Oct 21/Russia purchases another 34.2 tonnes of gold from the west as they now surpass Switzerland with 1307 tonnes of official reserves/gold and silver whacked/The chief central banker of the Bank of Italy under investigation for fraud and abuse of office/Caterpillar reports its 34th consecutive monthly decline in sales but this time it is in all regions as the company states that we are in a depression/

Good evening Ladies and Gentlemen:

Here are the following closes for gold and silver today:

Gold:  $1167.60 down $10.40   (comex closing time)

Silver $15.70 down 21 cents.

In the access market 5:15 pm

Gold $1167.00

Silver:  $15.70

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

At the gold comex today,  we had a very good delivery day, registering 13 notices for 1300 ounces  Silver saw 2 notices for 10,000 oz.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 208.52 tonnes for a loss of 94 tonnes over that period.

In silver, the open interest fell by a small amount of 43  contracts even though silver was up by 8 cents yesterday. I guess in silver nobody of importance wants to leave the arena.  The total silver OI now rests at 167,574 contracts In ounces, the OI is still represented by .838 billion oz or 120% of annual global silver production (ex Russia ex China).

In silver we had 2 notices served upon for 10,000 oz.

In gold, the total comex gold OI rose to 467,574 for a gain of 5,048 contracts.  We had 13 notices filed for 1300 oz today.

We had no change in tonnage  at the GLD / thus the inventory rests tonight at 697.32 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 a small change in silver inventory, a deposit of 381,000 oz at the SLV  / Inventory rests at 315.553 million oz.

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

1. Today, we had the open interest in silver fall by a small 43 contracts down to 167,574 despite the fact that silver was up by 8 cents with respect to yesterday’s trading.   The total OI for gold rose by a large 5,048 contracts to 467,792 contracts,as gold was up $4.70 yesterday.

No wonder we continue have raids on our precious metals as the OI for both silver and gold have been rising too fast for our criminal bankers.

(report Harvey)

2.Gold trading overnight, Goldcore

(/Mark OByrne)

3. ASIAN AFFAIRS
i) At 9:30 pm last night/9:30 am this morning, Shanghai opens and drops 3% overnight/Japan totally disappoints with trade numbers.
(zero hedge)
ii)
4.  EUROPEAN AFFAIRS
 i) Highly respected Italian central bank chairman under investigation for fraud and abuse of office
(zero hedge)
5. GLOBAL AFFAIRS
 i) Data from Caterpillar suggests were are in a severe depression as they report 34 consecutive retail sale declines.  This time in every single region.
(zero hedge/Catarpiller)
ii)  Artemis capital suggests that the upcoming next economic disaster will be a sovereign default setting off huge credit default payment busts!!
(Artemis capital)
iii) Citibank expects 3 nations plus Europe for more easing.  The countries are China, Japan, and Australia plus Europe.
 (zero hedge)
6. RUSSIAN AND MIDDLE EASTERN AFFAIRS
 i) Assad visits Moscow/Putin continues to bring a stranglehold on its strength in the middle east
(zero hedge)
ii) Newly elected Prime Minister of  Canada immediately withdraws jets from the Middle east fighting zone
much to the surprise of Obama
(zero hedge)
iii) Saudi Arabia is to be broke in 5 years according to the IMF
(zero hedge)
7.  OIL RELATED STORIES
     i) trannies fall and yet oil falls into the 44 dollar column
8.  EMERGING MARKETS
i) Brazil set to impeach President Rousseff

9 USA stories/Trading of equities NY

i) traders continue to dump treasuries as equity traders totally oblivious as to what is going on

(zero hedge)

ii) Biotech, a darling on Wall Street fires 11,000 workers and yet produces great results and the Dow keeps on rising…

(zero hedge)

iii) Valeant plummets along with biotechs as the street is worried about what the new administration will do

(zero hedge)

iv) Bill Ackman of Pershing square, the largest owner of Valeant is in trouble with his various holdings in major corporations

(zero hedge)

v) A warning to Wall Street:  Dennis Gartman just went long again

(zero hedge)

vi/Michael Snyder says “Goodbye to the middle class”

(Michael Snyder)

vii  Closing comments from Axel Merk and Greg Hunter

10.  Physical stories

i) India again to launch it’s phony paper gold monetization which will fail as all other attempts have failed

(Times of India/GATA)

ii) Gold seems to be strengthening according to John Embry

(John Embry/Kingworldnews)

iii)The prohibitive question:  why doesn’t journalists ask what on earth central banks are doing in the gold market?

(Chris Powell)

iv) did an Austrian banker state that central banks are using their gold reserves to manipulative the gold market?

(Chris Powell)

v) Bill Holter delivers a biggy tonight entitled:  “A saturated world”

vi) Russia accumulates another 34.2 tonnes of gold in September

(Lawrieongold)

 

Let us head over to the comex:

The total gold comex open interest rose from 462,744 up to 477,792  for a  of gain of 5048 contracts as gold was up $4.70 with respect to yesterday’s trading.   For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month, and today the latter stopped in its tracks and actually gold oz standing went up.  The new active delivery month we enter is October and here the OI fell by 107 contracts down to 663. We had 108 notices filed yesterday so we gained 1 gold contract or an additional 100 oz will stand for delivery in this delivery month of October.  The November contract went up by 1 contract up to 266. The big December contract saw it’s OI rise by 3,169 contracts from 317,127 up to 320,296. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 96,978 which is poor. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was weak at 131,603 contracts. The CME must be proud as they see their gold volume dissipate due the criminal manipulation of our ancient metal of kings.
Today we had 13 notices filed for 1300 oz.
And now for the wild silver comex results. Silver OI fell by a small 43 contracts from 167,617 down to 167,574 despite the fact that the price of silver was up by  8 cents yesterday.  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 2 contracts up to 20.  We had 0 contracts filed yesterday so we gained 2 silver contracts standing or an additional 10,000 oz will stand in this non active delivery month of October.  The November contract month saw it’s OI rise by 30 contracts back up to 44.
The big December contract saw its OI fall by 508 contracts down to 111,478. The estimated volume today as to number of contracts sold is 38,017 contracts (regular business hours, 8 20 am to 1:30 pm) is fair as the bankers through everything but the kitchen sink at silver trying to contain the price around $16.00.  The confirmed volume yesterday (regular plus access market) came in at 42,461 contracts which is good in volume.
We had 2 notices filed for 10,000 oz.

October contract month:

Initial standings

Oct 21/2015

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 13 contracts

1300 oz 

No of oz to be served (notices) 650 contract (65,000  oz)
Total monthly oz gold served (contracts) so far this month 364 contracts

 

36,400 oz

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 184,991.8  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

we had 1 adjustment:

i) out of Delaware:  776.64 oz was adjusted out of the customer and this landed into the dealer account at Delaware

 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 13 contracts of which 13 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
 
To calculate the final total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (364) x 100 oz  or 36,400 oz , to which we  add the difference between the open interest for the front month of Oct. (663 contracts) minus the number of notices served upon today (13) 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 (364) x 100 oz  or ounces + {OI for the front month (663)– the number of  notices served upon today (13 x 100 oz which equals 101,400 oz  standing  in this month of Oct (3.159 tonnes of gold).
We gained one contract or an additional 100 oz of gold will stand for delivery in this active delivery month of October.
We thus have 3.159 tonnes of gold standing and only 5.675 tonnes of registered gold (for sale gold/dealer gold) waiting to serve upon those standing.
Total dealer inventory 182,466.722 oz or 5.675 tonnes
Total gold inventory (dealer and customer) =6,704,069.599   or 208.52 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 208.52 tonnes for a loss of 94 tonnes over that period.
 
end
And now for silver

October silver Initial standings

Oct 21/2015:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 68,161/74 oz 

Brinks,CNT,Scotia

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil
nilNo of oz served (contracts) 2 contract  (10,000 oz)
No of oz to be served (notices) 18 contracts (90,000 oz)
Total monthly oz silver served (contracts) 66 contracts (330,000 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 9,288,181.7 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 0 customer deposits:

total customer deposits: nil oz

We had 2 customer withdrawals:
 i) out of CNT: 634,175.770 oz
ii) Scotia: 40,646.43 oz

total withdrawals from customer: 674,822.200.    oz

we had 1 adjustment
 i) out of Delaware:
4734.50 oz was adjusted out of the customer account and this landed into the dealer account of Delaware:
Total dealer inventory: 42.539 million oz
Total of all silver inventory (dealer and customer) 162.462 million oz
 *
The total number of notices filed today for the September contract month is represented by 2 contracts for 10,000 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 (66) x 5,000 oz  = 330,000 oz to which we add the difference between the open interest for the front month of September (20) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the Oct. contract month:
66 (notices served so far)x 5000 oz +(20) { OI for front month of September ) -number of notices served upon today (2} x 5000 oz ,=420,000 oz of silver standing for the Oct. contract month.
 we gained two contracts or an additional 10,000 oz will stand for delivery in this active month of October.
The bank run in silver resumes for both the dealer silver and customer 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 21./we had no change in gold inventory at the GLD./Inventory rests at 697.32 tonnes.
Oct 20./no change in gold inventory at the GLD/Inventory rests at 693.75 tonnes/
Oct 19.2015: A huge increase of 3.57 tonnes into the GLD/Inventory rests at 697.32 tonnes.  Highly unusual to have 3 consecutive deposits and withdrawals in a row!!
Oct 16./we had a huge withdrawal of 6.25 tonnes/inventory 693.75 tonnes
Oct 15.2015: a huge increase of 5.06 tonnes/inventory rests at 700.00
Oct 14/a huge increase  in gold tonnage of 7.74 tonnes/inventory 694.94 tonnes
oct 13/no changes in gold inventory at the GLD/rest at  687.20 tonnes
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
Oct 21/2015 GLD :697.32 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. I sure looks like there is stress inside the GLD!!
end

And now SLV

Oct 21:a we had a small addition in silver ETF inventory of 381,000 oz/inventory rests tonight at 315.533 million oz

Oct 20.2015/ no change in silver ETF/Inventory rests at 315.152 million oz

Oct 19.2016: no change in silver ETF/Inventory rests at 315.152 million oz

Oct 16/no change in silver ETF/inventory rests tonight at 315.152 million oz

Oct 15./no change in silver ETF inventory/rests tonight at 315.152

Oct 14/no change in silver ETF/silver inventory/rests tonight at 315.152 million oz

oct 13/no change in silver ETF /silver inventory/rests tonight at 315.152 million oz

:oct 12/ 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

oct 21/2015:  tonight inventory rests at 315.533 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 9.6 percent to NAV usa funds and Negative 9.4% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 61.9%
Percentage of fund in silver:37.9%
cash .2%( Oct 21/2015).
2. Sprott silver fund (PSLV): Premium to NAV rises to-0.06%!!!! NAV (Oct 21/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .60% to NAV Oct 21/2015)
Note: Sprott silver trust back  into negative territory at -0.06% Sprott physical gold trust is back into negative territory at -.60%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 atcontactus@kingsdaleshareholder.com.

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

Insane “Trillion Dollar Platinum Bullion Coin” Option Ruled Out By U.S. Treasury To Avert New Debt Crisis

The silly and somewhat insane uber Keynesian “Trillion Dollar Platinum Coin” appears to be now firmly off the table.

The US Congress has once again ruled out the possibility of issuing a “trillion dollar platinum coin” floated as a possible solution to the looming US Debt Crisis.

GoldCore: Trillion dollar platinum coin
Pressure is mounting as Treasury Secretary Jack Lew said earlier this week that Congress would need to raise the nation’s borrowing cap by November 3 to avoid a potential default.

“If Congress fails to raise the nation’s debt ceiling by that date, the US could risk a first-ever default on its obligations”.

Brett LoGiurato, writing in UK Business Insider, points out that as a resolution to the US  debt ceiling is still unclear, “speculation has popped up once again about two popular theorized “work-arounds” — the 14th Amendment and the “trillion-dollar platinum coin.”

Read more in “Treasury again rules out the ‘trillion-dollar coin’ option to avert the debt ceiling



DAILY PRICES
Today’s Gold Prices:   USD 1174.40 , EUR 1035.08 and GBP 759.88 per ounce.
Yesterday’s Gold Prices:  USD 1173.70 , EUR 1032.87 and GBP 747.86 per ounce.
(LBMA AM)

GoldCore: Gold in GBP - 1 month

Gold in GBP – 1 Month

Gold fell yesterday by $6.30 closing at $1146.60 but was up by 0.61% overall for the week.  Silver lost $0.05 to close at €15.08, down 0.46% for the week.  Euro gold fell to about €1023, platinum lost $7 to $945.

 

GoldCore: 7 Key Storage Must Haves

Download 7 Key Storage Must Haves

end

Good luck to India/this has no chance of happening!!

(courtesy Times of India/GATA)

India will launch gold monetization and bond schemes and gold coin on Nov. 5

Section:

From the Press Trust of India
via The Times of India, Mumbai
Tuesday, August 20, 2015

NEW DELHI, India — Prime Minister Narendra Modi will launch the first Indian gold coin bearing Ashok Chakra and other schemes on November 5.

Besides launching Ashok Chakra-bearing coins of 5 and 10 grams, Modi will launch gold monetization and sovereign gold bond schemes with a view to mobilizing a part of the 20,000 tonnes of idle gold lying with households and temples, sources said.

The government will launch gold monetization, the gold bond scheme, and the Indian gold coin scheme on November 5 to cash in on Diwali fervour. The schemes will be launched by the prime minister, sources said.

Security Printing and Minting Corp. of India Ltd will be minting these coins, the sources said, and 20,000 coins of 5 grams and 30,000 coins of 10 grams would be made available, the sources said. …

… For the remainder of the report:

http://economictimes.indiatimes.com/news/politics-and-nation/pm-narendra.

end

(courtesy John Embry/Kingworldnews)

Gold seems firmer, silver worries suppressors more, Embry tells KWN

Section:

1:30p ET Tuesday, October 20, 2015

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry tells King World News today that the gold market has a much firmer tone lately, with price smashes failing to accomplish much for long, and with the price suppressors seeming to be more worried about silver. An excerpt from the interview is posted at the KWN blog here:

http://kingworldnews.com/gold-silver-trans-pacific-partnership-and-the-m…

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

 

end

 

There is no way journalists are going to ask the correct question as to what central banks are doing in the gold market

(courtesy Chris Powell/GATA)

Prohibited question: What are central banks doing in the gold market?

Section:

2:09p ET Tuesday, October 20, 2015

Dear Friend of GATA and Gold:

Attending the London Bullion Market Association conference in Vienna, Austria, Daniela Cambone of Kitco News gets six minutes to interview one of the two executive directors of Austria’s central bank, Peter Mooslechner. Central bankers seldom make themselves available for questioning, so interviews with them are great journalistic opportunities. But Cambone declines to ask Mooslechner about surreptitious gold trading and intervention in the gold market by central banks. Instead Cambone asks him to review information about the Austrian central bank’s partial repatriation of its gold reserves, information already known.

What are central banks doing in the gold market? It’s the most compelling question for gold investors and indeed for investors everywhere, but few journalists want to know. Indeed, it seems as if not posing the question is the prerequisite of getting an interview with a central banker.

The wasted six minutes can be passed again at Kitco’s Internet site here:

http://www.kitco.com/news/video/show/LBMA-2015/1092/2015-10-20/Austrian-…

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

end

 

Are central banks using their gold reserves for market intervention?

(courtesy GATA)

 

Did Austrian central banker just acknowledge gold market intervention?

Section:

11:43p ET Tuesday, October 20, 2015

Dear Friend of GATA and Gold:

Did Peter Mooslechner, an executive director of Austria’s central bank, interviewed this week by Daniela Cambone of Kitco News on the sidelines of the London Bullion Market Association conference in Vienna, say that Asian central banks are using their gold reserves for market intervention?

That’s what Mooslechner seems to have said, even as Cambone had not asked particularly about gold market intervention and did not pick up on his comment.

At the 1:16 mark in the interview —

http://www.kitco.com/news/video/show/LBMA-2015/1092/2015-10-20/Austrian-…

— Cambone asks Mooslechner what role he thinks central bank gold reserves should be playing.

Mooslechner replies: “I think for small countries it’s more or less this buffer role in the end. It’s quite different, I think, for central banks in Asia, for example, where they are increasing their reserves a lot and they are much more active in using also their reserves in trading in the market and intervening into the market.”

end

Russia accumulates another huge 34.2 tonnes last month.  These guys know exactly where the gold is coming from  (mostly FRBNY and LBMA)

GOLD/SILVER

Russian central bank accumulates another 34.2 tonnes of gold

October 21, 2015lawrieongold

Russia continues to amass more gold in its reserves with the purchase of another 34.2 tonnes in September, bringing its total to around 1,353 tonnes – or around 13% of its total foreign exchange reserve figure. This is Russia’s second highest monthly total purchase in six years and represents yet another indicator of its continuing desire to downplay the significance of the U.S. dollar holding in its overall forex reserve make-up.

This is the seventh successive month that Russia has increased its gold reserve – it didn’t add to reserves in January or February. It thus remains the world’s sixth largest national holder of gold, moving further ahead of Switzerland in seventh place which is sitting on 1,040 tonnes and closing the official gap with China which also reported increasing its gold reserve in September by 15 tonnes to 1,708 tonnes, although this only represents well under 2% of its massive forex reserves of around $3.5 trillion. Many reckon though that gold held in Chinese government accounts amounts to a far higher total than officially reported being amassed in accounts which it does not classify as part of its forex holdings and thus does not report to the IMF.

Top 10 World national holders of gold in forex reserves
Country Gold holdings
(in tonnes)*
Gold’s share of
forex reserves
1 USA 8,133.5 72.6%
2 Germany 3,381.0 66.8%
3 Italy 2,451.8 64.9%
4 France 2,435.4 65.2%
5 China 1,677.4 1.6%
6 Russia 1,288.2 12.7%
7 Switzerland 1,040.0 6.1%
8 Japan 765.2 2.2%
9 Netherlands 612.5 56.3%
10 India 557.7 5.5%

Sources: IMF, Wikipedia, Sharelynx, LawrieOnGold

However transparency in the reporting of global gold holdings can be obscure – even for those like China and Russia which are reporting month by month official changes. Most of the gold holders in the table above as the central banks of the countries concerned do not allow audits of their gold holdings and many have reported zero change for a number of years. In particular, as Wikipedia points out, gold leasing by central banks could place into doubt their reported gold holdings.

http://lawrieongold.com/2015/10/21/russian-central-bank-accumulates-another-34-2-tonnes-of-gold/

-END-

 

(courtesy Bill Holter/Holter-Sinclair collaboration)

 

 

A “Saturated World”

 

For many years I have written about “debt saturation” being the ultimate problem and the end game to the current system.  Back in 2007 I wrote how we were facing a solvency problem rather than a liquidity problem.  When the Treasury and Fed treated the 2008 debacle with more liquidity, I was adamant they were treating the wrong disease with the wrong cure.  Fast forward to present day, we should soon see what the “disease” actually was, how incurable it now is and how devastating to our way of life it will be. 
  The following charts do not in any way say “this is it”, meaning the saturation level is here and now.  They do however show you what the problem is and how we have gotten to this point in time.
  What does tell you the problem is here and now are your own eyes.  If you are willing to look, you will see various European nations without the ability to issue more debt while Japan’s debt to GDP ratio has long ago passed the banana republic threshold.  Look around the United States and you will see various cities and states where revenue can no longer support even debt service, never mind pay down any principal.  If you look at the federal government debt, you will see foreigners are now sellers.  The big buyer is the Fed itself.  This is THE definition of monetization.  There is no other alternative.
  The problem with “debt saturation” is this, all fiat systems (Ponzi schemes) must have new investors in order to “grow”.  This is what is meant when you hear the word “reflate”.  The reflation process is always funded by new waves of borrowing.  For years we would see various economic sectors passing the baton of reflation until there were few left with the ability to borrow more.  Then we saw the real estate markets get to a point where more debt could not be added.  Finally, various sovereign governments and their central banks picked up the baton in a final reflation.  We have particularly seen this since 2008 with the various fiscal spending plans and quantitative easings.  
  One other area to mention is oil.  Oil price and usage has been very important to the U.S. Federal Reserve Note.  Since all oil has been priced and settled in dollars, this was “abnormal” demand but still huge “petro dollar” demand nonetheless!  We now have two things happening in the oil market, slightly lower usage because of weak economic activity and MUCH lower prices.  This will act to lower demand and velocity for the dollar.
None of the above should be anything new for readers.  If you think past where we are now then you understand Richard Russell’s term “inflate or die” is where we are headed.  The ability to reflate is now gone nearly all over the planet!  Everything has already been levered, re levered and levered again to the point where no un hypothecated collateral is left …and even with zero percent interest rates debt service is becoming overwhelming.  So what is left?
  What comes last as a final solution is a REFLATION of central bank balance sheet values.  Ask yourself this, how “rich” or how much wealth would central banks have if they valued their gold at $10,000 per ounce or higher?  Or MUCH HIGHER!?  The rest of the world can already see the Western financial system is at the end of their ropes.  Bretton Woods which started out as a gold standard and morphed into a con game has failed.  Should the world go back to gold (at vastly higher prices), central banks and treasuries who do actually hold gold will be able to avoid “bankruptcy”.  Some, with enough gold will even be able to reflate!
I guess the best way to finish this piece is by asking a few questions that drive home the answer.  If as central banks have recently said is true, “central banks can no longer save the world”, then who or what will?  If the central banks are actually in trouble (they are), who will save the central banks?  I submit to you, the central banks really and only have one way out with a caveat.  This one way out is to reflate the only thing you have left that has not been inflated, the GOLD!  By revaluing gold to levels far above where individuals can buy it, the banks will elevate themselves above their peon citizens grasp.  They “fill” the black holes in their balance sheets AND allow themselves a way to continue the game of reflation!
I did mention there was one caveat.  This is all dependent on whether or not the treasury or central bank ACTUALLY HAS GOLD to reflate!  This I believe is going to create huge problems in the West as gold has been flowing from West to East.  It seems to me, the East is beginning to do as they please and make their own rules in spite of U.S. wishes.  Is this because “they have the gold?”
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome bholter@hotmail.com
end
And now your overnight WEDNESDAY morning trading in bourses, currencies, and interest rates from Europe and Asia:

1 Chinese yuan vs USA dollar/yuan travels lower, this  time at  6.3487 Shanghai bourse: badly in the red, hang sang:red 

2 Nikkei closed up 347.13 or 1.91%.

3. Europe stocks all in the green   /USA dollar index down to 94.85/Euro up to 1.1354

3b Japan 10 year bond yield: falls slightly to .323% !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 120.02

3c Nikkei now just above 18,000

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

3e WTI: 45.69  and Brent:   48.43

3f Gold up  /Yen down

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund rises to  .628 per cent. German bunds in negative yields from 5 years out

 Greece  sees its 2 year rate rises  to 8.67%/:  still expect continual bank runs on Greek banks 

3j Greek 10 year bond yield falls to  : 7.68%  

3k Gold at $1177.50 /silver $15.84 (8 am est)

3l USA vs Russian rouble; (Russian rouble down 78/100 in  roubles/dollar) 62.90

3m oil into the 45dollar handle for WTI and 48 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 .9515 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0873 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 5 year German bund now  in negative territory with the 10 year rising to  +.628%/German 5 year rate negative%!!!

3s The ELA lowers to  82.4 billion euros,

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 2.05% early this morning. Thirty year rate below 3% at 2.90% / yield curve flatten/foreshadowing recession.

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

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

It’s Back To The Future As Stocks, Futures Jump On The Latest Abysmal Economic News; China Tremors Return

26 years ago, today was envisioned as day when cars flew, holographic movies were box office hits, hoverboards roamed, and people were fired by fax.

None of the happened – except maybe the fax thing when people still used those some 20 years ago. Instead the only “back to the future” moment this morning is a deja vu one we have seen every day for the past 7 years: bad economic news, in this case another month of Abenomics failing as Japanese exports missed badly, rising 0.6% or the slowest pace since August 2014 as Japan’s export-driven “recovery” fizzles, while imports tumbled from -3.1% to -11.1%, resulting not in the expected JPY87BN trade surplus but a JPY114.5BN trade deficit, pushing stocks higher.

Japan’s terrible trade data was promptly seen as grounds for more BOJ easing, lifting USDJPY above the critical 120 level, sending the Nikkei soaring 1.9%, and pushing US equity futures 11 points higher as of the moment. As Takashi Aoki, a fund manager at Mizuho Asset Management, summarized it “We’re starting to see hard evidence for our fears about the global economy being weak. Whenever we get negative economic news, hopes for additional monetary easing moves the market.”

Which also explains why stocks are surging for yet another day.

One place that did not soar on bad news was China, where despite initially seeing strength as a result of even more bad news after we learned that profits at state-owned companies in the Jan.-Sept. period fell 8.2% to 1.74 trillion Yuan, the SHCOMP proceeded to tumble, closing down -3.1%, while the tech heavy Chinext tumbled over %. Amid no fundamental catalyst and following weeks of stability in Chinese equities, volatility rose again, while alongside weakness in equities, the CNH vs CNY spread widened, suggesting an increase in capital outflows. “Market confidence is on shaky ground and investors rushed to sell on any slight hint of profit-taking,” Central China Securities strategist Zhang Gang says by phone. Not helping was Sinolink Securities which said Chinese stocks are overvalued, especially the Chinext.

What surprised us is that Chinese stocks were not limit up after the previously discussed state-owned Sinosteel officially missed an interest payment, raising questions about the government’s commitment to stand behind such firms. Surely more defaults is the bullishest thing possible for stocks.

Elsewhere, markets in Hong Kong were closed due to the Chung Yeung festival, while JGBs traded relatively flat amid subdued trade with the BoJ also in the market for JPY 780b1n worth of bonds. ASX 200 (-0.5%) was weighed by financials as large banks extended on yesterday’s declines.

Positioning ahead of the upcoming risk events, together with another round of less than impressive earnings, meant that European stocks spent the first half of the session in the red although pared the losses heading into the North American crossover to trade in positive territory (Euro Stoxx: +0.4%). At the same time, Bunds recovered from a lower open and moved into positive territory, while Portuguese bonds underperformed its EU peers amid reports that the country may face action from the EU as a result of not providing a draft budget.

In terms of notable movers, financials underperformed on the sector breakdown after Credit Suisse (-2.85%) announced that it is to raise USD 6.3bIn of fresh capital. Elsewhere, Pearson (-16.5%) shares fell over 10% after warning that 2015 earnings may be at lower end of range.

In FX, antipodean currencies saw weakness overnight, with AUD softening on the aforementioned volatility in Chinese stocks. While NZD continued to weaken on the back of yesterday’s weak GDT auction in which milk prices declined for the first time in 5 auctions, with today seeing Fitch downgrading Fonterra to A  from ‘AA-.

Ahead of the NA crossover, EUR/CHF and USD/CHF saw a bout of strength to move to fresh highs in quiet conditions with no fundamental news being attributed to this latest uptick at present, however unusual moves in CHF quite often spur speculation of intervention by the SNB. Going forward, market participants will get to digest the BoC rate decision as well as comments from BoC’s Poloz, BoE’s Carney and Fed’s Powell.

In addition to China, the only other sector suffering unexpected weakness “despite” the bevy of bad news was the commodity complex, where WTI and Brent crude futures traded lower in Europe, in part in reaction to another build in US API inventories but also reports that Russian President Putin has held talks with Syrian President Assad in an attempt to find a political solution to the ongoing conflict in Syria. Elsewhere, the metal complex was relatively subdued amid light newsflow. At last check, copper was down 0.42% after sliding as much as 1% earlier in the session.

Aside from MBA mortgage applications there is little on today’s calendar, but it’s a bumper day for corporate earnings in the US with 31 S&P 500 companies due to report, the highlights being Coca-Cola, eBay, American Express, Boeing, Abbot Laboratories, EMC, GM, Biogen, Texas Instruments, Kimberly Clark, Southern Copper, Illinois Tool Works, Baker Hughes, St. Jude Medical, SanDisk and Yelp.

Notable overnight events:

  • Credit Suisse to Raise Capital Amid Shift to Wealth Business: Will raise ~CHF6.05b of capital as part of reorganization; 3Q net CHF779m vs est. CHF858m
    • Credit Suisse Said to Name HSBC, SocGen, Citigroup for Offering: Said to name banks to help co. handle its rights offer
  • Ferrari Raises $893 Million Pricing IPO Shares at Top of Range: Fiat Chrysler priced 17.18m shares at $52 each after offering them for $48-$52 apiece
  • Ryan’s Demands for U.S. House Speaker Race Meet Early Resistance: Approach risks a backlash from conservative members of the House Freedom Caucus by seeking change to the procedure they threatened to employ to remove Boehner as speaker
    • House Republicans to Consider Debt Ceiling Options in Meeting: Closed-door members’ meeting to take place Wednesday to discuss proposals of Republican Study Committee
  • Syngenta CEO Mack Quits Amid Criticism Over Monsanto Snub: Chief Financial Officer John Ramsay to be interim CEO
  • Greece’s Bailout Costs Could Rise Over Life of Loans, ESM Says: So far Greece has been charged ~1% on funds released from EU86b bailout won in August; those costs aren’t locked in for the life of the loan, according to ESM CFO
  • Lam to Buy KLA-Tencor in $10.6b Chip Machinery Deal: Will acquire all outstanding KLA-Tencor shares in cash, stock deal for $67.02/shr, or $10.6b equity value based on Oct. 20 close
  • Syria’s Assad Met Putin in Moscow for Talks on Tuesday: First known foreign visit since Syria’s civil war erupted in 2011
  • Yahoo’s Mayer Still Chasing Growth in Fourth Year of Turnaround: 3Q adj. EPS and 4Q rev. ex-TAC, adj. Ebitda views miss ests.
    • Yahoo Says Spinoff of Alibaba Stake May Close in January: Confident that co. has “strong” legal opinion on tax-free spinoff plan
  • Brazil Impeachment Papers About to Drop as Crisis Hits New Stage: Group of high-profile lawyers plans to file a request Wednesday to begin impeachment process against President Dilma Rousseff
  • Puerto Rico Said Struggling to Reach Deal With Hedge Funds: Development bank, creditor group said to be deadlocked
  • Toyota Recalls 6.5m Vehicles for Melting Window Switch: Inconsistent greasing may cause switch to short circuit
  • Saudis Risk Draining Financial Assets in Five Years, IMF Says: May run out of assets amid drop in oil prices if the govt maintains current policies, according to the IMF
  • Uber CFO Says Public Offering ‘Years Away’ as Company Matures: Board member Bill Gurley’s Benchmark fund and investors including Google Ventures, Baidu Inc. and TPG have poured billions into the co., pumping its valuation up to >$50b
  • Other Post-Mkt News
    • Imax Reports Over $6.5m in Domestic ‘Star Wars’ Presales
    • Railcar Orders’ Biggest Drop Since 1980s Hints at U.S. Slump
    • Chipotle 3Q Adj. EPS Misses; Sees ’16 Comps. Up Low Single
    • IRobot Cuts Yr Sales Forecast, Boosts Yr EPS View; Shrs Fall
    • VMware 3Q EPS, Rev. Match Prelim; Forming Cloud JV With EMC

Market Wrap

  • S&P 500 futures up 0.3% to 2028
  • Stoxx 600 down less than 0.1% to 362
  • MSCI Asia Pacific up 0.6% to 135
  • Nikkei 225 up 1.9% to 18554
  • Shanghai Composite down 3.1% to 3321
  • S&P/ASX 200 up 0.2% to 5248
  • US 10-yr yield down 2bps to 2.04%
  • Dollar Index down 0.05% to 94.87
  • WTI Crude futures down 1.2% to $45.75
  • Brent Futures down 0.3% to $48.56
  • Gold spot down less than 0.1% to $1,175
  • Silver spot down 0.7% to $15.81

Bulletin Headline summary from Bloomberg and RanSquawk

  • FX markets saw Antipodean currencies underperform amid volatility in Chinese stocks and Fitch downgrading Fonterra to ‘A’ from ‘AA-‘
  • European equities trade in modest positive territory, paring earlier losses after touted positioning ahead of the upcoming risk events, together with another round of less than impressive earnings
  • Today’s highlights include the latest DoE crude inventories update, BoC rate decision and earnings by heavyweights Coca-Cola, eBay, American Express and Boeing
  • Treasuries gain within recent ranges amid losses in oil and industrial metals, volatility declines toward year lows amid expectations Fed on hold for rest of year.
  • Japan’s exports grew at the slowest pace in more than a year in September, with a drop in shipments to Asia all but overwhelming gains in sales to Europe and the U.S.
  • The ECB risks running into political and technical limits on just what bonds it can purchase, which means investors are already starting to question just how much more the euro area’s policy makers can do to revive inflation
  • ECB President Jean-Claude Juncker called for emergency talks and Slovenia gave its army a green light to help control a surge in migrants as Europe’s refugee crisis deepened before the onset of winter
  • Saudi Arabia may run out of financial assets needed to support spending within five years if the government maintains current policies, the IMF said, underscoring the need of measures to shore up public finances amid the drop in oil prices
  • China bond defaults are forecast to climb after a state- owned steelmaker missed an interest payment, raising questions about the government’s commitment to stand behind such firms
  • A group of high-profile lawyers plans to file a request Wednesday to begin impeachment proceedings against President Dilma Rousseff after months of will-she or won’t-she-be- impeached speculation that has deepened an economic slump
  • Syria’s Assad held talks in Moscow with Putin on Tuesday in his first known foreign visit since the civil war erupted in 2011, underscoring the growing Russian role in the four-year conflict
  • While the ESM has so far charged Greece about 1% on the funds released from the $98b bailout Tsipras won in August, those costs aren’t locked in for the life of the loan, ESM CFO Christophe Frankel said in an interview
  • A group of European high yield bond buyers is planning to ask issuers’ lawyers to summarize and explain key covenants in the first few pages of sale documents, according to two people familiar with the information
  • $2b IG priced yesterday, $360m HY. BofAML Corporate Master Index OAS narrows 1bp to +171, YTD range 180/129. High Yield Master II OAS narrows 12bp to +606, YTD range 683/438
  • Sovereign 10Y bond yields lower. Asian stocks mixed, European stocks mostly higher, U.S. equity-index futures rise. Crude oil and copper lower, gold little changed

 

DB’s Jim Reid completes the overnight recap

So this is the day we’ve been waiting for 26 years. October 21st 2015 was the day that Marty and Doc went forward to in Back to the Future II. They had flying cars, garbage powered vehicles, taxis paid for using a thumb print, hoverboards, talking jackets, self lacing boots, voice controlled TVs and the one that would be most useful to my life at the moment – a dog walking drone!! I think Bronte would lead the drone astray to be honest. Some of these have been mighty prescient although Marty did use a phone box which in the world of smart phones seems like a big miss. Holograms jumping out of advertising billboards is also a welcome thing they got wrong. Having said that I quite like the idea of me narrating this to you via a hologram beamed out of your tablet/phone/computer screen. Don’t choke on your coffee thinking about it.

Back to the present and markets are having a quiet week. The DOW (-0.08%) had its second successive day of moving less than 0.1% – something that has occurred twice previously this year (12th/13th August and 25th/26th February). Meanwhile the S&P 500 fell -0.14% and the NASDAQ dropped a steeper -0.50% as biotech shares in particular weighed on much of the broader index.

Earnings yesterday were largely to blame for what was a fairly directionless session across the pond. Of the 20 S&P 500 companies to have reported yesterday, 15 (75%) beat EPS estimates, but just 9 (45%) beat top-line estimates which is a strong reflection of the trend so far. With the count now at 86, 74% have reported an earnings beat and just 44% a beat at the top line. IBM’s disappointing after-market report on Monday saw the company’s share price drop nearly 6% in yesterday’s session, while Harley Davidson fell 14% and the most in nearly seven years after reporting a miss at both the profit and revenue level and downgrading its full year outlook for shipments in the process. Meanwhile Yahoo, reporting after the bell, recorded its biggest drop in quarterly sales since 2009 which sent the shares down over 5% in extended trading. These generally overshadowed some of the more positive earnings reports yesterday which were headlined in particular by Verizon and United Technologies.

Over in Asia this morning much of the focus has been on Japan’s September trade data where some soft export numbers in particular has put the focus back on more potential BoJ stimulus action. Exports rose just +0.6% yoy last month (vs. +3.8% expected), well below expectations and down from +3.1% in August for the slowest pace of growth in more than a year. Meanwhile imports fell just less than expected (-11.1% yoy vs. -12.0% expected), shrinking the trade deficit to ¥115bn. The BoJ next meets on October 30th.

In terms of market reaction, the Nikkei and Topix are up +1.10% and +1.17% respectively, holding steady after the initial steep climb higher. Japan aside it’s been a fairly dull session again in Asia this morning. The Shanghai Comp is +0.39%, while the Shenzhen (-0.39%) has slid. The Kospi (+0.35%) is a tad firmer but the ASX (+0.08%) is more or less unchanged. In the currency space the Yen (-0.08%) is a touch weaker. JGB’s are half a basis point wider while Japanese credit markets are a basis point tighter.

Back to yesterday. The latest ECB bank lending survey attracted plenty of attention with the results signalling positives effects from QE and perhaps raising the hurdle to any hopes that we might see some near-term action. While credit terms for households was said to have tightened and demand for housing loans weaker, the more positive news was on the business side with stronger loan demand as well as looser credit standards, while expectations were for further strong demand going forward, a signal that the ECB’s QE is having the desired effect.

With those outcomes possibly reducing the probability of ECB action tomorrow (we’ve always thought December was more likely), Eurozone sovereign bond yields crept higher yesterday. 10y Bunds eventually finished the session up 6.1bps at 0.624%, while the periphery nudged higher too with Italy, Spain and Portugal yields up 6.6bps, 4.9bps and 3.4bps respectively. European equities slid, the Stoxx 600 closing -0.43% and the Dax down -0.16%. Credit was little moved, Crossover finishing the session a basis point tighter. Speaking of credit markets, yesterday we also learned that VW is on the road with a new ABS deal, the first since the emissions scandal and one which will be worth keeping a close eye with investor meetings due to commence this week.

Across the pond, dataflow in the US yesterday was centered on the latest housing numbers. Housing starts in September were up +6.5% mom (vs. +1.4% expected) to an annualized rate of 1.206m, just off the eight year high reached in June after a surge in multi-family housing. Highlighting the volatility in the data however, building permits actually declined -5.0% mom (vs. +0.8% expected) to an annualized rate of 1.103m, the lowest since March.

Away from this, there wasn’t much to take away from yesterday’s Fedspeak. Speaking on liquidity in the Treasury market, Governor Powell noted that market participants need to have full faith in the structure and functioning of Treasury markets and that the Fed needs to consider the risk that liquidity may be more prone to disappearing at times when it is most needed, referring to the flash rally/crash in the Treasury market on October 15th last year.

Elsewhere, over at the BoE, committee member McCafferty reiterated his view that the BoE should raise rates in the near term, warning that the Bank needs to avoid getting behind the curve. McCafferty also suggested that, while the voting suggests some split on the MPC, in his opinion there isn’t much of a difference in views, saying that these are more of a ‘degree rather than of kind’.
Looking at today’s calendar, it’s another very quiet day for economic data with nothing of note out in the US session and just UK public sector net borrowing data due in the European session this morning. Away from that, the BoE is due to publish a paper on the bank stress test process while BoE Governor Carney is due to speak this evening. Fedspeak wise we’re due to hear from Powell again on liquidity in the Treasury market. Meanwhile it’s a bumper day for corporate earnings in the US with 31 S&P 500 companies due to report, the highlights being General Motors, Coca-Cola and Boeing pre-market and eBay which is due to report post the closing bell.
Oh and watch out for time travellers as you go about your day.

end

ASIAN AFFAIRS

Let us begin;  9;30 pm Tuesday night/9;30 Wednesday am Shanghai time)

Offshore-Onshore Yuan Spread At 1-Month Wides Hinting At Outflows As Japanese Stocks ‘Mysteriously’ Meltup At The Open

Since China GDP was unleashed, Offshore Yuan (CNH) has weakened significantly relative to Onshore Yuan (CNY). After over 3 weeks of ‘stability’ with CNY and CNH on top of each other, it appears selling pressure has reappeared suggesting outflows are on the rise (despite PBOC’s best efforts to hide/manage them) which may explain why Treasuries were so relatively weak today. The “will-never-learn” Chinese investors pile in once again extending the period of margin debt increases to the most since the peak of the bubble. AsiaPac stocks are mixed with China flat and Japan higher after a mysterious bidder lifted NKY 200 points instantly at the open. China strengthened the Yuan fix after 5 days of weakness.

Offshore Yuan relative weakness suggest capital outflows are gaining pace once again...

as PBOC strengthened the Yuan fix for the first time in 6 days…

which may explain why Treasuries sold off so much today (on a relatively quiet equity day).

Chinese investors continue to pile into stocks in a leveraged way…

  • *SHANGHAI MARGIN DEBT RISE HITS LONGEST STRETCH IN FOUR MONTHS

9th day in a row…

As Chinese stocks continue limp back towards pre-devaluation levels…

Japanese Stocks melted up to the 120 USDJPY tractor beam at the open…

*  *  *

Oh and with regard China’s bond bubble…

  • *PBOC GETS >CNH30B ORDERS FOR CNH5B DIM SUM BOND

Nope, no bubble there.

Charts: Bloomberg

end

 

EUROPEAN AFFAIRS

I guess this is par for the course
(courtesy zero hedge)

Italian Central Bank Chief (And ECB Council Member) Probed Over Corruption, Fraud, & Abuse Of Office

As the world places its ‘life’ in the hands of a few unelected members of ivory tower trusting them to centrally plan the global utopia, that faith may be shattered by Bank of Italy Governor Ignazio Visco. As Bloomberg reports, Visco and seven other people were place under investigation according to chief prosecutor. While the statement does not list allegations, court documents reveal allegedcorruption, fraud, and abuse of office.

As Bloomberg details,

Bank of Italy Governor Ignazio Visco is under investigation in a probe regarding the 2013 placement of Banca Popolare di Spoleto SpA in special administration, according to a court document obtained by Bloomberg News.

 

“The Bank of Italy is not aware of any initiative by judicial authorities,” the central bank said by e-mail earlier Tuesday, commenting on an article by newspaper Il Fatto Quotidiano which reported that Visco is among those being probed. A spokeswoman for Visco declined to comment further.

 

Prosecutors in the central Italian town of Spoleto are investigating Visco for alleged corruption, fraud and abuse of office, according to a Sept. 11 court document that lists several people under investigation. The bank’s former special administrators are also being probed, according to the document. Prosecutor Gennaro Iannarone said in an e-mailed response to questions that he’s not allowed to speak to the press on such matters.

 

 

Popolare Spoleto was put under special administration in February 2013 by the Finance Ministry following a request by the central bank. The lender was then sold to Banco di Desio e della Brianza SpA. Italy’s Council of State ruled last year that Popolare Spoleto should not have been put under special administration, prompting complaints by some of the lender’s shareholders.

 

The Bank of Italy cannot comment on recent developments regarding Popolare Spoleto, the central bank said in a second statement late on Tuesday. The central bank provided a summary of the main phases of the lender’s status leading up to special administration, without mentioning Visco.

 

“If he is under investigation, the Governor should suspend himself until his name is cleared the very same way any employee at the Bank of Italy is required to do in similar circumstances,” Luigi Leone, head of the central bank’s main labor union Confsal-Falbi, said in a telephone interview.

 

Visco met with the President of the Republic Sergio Mattarella earlier on Tuesday,the president’s office said in a statement, without providing any further details of the meeting.

*  *  *

We are assured this is merely transitory alleged corruption and in no way reflects on any other global central bank (or banker), such as The Fed (who itself is under investigation for not one but two leaks). The probe of Visco, 65, who is a member of the European Central Bank Governing Council, is getting dangerously close to Goldman’s man-in-charge Mario Draghi.

end

RUSSIAN AND MIDDLE EASTERN AFFAIRS
Russia continues to get a stranglehold on middle eastern affairs:
(courtesy zero hedge)

From Russia With Love: Assad Unexpectedly Visits Putin In Moscow

On Tuesday, we noted how absurd it is for Saudi foreign minister Adel al-Jubeir to suggest that it will be “difficult” for Iran to play a part in “resolving” Syria’s years-old civil war. Here’s how we put it yesterday:

It’s rather strange for the Saudis to make statements like “it will be difficult for Iran to play a role in finding a solution to the conflict.” We hate to be the bearers of bad news, but Iran is already playing a role in finding a “solution” – they’re summarily wiping out the groups funded by the Saudis on the way to restoring the regime. If anyone is going to have a “difficult” time playing a part, it’s the Saudis. 

That same logic applies to the US and any of Washington and Riyadh’s regional allies.

With each passing day, the opportunity for the West and the Sunni axis to have some say in Syria’s political future slips away. As we’ve said on a number of occasions, Russia isn’t going to risk the lives of her troops and spend who knows how many tens if not hundreds of millions of dollars only to have the West dictate the terms of any political “transition” which may or may not take place once the smoke has cleared.

Indeed, several Western powers and some of the regional backers of the Sunni extremist groups battling the regime have already admitted that Assad may have to remain in power during a “transitional” period.

Now that Iranian ground troops are poised to take Aleppo in what amounts to a final push to restore Assad’s grip over the country, The Kremlin is already looking at how to go about shaping the country’s political future as Assad traveled to Moscow in what the media says is his first foreign visit since the start of the civil war. At a meeting with Putin, the two leaders discussed the “political process” and reviewed the progress in the fight against “international terrorists.” Here’s Bloomberg with more:

Syrian President Bashar al-Assad held talks in Moscow with President Vladimir Putin on Tuesday in his first known foreign visit since the civil war erupted in 2011, underscoring the growing Russian role in the four-year conflict.

 

Almost a month into a Russian bombing campaign in support of Assad’s forces, Putin told the Syrian leader during the unannounced visit to the Kremlin that “there have been some major positive results in this fight” against the “international terrorists” battling government forces, according to a transcript released by Russia’s government.

 

Ending the crisis requires “a political process with the participation of all political forces, ethnic and religious groups,” Putin said in comments shown on Russian state television on Wednesday. Assad, thanking Russia for its assistance, said the fight against “terrorism” is the “obstacle against any true political steps that could be taken on the ground.”

 

Sami Nader, head of the Beirut-based Levant Institute for Strategic Affairs, said the trip to Moscow was Assad’s first foreign visit since the Syrian conflict began with an uprising against the regime in Damascus, and pointed to future Russian strategy ahead of any peace talks.

 

It’s “Russia’s way of saying he is in our pocket, he is our asset and we will decide whether to keep him,” Nader said. “This is for sure a preparation for a deal and one more attempt by the Russians to embolden their bargaining position.”

And so, just as we said from the beginning, Moscow’s move to muscle the West out of the way militarily has led directly to Russia hijacking the political negotiations as well.

In short: Washington and its regional allies will be allowed to participate in a discussion with The Kremlin, but that’s as far as it goes. Russia will decide Syria’s political future in consultation with Iran and given the strategic importance for Tehran of ensuring that there’s a “friendly” government operating in Damascus, you can bet that whatever the solution ends up being, Washington, Riyadh, Ankara, and Doha will most assuredly not like it.

To the victor go the spoils.

For now, we’ll close with one quote from Sergei Karaganov, dean of the Faculty of World Economy and International Affairs at Moscow’s Higher School of Economics, and one amusing picture which we’ll leave it to readers to caption (note the ear-to-ear grins).

“The message to the world is that Russia solves problems and you don’t. If you want to solve problems, work with us.” 

 


end

who would have guessed that this would be possible?

(courtesy zero hedge)

Saudi Arabia Will Be Broke In 5 Years, IMF Predicts

Of course you wouldn’t know it if you read the account of King Salman’s latest visit to Washington which included booking the entire DC Four Seasons and procuring a veritable fleet of Mercedes S-Class sedans.

You’d also be inclined to think that everything is fine if you simply looked at SAMA holdings (i.e. FX reserves) which still total nearly $700 billion.

The problem however, is the outlook.

Fighting wars costs money and so does bribing the citizenry to ensure you don’t get some kind of Arab Spring-type uprising. When you endeavor to artificially suppress the price of the export that is the source for your wealth and international prestige (all in an epic attempt to bankrupt the competition and secure geopolitical “ancillary benefits”) you don’t do yourself any favors from a financial perspective and now, the Saudis are staring down a massive budget deficit and a current account that’s in the red for the first time in ages.

So while things may look on the up and up from an FX reserve perspective (even as the cushion is at its lowest level since 2013) and while the kingdom has plenty of capacity to borrow with a debt-to-GDP ratio of just a little over 2%, things are about to get ugly very quickly going forward and if Riyadh decides to plunge headlong into Syria’s civil war, it will only get worse. Note that while debt levels are likely to stay low relative to a world where countries like Japan are borrowing so much that the number of decimal places won’t even fit into a title, going from basically 0% to ~16% of GDP in the space of just 24 months isn’t exactly a good sign:

The situation is in fact so dire that the Saudis have begundelaying payments to contractors in an effort to preserve cash.

On Wednesday, the IMF is out with a new report on the economic outlook for the Mid-East and the picture for the Saudis is not pretty. In short, Riyadh will burn through its cushion in less than 5 years under current conditions. Here’s more:

Sharply lower oil prices have significantly affected the fiscal prospects of oil exporters across MENA and the CCA.1 The Brent oil price is projected to average $53 a barrel in 2015, down from almost $110 a barrel in the first half of last year. Exporters’ fiscal balances have turned from sizable surpluses to large deficits, with MENA and CCA export revenues dropping by $360 billion and $45 billion, respectively, this year alone.

 

 

For oil exporters, the main policy issue is fiscal adjustment and rebuilding buffers over the medium term. The Brent oil price is projected to recover only modestly to about $66 a barrel by the end of the decade, with MENA and CCA export receipts remaining $345 billion and $30 billion, respectively, below the 2014 level, even in 2020. In the absence of adjustment, fiscal balances will remain in deep deficit in most countries, with public debt ratios rising rapidly (red lines in Figure 4.2). 

 

 

Even under the IMF baseline scenario, however, public debt ratios will continue to rise in many GCC and CCA exporters (blue lines in Figure 4.2). In a number of countries, mediumterm fiscal balances will fall well short of the levels needed to ensure that an adequate portion of the income from exhaustible oil and gas reserves is saved for future generations (Figure 4.3). Bahrain, Oman, and Saudi Arabia have medium-term fiscal gaps of some 15–25 percentage points of non-oil GDP, while conflict-torn Libya has a gap of more than 50 percent of non-oil GDP. 

 

The large and sustained drop in oil prices has increased fiscal vulnerabilities in MENA and CCA oil-exporting countries. The issue of fiscal space has become critical as oil exporters decide how quickly to adjust their fiscal policies to the new reality of persistently lower oil prices. This box considers several alternative measures of fiscal space. A good starting point is the size of governments’ financial assets—commonly referred to as “fiscal buffers.” In general, countries with larger buffers can afford to maintain fiscal deficits further into the future, so as to reduce the impact of lower oil prices on growth. On current trends, however, all non-GCC MENA oil exporters are already projected to run out of liquid financial assets in the next three years (see Chapter 1). In, contrast, CCA oil exporters have at least 15 years’ worth of available financial savings,1 while GCC countries are split evenly between countries with relatively large buffers (Kuwait, Qatar, and the United Arab Emirates—more than 20 years remaining) and countries with relatively smaller buffers (Bahrain, Oman, and Saudi Arabia—less than five years).

As a refresher, here’s BofAML’s sensitivity analysis which shows how long Riyadh’s SAMA reserves will last under various scenarios for crude prices and debt issuance:

One important takeaway from the above is that if the Saudis were to burn through their reserves it would represent a nearly $700 billion global liquidity drain as Riyadh dumps its USD-denominated assets. That would amount to a complete reversal of the petrodollar virtuous circle that’s underwritten decades of dollar dominance and which has served to underpin the global economic order for as far back as most market participants can remember.

And while it’s by no means a foregone conclusion that oil prices will remain “lower for longer” as the Saudis are to a certain extent the masters of their own destiny in that regard, one thing worth noting is that not only is Iranian supply set to come back online, but Tehran seems determined to supplant Riyadh as regional power broker. Both of those eventualities will have very real consequences for crude prices and thus for the future of The House of Saud.

Average
Newly elected Trudeau vacates promise as Canada withdraws fighter jets from Syria and Iraq
(courtesy zero hedge)

PM-Elect Of ‘US Ally’ Canada Wastes No Time: Tells Obama Will Withdraw Fighter Jets From Syria, Iraq

With the ink still damp on voter slips, newly crownedelected Canadian Prime Minister Justin Trudeau wasted no time in fulfilling the first of his liberal “hope” and “change” promises. As AFP reports, hours after defeating Stephen Harper, Trudeau has told US President Obama that he will withdraw Canadian fighter jets from Syria and Iraq, though giving no timeline. So far, the US response is a mutedly diplomatic but tinged with guilt, “We have stood shoulder to shoulder with Canadian armed forces… in Iraq and Afghanistan,” from the US State Department.

“About an hour ago I spoke with President Obama,” Trudeau told a press conference.

 

While Canada remains “a strong member of the coalition against ISIL,” Trudeau said he made clear to the US leader “the commitments I have made around ending the combat mission.”

 

Canada last year deployed CF-18 fighter jets to the region until March 2016, as well as about 70 special forces troops to train Kurds in northern Iraq.

 

During the campaign, Trudeau pledged to bring home the fighter jets and end its combat mission. But he vowed to keep military trainers in place.

 

His new Liberal government will be“moving forward with our campaign commitments in a responsible fashion,”Trudeau said.

 

“We want to ensure that the transition is done in an orderly fashion.”

Earlier on Tuesday, as Sputnink News reports, the US State Department addressed questions as to whether or not it was concerned that Canada’s new government may not support US foreign policy regarding IS presence in Afghanistan.

“These are all decisions the Canadian people have to make and Canadian legislators have to make… and their Prime Minister [has to make],”department spokesperson John Kirby told reporters.

 

“We have stood shoulder to shoulder with Canadian armed forces…in Iraq and Afghanistan,” he added.

*  *  *

While this move seems like a hope-y and change-y step forward, the lack of timeline leaves plenty of room for the neocons to knock on Trudeau’s door and shower gifts on an economy floundering on the verge of “Emerging Market” status (as HSBC analysts warned).

 

end

 

GLOBAL AFFAIRS

We are now in a global depression:  just take a look at Caterpillar who has just recorded 34 consecutive months of sales declines.

And today, we find that all regions recorded a drop

 

(courtesy Caterpillar/zero hedge)

end

The economy is so bad now as Citibank expects imminent easing from the central banks of:

i) China

ii) Australia

iii) Europe

iv)  Japan

a must read….

Citi Expects Imminent Easing From Central Banks Of China, Australia, Japan And Europe

In the past few months, Citi’s chief economist Willem “Gold is a 6000 year old bubble” Buiter, has been making increasingly more hyperbolic and grandose predictions about the future, which doesn’t make them wrong. First, in August, after the US stock market tanked in the matter of days, he predicted that “Only “Helicopter Money” Can Save The World Now” the reason for which being that just a few days later, Citi made a “global recession in 2016” its base case scenario.

Then today, Buiter released another forecast, where while backtracking somewhat on his global recession call, he does cut Citi’s global economic growth forecast for 2016 for the fifth consecutive month, now expecting just 2.8% growth, down from 2.9% a month ago.  Buiters said that “if we adjust for the probable mis-measurement of China’s GDP growth in official data, “true” global growth is probably around 2¼% this year and also is likely to be below 2½% in 2016 (i.e. well below the 3% long-run norm). EM growth on this measurement-adjusted basis probably is about 2½% YoY this year, the lowest since the late 1990s. Even after these downgrades, risks to our global forecasts probably lie to the downside.”

Some more details:

The global economy is being hit by the third major disinflationary wave of the past ten years, with the Great Financial Crisis of 2007-09 and the Euro Area crisis of 2011-12 now followed by a major and widespread EM slowdown. We have been gloomy on China’s growth prospects for a while, and remain so even with the apparent resilience in the official data. With the twin supports from China’s credit boom and the commodity-related investment boom fading, YoY growth of GDP for EM ex-China is now below 2% YoY.

So why a far more muted stance on what a month ago was a mega bearish “base case” for a global recession in 2016? Simple: more central bank interventions to kick the can, and buy a few more months of time. Much moar.

With disinflationary global conditions and sluggish pay growth, most advanced economies are likely to remain locked into low-flation, and we expect headline and core inflation rates will continue to run below target and below central bank forecasts next year. Against this backdrop, we expect further near-term easing from the PBOC, RBA, BOJ and ECB and forecast only very gradual and delayed tightening by the Fed (starting around March 2016) and BoE (starting around end- 2016).

In other words, no rate hike from Yellen ever (forget March 2016 – the Fed will never hike 6 months before a presidential election risking unelashing an economic tailspin), and alongside that, one can bury any hope fo a US or global recovery, and instead expect much more of the same, as the central banks of China, Australia, Japan and Europe all line up with even more monetary stimulus in the coming days.

end

the following author certainly has got this correct!!  He explains that the next big Lehman moment will be a sovereign bust!!

(courtesy zero hedge)

We Didn’t “Financially Engineer” Our Way Out Of The Great Depression, We Won A World War

Excerpted from Artemis Capital Management letter to investors,

The arms race of devaluation is not free and has come at the cost of massive global debt expansion. There is no precedent in financial history for a robust economic recovery absent either debt reduction or rampant inflation.  We never deleveraged, in fact we just doubled down. According to a recent McKinsey study the world has reached $200 trillion of debt in 2014 (286% of global GDP), which is a staggering 40% increase from 2007 levels (+$57 trillion). In China, debt has grown four times faster than GDP since 2007, and half of that debt is linked to their property market. The world has simply shifted private debt to the public balance sheet.

The private risk transfer to the public balance sheet can also be seen in the evolution of credit default swap pricing since 2007. Notice the sharp divergence between global sovereign CDS (red) and financial corporate CDS (blue) starting in 2013. The next major global crash will likely be driven by unhealthy sovereign credit rather than corporate credit. The next Lehman moment will be the financial collapse of a major developed country instead of a bank.

There are those who point to aggressive central banking of the late-1930s as the model for de-leveraging post-depression but this argument is highly flawed.

We didn’t financially engineer our way out of the Great Depression – we won a World War.

 

It’s extremely helpful in the de-leveraging process if you are the only capitalist industrial power left in the world untouched by utter and complete destruction. De-leveraging from the Great Depression had as much to do with the blood, sweat, and tears of American soldiers, the development of nuclear weapons, and the fact we were an ocean removed from the battlefield on both sides, as anything related to fiscal and monetary policy from the era.

I don’t think some investors are being radically honest when they omit this brutal truth in their analysis of late-1930s as model to argue for more quantitative easing. More quantitative easing is a great thing if you run a large risk parity fund but it will not help the American middle class.

end
EMERGING MARKETS
Brazil is in turmoil as the country is set to impeach the Brazilian President Rousseff
(courtesy zero hedge)

Corrupt Lawmaker Looks To Oust Brazilian President As Crisis Deepens

One key theme we’ve been keen on pushing as the EM meltdown unfolds is that in addition to extremely poor fundamentals, idiosyncratic political risk threatens to derail several of the world’s most important emerging economies.

Take Turkey for instance, where President Recep Tayyip Erdogan’s politically motivated crackdown on PKK “terrorists” has plunged the country into civil war ahead of elections next month.

And then there’s Malaysia, where voters still want to know how $700 million in 1MDB funds ended up in the private bank accounts of PM Najib Razak.

But as precarious (and tragically absurd) as the situation in Turkey is, and as angry as many Malaysians most certainly are at the Najib government, the quintessential example of EM political turmoil is Brazil, where President Dilma Rousseff (and her main political rival) are embroiled in scandals that threaten to bring further instability to an already unstable situation.

As we discussed two weeks ago, House speaker Eduardo Cunha is reviewing several impeachment petitions and if he accepts even one, representatives from all parties will analyze it and ultimately put it to a lower house vote. Earlier this month, a Supreme Court justice granted an injunction that delayed such a vote, prompting Cunha to assert his right to exercise what he calls a “constitutional prerogative” to review impeachment requests.

Of course Cunha has his own set of problems. Allegations of corruption tied to the discovery of Swiss bank accounts have led to calls for his resignation and that, in turn, has Rousseff’s “aides fear[ing] the speaker could try to speed up the impeachment process.”

On Wednesday, a group of lawyers is expected to file a new impeachment request which repeats allegations of fiscal book cooking. Some say Cunha could end up accepting the lawyers’ petition.

Apparently, this particular request is seen as the most credible to date due in part to its authors, one of which is former Justice Minister Miguel Reale Junior. If Cunha accepts, it would set the impeachment process in motion. Here’s Bloomberg with more:

A group of high-profile lawyers plans to file a request Wednesday to begin the proceedings, nudging President Dilma Rousseff closer to being ousted after months of will-she or won’t-she-be-impeached speculation that has paralyzed Congress, rattled financial markets and deepened an economic slump.

 

If lower house President Eduardo Cunha, a Rousseff rival, accepts the request, it will trigger a months-long process and exacerbate the drama of corruption and political infighting that has highlighted Brazil’s fall from emerging-market darling.

 

Weakened by a bribery scandal that started at the state-run oil giant and has helped push her approval ratings to record lows, Rousseff is accused of doctoring the government’s 2014 and 2015 fiscal accounts. While the outcome of the impeachment effort is far from clear, economists and investors agree: The political stalemate needs to be resolved — and quickly.

As we’ve noted on any number of occasions, the real problem here is uncertainty, as the market has been struggling to understand exactly what’s likely to happen in Brazil for months and in this particular case, the political infighting has caused investors to question whether the government can truly get its act together in time to pass reforms aimed at closing a yawning budget gap. The sooner there’s a resolution, the better. Back to Bloomberg:

Without stability in the capital, Latin America’s biggest country will struggle to shore up its soaring budget deficit, win back investors and rebound from what’s projected to be the longest recession since the Great Depression.

 

“A fast resolution would be good, one way or the other, but then it really depends what type of political reality emerges at the end of the process,” said Alberto Ramos, chief Latin America economist for Goldman Sachs Group Inc. “Nobody can claim to know what’s going to happen next. We just know which questions to ask, but we don’t know the answers.”

 

“To wait for the impeachment to complete itself — six to eight months — you’re going to put Brazil through the wringer even worse than it already is,” said David Fleischer, professor emeritus of political science at the University of Brasilia. “What needs to happen is to quickly restore private-sector confidence in government.”

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

Euro/USA 1.1354 up .0001

USA/JAPAN YEN 120.01 up .228

GBP/USA 1.5453 up .0008

USA/CAN 1.2999 up .0014

Early this Monday morning in Europe, the Euro rose by a tiny 1 basis point, trading now well below the 1.14 level falling to 1.1374; 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 successful ramping of the USA/yen cross above the 120 yen/dollar mark.  Last night the Chinese yuan fell in value (onshore).  The USA/CNY rate at closing last night:  6.3487 up .0007  (yuan lower)

In Japan Abe went all in with Abenomics with another round of QE purchasing 80 trillion yen from 70 trillion on Oct 31/2014. The yen now trades in a slight southbound trajectory  as settled down  again in Japan by 22 basis points and trading now just above the all important 120 level to 120.02 yen to the dollar.

The pound was up this morning by 8 basis points as it now trades well above the 1.54 level at 1.5453.

The Canadian dollar is now trading down 14 basis points to 1.2999 to the dollar.

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

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

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

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

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

The NIKKEI: this Wednesday morning: closed up 347.13 or 1.91%

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

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

Gold very early morning trading: $1178.00

silver:$15.85

Early Wednesday morning USA 10 year bond yield: 2.05% !!! down 2 in basis points from Tuesday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield falls to  2.90 down 2 in basis points.

USA dollar index early Wednesday morning: 94.85 down 9 cents from Tuesday’s close. (Resistance will be at a DXY of 100)

 

This ends early morning numbers Wednesday morning

end
OIL RELATED STORIES

Teetering Trannies? Oil “Could Get Very Very Ugly, Very Very Quickly”

end

 

And now for your closing numbers for Wednesday night: 2 pm
Closing Portuguese 10 year bond yield: 2.45% up 3 in basis points from Tuesday
Japanese 10 year bond yield: .320% !! up slightly from Tuesday and still extremely low
Your closing Spanish 10 year government bond, Wednesday down 6 in basis points.
Spanish 10 year bond yield: 1.75% !!!!!!
Your Wednesday closing Italian 10 year bond yield: 1.60% down 6  in basis points from day: Wednesday/ trading 15 basis points lower than Spain.
IMPORTANT CURRENCY CLOSES FOR WEDNESDAY
Closing currency crosses for WEDNESDAY night/USA dollar index/USA 10 yr bond:  3:00 pm
 Euro/USA: 1.1342 down .0012 (Euro down 12 basis points)
USA/Japan: 119.96 up 0.166(Yen down 17 basis points)
Great Britain/USA: 1.5421 down .0024(Pound down 24 basis points
USA/Canada: 1.3130 down .01448 (Canadian dollar down 145 basis points)

USA/Chinese Yuan:  6.3485 up .0005  (Chinese yuan down)

This afternoon, the Euro fell by 12 basis points to trade at 1.1342. The Yen fell to 119.96 for a loss of 17 basis points. The pound was down 24 basis points, trading at 1.5421. The Canadian dollar fell 144 basis points to 1.3130. The USA/Yuan closed at 6.3485
Your closing 10 yr USA bond yield: down 4 in basis points from Tuesday at 2.03%// ( trading below the resistance level of 2.27-2.32%).
USA 30 yr bond yield: 2.87 down 5 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: 95.04 up 18 cents on the day .
European and Dow Jones stock index closes:
London:  up 3.29 points or 0.05%
German Dax:  up 90.42 points or .0.89%
Paris Cac up 21.29 points or 0.46%
Spain IBEX: up 56.90 points or 0.56 %
Italian MIB: down 97.47 points or 0.44%
The Dow: down 48.50 or .28%
The Nasdaq:  down 40.85 or 0.84%
WTI Oil price;  45.24
Brent OIl:  47.88
USA dollar vs Russian rouble dollar index:  63.03  down 92/100 rouble per dollar
This ends the stock indices, oil price, currency crosses and interest rate closes for today.
And now for USA stories:

 

New York equity performances for today:

Stocks Turmoil As “Easing” Exuberance & “Hope” Hype Trumped By Biotech Bloodbath

Only one clip possible really…

 

Before we start, we want to note the major convergence of technical signals that is occurring in S&P 500 cash market… (Fibonacci Time and Price extensions, downtrend resistance, and 100-day moving-average resistance)

Source: @NautilusCap via @Not_Jim_Cramer

*  *  *

Of course, the story of the day was the evisceration of Valeant…*ACKMAN SAYS HE HASN’T SOLD A SHARE OF VALEANT.. but the bounce died when they issued a 2nd statement via CNBC

 

Which weighed on Biotechs…

 

And dragged Nasdaq lower on the day…

 

As Algos bounced The Dow back to unchanged but were unable to hold it..

 

Quite a day for Stocks – Dow ~700 points of swing…2 words – Gamma bitches!!

 

Don’t say we didn’t warn you... (via Mr.Gartman)

We are still of the opinion that the “bear market” that began in late May ran its course, when stocks at their worst were down just a bit more than 19%. We look for stock prices still to move higher, and to finish the year higher, but likely not materially so. As such, we are buyers of any intra-and inter day weakness on balance for that is what one is to do in a bull market.”

But note every ramp in S&P Futs stalled at VWAP as institutional sell orders were filled…

 

As VXX was “used” and “abused” to creats every turn…

 

The Dow clung to unchanged on the week but Small Caps, Nasdaq, and S&P all turned red…

 

VXX had its best day in a week…

 

Ferrari was a “flop”…

 

Treasury yields plunged all day…

 

As Stocks tried twice to decouple and failed…

 

The USDollar rose notably on the day,  thanks to CAD weakness (no rate move) and JPY 120 Tractor…

 

Commodities all lost ground on the day (as The USD rose) but crude was worst, even with its crazy bounces..

 

Which slammed Crude to its lowest in a month…

 

Charts: Bloomberg

Bons Chart: Another Recession Indicator…

Bonus Bonus Chart: S&P 500 Ends The Day Perfectly Unchanged From The End Of QE3

Average:

Traders continue to dump treasuries as they are worried about an accident due to the upcoming debt ceiling limit:

(courtesy zero hedge)

Traders Dump T-Bills Despite Lew’s “Hope” US Avoids Crisis

 

Biotech company Biogen fires 11% of its workers despite reporting great earnings and boosting guidance.

(courtesy zero hedge)

Biogen Fires 11% Of Workers Despite Reporting Stellar Earnings, Boosting Guidance

There may not be many biotechs with positive cash flows out out there, but the 4th most profitable, Biogen (after Gilead, Amgen and Shire), saw its shares halted moments ago ahead of reporting earnings, which were a blowout: the company reported Q3 EPS of $4.48, not only beating consensus of $3.77, but coming ahead of the highest estimate in the range of $4.04, as revenue of $2.78 billion also solidly beat expectations of $2.64 and was also above the highest forecast. The reason: sales of the company’s blockbuster drug Tecfidera, which generated sales of $937 million, above the $897 expected, following misses in Q1 and Q2.

Furthermore, the company also raised guidance, and now expects year end EPS of $16.20-$16.50 up from $15.50-$15.95, and well above the $15.78 estimate.

One wonders, however, just how credible the company’s optimism is in light of the recent crackdown on “astronomical, non-competitive” pricing practices by specialty pharma companies spearheded by the Democratic presidential candidates.

That remains to be seen, however what is even more confusing is why, in light of the company’s glowing earnings and impressive guidance, it also announced it would be laying off 11% of its workforce, or about 800 workers, while cutting a number of pipeline programs.

From the release:

Biogen also announced a corporate restructuring, which includes the termination of a number of pipeline programs and an 11% reduction in workforce. These changes are expected to reduce the current annual run rate of operating expenses by approximately $250 million. The Company plans to reinvest these savings to support key commercial initiatives, including increased sales and marketing activities behind TECFIDERA, and the advancement of high potential pipeline candidates in areas such as Alzheimer’s disease, multiple sclerosis, and spinal muscular atrophy.

Additionally, and what may come as unwelcome news to those tracking the company’s future growth prospects, Biogen also announced that its Phase 3 ASCEND study investigating natalizumab in the treatment of secondary progressive multiple sclerosis (SPMS) did not achieve its primary and secondary endpoints.

So the trend continues: strong earnings (and in this case even a top-line beat), at either the expense of capex spending (as is the case for most non-biotechs), or workforce reductions, and makes one wonder just what these companies keep seeing about the future that makes them trim expenses so aggressively, that the BLS’ initial weekly claims refuse to see.

BIIB stock will resume trading at 8:00 am.

 

end
Valeant plummets on Citron’s report
(courtesy zero hedge)

Ackman Loses $600 Million In Seconds As Valeant Plummets On Citron’s “Enron Part Deux” Report

With default risk soaring, and Ackman’s dreams dissolving, Valeant Pharma is crashing again today (halted three times and down over 28%) following a report by Citron Research that claims to have a“smoking gun” on the company’s activities, claiming Valeant is channel stuffing  using pharmacies related to Philidor to store inventory and record the transactions as sales.

  • *VALEANT MENTIONED CAUTIOUSLY BY CITRON
  • *VALEANT PRICE TARGET LOWERED TO $50 BY CITRON

The key section from the report:

It is apparent to Citron that Valeant has created a network of “pharmacies” as clones of Philidor. Why do these exist? Citron believes it is merely for the purpose of phantom sales or stuff the channel, and avoid scrutiny from the auditors.

And the punchline:

Is this Enron part Deux??

 

These similarities are too close to ignore. Does everyone remember during the Allergan takeover battle, when Allergan chose the words “house of cards” ? Look at the following similarities between statements by Valeant and those of Enron:

 

Citron has seen this movie before. In 2008, Arthrocare, a successful medical device company, was doing its dirty deeds through Discocare, an undisclosed captive “independent company”. When Citron exposed the relationship, Arthrocare tried to make it all go away by announcing it was buying Discocare. At the time, virtually every investment banking house on the Street had a “buy” or “strong buy” on Arthrocare, and Goldman-Sachs had been engaged to “explore strategic alternatives”. The entire thing began to unravel when Citron discovered — and published — that Arthrocare and Discocare — ostensibly separate companies, had the same fax number.

 

The CEO of Arthrocare is now doing 20 years.

 

While it is impossible for Citron to state for certain at this point, this has the distinct aroma of product being jammed into a channel. It had to have started small, and now it’s just too big. “We have an option to purchase Philidor” is simply … trying to put the genie back in the bottle.

The result: carnage:

 

To 1 year lows…

 

Which has smashed Nasdaq Biotech Index below its uptrend….

 

Full Citron Report below…

Citron Report

end
And is Bill Ackman’s Pershing square about to be blown up?  As Valeant plummets over 30% today:
(courtesy zero hedge)

If Ackman Is About To Blow Up, This Is What Plunges Next

With Valeant having collapsed over 30% today alone, now under $100 for the first time in a year (from highs over $260 in August 2015)..

 

We thought a glance at Bill Ackman’s largest holdings was worthwhile in case things start to escalate even quicker… one wonders how long before the rest of Pershing Square’s holdings are liquidated…

 

With these sizable positions, even the slightest fear of liquidation will spark investor front-running in these names… it seems they already are…

 

And then there is Ackman’s “Big Short” – Herbalife…

 

Charts: Bloomberg

end
Oh OH!!!  Gartman went long and is a buyer of any intra and inter day weakness!!!
trouble ahead
(courtesy zero hedge)

And Now A Warning For The Bulls: Gartman Is A “Buyer Of Any Intra-And Inter Day Weakness”

The long awaited moment has arrived.

It was precisely one week ago, when we said “Bears have been duly warned“, after we revealed that Gartman just went bearish. Recall that in this broken, hilarious “market”, completing the trifecta of the only catalysts that matter, in addition to daily central bank intervention and stock buybacks of course, is fading Gartman’s daily flipflopping.

This is what he said in his note to “clients” on the morning of October 14:

All the markets that comprise our International Index have fallen, a very rare occurrence indeed. In fact, when this sort of thing happens following bullish moves it has almost always signaled the end of the bull-run. Couple this unanimity of price movement with the “reversals” noted above and we have a situation that  concerns us greatly. Indeed it concerns us enough to exit our long positions entirely upon receipt of this commentary… positions that only a day or two ago seemed to us to be insulated from random noise, able to withstand a day or two of normal consolidation, but unable now to withstand the technical deterioration that has taken place as swiftly as it has. Certainly we do not like switching positions this quickly, for we appear to be flippant and foolhardy, but history tells us that we have no choice.

 

We turned bullish of stocks when this index and others “reversed” to the upside following the Employment Situation Report two weeks ago, but the trend line weighed heavily and the Index “reversed” to the downside yesterday… to our chagrin.”

Incidentally, this bearish reversal followed just 5 days after the following prognostication: “The “Melt-up” Begins: The reversal to the upside that took place last Friday was the ignition point for the bull run, but now the fact that this trend line is being taken out from below shall simply add fuel to the already heated fire. Let the “Melt-Up” begin.”

Here is what happened next:

 

Since then we eagerly cautioned anyone who cared to listen not to turn “bearish of stocks in any terms” until Gartman flopped again, as was inevitable.

That just happened. To wit from the latest Gartman letter to “subscribers”:

We are still of the opinion that the “bear market” that began in late May ran its course, when stocks at their worst were down just a bit more than 19%. We look for stock prices still to move higher, and to finish the year higher, but likely not materially so. As such, we are buyers of any intra-and inter day weakness on balance for that is what one is to do in a bull market.”

What indeed is one to do in a bull market (that supposedly ended one week ago), than to listen to the most accurate, if inversely, forecaster the world may have ever seen.

Bulls: you have been warned.

 

end

A good look at the USA’s middle class

(courtesy Michael Snyder/End of the American Dream Blog)

Goodbye Middle Class: 51% Of All American Workers Make Less Than $30,000 A Year

Submitted by Michael Snyder via The End of The American Dream blog,

We just got more evidence that the middle class in America is dying.  According to brand new numbers that were just released by the Social Security Administration, 51 percent of all workers in the United States make less than $30,000 a year.  Let that number sink in for a moment.  You can’t support a middle class family in America today on just $2,500 a month – especially after taxes are taken out.  And yet more than half of all workers in this country make less than that each month. In order to have a thriving middle class, you have got to have an economy that produces lots of middle class jobs, and that simply is not happening in America today.

You can find the report that the Social Security Administration just released right here.  The following are some of the numbers that really stood out for me…

  • -38 percent of all American workers made less than $20,000 last year.
  • -51 percent of all American workers made less than $30,000 last year.
  • -62 percent of all American workers made less than $40,000 last year.
  • -71 percent of all American workers made less than $50,000 last year.

That first number is truly staggering.  The federal poverty level for a family of five is $28,410, and yet almost 40 percent of all American workers do not even bring in $20,000 a year.

If you worked a full-time job at $10 an hour all year long with two weeks off, you would make approximately $20,000.  This should tell you something about the quality of the jobs that our economy is producing at this point.

And of course the numbers above are only for those that are actually working.  As I discussed just recently, there are 7.9 million working age Americans that are “officially unemployed” right now and another 94.7 million working age Americans that are considered to be “not in the labor force”.  When you add those two numbers together, you get a grand total of 102.6 million working age Americans that do not have a job right now.

So many people that I know are barely scraping by right now.  Many families have to fight tooth and nail just to make it from month to month, and there are lots of Americans that find themselves sinking deeper and deeper into debt.

If you can believe it, about a quarter of the country actually has a negative net worth right now.

What that means is that if you have no debt and you also have ten dollars in your pocket that gives you a greater net worth than about 25 percent of the entire country.  The following comes from a recent piece by Simon Black

Credit Suisse estimates that 25% of Americans are in this situation of having a negative net-worth.

 

“If you’ve no debts and have $10 in your pocket you have more wealth than 25% of Americans. More than 25% of Americans have collectively that is.”

 

The thing is– not only did the government create the incentives, but they set the standard.

 

With a net worth of negative $60 trillion, US citizens are just following dutifully in the government’s footsteps.

As a nation we are flat broke and most of us are living paycheck to paycheck.  It has been estimated that it takes approximately $50,000 a year to support a middle class lifestyle for a family of four in the U.S. today, and so the fact that 71 percent of all workers make less than that amount shows how difficult it is for families that try to get by with just a single breadwinner.

Needless to say, a tremendous squeeze has been put onthe middle class.  In many families, both the husband and the wife are working as hard as they can, but it is still not enough.  With each passing day, more Americans are losing their spots in the middle class and this has pushed government dependence to an all-time high.  According to the U.S. Census Bureau, 49 percent of all Americans now live in a home that receives money from the government each month.

Sadly, the trends that are destroying the middle class in America just continue to accelerate.

With a huge assist from the Republican leadership in Congress, Barack Obama recently completed negotiations on the Trans-Pacific Partnership.  Also known as Obamatrade, this insidious new treaty is going to cover nations that collectively account for 40 percent of global GDP.  Just like NAFTA, this treaty will result in the loss of thousands of businesses and millions of good paying American jobs.  Let us hope and pray that Congress somehow votes it down.

Another thing that is working against the middle class is the fact that technology is increasingly taking over our jobs.  With each passing year, it becomes cheaper and more efficient to have computers, robots and machines do things that humans once did.

Eventually, there will be very few things that humans will be able to do more cheaply and more efficiently than computers, robots and machines.  How will most of us make a living when that happens?

The robopocalypse for workers may be inevitable. In this vision of the future, super-smart machines will best humans in pretty much every task.A few of us will own the machines, a few will work a bitwhile the rest will live off a government-provided income… the most common job in most U.S. states probably will no longer be truck driver.

For decades, we have been training our young people to have the goal of “getting a job” once they get out into the real world.  But in America today there are not nearly enough good jobs to go around, and this crisis is only going to accelerate as we move into the future.

I do not believe that it is wise to pin your future on a corporation that could replace you with a foreign worker or a machine the moment that it becomes expedient to do so.  We need to start thinking differently, because the paradigms that worked in the past are fundamentally breaking down.

So what advice would you give to a young adult today that is looking toward the future?

end

Let us close with this great interview with Axel Merk and Greg Hunter

(courtesy Greg Hunter/Axel Merk)

Negative Rates for Next 10 Years-Buy Gold-Axel Merk

Alex MerkBy Greg Hunter’s USAWatchdog.com

Money manager Axel Merk says you simply must own physical gold in this risky environment. Merk explains, “Many people say why invest in a brick that doesn’t pay interest? When you look at cash paying negative interest rates on a real basis, after inflation, then a brick suddenly doesn’t look so bad anymore. . . . I would allege the Fed is all but promising to be behind the curve. Even if the Fed is trying to raise rates, emphasis on trying, they will be behind inflation. Yes, they will raise rates, but net inflation, real interest rates are going to continue to be negative. If I look out a decade from now, I don’t see how the U.S., Europe, Japan, or any other country can afford positive real interest rates.”

Merk thinks stocks are “expensive and way overdue for a bear market” even with the recent rally that we are in and thinks the market can “crash.” Merk contends, “What the central banks have been achieving in recent years is they have been breeding complacency. . . . When volatility is low and prices are rising, what could possibly go wrong you buy stocks? What has happened is instead of buying the dips, people are now going to sell the rallies. We’ve had these amazing rallies, and that is exactly what happens in a bear market. . . . With rates going back away from the zero level, risk premiums have to rise. That means fear has to come back into the market, and volatility has to go up. With the economy, if you base the recovery on asset price inflation, you have a big problem on your hands.”

One of the very bad signs Merk sees is banks are not wanting to take any risk. Merk explains, “Liquidity is drying up . . . . If you look at earning in the banking sector, they are shutting down their trading. Banks are no longer risk takers. All the risk is moving to the corporate sector. We see that on the commodities with Glencore. These are now risky institutions that are not regulated by the Fed. Maybe we don’t have to bail them out, but ultimately, the bank is the counter-party to many of them. So, the next crisis is going to be different. I happen to think that, yes, there are going to be very sharp moves in the stock market. A 1,000 point down move is something that is going to become more common. Central banks can provide liquidity. They cannot provide solvency. We are going to have risk flare-up in pocket that we don’t even know about yet.”

On the U.S. dollar, Merk says, “The dollar is supposed to rise when the world is in crisis, but what happened over the last year and a half or so is whenever there was good news, the dollar was rallying, and every time we had a sell-off, the dollar was plunging. The dollar rally has pretty much evaporated, and people aren’t aware of it yet. The dollar isn’t as healthy as it used to be. The story line was rates were going to go through the roof because everything is fantastic in the U.S. The dollar, just like the stock market, is way over extended. . . . The environment is very supportive for the price of gold right now.

Join Greg Hunter as he goes One-on-One with Axel Merk, founder of Merk Funds.

(There is much more in the video interview.)

After the Interview:

Well that will do for today.

I will see you tomorrow night

Harvey

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2 comments

  1. Re: Snyder: So many people actually making it below the dollar cost of living. What do they know? What do we all know? Can we live/bypass money?

    Like

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