sept 16/Gold and silver rise ahead of the FOMC meeting/comex gold continues to leave the santuary/also dealer silver is declining rapidly/Kazakhstan runs out of foreign reserves/S and P lowers grade on sovereign Japan/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1119.20 up $16.40   (comex closing time)

Silver $14.88 up 56 cents.

In the access market 5:15 pm

Gold $1119.00

Silver:  $14.91

 

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

At the gold comex today we had a poor delivery day, registering 4 notices for 400 ounces  Silver saw 55 notices for 275,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 214.31 tonnes for a loss of 89 tonnes over that period.

In silver, the open interest rose by 632 contracts despite the fact that silver was down in price by 13 cents yesterday. Again, our banker friends tried to use the opportunity to cover as many silver shorts as they could and failed.  The total silver OI now rests at 158,007 contracts In ounces, the OI is still represented by .790 billion oz or 113% of annual global silver production (ex Russia ex China).

In silver we had 55 notices served upon for 275,000 oz.

In gold, the total comex gold OI rose to 413,333 for a gain of 2192 contracts. We had 4 notices filed for 400 oz today.

We had no changes in tonnage at the GLD,  thus the inventory rests tonight at 678.18 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. It sure looks like 670 tonnes will be the rock bottom inventory in GLD gold. It looks to me that China has taken the last amounts of physical gold from the GLD. I guess the only place left for China to receive physical gold will be the FRBNY and the comex.   In silver, we had no change in silver inventory at the SLV/Inventory rests at 320.915 million oz.

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

1. Today, we had the open interest in silver rose by 632 contracts up to 158,007 despite the fact that silver was down by 4 cents in price with respect to yesterday’s trading.   The total OI for gold rose by 632 contracts to 413,333 contracts, despite the fact that gold was down $4.90 yesterday.

(report Harvey)

2.Gold trading overnight, Goldcore

(/Mark OByrne)

3.  China opens for trading 9:30 pm est Tuesday, Wednesday morning/9:30 Shanghai time

(zero hedge

4. S and P lowers its rating on Japan to A+
(zero hedge)
5. The refugee crisis/two commentaries
(zero hedge)
6. Mike Krieger suggests that the upcoming financial crisis will see many bankers jailed
(Mike Krieger)
7.  Simon Black on the changing of the guard:  new technologies, new reserve currency/nations going bankrupt
(Simon Black)
8. Kazakhstan has just run out of USA dollars.  An upcoming glimspe as to what is going to happen will all countries run out of foreign reverse currencies
(zero hedge)
9.  Oil related stories:  3 commentaries/zero hedge/Alexis Arthur OilPrice.com

10.  USA stories/Trading of equities NY

a) Bellwether Fedex misses again, showing global growth in trouble.

b) Silver and gold jump on negative CPI/two commentaries/zero hedge)

c) record number of Americans 47.4 million poor souls live below the poverty line

(zero hedge)

d)  Raul Meijer believes that the Fed may be bold enough to raise rates tomorrow

(Raul Meijer)

11.  Physical stories

i)  Zero hedge and Steve St Angelo comments on the huge gold run at the comex.

JPMorgan sees its deliverable gold is now down to .33 tonnes.

(zero hedge and Steve St Angelo/SRSRocco report)

ii. James Turk talks with Eric King on gold backwardation

(Turk/Eric King/Kingworldnews)

iii.  Craig Hemke, of TFMetals, talks about the two scenarios on whether the Fed increases its interest rate or not and what it means
(Craig Hemke,TFMetals)
iv. India’s gold scheme designed to lessen demand

(GATA)

v. Chris Powell delivers his commentary today outlining the phoniness of data from the comex

(Chris Powell/Jessie Americain cafe, Craig Hemke/GATA)

vi.  Bill Holter’s extremely important commentary today is titled:

“Is YOUR “Pool” Full?”

12.  Today’s wrap up with Greg Hunter interviewing David Stockman

(David Stockman/Greg Hunter)

and well as other commentaries…

Let us head over and see the comex results for today.

The total gold comex open interest fell from 411,141 up to 413,333 for a gain of 2192 contracts despite the fact that gold was down $4.90 with respect to yesterday’s trading.   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 continued with its decline as gold ounces standing rose. What is also interesting is that the LBMA gold is continually witnessing a 7.00 plus premium spot/next nearby month as gold is now in backwardation over there. We now enter the delivery month of September and here the OI rose by 3 contracts down to 110 . We had 0 notices filed yesterday so we gained 3 contracts or 300 additional oz will stand for delivery in this non active month of September. The next active delivery month is October and here the OI rose by 171 contracts up to 22,289. The big December contract saw it’s OI rise by 1121 contracts from 281,135 up to 282,256. The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was estimated at 110,953 which is poor. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 85,687 contracts.
Today we had 4 notices filed for 400 oz.
 
And now for the wild silver comex results. Silver OI rose by 632 contracts from 157,375 up to 158,007 despite the fact that silver was down by 4 cents  with respect to yesterday’s price . As mentioned above we always have a huge contraction in the OI of an upcoming active precious metal month.  The bankers continue to pull their hair out trying to extricate themselves from their silver mess (the continued high silver OI with it’s extremely low price, combined with the banker’s massive physical shortfall) as the world senses something is brewing in the silver arena (judging from the high volume every day at the comex). We are now in the active delivery month of September. Here the OI fell by 5 contracts to 440. We had 5 notices filed yesterday, so we neither gained nor lost any silver contracts that will stand for delivery in this active delivery month of September.
The big December contract saw its OI rise by 496 contracts up to 122,677.The estimated volume today was estimated at 39,242 contracts (just comex sales during regular business hours) which is poor.  The confirmed volume yesterday (regular plus access market) came in at 24,902 contracts which is poor in volume.
We had 55 notices filed for 275,000 oz.

September contract month:

Initial standings

September 16.2015

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz 2,594.133 oz

HSBC,Manfra,

Scotia

 

Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  (nil)
No of oz served (contracts) today 4 contracts

 (400 oz)

No of oz to be served (notices) 110 contracts (11,000 oz)
Total monthly oz gold served (contracts) so far this month 24 contracts

(2,400 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 368,413.1   oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
we had 0 dealer deposits
total dealer deposit:  zero
We had 3 customer withdrawals:
 i) Out of Scotia: 2,397.707 oz
 ii) Out of Manfra:  96.45  3 kilobars
iii/ HSBC: 99.976 0z
total customer withdrawal: 2,594.133 oz
We had 0 customer deposit:

Total customer deposit: nil  oz

We had 2  adjustments:
i) Out of Delaware:  902.381 oz was removed from the dealer and this entered the customer account of Delaware
ii) Out of Manfra:  297.942 oz was removed from the dealer of Scotia and this entered the customer account of Manfra;

JPMorgan has only 0.3350 tonnes left in its registered or dealer inventory. (10,777.29 oz)  and only 874,018.71 oz in its customer (eligible) account or 27.18 tonnes

.
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 4 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
 
To calculate the final total number of gold ounces standing for the August contract month, we take the total number of notices filed so far for the month (24) x 100 oz  or 2000 oz , to which we  add the difference between the open interest for the front month of September (110 contracts) minus the number of notices served upon today (4) x 100 oz   x 100 oz per contract equals the number of ounces standing.
 
Thus the initial standings for gold for the September contract month:
No of notices served so far (24) x 100 oz  or ounces + {OI for the front month (110)– the number of  notices served upon today (4) x 100 oz which equals 12,700 oz  standing  in this month of Sept (0.4043 tonnes of gold).
we gained 3 contracts or an additional 300 oz will stand in this non active delivery month of September.
Total dealer inventory 162,034.084 or 5.0399 tonnes
Total gold inventory (dealer and customer) =6,890,244.938 or 214.31  tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 214.31 tonnes for a loss of 89 tonnes over that period.
 
 the comex continues to massively bleed gold
end
And now for silver

September silver initial standings

September 16/2015:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  630,914.965oz

(CNT)

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 860,190.075 JPMorgan, CNT,

Brinks,Scotia

No of oz served (contracts) 55 contracts  (275,000 oz)
No of oz to be served (notices) 385 contracts (1,925,000 oz)
Total monthly oz silver served (contracts) 1093 contracts (5,465,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month 603,500.075 oz
Total accumulative withdrawal  of silver from the Customer inventory this month 16,017,821.3 oz

Today, we had 0 deposit into the dealer account:

total dealer deposit; nil oz

we had 0 dealer withdrawals:
total dealer withdrawal: nil  oz
We had 4 customer deposits:
 i) Into CNT:  5843.500 oz
ii) Into JPMorgan: 603,500.075  oz
iii) Into Brinks:  100,031.400 oz
iv) Into Scotia;  150,815.100 oz

total customer deposits: 860,190.075oz

We had 1 customer withdrawals:
i)Out of CNT:  630,914.965 oz

total withdrawals from customer: 630.914.965   oz

we had 1  adjustments
 i) Out of CNT:
we had a withdrawal of 873,408.595 oz from the dealer and this entered the customer account of CNT
Total dealer inventory: 47.865 million oz
Total of all silver inventory (dealer and customer) 167.54 million oz
the silver comex has its dealer or registered (for deliverable sale) continuing to decline. 
The total number of notices filed today for the September contract month is represented by 55 contracts for 275,000 oz. To calculate the number of silver ounces that will stand for delivery in September, we take the total number of notices filed for the month so far at (1093) x 5,000 oz  = 5,465,000 oz to which we add the difference between the open interest for the front month of September (440) and the number of notices served upon today (55) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the September contract month:
1093 (notices served so far)x 5000 oz +( 440) { OI for front month of September ) -number of notices served upon today (55} x 5000 oz ,=7,390,000 oz of silver standing for the September contract month.
we neither gained nor lost any silver ounces that will  stand in this active delivery month of September.
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
And now the Gold inventory at the GLD:
Sept 16/2015:  no change in gold tonnage at the GLD/Inventory rests at 678.18 tonnes
Sept 15./no change in gold tonnage at the GLD/Inventory rests at 678.18 tonnes
Sept 14./no change in gold tonnage at the GLD/Inventory rests at 678.18 tonnes.
Sept 11/no changes in tonnage at the GLD/inventory rests at 678.18 tonnes
Sept 10. late last night, a huge withdrawal of 4.41 tonnes/this gold is no doubt heading towards Shanghai/Inventory 678.18 tonnes
Sept 9/2015: no changes in gold inventory at the GLD/rests tonight at 682.35 tonnes
Sept 8/ a slight withdrawal and this no doubt was to pay for fees/withdrawal of .24 tonnes/GLD inventory tonight at 682.35 tonnes
Sept 4/ again no changes in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
sept 3/no change in gold tonnage at the GLD/inventory rests at 682.59 tonnes.
Sept 2.2015: no change in gold tonnage at the GLD/inventory rests at 682.59 tonnes
Sept 1/2015: no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 31./no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 28.2015:/no change in gold tonnage at the GLD/Inventory rests at 682.59 tonnes
August 27./ a huge addition of tonnage at the GLD to the tune of 1.49 tonnes/Inventory rests at 682.59 tonnes
Sept 16/2015 GLD : 678.18 tonnes
end

And now SLV:

sept 16.2015: no change in inventory at the SLV/rests tonight at 320.915 million oz/

Sept 15./no change in inventory at the SLV/rests tonight at 320.915 million oz

Sept 14./we had another withdrawal of 1.145 million oz from the SLV/Inventory rests at 320.915 million oz

Sept 11.2015: no changes in silver inventory at the SLV/inventory rests at 322.06 million oz

Sept 10.2015: we had no changes in silver inventory at the SLV/rests tonight at 322.06 million oz

Sept 9.2015:

we had another huge withdrawal of 1.336 million oz of silver from the vaults of the SLV/Inventory rests at 322.06 million oz

Sept 8/we had a huge withdrawal of 1.524 million oz of silver from the SLV/Inventory rests tonight at 323.396 million oz.

Sept 4.2015:no changes in inventory at the SLV/rests tonight at 324.923 million oz

sept 3/we had a small withdrawal of 140,000 oz of silver from the SLV/Inventory rests at 324.923 million oz

Sept 2:  we had a small withdrawal of 859,000 oz of silver from the SLV vaults/inventory rests tonight at 325.063 million oz

September 1/no change in inventory over at the SLV/Inventory rests tonight at 325.922 million oz

August 31.a huge addition of 954,000 oz were added to inventory today at the SLV/Inventory rests at 325.922 million oz

August 28.2015: no change in inventory at the SLV/Inventory rests tonight at 324.698 million oz

August 27.no change in inventory at the SLV/Inventory rests at 324.698 million oz

September 16/2015:  tonight inventory rests at 320.915 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 8.8 percent to NAV usa funds and Negative 8.3% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.7%
Percentage of fund in silver:37.0%
cash .3%( Sept 16/2015).
2. Sprott silver fund (PSLV): Premium to NAV falls to+1.46%!!!! NAV (Sept 16/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – .20% to NAV September 16/2015)
Note: Sprott silver trust back  into positive territory at +1.46% Sprott physical gold trust is back into negative territory at -.20%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)

Bullion Safe Haven – Gold’s Near Highs In Currencies Globally

 

 

Gold has risen to near record highs in many currencies internationally. Bullion is again acting as a safe haven for people throughout the world whose currencies are devaluing and for those who are fleeing instability, terrorism and war.

GoldCore: Gold vs Syrian Pound

Gold is not reaching record highs per se, rather these paper currencies are losing their value or are being devalued.  People throughout the world who own safe haven gold are, again, protecting their purchasing power.

Yet you would not know this looking at the many negative headlines and sentiment surrounding gold. Our Western-centric views lead to a simplistic focus on gold solely in dollars, euros and pounds. For most of humanity, gold’s price in dollars is irrelevant. What is relevant is gold in their local currency terms.

GoldCore: Gold vs Ukranian Hryvnia

The gold charts from Nick Laird’s excellent www.sharelynx.comclearly show this important and little known fact.

People in all continents of the world are being protected by owning gold. People in the Ukraine in Europe, in Syria in the Middle East, in South Africa in Africa and indeed, in Brazil and Argentina in South America are all seeing their currencies devalue rapidly as competitive currency devaluations andcurrency wars intensify.

GoldCore: Gold vs South African Rand

The direct experience of these people – both historically and today – clearly shows gold’s importance as financial and monetary insurance. The terribly sad scenes of desperate refugees and economic migrants trying to access our wealthy European shores and nations is a tragedy of biblical proportions. Indeed, it has parallels with the tragic Jewish experience throughout history.

Nothing will compensate these people for the destruction of their nations and being forced to leave their homelands in search of peace, security and a better standard of living. Those Syrian, Egyptian, Iraqi and other refugees and economic migrants that have brought portable gold coins and bars or even gold jewellery with them will be in a better position to start new lives in Western nations.

As were the Jewish people who fled Germany and other European nations in the 1930s and 1940s.

GoldCore: Gold vs Brazilian Reals

Unfortunately geopolitical risk is set to continue and will likely get worse before getting better.

We expect currency devaluations to deepen and intensify. It is complacent in the extreme to assume that other fiat currencies such as the dollar, euro and pound are immune to this and that they too will not be devalued in the coming years.

Today, most of the developing world, tomorrow most of the developed world. Today Ukraine, Syria, South Africa and Brazil. Tomorrow Ireland, Greece, the UK, the EU, other Middle Eastern and African nations and the U.S.

With all due respect to the on-going and all-consuming focus on the ‘all powerful’ Federal Reserve and their long awaited piffling 25 basis point interest rate rise, or not. In our unstable world the tragic refugee crisis and the global competitive currency devaluations that are being seen today are of far greater economic and monetary consequence to the wealth of nations and their people.

DAILY PRICES
Today’s Gold Prices: USD 1109.75, EUR 987.54 and GBP 719.82 per ounce.
Friday’s Gold Prices: USD 1108.00, EUR 977.98 and GBP 716.97 per ounce.
(LBMA AM)

Gold had a marginal loss of $3.20 to $1,105.50 while silver fell 1 cent to $14.43 an ounce on the COMEX yesterday. Gold was a few dollars higher in gold trading in Singapore and is marginally higher in European trading.

GoldCore: Gold in GBP - 10 Years
Gold in GBP – 10 Years

Gold is holding near $1,109/oz this morning, a touch higher than where they ended Tuesday but little changed from this time yesterday. The metal fell 0.3% yesterday, but remained hemmed into the narrow (less than $8) range that it has stuck to this week.

Silver bullion and platinum are also a touch higher, but palladium’s down 0.6%, surrendering some of yesterday’s impressive 2.3% gains. All eyes are on the ‘all powerful’ Fed.

end

 

I have outlined this to you yesterday.  Zero hedge does a great job providing the details of JPM’s liquidation of their dealer (deliverable) gold. It also highlights the fact that all official vaults are seeing a run on gold as investors are scared out of their minds holding gold at the comex.

(courtesy zero hedge)

 

Comexodus: JPMorgan’s Vault Is One Withdrawal Away From Running Out Of Deliverable Gold

 

One week ago, when we reported the record plunge in registered gold held by the various Comex gold warehouses in general, and JPMorgan in particular, which saw the “gold coverage” ratio, or the number of paper claims through open futures interest for every ounce of deliverable gold, soar to what we then thought was a record, and unsustainable 207x, we thought this situation would be promptly rectified as a few hundred thousand ounces of eligible gold would be “adjusted” back into the “registered” category.

Not only has this not happened, but with every passing day the situation is getting progressively worse.

According to the latest Comex vault data, not only was another 157K ounces withdrawn today, but the conversion of Registered into Eligible continues, and as a result another 10% of total deliverable gold was “adjusted away”, leaving just 163,334 ounces of registered gold: the lowest in Comex history.

As a result, the ratio of Eligible to Registered gold is now a record high 41.2x in the history of the Comex.

 

Once again the culprit for the decline was JPM which saw not only a 122,124 ounces of Eligible gold be withdrawn, reducing the total by 13% to 750K ounces, but 8.9K ounces of registered gold was pushed into the Eligible category, in the process reducing total JPM registered gold by 45% overnight to a paltry 10,777 ounces: this amounts to only 335 kilograms of gold, or just 27 bricks of “good delivery” gold.

 

Finally, since aggregate gold open interest continues to remaining consistent at just about 41 million ounces of gold, today’s latest ongoing reduction in deliverable Comex gold means that as of yesterday’s close, there was a record 252 ounces of gold paper claims to every gold physical ounce of currently available and deliverable gold.

To summarize: last week we were confident that JPM would promptly adjust a few hundred thousands ounces of Eligible gold back into Registered status to silence growing concerns about Comex distress. A week later we are not as concerned by the relentless surge in paper gold dilution, as we are that JPM still has not even bothered to do this. Especially since with just 335 kilograms of gold, or less than 27 bricks, JPMorgan is now just one withdrawal request away from running out of deliverable physical gold.

end

 

 

 

Steve St Angelo picks up on the same theme as above and he includes the huge withdrawal of registered or dealer silver for the past 5 months.

 

(courtesy Steve St Angelo/SRSRocco report)

 

JP Morgan Loses 45% Of Registered Gold Stock In One Day

— Posted Wednesday, 16 September 2015 |

By Steve St. Angelo, SRSrocco Report

While the drain of COMEX gold and silver Registered inventories continues as demand for physical precious metals increases, JP Morgan experienced a 45% decline of its Registered Gold Inventories in one day. JP Morgan now only has a lousy 10,777 oz of gold remaining in its Registered gold inventories.

Basically, JP Morgan holds 1/3 metric ton of gold in its Registered inventories. This is the reason we are seeing the paper gold ratio on the COMEX above the 250/1 ratio. If we look at the COMEX warehouse table below, we can see just how little Registered Gold remains on the exchange:

Not only did JP Morgan suffer a 45% reduction (8,941 oz) of its Registered Gold inventories, it also experienced a 122,124 oz withdrawal from its Eligible stocks. We must remember, its JP Morgan’s Registered Inventories that are available for delivery into the market, not its Eligible.

Currently, the COMEX holds a total of 163,334 oz (5 metric tons) of gold in its Registered inventories for ALL BANKS… LOL.

COMEX Silver Registered Inventories Plunged Again Today

If you read my article, Stunning Development in the U.S. Silver Market, you would have seen this chart below:

As of yesterday, there were 50.4 million oz (Moz) of silver stored as Registered inventories at the COMEX warehouses.  (Harvey:  today 47.865 million oz) What is interesting about the current drain of COMEX Registered silver inventories, is that its average monthly decline rate of 4 Moz (per month) is more than double the previous decline from March 2010 to July 2011 of 1.8 Moz per month.

For whatever reason, the Registered silver inventories are declining at a much faster pace than they were during the huge price spike in 2011, even though the price of silver is trading at $14-$15 while industrial silver demand is falling.

Today’s COMEX silver warehouse update was another whopper:

While the exchange experienced a net 450,657 oz deposit of silver, the important figures to focus on are the decline in Registered inventories. Brinks transferred 568,092 Registered silver to its Eligible category and the CNT Depository withdrew 601,231 oz for a total of 1,169,324 oz.

The total Registered silver inventories at the COMEX are now at 48.6 Moz compared to a high of 70.5 Moz in April. As I stated above, the average monthly decline rate of silver out of the COMEX Registered was 4 Moz. However, in one day it fell nearly 1.2 Moz.

With India importing record amounts of silver as well as the huge surge of physical silver investment demand, it is putting stress on the 1,000 oz wholesale market. It will be interesting to see the Fed rate hike decision on Thursday and its impact on the precious metals.

If the Fed raises or keeps rates the same, I believe we will continue to see more stress on the wholesale precious metals market. We live in interesting times.

-END-

 

 

James Turk does a good job explaining why gold should never be in backwardation.  Gold at the comex is slightly in backwaration: gold at the LBMA is fully in backwardation:

 

 

 

(courtesy James Turk/Kingworldnews)

Backwardation in gold hints at end of price suppression, Turk tells KWN

Section:

2:45p ET Tuesday, September 15, 2015

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk today tells King World News about the continuing backwardation in gold futures, an indication of great strain in the gold market, and wonders if something similar to 1968’s collapse of the London Gold Pool price suppression scheme is imminent. Turk’s interview is excerpted at KWN here:

http://kingworldnews.com/the-secret-operation-behind-closed-doors-and-a-…

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

end

 

 

 

Craig Hemke does a superlative job outlining the two scenarios as to what might happen to gold and silver once the decision on interest rates is announced tomorrow afternoon.  It is my belief that they can never raise rates as this will blow up the entire financial system of the globe.

 

 

(courtesy Craig Hemke/”Turd Ferguson”/GATA/TFMetals Report/)

TF Metals Report: Well, here we go

Section:

11:27a ET Tuesday, September 15, 2015

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today offers two scenarios for market reaction to the Federal Reserve’s interest rate decision on Thursday. He thinks that the monetary metals are being set up this week to break down through support prior to resumption of extraordinary measures by central banks to save the world financial system once more. His commentary is headlined “Well, Here We Go” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/7141/well-here-we-go

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

end

The crazy scheme of India to suppress gold’s demand over there.  It will never work

 

(courtesy DNAindia.com/GATA)

India’s gold bond scheme is structured to cut demand for metal

Section:

10:30a ET Tuesday, September 15, 2015

Dear Friend of GATA and Gold:

Writing today for the newspaper DNA in Mumbai, investment adviser Harsh Roongta explains, if a bit inadvertently, how the Indian government’s gold bond scheme is structured to reduce demand for the monetary metal and thus push its price down. Roongta’s analysis is headlined “Gold Bond Scheme Comes with Attendant Costs” and it’s posted at DNA India here:

http://www.dnaindia.com/money/report-gold-bond-scheme-comes-with-attenda…

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

 

end

Are monetary metals futures markets legitimate anymore? Are any markets?

Section:

8:41a ET Wednesday, September 16, 2015

Dear Friend of GATA and Gold:

Is there a worsening shortage of monetary metal in the financial markets?

The argument is heating up in the Internet section of the metals netherworld.

Dave Kranzler of Investment Research Dynamics elaborates today in commentary headlined “The Comex Is One Big Lie”:

http://investmentresearchdynamics.com/the-comex-is-one-big-lie/

The TF Metals Report’s Turd Ferguson replies directly to Jeff Christian of CPM Group and Bron Suchecki of the Perth Mint in commentary headlined “The Attack of the Apologists”:

http://www.tfmetalsreport.com/blog/7144/attack-apologists

Of course there’s always metal around, especially gold, which is produced mainly to be hoarded, unlike silver, most of which is consumed in manufacturing. So the question is really the price, the ratio of monetary metal’s value to the value of currencies and other assets, that will draw metal into the market, and especially the price that will be permitted by governments that issue currencies whose own value is the reciprocal of the prices of the monetary metals.

That’s why your secretary/treasurer increasingly is inclined to consider Comex gold futures market data meaningless, as Kranzler and Ferguson do — because at a moment’s notice central banks and governments always can inject metal or claims to metal into the system, through intermediaries. Metal available in the futures market system, about which data, reliable or not, is published, is not as important as metal available or claims to metal that can be injected into the system by government, about which no data is available.

That’s also why GATA long has maintained that no analysis of the monetary metals market is worth much if it fails to address these questions:

— Are central banks and governments in the gold, silver, and commodity markets surreptitiously or not?

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

— If central banks and governments, 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 confirming the surreptitious intervention in these markets by central banks and governments has been summarized at GATA’s Internet site here:

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

It would be nice if those who assert the legitimacy of the markets would address this documentation. That they decline to do so is itself evidence that something is very wrong.

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

 

 

end

 

 

And now Bill Holter with an extremely important commentary for today:

 

 

Is YOUR “Pool” Full?

Yesterday was a very interesting day, first my mailbox was jammed with readers saying “did you see what Bron Suchecki had to say about you”? http://research.perthmint.com.au/2015/09/14/who-is-the-player-and-who-is-being-played/   Then a second wave of e-mails came through asking if I had seen the article Kitco put out regarding COMEX inventories? http://www.kitco.com/news/2015-09-15/Don-t-Believe-The-Hype-Comex-Gold-Warehouses-Well-Stocked-Two-Analysts.html
Before hitting Mr. Bron over the head with logic, let’s look at the Kitco article titled “Don’t believe the hype, COMEX warehouses well stocked”.   First it is worth noting Kitco’s article cites only two sources, Barclays and CPM group.  If you recall back in 2010 during the CFTC hearing, Jeffrey Christian of CPM accidentally spilled the beans when he said what they called the “physical market” was actually more than 100-1 paper to actual gold.  Barclays and CPM are perennially long term bullish and short term neutral/bearish, for that matter, most articles I read out of Kitco are similar.  It is as if they try to temper immediate demand for product, Jon Nadler of Kitco was living proof of that.  Why does Kitco continually put out “opinion” pieces negative to their own product?  Are they afraid of a stampede?  The obvious question in my own mind is how would their pooled accounts fare under such circumstance?  
  Getting to the heart of their article, registered stocks of COMEX gold are now barely over 5 tons and JP Morgan’s position is about 1/3rd of one ton.  I can remember when 30 tons or much more was normal for the registered category and I seem to remember just a couple of months back JP Morgan claimed nearly 20 tons registered.  So no matter what spin Kitco puts on this, the current registered warehouse stocks are ridiculously low.  To put these tiny hoards into perspective, 5 tons of gold is the laughable number of $176 million, JP Morgan’s position is no bigger than a single large retail client at about $10 million!
Switching over to Bron Suchecki of The Perth Mint of Australia, first I want to say “thank you” for thinking “Bill Holter” is important enough to refute.  He wrote “Bill Holter may not think that you should be shocked about 25% premiums in silver and that “whatever you must pay to get it into your hands” is fine. Personally I can’t see the sense of paying 25% when for a few percent you can buy physically backed pool accounts.”  First it should be said Mr. Suchecki’s “logic” is his opinion as you will shortly see.  Rather than going after his entire piece, let’s just look at the logic used in his refutation of my article.  If Mr. Suchecki would like to debate the merits of any of my work, I will be happy to do so publicly via Skype, live or whatever format.
If you read my article he refers to the end where I ask the question “what is the real price of silver, is it what you pay on COMEX/LBMA/pooled account or is it the amount you must pay to receive it in your hand?”  If silver is “in your hand”, you then know for a FACT you own it, no questions.  If you have a “receipt” for silver, how do you know the silver is actually there?  Even CME group has disclaimered they cannot guarantee the individual reportings of member firms.  COMEX and LBMA (thank you Jeffrey Christian) have already admitted they operate on a fractional reserve basis.  How do we know the pooled accounts are not operated in the same fashion?  From a logic standpoint, we know for a fact China alone is delivering via SGE more gold than is produced on the planet …then you can add in India’s demand of 1,000+ tons before the rest of the world accounts for even one ounce.  Where O where is this supply coming from if no one fesses up to their vaults being depleted?  Ft. Knox/West Point are full  right?  Just look at the audits …from 1956 (sarcasm).  GLD is full although if you read the prospectus you might be surprised at what it could be “full of”.
Maybe I am just too skeptical and should be more “trusting”?  Most people I know who have purchased gold and silver have done so for the VERY REASON they do not trust their government/system/currency to save their hard earned capital in!  As it stands right now, if you want real silver in your hand you must pay a hefty premium over the paper markets.  Said differently (by me),  if you want to “hope or think” you own silver you can do so by paying a discount to the real thing, it is individual choice.  For some people just seeing the word “gold or silver” is good enough, for me it is not.  It is my money and my choice.  I do not trust the currency markets and do not trust financial institutions for good reason.  They have both already proven to be poor stores of long term value and poor custodians during times of stress (we could talk about bail in legislation but a topic for another day, legislation has been written to be used).
It just occurred to me the two articles were like a one two punch from the Canadian powerhouse Kitco and Australia’s Perth mint.  It’s a shame Jon Nadler couldn’t still be around to harmonize with Bron Suchecki but I believe this is a case of “they doth protest too much”!  In my opinion when all is said and done, I believe one of the largest scandals in all of history will be the discovery “vaulted gold is gone”.  I believe MANY will discover they do not own what they thought they did and their “pool is not full”…this part is my opinion.
Not opinion is this, physical supply does not and has not for years been able to meet demand.  The supply has had to come from somewhere and I do not know where this “somewhere” is.  I also know that this “somewhere” must be a place where actual silver or gold exists(ed) and is available for delivery.  The reason people own gold or silver is to protect themselves from a financial collapse.  Factually, NOTHING has been changed or fixed since the 2008 affair, what comes will be very close to the same thing only worse as debt and leverage ratios are far worse.  A financial collapse is mathematically coming, this is not opinion.
Gold and silver are crash insurance and will be “called” on when the markets break.  They must be available in a time of crisis to perform their function.  If you hold metal in hand, you have no question as to whether you own it.  Your alternative is to trust Bron Suchecki et al that your “receipt” is in fact fully backed by metal.  If Bill Holter is wrong, you will still have your metal albeit slightly less than you could have had at the discounted paper rates.  If Bron Suchecki is wrong and all this paper is not in fact backed, you end up just like everyone else, broke!
I will finish with this.  Bill Holter is not asking you to trust him.  He is putting forth logic and welcomes you showing where the logic is faulty.  I have pointed out Mr. Suchecki’s poor logic as it is based on his opinion.  He basically says to an investment segment untrusting to begin with ,”trust paper”.  Sorry Bron, I’d like to but I trust my own eyes far more than you or anyone else’s word!  Logic is logic and if more gold has been demanded than produced for years upon years, it had to come from somewhere yet no one says their vault has been emptied …logic tells me someone is lying as to how full their pools really are.
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome (even from Bron Suchecki) 
bholter@Hotmail.com

 

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

1 Chinese yuan vs USA dollar/yuan falls a bit in value, this  time at   6.3707/Shanghai bourse: deeply in the green and Hang Sang: green

2 Nikkei up 145.12   or 0.81.%

3. Europe stocks all in the green except London      /USA dollar index up to  95.83/Euro up to 1.1217

3b Japan 10 year bond yield: falls to .378% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.58

3c Nikkei now above 18,000

3d USA/Yen rate now just above the important 120 barrier this morning

3e WTI:  45.30 and Brent:  48.43

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 rises to .763 per cent. German bunds in negative yields from 4 years out

 Greece  sees its 2 year rate falls to 11.39%/Greek stocks this morning up by 1.56%:  still expect continual bank runs on Greek banks /

3j Greek 10 year bond yield rises to  : 8.64%  

3k Gold at $1108.00 /silver $14.54  (8 am est)

3l USA vs Russian rouble; (Russian rouble up 79/100 in  roubles/dollar) 65.97,

3m oil into the 45 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  (already upon us). 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 .9754 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0941 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 now enters in negative territory with the 10 year moving further from negativity to +.763%

3s The ELA lowers to  89.1 billion euros, a reduction of .6 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 2.28% early this morning. Thirty year rate below 3% at 3.07% / yield curve flatten/foreshadowing recession.

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

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

end

 

China Plunge Protectors Unleash Berserk Buying Spree In Last Hour Of Trading As Fed Meeting Begins

Maybe China’s Plunge Protection, aka “National”, Team did not enjoy Bloomberg’s poking fun of its investing “success” (“the 46 companies that reported China’s Securities Finance Corp as a top 10 shareholder in the past two months lost an average 29 percent since the  announcement, versus a 21 percent drop for the Shanghai Composite Index), maybe China was just embarrassed at the biggest 2-day drop in over a month despite increasingly grotesque and entertaining (if not for the sellers) market manipulation measures, or perhaps the PBOC simply wanted to close above 3000 the day the Fed starts its “most important meeting ever”, but for whatever reason starting in the last hour of trading and continuing until the close, the Shanghai Composite – after trading largely unchanged – went from red on the day to up 4.9% after hitting 5.9% minutes before the close – the biggest one day surge since March 2009 – and nearly erasing the 6.1% drop from the past two days in just about 60 minutes of trading, providing a solid hour of laughter to bystanders and observers in the process.

Some observations on the move from Bloomberg:

  • Shanghai Composite Index closes 4.9% higher, biggest gain since Aug. 27, after surging as much as 5.9% in late trading.
  • ChiNext +7.2%, biggest jump on record, as 62 of 79 stocks traded rise 10%
  • Volume remains light, with Shanghai ~47% below 100-day avg
  • More than 300 SHCOMP stks up limit 10%; Biggest index movers incl. PetroChina, CRRC Corp., China Shipbuilding
  • SHCOMP pares ytd loss to 2.6%
  • “There’s need for a technical rebound after recent declines, and investors may be expecting some favorable policies to support the market,” Central China Securities strategist Zhang Gang says by phone.

“I suspect state support may be behind the sharp rally in the final hour,” said Bernard Aw, a strategist at IG Asia, referring to 5% jump. “This is huge even if the positive mood from the U.S. session helped boost risk appetite.” You don’t say…

That no carbon-based trader can trade this utter mess is now beyond clear to everyone.

Other Asian markets traded mostly higher following the strong close on Wall Street where better than expected retail sales group data and upward revisions of the prior retail figures supported sentiment. ASX 200 (+1.6%) outperformed amid broad based gains across all sectors, while Nikkei 225 (+0.8%) was dictated by JPY weakness. 10yr JGBs traded lower as the risk on sentiment combined with the poor 20yr JGB auction where the tail in price widened significantly and b/c was at its lowest since May 2013.

European equities have spent the morning firmly in positive territory today (Euro Stoxx: +1.0%), with positive sentiment filtering through from the Asia session. Said otherwise, “positive sentiment” and goodwill from government manipulation on one continent now spills over everywhere else. The key driver was today’s European inflation print which rose just 0.1%, below the 0.2% expected, and confirmation Europe’s Q€ is also not working, thereby unleashing demands for even more Q€ which should boost stocks even higher if not the economy.

On a sector specific breakdown, materials and energy names are among the session’s laggards despite the commodity complex seeing a bid this morning on the back of improved Chinese sentiment. The most notable stock specific news in Europe saw SABMiller (+20.0%) announce they expect AB Inbev (+7.5%) to make an offer, although noting that no proposal has been put forward yet, with the announcement seeing both companies rise sharply to be among the best performers in Europe . Luxury names are also among the best performers today after Richmont (+6.4%) reported better than expected sales pre market, dragging LVMH higher in tandem. In terms of US earnings today, FedEX are set to report pre market, with Oracle to report after the closing bell.

In fixed income markets Bunds reside in negative territory in tandem with strength in equities to extend on losses seen yesterday afternoon , with the German benchmark falling tandem with T-Notes on the back of the better than expected US Retail Sales Control Group (M/M 0.40% vs. Exp. 0.30%). Of note German 5/30 broke through the 121 bps resistance yesterday to now reside at their highest levels since mid-July after the 30yr auction earlier in the session.

FX markets have seen an unwind of safe haven bids given the upbeat Chinese sentiment and as such weakness has gone through EUR and JPY, while commodity currencies have benefitted from the aforementioned strength in commodities , with the likes of CAD, AUD and RUB all experiencing a bout of strength in early trade. Following the S&P downgrade of Japan, the USDJPY has broken to the upside – for now the S&P futures correlation algos have forgotten to follow its surge higher.

In terms of notable data, the UK employment data today saw GBP/USD breaking out of a tight range and above the 1.5400 handle in an immediate reaction to the substantial beat on weekly earnings as well as the unexpected fall in ILO unemployment. Elsewhere, today has seen the final reading of Eurozone CPI, which showed a fall in Y/Y reading (0.10% vs. Exp. 0.20%) and as such saw further weakness go through EUR.

Goldman Sachs Chief Economist Hatzius said it is not out of the realm of the possibility that the Fed will not hike rates until 2016. (BBG TV) Of note, Goldman Sachs are expecting the Fed to remain on hold at Thursday’s rate decision and Chief Economist Hatzius expects the Fed to hike rates in December.

Looking at commodities, Oil prices trade higher heading into the US open as yesteday’s API inventories showed a draw-down of 3100K and ahead of today’s DoE inventories (Exp. 1750k, Prey. 2570k). Strength in energy comes in tandem with strength within the metals complex, which comes alongside the aforementioned boost in sentiment from China, with silver, nickel and copper among the best performers.

Looking ahead, today’s highlights include US real average weekly earnings and CPI as well as New Zealand GDP, but the main event of the week is the FOMC “first rate hike in 9 years” rate decision, which starts today and concludes tomorrow.

In summary: Europe’s Stoxx 600 rises 1.2% as of 11:50 am U.K. time on volume that is ~112% of the 30-day average at this time of day, with VStoxx volatility index tumbling to a near 4-week low as Fed set to begin 2-day rate meeting. Beverage stocks soar on SABMiller/AB InBev deal talks. Richemont’s revenue beat sparks relief rally in luxury stocks. China stocks jump in last hour of trading. Japan cut to A+ from AA- by S&P; outlook stable.

Market Wrap

  • Equities: S&P 500 futures -0.2% at 1965.8, Shanghai Composite +4.9%, CAC 40 +1.2%,
  • VStoxx Index -7.3% at 27.77, lowest since Aug. 21
  • Equity indexes: FTSE 100 up 0.8%, CAC 40 up 1.2%, DAX up 0.5%, IBEX 35 up 1.2%, FTSE MIB up 0.9%, Euro Stoxx 50 up 1.2%
  • 18 out of 19 Stoxx 600 sectors rise; food & beverage is the most active, +4.5% on 228% 30-day avg. vol., boosted by SABMiller/AB InBev deal talks
  • Bonds: German 10yr yield +2bps to 0.76%, Greek 10yr yield -7bps to 8.56%, Portugal 10yr yield -3bps to 2.68%
  • Credit: iTraxx Main down 0.5 bp to 71.53, iTraxx Crossover down 4.5 bps to 326.26
  • FX: EUR/GBP +0.8%, Sterling spot +0.5%, Euro spot -0.3% at 1.1235, dollar index up 0.1% at 95.707
  • Commodities: WTI Futures +1.8%, LME 3m Nickel +1.6%, Brent crude up 1.6% at $48.53/bbl, Gold up 0.3% at $1109.03/oz, Copper up 0.6% at $5380/MT
  • AB InBev Confirms Made M&A Approach to SABMiller’s Board
  • Glencore Sells $2.5 Billion in Stock to Reduce Debt Load

Bulletin Headline Summary from Bloomberg and RanSquawk

  • Equities trade in the green while JPY and EUR see weakness on the back of a positive Chinese close
  • GBP/USD broke above the 1.5400 handle in an immediate reaction to higher than expected weekly earnings as well as the unexpected fall in ILO unemployment
  • Looking ahead, today’s highlights include US real average weekly earnings and CPI as well as New Zealand GDP
  • Treasuries higher despite rallies in Asian and European stocks before Fed’s two-day meeting begins; market remains split on prospect of 1st rate increase in more than 9 yrs, based on published research.
  • China’s stocks surged after the Shanghai Composite Index slid below the key 3,000 level, with gains coming in the last hour of trading in a pattern that’s become associated with state support
  • Euro area consumer prices rose 0.1% in August, lowest in four months and below expectations, after +0.2% increase in July, according to the EU’s statistics office
  • S&P cut Japan’s credit rating to A+ from AA-, says govt’s strategy to revive economic growth and end deflation appears unlikely to reverse deterioration in the next two to three years
  • U.K. wages grew at their fastest pace in more than six years and the unemployment rate unexpectedly fell, suggesting inflationary pressures are building in the labor market
  • Sovereign 10Y bond yields mostly higher. Asian stocks higher, European stocks gain, U.S. equity-index futures decline. Crude oil, gold and copper gain

 

DB completes the overnight recap/Jim Reid

There’s plenty of ebbing and flowing in markets at the moment which is unsurprising with the commencement of the FOMC meeting today and the hotly anticipated decision due in just 36 hours. Yesterday was a reasonably decent day all round for equity markets, although low volumes, which was again the case yesterday, are helping to exaggerate some of these swings. The S&P 500 closed up +1.28% and back to its highest level since August 28th, albeit on volumes nearly 20% below the three-month average. European markets also had a decent session with the Stoxx 600 up 0.79%. This was despite more steep declines in Chinese equities yesterday and rather the better tone being attributed to some positive signs from yesterdays US retail sales report which more than made up for soft data elsewhere. Curiously, some of the more material moves were in the bond market where we saw 10y Treasury yields close up over 10bps (to 2.288%) in the aftermath of the data, while 2y yields (+7.7bps) rose to the highest level since April 2011 at 0.804%. The data has only helped to nudge expectations of a Fed hike tomorrow slightly, priced at 32% which is up a tad from 28% this time yesterday. More on the Fed and yesterday’s data shortly, but firstly to the latest in Asia this morning.

Bourses are generally on a firmer footing in Asia, following much of the lead from the US yesterday. The material gain has come from the Kospi which is up 2.02% as we go to print, while the Hang Seng (+1.01%) and ASX (+1.41%) are also seeing decent strength. The Nikkei is up 0.55% while China is generally underperforming the wider region although there were still modest gains for the Shanghai Comp (+0.15%) and CSI 300 (+0.14%) at the midday break. Elsewhere, S&P 500 futures are point to a slightly softer start, down 0.2%, while Treasuries have made up for some of yesterday’s losses with the 10y yield 2.3bps lower.

Back to China briefly. Yesterday our China Chief Economist Zhiwei Zhang noted that fiscal expenditure grew by 25.9% yoy in August (24.1% in July), much faster that the 11.8% we saw in H1. Importantly, Zhiwei sees this as another strong signal of policy easing, with the acceleration of fiscal spending a reflection of the policy stance shift from tightening to stimulus that took place mid-way through this year, rather than one driven by seasonal patterns. Zhiwei also points out that a broader concept of government expenditure which covers both the fiscal budget and government funds also showed similar acceleration. On the other hand, growth of government revenue remains weak, but Zhiwei is optimistic that we will see improvement in Q4 though as we have already seen a strong pickup in land sales in recent months.

Moving on and back to the data yesterday where, as we mentioned, much was made of the August US retail sales report in particular. Headline retail sales missed (+0.2% mom vs. +0.3% expected) last month, as did the ex auto and gas reading (+0.3% mom vs. +0.4% expected), however it was the details which took up much of the focus with a one-tenth and three-tenths upward revision to each respectively in July. The control group reading (which goes into the national accounts) was also supportive, printing at +0.4% mom (vs. +0.3% expected) and also benefiting from a three-tenths upward revision to July’s report.

The data was however followed by some fairly soft factory sector reports. Both industrial (-0.4% mom vs. -0.2% expected) and manufacturing production (-0.5% mom vs. -0.3% expected) printed below market, while capacity utilization dropped down 0.4pps to 77.6% (vs. 77.8% expected). Also soft was the NY Fed empire manufacturing reading for September which while improving a very modest 0.2pts to -14.7, came in well below hopes for a rebound to -0.5, while a six-month outlook measure dropped to the lowest level since January 2013. Finally business inventories printed in-line for July at +0.1% mom. The Atlanta Fed has kept their Q3 GDP forecast unchanged relative to the September 3rd estimate at 1.5% saar. Having declined for much of last week, the Dollar caught a bid yesterday with the Dollar index closing up 0.38% while Oil had a better day with both WTI (+0.96%) and Brent (+0.84%) firming.

So as we look ahead tomorrow’s big event, DB’s Peter Hooper has given a rundown on what he expects from the meeting. While Peter still expects a very close call, he notes that the most compelling change in view from they will to they won’t, was driven by a succession of centrist and even hawkish members and participants of the FOMC backing away or softening their view on September liftoff in the wake of market turmoil, touched off by events in China. Market stress has since remained elevated and market expectations of liftoff tomorrow have slipped, while the Fed has provided no guidance to suggest that the market was reading things wrong which Peter sees as an important signal. The mitigate to this and what makes it a close call in Peter’s mind is that the economic case for beginning normalization is compelling, including labour market momentum, inflation restrained by transitory factors and extremely easy monetary policy. Peter suggests that the committee could decide at this meeting that the data warrant a move even if the market is not expecting one. In terms of the dot plots, Peter expects the median dot to edge lower by 25bps at the end of this year, next year and in the LT. If they choose not to hike, they should signal for a rate increase by year end. In terms of the message that Yellen delivers, Peter expects it to be hawkish if they do not go and dovish if they do. In choosing to stand pat this time, he notes that she will likely emphasize that October is very much on the table if conditions warrant. If they do go, he expects the message to be that they will want to be patient and see how the markets and the economy react before deciding on the next move.

Back to the rest of markets yesterday. In Europe we saw some fairly material moves higher across DM sovereign bond yields also, led by the moves in Treasuries. 10y Bunds finished 8.8bps higher at 0.742% which was representative of most of the DM economy moves. This was despite some mixed data out of the region. The German ZEW current situations survey printed at 67.5 which was up 1.8pts from August and above expectations of a fall to 64. However, the expectations survey was less positive, with the 12.1 reading (vs. 18.3 expected) down 12.9pts from last month and to the lowest since November last year. Meanwhile, in the UK we got the latest inflation readings for the month of August. An in-line +0.2% mom reading at the headline was enough to nudge the annualized rate down one-tenth to 0.0% yoy, while the core also declined, down two-tenths to 1.0% yoy which was also in line with expectations. DB’s George Buckley noted that with upstream prices also soft last month (input prices down 2.4%, output down 0.4% and core output flat) there seems to be little evidence of underlying inflationary pressure as yet. George, however, expects CPI to rise as base effects drop out in the coming months, but argues that the BoE has room to wait before hiking rates.

Turning over to today’s calendar now, this morning’s focus in Europe is set to be on the release of UK employment indicators and the final reading of Euro area CPI. Over in the US this afternoon, the focus will on the August CPI reading where the market consensus is for a -0.1% mom headline reading and +0.1% mom core print, with our US colleagues slightly higher than this, forecasting for an unchanged and +0.2% reading respectively. Real average weekly earnings data is also due to be released along with the NAHB housing market index.

 

end

 

 

Now early Chinese trading/9:30 pm est/9:30 am Shanghai time:

 

(courtesy zero hedge)

 

AsiaPac Quiet, Too Quiet: Aussie Leading Index Plunges, PBOC Devalues Yuan, & China’s “$800,000 Dog” Bubble Bursts

Following last night’s double-disappointmentthe absence of China’s ‘National Team’ and the lack of moar from The BoJ, everything was not awesome when Asian markets closed. However, dismal US data has floated all boats on a sea of bad-news-is-good-news as the world holds its breath ahead of Thursday’s Fedsplosion. China’s weakness is spreading as Aussie Leading Index plunges most in 3 years. Trading volumes remain de minmus as 1300 hedge funds have liquidated in China in recent weeks (as the $800,000 Tibetan Mastiff bubble bursts). Tonight Japan opens with selling pressure ands China bouncing modestly higher, but it’s quiet, too quiet. PBOC devalued Yuan for the first time in 4 days but one local Chinese trader opined confidently ahead of The Fed, “Mother PBOC is so worried there could be a liquidity problem that it will ensure abundant supply.”

 

Last night’s Japanese open was an epic meltup in USDJPY and NKY 225 (only to give it all back when The BoJ did not “get back to work”). Tonight it starts with “malicious selling” but that was quickly ramped.

 

 

Aussie markets are unhappy as The Westpace leading Index collapsed by the most in 3 years

 

China opens with an idea...

  • *CHINA TO PROMOTE COS.’ OVERSEAS DEBT REGISTRATION REFORM
  • *CHINA NDRC TO REMOVE QUOTA FOR COS.’ OVERSEAS DEBT
  • *CHINA TO ENCOURAGE QUALIFIED COS. TO SELL BONDS OVERSEAS

Which will lower the cost of borrowing (great), ensure some USD liquidity (easing PBOC pressures perhaps), but will leave Chinese corporates exposed to a devaluing Yuan (un-great).

And then unleashes some propaganda (it’s unpatriotic to move your money overseas…)

 

Margin debt declines once again as Chinese Stocks push lower amid the absence of The National Team…

  • *SHANGHAI MARGIN DEBT BALANCE DROPS TO LOWEST IN NINE MONTHS

Shenzhen and ChiNext are getting slammed this week…

 

With a small bounce in the pre-market has now faded:

  • *CHINA’S CSI 300 INDEX SET TO OPEN DOWN 0.1% TO 3,149.16
  • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 0.2% TO 2,998.04

PBOC stepped back in and devalues Yuan after 3 days of strengthening…

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3712 AGAINST U.S. DOLLAR

More bad news for US automakers:

  • *FITCH: CHINA AUTO SECTOR MOVES INTO NEW NORMAL OF SLOWER GROWTH

New-car sales in China may decline for the first time in more than a decade this year, as a slowing economy combines with a clampdown on lavish spending, stricter registration limits and stock-market volatility. The slowdown and unprecedented discounts dragged on the eight Chinese car dealers trading in Hong Kong, with combined net income falling by 29 percent in the first six months.

And the death of liquidity in Chinese stock futures markets have rung the bell on the newly minuted Chinese hedge fund industry (as Bloomberg reports)…

It’s about to get even uglier for China’s hedge funds.

 

The newfangled industry, short on expertise and ways to protect itself from market declines, has seen almost 1,300 funds liquidate amid China’s $5 trillion stocks selloff, and a similar number may be at risk, according to Howbuy Investment Management Co. Now, a government crackdown on short selling and other hedging strategies have made prospering in a bear market difficult.

 

It’s an inglorious turn for China’s on-again, off-again love affair with stocks, which saw the number of hedge-fund-like vehicles explode in past years as the government made it easier to register funds and introduced new financial instruments. The market rout — and the regulatory response to it — has revealed cracks in the industry that suggest it may need years to recover. In the most devastating blow to domestic hedge funds, China has imposed new restrictions on trading in stock-index futures, a key investment strategy to dampen volatility and avoid big losses.

 

“It spells the end, at least temporarily, for China domestic hedge funds,” Hao Hong, chief China strategist at BOCOM International Co. in Hong Kong, said in an interview.

But it is another bursting bubble that everyone is talking about… If this does not sum up the farce of China, I do not know what does…

“The Tibetan mastiff market went crazy in 2008 when some investors, instead of dog lovers, hyped the price among rich people,” he said. “The price was not reasonable at all.”

 

 

Many newly rich Chinese such as coal mine owners who became extremely wealthy during the price hike in commodities between 2006 and 2008 started to buy such a dog as a pet.

 

Different from dog lovers and professional breeders, they did not have the inside knowledge about such dogs, including how to tell a real one from the mixed-blood species and even other similar kinds. As a result, the market was full of so-called Tibetan mastiffs with prices as high as 5 million yuan ($793,650) to 10 million yuan for one such dog.

 

“Even if they paid a lot, the dogs they got were still not pure-bred Tibetan mastiffs,” Peng said.

 

However, the market still created many millionaires at the time. Some people began to trade so-called Tibetan mastiffs as a business.

It appears The Chinese just cannot help themselves.

But it is next week’s big event that is the real deal… (post-FOMC)…

  • *CHINA’S XI TO VISIT U.S. SEPT. 22-25

China’s President Xi Jinping will visit Washington Sept. 25, the White House confirmed in a statement released late Sept. 15.

The widely anticipated official state visit reciprocates President Barack Obama’s state visit to China in November 2014. The White House said Xi’s visit “will present an opportunity to expand U.S.-China cooperation on a range of global, regional, and bilateral issues of mutual interest” and will allow Obama and Xi to “address areas of disagreement constructively.”

Finally, we leave it to one local Chinese trader to sum up the “we have faith” attitude that somewhow still remains… (as MNI reports)

“Mother PBOC is so worried there could be a liquidity problem that it will ensure abundant supply — liquidity is super good now so we can sit back and relax,” said said Qin Xinfeng, a trader with Qingdao Rural Commercial Bank.

But the Fed hike will nonetheless push global and Chinese markets into unknown territory.

 

 

 

 end
Over in Japan: Sand P downgrades Japan to A+
(courtesy zero hedge)

S&P Downgrades Japan From AA- To A+ On Doubts Abenomics Will Work – Full Text

Who would have thought that decades of ZIRP, an aborted attempt to hike rates over a decade ago, and the annual monetization of well over 10% of sovereign debt would lead to a toxic debt spiral, regardless of how many “Abenomics” arrows one throws at it? Apparently Standard and Poors just had its a-ha subprime flashbulb moment and moments ago, a little over 4 years after it downgraded the US from its legendary AAA-rating which led to angry phone calls from Tim Geithner and a painful US government lawsuit, downgraded Japan from AA- to A+.  The reason: rising doubt Abenomics is working.

Apparently S&P has never heard of the Magic Money Tree theory concocted by economists who have never traded an asset in their lives, in which “countries that print their own currency” have nothing to fear about a 250% debt/GDP ratio. In fact, the only fear is that it is not big enough.

Expect the market’s reaction to be that since Abenomics has not worked yet, some nearly three years after it was launched then Japan will be forced to do even more of it, simply because it has no choice – it is now all in, the problem of course being that the BOJ is simply running out of stuff to monetize as even the IMF warned two weeks ago…

Here is the S&P’s full downgrade.

Japan Ratings Lowered To ‘A+/A-1’; Outlook Is Stable

OVERVIEW

  • Economic support for Japan’s sovereign creditworthiness has continued to  weaken in the past three to four years. Despite showing initial promise,  the government’s strategy to revive economic growth and end deflation appears unlikely to reverse this deterioration in the next two to three  years.
  • We are lowering our sovereign credit ratings on Japan to ‘A+/A-1’ from  ‘AA-/A-1+’.
  • The outlook on the long-term rating is stable.

RATING ACTION

On Sept. 16, 2015, Standard & Poor’s Ratings Services lowered its long-term foreign and local currency unsolicited sovereign credit ratings on Japan to  ‘A+’ from ‘AA-‘. The outlook is stable. We also lowered the short-term foreign and local currency unsolicited sovereign credit ratings to ‘A-1’ from ‘A-1+’.  We revised our transfer and convertibility (T&C) assessment to ‘AA+’ from ‘AAA’.

RATIONALE

We believe the likelihood of an economic recovery in Japan strong enough to restore economic support for sovereign creditworthiness commensurate with our previous assessment has diminished. Over 2011-2014, average per-capita income in Japan slipped to US$36,000 from close to US$47,000. Apart from a sharp depreciation in the exchange rate between the yen and the U.S. dollar, this also reflected weak average economic growth during the period and persistently weak price trends. Despite showing initial promise, we believe that the government’s economic revival strategy–dubbed “Abenomics”–will not be able to reverse this deterioration in the next two to three years.

Our ratings on Japan balance the country’s strong external position, relatively prosperous and diversified economy, political stability, and stable  financial system against a very weak fiscal position that the country’s aging population and persistent deflation exacerbate.

Japan remains a relatively high-income economy despite years of low growth and deflation. We estimate per capita GDP at close to US$33,100 in fiscal 2015 (ending March 31, 2016). We estimate Japan’s 10-year weighted average per-capita income growth at 0.9%.

The strength of Japan’s institutional and governance effectiveness remains a key factor supporting the sovereign ratings. Japan’s homogeneous and cohesive society, generally effective checks and balances in the government, strong respect for the rule of law, and free flow of information facilitate policymaking. This has helped achieve popular acceptance of challenging policy changes such as the 2014 increase in the sales tax rate. However, we see slow decision-making among policy institutions somewhat impairing policy implementation.

Japan’s strong external position and monetary policy settings also support its sovereign credit fundamentals. The free-floating yen’s status as a reserve currency reflects these strengths. We believe that the yen’s status derives from the credible political and policy institutions in the country–including the Bank of Japan (BOJ), a sound financial system, freedom of capital flows, and sizable domestic capital markets. Demand for the yen as a reserve currency reduces Japan’s vulnerability to large fluctuations in international capital flows and augments the BOJ’s ability to conduct monetary policy.

A strong external balance sheet further strengthens support for the sovereign ratings. Despite the slide in the household saving rate as the population ages, the current account remains in consistent surplus. This indicates that private-sector savings in the country continue to exceed dissavings in the government sector. We project that Japan’s total external debt will exceed financial and public sector financial assets by less than 20% of current account receipts (CARs) at the end of 2015, i.e., the nation will have a small narrow net external debt position. This metric does not include external assets held by the nonfinancial sector, which are very substantial. We expect Japan’s net international asset position to be about 270% of its CARs or more in the next few years.

Japan’s very weak fiscal attributes are an important weakness in its credit metrics. Since fiscal 2008, the damage that the global financial crisis and the Great East Japan Earthquake have dealt to the Japanese economy has depressed government revenue. However, general government spending has continued to grow, partly as a result of expanding social security spending associated with the nation’s aging population. Despite the 2014 increase in the national sales tax and stronger tax revenue from exporters, we project annual increases in general government debt will equal 5% of GDP or more over 2015-2018. By our projections, the corresponding increase in net general government debt will reach 135% of GDP in fiscal 2018 from 128% in fiscal 2015.

The Bank of Japan’s sizable purchases of Japanese government debt have kept the government’s borrowing costs low. The central bank now holds about 30% of Japanese government bonds outstanding. However, interest rates could rise, increasing pressure on the budget, when the central bank normalizes its monetary policy stance. Japan will face by far the world’s highest debt rollover ratio (including short-term debt)

OUTLOOK

The stable outlook on the long-term rating on Japan reflects our expectations that modest growth and stabilization of price levels will slow an increase in government indebtedness over the next two years and eventually stabilize it. We could raise the sovereign ratings on very significant improvements in the government’s fiscal performance, likely brought on by the economy returning to low and sustained inflation accompanied by stronger growth. We could lower the sovereign ratings on indications that the government debt burden could rise more significantly than we currently expect, potentially due to continuously weak economic growth and prices trends.

 

* * *

And now we wait for Japan’s lawsuit against S&P. In the meantime, dear nervous bond investors: here are some inspiring words from the Japanese Finance Ministry to life your spirits. 

 

 end
And now over to Kazakhstan where we find the country just ran out of USA dollars.  This is a good glimpse as to what will happen to all countries as they run out of foreign reserves, namely uSA dollars:
(courtesy zero hedge)

A Glimpse Of The Devaluation Endgame: Kazakhstan Runs Out Of Dollars And Euros To Sell

Late last month, Kazakhstan stormed onto the radar screens of market participants who might have been previously unaware that the country existed after central bank governor Kairat Kelimbetov moved the tenge to a free float overnight, triggering a 20%+ devaluation and serving notice that China’s new FX regime was set to have far-reaching consequences across emerging economies already hard hit by plunging commodity prices. 

In addition to plunging crude, Kazakhstan’s situation was complicated by the tenge’s relative strength vis-a-vis the Russian ruble. The attendant loss of export competitiveness was crippling the country and long story short, REER appreciation was no longer tolerable. 

After rebounding briefly at the end of August, the tenge resumed its plunge earlier this month and as of Wednesday, had fallen 9 straight days for its worst losing streak in more than two years and may well weaken further to around 350 on the dollar (although one might suggest that would be an overshoot).

It’s against that backdrop that we bring you the following from Interfax (Google translated) which reports that dollars and euros are now hard to come by in Kazakhstan:

Exchange offices Almaty and Astana have suspended the sale of US dollars and euros due to the shortage of currencies.

 

“Dollar selling rate is 297 tenge, but at the moment there is no stock of dollars, as well as the euro,” – said the agency “Interfax” on Wednesday in a network exchange points “MIG”.

 

At another point he noted that the currency is not for several days. “A couple of days there is no currency. Only buy dollars and euros, in the tenge no changes, so there is no currency”, – said in the exchange office.

 

The interviewee noted that the growing demand for the currency. “People go, constantly ask dollars or euros.

 


 

Over the past two days, people who want to buy the currency, it was more than it was last week,” – explained in one of Almaty exchangers.

 

A similar situation is observed in Astana. “US has not yet sell, call in the afternoon,” – told in one of the capital exchangers.

Capital controls? An effort to protect FX reserves? You decide.

 

end

The refugee crisis continues to escalate as Hungary closes its orders.  The new route of passage is now Croatia and then onto Austria and then onto Germany:
(courtesy zero hedge)

“The End Of The EU”: Merkel’s “Heroic” Refugee Response May Destroy Union, Slovakia Warns

 

On Tuesday, Hungarian Prime Minister Viktor Orban served notice that he absolutely was not joking around about ensuring that an influx of migrants fleeing war-torn Syria did not end up “changing” Hungary’s “1000-year old Christian culture.”

So serious about this was Orban, that he built himself a 100 mile-long, 12-foot anti-migrant fence out of razor wire along the border with Serbia, passed a set of emergency laws that allow for the arrest and subsequent prosecution of anyone who damages his new fence, and then sent police on horseback as well as the military to enforce his new laws.

Here is the one-day result of that crackdown:

Source

And here’s Gyorgy Bakondi, an aide to Prime Minister Viktor Orban: “We hope that the messages we have been sending migrants for a long time have reached them. Don’t come. Because this route doesn’t lead where you want to go.”

So, for now anyway, it’s mission accomplished for Orban.

But this isn’t a story about Viktor Orban, it’s a story about migrants and while Orban may succeed in ensuring that Hungary isn’t inundated with asylum seekers (that is unless Germany decides to make quotas mandatory), closing one border won’t keep the huddled masses fleeing Syria from finding their way north to Germany.

As we noted on Tuesday, Hungary has begun sending refugees back to Serbia which is of course in no position to handle the influx even if it wanted to. Serbian labor minister Aleksandar Vulin had thefollowing message for Budapest:

“They have not done anything wrong by any criminal law. You cannot send them to Serbia without their permission. These people don’t want stay in Serbia. They want to travel to Europe or wherever they want. We are not a concentration camp and we do not expect anyone to consider us as a concentration camp.”

So, predictably, the new favored route to Germany will go through Croatia. Here’s WSJ:

About 150 migrants crossed into Croatia from Serbia overnight, the Croatian interior ministry said on Wednesday, marking an alternative route for refugees to enter the European Union after Hungary fenced-off its border with Serbia.

 

The migrants were being registered at a border crossing at Tovarnik on Wednesday, a Croatian interior ministry spokeswoman said.

 

Buses in Serbia have been taking migrants to Sid, a town on the Serbian side of the border, Serbian and Hungarian media reported after Hungary erected a 110-mile long fence in an effort to stem the flow of refugees. Migrants would then enter Croatia, some through points other than the official border crossing.

 

Croatia’s Prime Minister Zoran Milanovic said his country would handle migrants or direct them further north to the more affluent European countries, mostly Germany and Sweden, where most migrants have said they wish to go.

Here’s a look at the current state of border controls (courtesy of BBC) followed by a graphic that takes a more granular look at people flows in the region (via Frontex):

But the new route presents its own set of challenges, both for Croatia and for the refugees. Via The New York Times:

The closing of Hungary’s borders has raised concerns among humanitarian groups that migrants seeking to get to Croatia could inadvertently cross through areas near the Hungarian-Croatian border that are littered with thousands of land mines left from the Balkan wars of the 1990s. On Wednesday, Croatian demining experts were sent to the area where many migrants were arriving, Reuters reported.

 

The countries of the former Yugoslavia, which were torn apart by the wars, have thus far taken a tolerant and welcoming stance toward the migrants, who have viewed the region as a transit zone rather than a final destination. But with Hungary’s decision to criminalize the breaching of its borders, countries like Serbia and Croatia, which are relatively homogeneous and poor compared with some of their richer European neighbors, could soon confront a stream of migrants for which they are ill prepared.

Through it all, the allure of a new life in Germany far outweighs the risks for most asylum seekers, especially considering the horrors in Syria that they have managed to escape. Indeed, the picture the Germans are painting about what it’s like to arrive in the country couldn’t be more different than what now welcomes refugees at the Hungarian border. Compare and contrast:

For Chancellor Angela Merkel, the German response to the crisis has done wonders to restore her reputation which, as regular readers are no doubt acutely aware, was tarnished by Berlin’s hardline stance throughout the protracted Greek bailout negotiations. And although Merkel’s position carries significant political risks, she seems to be as resolute in her beliefs and Orban is in his own. Here’sBloomberg:

It was when the numbers became faces that German Chancellor Angela Merkel made a decision that could make or break her political legacy.

 

As she toured a refugee center in the eastern German town of Heidenau on Aug. 26, hearing stories from Syrians about traumatic journeys to flee their civil war, protesters against their arrival jeered and shouted abuse. Some called her a “traitor to the nation.” The experience left her shaken but determined to act, according to two close Merkel aides.

 


 

What ensued was a strategy for dealing with a flood of refugees by simply letting them come. While her open-door policy transformed her image almost overnight from the scourge of the Greeks into the conscience of Europe, it threatens to split the continent and presents a domestic high-wire balancing act even more dramatic than the euro crisis.

 

“If we now have to start apologizing for showing a friendly face in response to an emergency situation, then that’s not my country,” Merkel said at a press conference in Berlin on Tuesday.

The question now, is whether Merkel will seek to use Germany’s financial and political clout to force other EU nations to soften their stance on refugees. As we said on Tuesday, “the perception that Germany is forcing an unwanted demographic shift might well serve to fan the flames not only of nationalism but of religious intolerance, especially given the likelihood that those opposed to settling the migrants will be predisposed to stirring up fears of ISIS operatives slipping into Europe disguised as refugees.”

And that’s not all. To let some countries tell it, were Germany to impose its will on recalcitrant states by force, they may well destroy the EU for good. We close with the following from Reuters:

Chancellor Angela Merkel appealed for European unity after one of her ministers called for financial penalties against countries that refused to accommodate their share of the migrants, provoking anger in central Europe.

 

A Czech official described such threats as empty but nonetheless “damaging” while Slovakia said they would bring the “end of the EU”.

 

 

 

end

 

 

Riot Police Unleash Tear Gas, Water Cannons As Migrants Storm Hungarian Border Barriers

Tensions between migrants fleeing Syria’s bloody civil war on their way to the German “promised land” and Hungarian authorities have reached a fever pitch over the last 48 hours in the wake of Prime Minister Viktor Orban’s move to erect a 100-mile, razor wire fence along the border with Serbia.

From AFP:

Hungarian police fired tear gas on Wednesday at migrants protesting at being unable to cross the border from Serbia and throwing stones, an AFP reporter said.

 

Hungarian police said that “the crowd on the Serbian side became aggressive and threw stones, bottles and sticks at police on the Hungarian side and crossed the barrier at the border.”

Rather than turn back, or divert through Croatia, migrants are now storming the fence prompting a predictably harsh response from Hungarian riot police who have reportedly deployed tear gas and water cannons.

(live feed)

More visuals:

Average:

 

end

 

To Mike Krieger, it looks like the next upcoming financial crisis will see many bankers jailed:

 

(courtesy Mike Krieger/Liberty Blitzkriegblog.)

 

 

 

 

 

Bankers Will Be Jailed In The Next Financial Crisis

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Screen Shot 2015-09-14 at 1.40.18 PM

Jesus College, Cambridge hosted, once more, the world’s leading Symposium on Economic Crime, and over 500 distinguished speakers and panelists drawn from the widest possible international fora, gathered to make presentations to the many hundreds of delegates and attendees.

 

What became very quickly clear this year was the general sense of deep disgust and repugnance that was demonstrated towards the global banking industry.

 

I can say with some degree of certainty now that a very large number of academics, law enforcement agencies, and financial compliance consultants are now joined, as one, in their total condemnation of significant elements of the global banking sector for their organised criminal activities.

 

Many banks are widely identified now as nothing more than enterprise criminal organisations, who engage in widespread criminal practice and dishonest conduct as a matter of course and deliberate commercial policy.

 

– From the excellent article: The Banking Criminals Exposed

My prediction is that bankers will be jailed in the next economic/financial crisis. Lots and lots of bankers.

It may seem to many that those working within this profession will remain above the law indefinitely in light of the lack of any accountability whatsoever since the collapse of 2008. It may seem that way, but extrapolating this trend into the future is to ignore a monumentally changed political environment around the world. From the ascendancy of Donald Trump and Bernie Sanders here in the U.S., to Jeremy Corbyn becoming Labour leader in the UK, big changes are certainly afoot.

I have become convinced of this change for a little while now, but we won’t really see evidence of it until the next collapse. However, something I read earlier today really brought the point home for me. Rowan Bosworth-Davies recently attended the 33rd Cambridge International Symposium on Economic Crime and provided us with some notes in an excellent piece titled, The Banking Criminals Exposed. Here are a few excerpts:

Jesus College, Cambridge hosted, once more, the world’s leading Symposium on Economic Crime, and over 500 distinguished speakers and panelists drawn from the widest possible international fora, gathered to make presentations to the many hundreds of delegates and attendees.

 

This Symposium has indeed become an icon among other international gatherings of its knd and over the years, it has proved to be highly influential in the driving and development of international policy aimed at combating international financial and economic crime.

 

What became very quickly clear this year was the general sense of deep disgust and repugnance that was demonstrated towards the global banking industry.

 

I can say with some degree of certainty now that a very large number of academics, law enforcement agencies, and financial compliance consultants are now joined, as one, in their total condemnation of significant elements of the global banking sector for their organised criminal activities.

 

Many banks are widely identified now as nothing more than enterprise criminal organisations, who engage in widespread criminal practice and dishonest conduct as a matter of course and deliberate commercial policy.

 

Speaker after speaker addressed the implications of the scandalous level of PPI fraud, whose repayment and compensation schedules now run into billions of pounds.

 

Some speakers struggled with the definition of such activity as ‘Mis-selling’ and needed to be advised that what they were describing was an institutionalized level of organised financial crimes involving fraud, false accounting, forgery and other offenses involving acts of misrepresentation and deceit.

 

One of the side issues which came out of this and other debates, was the general and genuine sense of bewilderment that management in these institutions concerned, (and very few banks and financial houses have escaped censure for this dishonest practice) have walked away from this orgy of criminal antics, completely unscathed. The protestations from management that these dishonest acts were carried out by a few rogue elements, holds no water and cannot be justified.

 

In the end, I sat there, open-mouthed while evidence against the same old usual scum-bag financial institutions, was unrolled, and a lengthy list of agencies, all apparently dedicated to dealing with fraud and financial crime, lamely sought to explain why they were powerless to help these victims.

 

This was followed by a lengthy list of names of major law firms, and Big 5 accounting firms who were willing to join with these pariah banks to bring complex and expensive legal actions against these victims, bankrupting them, forcing them from their homes, repossessing properties they had worked for years to create, while all the time, the regulators and the other agencies, including to my shame and regret, certain spineless police forces, stood by and sought to justify their inaction.

 

At one stage, we were shown how banks ritually and deliberately take transcripts of telephone calls made between complainants and the bank, and deliberately and systematically go through these conversations, re-editing them and reproducing them in a format which is much more favourable to the bank.

 

For the first time, I found routine agreement among delegates that the banking industry had become synonymous with organised crime. Many otherwise more conservative attendees expressed their grave concern and their repugnance at the way in which so many of our most famous banking names were now behaving. It is becoming very much harder to believe that the banks will be able to rely on the routine support they have traditionally enjoyed from most ordinary members of the public.

 

The election of Jeremy Corbyn to the leadership of the labour Party means that banking crime and financial fraud will now become an electoral issue.

 

But now, the new Labour leadership will focus the attention of the electorate on the relationship between the Tory party and their very crooked friends in the City, and the degree of protection that the Square Mile gangsters and their Consiglieri, their Capos, and their Godfathers will become much more identifiable. Bank crime will now become much more identifiable as a City practice and their friends in the Tories will be seen as being primary beneficiaries.

Things are moving in the direction of justice. At a glacial place for sure, but moving they are.

 

end

 

Simon Black is perfectly correct on this

 

(courtesy Simon Black/SovereignMan.com)

The Last Time This Happened Was… Never

Submitted by Simon Black via SovereignMan.com,

Every few centuries a new technology is invented and adopted that fundamentally changes everything about how a society is structured and organized.

The Agricultural Revolution allowed early humankind to stop being nomadic hunters and establish the roots of civilization in a single location.

The invention of the moveable type printing press in the 1400s (the Internet of its day) created a rapid spread of ideas that spawned lasting political revolutions across Europe.

The Industrial Revolution lifted millions of people out of poverty, empowered the middle class, and finally ended the feudal system.

Today it’s the Digital Revolution, which, along with robotics, genomics, and AI, is already creating fundamental changes in society.

Now, to say that the world is constantly changing is a statement of the obvious.

But the changes we’re experiencing right now have never been seen before in all of history.

Because in addition to major social changes, we’re also seeing a change in the world’s dominant superpower.

This happens from time to time throughout history.

The Italian city-states. The Ottoman Empire. Spain. France. Britain. All of these great empires held the top spot in the world for a time. Sometimes centuries.

But each was ultimately displaced by another rising power. Nations, like people, have natural life cycles. They rise, peak, and decline. It’s completely normal.

The United States as the world’s dominant superpower today is in its own period of decline.

Over the past 55 years, the US government posted a budget surplus a grand total of TWO times (one of which was a razor-thin surplus of just 0.01% of GDP), showing that this downward slide has been essentially uninterrupted.

There’s simply too much debt, military folly, and pitifully unsustainable entitlement programs for it to get back on track.

To quote former US Treasury Secretary Larry Summers, “There is surely something odd about the world’s greatest power being the world’s greatest debtor.”

Both of these trends are also playing a role in precipitating a reset within the third: finance.

Every few decades, the dominant financial system in the world is replaced, usually tracked by the rise and fall of global reserve currencies.

The current financial system, based on central bank innuendo and false political promises, is decades old.

Wreaking havoc on markets and decreasing the living standards of the majority of the population today, it’s clear that it’s time for a reset.

This is already in motion as we are seeing significant challenges to the US dollar’s dominance, with the Chinese dumping their US Treasury securities, and the establishment of the Asian Infrastructure Investment Bank.

You’ve seen and felt all of these trends, but what you may not realize is just how unique this is.

We’re seeing a shift in the world’s dominant superpower at the exact same time there’s a shift in the global financial system, and reserve currency, and game-changing technology. And even more trends that we haven’t even discussed.

The convergence of all of these trends at the same moment is the MEGA-trend.

The last time this happened was… never.

And it is bringing with it a whole host of unusual and unprecedented risks, which we’re already starting to see.

Financial markets are topsy-turvey, rising and collapsing in double digits within a few hours. That’s not supposed to happen.

Entire nations are going bankrupt. Radical and socialist politicians are surging.

Banking systems are on exceptionally shaky footing. Interest rates in many countries are actually negative.

And there are massive financial bubbles everywhere we look.

These risks are very real, and this is absolutely no time to be asleep at the wheel.

But behind each of these risks are incredible opportunities, and that’s what makes these changes so exciting.

In forgotten corners of financial markets, there are successful, profitable companies that are selling for HUGE discounts to their book values… and in some cases for less than the amount of cash they have in the bank.

Next-generation financial assets (including gold, silver, and even cryptocurrencies) are selling at historic discounts.

And alert individuals have the chance to invest in game-changing technologies that will dominate the next 100 years.

This is all incredibly exciting for anyone who’s actually paying attention.

There are huge risks. And huge opportunities. It’s important to be prepared for both.

Book 10 of Virgil’s Aeneid is one of the earliest references to the phrase “audentis Fortuna iuvat,” which is most commonly translated as “Fortune favors the bold.”

Perhaps. But if history is any guide, Fortune favors the prepared.

 

 end

Oil Slides Despite Inventory Draw And Crude Production Dropping For 6th Week

Confirming last night’s ‘surprise’ API inventory drawdown, DOE reported a 2.1mm draw, following 2 weeks of significant builds. Crude production fell for the 6th week in a row to its lowest since Dec 2014. It appears some profit-taking algos are in place as a draw combined with lower production has been met with significant selling pressure in WTI.

Inventories down… (DOE 2.1mm draw is less than the 3.1mm API draw – so maybe that is why oil is sliding!!?)

 

and production down for 6th week in a row… note that this was driven by a 0.4% decline in Lower 48 production (while Alaska increased production 3.8%)

 

and the result… a selloff

Charts: Bloomberg

end

WTI Crude Soars Above $47 As Algos Finally Read DoE Report

It appears the machines decided to read the whole DOE report after all… and run some more stops.

 

WTI is up over 6% – back to 2 week highs

 

Seemingly running stops again…

 

and as goes crude, so goes US equities…

 

Charts: bloomberg

 

end

For Canadian Oil Sands It’s Adapt Or Die

A good commentary on the Canadian oil sands industry in that it has better adapt or else:
(courtesy Alexis Arthur/OilPrice.com)

That low oil prices are squeezing out oil sands producers is not breaking news. But in spite of a grim oil price outlook, production out of Calgary has continued to grow, defying both expectations and logic. The implications are serious, not just for the future of Canada’s energy industry and economy, but also North American energy relations.

In June 2015, the Canadian Association of Petroleum Producers (CAPP) revised down its 2030 production forecast to 5.3 million barrels per day (mbd). A year earlier the group predicted Canada would be able to produce 6.4 mbd by 2030. This is compared to the 3.7 mbd produced in 2014. Most experts agree that capital intensive oil sands projects are marginal – if not loss-making – in the $45 – $60 range. Yet production continues apace.

Of course, the nature of capital intensive operations such as the oil sands is that they are also prohibitively expensive to shut down. Producers are left in limbo, praying that prices will rise.

The implications for Canada should not be understated. Of the nation’s estimated 339 billion barrels of potential oil resources, oil sands account for around 90 percent. The Canadian dollar is at a decade low, which softens the blow for exporters in the short term but the long-term economic consequences are less rosy.

Projects are being delayed, and many experts wonder if the current oil sands model has a future. Peter Tertzakian of ARC Financial told Alberta Oil Magazine that the era of oil sands mega projects was over.

In Alberta, an estimated one in 16 jobs is tied to the energy sector. According to the National Energy Board, crude oil and bitumen brought in $70 billion for Canada in 2014. Perhaps, as Tertzakian noted, new projects will simply adapt, becoming more nimble, flexible, and focused on value rather than quantity.

U.S. shale producers have found great success with this approach.

Oil sands companies are already feeling the effects of a weaker macroeconomic environment and volatile global oil market. In August, Moody’s Investor Service downgraded Canadian Oil Sands Ltd to Baa3, one step above a speculative rating. Canadian Oil Sands holds a 36.74 percent share in Syncrude, one of the most significant players in the oil sands space. The negative outlook reflects poorly on the industry as a whole.

But with Canada’s oil sands production still rising, where will all this oil go?

Currently, Canada sends 99 percent of its oil exports – 2.9 million barrels per day – to the United States. Much of this is headed to refineries in the North East and on the U.S. Gulf Coast.

The U.S. has been suffering its own oil glut as increased productivity and efficiency gains in shale production have kept many operators afloat. However, even in the United States, oil production is finally starting to decline.

One way to ease an oversupply in the U.S. – and make room for even more Canadian crude – would be to reverse the outdated crude oil export ban. Lifting the ban to allow the U.S. to export crude globally makes economic sense and advocates are garnering support from across the political spectrum. Still, the political maneuvering required means that any real movement is likely to be a medium-term prospect at best.

In the meantime, Canada’s major limiting factor going forward is its lack of pipeline infrastructure. The United States will continue to consume Canadian crude but the market will eventually be saturated. Canada is looking to expand into markets in Europe and Asia but has no efficient means of getting there.

The controversial Keystone XL pipeline has grabbed the headlines but it is only part of the picture. Even if the pipeline were approved, Canada’s oil sands production would rapidly exceed its capacity. Instead, Canada is looking to improve transport infrastructure at home.

The Energy East Pipeline aims to send 1.1 million barrels of oil from Alberta to refineries in eastern Canada but has faced opposition from several municipalities in Quebec, through which it would pass en route to Brunswick.

The Northern Gateway Pipeline would carry over 500,000 barrels per day to Kitimat in British Columbia but has likewise experienced backlash from affected communities and environmental groups.

With pipeline infrastructure moving slowly through regulatory processes, environmental impact studies, and community consultations, there are few alternatives in the interim. Canada continues to send crude by rail but the risks have been evidenced by a series of high-profile accidents in the last two years.

In the short-term, there may be no obvious relief for Canada’s oil sands producers. Further credit rating cuts may force operators’ hands. Oil sands production was always going to be a risky venture, even in a high oil price environment. Volatility will have a far more lingering effect on current and future production.

end
 
Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/Wednesday morning

Euro/USA 1.1217 down .0053

USA/JAPAN YEN 120.58 up .159

GBP/USA 1.5418 up .0077

USA/CAN 1.3247 up .0002

Early this Wednesday morning in Europe, the Euro fell by 53 basis points, trading now well above the 1.12 level rising to 1.1217; 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, flash crashes.  Last night the Chinese yuan lowered in value . The USA/CNY rate at closing last night:  6.3707, 

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 now trades in a southbound trajectory  as settled up again in Japan up by 16 basis points and trading now just above the 120 level to 120.58 yen to the dollar. 

The pound was up this morning by 77 basis points as it now trades just above the 1.54 level at 1.5418.

The Canadian dollar reversed course by falling 2 basis points to 1.3247 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  with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable. 

2, the Nikkei average vs gold carry trade (blowing up)

3. Short Swiss franc/long assets (European housing/Nikkei etc. This has partly blown up (see Hypo bank failure).(blew up)

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 Wednesday morning: up  145.12 or  0.81%

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

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

Gold very early morning trading: $1108.20

silver:$14.51

Early Wednesday morning USA 10 year bond yield: 2.28% !!! up 1  in basis points from Tuesdayday night and it is trading just above resistance at 2.27-2.32%.  The 30 yr bond yield rises to  3.07 up 2 basis point.

USA dollar index early Wednesday morning: 95.83 up 24 cents from Monday’s close. (Resistance will be at a DXY of 100)

This ends the early morning numbers, Wednesday morning
And now for your closing numbers for Wednesday night:
Closing Portuguese 10 year bond yield: 2.71% par in basis points from Tuesday
Japanese 10 year bond yield: .370% !!  a fall of 2  basis points from Tuesday
Your closing Spanish 10 year government bond, Wednesday, up 1 in basis points Spanish 10 year bond yield: 2.13% !!!!!!
Your Wednesday closing Italian 10 year bond yield: 1.92% up 3  in basis points from Tuesday: trading 21 basis point lower than Spain.
IMPORTANT CURRENCY CLOSES FOR WEDNESDAY
Closing currency crosses for WEDNESDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 Euro/USA: 1.1296 up .0026 (Euro up 26 basis points)
USA/Japan: 120.54 up 0.125 (Yen down 13 basis points and provides the necessary ramp for the Dow)
Great Britain/USA: 1.5499 up .0157 (Pound up 157 basis points USA/Canada: 1.3133 down .0055 (Canadian dollar up 55 basis points)

USA/Chinese Yuan:  6.3694  up .0009  (Chinese yuan down/on shore)

This afternoon, the Euro rose by 26 basis points to trade at 1.1296. The Yen fell to 120.54 for a loss of 16 basis points as this ramp succeeded to ignite the NYSE/Nasdaq. The pound was up 157 basis points, trading at 1.5499. The Canadian dollar rose 55 basis points to 1.3183. The USA/Yuan closed at 6.3694.
Your closing 10 yr USA bond yield: up 2 basis points from Tuesday at 2.29%// ( trading above the resistance level of 2.27-2.32%).
USA 30 yr bond yield: 3.08 up 3 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 
 Your closing USA dollar index: 95.28 down 32 cents on the day .
European and Dow Jones stock index closes:
England FTSE up 91.61 points or 1.49%
Paris CAC up 76.47 points or 1.67%
German Dax up 39.08 points or 0.38%
Spain’s Ibex up 194.30 points or 1.99%
Italian FTSE-MIB up 155.58 or 0.71%
The Dow up 142.10 or 0.84%
Nasdaq; up 31.61 or 0.65%
OIL: WTI:  $47.17    and  Brent:  $49.69
Closing USA/Russian rouble cross: 65.24  up 1 and 1/2 roubles per dollar on the day
And now for your more important USA stories.
Your closing numbers from New York

Fed “Up” – Stocks Squeezed To ‘Black Monday’ Highs, Crude Rips, Bonds Dip

Ahead of tomorrow’s crucial meeting, this seemed appropriate…

 

Pulling back briefly, we see what magnetic attractor grabbed stocks by the short-and-curlies… the scene of the crime from Black Monday…

 

But still red from FOMC Minutes…

 

it’s been quite a week of exuberance in stocks as shitty data has comforted algos that there will be no hike…

 

Since Friday,

 

VIX was bid after Europe closed as perhaps there was some fear after all…

 

It appears VXX and stocks were in sync as OPEX and ETF rolls wreaked havoc with protection…

 

Post-CPI, Gold & Stocks were up equally as Bonds drifted lowewr…

 

 

Treasury yields push on higher again – though more rangebound…

 

The US Dollar round-tripped – sold thru the European close and then bid… as AUD strength continued…

 

Commodities surged afte CPI data hit…

 

With Crude ripping on the DOE data and then exaggerated by Syria concerns…

 

Charts: Bloomberg

Bonus Chart: SKEW is extremely elevated once again…

 

end

 

 

Bellwether Fed Ex misses and then cuts outlooks as it blames weak aggregate demand:

 

 

(courtesy zero hedge)

Global Trade Bellwether FedEx Misses, Cuts Outlook, Blames Weak Industry Demand, Higher Wages

 

Every quarter we pay particular interest to the results reported by Fedex not only due to its position as the leading company in worldwide logistics but due to its status as a bellwether in global trade. And not surprisingly, following a bevy of reports here and elsewhere confirming the plunge in global trade, Fedex did not disappoint, or rather it did when it reported non-GAAP EPS of $2.42 (which included one extra day att the company’s operating segments) missing already reduced consensus expectations of $2.45, but it also cut its full year 2016 EPS guidance from $10.60-$11.10 to $10.40-$10.90 (below the consensus $10.83) proving yet again that hopes for EPS growth are just as misplaced as those for multiple expansion at a time when the Fed is preparing to hike rates and as China unleashes Quantitative Tightening.

Specifically, the company announced that a boost in operating income at FedEx Express “were partially offset by higher incentive compensation accruals, higher self-insurance reserves and operating costs at FedEx Ground, and lower-than-anticipated volume at FedEx Freight. Fuel had a slightly negative net impact to operating income.”

At Express, FedEx managed to grow operating income by 45% even as revenues dropped 4% Y/Y to $6.59 billion “as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates.”

If Express saw a rebound in profits despite a rise in revenues, the company’s Ground segment did the opposite with operating income declining 1% to $537 million “as lower fuel surcharges and unfavorable currency exchange rates more than offset improved base rates. U.S. domestic package volume grew by 1%, driven by growth in deferred box and overnight envelope. U.S. domestic revenue per package decreased 3% due to lower fuel surcharges, partially offset by strong base rates.”

But the biggest disappointment was FedEx Freight where revenue was virtually unchanged, yet where operating income tumbled 21% as Less-than-truckload (LTL) average daily shipments declined 1% with the company blaming “weak industry demand”. LTL revenue per shipment was down 1% as higher rates from yield initiatives were more than offset by lower fuel surcharges.Operating results declined primarily due to salaries and employee benefits expense outpacing lower-than-anticipated volume.

Perhaps now it is time to trim those record S&P margin forecasts?

So with much of the company’s pain due to underprovisioning for fuel surcharges, which was surprising considering the global plunge in gas prices, the company announced that it will “increase shipping rates by an average of 4.9% effective January 4, 2016. FedEx is also increasing surcharges for FedEx Ground shipments that exceed the published maximum weight or dimensional limits, and updating certain fuel surcharge tables at FedEx Express and FedEx Ground effective November 2, 2015.”

Finally, it appears not even the company is confident it can execute as the world slows down, and as a resultt it aggressively cut its forecast:

FedEx now projects adjusted earnings for fiscal 2016 to be $10.40 to $10.90 per diluted share before year-end mark-to-market pension accounting adjustments, aided by benefits from the profit improvement program. The outlook assumes moderate economic growth and does not include any operating results or costs related to TNT Express. The capital spending forecast for the fiscal year remains $4.6 billion.

 

“Our new fiscal 2016 outlook is modestly lower than our initial forecast due primarily to weaker LTL industry demand and higher than expected self-insurance reserves and operating costs at FedEx Ground,” said Alan B. Graf, Jr., FedEx Corp. executive vice president and chief financial officer. “We still expect strong earnings growth this year, as we remain focused on executing our profit improvement program, leveraging e-commerce growth and enhancing our revenue quality.

Good luck with passing those costs through in a environment of weak demand and the assumption of “moderate economic growth” especially as the Fed begins to hike.

end
Today’s negative CPI print causes gold, silver, crude and copper all to soar as the dollar is sold:
(courtesy zero hedge)

Silver & Gold Jump, Dollar Dumps After CPI Disappoints

It appears the commodity markets love the smell of deflation in the morning. Once the negative CPI print hit, Gold, silver, crude, and copper all soared as the US Dollar tumbled, we presume on rate-hike probabilities dropping. Stocks could care less.

 

USD Index tumbled…

 

And Commodities jumped…

 

With Silver leading the way…

 

With bonds and stocks weaker…

 

Charts: Bloomberg

end

Energy prices down 2% and this caused the first headline deflation since January.  This is not what the Fed wants
and especially before the big FOMC meeting.
(courtesy zero hedge)

Fed Enters Rate Hike Meeting With First Headline Deflation Since January

As the final inflation data before the FOMC decision, some have argued that this print matters most as an excuse to stay in ’emergency mode’ – perhaps they are right. Consumer Prices dropped 0.1% (as expected) in August – this is the first ‘deflation’ since January – great news for consumers.Gasoline and airline tickets saw the biggest drops dragging down YoY CPI but The Fed will shrug its “transitory” shoulders but ex-food-and-energy did miss expectations, rising 1.8% YoY (against 1.9% exp). Notably food prices rose 0.2% in August, driven by a surge in egg prices. So WWJYD?

 

Chart: Bloomberg

The index for all items less food and energy increased 0.1 percent in August, the same increase as in July.The index for shelter rose, as did the indexes for apparel, tobacco, and alcoholic beverages. However the index for airline fares declined sharply, and the indexes for household furnishings and operations, recreation, and used cars and trucks also decreased in August, with the indexes for new vehicles and medical care unchanged.

Full Breakdown…

 

The gasoline index declined sharply in August and was the main cause of the seasonally adjusted all items decrease. Other energy indexes were mixed, with the fuel oil index continuing to decline but the indexes for electricity and natural gas increasing in August. The food index rose 0.2 percent in August, with the indexes for eggs and for fruits and vegetables rising notably

And while energy was the culprit for the headline deflation with energy prices sliding 2.0% in August, here is some more details on where the BLS does see inflation:

The index for all items less food and energy increased 0.1 percent in August, as it did in July. The shelter index was the main source of the increase; it rose 0.2 percent in August following a 0.4 percent increase in July. The rent index rose 0.3 percent in August, the same increase as in July, while the index for owners’ equivalent rent increased 0.2 percent. The index for lodging away from home, however, turned down in August, falling 0.6 percent after a 2.5 percent increase the prior month. The apparel index increased 0.3 percent in August, the same increase as last month. The tobacco index also rose in August, increasing 0.5 percent, and the index for alcoholic beverages advanced 0.1 percent. The medical care index was unchanged in August, with the indexes for hospital services and prescription drugs rising but the indexes for physicians’ services and nonprescription drugs declining. The new vehicles index was unchanged in August, as was the index for personal care. Several indexes declined in August. The index for airline fares fell 3.1 percent after decreasing 5.6 percent in July. The index for used cars and trucks decreased 0.4 percent, its fourth decline in a row. The index for household furnishings and operations declined 0.3 percent, and the recreation index fell 0.1 percent.

 

The index for all items less food and energy has risen 1.8 percent over the past 12 months; the 12-month change has been 1.8 percent in five of the last 6 months. The indexes for shelter, medical care, new vehicles, recreation, and tobacco are among the indexes that have increased over the past year. In contrast, the indexes for airline fares, apparel, used cars and trucks, and household furnishings and operations have all declined over the last 12 months.

Finally, while the Fed now has to decide if it will hike rates with the first headline deflation in 7 months, here is the biggest threat for the Fed – imported deflation, which as we noted last week in our post on tumbling import prices, is sending a recession-level deflation impulse and is the reason why Goldman is saying far from hiking, the Fed should consider easing at this point. 

 

 end
 Record numbers of Americans live in poverty
(courtesy zero hedge)

Record 46.7 Million Americans Live In Poverty; Houshold Income Back To 1989 Levels

At this moment, president Obama is taking to the Business Roundtable where as noted previously he will discuss “the turnarounds in the stock market, housing iprices [sic?] and job growth.”

In other words: helping wealth inequality hit record levels, permitting Chinese and other offshore “investors” to push high-end US real estate prices to never before seen levels, while everyone else “benefits” from record jobs for bartenders and waiters.

As for the stock market, other socialist leaders will laugh at Obama’s puny returns.

That said, here are some things Obama will not discuss.

According to the just released Census Bureau annual report on Income and Poverty, in 2014 the official poverty rate was 14.8% as a result of a record 46.7 million Americans living in poverty. This is the fifth consecutive year since the end of the recession that the number of impoverished Americans has barely not budged. What recovery?

Worse, while there was no material change for the percentage of Americans in poverty, there was a statistical increase in the number of people in poverty who had at least a bachelor’s degree (rising from 3 million to 3.4 million in one year) and married-couple families. Because through higher education and debt, to poverty.

The people living in extreme poverty, i.e. below 50% of the poverty minimum, also rose to an all time high of 20.8 million.

 

Of the 91 million Americans who were out of the labor force in 2014 and otherwise did not work, a record 24.2% or 22 million, lived in poverty.

 

But the most damning fact about the total failure of the US recovery, and one thing Obama will certainly not mention, is that the median real household income, after posting a modest increase in 2013 to $54,462, dropped once again, sliding 1.5% in 2014 to $53,657 and down from a high of $57,843 record in 1999.

This was nearly the same as the $53,306 median household income recorded in… 1989.

So all those talking about Japan’s lost three decades, perhaps it is time to mention America’s lost 25 years…

end

 

Meijer believes the Fed may be stupid enough to raise rates tomorrow

 

(courtesy Raul Meijer)

Will The Fed Pick A Winning Combination?

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

It’s highly amusing to read all the ‘expert’ theories on a Federal Reserve hike or no hike tomorrow, butit’s also obvious that nobody really has a clue, and still feel they should be heard. Don’t know if that’s so smart, but I guess in that world being consistently wrong is not that big a deal.

Thing is, US economic numbers are so ‘massaged’ and unreliable, the Fed can pick whichever way the wind blows to argue whatever decision it makes. As long as jobs numbers get presented for instance without counting the 90-odd million Americans who are not in the labor force, and a majority of new jobs are waiters, just about anything goes in that area. Numbers on wages are just as silly.

And people can make inflation a big issue, but hardly anyone even knows what inflation is. Wonder if the Fed does. It had better, because if you don’t look at spending, prices don’t tell you a thing. They surely must look at velocity of money charts from time to time?!

The biggest thing for the Fed might, and perhaps must, be the confidence factor. It’s been talking about rate hikes for so long now that if it decides to leave rates alone, it will only create more uncertainty down the road. Uncertainty about the economy (no hike would suggest a weak economy), and also about its own capabilities.

If all you have is talk, people tend to take you a lot less serious. Moreover, the abject -and grossly expensive- failure of the Chinese central bank to quiet down its domestic stock markets has raised questions about the omnipotence of all central banks.

This morning’s spectacle of a 5% rise in Shanghai in under an hour near the close no longer serves to restore confidence, it further undermines it. Beijing doesn’t seem to get that yet. But the Fed might.

No rate hike is therefore an enormous potential threat to Fed credibility. And that’s a factor it may well find much more important than a bunch of numbers it knows are mostly fake anyway. It has for years been able to fake credibility, but that is no longer all that obvious. And delaying a hike will certainly not boost that credibility.

Sure, volatility is an issue too, but volatility won’t go down on a hike delay. It’ll simply continue – and perhaps rise- until the next meeting. There’s nothing to gain there.

Besides, don’t let’s forget how crazy it is that the entire financial world is dead nervous ahead of a central bank meeting, even as everyone knows it’s all just about a decision on a very small tweak in rates.

Yellen et al are very aware of the risks of that, even if they love the limelight it brings. All that attention tells people, meeting after meeting, that the US economy is not functioning properly, no matter what the official statements say.

There are ‘experts’ talking about the dangers of emerging markets if the Fed votes Yes on a hike, but those markets are not even part of its mandate. if Yellen thinks something can be gained from pushing emerging markets and currencies down further, she’ll do just that.

Still, all this is just pussyfooting around the bush. The Fed may have noble mandates to help the real economy, but it will in the end always decide to do what’s best for Wall Street banks. And these banks could well make a huge killing off a rate hike.

They can profit from trouble and volatility in emerging markets as well as domestic markets, provided they’re well-positioned. Given that they’ve had ample time, and it’s hard to answer the question who else is in a good position, we may have an idea which wind the wind will blow.

Increasing credibility for the Fed and increasing profits for Wall Street banks. Might be a winning combination. And if Yellen is realistic about the potential for a recovery in the American economy, why would she not pick it?

end
Let us close with one of my favourite commentators, David Stockman
as he goes one on one with Greg Hunter

Financial System Booby Trapped with Debt Bombs-David Stockman

Stockman, David NEW (cr. Caryl Englander)By Greg Hunter’s USAWatchdog.com

Former Reagan Administration budget director David Stockman says the biggest crash coming is not going to be in the stock market. Stockman warns, “I think we are headed for a central calamity. The central banks of the world have been on a 20 year campaign to massively expand their balance sheets and intrude into financial markets in ways that were never before imagined. In the process, they falsified every asset value there is from overnight money all the way to 30-year bonds and the stock market. Everything now is trading off the central banks, but the central banks have hit the end of the road. They have printed so much money and created such a massive global bubble that we are now in the process of that bubble fracturing. The central banks are now beginning to become confused and panicked about what to do. The Chinese have no idea what to do with their $28 trillion credit bubble and that house of cards in China. Our Fed is now on the verge of another meeting where they are debating if 80 months of 0% interest rates is enough. That is crazy.”

Stockman, who also had a 20 year career on Wall Street, says enormous amounts of global bond debt will never be repaid. Stockman explains, “That’s why I say the financial system is booby-trapped with debt bombs waiting to explode. I use the 100 year Brazilian bonds as an example, but there are trillions of dollars of this stuff all over the place. You know the central bankers pretend that they don’t see any bubbles. These people are not only bubble blind, they are bubble deaf. They have no capacity to understand the explosive nature of the financial markets that they are toying with.”

Stockman goes on to paint a grim picture and says, “What happens when the financial breakdown comes is there is a great margin call. Everybody says ‘I want my money back and I’ll take your collateral if I don’t get it back. If I do take your collateral, I will sell it for whatever price I can get and cut my losses.’ So, this is truly a house of cards. The whole pyramid of debt and what we call hypothecation and rehypothecation of financial assets, that is the real bubble. That’s what people don’t focus on enough. Sure, you can think of stocks that are a bubble, like Tesla and its current price of around $250, or the biotech index which is trading at hundreds of times earnings is crazy. What’s really crazy is all of this debt that has been created has been turned into collateral and borrowed against at a very high rate. The whole thing is very unstable and tottering as we speak.. . . Much of this collateralized credit that has been created is a confidence game. It is a daisy chain, and when the confidence breaks and they start to unwind the chain, the amount of debt outstanding will shrink. That will create tremendous broken furniture in the financial system.”

How do you protect yourself? Stockman says, “The place to go in my view is cash. Stay short and liquid because we are going into deflationary collapse. We are going into a great reset in the financial markets where inflated asset values are going to be marked down tremendously, bond prices and stock prices. As a result of, that there will be great opportunity after the dislocation runs its course to buy things much cheaper than they are priced today.”

Stockman thinks the whole system unwinds sometime before the 2016 Presidential race is finished.

Join Greg Hunter as he goes One-on-One with financial expert David Stockman, who is also the author of the best-selling book “The Great Deformation.”

(There is much more in the video interview.)

After the Interview:

David Stockman website has free information on it. It’s called DavidStockmansContraCorner.com. If you would like to buy a copy of Mr. Stockman’s best-selling book “The Great Deformation”click here.

end

see you tomorrow night

 

h.

 

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2 comments

  1. JPM gold? Check their acquisitions of silver the last 5 [maybe more] business days. A half million ounces a day. No one noticed yet? I thought it was well known that they were trying to corner the silver market.

    Like

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