Oct 12/Gold and silver advance again/the big Mitsui trading company abandoning gold and silver trading/no gold entering the comex/Silver comex again is draining silver

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1164.90 up 8.60   (comex closing time)

Silver $15.86  up 5 cents.

In the access market 5:15 pm

Gold $1163.90

Silver:  $15.86

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

At the gold comex today,  we had a very poor delivery day, registering 1 notices for 100 ounces  Silver saw 33 notices for 165,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 207.65 tonnes for a loss of 95 tonnes over that period.

In silver, the open interest rose by a considerable 18  contracts despite the fact that silver was up by only 5 cents on Friday. I guess in silver nobody of importance wants to leave the arena.  The total silver OI now rests at 159,302 contracts In ounces, the OI is still represented by .797 billion oz or 114% of annual global silver production (ex Russia ex China).

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

In gold, the total comex gold OI rose to 433,793 for a gain of 4611 contracts.  We had 63 notices filed for 6300 oz today.

We had no changes  in tonnage  at the GLD /   thus the inventory rests tonight at 687.20 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 changes in silver inventory at the SLV  / Inventory rests at 315.152 million oz.

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

1. Today, we had the open interest in silver rise by a considerable 1835 contracts up to 159,302 despite the fact that silver was up  by only 5 cents with respect to Friday’s trading.   The total OI for gold rose by 4611 contracts to 433,793 contracts, as gold was up $11.60 yesterday.

(report Harvey)

2.Gold trading overnight, Goldcore

(/Mark OByrne)

 

Asian affairs:

3

 2 commentaries

i) trading from China\ii) another explosion in Tianjin

(zero hedge)

 

European affairs:

4a) Glencore and its problems

(zero hedge)

 

Russia  + USA affairs/Middle eastern affairs

5. a) one commentary

(zero hedge)

Global affairs:

6a) Baltic dry index plummets again

(zero hedge)

EMERGING MARKETS

7a)Brazil’s interest rates rise again

(zero hedge)

 Oil related stories

8a)  Oil drops again on Goldman warning

(zero hedge)

 

8 USA stories/Trading of equities NY

a) Trading today on the NY bourses

 

9.  Physical stories

i. Bill Holter

2,IMF and world bank disagree on competitive devaluations

3 Who are the great concealers?  Not the goldbugs but central banks and journalists

4 Koos Jansen on the Chinese gold market

5 Mitusi the big JAPANESE trading company is leaving the precious metals business\

6. Dave Kranzler discusses the above

 

Let us head over to the comex:

The total gold comex open interest rose from up to 433,793 429,152  for a  of gain of 4611 contracts as gold was up $11.60 with respect to Friday’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 of these developments continued but a slower pace.  The new active delivery month we enter is October and here the OI fell by 73 contracts down to 1301. We had 1 notice filed yesterday so we lost 72 contracts or 7200 additional oz will not stand for delivery.  The November contract went up by 16 contracts up to 24. The big December contract saw it’s OI ros by 4229 contracts from 292,020 up to 296,249 The estimated volume on today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was  107,384 which is poor. The confirmed volume on yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 139,174 contracts.
Today we had 1 notices filed for 100 oz.
And now for the wild silver comex results. Silver OI rose by a considerable 1835 contracts from 157,527 up to 159,302 despite the fact that the price of silver was up  to the tune of only 5 cents on Friday.  Since October is not an active month, we will not see a huge contraction in the OI standing for delivery. 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. We enter the October contract month which saw it’s OI rise by 0 contracts remaining at  41. We had 0 contracts filed yesterday so we neither gained nor lost any silver ounces that will stand for metal in this non active month of October. The November contract month saw it’s OI rise by 6 contracts to 43.
The big December contract saw its OI rise by 131 contracts up to 112,126. The estimated volume today as to number of contracts sold is 38,873 contracts (regular business hours, 8 20 am to 1:30 pm) is good as the bankers through everything but the kitchen sink at silver trying to contain the price below 16.00.  The confirmed volume yesterday (regular plus access market) came in at 48,821 contracts which is huge in volume.
We had 33 notices filed for 165,000 oz.

October contract month:

Initial standings

Oct 12.2015

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  nil
Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz   nil

 

No of oz served (contracts) today 1 contracts

100 oz 

No of oz to be served (notices) 1300 contracts

130,000  oz

Total monthly oz gold served (contracts) so far this month 190 contracts

(19,000 oz)

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 184,959.6  oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
we had 0 dealer deposits
total dealer deposit:  zero
We had 0 customer withdrawals:  
total customer withdrawal nil:   oz
We had 0 customer deposit:

Total customer deposit: nil   oz

***extremely unusual to have no incoming gold on a continual basis especially with 4.8615 tonnes of gold standing for delivery.

 JPMorgan has a total of 10,777.279 oz or.3352 tonnes in its dealer or registered account.
***JPMorgan now has 580,809.509 oz or 18.06 tonnes in its customer account.
.
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 1 contracts of which 1 notice was 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 Oct contract month, we take the total number of notices filed so far for the month (190) x 100 oz  or 19,000 oz , to which we  add the difference between the open interest for the front month of Oct. (1300 contracts) minus the number of notices served upon today (1) x 100 oz   x 100 oz per contract equals the number of ounces standing.
 
Thus the initial standings for gold for the Oct. contract month:
No of notices served so far (190) x 100 oz  or ounces + {OI for the front month 1300)– the number of  notices served upon today (1) x 100 oz which equals 149,000 oz  standing  in this month of Oct (4.643 tonnes of gold. We lost 72 contracts or an additional 72,200 oz will not stand for delivery.  It seems that the cash settlements resumed in earnest today.
We thus have 4.643 tonnes of gold standing and only 5.3378 tonnes of registered gold (for sale gold/dealer gold) waiting to serve upon those standing.
 
Total dealer inventory 171,613.368 oz or 5.3378 tonnes
Total gold inventory (dealer and customer) =6,675,953.433   or 207.65 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 212.65 tonnes for a loss of 95 tonnes over that period.
 
 the gold comex resumes massive liquidation of total inventory
 
end
And now for silver

October silver Initial standings

Oct 12/2015:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 701,843.01  oz

CNT,Delaware,Scotia

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 599,802.892 oz

Delaware

No of oz served (contracts) 33 contracts  (165,000oz)
No of oz to be served (notices) 41 contracts (205,000 oz)
Total monthly oz silver served (contracts) 62 contracts (310,000 oz)
Total accumulative withdrawal of silver from the Dealers inventory this month nil oz
Total accumulative withdrawal  of silver from the Customer inventory this month 7,299,239.8 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 1 customer deposits:
 i) Into Delaware  599,802,892 oz

total customer deposits: 599,802.892 oz

We had 3 customer withdrawals:
i) Out of CNT: 201,521.28 oz
ii) Out of Delaware:  60,204.918 oz
ii1 Out of Scotia; 440,086.820 oz

total withdrawals from customer:701,813,01    oz

we had 0  adjustments
Total dealer inventory: 43.095 million oz
Total of all silver inventory (dealer and customer) 162.67 million oz
 *
The total number of notices filed today for the September contract month is represented by 33 contracts for 165,000 oz. To calculate the number of silver ounces that will stand for delivery in Oct., we take the total number of notices filed for the month so far at (62) x 5,000 oz  = 310,000 oz to which we add the difference between the open interest for the front month of September (41) and the number of notices served upon today (33) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the Oct. contract month:
62 (notices served so far)x 5000 oz +(41) { OI for front month of September ) -number of notices served upon today (33} x 5000 oz ,=350,000 oz of silver standing for the Oct. contract month.
we neither gained nor lost any silver ounces standing in this non active delivery month of October.
the comex resumes its liquidation of silver from dealer inventory as well as the customer side. 
*** Ladies and Gentlemen: we are having an old fashioned bank run but instead of paper money being removed, it is silver.
end

 

The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.There is now evidence that the GLD and SLV are paper settling on the comex.***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:i) demand from paper gold shareholders ii) demand from the bankers who then redeem for gold to send this gold onto China
And now the Gold inventory at the GLD:
Oct 12./2015:  no change in gold inventory at the GLD/rests at 687.20 tonnes
Oct 9.2015: no change in gold inventory at the GLD/rests at 687.20 tonnes
Oct 8.2015: no change in gold inventory at the GLD/inventory rests at 687.20 tonnes
Oct 7/ a withdrawal of 1.78 tonnes at the GLD today/Inventory rests at 687.20 tonnes
oct 6/ no change in gold inventory at the GLD/Inventory rests at 688.98 tonnes.
OCT 5/ a small withdrawal of .22 tonnes of gold inventory at the GLD/Inventory rests at 688.98
oct 2.2015: another addition of 1.78 tonnes of gold inventory at the GLD/Inventory rests at 689.20 tonnes
Oct 1.2015/ a huge addition of 3.28 tonnes of gold inventory at the GLD/Inventory rests at 687.42 tonnes
Sept 30./no change in tonnage at the GLD/Inventory rests at 684.14 tonnes
Sept 29.2015: no change in tonnage at the GLD/inventory rests at 684.14 tonnes
sept 28/another huge addition of 3.87 tonnes of gold into the GLD/Inventory rests tonight at 684.14 tonnes
Sept 25/we had a huge addition of 5.66 tonnes into the GLD/Inventory rests at 680.27 tonnes.
sept 24.2015; no change in gold inventory/inventory rests at 676.40 tonnes
Sept 23.2015: we gained a rather large 1.79 tonnes of gold into the GLD/Inventory rests tonight at 676.40
Oct 12/2015 GLD : 687.20 tonnes*
* London is having a tough time sourcing gold. I believe that the last few days of additional GLD gold is a paper gold addition and not real physical.
end

And now SLV: no change in the silver ETF/silver inventory rests tonight at 315.152 million oz

Oct 9.2015:/no change in the silver ETF SLV inventory/rests tonight at 315.152 million oz/

Oct 8.2015/no changes in the silver ETF  SLV/Inventory rests tonight at 315.152 million oz

Oct 7/a huge withdrawal of 3.243 million oz from the SLV/Inventory rests tonight at 315.152 million oz

Oct 6/no change in silver inventory/inventory rests at 318.395 million oz

oCT 5/we had a small withdrawal of inventory at the SLV of 134,000 oz/and this is also to pay for fees/inventory rests at 318.395 million oz

Oct 2.2015: no change in silver inventory at the SLV/inventory rests at 318.529 million oz

Oct 1.2015:another addition of 1,145,000 oz of silver inventory added to the SLV inventory./inventory rests at 318.529 million oz

Sept 30/no change in silver inventory at the SLV/Inventory rests at 317.384 million oz

sept 29.2015: we had another withdrawal of 859,000 oz from the SLV/Inventory rests at 317.384 million oz

sept 28./no change in silver inventory/rests tonight at 318.243 million oz/

Sept 25./we had another 954,000 oz of silver withdrawn from the SLV/Inventory rests this weekend at 318.243 million oz

Sept 24.2015: no change in silver inventory tonight/inventory rests at 319.197 million oz

Sept 23.2015: we had a huge withdrawal of 1.718 million oz at the SLV/Inventory rests at 319.197 million oz

oct 12/2015:  tonight inventory rests at 315.152 million oz***
 ** the jury is still out if the addition of silver is real or paper silver
especially with London in silver backwardation.
end
 
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 9.8 percent to NAV usa funds and Negative 9.8% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.2%
Percentage of fund in silver:38.6%
cash .2%( Oct 9/2015).
2. Sprott silver fund (PSLV): Premium to NAV falls to+0.73%!!!! NAV (Oct 9/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .85% to NAV Oct 9/2015)
Note: Sprott silver trust back  into positive territory at +0.73% Sprott physical gold trust is back into negative territory at -.85%Central fund of Canada’s is still in jail.

Press Release OCT 6.2015

Sprott Increases Offer for Central GoldTrust and Silver Bullion Trust

Offering an Additional Premium of US$0.10 per GTU Unit payable in Sprott Physical Gold Trust Units
and US$0.025 per SBT Unit payable in Sprott Physical Silver Trust Units

When Announced on April 23, 2015, Offers Represented a Premium of US$3.06 per GTU Unit and US$0.91 per SBT Unit for Unitholders Based on Trading Value and the NAV to NAV Exchange Ratio

Premiums as of October 5, 2015 (including the Increased Consideration) are US$1.14 per GTU Unit and US$0.61 per SBT Unit

Notice of Extension and Variation to be Filed Shortly

Offers Will Now Expire on October 30, 2015 –Unitholders Urged to Tender Now

TORONTO, Oct. 6, 2015 (GLOBE NEWSWIRE) — Sprott Asset Management LP (“Sprott” or “Sprott Asset Management”), together with Sprott Physical Gold Trust (NYSE:PHYS) (TSX:PHY.U) and Sprott Physical Silver Trust (NYSE:PSLV) (TSX:PHS.U) (together the “Sprott Physical Trusts”), today announced that it has increased the consideration payable to unitholders in connection with its offers to acquire all of the outstanding units of Central GoldTrust (“GTU”) (TSX:GTU.UN) (TSX:GTU.U) (NYSEMKT:GTU) and Silver Bullion Trust (“SBT”) (TSX:SBT.UN) (TSX:SBT.U) (the “Sprott offers”).

Unitholders will now receive an additional premium of US$0.10 per GTU unit payable in Sprott Physical Gold Trust units and US$0.025 per SBT unit payable in Sprott Physical Silver Trust units (the “Premium Consideration”), in addition to the units of Sprott Physical Gold Trust and units of Sprott Physical Silver Trust, respectively, being offered on a net asset value (NAV) to NAV exchange basis. Based on trading values and the NAV to NAV Exchange Ratio (as such term is defined in the Sprott offers) at the time Sprott announced its intention to make the Sprott offers on April 23, 2015, the offers reflected a premium of US$3.06 per GTU unit and US$0.91 per SBT unit. The premium as of October 5, 2015, based on trading values, the NAV to NAV Exchange Ratio and the Premium Consideration, represents US$1.14 per GTU unit and US$0.61 per SBT unit, respectively. In connection with this increase in consideration, the expiry time for each Sprott offer is extended to 5:00 p.m. (Toronto time) on October 30, 2015.

“Central GoldTrust and Silver Bullion Trust unitholders have been burdened for too long by a group of trustees committed to protecting the interests of the Spicer family. It is only through the public spotlight that the variety of undisclosed fees paid to supposedly independent trustees has forced public disclosures and hollow justifications. Sprott’s offers to unitholders are compelling and momentum is building as we continue to show the clear advantages of the offers. The response of the GTU and SBT trustees has been to penalize unitholders with the burden of paying for costly lawsuits and expensive advisors to protect the Spicer family and the fees they receive. We are accordingly increasing our offer to compensate unitholders for this abuse of trust, and encourage them to take advantage of this opportunity to exchange their units for an immediate premium, and trade a management committed to entrenchment to one committed to their best interests,” said John Wilson, Chief Executive Officer of Sprott Asset Management.

Added Wilson, “We have provided extensions to the offers so that no unitholders are left without this opportunity to exit an underperforming investment and enter into a high quality security that functions as intended, reflecting the value of the bullion held in the trust. Sprott appreciates the support of GTU and SBT unitholders to date and currently anticipates these extensions will be the final extensions to the Sprott offers.”

As of 5:00 p.m. (Toronto time) on October 5, 2015, there were 8,194,265 GTU units (42.46% of all outstanding GTU units) and 2,055,574 SBT units (37.60% of all outstanding SBT units) tendered into the respective Sprott offers. Total units tendered as of October 5, 2015, do not include pending units which are typically received on the date of expiration.

GTU and SBT unitholders who have questions regarding the Sprott offers, are encouraged to contact Sprott Unitholders’ Service Agent, Kingsdale Shareholder Services, at 1-888-518-6805 (toll free in North America) or at 1-416-867-2272 (outside of North America) or by e-mail at contactus@kingsdaleshareholder.com.

>end
Overnight gold/silver trading from Asia and Europe overnight:
courtesy Goldcore/Blog/Mark O’Byrne/Stephen Flood

Financial Advice Today and 400 Years Ago – Do Not “Venture All” “Eggs In One Basket”

We look at gold’s vital diversification benefits in the latest edition of Executive Global.

GoldCore: Executive Global Gold Vital Diversification

“Tis the part of the wise man to keep himself today for tomorrow, and not venture all his eggs in one basket” – Cervantes in Don Quixote in 1605

The key to successful long term investing is diversification and owning a range of different quality assets.

Gold has been shown to enhance returns and to reduce overall volatility over the long term. This was clearly seen during the financial crisis when gold was one of the very few assets to surge in value.”

Read the full article “Executive Global: Why gold is a vital diversification for today

 

DAILY PRICES
Today’s Gold Prices:  USD 1164.20, EUR 1021.54 and GBP 758.14 per ounce.
Friday’s Gold Prices:  USD 1151.50, EUR 1016.42 and GBP 749.01 per ounce.
(LBMA AM)

GoldCore: Gold in USD - 1 month
Gold in USD – 1 Month

Gold is up another 1% this morning, consolidating on last week’s 1.7% gain, and has touched a 7-week high at $1,167.30/oz. The metal has picked up some upward momentum after breaking decisively through its 100-day moving average (currently 1141) last week.

Silver, platinum and palladium are all also stronger, with silver leading the precious metals higher again. Silver is also up 1% after surging another 3.8% last week, its biggest weekly rise since mid May.

 

GoldCore: Protecting Your Savings in The Coming Bail-In Era

Download Protecting Your Wealth in the Coming Bail-in Era

Mark O’Byrne

-END-

IMF and World Bank disagree about competitive devaluations

Section:

The Real Fight to Win the International Currency Wars

By Mehreen Khan
The Telegraph, London
Saturday, October 10, 2015

China’s decision to tweak its exchange rate peg with the dollar in August provoked reactionary howls of derision — from the United States to India — that Beijing was gearing up for a new wave of international currency warfare.

But do currency wars really work?

Ahead of its bi-annual World Economic Outlook in Peru this week, the International Monetary Fund has waded into the debate. It published a comprehensive set of findings confirming that weaker currencies are still an effective tool for economies to grow their way out of trouble.

An exchange rate depreciation of around 1 0percent, said the IMF, results on average in a rise in exports that will add 1.5 percent to an economy’s output.

But both the research and the timing are not uncontroversial. …

… For the remainder of the report:

http://www.telegraph.co.uk/finance/economics/11918882/The-real-battle-to…

end

Koos Jansen: The Chinese gold market — lost in translation

Section:

12:58p ET Friday, October 9, 2015

Dear Friend of GATA and Gold:

Suspicions that the People’s Bank of China has been hiding national gold reserves on the books of domestic banks probably have arisen mainly from sloppy translations of remarks by Chinese officials, gold researcher and GATA consultant Koos Jansen reports today. His analysis is headlined “The Chinese Gold Market: Lost in Translation” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/koos-jansen/the-chinese-gold-market-lo…

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

end

 

‘Gold bugs’ aren’t the great concealers; central banks and financial journalists are

Section:

9p ET Sunday, October 11, 2015

Dear Friend of GATA and Gold:

MarketWatch columnist Brett Arends may win this year’s award for the most disinformation in financial commentary about gold. His October 9 column, “Here’s the Chart Gold Bugs Don’t Want You to See” —

http://www.marketwatch.com/story/heres-the-chart-gold-bugs-dont-want-you…

— is misleading from top to bottom.

In the first place, while the gold business has its share of dishonorable people, the gold business is small and its dishonorable people are outnumbered a thousand to one by dishonorable people in government, central banking, and the stock, bond, and real estate businesses. And whatever a few “gold bugs” are hiding from the markets, it is trivial compared to what investment banks and central banks are hiding, about which Arends has yet to show any curiosity.

Arends displays a long-term chart of the price of silver in dollars to argue that silver has not done well since the U.S. government “stopped treating silver as money all the way back in 1873.” That’s incorrect. While the U.S. government ended free coinage of silver in 1873, it continued to issue silver certificates — paper currency redeemable in silver — until 1964 and to issue silver coins as general currency until 1965.

No one will dispute Arends’ assertion that silver isn’t worth as much today in real terms as it was in the days of free coinage, but here is something else in which Arends demonstrates no interest — the U.S. government’s determination to suppress silver’s price since its demonetization by the Coinage Act of 1965. Signing the act, President Johnson himself proclaimed a policy of silver price suppression.

“If anybody has any idea of hoarding our silver coins,” the president said, “let me say this. Treasury has a lot of silver on hand, and it can be and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content.”

The president’s statement is posted at the American Presidency Project pages of the Internet site of the University of California at Santa Barbara here:

http://www.presidency.ucsb.edu/ws/?pid=27108

The Treasury Department’s silver stockpile is believed to have been exhausted since 1965 by dishoarding to suppress silver’s price, but price suppression by dishoarding failed eventually. Contrary to Johnson’s declaration, nearly all old U.S. silver coins were taken out of circulation by hoarders as silver’s price rose far above the values imprinted on the coins.

As a policy of price suppression, dishoarding of silver seems to have been replaced by government-sponsored trading in monetary metal derivatives and high-frequency trading in the monetary metals futures markets.

That is, while Arends wants to track the silver price from 1873, he seems not to want his readers to judge the silver price since 1965, nor, more importantly, to inquire into the government’s interference in the monetary metals markets in recent decades.

Arends acknowledges that the price of gold may not track the price of silver in the future.

He writes: “Today it is impossible to draw any serious conclusions about how gold ‘will’ perform during some future state of inflation, chaos, or disorder. That’s because we have basically very little data about how gold will perform in a modern economic society in which it is not honored by the government as real money. …

“Gold has little intrinsic value of its own. Jewelry — that’s about it. And so it’s unclear why it should somehow still function as a store of value now that countries no longer accept it as money.” He calls gold “completely useless.”

Yet while central banks are prohibited by the rules of the International Monetary Fund to peg their currencies to a fixed value in gold, they continue to recognize gold as de-facto money. Major central banks still hold large gold reserves, and by their own reports central banks on the whole have become net purchasers of gold in recent years after years of being net sellers.

It’s not really so strange that central banks do not reserve soybeans or pork bellies, just “completely useless” gold. For gold remains far more than jewelry; it still has the traditional characteristics of commodity money as well, characteristics the world saw as money’s prerequisites for thousands of years before certain elites sought to change the rules for their own advantage a few decades ago: the characteristics of durability, portability, divisibility, and “intrinsic value” — that is, value not just as jewelry but value independent of the value of other objects, or value without counterparty risk.

Arends continues: “This week it was considered news when the German Bundesbank apparently confounded its critics and threw open its vast holdings of gold bullion for all to see.”

Of course the Bundesbank did no such thing. In fact, the Bundesbank refused to account for its purported gold holdings —

http://www.gata.org/node/15826

http://www.gata.org/node/15829

— but Arends and other stooges for central banking predictably played along.

Arends concludes: “Without that completely useless yellow metal, the Germans would have nothing to fall back on but the productive power of their economy. Factories, engineers, scientists: What use are they? Lucky escape. Hmm. Or maybe the whole precious metal thing is just a load of nonsense.”

“Nonsense”? Then why are the Bundesbank and other central banks holding so much gold and, more important, why are they so secretive about it?

Arends has no curiosity here either. All he can do is try to squash the powerless little “gold bugs.” The real powers in the world, central banks, get a pass from him.

Actual journalism about gold would involve pursuing these questions:

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

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

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

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

Documentation responsive to these questions can be found at GATA’s Internet site here:

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

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

 

end

 

This is a big story!!

Report: Mitsui To Close Precious-Metals Business At End Of Year

Monday October 12, 2015 11:11

(Kitco News) – Mitsui & Co. plans to close its precious-metals business in New York and London at the end of the year, according to a report by Reuters, citing unnamed sources. Mitsui declined to comment. The news report cites weaker commodity prices and tougher regulations. The company has a team of roughly 50 involved with the precious metals around the world.

-END-

 

 

Dave Kranzler’s take on the above big story!!!

 

(courtesy Dave Kranzler/ird)

 

Is Japan “Inc.” Pulling Out Of The Comex And LBMA?

One of Japan’s largest global precious metals trading companies, Mitsui Precious Metals, is closing down its operations in New York and London by the end of 2015.  Note that it will maintain its operations in Tokyo and Hong Kong – interestingly:   Mitsui Pulls Out Of NY, London.

Mitsui is one of the largest business groups in Japan and one of the largest corporations in the world.  “When in doubt, pull out.”  In my view, this move reinforces the growing global fear of the massive paper to physical gold/silver leverage embedded in the NY/London banking system.

Remember, we are able to assess only what might be available to back visibly traded paper gold and silver derivatives (Comex futures, LBMA forwards).  And reported inventories are based on reports submitted by the bullion banks and Central Banks.  Do any of us really trust these bank reports as reported without visual confirmation and independent audits?

In fact, I will go as far to say that any analyst in this sector who presents any analysis and commentary based on bank-generated gold/silver inventory reports that does not stipulate up front that any and all information is based on reports that may or may not be accurate is thereby presenting invalid analysis.

missingbullionAnd, too be sure, all analysis that can be reasonably issued in entirely incomplete because it is impossible to assess the realistic exposure of OTC precious metals derivatives.   Even the banks who issue these opaque securities likely are in the dark.

I would suggest that Mitsui’s move pull out of the NY and London – thereby joining Deutsche Bank and Barclays – is symbolic of the world’s increasing perception that the New York and London financial markets are the biggest Ponzi schemes in history.  At the very least, it suggests that the world of growing weary of the fraudulent paper gold and silver markets on the Comex and the LBMA.

 

 

 

 

end

 

(courtesy Bill Holter)

Bill H:

Fantasy or reality …which is it?

I must apologize for leaving so many e-mails and comments unanswered last week. My wife Kathryn and I travelled to northern Michigan and the upper peninsula for the week and saw some wonderful fall foliage. Cell phone and wifi coverage was somewhat spotty. While there we celebrated her birthday and our 10 year wedding anniversary. The week away did allow me to step back from the global economic and financial fray to a vantage point of the very big picture and headlines rather than minutia.

Last week was a true dichotomy of fantasy and reality. We witnessed a massive short squeeze and the best week for U.S. equities in over a year. While the markets were oversold and due a bounce, the “bounce” came with a backdrop of very dire news! Day after day brought forth new and consistently worse news.

In no particular order of importance; Deutsche Bank reported a $6.5 billion loss (10% of their net equity), UBS joined the derivatives implosion party and required a capital raise, Glencore ‘fessed up to $100 billion in debt versus the previous $19 billion (with three or four other major commodity firms in the same boat), the Bank of England required their banks to disclose how much of this debt they were exposed to, China’s yuan surpassed the yen in the settlement of global trade, China also went live with their alternative settlement of trade in yuan (non dollars), Saudi Arabia and Norway disclosed they are now in deficit and thus no longer “buyers” of dollars (are they now sellers?) …and the U.S. was effectively kicked out of the Middle East! I might add that several recent economic reports even though fudged, massaged and outright falsehoods were unable to hide the reality of global AND U.S. recession and decline in the real economic sectors… MORE http://www.jsmineset.com/2015/10/11/fantasy-or-reality-which-is-it/

***

 

The helicopter route now being discussed?

 

(courtesy zero hedge/BANK OF AMERICA)

 

Why Gold Is Surging: BofA Says To Expect A “Massive Policy Shift In 2016”

While US equity futures have gone nowhere overnight, which is surprising considering (the incorrect) interpretation that by boosting overall liquidity through expanded collateral China has finally unleashed shadow QE (more on this later), which led to a rally for Chinese stocks if not US risk, one asset class that has been quietly levitating higher overnight is gold. Perhaps a lot of this is due to the realization that while the PBOC may not have launched QE now, it has no choice but to do so eventually.

Or perhaps the real realization is what Macquarie said over the weekend when it laid out quite correctly what the next big policy step will be after the current QE craze fizzles. This is what we said on Saturday:

To summarize what Australia’s biggest investment bank just said, in a nutshell, “small and incremental is out”, and will be replaced by big and “paradroppy”, a step which as Macquarie succinctly puts it, will “ban capitalism and by-pass banking and capital markets altogether.”

 

Crazy? Not at all: since the status quo will be fighting for its life, this step is all too likely if it means perpetuating a broken system, and an economic orders based on textbook after textbook of lies. In fact, we would go further and say war (of the global variety) is also inevitable, as the global “1%” loses control. It won’t go quietly.

 

Finally, we most certainly agree that the catalyst to unleash the “endgame” cycle will be some “combination of a major accident in several asset classes and/or sharp global slowdown.” But long before that even, keep an eye on gold: having provided a tremendous buying opportunity for the past 4 years because for some idiotic reason “conventional wisdom” decided that central banks are in control, have credibility and can fix a problem they created and make worse with each passing day, soon the global monetary debasement genie will be out of the bottle, and not even the entire BIS trading floor will be able to suppress the price of paper (as physical gold has not only decoupled from paper prices but long since departed on a one-way trip to China) for much longer.

Keeping an eye on gold this morning confirms just this:

Then last night, none other than BofA’s Michael Hartnett who is one of the very few strategists out there who “gets it”, issued a report warning investors to anticipate a massive policy shift in 2016” which would be a DM/EM mirror image: in the US/EU/Japan from QE to fiscal stimulus and in China from fiscal stimulus to QE & FX depreciation. In other words, the last big reflation push is almost upon us.

His key thoughts:

Neither deflation nor inequality has hindered the bull market on Wall Street in recent years. On the contrary, QE policies to end deflation & spark employment have been very beneficial to asset prices. But now:

  • The perception of unfair globalization, gilded elites & inauthentic politicians is leading to a rise in both populist politicians (Trump, Sanders, Corbyn) and parties (SNP, Syriza, Podemos, National Front) and…
  • …calls for the Fed to raise rates to boost the elderly’s return from saving are becoming louder…
  • …and the fragile improvement on Main Street is threatened by a stalled global economy in 2015.
  • If the secular reality of deflation & inequality is intensified by recession & rising unemployment, investors should expect a massive policy shift in 2016. Seven years after the west went “all-in” on QE & ZIRP, the US/Japan/Europe would shift toward fiscal stimulus via government spending on infrastructure or more aggressive income redistribution. And seven years after China went “all-in” on fiscal stimulus, a shift toward QE/rates/FX to support activity would be likely in the east.

And finally, getting to the point of this post, this is how Hartnett says investors should trade this “massive policy shift”:

  • …buy TIPs, gold, commodities, Main Street not Wall Street, China small cap
  • This new policy mix (which would be in response to recession & Quantitative Failure) would be most positive for TIPS/gold/commodities, for Main Street rather than Wall Street plays (e.g. mass retailers versus luxury), and for Chinese small cap. These are the assets bears should accumulate if markets head to new lows.
  • A trough in inflation expectations (Chart 7)…positive for Gold, TIPS & real estate
  • Income redistribution…buy Main Street, sell Wall Street, long KRX, short XBD

So short Wall Street, buy gold. If accurate this could be the biggest policy shift since the artificial price controls were imposed on gold by the BIS trading desk in September 2011 when the SNB unleashed its now failed currency peg, just hours after gold hit its all time nominal high just shy of $2000.

Finally, if China is indeed set to reflate at all costs, watch as a few hundred million Chinese drop their infatuation with the housing and stock bubbles, and go back to the one asset class that throughout history has been the best defense for currency devaluation and runaway inflation.

end
And now your overnight Monday 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  6.321/Shanghai bourse:  up 3.28%, hang sang: green 

2 Nikkei closed 

3. Europe stocks all  in the red    /USA dollar index down to 94.79/Euro up to 1.1368

3b Japan 10 year bond yield: falls slightly to .320% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.26

3c Nikkei now just above 18,000

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

3e WTI: 48.67  and Brent:   51.85

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 anddown for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls to .614 per cent. German bunds in negative yields from 4 years out

 Greece  sees its 2 year rate rises to 9.56%/:  still expect continual bank runs on Greek banks 

3j Greek 10 year bond yield rises to  : 7.77%  

3k Gold at $1164.50 /silver $15.96 (10 am est)

3l USA vs Russian rouble; (Russian rouble up 15/100 in  roubles/dollar) 61.36

3m oil into the 48 dollar handle for WTI and 51 handle for Brent/ China purchases huge supplies from Saudi Arabia

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 .9606 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0927 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 on criminal charges/

3r the 54year German bund now  in negative territory with the 10 year moving closer negativity to +.614%/German 4 year rate negative%!!!

3s The ELA lowers to  87.9 billion euros, a reduction of 1.0 billion euros for Greece.  The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 2.09% early this morning. Thirty year rate below 3% at 2.92% / yield curve flatten/foreshadowing recession.

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

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

 

Chinese Stocks Rally On Confusion Whether PBOC Finally Launched QE; US Futures Flat In Holiday Mode

With the “adult supervision” of US markets gone today as bond markets are closed for Columbus day, and the USDJPY tractor beam also missing with Japan also offline for Health and Sports day, stocks took their cues from China where speculation was rife that in lieu of cutting RRR, the PBOC has unleashed even more incremental QE by expanding its Collateral Asset Refinancing Program (CAR). Specifically, the central bank said this weekend it will expand a program allowing lenders to use loan assets as collateral for borrowing from the central bank, opening it up to nine more cities from the program’s test in Shandong province and Guangdong. The new areas for the program include Beijing and Shanghai. According to some estimates released several trillions in liquidity into the market, and not only sent government bond futures to new highs, but pushed the Shanghai Composite up over 3% overnight.

With both Japan and Europe on QE boost hiatus, many said it was only a matter of time before China steps in. According to the WSJ, “The market has widely interpreted the move as China’s version of quantitative easing,” said Jacky Zhang, an analyst at BOC International.

However, while Chinese stocks were bought first, with questions and half-baked goalseeked opinions either coming later or not at all, Market News explained that while Chinese markets surged on Monday as investors bought into talk that China’s quantitative easing is finally here “traders with commercial banks who could be expected to benefit from the new program were dismissive, saying the PBOC is simply opening up another channel to provide liquidity to the market and cautioning that the popularity of this latest one will be limited.

“This is definitely not QE. What happens here is the PBOC allows more assets to be used as collateral when banks borrow from it while QE involves the central bank buying assets — it’s completely different,” said a Beijing-based bank official with one of the “Big Four” state-owned banks.

“Markets are up because of this PBOC move. This kind of information, because it’s vague and uncertain, provides room for people’s imaginations and it can have a big impact,” said Yan Yan, a bond analyst with Guangdong Development Bank.

Well, semantics, but with central banks the verbal transmission channel is key. However, as MNI also correctly notes, the bigger issue isn’t one of liquidity. Instead, it’s the fact that there’s little demand for yet more credit in China’s overstretched, overbuilt and over-indebted economy. Expanding a loan collateral program isn’t going to fix that. “In the past 18 months, the impact of PBOC easing on lending activity has hardly been satisfying – the key here is loan demand, not supply,” said a trader with bank based in eastern China.

The irony is that while QE is meant to crush one’s currency, China has been scrambling to defend it following its surprising devaluation, and even as it desperately seeks to boost its credit and risk asset bubble, it is trying to push its currency higher, leading many to ask whether China even understands what the premise behind direct central bank intervention truly is.

So while China’s “maybe QE” helped Chinese risk assets, it has done little for US equity futures, which over the past week have seen their biggest weekly surge in years, precisely on expectations that the Fed itself has put off its own rate hike indefinitely and may instead proceed straight to QE4 or NIRP as we have speculated for over a year.

A quick check on the key global markets in today’s subdued session shows Asian equity markets traded mostly higher in a thinly traded session as Japanese participants were away for Health and Sports day, while Columbus Day in the US also contributed to the quiet tone. The Shanghai Comp (+3.3%) extended on last week’s gains, following comments from PBoC deputy Governor Yi that volatility in the markets have ran their course and additional measures are to be implemented to restore function to the markets. Furthermore Shanghai margin debt balance rose for the 2nd day, and of course, the abovementioned reports of the PBOC finally launching its own QE (which in any event is just a matter of time).

The German DAX index outperformed its EU peers following reports that RWE (+10.5%) and EON (+8.0%) have enough money in order to cover the clean-up costs of nuclear power plants. As a result, utilities led the move higher, with energy sector on the back foot as analysts at Goldman Sachs reiterated their bearish call on commodities and cut price target for WTI. On the other hand, shares of the troubled mining and trading company Glencore (-0.8%) failed to benefit from reports of further asset disposals and instead traded lower. In part this was in reaction to FT reporting that Rio Tinto will not cut copper production and instead will look to increase it, in hope that higher cost producers will go bust.

Given the lack of scheduled tier 1 releases, as well as the fact that US market participants are observing the Columbus Day holiday meant that trade volumes were below average. In turn this resulted in a relatively range bound price action by Bunds, with peripheral bond yield spreads also little changed.

In commodities, the week has started off with a continuation of the recent trend higher, befitting form the weaker USD. Despite bearish comments coming out of Goldman Sachs on commodities, the likes of Brent and WTI crude futures head into the North America crossover in positive territory, while gold is higher on the day by around USD 10.00 to trade around its highest levels since August 24th as US participants arrive at their desks.

In FX despite the bearish call by analyst at Goldman Sachs on commodities, high yielding and commodity sensitive currencies such as AUD, CAD and RUB traded firmer, with AUD/USD moving above the 100DMA line, while spot RUB fell below the key technical level. Elsewhere, CNH has seen its best one day performance since March and is at a 2 month high against the USD; this comes as PBoC gave a stronger fixing as well as inline with recent strength in equities and suggestions that major Chinese lenders were offloading USD in order to push up the exchange rate. BBDXY -0.18% at 1,190.26; earlier touched 1,189.83 3-wk low

A number of ECB members have spoken over the weekend and while Draghi again noted preparedness to expand the QE program if warranted, other members including Lautenschlager, Weidmann and Coeure has refrained from leaning towards further easing, which comes in spite of a raft of less than impressive macroeconomic data, especially from Germany. Of note many analysts had forecast an expansion to QE before the end of the year, with just two meetings left this year, one next week and one in December.

There is no data on the US docket, which as noted is on Columbus Day holiday, instead the focus of whoever is in the office will be on even more confusion spread by Fed members Brainard, Evans and Lockhart all set to speak later today.

Bulletin Headline Summary from RanSquawk

  • The German DAX index outperformed its EU peers following reports that RWE and EON have enough money in order to cover the clean-up costs of nuclear power plants.
  • High yielding and commodity sensitive currencies such as AUD, CAD and RUB outperform today, bolstered by further commodity strength
  • Today’s Columbus Day holiday sees a lack of tier 1 data, however comments are scheduled from Fed’s Lockhart, Evans and Brainard

DB’s Jim Reid completes the overnight recap

There’s plenty to keep our eyes open for this week after a slow start not helped by Columbus Day in the US today with the bond market closed. After this US earnings season starts to hot up and will be even more closely watched than normal for any signs of a domestic and international slowdown. The banks are the highlight this week with a selection of those reporting mentioned in the week ahead at the end. Elsewhere, China trade data tomorrow, CPI around the world on various days and US retail sales on Wednesday are the key releases. The full roster is at the end.

Most of the weekend headlines have been focused around the annual IMF meeting in Peru. Of particular note were the comments from Fed Vice-Chair Fischer who acknowledged that he was in the camp in September expecting a Fed rate hike this year, but signalled that ‘both the timing of the first rate increase and any subsequent adjustments to the federal funds rate target will depend critically on future developments in the economy’. Fischer highlighted that there are ‘considerable uncertainties’ around the US economic outlook, while noting also that the recent US jobs report was ‘disappointing’. Fischer went on to say that the Fed has to ‘remain cognisant of the risks ahead’.

Speaking early Saturday morning in Peru, ECB President Draghi said that while he is so far satisfied with the ECB’s QE program, he highlighted that it presently appears that it will take somewhat longer than previously anticipated for inflation to come back, and stabilise around, levels sufficiently close to 2%. Commenting on China, Draghi was noted as saying that the Chinese authorities were reassuring on the growth outlook for the economy. Meanwhile, the WSJ is running a story this morning, quoting a number of EM Central Bankers as urging the Fed to get on with raising rates in the hope that the uncertainty and volatility, which has been an overriding theme for emerging markets in particular of late, will dissipate somewhat.

In terms of markets, after a modest return on Friday (+0.07%), the S&P 500 capped its best week of the year having returned +3.26% over the past five days, with the index now posting positive returns in eight out of the last nine sessions. Oil markets had a decent week too with WTI (+8.98%) seeing its best performance in six weeks, while it was also a decent week across much of the commodity complex with Zinc (+8.96%) in particular surging the most last week in nearly four years, helped by the news of production cuts out of Glencore. Aluminium (+3.53%) and Copper (+3.82%) had their best week in six and four weeks respectively.

Markets in Asia have kicked off the week on the front foot, with gains across equities being led out of China in particular. The Shanghai Comp (+3.38%), CSI 300 (+3.53%) and Shenzhen (+4.12%) have all seen decent gains and extended the strong run since bourses reopened after Golden Week, while the Hang Seng (+1.36%) and Kospi (+0.25%) are also up in early trading. Markets in Japan are closed for a public holiday, but it’s been a softer start for equity markets in Australia with the ASX down -0.81%. It’s been a quieter start in credit markets, with indices generally unchanged to a couple of basis points wider. Oil is off to another strong start meanwhile, with WTI (+0.89%) passing the $50/bbl level again this morning.

As well as Fischer’s comments over the weekend, there was plenty of Fedspeak on Friday too for markets to digest with the majority still pushing for a move this year, but with more and more warning signs creeping in. Atlanta Fed President Lockhart, seen as something of a centrist, kicked things off by reiterating that he continues to see the Fed lifting off at either the October or December meeting, but at the same time noting there is more ambiguity in the current moment relative to a few weeks ago, while the latest US jobs report highlighted that there is ‘a touch more downside risk’ to the US economy. He was then followed by the NY Fed President Dudley who also said that he is expecting a rate rise this year, but noting that the ‘economy is downshifting a little bit’ and that ‘inflation is below our objective’, while pointing out that his view is not a commitment, highlighting that we’re set to get a lot of data between now and December. Meanwhile, the Chicago Fed’s Evans continued to emphasize his dovish view, saying that a delay in Fed liftoff until mid-2016 and then a gradual path thereafter ‘would be consistent with us getting inflation back up to 2% within a reasonable period of time’.

The US dataflow had generally little impact on markets on Friday. The September import price index reading, while still soft, was slightly better than expected at -0.1% mom (vs. -0.5% expected), in turn helping to raise the annualised rate to -10.7% yoy (from -11.3%). Wholesale inventories for August were a tad above expectations (+0.1% mom vs. 0.0% expected) but trade sales (-1.0% mom vs. -0.4% expected) were below consensus. That slight softness in the wholesale trade report saw the Atlanta Fed cut their Q3 GDP forecast a tenth to 1% and is now some way off the 1.8% forecast we saw back in late September. 10y Treasury yields nudged down 1.6bps to 2.089% while the Dollar weakened, with the Dollar index down half a percent. Fed hike pricing remained at largely unchanged levels, with December a shade below 40% and March at 62%.

Closer to home, the rally across European risk assets continues, with strength in the miners in particular helping the Stoxx 600 (+0.33%) finish up for the sixth day on the trot. It’s a similar story in credit markets too as Crossover closed 13bps tighter and is now nearly 60bps off the wides of earlier this month. Data out of France was solid with both industrial production (+1.6% mom vs. +0.6% expected) and manufacturing production (+2.2% mom vs. +1.0% expected) surprising to the upside, although the same could not be said for Italy which saw IP drop more than expected in August (-0.5% mom vs. -0.3% expected). DB’s Marco Stringa noted that the SIREN-Momentum indicator dropped to the lowest value in almost a month mainly due to the recent Germany industrial data, Spain’s September PMIs and to a lesser extent Spain’s August IP.

On to this week’s calendar now. It’s a very quiet start to the week today with no data releases due in either Europe or the US and with bond markets in the latter closed for Columbus Day. The focus instead will likely be on the Fedspeak with Brainard, Evans and Lockhart all due to speak.

end

let us begin:  9;30 pm est Sunday night//Monday night/9:30 am Shanghai time:\\

the rouble, the turkish lira and the Malaysian ringgit tumble as the usa dollar gains.  The yuan is also set much higher last night.

massive amounts of yuan injected into the Shanghai bourse causing it to rise over 3%

(courtesy zero hedge)

 

Ruble, Lira, & Ringgit Tumble On USD, Yuan Gains As PBOC States “China Correction Nearly Over”

After surging stronger for 2 weeks, EM FX is starting to lose ground in early Asia trading following Fischer’s comments Friday. The biggest losers so far are Turkish Lira, Russian Ruble, and Malaysian Ringgit which has dropped over 1% in early Asia trading – its biggest drop in a month. China expanded its regulatory crackdown to 11 more firms for “illegal stock operations” – i.e. selling – bringing the total to 41 firms. The PBOC Deputy Governor tells anyone who will listen that “China’s market correction is nearly over,” following the IMF annual meetings – “China’s economy is basically stable” – and Chinese stocks are modestly higher in the pre-open (with Dow futures -40pts). Yuan at 2mo highs after strengthening 7 days in a row.

 

 

After a couple of weeks of serious strength, EM FX is leaking back lower against the USD…

 

With Lira, Ruble, and Ringgit the biggest losers for now…

  • *RINGGIT FALLS 1.1% TO 4.1795 PER DOLLAR
  • The dollar reasserted itself, snapping an eight-day rally in Australia’s currency after Federal Reserve Vice Chairman Stanley Fischer joined the chorus touting a potential U.S. interest-rate hike by year end. Australian stocks fell with U.S. index futures following the best week for global equities since 2011.

 

*  *  *

Exceited by comments on China “managing:” to avoid a hard landing dureing discussions at The IMF’s annual meeting

The Chinese regulatory crackdown begins again…

CHINA CSRC HOLDS HEARING FOR ILLEGAL STOCK OPERATIONS: XINHUA

 

China Securities Regulatory Commission (CSRC) has held a two-day hearing for 11 illegal cases of reducing share holding.

 

It was the first time that the CSRC dealt with cases involving such amount of illegal share-holding reductions in one hearing.

 

The regulator asked big shareholders of public companies not to sell shares in an effort to keep the market stable in the past months.

 

Altogether 41 such cases had been investigated, and the 11 cases at the hearing on Friday and Saturday were suspected of similar operations, the commission said.

 

All the persons concerned admitted the facts at the hearing, but requested less punishment, claiming their operations tended to lower financial cost and made no impacts to the stock market, while they had carried out timely remedial measures.

Margin debt rises again…

  • *SHANGHAI MARGIN DEBT BALANCE REBOUNDS FOR SECOND DAY

And stocks are modestly bid in the pre-open…

  • *FTSE CHINA A50 OCTOBER FUTURES RISE 1% IN SINGAPORE
  • PBoC Dep Gov: China’s Market Correction Nearly Over — RTRS
  • *NDRC OFFICIAL LIU HE SAYS CHINA ECONOMY BASICALLY STABLE

 

And with the Yuan at 2-month highs, PBOC fixes the Yuan stronger for the 7th day in a row….

  • *CHINA SETS YUAN REFERENCE RATE AT 6.3406 AGAINST U.S. DOLLAR

 

A top Chinese central banker said a “persistent” weakening of the yuan would be inconsistent with the fundamentals of the world’s second-biggest economy, and the country is committed to making its currency regime more flexible and market based.

 

“As wide-ranging structural reforms are being carried out, the Chinese economy will become more balanced and sustainable,” People’s Bank of China Deputy Governor Yi Gang said Friday in a statement at the IMF annual meetings in Lima. Reforms to make the yuan more market-determined will make its exchange rate more flexible, “floating around the equilibrium level in both directions.”

*  *  *

end

Another explosion in Tianjin, China

(courtesy/zerohedge)

Massive Fire Burns After Another Explosion Rocks Tianjin Warehouse

As regular readers are no doubt aware, a giant explosion at a chemical plant in the Chinese port of Tianjin in August made international headlines and became a source of controversy and social unrest after citizens began to wonder if the Communist party was trying to cover up rampant corruption that might have allowed the catastrophe to happen.

Once the environmental effects of the chemical dispersion (mass fish die-offs and cyanide rain) became apparent, the world became fascinated with explosions at Chinese chemical factories which, if the last month or so is any guide, happen all the time.

Well don’t look now, but there are reports of another explosion at Tianjin. Here’s more from CCTV:

According to the Tianjin Fire news, the evening of October 12 Beichen District Sai Town, one about 500 square meters of a warehouse fire. Cause of the fire is the raw material spill alcohol on fire, after spread to the entire warehouse. Currently, the fire has been reported off-site no casualties. (CCTV reporter Zhao Yao’s)

 

Daily news, according to the Tianjin Beichen District authorities, October 12 evening 10:30 or so, Beichen District Sai Town, an ammonia and alcohol or the document storage warehouse fire in and accompanied by an explosion, as of now no casualties were reported

And from RT:

A major fire broke out in a deposit in the Chinese city of Tianjin. The fire was caused by a leak of alcohol, reports the China People’s Daily newspaper.

And here are the visuals:

GLENCORE AND EUROPEAN AFFAIRS
THIS IS NEWS THAT GLENCORE DID NOT WANT TO HEAR.  Rio Tinto is going to fill the gap on production that Glencore is cutting
(courtesy zero hedge)

First Glencore cut its coal production. Then a month ago as part of its “doomsday” deleveraging plan, the troubled Swiss miner-cum-trader announced drastic production cuts and major layoffs in its copper mining business, which would be reduced by 400,000 tons as a result of mine closures in Zambia and DR Congo. Then late last week the company surprised many when it once again slashed its zinc production by a third (while laying off 1,600 workers in Australia), in the process reducing global zinc output by 500,000 metric tons.

The logic, in theory, behind the move was simple enough. As DB summarized it, “$1650 for zinc is fundamentally too low and some of the capacity makes no cash at these levels – Solution: Shut it down until the price normalizes. While most market observers see the zinc market already in deficit, the dwindling price says otherwise and Glencore’s move should bring forward the crunch point with a resulting positive impact on the metal price.”

Additionally, DB provided a beautiful model of how said zinc production cut for Glencore – expected to be completed over the next 6 months – would look like, as well as the ensuing production ramp-up in 2017, “as the zinc price recovers.”

 

On Friday the market, too, was delighted by this announcement, and led not only to a rally in price of Glencore stock but also unleashed the biggest surge in the price of zinc, which soared by over 10%, the biggest intraday move in history.

 

There was just one problem, and we laid it out in our response to the market reaction to Glencore’s latest production cut – all it would take is for just one company to defect from this attempt to reestablish the “game theory” equilibrium, for the whole plan to fail. 

 

“with sales a function of price and volume, and with Glencore aggressively cutting volumes, it is hoping the price increase will (more than) offset the drop in volumes. Which is a big gamble as other cash-strapped miners step up their own production, in the process boosting supply and once again slamming the price of zinc (and copper) lower.”

 

It remains to be seen where the equilibrium price levels off after all these production cutbacks, although if the copper and zinc markets are anything like oil, it is certain that any volume reductions by Glencore will be promptly taken advantage of by Glencore’s competitors, because in a global deleveraging and commodity supercycle repricing, he who cooperates while others defect, always loses the game theory.

This was once again spot on, because while Glencore’s theory is admirable, it is what happens in practice that matters.

And what happened is that just as expected, overnight the world’s second biggest mining company, Rio Tinto, warned that it will not cut copper production, saying it would be illogical to hold back output and leave space in the market for higher-cost rivals.

And just like that Glencore’s assumption that others in the space will act rationally, and “cooperate” with the attempt by Glencore to impose a new game theoretical equilibrium by reducing supply, and thus boosting prices, has crashed and burned.

According to the FT, Jean-Sebastien Jacques, head of copper and coal at Rio, said the Anglo-Australian mining group would not reduce output even though current prices of the industrial metal did not reflect “fundamentals”.

His comments come just days after rival commodities group Glencore said it would slash its zinc output by a third after the price of the industrial metal fell to a five-year low on concerns about slowing economic growth in China.

 

Rio and its peer BHP Billiton have been ramping up production of their main commodities during the current price rout, betting that their low-cost assets will enable them to survive and maintain market share while higher-cost producers go bust.

 

While copper prices have been slumping, Rio has been spending billions of dollars expanding output at its giant copper project in Mongolia, and is preparing a second underground phase of the mine.

Furthermore, just as we said that the crude paradigm of the past year is now dominant, so it has spread to all other commodities: a world where diversified miners are hoping they can take out the high-cost marginal producers by keeping the price painfully low through production below cost. The CEO confirmed this:

“Why should I make cuts?” Mr Jacques said, in an interview ahead of LME Week, the biggest annual gathering of the metals and mining industry.

 

“If you have marginal assets and marginal projects and you have a pretty weak balance sheet I think you may be in trouble pretty soon,” he said.

Which in turn brings up monetary policy, because just like Saudi Arabia has been hoping high cost US shale producers would have long since burned out by now, they keep finding gullible junk bond investors who fund them at below-cost prices, if only to clip at least one hefty double digit coupon before the company defaults (because at the end of the day, the year-end bonus paid out from other people’s money, is all that matters in the ZIRP world).

So about that pretty Deutsche Bank zinc production chart shown above… well, scrap it because while it will be absolutely correct about the drop (unless Glencore renegs on its production cut plan just days after announcing it) there will be no rebound, unless Glencore wants to suffer even greater costs and negative cash flows associated with unmothballing stalled operations at prices that remain vastly uneconomical and loss-making.

Jacques also spoke to Bloomberg, reiterating his philosophy on boosting production at below-cost prices:

The metal is “not trading on fundamentals,” Rio Copper & Coal Chief Executive Officer Jean-Sébastien Jacques said in an interview in London. “There is lots of short-selling in copper and we’ve seen the pick up in terms of short-selling in copper on the back of what happened in China a few months ago.”

 

“It can be a very dangerous game in the medium and long term,” he said. “You don’t want to have a short position when the market moves into a deficit. From an industry standpoint, the sooner we move back into a deficit situation the better it is because currently there is a lot of noise in the system.”

Of course, with Rio Tinto set to boost production to take up the production generously given up by Glencore, the moment when the system shifts to equlibrium has been indefinitely delayed.

Worse, once Glencore realizes that its olive branch has been rejected, the miner will have no choice but to turn those machine back on, and proceed to regain all the market share it has lost because it, like the gullible longs, believes theory and practice are the same.

As for Glencore, the market is starting to realize the big picture, and the stock was down 4% as of this moment, its biggest drop in two weeks, and back to the level of the September equity follow on offering.

 END
Capital controls inside Greece escalate effecting one million pensioners and civil servants
(courtesy zero hedge)

Greek Cash Ban Escalates: ‘Permanent’ Stricter “Capital Controls” On 3 Million Pensioners, Civil Servants Imposed

In a stunning move towards the elites’ endgame of ‘banning cash’, Greek authorities unveiled stricter capital controls for civil servants and pensioners this weekend. By drastically limiting cash withdrawals and forcing the more ‘controllable’ compulsory use of plastic money, Greek authorities hope to stop tax evasion through the use of ‘fake cash registers’.

 

As KeepTakingGreece.com reports,

A shock-measure: civil servants and pensioners will be subject to stricter capital controls than the rest of the Greeks. They will be able to withdraw only €150 per week – with the cash withdrawal cap being €420 per week – that is a total of €600 per month. The rest of their wage or pension they will have to spend by using debit or credit card.

The news fell like a bombshell on Saturday evening and spoiled the weekend of millions of Greeks. It will probably spoil the rest of their lives too.

Greek media revealed, that the Finance Ministry plans to impose such a measure in order to combat tax evasion, but of course, not the tax evasion committed by the civil servants and pensioners as this is not possible as the state deducts their share on tax before they receive wages and pensions but the tax evasion committed by business owners.

According to the Finance Ministry plan, civil servants and pensioners will be able to withdraw in cash only part of their wages and pensions and the rest will have to remain in their bank deposit account. This remaining amount they will have to spend only through the compulsory use of debit or credit card.

“The measure will affect 2.65 million pensioners and 600,000 civil servants,” notes newspaper To Vima that revealed the shocking plan.

The newspaper adds that with this measure, the compulsory use of plastic money, the business owner , whether a shop or a professional like doctor, plumber etc will not be able to evade taxes since all transactions will be recorded in the banking system.

The Finance Ministry reasoning behind this plan is first of all the assumption that the money – or large party of the money – it pays in wages and pensions is been used in real economy without receipt thus without Value Added Tax and tax revenues for the state.

“Every month the State and the pension funds pay for salaries and pensions of approximately €2.6 billion, that is €30 billion per year.  The salary or the pension comes into the bank account of the beneficiary, who can withdraw 420 euro per week due to the capital controls.

This cash money is being used for the purchase of goods or services “and a large percentage of these transactions does not bring revenues to the state as the transactions are being done without the issue of receipt or receipt are issued by so-called fakecash registers which are manipulated to show less revenues.

In this way, the state suffers revenue losses of approximately 15-20 billion euro per year due to not collection of Value Added Tax and income tax,” from businesses and self-employed.

With this measure the state calculates that it will receive in no time revenues from V.A.T. and will not miss a cent from income tax. The state expects to rapidly increase its revenues and “proceeds to future reduction of the tax rates of 8.500,000 taxpayers.”

The Finance Ministry apparently considers to exempt pensioners of over 75 years old from the measure as well as those living in remote areas where the use of plastic money is limited.

If the measure successfully increases the state revenues and does not puts obstacles in the operation of households, “it can be extended also to salaries of the private sector.”

*  *  * 

The plan revelation triggered an outcry and anger not only among the civil servants and pensioners but also among those not affected by it. But there is more…

Plastic money compulsory for new companies

Another measure is apparently under way in the fight of tax evasion.

“Companies that are founded from next year onward plus a range of sectors of the Greek economy will only be able to accept payment via debit or credit card, according to a plan being drawn up by the government.

 

The plan, which has yet to receive the final approval from the country’s lenders, foresees all new companies having to be equipped with point of sale (POS) terminals that can accept credit and debit cards. The same will apply to numerous professions like will include doctors, lawyers, electricians and plumbers, which are all professions where tax evasion is thought to be rife.”

 

(full article ekathimerini)

Also in this case, the ambitious legislator will create 2 businesses categories and exclude form competition the new companies as they will not be able to accept cash.

Who wins?

One has also to ask who wins from these measures except the state and the revenues it calculates to receive.

For sure the biggest winner are the banks: first of all, they will keep longer the amounts of pensions and civil servants salaries. It could be 1-1.5 billion euro per month. Secondly, because they charge 2 euro per transaction via debit or credit card.

*  *  *

And the biggest loser is The average joe Greek citizen… again.

RUSSIAN AND MIDDLE EASTERN AFFAIRS
Tensions mount as Moscow demands Britain to explain herself: Britain was ordered to shoot down Russian jets if confronted:
(courtesy zerohedge)

Moscow Demands Britain Explain “Green Light To Shoot Down Russian Jets”

The chances of escalation from a proxy war to outright war just went to 11 on the Spinal Tap amplifier of sabre-rattling. A day after British and NATO pilots were reportedly given the green light to take drastic action against Russian fighter jets if they come under threat during missions over Iraq, Interfax reports that the Russian Defense Ministry has demanded clarification. Senior defence sources say it is just a matter of time before our fighters are involved in a deadly confrontation with Russian jets.

The Chinese, it appears, are wholeheartedly behind Putin’s efforts, judging by the following puff-piece from Xinhua (unofficially China’s government mouthpiece)…

Russia’s recent military intervention in the Syrian war in the form of airstrikes and missile attacks aimed both at supporting the government of President Bashar Al-Assad in combatting the Islamic State (IS) has reaped initial gains.

 

Russia’s bombing campaign in Syria, which began on Sept. 30, has strengthened the Syrian government, laying the foundation for a dialogue with all countries concerned to come up with solutions that could drag Syria out of the internal conflict that has lasted for more than four years.

 

According to Russia Today, Russia started its bombing campaign in Syria with a goal to provide air support to the government troops in fighting various terrorist groups, primarily the IS.

 

Russian air strikes hit 55 Islamic State group targets in Syria in the past 24 hours, the defense ministry said Saturday, as Moscow ramped up its military campaign in the war-torn country.

 

Russia’s air force has attacked a total of 112 targets since the start of the military actions.

 

On Thursday, Syrian government troops launched large-scale ground offensives under the cover of Russia’s repeated air strikes. At the same time, Russia launched 26 cruise missiles from the Caspian Sea and destroyed 11 IS targets.

 

Syrian political analyst Osama Dannura said Russia’s involvement in the Syrian conflict has upset the initial planning of Western powers that have their minds bent on toppling the Assad government.

 

The West’s strategic shortcomings were demonstrated by the disastrous 500 million-U.S.-dollar program to train and arm moderate rebels, which generated only a handful of fighters, many of whom surrendered or were captured almost immediately. The scheme was finally scrapped on Friday.

 

The reason why the U.S.-coalition has failed to deal a blow to the IS, according to Syrian political analyst Maher Ihsan, is a lack of offensives by ground troops. Besides, while attacking the IS, the United States is also offering the opposition rebels assistance including weapons, most of which end up into the hands of IS fighters.

 

In an interview with Iranian television broadcast on Sunday, al-Assad said a campaign of Western and Arab airstrikes against IS targets in Iraq and Syria has been counterproductive and terrorism has spread in terms of both territory and new recruits.

 

Around 40 percent of the IS infrastructure in Syria has been destroyed in just one week, Syria’s Ambassador to Russia Riad Haddad said on Wednesday.

But the huge escalation in British and NATO rhetoric towards Russia – green-lighting direct conflict – has made the situation dramatically more dangerous…

British and Nato pilots have been told to take the drastic action if they are fired on by Vladimir Putin’s air force during missions over Iraq.

 

The move comes after British ministers warned Russia had made the situation in the Middle East “much more dangerous”.

 

Senior defence sources say it is just a matter of time before our fighters are involved in a deadly confrontation with Russian jets.

 

One source said: “We need to protect our pilots but at the same time we’re taking a step closer to war. It will only take one plane to be shot down in an air-to-air battle and the whole landscape will change. ”

 

RAF pilots have been told to avoid contact with Russian jets at all costs and both US and British mission control teams will do their best to keep them apart.

 

But the pilots have been warned they must be prepared to fire on Russian jets if their lives depend on it.

 

One source said: “No one knows what the Russians will do next. We do not know how they will respond if they come into contact with a Western jet.

 

“When planes are flying at supersonic speeds the airspace gets crowded very quickly. There could be a collision or a Russian pilot might be mistakenly shot down. “

And then, as Reuters reports,

Russia has asked the British defense attache in Moscow to clarify media reports that British pilots had been given permission to attack Russian jets if they are fired on whilst flying sorties over Iraq, Interfax news agency reported on Sunday.

 

The British attache said he would submit an official response in the near future, RIA news agency reported.

*  *  *

One wonders just how far US, NATO “leadership” are willing to go to ‘expose’ Putin’s evil intent? Especially in light of China’s official mouthpiece (Xinhua News) reporting the following…

“The Russians have shown a naval capacity that was not expected,” said Thomas Gomart, head of the French Institute for Foreign Relations, adding that Russia is “challenging the West’s aerial supremacy.”

 

Moscow offered on Tuesday to resume talks with Washington to avoid any misunderstanding concerning its airstrike operation, as well as to discuss ways to avoid conflicts between the United States and Russian warplanes over Syria.

 

Washington also said on Saturday that it would resume talks with Moscow to avoid accidents in the skies over the war-torn country.

end
Russia/Iran rack up gains fighting Isis in Syria:\\\\
(courtesy zero hedge)

Russia, Iran Rack Up Gains In “Fiercest Syrian Fighting Yet”

Last week, we said the following about the next stage of Syria’s civil war: “In case it wasn’t clear enough what was set to happen soon after the Russian air force had spent a few days softening up anti-regime positions on the ground, allow us to spell it out: with the opposition on the run thanks to days of aerial bombardment, Iran will now send in the Hezbollah/Shiite militia/Quds clean up crew, who will personally ensure that whoever is left in the wake of the Su-34 strikes is swiftly eliminated at close range.

As we went on to explain, the Russians are providing air cover for what amounts to an Iranian ground invasion in support of the Assad regime.

Losing the country to the West would be a decisively bad turn of events for Tehran, which needs Syria in order to maintain the regional balance of power and preserve supply routes to Hezbollah in Lebanon.

Of course the Iranians have been on the ground in Syria for years, but as we’ve explained on a number of occasions, Tehran needed to remain somewhat cautious about the optics, given the nuclear negotiations. Now that those negotiations have been largely concluded and, more importantly, now that Iran has the Russian superpower stamp of approval, all pretense that this isn’t effectively a ground incursion has been abandoned. Case in point, here’s Reuters with the latest:

Syrian army and allied forces supported by Russian warplanes made further advances as they pressed an offensive against insurgents on Monday, in the fiercest clashes for nearly a week, a monitor said.

 

Russian jets carried out at least 30 air strikes on the town of Kafr Nabuda in Hama province in western Syria, and hundreds of shells hit the area as the Syrian army and Hezbollah fighters seized part of it, the Syrian Observatory for Human Rights said.

 

Forces loyal to President Bashar al-Assad have in the past few days recaptured territory close to the government’s coastal heartland in the west thanks to Russia’s intervention, reversing rebel advances made earlier this year.

 

Pro-government forces including the Lebanese group Hezbollah on Monday captured the southern part of Kafr Nabuda, the Observatory’s Rami Abdulrahman said.

 

The fighting, shelling and air strikes killed and wounded dozens of insurgents, he said.

 

“These are the most violent battles in the northern countryside (of Hama) since the start of joint operations several days ago” between the Russian air force and Syrian ground forces, he said.

 

Lebanese-based television station al-Mayadeen also reported the takeover of the southern part of Kafr Nabuda.

Kafr Nabuda’s capture would bring government forces closer to insurgent-held positions along the main highway that links Syria’s main cities. “The town is very important and strategic,” Abdulrahman said.

And more from BBC:

Syrian forces backed by Hezbollah militants from Lebanon are said to have made significant advances against rebels after heavy Russian air strikes.

 

Government gains are being reported in Idlib, Hama and Latakia provinces.

 

Russia says its aircraft carried out more than 60 missions over Syria in the past 24 hours, and that the Islamic State group was its main target.

 

But the Russian strikes appear to have impacted heavily on rebels fighting both the government and IS.

 

The main battlefront is currently close to the key highway that links the capital Damascus with other major cities, including Aleppo, and President Bashar al-Assad’s forces are believed to be seeking to cut off rebels in Idlib.

 

Before Russia’s intervention, Idlib had all but fallen to a rebel coalition that had been seriously threatening Mr Assad and his heartland as well as fighting IS, BBC Arab affairs editor Sebastian Usher reports.

 

Government forces are basically trying to win back areas they lost earlier this year, to the north of the city of Hama, and in the northern mountains of Latakia province near the coast. Rebels had penetrated there after unifying their ranks and with more concerted backing from their outside supporters, Turkey, Saudi Arabia and Qatar.

 


 

That posed a real threat to the heartland of Bashar al-Assad’s regime, and it is almost certainly what triggered the Russian intervention and a stepped-up role by Iran.

Again, it’s the Russians in the sky and Hezbollah on the ground and as everyone is well aware, Hezbollah is just Iran.

Meanwhile, Tehran’s habit of denying its official presence on the ground suffers from the rather inconvenient fact that Iranian soldiers keep dying in Syria. On Friday, Reuters reported that Hossein Hamedani, an Iranian general and close friend of Quds commander Qassem Soleimani was killed while “advising” Syrian soldiers near Aleppo:

An Iranian Revolutionary Guards general has been killed near Aleppo while advising the Syrian army on their battle against Islamic State fighters, the guards said in a statement on Friday.

 

The Guards said General Hossein Hamedani was killed on Thursday night and that he had “played an important role … reinforcing the front of Islamic resistance against the terrorists”.

 

Iran is the main regional ally of Syrian President Bashar al-Assad and has provided military and economic support during Syria’s four-year-old civil war.

 

Hamedani, a veteran of the 1980-88 Iran-Iraq war, was made deputy chief commander of the elite forces in 2005.

What all of the above suggests is that the tide has quite clearly turned and while there will undoubtedly be more Iranians going home in body bags before it’s all said and done, it’s now just a matter of time before the US and its “coalition” partners will have to decide on whether to see Assad back in power or else put boot to ground to counter the offensive because suddenly, the “freedom fighters” aren’t doing so well.

end
Obama makes a fool of himself talking out his failure of Syria policy on “60 Minutes” last night:
(courtesy zero hedge)

Obama Defends The Failure Of His Syria Policy Before A Beligerent 60 Minutes

Yesterday, in a comprehensive takedown of Obama’s handling of the second Syrian proxy war in three years (which is not over yet), we summarized events as follows: “The Tragic Ending To Obama’s Bay Of Pigs: CIA Hands Over Syria To Russia.”

The facts, which are largely undisputed, confirm this: having achieved no progress “against ISIS”, the stated goal of US intervention in Syria, and no progress in kicking Assad out of office and starting the Qatar has pipeline to Europe, the real goal of US intervention in Syria, the top democrat on the House Intelligence Committee, Adam Schiff, said that Obama “is debating the merits of taking further action orwhether they are better off letting Putin hang himself.”

By “hanging himself”, the democrat meant handing Syria over to the Kremlin on a silver platter aafter just a few short weeks of Russian military intervention in Syria which has crushed US supply routes to ISIS and other CIA-sponsored rebel groups, and once again –  just like in 2013 – put a premature end to US attempts to overthrow yet another head of state.

Fast forward to today when in what may have been the most awkward 60 Minutes interview for Obama before the US nation, Steve Kroft asked Obama about Trump, about Hillary, but it was Obama’s take on the US loss in (and of) Syria and the Russian gains there, and everywhere else, that demonstrated two things.

The first is just how marginalized the US has suddenly become in the global arena, with an impotent and insolvent Europe behind its back for moral if no other support, opposing a suddenly ascendant Russian axis in the middle-east, one which has China’s backing, especially in the aftermath of the quite demonstrative US implementation of the TPP which is meant first and foremost to offset China’s rising trade influence in the region.

The second is the extent of Obama’s delusion, or perhaps it was merely his spin relying on the naivete of the US public when it comes to foreign affairs, about the abovementioned snubbing of a superpower that until recently nobody dared to challenge unilaterally in the global arena.

The full exchange is presented below. We still can’t decide if Kroft’s at times near-aggressive belligerence toward the president was actually genuine, or as revealed previously especially in the case of the 2011 60 Minutes interview of Julian Assange, the host was directly instructed by the administration on how to approach the topics at hand, and to make Obama squirm on purpose, so as to make the loss more palatable to the people of America.

* * *

Steve Kroft: The last time we talked was this time last year, and the situation in Syria and Iraq had begun to worsen vis-à-vis ISIS. You had just unveiled a plan to provide air support for troops in Iraq, and also some air strikes in Syria, and the training and equipping of a moderate Syrian force. You said that this would degrade and eventually destroy ISIS.

President Barack Obama: Over time.

Steve Kroft: Over time. It’s been a year, and–

President Barack Obama: I didn’t say it was going to be done in a year.

Steve Kroft: No. But you said…

President Barack Obama: There’s a question in here somewhere.

Steve Kroft: There’s a question in here. I mean, if you look at the situation and you’re looking for progress, it’s not easy to find. You could make the argument that the only thing that’s changed really is the death toll, which has continued to escalate, and the number of refugees fleeing Syria into Europe.

President Barack Obama: Syria has been a difficult problem for the entire world community and, obviously, most importantly, for the people of Syria themselves that have been devastated by this civil war, caught between a brutal dictator who drops barrel bombs on his own population, and thinks that him clinging to power is more important than the fate of his country. And a barbaric, ruthless organization in ISIL and some of the al Qaeda affiliates that are operating inside of Syria. And what we’ve been able to do is to stall ISIL’s momentum to take away some of the key land that they were holding, to push back, particularly in Iraq against some population centers that they threatened. And, in Syria, we’ve been able to disrupt a number of their operations. But what we have not been able to do so far, and I’m the first to acknowledge this, is to change the dynamic inside of Syria and the goal here has been to find a way in which we can help moderate opposition on the ground, but we’ve never been under any illusion that militarily we ourselves can solve the problem inside of Syria.

Steve Kroft: I want us to take some of these things one by one. You mentioned an awful lot of things. One, the situation with ISIS, you’ve managed to achieve a stalemate. So what’s going to happen to ISIS?

President Barack Obama: Well, over time–

Steve Kroft: I mean, they have to be– somebody has to take them on. I mean, what’s going on right now is not working. I mean, they are still occupying big chunks of Iraq. They’re still occupying a good chunk of Syria. Who’s going to get rid of them?

President Barack Obama: Over time, the community of nations will all get rid of them, and we will be leading getting rid of them. But we are not going to be able to get rid of them unless there is an environment inside of Syria and in portions of Iraq in which local populations, local Sunni populations, are working in a concerted way with us to get rid of them.

Steve Kroft: You have been talking about the moderate opposition in Syria. It seems very hard to identify. And you talked about the frustrations of trying to find some and train them. You got a half a billion dollars from Congress to train and equip 5,000, and at the end, according to the commander CENTCOM, you got 50 people, most of whom are dead or deserted. He said four or five left?

President Barack Obama: Steve, this is why I’ve been skeptical from the get go about the notion that we were going to effectively create this proxy army inside of Syria. My goal has been to try to test the proposition, can we be able to train and equip a moderate opposition that’s willing to fight ISIL? And what we’ve learned is that as long as Assad remains in power, it is very difficult to get those folks to focus their attention on ISIL.

Steve Kroft: If you were skeptical of the program to find and identify, train and equip moderate Syrians, why did you go through the program?

President Barack Obama: Well, because part of what we have to do here, Steve, is to try different things. Because we also have partners on the ground that are invested and interested in seeing some sort of resolution to this problem. And–

Steve Kroft: And they wanted you to do it.

President Barack Obama: Well, no. That’s not what I said. I think it is important for us to make sure that we explore all the various options that are available.

Steve Kroft: I know you don’t want to talk about this.

President Barack Obama: No, I’m happy to talk about it.

Steve Kroft: I want to talk about the– this program, because it would seem to show, I mean, if you expect 5,000 and you get five, it shows that somebody someplace along the line did not– made– you know, some sort of a serious miscalculation.

President Barack Obama: You know, the– the– Steve, let me just say this.

Steve Kroft: It’s an embarrassment.

President Barack Obama: Look, there’s no doubt that it did not work. And, one of the challenges that I’ve had throughout this heartbreaking situation inside of Syria is, is that– you’ll have people insist that, you know, all you have to do is send in a few– you know, truckloads full of arms and people are ready to fight. And then, when you start a train-and-equip program and it doesn’t work, then people say, “Well, why didn’t it work?” Or, “If it had just started three months earlier it would’ve worked.”

Steve Kroft: But you said yourself you never believed in this.

President Barack Obama: Well– but Steve, what I have also said is, is that surprisingly enough it turns out that in a situation that is as volatile and with as many players as there are inside of Syria, there aren’t any silver bullets. And this is precisely why I’ve been very clear that America’s priorities has to be number one, keeping the American people safe. Number two, we are prepared to work both diplomatically and where we can to support moderate opposition that can help convince the Russians and Iranians to put pressure on Assad for a transition. But that what we are not going to do is to try to reinsert ourselves in a military campaign inside of Syria. Let’s take the situation in Afghanistan, which I suspect you’ll ask about. But I wanted to use this as an example.

Steve Kroft: All right. I feel like I’m being filibustered, Mr. President.

President Barack Obama: No, no, no, no, no. Steve, I think if you want to roll back the tape, you’ve been giving me long questions and statements, and now I’m responding to ’em. So let’s– so– if you ask me big, open-ended questions, expect big, open-ended answers. Let’s take the example of Afghanistan. We’ve been there 13 years now close to 13 years. And it’s still hard in Afghanistan. Today, after all the investments we have there, and we still have thousands of troops there. So the notion that after a year in Syria, a country where the existing government hasn’t invited us in, but is actively keeping us out, that somehow we would be able to solve this quickly– is–

Steve Kroft: We didn’t say quickly.

President Barack Obama: –is– is– is an illusion. And– and–

Steve Kroft: Nobody’s expecting that, Mr. President.

President Barack Obama: Well, the– no, I understand, but what I’m– the simple point I’m making, Steve, is that the solution that we’re going to have inside of Syria is ultimately going to depend not on the United States putting in a bunch of troops there, resolving the underlying crisis is going to be something that requires ultimately the key players there to recognize that there has to be a transition to new government. And, in the absence of that, it’s not going to work.

Steve Kroft: One of the key players now is Russia.

President Barack Obama: Yeah.

Steve Kroft: A year ago when we did this interview, there was some saber-rattling between the United States and Russia on the Ukrainian border. Now it’s also going on in Syria. You said a year ago that the United States– America leads. We’re the indispensible nation. Mr. Putin seems to be challenging that leadership.

President Barack Obama: In what way? Let– let’s think about this– let– let–

Steve Kroft: Well, he’s moved troops into Syria, for one. He’s got people on the ground. Two, the Russians are conducting military operations in the Middle East for the first time since World War II–

President Barack Obama: So that’s–

Steve Kroft: —bombing the people– that we are supporting.

President Barack Obama: So that’s leading, Steve? Let me ask you this question. When I came into office, Ukraine was governed by a corrupt ruler who was a stooge of Mr. Putin. Syria was Russia’s only ally in the region. And today, rather than being able to count on their support and maintain the base they had in Syria, which they’ve had for a long time, Mr. Putin now is devoting his own troops, his own military, just to barely hold together by a thread his sole ally. And in Ukraine–

Steve Kroft: He’s challenging your leadership, Mr. President. He’s challenging your leadership–

President Barack Obama: Well Steve, I got to tell you, if you think that running your economy into the ground and having to send troops in in order to prop up your only ally is leadership, then we’ve got a different definition of leadership. My definition of leadership would be leading on climate change, an international accord that potentially we’ll get in Paris. My definition of leadership is mobilizing the entire world community to make sure that Iran doesn’t get a nuclear weapon. And with respect to the Middle East, we’ve got a 60-country coalition that isn’t suddenly lining up around Russia’s strategy. To the contrary, they are arguing that, in fact, that strategy will not work.

Steve Kroft: My point is– was not that he was leading, my point is that he was challenging your leadership. And he has very much involved himself in the situation. Can you imagine anything happening in Syria of any significance at all without the Russians now being involved in it and having a part of it?

President Barack Obama: But that was true before. Keep in mind that for the last five years, the Russians have provided arms, provided financing, as have the Iranians, as has Hezbollah.

Steve Kroft: But they haven’t been bombing and they haven’t had troops on the ground–

President Barack Obama: And the fact that they had to do this is not an indication of strength, it’s an indication that their strategy did not work.

Steve Kroft: You don’t think–

President Barack Obama: You don’t think that Mr. Putin would’ve preferred having Mr. Assad be able to solve this problem without him having to send a bunch of pilots and money that they don’t have?

Steve Kroft: Did you know he was going to do all this when you met with him in New York?

President Barack Obama: Well, we had seen– we had pretty good intelligence. We watch–

Steve Kroft: So you knew he was planning to do it.

President Barack Obama: We knew that he was planning to provide the military assistance that Assad was needing because they were nervous about a potential imminent collapse of the regime.

Steve Kroft: You say he’s doing this out of weakness. There is a perception in the Middle East among our adversaries, certainly and even among some of our allies that the United States is in retreat, that we pulled our troops out of Iraq and ISIS has moved in and taken over much of that territory. The situation in Afghanistan is very precarious and the Taliban is on the march again. And ISIS controls a large part of Syria.

President Barack Obama: I think it’s fair to say, Steve, that if–

Steve Kroft: It’s– they– let me just finish the thought. They say your–

President Barack Obama: You’re–

Steve Kroft: —they say you’re projecting a weakness, not a strength–

President Barack Obama: –you’re saying “they,” but you’re not citing too many folks. But here–

Steve Kroft: No, I’ll cite– I’ll cite if you want me, too.

President Barack Obama: –here– yes. Here–

Steve Kroft: I’d say the Saudis. I’d say the Israelis. I’d say a lot of our friends in the Middle East. I’d say everybody in the Republican party. Well, you want me to keep going?

President Barack Obama: Yeah. The– the– if you are– if you’re citing the Republican party, I think it’s fair to say that there is nothing I’ve done right over the last seven and a half years. And I think that’s right. It– and– I also think what is true is that these are the same folks who were making an argument for us to go into Iraq and who, in some cases, still have difficulty acknowledging that it was a mistake. And Steve, I guarantee you that there are factions inside of the Middle East, and I guess factions inside the Republican party who think that we should send endless numbers of troops into the Middle East, that the only measure of strength is us sending back several hundred thousand troops, that we are going to impose a peace, police the region, and– that the fact that we might have more deaths of U.S. troops, thousands of troops killed, thousands of troops injured, spend another trillion dollars, they would have no problem with that. There are people who would like to see us do that. And unless we do that, they’ll suggest we’re in retreat.

Steve Kroft: They’ll say you’re throwing in the towel–

President Barack Obama: No. Steve, we have an enormous presence in the Middle East. We have bases and we have aircraft carriers. And our pilots are flying through those skies. And we are currently supporting Iraq as it tries to continue to build up its forces. But the problem that I think a lot of these critics never answered is what’s in the interest of the United States of America and at what point do we say that, “Here are the things we can do well to protect America. But here are the things that we also have to do in order to make sure that America leads and America is strong and stays number one.” And if in fact the only measure is for us to send another 100,000 or 200,000 troops into Syria or back into Iraq, or perhaps into Libya, or perhaps into Yemen, and our goal somehow is that we are now going to be, not just the police, but the governors of this region. That would be a bad strategy Steve. And I think that if we make that mistake again, then shame on us.

* * *

And just like that the US foray in Syria is unofficially over.

The sad thing is that for all the fake posturing by both Kroft and Obama, the US may still very well make this mistake and send 100,000 or 200,000 troops under the leadership of the Nobel Peace Prize winner, especially if our assessment of what the US withdrawal from the middle-east means for the upcoming dramatic shift in the regional balance of power.

* * *

The rest of the interview is primarily focused on domestic affairs, i.e., Trump, Hillary’s emails and Biden’s latest presidential run, which for the purpose of this post or the opinions coming from a lame duck president, are irrelevant.

At the end of the interview, Kroft asks Obama if he’s glad he can’t run for president again. Obama says he feels a mixture of satisfaction at what he’s accomplished and a desire to still do more.

Kroft then asks him: “Do you think if you ran again, could run again, and did run again, you would be elected?”

Yes,” says Obama, without missing a beat.

Judging by the “changing” IQ landscape in the US over the past eight years, the golfer-in-chief well be right.

Because just as the Obama was saying this, the following tweet hit the tape:

Somewhere Putin is laughing.

END
GLOBAL AFFAIRS
 Baltic Dry index lowest in 29 years.  Global trade is dead!!!

Baltic Dry ‘Bounce’ Is Dead – Freight Index Lowest In 29 Years For Time Of Year

Since the mid-July peak,when Jim Cramer warned the market’s “last shred of hope was the freight index holding up,” The Baltic Dry Index has been in free fall (at a time with very positive technicals). In fact, today’s drop to 809 is the lowest in over 3 months and the lowest for this time of year since 1986!!

 

Even as stocks have soared in the last 10 days, The Baltic Dry shows no signs of a pick up in freight traffic demand, instead quite the opposite.

 

Charts: Bloomberg

 

Emerging markets

 

Brazil again in trouble as its bank interest rate is now at a 20 yr high.
(courtesy zero hedge)

Brazil Bank Interest Rates At 20-Year High

 

Things in Brazil are getting worse by the day as the following brief summary of soaring interest rates courtesy of BNAmerics demonstrates.

Brazil Bank Interest Rates At 20-Year High

Brazil’s overdraft interest ratesreached 12.28% in October, the highest since September 1995 when the rate was 12.58%, according to research conducted by consumer protection group Procon.

Of the seven financial institutions included in the research, five increased their overdraft rates and one upped its rate for personal loans. The average overdraft rate of 12.28% per month was higher than that registered in September, 11.90%.

 

The bank that increased its rate the most was Caixa Econômica Federal, which changed its rate to 11.38% from 10.35% per month, a variation of 9.95% when compared to the September rate, Procon said.

Santander saw a positive variation of 4.21% from the previous month, Banco do Brasil had a variation of 3.69%,Itaú‘s variation was 2.58%, and Bradesco‘s was 2.41%. Other banks maintained their rates.

For personal loans, the average rate of banks surveyed was 6.27% per month, higher than the previous month, which was 6.26%. Bradesco raised its rate to 6.61% per month, an increase of 0.61% over September’s rate. Other banks maintained their rates.

* * *

That said, she doesn’t appear too concerned.

end

OIL RELATED STORIES
Goldman Sachs came out today and said that oil will remain lower for a longer period
(courtesy zero hedge)

Oil Stumbles Below $49 As Goldman Warns “Lower For Even Longer”

despite its dubious track record, oil prices are stumbling after Goldman Sachs releases a report calling for oil prices to remain lower for even longer, calling for a drop to $50 within the next 6 months.

 

Via Goldman Sachs,

Crude Oil: Lower for even longer

Fundamentals: Ex SPR US crude stocks built 3.6mb in Sep vs. a seasonal draw of 2 mb. Cushing on the other hand drew 3.9 mb vs. a seasonal draw of 2 mb though we are heading into peak refinery maintenance period. Fundamentals remain weak and we view the market to be strongly oversupplied. Sep crude, gasoline, distillate, jet, fuel oil and unfinished oil inventories have built 8.9 mb vs. a seasonal build of 1.5mb. The market now requires non-OPEC production to shift from growth to large declines in 2016. The uncertainty on how and where that adjustment will take place has increased significantly.

The potential access to capital in the US means that elevated financial stress needs to be maintained to eventually attain these adjustments. There is also the potential for prices to collapse to production costs if the oversupply breaches logistical and storage capacity. We estimate 2015 oil demand growth at 1.62 mb/d and we forecast 2016 global demand growth to be 1.28 mb/d which leaves the market 400 kb/d oversupplied.

Price Outlook: Prices have declined sharply over the past month to our previous $45/bbl forecast. Part of this was precipitated by macroeconomic concerns but in our view, it was also warranted by weak fundamentals. In line with our oversupplied outlook, we have changed our 3, 6 and 12-month WTI forecasts to $42/bbl, $40/bbl and $45/bbl.

Time spread Outlook: Time spreads should remain in contango as the market needs to incentivize storage since there is insufficient demand to absorb supply.

 

Charts: Bloomberg

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

Euro/USA 1.1368 up .0010

USA/JAPAN YEN 120.13 DOWN .100

GBP/USA 1.5350 up .0054

USA/CAN 129.566 up .0017

Early this Monday morning in Europe, the Euro rose by 10 basis points, trading now just above the 1.13 level rising to 1.1368; 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, Glencore, and the Ukraine,along with rising peripheral bond yields, and the continue ramping of the USA/yen cross above the 120 yen/dollar mark was successful today, causing most bourses to rises.  Last night the Chinese yuan rose in value.  The USA/CNY rate at closing last night:  6.3211 down .024  (yuan higher)

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 slight northbound trajectory  as settled slightly up again in Japan  by 10 basis points and trading now just above the all important  120 level to 120.13 yen to the dollar.(and thus the necessary ramp for all bourses worked in propelling bourses)

The pound was down this morning by 63 basis points as it now trades well above the 1.53 level at 1.5350.

The Canadian dollar is now trading down,  19 basis points to 1.2936 to the dollar. (Harper called an election for Oct 19)

 

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

1. the total dollar global short is 9 trillion USA and as such we are now witnessing a sea of red blood on the streets as derivatives blow up with the massive rise in the rise in the dollar against all paper currencies and especially  with the fall of the yuan carry trade. The emerging market which house close to 50% of the 9 trillion dollar short is feeling the massive pain as their debt is quite unmanageable.

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

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

These massive carry trades are terribly offside as they are being unwound. It is causing global deflation ( we are at debt saturation already) as the world reacts to lack of demand and a scarcity of debt collateral. Bourses around the globe are reacting in kind to these events as well as the potential for a GREXIT>

The NIKKEI: this Monday morning: closed 

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

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

Gold very early morning trading: $1164.50

silver:$15.97

Early Monday morning USA 10 year bond yield: 2.09% !!! down 1 in basis points from Friday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield falls to  2.92 down 1 in basis points.

USA dollar index early Monday morning: 94.79 down 7 cents from Friday’s close. (Resistance will be at a DXY of 100)

end
This ends the early morning numbers, Monday morning
 
And now for your closing numbers for Monday night: 2 pm 
Closing Portuguese 10 year bond yield: 2.44% up 4 in basis points from Friday
Japanese 10 year bond yield: .320% !! down slightly from Friday but still extremely low
Your closing Spanish 10 year government bond, Monday down 2 in basis points. 
Spanish 10 year bond yield: 1.81% !!!!!!
Your Monday closing Italian 10 year bond yield: 1.68% down 1  in basis points from Friday: trading 13 basis point lower than Spain.
IMPORTANT CURRENCY CLOSES FOR MONDAY
Closing currency crosses for MONDAY night/USA dollar index/USA 10 yr bond:  2:00 pm
 Euro/USA: 1.1356 down .0002 (Euro down 2 basis points)
USA/Japan: 120.03 down 0.195 (Yen up 20 basis points)
Great Britain/USA: 1.53430 up .0056 (Pound up 56 basis points
USA/Canada: 1.2999 up .0057 (Canadian dollar down 57 basis points)

USA/Chinese Yuan:  6.321  down .024  (Chinese yuan up)

This afternoon, the Euro fell by 2 basis points to trade at 1.1356. The Yen rose slightly to 120.03 for a gain of 20 basis points. The pound was up 56 basis points, trading at 1.53430. The Canadian dollar fell 57 basis points to 1.2999. The USA/Yuan closed at 6.321.
Your closing 10 yr USA bond yield: down 1 in basis points from Friday at 2.09%// ( trading below the resistance level of 2.27-2.32%).
USA 30 yr bond yield: 2.92 down 1 in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
The low yields means that the bond market is not buying the rallies on bourses.
 Your closing USA dollar index: 94.88 up 2 cents on the day .
 
European and Dow Jones stock index closes:
London:  down 44.98 points or 0.70%
German Dax:  up 23.03 points or 23%
Paris Cac down 12.69 points or 0.27%
Spain IBEX: down 63.20 points or 0.61 %
Italian MIB: down 166.62,points or 0.75%
The  Dow: up 47.25 or 0.28%
The Nasdaq:  up 8.18  or 0.17%
WTI Oil price;   46.82
Brent OIl:  49.72
USA dollar vs russian rouble dollar index:  62,12  down 1/10 rouble per dollar
This ends the stock indices, oil price, currency crosses and interest rate closes for today.
And now for USA stories:

First the NYSE performance today:

VIXtermination Lifts Stocks To Longest Winning Streak Of 2015 Despite Crude Carnage

Does anyone else feel like this market resembles the following…

Ain’t no stopping us now…

  • The Dow is up 7 days in a row now – its longest winning streak since mid-Dec 2014
  • Nasdaq up 8 of the last 9 days – breaking above its 50DMA
  • VIX down 10 days in a row (longest streak since Oct 2010)

Futures give us a sense of today’s Columbus Day trading (which was extremely quiet)..

 

Once Europe closed US equities traded in an extremely narrow range…

 

VIX was crushed again for the 10th day in a row (longest streak since oct 2010) and back below the key 200-day moving average…

 

With VIX pushing a 15 handle, it may be worth remembering Goldman’s baseline VIX levels of 18 would be justified given the current U.S. economic landscape.

Notably VIX entirely decoupled from stocks today…

 

VXX (The VIX ETF) is back at 9/17 lows, filling the gap again to Black Monday…

 

Trannies and crude decoupled…breaking that narrative…

 

Eli Lilly dropped 8% today – its biggest drop since Dec 2008…finding significant support at around $79

 

While the bond (and credit) markets are closed today, we thought a glance at Dell CDS (which soared on Friday) would be worthwhile (considering it is about to add $50bn more debt to its balance sheet!!!)…

 

For some context on relative bond market moves, Treasury futures infer the following (30Y -4bps, 10Y -3bps, 5Y -2bps)…One wonders iof last week’s bond dumpage was rate-locks ahead of EMC/Dell’s huge issuance

 

And while we are looking at the bond market, the up/downgrade ratio has not been this low (more downgrades than upgrades) since the peak of the crisis in 2009… (year-to-date S&P has upgraded 188 entities and downgraded 348)

As Dow Jones reports,

Rising downgrades and an increase in U.S. corporate defaults indicate ” some cracks on the surface” of the domestic-growth outlook, said Jody Lurie, corporate credit analyst at financial-services firm Janney Montgomery Scott LLC. Many investors closely monitor debt-market trends as an indicator of U.S. economic health.

 

In August and September, Moody’s Investors Service issued 108 credit-rating downgrades for U.S. nonfinancial companies, compared with just 40 upgrades. That’s the most downgrades in a two-month period since May and June 2009, the tail end of the last U.S. recession.

 

Standard & Poor’s Ratings Services downgraded U.S. companies 297 times in the first nine months of the year, the most downgrades since 2009, compared with just 172 upgrades. Meanwhile, the trailing 12-month default rate on lower-rated U.S. corporate bonds was 2.5% in September, up from 1.4% in July of last year, according to S&P.

 

About a third of the downgrades targeted oil and gas companies or firms in other commodity-linked industries, following a plunge in oil prices in the second half of 2014, said Diane Vazza, head of global fixed-income research at S&P

FX markets were dull with the USD ending flat against the majors (and an oddly linear drift lower in USDJPY)…

 

Commodities were generally quiet with gold rising and crude tumbling…

 

WTI Crude fell over 4.5% – its worst day since September 1st (after the epic Andy Hall ramp into August month-end)…

 

Notably both USO (oil ETF) and OVX (oil Volatility) appears to have reached critical levels…after decoupling at month-end on what looks like massive hedging…

 

Charts: Bloomberg

Bonus Chart: *FORTRESS SAID TO PLAN CLOSING DOWN MACRO HEDGE FUND?

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