rousseff’s comments to Handelsblatt that the country will remain mired in recession for another 6-12 months didn’t do anything to make the outlook seem any brighter.
Meanwhile, Rousseff scored a victory on Wednesday when the Senate approved a bill to cut payroll tax breaks.” That should help “to reduce a gaping fiscal deficit and restore confidence in her government’s accounts,” Reuters notes, adding that “Rousseff has struggled to pass austerity measures through a rebellious Congress, with the lower house approving bills that raise spending introduced by Speaker Eduardo Cunha, who broke with her coalition and defected to the opposition last month.”
But Cunha may not be a stumbling block for too much longer, because as Bloomberg reported early this morning (citing Folha de S. Paulo), Brazil’s Attorney-General is set to “charge Cunha for corruption Thursday”. The charges, Bloomberg continues, are “part of [the] ‘Carwash’ investigations into dealings at Petrobras.” Here are the implications, courtesy of Bloomberg strategist Davison Santana:
- Attorney-General expected to charge Cunha for corruption today; O Globo reports that hard evidence was found with help from Swiss authorities
- Cunha may be forced to step down from House presidency, depending on strength of evidence; Lawmakers already preparing request for his removal, according to Valor
- Cunha has been one of the biggest hurdles to President Rousseff’s agenda in Congress; his exit may mean a smoother political environment, as there isn’t likely to be any other strong opposition name to fill his shoes
- Possibility of better political scenario doesn’t guarantee an easy path for Rousseff, as economic outlook continues to deteriorate; July unemployment rate at 7.5% vs 7% est., 6.9% prior, worst July figure since 2009
- Senate passed yday a bill that that unwinds payroll tax breaks; text was approved with the changes proposed in the Lower House, which reduces its budget impact but accelerates revenue increase
- If Senate had decided to amend bill, it would need to return for fresh approval in Lower House, delaying whole process
- Bill is first of a series of austerity measures; expectation of their approval in Senate led to better performance by BRL last week
Lest we should lose track of why this is important, recall that Brazil is looking to close a yawning budget gap on the way to ameliorating at least one part the following conundrum:
As BofAML put it on Wednesday, “monitoring the upcoming political events amid increasing political and economic uncertainties is important [as] these events [are] possible triggers to improve governability and spur a rebound in confidence, a necessary condition for an inflection in economic growth.” They continue: “Even after the government revised the primary fiscal target, risks remain to the 0.15% of GDP print, as some measures waiting to be voted on in Congress could increase public spending if approved.”
On that note, here’s a look at key upcoming events:
Why Are So Many People Freaking Out About A Stock Market Crash In The Fall Of 2015?
Is the stock market going to crash by the end of 2015? Of course stock market crashes are already happening in 23 different nations around the planet, but most Americans don’t really care about those markets. The truth is that what matters to people in this country is the health of their own stock portfolios and retirement accounts. There are a lot of people out there that are very afraid of what could happen if the money that they have worked so hard to save gets wiped out in a sudden financial collapse. And right now there is an unprecedented amount of buzz about the potential for a giant stock market crash by the end of this calendar year. In fact, I don’t think that I have ever seen more experts come out with bold predictions that a stock market crash will happen within a very specific period of time.
The following is a sampling of some of the experts that have made very bold proclamations about the rest of this year over the past few weeks. Many of these individuals are putting their credibility on the line by proclaiming that a stock market crash is just around the corner…
-Tom McClellan says that we are heading for an “ugly decline” and that there will be “nothing good for bulls for the rest of the year”…
Tom McClellan loves doing what financial advisers tell you not to do. He tries to time the financial markets — to the exact day, if his charts align just right.
At the moment, they are telling him to be bullish on the stock market for all of his trading time frames, including those that trade every few days, weeks and months. But bulls should be ready to flee, as soon as this week.
That’s because McClellan said his timing models suggest “THE” top in stocks will be hit some time between Aug. 20 and Aug. 26. He expects “nothing good for the bulls for the rest of the year,” he said in a phone interview with MarketWatch.
McClellan doesn’t have a strong view on how far stocks could fall, just that it will probably be an “ugly decline” lasting into early 2016.
-Harry Dent recently stated that we are just “weeks away” from a “global financial collapse“.
-Gerald Celente says that “the global economy has collapsed” and he is “predicting that we are going to see a global stock market crash before the end of the year“.
-Larry Edelson insists that he is “100% confident” that a global financial crisis will be triggered “within the next few months”…
“On October 7, 2015, the first economic supercycle since 1929 will trigger a global financial crisis of epic proportions. It will bring Europe, Japan and the United States to their knees, sending nearly one billion human beings on a roller-coaster ride through hell for the next five years. A ride like no generation has ever seen. I am 100% confident it will hit within the next few months.”
-Jeff Berwick, the editor of the Dollar Vigilante, says that there is “enough going on in September to have me incredibly curious and concerned about what’s going to happen“.
-Egon von Greyerz recently explained that he fears “that this coming September – October all hell will break loose in the world economy and markets“.
-Even the mainstream media is issuing ominous warnings now. Just a few days ago, one of the most important newspapers in the entire world published a major story about the coming crisis under this headline: “Doomsday clock for global market crash strikes one minute to midnight as central banks lose control“.
-The Bank for International Settlements and the IMF have jumped on the prediction bandwagon as well. The following comes from a recent piece by Brandon Smith…
The BISwarns that the world is currently defenseless against the next market crisis. I would point out that the BIS has a record of predicting economic crashes, including back in 2007 just before the derivatives and credit crisis began. This ability to foresee fiscal disasters is far more likely due to the fact that the BIS is the dominant force in global central banking and is the cause of crisis, rather than merely a predictor of crisis. That is to say, it is easy to predict disasters you yourself are about to initiate.
It is no mistake that the warnings from the BIS and the IMF tend to come too little too late, or that they are beginning to compose cautionary press releases today that sound much like what alternative analysts were saying a few years ago. The goal of these globalist organizations is not to help people prepare, only to set themselves up as Johnny-come-lately prognosticators so that after a collapse they can claim they warned us all, which can then be used as a rationalization for why they are the best people to administrate the economies of the planet as a whole.
So why are so many prominent voices now warning that a global financial crisis is imminent?
The answer is actually very simple.
A global financial crisis is imminent.
Back on June 25th, I issued a red alert for the last six months of 2015 before any of these other guys issued their warnings.
When I first issued my alert, things were still seemingly very calm in the financial world, and a lot of people out there thought that I was nuts.
Well, here we are just a couple of months later and all hell is breaking loose. 23 global stock markets are crashing, the price of oil has been imploding, a new currency war has erupted, industrial commodities are plunging just like they did prior to the market crash of 2008, a full-blown financial crisis has gripped South America with fear, and junk bonds are sending some very ominous signals.
In the U.S., things are beginning to slowly unravel. The Dow is now down over 1200 points from the peak of the market. At this point, it isn’t going to take much to push us into a bear market.
So enjoy what is left of August.
September is right around the corner, and if the experts that I mentioned above are correct, then it is likely to be one wild month.
Oil related stories
(courtesy Nick Cunningham/OilPrice.com)
Low Oil Prices Could Break The “Fragile Five” Producing Nations
Persistently low oil prices have already inflicted economic pain on oil-producing countries. But with crude sticking near six-year lows, the risk of political turmoil is starting to rise.
There are several countries in which the risks are the greatest – Algeria, Iraq, Libya, Nigeria, and Venezuela – and RBC Capital Markets has labeled them the “Fragile Five.”
Iraq, facing instability from the ongoing fight with ISIS, has seen its problems compounded by the fall in oil prices, causing its budget to shrink significantly. The government is moving to tap the bond markets for the first time in years, looking to issue $6 billion in new debt.
Revenues have been bolstered somewhat by continued gains in production. Iraq’s oil output hit a record high in July at 4.18 million barrels per day, up sharply from anaverage of 3.42 million barrels per day in the first quarter of this year. But with Brent crude now dropping well below $50 per barrel, Iraq’s finances are worsening. According to Fitch Ratings, Iraq may post a fiscal deficit in excess of 10 percent this year, and all the savings accrued during the years of high oil prices have been depleted.
Other political problems loom for Iraq. The central government and the semiautonomous region of Kurdistan have been unable to resolve a dispute over oil sales. With revenues running low for the central government, it has failed to transfer adequate funds to the Kurdish Regional Government (KRG). That led to the breakdown of a tenuous deal between the two sides that saw Kurdish oil sold under the purview of the Iraqi government. The KRG is selling oil on its own now in an effort to obtain much needed revenue in order to pay private oil companies operating in its territory.
Meanwhile, in southern Iraq, which produces the bulk of the country’s oil and has been far from the violence associated with ISIS, protests have threatened oil operations there. Protests at the West Qurna-2 oilfield operated by Russian firm Lukoil have raised concerns within both the company and the Iraqi central government about disruptions. The Prime Minister even traveled to the site to reassure Lukoil about the stability of its operations.
“Recent pressure from villagers and nearby residents making demands could force us to consider halting operations if they keep extorting us,” a Lukoil official reportedly said. Disruptions don’t appear to be imminent, but any cutback in production would be a huge blow to Baghdad and would plunge Iraq deeper into financial despair.
Low oil prices could also push Venezuela into a deeper crisis. The cost of insuring Venezuelan government bonds has hit its highest level in 12 years, indicating the growing probability of default. Critical parliamentary elections loom in December, but the government has already cracked down on opposition candidates and will likely prevent a fair election from taking place, even while President Maduro’s popularity sinks. The economy is already in crisis, but it is teetering on the brink of something more acute. Bloomberg’s editors openly wonder whether Venezuela’s neighbors are prepared for its collapse.
For Libya, already torn apart by civil war and the growing presence of ISIS militants, low oil prices are the last thing the country needs. ISIS violently crushed a civilian rebellion last week in the coastal city of Sirte, according to Al-Jazeera. Libya’s internationally-recognized government has called upon Arab states for help in fighting ISIS, something that the Arab League hasendorsed. Meanwhile, the country’s oil sector – the backbone of the economy – is producing less than 400,000 barrels per day, well below the 1.6 million barrels per day Libya produced during the Gaddafi era. In other words, Libya is selling far less oil than it used to, and at prices far below what they were as recently as last year. Citing IMF data, Bloomberg says that oil is selling for almost $160 per barrel less than what Libya would need it to be for its budget to breakeven.
Saudi Arabia does not belong in the same category of troubled countries, but it is also not immune to oil prices at multiyear lows, despite its vast reserves of foreign exchange. Saudi Arabia could run a fiscal deficit that is equivalent to about 20 percent of GDP. To finance public spending, Saudi Arabia has returned to the bond markets for the first time in eight years, issuing 15 billion riyals ($4 billion) in July, only to be followed up by an additionalbond offering of 20 billion riyals ($5.33 billion) in August. The government plans on taking on more debt in the coming months as well.
Still, Saudi Arabia has a market share strategy that it is pursuing, and there are no signs that it will reconsider.That could spell trouble for much more fragile oil-producing countries around the world.
Euro/USA 1.1177 up .0059
USA/JAPAN YEN 123.99 up .059
GBP/USA 1.5645 down .0036
USA/CAN 1.3151 up .0026
Early this Thursday morning in Europe, the Euro rose by 59 basis points, trading now well above the 1.11 falling to 1.1177; 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 and another Chinese currency devaluation although last night it strengthened a tiny .008 basis points.
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 6 basis points and trading just below the 124 level to 123.99 yen to the dollar.
The pound was down this morning by 36 basis points as it now trades well above the 1.56 level at 1.5645, 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 fell again by 26 basis points to 1.3151 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 and especially last week with the fall of the yuan carry trade.
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 Tuesday morning: down by 189.11 or 0.94%
Trading from Europe and Asia:
1. Europe stocks all deeply in the red
2/ Asian bourses all deeply in the red … Chinese bourses: Hang Sang red (massive bubble forming) ,Shanghai red (massive bubble ready to burst), Australia in the red: /Nikkei (Japan)red/India’s Sensex in the red/
Gold very early morning trading: $1138.50
Early Thursday morning USA 10 year bond yield: 2.09% !!! down 6 in basis points from Wednesday night and it is trading well below resistance at 2.27-2.32%
USA dollar index early Thursday morning: 96.20 down 26 cents from Wednesday’s close. (Resistance will be at a DXY of 100)
USA/Chinese Yuan: 6.3875 down .0003 ( Chinese yuan up 8.3 basis points)
Dow-Stockalypse-Wow: Bonds & Bullion Soar As Equities Crash
On a day like this – we deserve two clips…
And of course…
- *S&P 500 FALLS 2.1% FOR WORST DAY SINCE FEBRUARY 2014
So let’s dive in – here is the US equity indices Since their kneejerk pop after FOMC Minutes…NOT “Off The Lows”
- *S&P 500 SLIPS BELOW MARCH LOW OF 2,040, BOTTOM OF TRADING RANGE
And on the week…CARNAGE!
But futures show the swings even more dramatically… China China China…Fold…
Here are all the major stock indices showing the level of retardation…
And since the end of QE3…Small Caps are now unchanged, Dow and Trannies notably red…
VIX exploded back above 19…
65% Off Sale in TWTR…
and 18% Off Sale in DIS…
Surprise!!! Energy stocks are collapsing back to credit and commodity reality.. NOTE: Energy Credit Risk is at a record high 1110bps!
Who could have seen that coming?
This has been worrying us for a while…
Stocks cratered to catch down to credit’s reality once again… for the 3rd time in 10 days…
But stocks have a long way to go to reality…
Treasury yields collapsed with 10Y pushing back towards a 1 handle…10Y 2.07% lows, 30Y 2.74%
This leaves the entire Treasury complex lower in yield on the year (but but but all those clever economists said rates would rise?)
Swiss Franc contonues tobe well bid, as is the EUR, as Yellen popped the dollar bid bubble (albeit maybe briefly) yesterday with her confusion… This is the biggest 2day drop in USD Index in 3 months and closes at its lowest in 6 weeks…
Commodities all gained on the day (as the USD dumped) but crude was technically driven by the expiration…
While the carnage in stocks grabbed the headlines, the last 2 days have seen the biggest surge in gold prices sicne 2014…breaking back above its 50-day moving average…
Gold and Silver soared…
And finally this trend is not your friend…
Bonds are now the best performer of 2015 (up very modestly) with gold and silver ahead of stocks…
Bonus Chart: Is Oil Cheap? Is Gold Expensive?
Bonus Bonus Chart: with a big h/t to @RaoulGMI – This is the most important trendline in the world right now… which way next?
Bonus Bonus Bonus Chart…
Philly Fed Stagnant At 2015 Lows Amid Weaker Prices And New Orders
After July’s hope-crushing drop in the Philly Fed manufacturing survey, August printed 8.3, modestly higher than expectations of a modest rise to 6.5. Prices Paid and Prices Received tumbled as did New Orders as deflation has firmly reappeared: “percentage of firms reporting reductions in prices received exceeded those reporting increases in prices received”, but the headline index rose thanks to a pick up in employment and average workweek. The bottom line is that Philly Fed’s survey is flatlining at the lowest levls in 2 years; and on a side note, the not-discussed-much Philly Fed non-manufacturing survey utterly collapsed from 51.4 to 2.7 in July.
Philly Fed is going nowhere:
The breakdown was mixed:
And The Philly Fed’s special question sums it all up: global trade is disappearing.
Philly Fed increased from 5.7 in July to 8.3 in August.This index has hovered in a low range since the beginning of the current year, far below the highs of late 2014. The demand for manufactured goods, as measured by the survey’s current new orders index, remains low as well, falling slightly more than 1 point to 5.8 in August. However, the current shipments index rebounded 12 points to 16.7.
Input price pressures were subdued: The prices paid index fell 14 points, to 6.2. With respect to prices received for manufactured goods, a majority of firms (81 percent) reported no change in prices. The percentage of firms reporting reductions in prices received (11 percent) exceeded those reporting increases in prices received (6 percent) for the first time in three months.
* * *
Finally we have the Services side of Philly Fed collapsing…
July Philadelphia Fed Non-Manufacturing Index at 8.1
- July general activity for the firm fell to 2.7 vs 51.4
- New orders fell to -5.4 vs 27.0
- Sales fell to -21.6 vs 32.4
- Unfilled orders fell to -2.7 vs 10.8
- Inventories fell to -2.7 vs 5.4
- Prices paid fell to 18.9 vs 35.1
- Prices received fell to 5.4 vs 32.4
- Full-time employment fell to 5.4 vs 24.3
- Part-time employment fell to -2.7 vs 32.4
- Average employee workweek fell to 0.0 vs 18.9
- Wages and benefits fell to 24.3 vs 35.1
- Capital expenditures- plant fell to 10.8 vs 16.2
- Capital expenditures- equipment fell to 5.4 vs 18.9
Initial Jobless Claims Rise For 4 Straight Weeks – First Time In 5 Years
While still hovering at multi-decade lows, initial jobless claims (up 4,000 to 277k) have now risen for 4 straight weeks (for the first time since August 2010).
A good Bellwether that something is wrong as the conference board leaving indicators plunge to the lowest levels in over 2 years:
(courtesy Conference Board/zero hedge)
Conference Board “Leading Indicators” Plunges To Lowest Since March 2013
The July index of leading indicators, from The Conference Board, cratered in July. The self-referential index (which includes Treasury yields) tumbled to -0.2% as the curve steepened. The last time it was weaker than this was March 2013.
charts: courtesy Bloomberg
For Caterpillar, This Is What The “Second Great Depression” Looks Like
Having repurchased billions of its own stock near the all-time high price (or, to avoid cause-and-effect confusion,leading to all time high prices), Caterpillar recently hit its debt issuance ceiling and as a result is no longer able to sell debt and use the proceeds to buyback stock. The result: CAT stock has recently tumbled to levels last seen in 2011. And judging by its monthly retail sales data it is going much, much lower.
The reason: the second great depression which for industrial bellwether CAT started in December 2012 and has since resulted in 32 consecutive months of declining global retail sales and over a year longer than the decline observed during the great financial crisis, refuses to go away.
Notably, CAT suffered a sales decline in virtually every region, not just Asia where the drop accelerated from -19% to -25% Y/Y, but surprisingly in North America where the -5% slide was tied for the largest decline in two years. The one silver lining: Latin America is no longer seeing sales plunge by 50% – in august the Latin America plunge was “only” -37%.
So how can a company report 32 consecutive declines, the vast majority of which are double-digit? Simple: just think of its as Xeno’s paradox for the New Normal: the sad reality is that CAT retail sales can decline in perpetuity and they will never actually hit zero, although the same can not be said for CAT’s stock price if the stock buyback machinery has indeed gotten rusty.
well that about does it for tonight
I will see you tomorrow night