sept 18/Gold and silver break out/Bank of England’s Andy Haldane now states that England should now undergo NIRP and ban cash/Russia now contemplates putting troops on the ground in Syria/Israel’s Netanyahu heads to Moscow/Nigerian banks refuse to lend to each other/rates climb above 200%/Military coup in Burkina Faso/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1138.10 up $20.10   (comex closing time)

Silver $15.15 up 18 cents.

In the access market 5:15 pm


Gold $1138.95

Silver:  $15.16



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

At the gold comex today we had a poor delivery day, registering 0 notices for nil ounces  Silver saw 112 notice for 560,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 213.926 tonnes for a loss of 89 tonnes over that period.

In silver, the open interest fell by 2,061 contracts despite the fact that silver was up in price by 10 cents yesterday. Again, our banker friends tried to use the opportunity to cover as many silver shorts. They must be really frightened as to what might happen in a default situation.  The total silver OI now rests at 152,327 contracts In ounces, the OI is still represented by .761 billion oz or 109% of annual global silver production (ex Russia ex China).

In silver we had 112 notices served upon for 560,000 oz.

In gold, the total comex gold OI fell to 414,115 for a loss of 174 contracts. We had 0 notices filed for nil 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 fall by 2,061 contracts down to 152,327 despite the fact that silver was up by 10 cents in price with respect to yesterday’s trading.   The total OI for gold fell by 174 contracts to 414,115 contracts, as gold was down $1.90 yesterday.

(report Harvey)

2.Gold trading overnight, Goldcore

(/Mark OByrne)

3. COT report  (Harvey)

4.  China opens for trading 9:30 pm est Thursday night/Friday morning 9:30 Shanghai time

(zero hedge)

5.  a)UK stock market flashes crashes
(zero hedge)
5 b)  The Bank of England’s lone voice of sanity,Andy Haldane, just went to the dark side by proposing negative interest rates in England and also banking cash.  Looks like NIRP is rapidly coming onto us.
(zero hedge)
6. a) The ECB may now have to increase QE due to the rising euro even though there is a limit as to how many bonds that they buy
(zero hedge)
6b Moody’s downgrades France citing no action on lessening its debt
(Moody’s, zero hedge)
7. Russia may have seen troops on the ground to combat Isis.  Israel’s Netanyahu is going to Moscow for talks.
Obama folds!!
(two commentaries/zero hedge)
8More on the refugee crisis and how it may bring down Europe!
(zero hedge/Prof Buiter)
9. Greek election on Sunday/rundown/
(zero hedge)
 10..  Two major events in Africa today
i) Nigeria’s banks refuse to lend to one another as interbank rates climb to 200%
ii Burkina Faso coup by a general ahead of democratic elections
11. Oil related stories
 2 commentaries/(zero hedge)

12.  USA stories/Trading of equities NY

a)  Futures on NY drop immediately after Gartman signals that he is going long!

(zero hedge)

b  Martin Armstrong believes that the USA has made a terrible policy error with their FOMC no rate cut similar to that of 1927



13.  Physical stories

i)Another lawsuit on the rigging of treasuries, libor etc


ii) Jessie of Americain cafe:  why you must own gold

iii) Alasdair Macleod comments on gold as money

(Alasdair Macleod)


iv) Another example of devastation in the gold mining area:

(Helen Thomas/Wall Street Journal)

v) Peter Cooper/Arabian money/the perfect storm for gold and silver brewing.

vi) Bill Holter comments as he responds to Bron Sucheki

(Bill Holter-Holter Sinclair collaboration)

14.  This week’s wrap courtesy of Greg Hunter/USAWatchdog/

and well as other commentaries…

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

The total gold comex open interest fell from 414,289 down to 414,115 for a loss of 174 contracts as gold was down $1.90 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. We now enter the delivery month of September and here the OI fell by 0 contracts staying at 91 . We had 0 notices filed yesterday so we neither  gained nor lost any gold contracts that will stand for delivery in this non active month of September. The next active delivery month is October and here the OI fell by 339 contracts down to 20,505. The big December contract saw it’s OI rise by 189 contracts from 283,993 up to 284,182. 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 173,523 which is poor. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 155,222 contracts.
Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI fell by 2061 contracts from 154,388 down to 152,327 despite the fact that silver was up by 10 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 3 contracts to 369. We had 1 notice filed yesterday, so we lost 2 silver contracts or an additional 10,000 oz  will not stand for delivery in this active delivery month of September.
The big December contract saw its OI fall by 1885 contracts down to 117,390. The estimated volume today was estimated at 50,306 contracts (just comex sales during regular business hours) which is excellent.  The confirmed volume yesterday (regular plus access market) came in at 44,142 contracts which is very good in volume.
We had 112 notices filed for 560,000 oz.

September contract month:

Initial standings

September 17.2015

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz 95.110  oz  Delaware
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  (nil)
No of oz served (contracts) today 0 contracts (nil oz)
No of oz to be served (notices) 91 contracts (9,100 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 380,912.81  oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
we had 0 dealer deposits
total dealer deposit:  zero
We had 1 customer withdrawal:
 i) out of Delaware:  95.110
total customer withdrawal: 95.11 oz
We had 0 customer deposits:

Total customer deposit: nil  oz

We had 0  adjustments:

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 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
To calculate the 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 (91 contracts) minus the number of notices served upon today (0) 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 (91)– the number of  notices served upon today (0) x 100 oz which equals 11,500 oz  standing  in this month of Sept (0.3576 tonnes of gold).
we neither gained or lost any gold ounces standing in this non active delivery month of September.
Total dealer inventory 162,034.084 or 5.0399 tonnes
Total gold inventory (dealer and customer) =6,877,744.997 or 213.926  tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 213.926 tonnes for a loss of 89 tonnes over that period.
 the comex continues to bleed gold
And now for silver

September silver initial standings

September 17/2015:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  101,140.35 oz(CNT,Brinks)
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 1,123,379.715  oz JPMorgan, HSBC,Brinks,CNTDelaware
No of oz served (contracts) 112 contracts  (560,000 oz)
No of oz to be served (notices) 259 contracts (1,285,000 oz)
Total monthly oz silver served (contracts) 1206 contracts (6,030,000 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 17,747,362.5 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 5 customer deposits:
i) Into JPMorgan: 525,319.930  oz
ii) Into brinks:  7242.83 oz
iii) Into CNT: 954.300 oz
iv) Into HSBC 574,805.855
v) Into Delaware:  15,056.800 oz

total customer deposits: 1,123,379.715  oz

We had 2 customer withdrawals:
i)Out of Delaware:  1020.85 oz
ii) Out of CNT;  100,119.500 oz

total withdrawals from customer: 101,140.35   oz

we had 0  adjustments
Total dealer inventory: 46.863 million oz
Total of all silver inventory (dealer and customer) 168.557 million oz
The total number of notices filed today for the September contract month is represented by 112 contracts for 560,000 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 (1206) x 5,000 oz  = 6,030,000 oz to which we add the difference between the open interest for the front month of September (369) and the number of notices served upon today (112) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the September contract month:
1206 (notices served so far)x 5000 oz +( 369) { OI for front month of September ) -number of notices served upon today (112} x 5000 oz ,=7,345,000 oz of silver standing for the September contract month.
we lost 2 contracts or an additional 10,000 oz will not stand in this active month of September.


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 18.2015: NO CHANGES  in gold tonnage at the GLD/Inventory rests at 678.18 tonnes
sept 17.2017: no changes in gold tonnage at the GLD/Inventory rests at 678.18 tonnes
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 18/2015 GLD : 678.18 tonnes

And now SLV:

Sept 18.2015; no changes in inventory at the SLV/inventory rests at 320.915 million oz

sept 17.2017:no change in inventory at the SLV/rest tonight at 320.915

million oz/

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 change in inventory at the SLV/Inventory rests at 324.698 million oz

September 18/2015:  tonight inventory rests at 320.915 million oz
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 9.0 percent to NAV usa funds and Negative 8.4% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.1%
Percentage of fund in silver:37.7%
cash .2%( Sept 18/2015).
2. Sprott silver fund (PSLV): Premium to NAV falls to+1.43%!!!! NAV (Sept 17/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .42% to NAV September 17/2015)
Note: Sprott silver trust back  into positive territory at +1.43% Sprott physical gold trust is back into negative territory at -.42%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. * * * * *

At 3:30 pm we receive the COT report which gives position levels of our major players
First the gold COT:
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
174,225 134,678 51,513 154,988 187,967 380,726 374,158
Change from Prior Reporting Period
-9,390 10,356 2,630 -632 -23,632 -7,392 -10,646
118 119 96 44 52 209 227
Small Speculators  
Long Short Open Interest  
32,607 39,175 413,333  
-1,007 2,247 -8,399  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, September 15, 2015
This report is from Tuesday through til Tuesday ending Sept 15 and does not include the FOMC results:
Our large specs:
Those large specs that have been long in gold pitched 9390 contracts from their long side and they are very sorry that they did
Those large specs that have been short in gold added a large 10,356 contracts to their short side and they are crying the blues this weekend.
Our commercials
Those commercials that have been long in gold pitched a tiny  632 contracts from their long side.
Those commercials that have been short in gold somehow knew that they had better cover to the tune of a whopping 23,632 contracts.
Our small specs;
Those small specs that have been long in gold pitched a tiny 1007 contracts from their long side.
Those small specs that have been short in gold added 2247 contracts to their short side.
Commercials go net long by 23000 and that is bullish.
For once the bullish indicators work!!
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
60,443 46,180 14,576 61,170 82,527
1,682 6,160 -368 175 -4,028
83 57 35 45 39
Small Speculators Open Interest Total
Long Short 158,007 Long Short
21,818 14,724 136,189 143,283
903 628 2,392 1,489 1,764
non reportable positions Positions as of: 142 120
Tuesday, September 15, 2015   © Silv
our large specs:
Those large specs that have been long in silver added 1682 contracts to their long side
Those large specs that have been short in silver added a large 6160 contracts to their short side.
Our commercials:
Those commercials that have been long in silver added a tiny 175 contracts to their long side
Those commercials that have been short in silver covered a large 4028 contracts
Our small specs;
Those small specs that have been long in silver added 903 contracts to their long side
Those small specs that have been short in silver added 628 contracts to their short side.
Conclusion:  commercials go net long by 4200 contracts and that is bullish
And now for your overnight trading in gold and silver plus stories on gold and silver issues:

 just take a look at the premiums on gold/silver coins!!

(courtesy/Mark O’Byrne/Goldcore)

Gold and Silver Coins, Bars See Very Robust Demand – Delays and Premiums Rising

  • Demand for physical gold this month at “a historically high level” – HSBC
  • Q3 U.S. Mint gold sales set to dwarf those of previous two quarters
  • Supply of physical silver “continues to be tight” and premiums rising
  • China and India demand remains very strong
  • Seasonal Asian buyers to add to demand in coming weeks
  • Dovish Fed bullish for gold

Demand for physical gold and silver in August and September has been exceptionally strong as investors seek a safe-haven from market turmoil, as the global economy slows down and as it becomes clear that the Federal Reserve and central banks generally are slowly losing credibility and ultra loose monetary policies are set to continue for the foreseeable future.


Gold Bars (1 oz – Perth Mint) 3.75% In Stock
Gold Bars (1 oz) 4% In Stock
Gold Bars (10 oz) 3.75% Delivery Delay – 5 Days
Gold Bars (1 kilo) 2.00% Delivery Delay – 5 Days
Gold Maples (1 oz) 4.25% Delivery Delay – 5 Days
Gold Eagles (1 oz) 5% Delivery Delay – 5 Days
Gold Krugerrands (1 oz) 4.25% In Stock
Gold Philharmonics (1 oz) 5.00% In Stock
Gold Buffalos ( 1 oz) 5.00% In Stock
Gold Sovereigns (0.2354 oz) 8.50% 2015 In Stock
Gold Sovereigns (0.2354 oz – Pre 1933) 9.00% Not available in volume
Silver Bars (100 oz Generic) 9.50% Delivery Delay – October 4
Silver Bars (100 oz LBMA – Asahi Refinery) 9% Delivery Delay – Nov 9
Silver Bars (1000 oz) 5.50% Delivery Delay – 1 to 15 Days
Silver Eagles (1 oz) 35% Not Available
Silver Maples (1 oz) 25% Delivery Delay – Unknown

Note: Given continuing and deepening delays for certain popular bullion coins and bars and rising premiums we believe it is important to keep our clients and subscribers aware of the most up to date premiums and availability. The prices quoted are indicative and can change at any time. We continue to be one of the most competitive bullion dealers internationally. The premiums quoted are for smaller orders and there are volume discounts and lower premiums on larger orders..

HSBC described gold demand from the U.S. Mint as being at a “historically high level” which indeed it has been. The bank report that the Mint has sold 322,000 ounces of gold in the first half of this month.

Of this, only 91,000 ounces were made up of Gold Eagle coins – the most popular coin with retail investors – although some market participants believe that some of the stock may be being accumulated by large institutional investors.

And yet, demand for gold eagles is still very strong with demand in Q3 set to dwarf demand of the previous two quarters. With two weeks still to go, total Gold Eagle coin sales have been a staggering 352,500 ounces.

That compares with sales of 146,000 oz in Q1 and 127,000 oz in Q2. So far this year Gold Eagle sales are almost 20% higher than last years total sales of 524,500 oz.

Silver eagle supply continues to be very tight with long delays and a lack of clarity about when supply will be available again. Premiums on Eagles have surged and some are selling for as much as 40% or more than $6 per coin over spot. Dealers report “unprecedented” demand for large silver bars.

GoldCore: Gold in GBP - 1 Week
Gold in USD – 5 Days

Silver maples are on small weekly allocations and silver bars are also becoming difficult to source in volume. The release of the 2016 Australian 1 oz silver .9999 Kangaroo, intended to compete with the Eagle/Maple is already in such demand that the Perth Mint is rationing supply to large dealers.

Production on other 2016 silver products has been delayed by the Australian mint to maintain production levels on the Kangaroo due to very strong global demand.

At the same time the traditional months of strong demand from Asia are now ahead of us which will add even greater demand for gold in the coming weeks. In India, gold demand will reach its peak  later than usual this year as Diwali falls in the second week of November.

Premiums for physical gold in China have risen from $4 per ounce to as high as $6 this indicating very strong demand in China. As do withdrawals from the Shanghai Gold Exchange.

The incredibly strong demand for physical precious metals around the world continues to be obscured by institutional selling of futures contracts on the COMEX. The paper or electronic market continues to dominate the spot price for now. But rising premiums and delays for popular bullion products suggests that proper price discovery reflecting real world supply and demand may be at hand.

However, it is clear both from the enormous demand and from the shortages in the precious metals markets that many investors are becoming nervous about the markets and the state of the global economy.

We advise our readers, as always, to acquire physical gold and to store it outside of the banking system in safer jurisdictions internationally.



Today’s Gold Prices: USD 1136.00, EUR 992.31 and GBP 726.25 per ounce.
Yesterday’s Gold Prices: 1118.15, EUR 987.46 and GBP 720.64 per ounce.

GoldCore: Weekly relative performance

Gold rose nearly 1% or $11.60 to $1,131.30 while silver gained 1.4% or 20 cents to $15.11 an ounce on the COMEX just before the Federal Reserve interest rate announcement yesterday.

Gold in Singapore dipped lower but in European trade gold was moved higher again and is now above $1,140 per ounce. Silver bullion has ticked another 0.8% higher to $15.35 today. Platinum and palladium are slightly lower today.

Gold is headed for a 3 percent weekly gain and silver for a 5.5% weekly gain.

The Federal Reserve kept interest rates unchanged yesterday due to increasing concerns about the global economy and financial market volatility. The sluggish U.S. economy may also have played a role in the decision but this was not signalled.

In what amounted to a somewhat embarrassing volte face, Yellen said developments in a tightly linked global economy had in effect forced the U.S. central bank’s hand. “The outlook abroad appears to have become less certain,” Yellen understatedly told a news conference as gold prices ticked higher.

Yellen was more dovish than expected which is bullish for gold and suggests that the long awaited for bottom for gold may have occurred in early August prior to recent market volatility.

The longer interest rates stay at these record low levels, the better for gold.



FTSE falters after Fed but gold shines as dollar falls – The Guardian
Gold Gets Saved (This Time) by the Fed as Rate Rise Is Deferred – Bloomberg
Gold jumps to 2-week high as Fed holds U.S. rates steady – Reuters
Gold prices head higher after Fed stands pat on rates – MarketWatch
Gold price rallies after Fed holds rates steady –


World May Soon Need “QE For The People” – The Telegraph
Corbyn’s QE for the people is exactly what the world may need – The Telegraph
This Is What Yellen Said About Negative Rates Coming To The US – Zero Hedge
VIX Crushed As Bonds & Bullion Rip, USDollar & Stocks Slip – Zero Hedge
Britain’s economic Achilles heel – MoneyWeek




For those of you who want to get a handle on what on earth is going on this conference should be just the place to attend.


(courtesy Chris Powell/GATA)



Please join GATA in New Orleans in October — you really can’t lose


4:28p ET Thursday, September 17, 2015

Dear Friend of GATA and Gold:

With recent equity market crashes, China’s devaluation, Greece’s bankruptcy, the European Union’s dissolution, the collapse of commodity prices and world trade, and ever-more-obvious central bank interventions against gold, the world financial system may be approaching a turning point — just as the annual New Orleans Investment Conference convenes, from Wednesday through Saturday, October 28-31. If, as some observers suspect, the monetary metals are turning around and about to start exacting their revenge on market-rigging central banks and their investment bank agents, New Orleans will be the place to be.

Once again GATA Chairman Bill Murphy and your secretary/treasurer will be speaking in New Orleans. We’ll be joined by many renowned market analysts and critical thinkers, including the columnists Mark Steyn and Charles Krauthammer; fund manager, best-selling author, geopolitical strategist, and gold market analyst Jim Rickards; newsletter editor Marc Faber; contrarian and provocateur Doug Casey; and Adrian Day, Frank Holmes, Marin Katusa, Brent Cook, Mary Anne and Pamela Aden, Mark Skousen, Eric Coffin, Ian McAvity, and many others.

But of course New Orleans itself is always one of the stars of the show. The conference again will be held at the Hilton New Orleans Riverside hotel, on the Riverwalk along the Mississippi, across the street from Harrah’s casino, adjacent to the city’s trolley line, and a short walk from the French Quarter, beautiful Jackson Square, and many wonderful restaurants and museums.

New Orleans is not a free conference, but GATA supporters really can’t lose on it.

In the first place, if you use the GATA-aligned link below for registration and enter “FREEGOLDCLUB” in the promotional field, you’ll be given free membership in the conference’s Gold Club, entitling you to entry to the conference’s special private viewing area with day-long coffee service, exclusive question-and-answer sessions with select speakers following their presentations, copies of special reports and investment information, discounts on conference compact discs and video discs, and more.

Further, the conference offers you a financial guarantee: If you attend and within six months have not earned back, because of your attendance, at least four times your registration fee, the conference will refund it to you. (Of course you’d still be out your lodging expenses, but you’ll have had a great time in New Orleans.)

There’s another special reason for GATA supporters to attend the conference: The conference will make a donation to GATA for every GATA supporter who attends.

The New Orleans Investment Conference long has been important to GATA, giving us a forum among some hugely influential people. It’s more important than ever for us to show that the cause of free and transparent markets and limited and accountable government endures and indeed still offers the world its best hope for prosperity.

So please consider joining GATA in New Orleans by learning about and registering for the conference here:

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






(courtesy Peter Cooper/Arabian money)

‘Mini-perfect storm’ for gold and a positive hurricane brewing for silver

Posted on 18 September 2015 with no comments from readers


Gold futures climbed again on Friday and eyed a solid weekly gain of around three per cent or higher, with analysts giving the credit to the Federal Reserve’s decision to keep interest rates at historically low levels.

‘Gold seems to be holding on to gains, and perhaps this is a mini-perfect storm for gold,’ said William Adams, head of research for Fastmarkets, explaining that ‘prices are low, other asset classes are relative high and interest rates will stay down for longer.’

Silver hurricane?

But then if gold was doing well its volatile sister was outperforming to the upside with prices set for gains of more than five per cent for the week, and a positive hurricane seems to be brewing in the silver camp. Remember 2008-11 when silver jumped from $8 to $48.50 an ounce?

Gold for December delivery was up two per cent to $1,140 an ounce at the time of writing on Friday, while December silver had leapt to $15.40 an ounce.

Analysts led by Goldman Sachs had previously emphasized that higher interest rates would hurt gold because it doesn’t pay interest, meaning some investors would step away from it. Plus, higher rates lift the dollar and a stronger greenback can weigh on dollar-denominated commodities as they become pricier for holders of other currencies.

In the event the Fed was having none of this, and the weary business of trying to anticipate when it will finally raise rates must start again. However, more stormy global economic clouds ahead could now kick rate rises into the very long grass.

Great expectations

To turn Goldman’s somewhat dubious logic – as gold has often risen with interest rates in the past – on its head, then surely gold and silver prices have only one way to go absent interest rate rises.

Hedge funds and other momentum traders are always on the look out for trading positions like this, where you just buy and ride the momentum upwards. Could it be that stocks will now continue to head downwards while precious metals step up into the great blue yonder?

The trend is your friend, until it is not.

Posted on 18 September 2015




Of course it is rigged!!  Everything is rigged!!


(courtesy Bloomberg)

Primary dealers rigged Treasury auctions, investor lawsuit says


By Alexandra Scaggs Matthew Leising
Bloomberg News
Thursday, September 17, 2015

The same analytical technique that uncovered cheating in currency markets and the Libor rates benchmark — resulting in about $20 billion of fines — suggests that the dealers who control the U.S. Treasury market rigged bond auctions for years, according to a lawsuit.

The analysis was part of a 115-page lawsuit filed in Manhattan federal court on Aug. 26 by Quinn Emmanuel Urquhart & Sullivan LLP and other law firms. The plaintiffs built their case against the 22 primary dealers who serve as the backbone of Treasury trading — including Goldman Sachs Group Inc., JPMorgan Chase & Co., and Morgan Stanley — using data from Rosa Abrantes-Metz, an adjunct associate professor at New York University who has provided expert testimony in rigging cases.

Her conclusion: More than two-thirds of a certain type of Treasury auction appear to have been rigged. She found issues with other auctions too. …

The new case is Cleveland Bakers and Teamsters Pension Fund v. Bank of Nova Scotia, 15-cv-06782, U.S. District Court, Southern District of New York (Manhattan).

… For the remainder of the report:




Alasdair Macleod’s commentary for the week, a must…


(courtesy Alasdair Macleod/GATA)

Gold remains money

We think we know that gold is no longer money, because Keynesians and monetarists insist it is so.

Furthermore, it has been replaced by government currencies, which we use to buy and sell, do our accounts and pay our taxes. While it is undoubtedly true that gold is no longer used for transactions in all but a few places in Asia, this common assumption has no basis in fact.

It is one thing for macroeconomists of all veins to theorise about the contents of the dustbin of history, but the choice people make is what really matters. Humanity has an infinite capacity for adapting and using what is either made available or forced upon them. But just because they have adapted and used government currencies as their circulating media, they have not always given up on gold as the money of choice to retain a store of value.

This article is written in the parochial confines of a welfare state that has advanced beyond regarding gold as money. The views of the people in Britain on this subject are probably similar to those in the other welfare states of Europe, North America and Japan. Those in the finance industries trained in macroeconomics and subscribing hook line and sinker to the relegation of gold to the rank of a plain commodity are relatively few: probably a few million world-wide at most. There are a greater number so dependent on the fiat money system that they would rather dismiss the issue instead of properly considering it, which to a lesser extent must also be true of the wider population which benefits from government welfare and spending.

The welfare system, based as it is on anything other than free markets, conflicts with the concept of sound money. People would rather not pay for everything through taxes, and money and credit inflation as a means of funding are a convenient cop-out. But it is plainly wrong to say the uncaring masses are anti-gold; it is more correct to describe them as not bothered one way or the other. Even most western gold-bugs, which in numbers probably balance the aforementioned macroeconomist establishment, vaguely regard gold as an insurance policy or speculative investment, rather than sound money only driven out of circulation by Gresham’s law.

So the combined population of the welfare states is not anti-gold at all, and the argument that progress in economic thinking has reduced its status to a plain commodity is not true. Nor is it true in South and Central America, where the US dollar is regarded as the sound money alternative to local currencies, only because people have adapted to what is available to them. Nor is it true in sub-Saharan Africa, where the majority of the population has its roots in subsistence farming and tribal communities. However, in Asia, where civilisations have long histories, the story is very different.

For centuries ordinary people from all walks of life are painfully aware that government money is ephemeral, and true money is gold. When the cumulative debasement of a currency leads to its replacement by another debasing currency, you continue to dump the government stuff for gold. This is the experience of the Turks, who faced a million-to-one consolidation of the lira in 2005. According to Wikipedia one gold lira coin could be sold for 154,400,000 old paper lira towards the end, and the new lira is still going down. Indian farmers and traders put their savings into gold, a wisdom borne out by the rupee’s continual devaluation over the years. Even the Chinese, after decades of communism and the brain-washing of the cultural revolution still persist in accumulating gold as the only sound money to tuck away for a rainy day.

To understand why the belief persists that gold is the ultimate money, you have to look back in time to appreciate its value before it was used as money. Anyone who has not been to Cairo and seen the 3,300 year old gold mask of Tutankhamen, and is unable to understand the feeling of awe that overcomes one’s emotions in its presence, must be devoid of all imagination. Not only has it endured an extraordinary length of time, it is in itself timeless, and unchanged from when it was fashioned: that’s some store of value.

Max Keiser of the eponymous show on RT told me of an occasion when he joined a debate on BBC Television about this very subject. He argued the case for gold, while an economist representing the prestigious Economist weekly journal argued against. Off-camera after the debate, the young economist was just as eager as anyone else in the studio to touch and feel the gold bar that had been brought into the studio as a prop.

That is the point: despite the theorising of macroeconomists and what governments with a vested interest force us to believe, gold has an enduring fascination for and a value to humanity. The majority of above-ground stocks are still wrought in the form of jewellery and the highest classification of ornaments. Gold’s durability and fungibility makes this unique material eminently suitable as the only sound money available to the human race.

The welfare states’ denial of this simple fact, and their insistence that their own inflating currencies are superior, is leading them towards economic disaster. They have committed themselves to the destruction of a basic human value, which they will never supress. Asian governments, many of which would undoubtedly like to take this route are forced by their people to be more realistic. Even government officials privately acknowledge the superiority of gold, and in the case of China they have actually encouraged their population to accumulate it.

This matters to us all, because the process of wealth creation is declining in the west, and accelerating in Asia. Furthermore, there are four billion Asians, the majority of which are either directly or indirectly involved in the economic union of the Shanghai Cooperation Organisation, and who have overwhelmingly become the world’s savers and wealth creators.

Government currencies come and go while human values endure. The adaptability of the human race will allow it to continue to use whatever is most convenient for day-to-day transactions. But the days of ordinary people in the welfare states blindly accepting fiat currencies as valid for storing the product of their labour, however temporary, are probably drawing to a close. The impossibility of our debt obligations, including the net present value of future welfare commitments, is catching up with us, and the requirement to debase these obligations is becoming paramount.

When this becomes obvious to growing numbers of the public in the welfare states, as it is bound to do, they will switch from no opinion on gold to having one. The derisory term for gold-bugs will disappear as their prescience emerges, and the price of physical metal measured in government currencies will reflect more properly its unique monetary quality.


Another example of devastation in the mining sector

(courtesy Helen Thomas/WallStreet/GATA)

Gold is so cheap, it’s being given away


By Helen Thomas
The Wall Street Journal
Thursday, September 17, 2015

It is a sign of the beleaguered state of the gold sector that people are effectively giving the stuff away for nothing.

Consider Randgold’s agreement to form a 50/50 joint venture with AngloGold Ashanti, aimed at redeveloping the Obuasi mine in Ghana, which AngloGold largely closed last year. Details weren’t disclosed, but it doesn’t appear Randgold is paying anything upfront for the mine, which offers 5.3 million ounces of reserves. Instead, the pair will share development costs and rehabilitation liabilities.

Mark Bristow, chief executive of Randgold, seems to have parlayed his reputation as the best operator in the business into a cut-price option on a sizable gold mine. AngloGold has already laid off thousands of workers at the loss-making mine. Near-term, Randgold need only shell out a few million to study if the mine can be overhauled and mechanized. …

… For the remainder of the report:…



Why you must own gold:

(courtesy Jessie/Americain cafe)

The Misguided Paperati & Bifurcated ‘Gold’ Markets

Submitted by Jesse via Jesse’s Cafe Americain,


There is a short excerpt of a video interview with hedge fund titan Ray Dalio at the Council on Foreign Relations below.I think it is priceless.   Ray lays out his thoughts on wealth and hedging with gold to the chuckles and sniggers of the pampered ruling class  in a very clear and straightforward manner.

There is also another video interview in which Dalio discusses his views with the smirking chimps from CNBC.   It is almost a scene out of Huxley’s Brave New World,  with Dalio as some kind of monetary savage trying to explain reality to those who have been incubated in an artificial currency regime of King Dollar and know nothing else.

*  *  *

Here is why I think that this is important.

The gold market in particular seems to have bifurcated, or split into two: one market for largely paper speculation and high leverage, and another for the purchase and distribution of actual physical bullion.

Is this a problem?

Yes it is.  Because the attitude towards gold among the status quo in the West has become rigidly dogmatic, supported by years of lazy thinking and a determined the campaign of ridicule and propaganda to try and extend the unsustainable.

You can see it emerge every so often in sites and media outlets and analysts who can be considered as creatures of the establishment, to use an older phrase, for whatever reason they may have.   Some of the economist manservants of the ruling class talk about gold with the same sneering manner that a Victorian aristocrat might have discussed the ‘rights’ of the peoples of India or of China.

And I do not necessarily think they are bad motives, in the dishonest sense at least.  Some may actually believe what they say, although for the most part I don’t think that the fortunate care what is good or what is true, if it serves their own special interests.  This is how they have been taught to be, how life is.

If you have been brought up, bred, and bombarded with certain points of view for most of your life, it is no surprise that you may reflexively tend to adhere to and promote those views without regard to any intervening facts, past or present.  You have been programmed by your education and, dare I say it, class.  I see it all the time.

And it can sometimes lead to odd divergences in reasoning.   This is why certain Founding Fathers found it perfectly acceptable to declare that ‘all men are created equal’ and also own slaves.  Or to seek to curtail the rights of the non-landed and women in terms of ruling and voting.   They are running on what they knew, without proper and rigorous examination.

It is hard for someone who has come from outside that system to understand how they can rationalize such a glaring discrepancy.  But if you put yourself in their place, and honestly examine some of your own habitual thinking, it is not so hard.

Hypocrisy, maybe.  And maybe it is just the unexamined prejudices of the fortunate.   Sometimes even what seems to be an obvious truth can only be seen clearly through tears.  And we have quite a surplus of the exceptionally fortunate these days, who have been pampered and privileged by an order which care very well for them, but that seems to be passing.

A big change is what we are heading for.   We have a financial system that still holds a vast amount of gold in the central banks, including the US and Europe according to their reports at least.  And more importantly, it is on a mad increase in the East with the central banks and the people buying in ever increasing amounts.   Those who serve the power circles of New York, Washington, and London do not want to hear about it, anymore than Winston Churchill had a regard for the thoughts of Mr. Gandhi.

And despite the huge change in the global supply and demand for bullion, we have a holdover, a significant price discovery mechanism in New York and London that is increasingly diverging from the physical realities of supply and demand.

There is going to be a reconciliation of attitudes and realities at some point.  And it may be quite impressive.  The longer that the status quo and their courtiers try to maintain their modern aristocracy, like vast tectonic plates unable to move but building greater and greater pressure, the more dramatic that change may be when it finally comes.

And alas, so many of our politicians are servants, although well paid and well taken, of the moneyed interests.  So they will do nothing that would perturb their true lords and masters, if they wish to also become fabulously rich and rise within the existing system.

The thought of the harm that this careless disregard for justice and right reason is doing to a very large group of relative bystanders and innocents, whose proper role is to be protected by those who have been gifted with greater talents accompanied by oaths of office, is almost disheartening.



Bill Holter responds to bron Suchecki/director of the Perth Mint



(courtesy Bill Holter/Holter-Sinclair collaboration)

Bron Suchecki is a Gentleman



Yesterday’s article “Is YOUR ‘pool’ full?” drew many responses and much to my surprise a reply from Bron Suchecki himself!  I must say, even though I disagree with some of his writings, Mr. Suchecki is a class act and true gentleman.  He began with an apology for the title and closing of his article “Who is the player and who is being played?”.  He wrote his intention for that phrase was for his example of the games played with warehouse stocks.
  Bron did not refute my logic but disagrees about the cause for the current retail coin shortages.  He believes the shortages exist because the mints cannot keep up with demand, it is not a problem getting the raw metal he says.  I would simply ask this, “why is gold in London in severe backwardation?”  This condition should NEVER exist.  
  What he did disagree with is paying a large premium to own coins in hand.  I would again simply ask, what is the cost to own a coin and have it in your hand?  It is the physical price, not the pooled price nor any other paper price.  We clearly saw an example of HUGE premiums of physical over paper in 2008, while COMEX briefly traded under $9, no physical metal changed hands under $15.  So, what was the “real” price back then?
  He went on to say he was surprised at my statement “if you hold metal in hand, you have no question as to whether you own it” because that as he said “implied I did not trust Eric Sprott’s funds or James Turk’s services”.  Let me say this, I know Mr. Sprott very well and I know James Turk via e-mail and his writitngs, I trust them both.  That said, I trust my own eyes more than I trust ANYTHING OR ANYONE (even though age is taking its toll and it’s time for glasses).  One final point he agreed with to my shock was “there will be future cases of fraud and empty vaults” even citing the latest at Bullion Direct as an example.  (As a side note, the biggest example of “empty vaults” was Morgan Stanley charging full storage fees for nonexistent metal.  Only to be slapped on the wrist because they had the paper to pay clients with)  I believe his thought process here reinforces much of what I wrote yesterday.  Mr. Suchecki finished his e-mail by pointing out Perth Mint has been in business for 116 years, is still owned by the government and provided a bar list for perusal.  
To finish I must say thank you for the reply Bron.  You showed me you are a gentleman and a class act with your response!  Now I will do something I have hesitated to do because I never want to appear self serving or like a carnival barker.  Since joining forces with Jim, I have retained my business relationship with Miles Franklin, still broker metals and can help with storage of metals via Brink’s in Montreal.  We also have “non bank” storage agreements in Switzerland, Hong Kong, and Singapore.  While I cannot comment first hand on the Swiss, Hong Kong or Singapore facilities, I have been personally to the Brink’s vault and observed while they audited the holdings.  I saw with my own eyes how and where the metals are stored and how they are audited.  This process is done every six months by an independent auditor.  If segregated storage is something you feel necessary because you hold too much metal to be safely secured personally, please feel free to contact me.  
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome! 
And now your overnight Friday morning trading in bourses, currencies, and interest rates from Europe and Asia:

1 Chinese yuan vs USA dollar/yuan rises a bit in value, this  time at   6.3664/Shanghai bourse: barely in the green and Hang Sang: green

2 Nikkei down 362.06   or 1.96.%

3. Europe stocks all in the red      /USA dollar index down to  94.20/Euro up to 1.1430

3b Japan 10 year bond yield: falls to .340% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 119.15

3c Nikkei now just above 18,000


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

3e WTI:  46.30 and Brent:  48.85

3f Gold up  /Yen up

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to .699 per cent. German bunds in negative yields from 4 years out

 Greece  sees its 2 year rate falls to 10.83%/Greek stocks this morning down by 0.75%:  still expect continual bank runs on Greek banks /

3j Greek 10 year bond yield falls to  : 8.46%  

3k Gold at $1136.00 /silver $15.26  (8 am est)

3l USA vs Russian rouble; (Russian rouble down 22/100 in  roubles/dollar) 65.70,

3m oil into the 46 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 .9543 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0905 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 closer to negativity to +.699%

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 2.15% early this morning. Thirty year rate below 3% at 2.07% / yield curve flatten/foreshadowing recession.

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


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


Global Stocks Slide, Futures Tumble On Confusion Unleashed By “Uber-Dovish” Fed

What was one “one and done“, just became “none and done as the Fed will no longer hike in 2015 and will certainly think twice before hiking ahead of the presidential election in 2016. By then the inventory liquidation-driven recession will be upon the US and the Fed will be looking at either NIRP or QE4. Worse, the Fed just admitted it is as, if not more concerned, with the market than with the economy. Worst, suddenly the market no longer wants a… dovish Fed?

* * *

While consensus was split if the Fed was going to hike or keep rates the same (although with Goldman pushing for the latter and even urging further easing, it is no surprise for the first time ever a FOMC member suggested negative rate), everyone was expecting some hawkish component to yesterday’s FOMC announcement: either the hike itself, or a hawkish “hold” in which the Fed would promise a hike is imminent any moment. After all, 7 years later, the market needed at least a little confirmation that the economy is finally starting to pick up through the lens of the Fed. Nobody expected that dovish mess that was unleashed at 2pm yesterday, in which the Fed explicitly made it clear that it now has a third mandate: responding to Chinese and global events, and that a rate hike is virtually impossible any time emerging markets are “tantruming” due to the same dollar strength that accompanies any pre-hiking intentions, thus proving what we have said all along: the Fed is trapped in a catch 22.

This is how JPM’s chief economist Michael Feroli summarized the confusion unleashed by the Fed:

“While that outcome wasn’t too much of a surprise – we were leaning toward a hike but thought it was basically a coin flip – what was a surprise was the dovish statement and dovish tone of Yellen’s remarks in her post-meeting press conference. Rather than reinforce the message that a rate hike before year-end is highly likely, she gave little sense of growing confidence that inflation will return to its 2% objective over time.”

As for the Fed admitting it is now trapped by the market, here is Vanguard’s senior economist Roger Aliaga-Diaz:

“We are concerned with the Fed’s acknowledgement of recent market volatility in its decision. The Fed runs the risk of being held captive to the markets as, paradoxically, much of that volatility is due to the anticipation and uncertainty around when the Fed will move.”

What’s worse, said Catch 22 also confirms that just like all other central banks who hiked just to ease promptly thereafter, starting with Japan’s failed attempt to escape ZIRP in 2000 and continuing through all the aborted rate hikes in the New Normal, a reflexive attempt to stimulate confidence, and thus inflation, by hiking rates first and hoping inflation follows, will not work forcing central banks to consider the “last option” (hyper)inflationary paradigm – direct monetary injections to the general population bypassing the bank transmission mechanism, where money creation is trapped in capital markets. In other words, monetary paradrops. That, of course, would be the final event before central banks lose all confidence, and incidentally is precisely why the market is trading as it is right now: down big in response to the most dovish Fed we have seen in over two years.

In the meanwhile, the market itself is stunned with its response to the Fed decision: while dovish holds such as this one has previously been almost inevitably bullish for risk assets, the selloff following 2pm’s kneejerk response and the ongoing selling overnight, confirms something is very wrong not only with the global economy, but the market’s “reaction function” to the Fed’s “reaction function.” Just as bad, the debate remains: when will the Fed hike, bringing with it the attendant volatility; and if the Fed does not hike, will it at least go NIRP or launch QE?

For now, all these are seen as dollar negative which is bad news for the ‘recovery’ narrative but good news for emerging markets for the time being.

As a result, while Emerging Markets are enjoying a brief but acute rally on the heels of dollar weakness overnight, developed market stocks are currently tumbling in virtually every market, from Japan which was down 2%, to Europe, to US equity futures which were up early but have since followed the USDJPY far lower as markets are now “tantruming” and demanding that if the Fed will not hike rates, then at least the BOJ or ECB will provide more QE.

The somewhat bright spot was Asian development markets where equities traded mostly higher as the region digested the Fed’s decision to keep rates unchanged but reiterated that a 2015 rate lift-off remained on the table. ASX 200 (+0.5%) and Shanghai. Comp. (+0.4%) traded in positive territory following the FOMC decision, while an improvement in Chinese new home prices (Y/Y -2.3% vs. Prey. -3.7%) further supported sentiment. Nikkei 225 (-2.0%) underperformed ahead of its extended 5-day closure with the index weighed on by a stronger JPY. JGBs tracked the firm gains seen in USTs as domestic pension funds were said to be in bids for bonds in the super long end, while the BoJ also entered the market to purchase JPY 820b1n in government debt.

Cautious sentiment dominated the price action in early trade, as market participants re-position following the decision by the Fed to leave rates unchanged . At the same time, Fed’s Yellen put particular emphasis on China and the recent market volatility in her press conference. As a result of the cautious tone European equities opened in the red (Euro Stoxx: -1.8%), with defensive sectors outperforming. Despite coming off the best levels of the session, both Bunds and Gilts are trading sharply higher, with Euribor and Short-Sterling curves flattening as market participants re-price rate hike expectations.

In FX, it has been a dollarpocalypse the hours following the FOMC announcement with the EUR gaining across the board, as the currency is now viewed as a slightly less attractive option for carry related trades and as such some unwinding has been observed. On that note, analysts at Bank of America have increased their EUR/USD forecast to 1.05 by the end of the year. The USD has continued to soften overnight (USD-Index: -0.5%) to see strength in major pairs, while safe haven flows to JPY have seen USD/JPY fall over a point to below the 119.50 level. At the same time, high-yielding currencies have been the main beneficiary with CAD and AUD seeing strength overnight despite the bleak outlook for metals and energy markets.

The commodity complex has seen further strength on the back of the week USD overnight with gold higher by over USD20.00 since the release of the FOMC rate decision. Elsewhere, copper and iron ore prices were mildly pressured with the latter on course for its worst week in over 2 months as a lack of demand from the world’s largest consumer China continues to weigh. WTI and Brent futures both reside near intraday highs heading into the North American crossover and on course to finish the week in positive territory.

There is nothing on the US calendar today, which gives markets even more time to digest the confusion the Fed unleashed yesterday.

Bulletin Headline Summary

  • Cautious sentiment dominated the price action in early trade, and as such European equities opened in the red with defensive sectors outperforming
  • EUR gained across the board, as the currency is now viewed as a slightly less attractive option for carry related trades and as such some unwinding has been observed
  • Looking ahead, notable events on the calendar include Canadian CPI as well as comments from BoE’s Haldane and ECB’s Coeure
  • Treasuries extend post-Fed rally, move to gain on week after Yellen cited concern over slowing growth in China and turbulence in global markets for keeping rates unchanged.
  • Fresh charges in the U.K. Libor rigging investigation may target traders linked to the benchmark’s euro counterpart, with prosecutors focusing efforts on that strand of the probe in recent weeks
  • Greece’s election remains too close to call as a three-week campaign wraps up on Friday with no clear front-runner in a vote that may put Europe’s most indebted state on course for thorny coalition talks as of next week
  • China’s stocks capped their steepest weekly loss this month as turnover shrank amid growing concern government measures to support the world’s second-largest equity market and economy are failing
  • Life is getting better in the U.S. even with stagnating wages for some workers, thanks to improvements in technology and cars, according to JPM’s Jamie Dimon
  • Abe’s fiscal policy is backfiring again: More than a year after a sales-tax increase tipped Japan into a recession, efforts to clamp down on soaring pension payments are suppressing a recovery in consumer spending
  • PBOC orders banks to tighten supervision of their clients’ FX deals, Reuters reports, citing unidentified people with direct knowledge of the matter
  • Sovereign 10Y bond yields lower. Asian stocks higher with the exception of Japan. European stocks, U.S. equity-index futures decline. Crude oil, gold and copper rise


DB concludes the overnight wrap


So the Fed stands pat and the spell of record low rates continues as concerns about developments abroad and the fragility of markets proved to be enough of a red flag for policymakers. The overall tone and message from both the statement and Fed Chair Yellen certainly felt like it was weighed more towards the dovish end of the scale. Median dot plot estimates were lowered by a quarter basis point for the next three years (leaving one hike for 2015), while the LT rate was also notched down by the same proportion to 3.5%. Growth and inflation expectations for 2016 and 2017 were revised down, while the 2% core inflation target was moved back to 2018. The stronger Dollar and the disinflationary impact that this is having was an overriding theme. There was some support from Yellen on the improvements in domestic activity with both business spending and the labour market in particular highlighted. She also kept the door open for a move this year, including October, but once again the timing was downplayed with the expected path of rate rises re-emphasized as the more important factor.

In terms of the market reaction, the price action in Treasuries actually started about 45 minutes pre-FOMC as yields moved south in a hurry. The most notable move was in the 2y which was already down about 5bps prior to the release. The yield then plummeted a further 8bps post-decision and Yellen conference, finishing the day 13.1bps lower at 0.682% and in turn marking the biggest single day move lower since March 2009 when the Fed announced its QE program. The 10y closed just over 10bps lower at 2.191%, although it’s worth noting that it’s pretty much back to where it was at last Friday’s close. Meanwhile, the Dollar unsurprisingly came under decent pressure, the Dollar index finishing down 0.91%. Some of the more interesting price action came in risk assets. Equities initially rallied on the decision, the S&P 500 jumping as high as +1.3% before nerves crept in as Yellen’s press conference got underway, with the index eventually paring all of that move and more, closing down -0.26%. Credit indices saw a similar trend, CDX IG finishing about half a basis point tighter after trading nearly 3bps tighter.

While there weren’t huge changes to the statement put out by the committee, the main focus was on the paragraph ‘recent global economic and financial developments may restrain economic activity somewhat and are likely to put downward pressure on inflation in the near term’. This was followed up by Yellen in her press conference saying that officials had decided to stay put ‘in light of the heightened uncertainties abroad’. Yellen balanced this with supportive comments around the state of the domestic economy, but that was already overshadowed somewhat by a cut in growth estimates by the committee for 2016 (to 2.3% from 2.5% previously) and 2017 (2.2% from 2.3%), while core PCE projections were notched down to 1.7% (from 1.8%) and 1.9% (from 2.0%) respectively. The proportion of Fed officials now expecting a move by the year end has dropped to 13 out of the 17 officials, down from 15 who expected such at June. As mentioned median dot plots were nudged down 25bps and one committee member is now advocating for a rate cut.

As DB’s Peter Hooper notes, the Fed has now added considerable complexity to the task of divining when conditions will be ‘right’ in their view by stressing the importance of economic and financial market developments abroad as well as at home. The door has been kept open for now, but one has to think that that door is slowly starting to creak shut and a lot will rest on how markets react over the next month or so. As we stand, market pricing for an October hike is at just 18%, while December is currently at 44%.

In terms of trading in Asia this morning, with the exception of Japan – which has been weighed down by a stronger Yen – most major equity bourses have followed up in a positive manner, although not without some early swings. In China the Shanghai Comp and CSI 300 are up +0.40% and +0.62% respectively at the midday break, although the former has crossed between gains and losses eight times already. Elsewhere the Hang Seng (+0.42%), Kospi (+0.63%) and ASX (+0.88%) have all taken a leg up, although in Japan we’ve seen both the Nikkei (-1.39%) and Topix (-1.62%) tumble. Oil markets are more or less unchanged after falling over a percent yesterday, while Gold (-0.30%) has given back some of yesterday’s post FOMC gains. S&P 500 futures are currently up +0.2%, while Treasuries have seen little change. EM currencies have firmed although no more than three-tenths of a percent while Asia credit is generally a couple basis points tighter. Meanwhile, August home price data out of China this morning was reasonably supportive with prices rising in 35 of the 70 cities from the previous month.

Unsurprisingly there wasn’t much to report in the European session prior to the Fed yesterday. Equity markets were fairly mixed. The Stoxx 600 closed -0.18% while there were some modest gains for the DAX (+0.02%) and CAC (+0.20%) although in fairness there was little conviction for most of the session. It was a decent day for European credit though. Crossover closed some 7bps tighter and Main finished 1.5bps tighter.

Despite the obvious main event of the Fed taking up most of the attention there was also some data out yesterday. The highlight was a soft headline Philly Fed business outlook print for September which declined over 14pts to -6.0 (vs. +5.9 expected). The reading was the lowest since February 2013, although there were some positives in the details. Notable was a decent leg higher for capex expectations, while there were also firmer new orders and employment indices numbers. The six-month ahead outlook also rose relative to last month. Elsewhere, both housing starts (-3.0% mom vs. -3.8% expected) and building permits (+3.5% mom vs. +2.5% expected) readings recorded beats. Finally initial jobless claims declined 11k last month to 264k after expectations of no change. Meanwhile, in the UK we got an in-line +0.2% mom gain for retail sales for August, with the ex auto and fuel reading also printed as expected at +0.1% mom.

Before we get onto the day ahead, one event which has somewhat flown under the radar is Greece’s general election this Sunday. The recent polls have been too close to call, with fairly evenly split support for Syriza and New Democracy although neither is likely to control a majority in parliament. The successful conclusion of the 3rd ESM package and broad-based political support to meet creditors’ demands eliminated a lot of the political risk however and as DB’s George Saravelos pointed out previously the eventual outcome of the vote may not entail particularly different paths ahead. The bigger picture is the popular support towards underlying Eurozone membership as the key underlying factor behind ensuring that Greece’s path towards stabilization is in place.

It’s a quiet day for data today, with the focus set to be more on the price action following the Fed. There’s nothing of note in Europe this morning, while over in the US we’ve got the Conference Board’s leading indicator as the only notable release. Tomorrow we get the first Fedspeak post yesterday’s decision with Williams and Bullard both due to speak on the US economic outlook, so it’ll be worth keeping an eye on that.



Your opening of Japan and Shanghai stock markets, Thursday night 9:30 pm/Thursday morning 9:30 Shanghai time:

USA/Yen continues to plummet/Japanese stocks falter badly.  China raises value of yuan which will cause more USA dollar outflows. Margin debt increases. The big news:  the minister believes the USA/Yen rate will fall to 115:  this would be the death blow to the yen carry traders.

(courtesy zero hedge)

Japanese Stocks/USDJPY Plunge As China Cracks Down On Aggressive-Buying By “Sinister Stock Squads”

Despite the approval of various Asian nation officials (e.g.Japan’s Amari: “Fed decision appropriate”), it appears non-hawkishness is not enough to keep the dream alive. Japan’s Nikkei 225 is down over 600 points from its post-FOMC spike highs, and USDJPY has tumbled over 1 handle – back below 120.00. Chinese stocks are extending losses after last night’s late tumble, as ironically, China’s securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash. The PBOC strengthened the Yuan fix for the 2nd day in a row (by the most in 2 weeks).


A sigh of relief from Japan’s leadership:


But it is not enough, as USDJPY and Nikkei 225 are tumbling…


And this did not help…


Which legged USDJPY lower still.

*  *  *

Broad asian equity markets weaker…


And China is opening lower, extending last night’s closing weakness…



Despite a 2nd day of releveraging…


Which is ironic since China’s securities regulator has uncovered a number of market manipulators who boosted prices of some stocks to sky-high levels during the peak of the bull market, attracting numerous followers who have suffered heavy losses in the recent market crash,according to Shanghai’s China Business News.

The China Securities Regulatory Commission (CSRC) has penalized two such manipulators, announcing on Sept. 11 the confiscation of 47 million yuan (US$7.3 million) of the illegal gains Ma Xinqi and Sun Guodong made from stock manipulation.


In its announcement, the comission described how Ma Xinqi jacked up the stock price of Beijing Baofeng Technology, an internet video company, by placing massive orders which were canceled shortly afterwards before selling off his original holdings of the stock, making huge gains.



Sun Guodong repeatedly bolstered the stock prices of Guangdong Qtone Education and 12 other listed companies by placing orders for those stocks before selling off his original holdings the following day.


Insiders pointed out that Ma and Sun are members of 10-dd “stock squads” focusing on investments in high-flyers, China Business News said.


“These stock squads, each boasting several hundreds of millions of yuan in funds, carefully study technical market charts and profit from investments of extremely short duration,” remarked an executive of a private equity fund, adding that in addition to their own money the squads also solicit funds to boost their clout in manipulating stock prices.


The private equity fund executive said both Ma and Sun are but minor players among the stock squads, however, pointing to their limited profits, according to the announcement of CSRC.


Market insiders suspect that Ma and Sun are followers of much greater forces manipulating stock prices, perhaps involving fund managers, which were behind the stock price rise at daily ceiling of Baofeng Technology for 34 trading sessions consecutively in March this year, according to China Business News.


“Institutional investors have driven the prices of many stocks with shaky fundamentals to sky-high level,” the private equity fund executive said.

So – it appears – in China, do not be an over-aggressive buyer or a seller of stocks. We love the smell of free markets in the morning.

China strengthened the Yuan fix fior the 2nd day in a row..


That was the biggest rise in 2 weeks:


Charts: Bloomberg




Over in England, another flash crash!!


(courtesy zero hedge)

UK Stocks Flash-Crash As BP, Banks Plunge

Chatter of a fat-finger trade, then exaggerated by the algos, has smashed UK’s FTSE 100 lower instantly this morning, dragging major firms with it…


As with all these plunges, the machines BTFD but the rebound is weak.

As Bloomberg noted:



Charts: Bloomberg



We now have Bank of England’s Andy Haldane, who seemed to have a head on his shoulders and was the lone voice of sanity inside the Bank of England has just gone to the dark side by proposing:


i) negative interest rates in England

ii) a ban on all cash.


Ladies and Gentlemen; the wheels are coming off the entire globe’s finances:


(courtesy zero hedge)


Bank Of England Economist Calls For Cash Ban, Urges Negative Rates

Just three short years ago, Bank of England chief economist Andy Haldane appeared a lone voice of sanity in a world fanatically-religious Keynesian-esque worshippers. Admissions in2013 (on blowing bubbles) and 2014 (on Too Big To Fail “problems from hell”) also gave us pause that maybe someone in charge of central planning might actually do something to return the world to some semblance of rational ‘free’ markets. We were wrong! Haldane appears to have fully transitioned to the dark side, as The Telegraph reports, he made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.

Speaking at the Portadown Chamber of Commerce in Northern Ireland, as The Telegraph reports, Mr Haldane’s support for a possible cut in rates came as the Bank as a whole has signalled that the next move in rates would be up.


Andy Haldane, one of the Bank’s nine interest rate setters, made the case for the “radical” option of supporting the economy with negative interest rates, and even suggested that cash could have to be abolished.


He said that the “the balance of risks to UK growth, and to UK inflation at the two-year horizon, is skewed squarely and significantly to the downside”.


As a result, “there could be a need to loosen rather than tighten the monetary reinsas a next step to support UK growth and return inflation to target”.

But recent volatility in financial markets, prompted by China, and a decision by the US Federal Reserve to delay rate hikes, have pushed back expectations of the Bank’s first rate rise to November 2016.

Traditionally policymakers have resisted cutting rates below zero because when the returns on savings fall into negative territory, it encourages people to take their savings out of the bank and hoard them in cash.



This could slow, rather than boost, the economy. It would be possible to get around the problem of hoarding by abolishing cash, Mr Haldane said

Interestingly, one idea, Haldane told an audience of business owners in Northern Ireland, could be to scrap cash and adopt a state-issued digital currency like Bitcoin. Although widely reviled as the currency for drug dealers and criminals, Haldane said Bitcoin’s distributed payment technology had ‘real potential’. Which may explain the Fed’s sudden fascination in the virtual currency.

NIRP – it would appear – is about to global.

So Haldane has gone from worrying that “financial markets were detaching themselves too materially from fundamentals” and fearing the “biggest risk to global financial stability right now it would be a disorderly reversion in the yields of government bonds globally,” the BoE’s chief economist has not only called for policies which will enable an even bigger bond bubble but will also remove freedom from the people to do what ‘they’ think is best with their capital. Indoctrination is complete (or more ominously, is there something Haldane sees that has driven him to this extremist perspective?)


The ECB may have to react as the world now perceives that the USA policy to leave the rates unchanged is a blunder.

ECB board member Coeure suggests that more QE may be in the hopper.  Europe is frightened to see the Euro rise which will dampen exports, the only saving grace for them.  The one problem, of course, is the one we highlighted to you on several occasions:

they just do not have enough bonds to monetize!!


(courtesy zero hedge)

ECB May Launch More QE In Response To Fed Inaction, Board Member Hints

As noted earlier, the very simple calculus of yesterday’s Fed announcement boils down to the following: “markets are now “tantruming” and demanding that if the Fed will not hike rates, then at least the BOJ or ECB will provide more QE.” Moments ago the EURUSD briefly hit 1.1450, a 150 pip increase since the Fed statement, and an unwelcome development for Europe’s economy which has been treading water only due to its weak currency which has supported the European trade balance.

So now that the Fed appears to have made a grave policy error judging by the market’s initial reaction, it is up to the ECB and BOJ to step up (even if as we warned two weeks ago both are running out of monetizable material) and try to preserve some confidence, i.e., halt the selling.

Sure enough, that is precisely what happened earlier today when infamous ECB board member and hedge fund leaker Benoit Coeure hinted that if only the market drives 5Y5Y’s even lower, i.e., inflation expectations, the ECB will have no choice but to boost QE.

To wit:


This is happening even as the much touted European recovery is supposedly now faltering:


Better yet, Coeure came this close to admitting that which shall never be admitted by central bankers in polite company, namely that QE is nothing but a mechanism to manipulate exchange rates (and boost stocks in the process):


And yet all the wrath of the world is focused on China’s and its “massive” 3% devaluation when the Yen has gone from 80 to 120 in three years simply due to printing money?


But it sure will try, and quite soon at that – just push those 5Y5Y fwds low enough, and sit back awaiting more Q€.



Late this afternoon: Moody’s cuts France’s rating to Aa2 from Aa1



(courtesy Moodys/zero hedge)

Moody’s Downgrades France, Blames “Political Constraints”, Sees No Material Reduction In Debt Burden

Citing “continuing weakness in the medium-term growth outlook,” Moody’s has downgraded France:


Apearing to blame The EU’s “institutional and political constraints,” Moody’s expects French growth to be at most 1.5% and does not expect the debt burden to be materially reduced this decade.


Moody’s Investors Service has today downgraded France’s government bond ratings by one notch to Aa2 from Aa1. The outlook on the ratings is stable.
The key interrelated drivers of today’s action are:
1. The continuing weakness in France’s medium-term growth outlook, which Moody’s expects will extend through the remainder of this decade; and
2. The challenges that low growth, coupled with institutional and political constraints, poses for the material reduction in the government’s high debt burden over the remainder of this decade.
At the same time, France’s credit worthiness remains extremely high, supporting an Aa2 rating. The country’s significant strengths include: (i) a large, wealthy, and well-diversified economy with a high per capita income, (ii) favourable demographic trends as compared to other advanced economies, and (iii) a strong investor base and low financing costs. The rating and its stable outlook are also supported by the country’s efforts to stabilise its public sector finances and initiatives recently deployed or announced to arrest the erosion of the economy’s competitiveness.
In a related rating action, Moody’s has today announced its decision to downgrade the ratings of the Société de Prise de Participation de l’État (SPPE) to Aa2 from Aa1. The SPPE’s short-term rating was affirmed at P-1, including its euro-denominated commercial paper programme. The outlook on the ratings is stable. The debt instruments issued by the SPPE are backed by unconditional and irrevocable guarantees from the French government.
The local and foreign currency deposit ceilings and the local-currency and foreign-currency bond ceilings for France are unaffected by this rating action and remain at Aaa/P-1.
The main driver of Moody’s decision to downgrade France’s government bond rating to Aa2 is the increasing clarity, in Moody’s view, that French economic growth will remain low over the medium term, and the obstacle that this will pose for any material reversal in France’s elevated debt burden in the foreseeable future.
The current economic recovery in France has already proven to be significantly slower — and Moody’s believes that it will remain so — compared with the recoveries observed over the past few decades. In part, this is due to the erosion of competitiveness and loss of growth potential following the global financial crisis. It is becoming increasingly clear, in the rating agency’s view, that these problems will continue to constrain growth long after the cyclical recovery from the crisis is completed. In Moody’s opinion, France’s potential annual growth rate is at most 1.5% over the medium term. France faces material economic challenges, such as a high rate of structural unemployment, relatively weak corporate profit margins, and a loss of global export market share that have their roots in long-standing rigidities in its labour and product markets.
France entered the crisis with a legacy of sustained, very high levels of state expenditure and a history of recurring budget deficits that goes back four decades. A pattern that has become evident over time has been that French public sector debt, relative to GDP, essentially stabilises in good times and rises in bad. The rise in indebtedness since the onset of the crisis has been very rapid and the country’s debt burden will likely peak and stabilise at around or close to 100% of GDP. Notwithstanding the magnitude of the fiscal and economic challenges that the government faces, the institutional response since the onset of the crisis has been slow and halting, essentially consisting of a series of small positive steps that have, individually and collectively, been insufficient to deal with these challenges in a timely manner. Within the context of Moody’s sovereign rating methodology, a government’s institutional willingness and ability to reverse the impact of shocks on the public finances is an important attribute associated with very high rating levels. While Moody’s assessment of the quality of France’s institutions remains very high, the rating agency does not believe that the country’s institutional strength is on a par with many of the most highly rated sovereigns.
Taken together, low growth and institutional and political challenges to reforms make it unlikely that we will see a material reduction in the government’s high debt burden over the rest of this decade, which means that it will remain well above the debt burdens of Aa1-rated peers. The combination of structurally weaker growth, low inflation, and a more than 30 percentage point increase in the debt/GDP ratio since the onset of the global financial crisis means that the shock absorption capacity of France’s balance sheet has weakened and, in Moody’s view, is no longer expected to recover materially in the next three to five years.
The stable outlook on France’s Aa2 sovereign rating partly reflects the strengths that underpin the Aa2 rating itself–the underlying economic and fiscal strengths of the French sovereign. France is a large, wealthy and well-diversified economy that is home to a significant number of companies in high-value added sectors. Income inequality is relatively low. Relative to other advanced economies, France has a favourable demographic profile, and is not expected to see a contraction in the size of its working age population over the long term. The government’s current interest burden (both as a percentage of revenues and as a percentage of GDP) does not represent a significant constraint on the public finances. Efforts are being taken to reduce the budget deficit, albeit at a materially slower pace than was envisioned as recently as the 2014 Stability Programme.
The stable outlook also recognises the French government’s stated desire to address some of the structural challenges to growth and the fiscal balance, which should at least protect its balance sheet from further deterioration. While the revealed preference of French institutions is to undertake incremental, gradual change, the changes we expect in these areas–for example, though a second Macron Law and a revision to the labour code–between now and national elections in 2017 should prevent a further material deterioration in French credit quality over this time horizon.
As reflected by the stable rating outlook, Moody’s does not anticipate any movement in the rating over the next 12-18 months. However, downward pressure on the rating could arise if progress on structural macroeconomic reform were to fail to materialise as we expect. Moody’s could also downgrade France’s government debt rating further in the event of a reduced political commitment to fiscal consolidation or should we conclude that a material increase in debt was likely for any other reason.
Conversely, Moody’s would consider changing the outlook on France’s rating to positive, and ultimately upgrading the rating back to Aa1 in the event of much more rapid economic growth and debt-to-GDP reduction than Moody’s is currently anticipating.
GDP per capita (PPP basis, US$): 40,375 (2014 Actual) (also known as Per Capita Income)
Real GDP growth (% change): 0.2% (2014 Actual) (also known as GDP Growth)
Inflation Rate (CPI, % change Dec/Dec): 0.1% (2014 Actual)
Gen. Gov. Financial Balance/GDP: -4% (2014 Actual) (also known as Fiscal Balance)
Current Account Balance/GDP: -0.9% (2014 Actual) (also known as External Balance)
External debt/GDP: [not available]
Level of economic development: Very High level of economic resilience
Default history: No default events (on bonds or loans) have been recorded since 1983.
On 15 September 2015, a rating committee was called to discuss the rating of the France, Government of. The main points raised during the discussion were: The issuer’s economic fundamentals, including its economic strength, have materially decreased. The issuer’s institutional strength/framework, have materially decreased. The issuer’s fiscal or financial strength, including its debt profile, has materially decreased. An analysis of this issuer, relative to its peers, indicates that a repositioning of its rating would be appropriate.



The following is very worrisome.  Netanyahu is heading to Moscow worried that weapons will be given to Syria.  The fear is that these weapons will be given to Israel’s enemy, Hezbollah:


(courtesy zero hedge)


Russia Says It May Send Troops Into Combat In Syria As A Worried Netanyahu Heads To Moscow

On Thursday evening, we detailed a Reuters report which suggested that the influx of Russian technical and logistical support to Bashar al-Assad’s depleted army at Latakia might have breathed new life into the regime as it seeks to rout Islamic State and a whole host of other armed groups fighting for control of Syria. “Foreign Minister Walid al-Moualem said on Thursday Russia had provided new weapons and trained Syrian troops how to use them,” Reuters said, before describing what certainly sounds like an invigorated air campaign against the de facto ISIS capital at Raqqa.

Importantly, al-Moualem also indicated that Syria would be willing to make an official request for Russian combat troops “if needed.”

Now clearly, it seems likely that Russian troops have already joined the battle and indeed, when the bullets start flying, the distinction between “logistical” support and “combat” support quickly becomes blurred, but through all the sabre rattling and back-and-forth banter between Kerry and Lavrov, both sides are still keen to at least pay lip service to the unwritten rules of international diplomacy which is why before Russia can admit that its troops are actually on the ground to fight, they’ll be a charade where Syria will pretend to be raising the issue with the Kremlin for the first time at which point the Kremlin will take a few days to “consider” things. As of Friday, it appears as though that process has begun. Here’sBloomberg:

Russia said it’s willing to consider sending troops into combat operations in Syria if President Bashar al-Assad’s government requests assistance.


While the possibility is hypothetical now, “if there is a request, it will be discussed as part of bilateral contacts,” Kremlin spokesman Dmitry Peskov told reporters on a conference call on Friday. “Of course it will be discussed and considered.”


The prospect of direct Russian involvement in the country’s civil war, in which more than 250,000 people have died since 2011, would mark a sharp escalation in President Vladimir Putin’s support for the embattled Assad government. The U.S. has accused Russia of increasing military aid to Syria in recent weeks by sending tanks, artillery and personnel, as well as setting up what the Pentagon says might be a forward airbase near the coastal city of Latakia. Syria also hosts Russia’s only naval facility outside the former Soviet Union at Tartus.


The possibility of troop involvement emerged before a visit to Moscow by Israeli Prime Minister Benjamin Netanyahu on Monday for talks with Putin about Russia’s growing military involvement in Syria. Netanyahu “will present the threats posed to Israel as a result of the increased flow of advanced war material to the Syrian arena and the transfer of deadly weapons to Hezbollah and other terror organizations,” the Israeli government said in an e-mailed statement on Wednesday.

To be sure, Netanyahu’s Russian visit comes at an interesting time. In the US, the last challenge to the Iran nuclear deal was defeated in the Senate on Thursday, paving the way for the agreement’s implementation. Needless to say, Netanyahu isn’t particularly pleased with The White House’s stance on Iran’s nuclear ambitions and US-Israeli relations have deteriorated markedly this year thanks in large part to the Iran deal. But the Israeli PM is also concerned that Russia’s move to reinforce Assad could have implications for Hezbollah, something Netanyahu and Putin will discuss on Monday. Here’s Reuters:

Western officials and a Russian source said last week that Russia was sending an advanced anti-aircraft missile system to Syria in support of Assad.


The Western officials said the SA-22 system would be operated by Russian troops. A U.S. official, who confirmed the information, said the system may be part of a Russian effort to bolster defences at an airfield near Latakia, an Assad stronghold.


Even if Russians operated the missiles and kept them out of the hands of the Syrian army, the arrival of such an advanced anti-aircraft system could unsettle Israel, which in the past has bombed sophisticated arms it suspected were being handed to Assad’s Lebanese guerrilla allies, Hezbollah.


(Hezbollah chief Hassan Nasrallah)


Worried about accidentally coming to blows with Russian reinforcements in Syria, Israeli officials said last week they were in contact with Moscow. But Israel also made clear it would continue its policy of stopping advanced arms reaching Hezbollah.

And let’s not forget that just one month ago, Israel hit targets inside Syria after Damascus-based Islamic Jihad lobbed rockets at a village in Northern Israel. Netanyahu claimed the militants were acting on order from an “Iranian general.”

“This is another clear and blatant demonstration of Iran’s continued and unabating support and involvement in terrorist attacks against Israel and in the region in general. This attack has also occurred before the ink on the . . . nuclear agreement has even dried, and provided a clear indication of how Iran intends to continue to pursue its destabilising actions and policies as the international sanctions regime is withdrawn in the near future,” Israel’s foreign ministry said at the time.

That came just four weeks after Quds commander Qassem Soleimani reportedly met with Vladimir Putin in Moscow where, according to GOP mouthpiece Fox News, the Russian and Iranian leaders discussed “a new joint military plan to strengthen Syrian President Bashar Assad, a plan that is now playing out with the insertion of Russian forces in Syria.”

In what looks like a rather conveniently timed announcement ahead of Netanyahu’s trip to Russia, the Treasury said on Thursday that any Iranian bank receiving sanctions relief as part of the Iran nuclear deal would have sanctions re-imposed in the event they support Hezbollah or the Quds.

(Soleimani who, according to a CIA officer who spoke to The New Yorker in 2013, is “the most powerful operative in the Middle East today“)

So this is the backdrop for Netanyahu’s visit to the Kremlin and, as mentioned above, it’s complicated by the fact that the Prime Minister is now at odds with the US over Washington’s handling of the Iran Nuclear Deal. At the end of the day, one is certainly left to believe that Israel’s “worries about accidentally coming to blows with Russian reinforcements in Syria” will quickly evaporate should Netanyahu get confirmation that the Quds are indeed on the ground as some reports have recently suggested and if it becomes clear that weapons are being funneled to Hezbollah, well, then all bets will officially be off.








Obama folds again as they will now begin with military talks on Syria with Russia;



(courtesy zero hedge)

Obama Folds Again, To Begin Syria Military Talks With Russia “Very Shortly”

Ever since Russia began stepping up its technical and logistical support for Bashar al-Assad’s forces at Latakia, Washington has insisted that Moscow’s intentions “aren’t yet clear.”

Essentially, that’s the excuse the US is giving for why it won’t join Russia in what would ultimately amount to an all-out push to rout ISIS in Syria.

The problem with that excuse, is that it creates a problem in terms of how the public perceives the situation. That is, the more explicit the Kremlin became about its aims in Syria, the harder it became for The White House to explain why the US isn’t on board.

The West has gone to great lengths to create a bogeyman par excellence in ISIS and it has, from the public’s perspective anyway, largely succeeded. However, Russia’s presence in Syria now means that the US will no longer be able to sit back and wait for ISIS (or anyone else for that matter) to overrun Assad.Russian military intervention has effectively taken that eventuality off the table, putting Washington in the extremely awkward position of having to either i) explain to the public that in fact Assad and Russia are the greater threats and therefore it’s in the US’s geopolitical interests to see if ISIS can finish the job even with the Russians on the ground, or ii) cave and admit privately that unless the US intends to go to war with Russia, Assad, and ISIS all at once, achieving the original goal (i.e. routing ISIS once ISIS routs Assad) is no longer possible, and say publicly that the US is willing to partner with Russia to defeat ISIS and the two nations will then negotiate for the future of the Assad regime.

To be clear, the first option is obviously a no-go because it blows the entire charade wide open.

As for the second option, as of Friday, it’s now in play. Here’s The New York Times:

Secretary of State John Kerry said on Friday that the United States was prepared to engage in military-to-military talks with Russiaconcerning Syria.


“The president believes that a military-to-military conversation is an important next step,” Mr. Kerry said, “and I think, hopefully, it will take place very shortly.”


The initial purpose of the talks with Russia, Mr. Kerry said, will be to help “define some of the different options that are available to us as we consider next steps in Syria.”


Mr. Kerry said that the Obama administration would not change its basic goals in Syria: The defeat the Islamic State, also known as ISIS or ISIL, and a political solution for the conflict there.


But though the administration has long said that President Bashar al-Assad must go for there to be a durable solution to the Syria crisis, Mr. Kerry seemed on Friday to allow for the possibility that Mr. Assad might remain in power in the short term. Mr. Assad has had Russia’s backing throughout the conflict.


“Our focus remains on destroying ISIL and also on a political settlement with respect to Syria, which we believe cannot be achieved with a long-term presence of Assad,” Mr. Kerry said. “But we’re looking for ways in which to try to find a common ground. Clearly, if you’re going to have a political settlement, which we have always argued is the best and only way to resolve Syria, you need to have conversations with people, and you need to find a common ground.”

And so, two years (nearly to the day) after Kerry folded to Sergei Lavrov over Assad’s chemical weapons stash (the pretext for the original attempt to justify ousting Assad by military force), the US looks set to fold again.

Note that if Russia ends up negotiating for Assad to remain in power, all of this will have been for nothing. Make no mistake, none of it was “justified” in the first place. Engineering a civil war by funding and training extremists knowing that the resultant chaos will cost the lives of countless civilians would be deplorable even if the regime one sought to overthrow was unequivocally evil and the outcome was 100% certain. In Syria however, what you have is another example of a Mid-East strongman being destabilized by the West only to find that i) the human suffering brought on by the fighting and the chaos that reigns in its aftermath is far worse than the oppression the people suffered under the regime’s rule, and ii) the outcome is far from certain and in this case, it appears that thanks to Russia, Assad isn’t going anywhere.

So at the end of the day, hundreds of thousands of lives will have been wasted only to see the very same regime in power, only now, mutliple violent extremist groups that otherwise might not have existed will likely be present in one form or another in the region for decades to come.

Another US foreign policy success story.






Greek election on Sunday.  The election has the two major parties running neck and neck and both parties want the bailout to proceed.

So expect no fireworks here:


(courtesy zero hedge)

Greece Heads Back To The Polls: Full Sunday Election Preview

For months on end, all anyone could talk about was Greece. Throughout the spring and summer, the country’s fate in the eurozone was considered the main risk to global markets if not for what the financial fallout from a Grexit would be (that risk was largely confined to the public sector), then for what a Grexit would mean for the future of Europe’s fragile currency union.

Then, a funny thing happened. Everyone forgot about Greece. 

On the heels of a final, dramatic showdown in Brussels that pitted PM Alexis Tsipras (who came in wielding a referendum “no” vote from his people) against German Finance Minister Wolfgang Schaeuble and saw Greece finally capitulate after a weekend of “mental waterboarding,” the world seemingly accepted the fact that Athens will remain a debt serf for decades to come, and although the issues of debt relief and bank recapitalization remain contentious, it seems that a Greek exit is no longer on the table.

Late in August, Tsipras resigned, setting in motion a series of events which would lead to snap elections. Again, the news was greeted with little fanfare as, by that point, the market had turned its attention to China, its currency, its stock market, its economy, and how it would all factor into the Fed decision in September. 

Well, as we head into the weekend (liftoff-less, still), it’s worth noting that Greece is having an election on Sunday, and although the outcome is unlikely to change the course of the bailout deal, black swans wouldn’t be black swans if they were easy to spot ahead of time and if the first half of the year taught us anything, it’s that “inconsequential” things like Greek politics actually do matter for markets, and it’s with those two considerations in mind, that we present Bloomberg’s four scenarios for the Greek election outcome.

*  *  *

From Bloomberg

Scenario 1: Moderate Coalition Government

The two (alternate) poll leaders Syriza and New Democracy are unlikely to win with an absolute majority. Our baseline scenario therefore is a new round of coalition patch-working to start as soon as next week and result in a moderate center-left or center-right coalition. The victorious party will win a 50-seat bonus and be given the mandate by President Prokopis Pavlopoulos to form a coalition. If Syriza comes first, it will probably turn to smaller, centrist parties such as Pasok and/or To Potami to build a “progressive” coalition — as Tsipras put it during the campaign. In the case of a New Democracy victory, the party would also go hunting among the same smaller parties for allies. The quick formation of a new government would enable the legislative business to restart and get the ball rolling on the required reforms ahead of the next bailout program review — currently scheduled for October.

Scenario 2: Grand Coalition

If coalition talks with small parties fail to bring a solid majority, the two main parties could reach out to each other. New Democracy new leader Vangelis Meimarakis already said he could work with Syriza. By contrast, Tsipras ruled that prospect out — but he has shown some unexpected pragmatic skills lately. We see a grand coalition between two ideologically different parties becoming a reality only as a last resort. Both parties do want to respect the bailout program commitments, but they have opposite views on pretty much everything else. The collaboration would therefore be quite unstable and short-lived in our opinion. Furthermore, in this scenario the main opposition party could end up being the third-polling Golden Dawn, a neo-Nazi party. Not the kind of constructive opposition you’d wish in a democracy.

Scenario 3: New New Elections

The elections could result in an overly fragmented Parliament and unsuccessful coalition talks. That would be a remake of 2012. Back then, the May general elections resulted in a deadlocked political situation leading to new elections he month after and the eventual formation of a coalition led by Antonis Samaras. In this scenario, Greece would lose at least another month marked by political uncertainty before the organization of yet more elections. The implementation of the program would fall behind schedule and some creditors could lose patience and trust — two virtues which are not trending particularly high right now.

Scenario 4: Absolute Majority

One party reaching an absolute majority is the least likely scenario, but arguably the best one for the implementation of the bailout program and the stability of the euro area. A single-party government would have a longer life expectancy than any coalition, potentially able to serve a full term mandate of four years. That would cover the entire program period until 2018. Yet this scenario remains the least probable given the state of public opinion. Both Syriza and New Democracy have been polling around 25 percent. That’s far from Syriza’s victorious score of 36.3 percent in January which fell short of absolute majority by only one seat.

*  *  *

For his part, Tsipras is confident that despite polls that show Syriza running neck and neck with New Democracy, when it comes time for Greeks to cast their ballots, he we prevail. “There is a voting body that is below the radar, it is not being traced,” he told told Greece’s ANT 1 television.

As for New Democracy leader Vengelis Meimarakis, he’s looking to capitalize on what he hopes are public doubts about Tsipras after the former PM sold out the referendum “no” vote in Brussels. “The question is clear. Should we listen to false promises and wishful thinking, or move forward responsibly and with a national plan? It’s high time we did away with incompetence. The Syriza experiment ends on Sunday.”

The unfortunate reality here is that the Syriza vision that resonated so well with voters in January has, in the space of just nine months, been relegated to the realm of “wishful thinking” and as should be clear from the above, even if Tsipras wins, this is not the Tsipras who swept to power earlier this year and this version of Syriza has been watered down in the wake of the split which saw Panagiotis Lafazanis form his own, break away party last month.

In short, the IMF, Berlin, and Brussels got what they wanted – even if the fight was perhaps more difficult than they had imagined. Democracy has been undermined in Greece by the purse string and although Europe’s methods were more subtle than say, Turkey’s, the outcome is the same: a democratic election result that was seen as undesirable by those who ultimately control Europe was nullified and the will of the Greek people has been subverted.

Now, Greeks find themselves going to the polls facing a situation that will be familiar to many American voters – a choice between two parties that claim to be diametrically opposed, but who are actually all too similar.

*  *  *

From Deutsche Bank

One event which has somewhat flown under the radar is Greece’s general election this Sunday. The recent polls have been too close to call, with fairly evenly split support for Syriza and New Democracy although neither is likely to control a majority in parliament. The successful conclusion of the 3rd ESM package and broad-based political support to meet creditors’ demands eliminated a lot of the political risk however and as DB’s George Saravelos pointed out previously the eventual outcome of the vote may not entail particularly different paths ahead. The bigger picture is the popular support towards underlying Eurozone membership as the key underlying factor behind ensuring that Greece’s path towards stabilization is in place.

From Citi

Sunday’s election should show political system remains fragmented and uncertain. Five new polls released since yesterday suggest that uncertainty around the outcome of Sunday’s election remains as high as ever. Three polls (from Alco, Metron Analysis and Pulse pollsters) see the two main parties, New Democracy and Syriza, with almost exactly the same share of votes (27.4% vs 27%, 31.6% vs 31.9%, and both even at 29%, respectively for the three pollsters). Another poll by the Interview shows a ND lead at 32.8% vs. 30.6% for Syriza. An E-voice poll instead puts Syriza at 32.6% and ND at 28.5%.Comment: recent polls suggest that ND has increased its support and closed the gap with Syriza, but probably not enough to win the election, and most importantly to win a parliamentary majority. A Syriza win remains our base-case scenario, with a coalition with smaller centre-left parties likely to be necessary to form the next government. However, whichever party wins Sunday’s election, it will probably take a while for the next government to be formed and it is likely to be a fragile one. This would make it difficult to implement quickly the Memorandum requests necessary to get additional financial help and, crucially, to recapitalize Greek lenders.We believe that Greece’s position within the Eurozone could come into question again within the next few months.

From Nomura (via Bloomberg)

A bad outcome would be a highly fragmented parliament, with Syriza and New Democracy getting very low shares of the vote, in which case more parties will be needed to form a government. A disastrous scenario would see Golden Dawn, and the anti-European parties getting a really high share of the vote. But that’s just a tail risk and it’s highly unlikely to happen. Even a bad scenario will probably be good-enough for investors in the grand scheme of things.






Buiter believes that the refugee crisis can bring down the EU:



(courtesy Buiter/Citibank/zero hedge)


Buiter: Migrant Crisis “May Signal The Beginning Of The End” For EU

Earlier this month, in a call that grabbed headlines across the mainstream financial media, Citi chief economist Willem Buiter made “some kind of recession” his team’s base case scenario for the next two years.

The rationale: China mainly, and EM more broadly. The solution: why, “helicopter money” of course.

Unfortunately for the EU – which Buiter says is laboring under “already excessive public debt and the pro-cyclical nature of the constraints imposed by the Stability and Growth Pact and its myriad offspring” –member countries now face a growing problem that can’t be immediately “fixed” by cranking up the printing presses, namely, an influx of asylum seekers fleeing Syria’s four-year civil war. 

As documented in these pages extensively, Europe’s migrant crisis threatens to undermine the spirit of the Schengen Agreement and the events that unfolded on Hungary’s border with Serbia over the past week presage what may be in store for the region should recalcitrant nations refuse to comply with the quotas Brussels wants to enforce in an effort to settle hundreds of thousands of asylum seekers.

As Slovakia put it earlier this week, if Germany attempts to use its financial leverage to force other nations to take on migrants, it would “bring the end of the EU.” We’ve also warned that any effort on the part of Berlin to impose its will risks fanning 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.

Willem Buiter apparently agrees with all of the above.

In an interview with RIA Novosti, Buiter expressed concern that the strain imposed by the steady flow of migrants threatens to tear the EU apart at the seams. Here’s more, via Sputnik:

The current refugee crisis is putting the EU’s fundamental principles on the line and may become the beginning of the end of the 28-nation association, Citigroup’s chief economist warned.


“The refugee crisis is undermining the EU’s fundamental principle of free cross-border movement within the Union… This is effectively throwing the EU’s very future in question,” Willem Buiter, global chief economist at Citigroup, told RIA Novosti news agency on Wednesday.


He said that even though some countries were introducing temporary entry bans in a bid to tackle “a huge humanitarian crisis, they may eventually become permanent not only for the  migrants but for EU residents as well.”


“This may signal the beginning of the end, the stakes are extremely high,” he warned.


Willem Buiter believes that the current refugee crisis could shift European policy towards “radicalization, xenophobia and nationalism,” which would have an immediate negative effect on their economies.


“Western Europe is much better off than the East European countries as it is more experienced in dealing with immigration-related issues which are a real problem for countries like Hungary, Poland, the Czech Republic, Slovakia, Bulgaria and Romania, which  have never had to deal with massive inflows of migrants. This is a big challenge to them,” Buiter said.

We leave you with the following video from the Croatian border with Serbia which has become the choke point for the Balkan route to Germany:


And now onto Africa where we have two major events:

First Nigeria:

when you hear a central banker claiming”don’t panic” you can rest assured that trouble is ahead as banks there halt lending to each other:


(courtesy zero hedge)

Nigeria Central Bank Urges “Don’t Panic” As Banks Halt Lending To Each Other

When the head of the central bank utters the two words “don’t panic” you know the economy, currency, and financial system is in trouble…and that’s just what Nigerian central bank Governor Godwin Emefiele just did. Following government intervention to sweep cash from local to central accounts, banks have panicked. As Reuters reports, overnight interbank lending rates spiked to 200%, which Emefiele opined was “a momentary action… just sentiment,” but the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30%.


O/N rates spiking…


And CDS imply a notable devaluation is looming…

Charts: Bloomberg

As Reuters reports, Nigerian central bank Governor Godwin Emefiele ruled out a naira devaluation on Thursday and told people not to panic about a government order which risks draining billions of dollars from the financial system.

In an interview with Reuters, Emefiele said he was ready to inject liquidity if needed into the interbank market, which dried up this week following the directive to government departments to move their funds from commercial banks into a “Treasury Single Account” (TSA) at the central bank.


The policy is part of new President Muhammadu Buhari’s drive to fight corruption, but analysts say it could suck up as much as 10 percent of banking sector deposits in Africa’s biggest economy – playing havoc with banks’ liquidity ratios.


With global oil prices tumbling, banks and companies are already struggling with the consequences of a dive in Nigeria’s energy revenues that has hit the naira currency and triggered flows of capital out of the country.


Then JP Morgan kicked Nigeria out of its influential Emerging Markets Bond Index last week due to restrictions that the central bank imposed on the currency market to support the naira and preserve its foreign exchange reserves.


Since taking office in May, Buhari has vowed to rein in Nigeria’s dependency on oil exports which account for 90 percent of foreign currency earnings. However, he has faced criticism from investors for failing to appoint a cabinet yet or outline concrete policies.

Amid confusion over the implementation of the single account policy, overnight interbank lending rates spiked to 200 percent, but Emefiele denied the policy had provoked a liquidity crisis.

“There is no shortage of liquidity,” he said, pointing to an oversubscribed sale of treasury bills on Wednesday. “A spike is a momentary action. It’s sentiment.”

“I do not think there is any need for anybody to panic,” he added.

Nevertheless, the interbank naira market was paralyzed for a third day on Thursday, with banks unwilling to lend to each other, even when rates fell back to 20-30 percent.

In a sign of the financial ructions,commercial bank cash balances with the central bank that are normally earmarked for foreign exchange or bond purchases plunged to 173 billion naira on Thursday from 486 billion two days ago.


Analysts had predicted that the TSA edict could suck 1.2 trillion naira ($6 billion) out of the commercial banking system.Emefiele said the amount would be less than one trillion, although he did not give details beyond saying the measure was designed to root out graft.

His comments did not instill confidence in the new rules among economists.

“It’s an example of the government deciding on a policy without thinking through the mechanics of how its implementation will work,” said Alan Cameron at Exotix, a London-based specialist in frontier markets – a higher risk subset of emerging economies





then in Burkina Faso:an unwanted coup!


(courtesy zero hedge)



Meanwhile, In Burkina Faso: Images From A West Africa Military Coup

In October of last year, Blaise Compaoré stepped down after nearly three decades as President of the West African nation of Burkina Faso amid a popular uprising that some likened (in spirit anyway) to the protests that defined the Arab Spring.

On Thursday, October 30, Compaoré sought to pass legislation that would have paved the way for a new 5-year term. Here’s how WSJ describes what happened next:

That ambition was thwarted by tens of thousands of his compatriots, who swarmed the streets of the capital Ouagadougou. They set fire to the parliament building where the vote had been scheduled to take place, among other government offices. They tore through hotels and shops seen as pro-regime. Up to 30 people were killed in rioting, a French diplomat said, citing preliminary reports.


As the Journal went on to detail, “under Compaoré’s rule, Burkina Faso [had] seen an explosion of young people flocking to its cities. Many seek the perks of metropolitan life—jobs, spending money, a chance to travel abroad—only to find themselves on the underside of an economy where just 5% of working age adults are employed full time, according to a 2013 Gallup Poll.” “We wanted a change, that’s all. If we people didn’t complain, it would have never happened,” one citizen told the paper.

But the push for democratic reform would be short lived. Predicatably, several members of the military immediately declared themselves leader prompting the US and France to warn that if army officers took power, Compaoré’s outster would be considered a military coup. Around three weeks later, former foreign minister Michel Kafando was named interim President by a committee made up of military, religious, and political leaders.

Fast forward to the present. Burkina Faso had planned to hold free elections (viewed as a turning point for its democracy) on October 11, but that hope was dashed virtually overnight on Wednesday when, apparently in retaliation for a government decision to disband the Presidential Guard, the elite military unit (which served the Compaoré regime for decades) arrested President Kafando along with Prime Minister Yacouba Isaac Zida.

Here’s Reuters with more:

A shadowy spy master formerly the right-hand man to toppled President Blaise Compaore seized power in Burkina Faso at the head of a military coup on Thursday, less than a month before elections meant to restore democracy in the West African state.


General Gilbert Diendere, who for three decades served as Compaore’s chief military adviser and operated an intelligence network spanning West Africa, was named as the head of a military junta called the National Council for Democracy.


The power grab led by the presidential guard unfolded three days after a government committee recommended dissolving the elite unit, which was a pillar of Compaore’s 27-year rule and has repeatedly meddled in politics since his fall.


A spokesman for the coup leaders hinted at a political agenda to back a return to power by loyalists to Compaore, who has remained in exile in neighbouring Ivory Coast since he was toppled by a popular uprising in October last year.


Under Compaore, Burkina emerged as an important regional ally of France and the United States against al Qaeda-linked militants. It hosts some 200 French special forces as part of France’s Barkhane regional anti-terrorist operation.


On Thursday, soldiers fired warning shots to disperse a crowd of more than 100 protesters gathered in central Independence Square of the capital Ouagadougou. Soldiers drove the streets in pick-up trucks, beating and detaining demonstrators.

And more from WSJ:

The coup, which was confirmed in a television and radio announcement on Thursday, was greeted by protests in the capital Ouagadougou, which turned deadly as the demonstrators clashed with soldiers. At least 12 protesters were killed by soldiers during the clashes, according to a pro-democracy movement called Balai Citoyen, or Citizens With Brooms.


At least one presidential candidate said his home had been ransacked by the army, as the military attempted to regain control of the situation. However, the troops have struggled to quell the protests in the country at large.

A curfew is now in place, and the military has closed the borders. Here are the visuals:

*  *  *

We suppose the question now, is how the West will view the coup in light of the spread of Islamist conflicts in neighboring Mali. We also wonder what this means for the future of Operation Creek Sand.

Oil related stories
Oil jumps on USA oil rig count drop.  It will not help as total production will still rise, causing huge grief to our shale boys:
(courtesy zero hedge)

Crude Pops As US Oil Rig Count Drops For 3rd Week To 2-Month Lows

Following 2 weeks of notable rig count declines (to its lowest in 2 months), Baker Hughes reports another decline (the first 3 week decline in 3 months). Total rig count fell to 842 from 848 but oil rigs declined 8 to 644. Crude prices were weak heading into the data (post Fed) and popped after…


This is the biuggest 3-week declinein 4 months..


Charts: Bloomberg


And then as expected, oil was clubbed:

WTI Crude Clubbed To $44 Handle As Growth Fears Mount

Growth hope, production cuts, and geopolitical premia were so Wednesday…



Crude gives up the week’s gains after being up over 7% as it appears the big hedges are being lifted and underlying longs reduced…


Charts: Bloomberg

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

Euro/USA 1.1430 up .0028

USA/JAPAN YEN 119.15 down .934

GBP/USA 1.5629 up .0063

USA/CAN 1.3028 down .0074

Early this Thursday morning in Europe, the Euro rose by 28 basis points, trading now well above the 1.14 level rising to 1.1430; 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 and broken bourses in Europe along with Japan.  Last night the Chinese yuan raised in value . The USA/CNY rate at closing last night:  6.3664, (strengthened)

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 northbound trajectory  as settled up again in Japan up by 94 basis points and trading now well below the all important  120 level to 120.96 yen to the dollar.

The pound was up this morning by 63 basis points as it now trades just above the 1.56 level at 1.5629.

The Canadian dollar reversed course by rising 74 basis points to 1.3028 to the dollar. (Harper called an election for Oct 19)

Action today saw all the major currencies fly northbound against the dollar. 

We are seeing that the 3 major global carry trades are being unwound. The BIGGY is the first one;

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies 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 Friday morning: up  260.67 or  1.43%

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

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

Gold very early morning trading: $1117.25


Early Friday morning USA 10 year bond yield: 2.15% !!! down 12 in basis points from Thursday night and it is trading just above resistance at 2.27-2.32%.  The 30 yr bond yield rises to  2.97 down 10 in basis points.

USA dollar index early Friday morning: 94.20 down 34 cents from Thursday’s close. (Resistance will be at a DXY of 100)

This ends the early morning numbers, Friday morning
And now for your closing numbers for Friday night:
Closing Portuguese 10 year bond yield: 2.51% down 16 in basis points from Thursday
Japanese 10 year bond yield: .314% !!  a fall of a huge 5  basis points from Thursday
Your closing Spanish 10 year government bond, Friday, down a huge 15 in basis points
Spanish 10 year bond yield: 1.94% !!!!!!
Your Friday closing Italian 10 year bond yield: 1.76% down 14  in basis points from Thursday: trading 18 basis point lower than Spain.
Closing currency crosses for FRIDAY night/USA dollar index/USA 10 yr bond:  2:00 pm
 Euro/USA: 1.1359 down .0043 (Euro down 43 basis points)
USA/Japan: 119.76 down 0.329 (Yen up 33 basis points)
Great Britain/USA: 1.5563 down .0001 (Pound down 1 basis points
USA/Canada: 1.3159 down .0017 (Canadian dollar up 17 basis points)

USA/Chinese Yuan:  6.3625  up .0020  (Chinese yuan up/on shore)

This afternoon, the Euro fell by 43 basis points to trade at 1.1359. The Yen rose to 119.76 for a gain of 33 basis points. The pound was down 1 basis point, trading at 1.5563. The Canadian dollar rose 17 basis points to 1.3159. The USA/Yuan closed at 6.3625/down.0020
Your closing 10 yr USA bond yield: down 6 basis points from Wednesday at 2.14%// ( trading below the resistance level of 2.27-2.32%).
USA 30 yr bond yield: 2.94 down 8 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 Your closing USA dollar index: 94.79 up 25 cents on the day .
European and Dow Jones stock index closes:
England FTSE down 82.88 points or 1.34%
Paris CAC down 119.29 points or 2.56%
German Dax down 313.42 points or 3.06%
Spain’s Ibex down 259.40 points or 2.57%
Italian FTSE-MIB down 584,63 or 2.65%
The Dow down 289.95 or 1.74%
Nasdaq; down 66.72 or 1.36%
OIL: WTI:  $45.26    and  Brent:  $48.14
Closing USA/Russian rouble cross: 66.26  down 3/4 roubles per dollar on the day
And now for your more important USA stories.
Your closing numbers from New York

Investors Dump Stocks For Safety Of Bonds & Bullion In Yellen’s New “World Of Confusion”

here is really only one clip for this week  – so full of chest-beating “I told you so”-ism early on, only to have hope crushed by an old granny’s confusion – it’s an oldie but a goodie…


What did Janet Do?!!

  • Copper -3.1% – worst week in 2 months
  • WTI Crude – biggest 2-day drop in a month
  • Silver – biggest 3-day gain in 4 months (best week in 4 months)
  • Gold – biggest 3-day gain in 4 months
  • US Equities – worst 2-day drop since Sept 1st
  • VIX biggest daily jump in 2 weeks (above 50DMA for 22 days – longest period since October)
  • China Equities – down 4 of last 5 weeks, lowest close since Feb 2015
  • German Equities worst day in a month
  • 30Y Yield -15bps – biggest 2-day drop since Jan 6th 2015
  • 2Y Yield -13.7bps – biggest 2-day drop since March 2009

Since The Fed unleashed the world of confusion… Gold and The Long Bond ripped 2%, S&P dipped 2%


Futures gives us a decent view of the action in the last 48 hours (note the weakness overnight and the opening US ramp by the algos back to VWAP)..\


At 1515ET on Quad-Witching, NYSE Broke but the market did not do what it was supposed to…


XIV and SPY are slowly starting to converge…


On the week, a mixed picture – Small Caps only ones to cling to gains…


Some context for the moves – failed breakouit of key resistance… and a close below support


Very ugly week for financials…


This is not helping…


Treasury yields have collapsed in the last 2 days (with 30Y catching down today and notably flattening the curve) closing the week modestly lower in yields…


The US Dollar ende dthe week unchanged after being dumped yesterday and overnight but “rescued” mysteriously by a very active JPY seller (cough Kuroda cough) today…


Which created some equity momo off the open but that failed as Europe closed…


Commodities ended the week very mixed as The Fed’s inaction sparked degrowth selling in crude and copper and PMs surged…


Gold jumping to 3 week highs… (seems like someone knew something on Wednesday)


Crude roundtripped all the way to unch on the week… from growth hype to no hope…


As Oil Vol and the underlying recoupled… (hedges on the ramp lifted and forcing coinvergence)…


Charts: Bloomberg



Oh no!! Gartman goes long!!!

Futures Drop More After Gartman Turns “Net Long Of Equities”

One week after Gartman was convinced there is 200 points of downside to the S&P and predicted a target of 1725-1750, only to be promptly stopped out 24 hours later, he has as of this morning turned “net long of equities.”

There was massive confusion in the US equity market yesterday following the Fed “Nativist nondecision” on the Fed funds rate, for the market initially soared; then plunged; then soared again and the plunged, ending the day lower, but ending the day well below the day’s highs. For the year-to-date, as a result, our International Index has lost 338 “points” or 3.4% while the S&P is down 70 “points” or 3.4% also.


We are, here at TGL in our retirement fund, long of Apple and long of a “tanker’s” shares, whilst we are “short” of derivatives in sufficient quantity to be modestly net long of equities …”


As of this moment futures are now down 21 points.



Armstrong believes the USA made a terrible policy error yesterday afternoon at 2pm:
(courtesy Martin Armstrong)

Martin Armstrong Warns: The Fed Just Made The Same Mistake As It Did In 1927

Submitted by Martin Armstrong via,


The Federal Reserve yielded to international pressure making the very same mistake that it made during 1927.

Back then, there was a secret meeting and the Fed agreed to lower US rates to try to help  Europe and thereby deflect capital inflows back to Europe.

The exact opposite unfolded in the aftermath and even more money abandoned Europe and flowed directly into the US share market.



In 1927, the Fed lowered US rates to try to help Europe which was then in the middle of an economic debt crisis the same as today.

It is very curious how history repeats and we have just witnessed the Fed yield to international pressure once again. In doing so, they are condemning US pension funds as well as the elderly to financial doom setting in motion the next financial crisis.


Dave Kranzler on Yellen’s bluff:  A MUST READ
(courtesy Dave Kranzler/IRD)

Yellen Folds Her Cards – Admits It Was A Bluff

“In the summer of 2011 is when things went insane.”  – Remember this quote

In the process, Yellen is making herself out to be a complete fool or a liar:

“I do not want to overplay the implications of these recent developments, which have not fundamentally altered our outlook,” she said. “The economy has been performing well, and we expect it to continue to do so.” Bloomberg News

The economy has been “performing well?”  Seriously?   Let’s have a look.  Here’s year over year percentage change in retail sales:

Graph1As you can see, there’s been a steady decline in the year over year growth in real retail sales since August 2010. Is this 70% of the economy the part to which Yellen is referencing as “performing well?”

But here’s the kicker:

graph2THIS graph shows the actual dollar change in retail sales LESS auto sales since August 2010. We know that auto sales have been pumped up by the largest expansion in automobile subprime (junk) debt issuance in history. If you strip away that artificially pumped up area of the economy – pumped up by Yellen and Bernanke – look at the stunning decline in retail sales.

Retail sales represents 70% of the economy.  How can the economy possibly be doing well when the only segment of retail sales showing signs of life is the automobile segment, which has been pumped up by what will be the eventual catastrophic availability of junk loans.   Contacts of mine in the local auto business are in outright shock at the number of 2013-2014 cars hitting the repo market.  I have seen with my own eyes leased land lots along busy commercial boulevards which are overflowing with repo’d vehicles.

Perhaps Yellen was referencing the “low” unemployment rate.  The magical 5.1% rate of unemployment that is conjured up with Government fabrication.  Ya that number may be the unemployment rate if you use the Census Bureau guesstimate of employment based on flimsy population samples and if you ignore the fact that nearly 100 million people in the working age population are not part of or have left the labor force – or if you just make up the numbers (birth-death model):

graph3We’ve all seen this graph several times but it’s worth seeing again in the context of Janet Yellen making the statement that “the economy is performing well.”

In the famous phrase from Macbeth, the employment situation in the United States is “a tale told by an idiot, full of sound and fury, signifying nothing.”

Now here’s another kicker.  Many of you have already seen the outstanding Fed video written and produced by my good friend and colleague, John Titus:   Best Evidence –  Fed Audit Shocker:  They Come From Planet Klepto.    I get previews of his work along the way and he shares a lot of information with me about everything he discovers reading the Fed transcripts, which are released 5 years ex post facto.

The particular transcript John was pouring over for the above video was from the Fed meeting right before QE was introduced.  The information is there for anyone to look at but John actually does the work.

Recall from yesterday that Janet Yellen referenced the unemployment rate as evidence that QE had worked.  I received a text from John last night that said: “Janet Yellen is such a fucking liar.”   To which I replied: “based on what, this time?”  To which he cited:  “Did you see that shit about the Fed not boosting inequality?  She says QE put people back to work.  Based on what?  Because in the June 2009 Fed transcript she said the unemployment rate b.s.”  As you can see, John is extremely pissed off at Yellen’s blatant dishonesty.

So there you have it.  Yellen is on record stating to her Fed cohorts that the unemployment rates is nonsense.  This was when she was Bernanke’s co-pilot of the FOMC.  From this we can conclude that Yellen is a serial liar.  But we can also conclude that she is an idiot because she has a left a definitive trail of evidence proving that she’s a liar.

This brings me to the “in the summer of 2011 is when things went insane”comment. The very same John Titus attended a conference yesterday put on by Eric Hunsader, of HFT’s Nanex fame.  Titus asked Hunsader when he first noticed that there was no longer Rule of Law in the markets.   Hunsader replied that “I guess it’s always been there but it got worse” [he pondered searching for a reflective answer and compared it the frog in boiling water adage].

But then John said one of Hunsader’s underlings spoke out – the first and only time during the show – and said “the summer of 2011 is when things went insane.”

I would like to tie this back to the two graphs above which show that retail sales began a definitive decline in growth rate in early 2011 AND an outright decline ex-autos in “the summer of 2011.”

By that time the U.S. system had been bombarded with QE for two years and interest rates had been at zero for a bit longer than two years.  Additionally, the Fed and the Government began an undeniably aggressive attempt to reflate all asset markets and pump up housing and auto sales.

graph4A lot of bad occurrences developed in the summer of 2011. As you can see from this graph to the left, the stock market went on the longest uninterrupted rise in its history without any real correction. 2011 is when it became obvious to most observers willing to admit it that the Fed was controlling the asset markets with QE.  AND, I might add, figured out how to take advantage of HFT trading and the shadow banking system to help serve its objectives.

If we learned one thing yesterday, it’s that the Fed can not and will not raise interest rates. It’s backed into a corner from which it will be impossible to emerge without a full-scale systemic reset or crash. The problem is that, when this cesspool of lies, fraud and corruption starts to really implode, we will all wish we were watching the show from another planet.



It’s also why have stated in the past, and have increasing confidence in my conviction, that this is leading to world war three and, ultimately, “The Road.” Interestingly, I’ve received emails from some well-known personas in finance that have expressed a similar belief…

Mike Krieger now discusses the census data released yesterday that which was reported to you:
(courtesy Mike Krieger/Liberty Blitzkrieg blog)

Census Data Confirms: There Was No Economic Recovery Unless You Were Already Rich

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

This is the perfect note for a post-Fed day, where once again America’s Banana Republic central planning statists were too petrified to raise interest rates. The Fed has now missed the entire economic cycle without raising rates once. All you can do now is sit back, relax and wait for all hell to break loose.

Recently released data from the Census Bureau is nothing short of devastating to anyone who has been pushing the absurd meme of a strong U.S. economy.

There is simply no way one can look at this data and not conclude that the last seven years has been nothing more than an upward redistribution of wealth crafted by the Federal Reserve. As I’ve said many, many times before, central bankers should be tried for crimes against humanity for what they have done.

From Bloomberg:

U.S. Census Bureau data out Wednesday underscore just how lousy the recovery has been if you aren’t rich.


Looking at eight groups of household income selected by Census, only those whose incomes are already high to begin with have seen improvement since 2006, the last full year of expansion before the recession. Households at the 95th and 90th percentiles had larger earnings through 2014, the latest year for which data are available.

Want to see a chart of how bad this really is? Here you go:

Screen Shot 2015-09-17 at 12.22.54 PM


Income for all others was below 2006 levels, indicating they’re still clawing their way out of the hole caused by the deepest recession in the post-World War II era.


Median household income is 6.5 percent lower than in 2007, the year the recession started.

So this is now what we call a “recovery”?

Overall, median income was $53,657 in 2014, not a statistically significant difference on an inflation-adjusted basis from 2013’s median of $54,462. It’s the third straight year that there’s been no significant change, after two consecutive years of annual declines.


That’s happened even though the labor market has posted steady progress.


Meanwhile, the official poverty rate was 14.8 percent, with some 46.7 million people in poverty—both little changed from 2013. The rate is 2.3 percentage points higher than it was in 2007.

If you believe this translates into an “economic recovery,” you will literally believe anything.

I haven’t been calling this the “Oligarch Recovery” for nothing.


Zero hedge provides a great narrative as to what to expect next due to the huge problems facing the globe because of China’s demand faltering.
It seems that although we knew it would be almost impossible to raise rates, the move caught many bankers offside.  Many bankers now will have to rethink what their next move will be.
The following is a recap of events during the past 3 weeks. It is still worth the review:
(courtesy zero hedge)


Fed Not Raising Interest Rates, CNN Big Loser in GOP Debate, GOP and DNC Fear Trump

4 pngBy Greg Hunter’s (WNW 208 9.18.15)

The Federal Reserve is not raising interest rates, but now there are hints by Fed Head Janet Yellen that it might consider negative interest rates if the economy gets bad enough. The economy is already bad, and the Fed decision to keep a key rate near 0% says it all. I have been telling you for a couple of years that there is no real recovery on Main Street. The only real recovery is on Wall Street. Data point after data point shows the economy is not good. This is why the Fed is not raising interest rates. I wonder if the stories out this week in the mainstream media were nothing more than a huge psychological operation, or PSYOP. There were stories all over the place saying that a rate hike would “Not Likely Spook the Economy,” or an interest rate hike would be a “good thing.” Obviously, no rate hike is a much better thing, and now the Fed is hinting at negative interest rates if the economy gets bad enough. By the way, Gregory Mannarino of brought up the possibility of the Fed going to negative interest rates months ago. Mannarino also says the Fed decision NOT to raise rates shows that all is not well in the economy, and if the economy would be getting better, the Fed “would not need to continue emergency monetary policy of 0% rates.” He also says, “At some point, the dose becomes toxic and turns to poison and kills the patient.” He’s talking about the 80 months and counting of 0% interest rates, and remember, rates could be forced to go negative in the future.

On top of that bad news, people like Nobel Prize winning economist Professor Robert Shiller continue to warn that the stock market looks like it is in a bubble. There are also reports of the biggest double top in stock market history that was recently made, and when that happens, it is downhill for the markets. This includes the global debt market that dwarfs the stock market by orders of magnitude. I just interviewed former Reagan White House Budget Director David Stockman, and he says the “financial system is booby trapped with debt bombs.” This is not ifthe bond market will blow up, but only a matter of when the bond market will blow up. According to Mr. Stockman, it could all unwind any time before the 2016 election cycle is over. That is a Nobel winner in economics and a top Washington insider saying basically the same thing for the stock and bond markets.

CNN was the only real loser in the second GOP debate. The debate started out looking like CNN just wanted the candidates to trash Trump. It looked juvenile and petty, and even NJ Governor Chris Christie called BS on the BS when he directed the discussion back to how the GOP was going to help the struggling middle class. Trump won the debate by virtue of the fact CNN centered it on him and tried to get the other candidates to tear him down. Sure, there were candidates that had their moments, and some will move up and down in the polls, but Trump still emerges as the front-runner. Let’s make this perfectly clear, Donald trump could win it all. Yes, the election is a little more than a year away, but I do not think he is going to mess up that bad, and he certainly is not going to run out of money. This is why both the left and the right fear and hate him. He could win, and he might even do something for average Americans instead of pandering to the criminal special interests that want a fraudulent economy where no top banker goes to jail for obvious crime. I don’t care if it is Democrat or Republican. Many of these candidates are bought and paid for and will not go against their elite donors even it is destroying America. Nobody is going to buy Mr. Trump, and that is a good thing.

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


see you Monday night.
as a heads up, I will not provide a commentary on Wednesday night.
all the best

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