nov 17/Huge raid on gold orchestrated by our banker friends/Copper falls again for the 10th straight day/Glencore falls to 87 pence/Ambulance found near the stadium where Germany was to play Holland in a soccer match/this sends NYSE/Nasdaq tumbling from their highs today/Russia announces that the airline downed in Egypt was caused by a bomb and they have offered 50 million dollars reward for information on who did it/

Gold:  $1068.70 down $15.00 cents   (comex closing time)

Silver $14.22 up 2 cents

In the access market 5:15 pm

Gold $1070.10

Silver:  $14.17

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

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

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 204.97 tonnes for a loss of 98 tonnes over that period.

In silver, the open interest surprisingly rose by a monstrous 3,233 contracts despite silver being up by only 2 cents in yesterday’s trading. The total silver OI now rests at 169,035 contracts In ounces, the OI is still represented by .846 billion oz or 120% of annual global silver production (ex Russia ex China).

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

In gold, the total comex gold OI rose by a huge 7,209 contracts to 435,008 contracts despite gold being up by only $2.90 in yesterday’s trading. It seems the modus operandi of the bandits is to try and liquefy gold/silver OI as be approach first day notice on Monday, November 30. The bankers get very nervous when OI is rising despite awful prices for the metals. We had 0 notices filed for nil today.

We had no change in gold inventory at the GLD / thus the inventory rests tonight at 661.94 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. Our 670 tonnes of rock bottom inventory in GLD gold has been broken. 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, after they deplete the GLD will be the FRBNY and the comex.   In silver, we had no change in silver inventory to the tune of  / Inventory rests at 317.256 million oz.

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

1. Today, we had the open interest in silver rise by a huge 3233 contracts up to 169,035  despite the fact that silver was up by only 2 cents with respect to yesterday’s trading.   The total OI for gold rose by a considerable 7,209 contracts to 435,008 contracts despite the fact that gold was up by only $2.90 with respect to yesterday’s trading.

(report Harvey)

2.  a)Gold trading overnight, Goldcore

(/Mark OByrne)

 i) Last night, 9:30 pm MONDAY night, TUESDAY morning Shanghai time.  Japan Nikkei rises, Shanghai falls slightly.  Base metals falter again putting pressure on Glencore et al. Glencore falls to 87 pence. Japan falls into recession for the 5th time
(zero hedge)
 ii Another chemical fire in China
(zero hedge)
 i)  Hollande (France) unleashes a 2nd day of ISIS strikes but strangely they are targeting abandoned areas.  Most of the damage is done by the Russians
(courtesy zero hedge)

 ii) It appears that France ignored not once but twice information about the terrorist, Mostefai from Turkey

(courtesy zero hedge)
 iii)  Soccer gain between Germany and Holland cancelled due to concrete threat
(zero hedge)

the Baltic dry index collapses again to record lows

(zero hedge)

i)  Oil is not buying the rally on NYSE/Nasdaq
(courtesy zero hedge)
ii) There is simply no land storage for oil:
(courtesy zero hedge)
iii Oil rises despite huge buildup in Cushing
(zero hedge)
 On Brazil and its state owned company: Petrobras
Petrobras cannot keep its debt problems under control
They just might not make it.

9 USA stories/Trading of equities

i) Health care and housing costs rising faster than expected in these last six months


ii)  The cost of renting, is rising at the fastest pace in 8 years

(zero hedge)

iii)  A biggy!!  USA industrial production growth falls to weakest levels since 2010:

(zero hedge)
iv) Dennis Gartman, Mr Yo YO goes bullish again/this may present problems for the bulls
(zero hedge)

v) Home builder sentiment falls for the first time in quite some time  (6 months)

(zero hedge)

 vi) Now more than half of the uSA states (27 to be exact) are opposed to the entry of the Syrian refugees
(zero hedge)

vii  This is telling!!  The banks pull the deal to purchase Veritas because the cost to the new company is just too great and they would probably go under//LBOs start to lose their efficiency as cost of funding soars…(zerohedge)

10.  Physical stories

i)  Dr. Copper falls again which will no doubt create massive problems for Glencore and its derivative counterparty Deutsche Bank

(zero hedge)

ii) James Turk with Eric King talk about gold being well contained/and not allowed to move higher.  Turk explains that once the USA does not raise rates, that should free up gold.  If they do not raise rates in 2015 they will certainly not raise in 2016 due to the USA wel

(James Turk/Kingworldnews)

iii)  The late Peter George:  whenever there is a crisis central banks are sure to suppress the price of gold.

and sure enough with the Paris massacre, they were front row centre in the manipulation of gold southbound

(Chris Powell/GATA)

iv) Bill Murphy of GATA interviewed by silverdoctors and believes that the bankers want total annihilation of the monetary metals gold and silver. It can’t and won’t happen



(courtesy Bill Murphy/silverdoctors)


v) Dave Kranzler on physical demand for gold from China, India Russia et al and the insane paper gold game played by the bankers trying to contain its price.


(Dave Kranzler)

 vi Lawrie Williams on gold demand
(Lawrie williams/Sharp Pixley)

Let us head over to the comex:

The total gold comex open interest rose from  427799 up to 435,008  for a gain of 7209 contracts as gold was up $2.90  with respect to yesterday’s trading.   For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month, and 2) a continual drop in the amount of gold standing in an active month. It looks like both of these occurrences have continued. The November contract lost 7 contracts down to 213 contracts. We had 0 notices filed yesterday, so we lost 7 gold contracts or an additional 700 oz of gold will not stand for delivery in this non active delivery month of November. The big December contract saw it’s OI rise by 2,483 contracts from 191,543 up to 194,026. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 154,439 which is  good. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 175,156 contracts.

Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI rose by a huge 3233 contracts from 165,802 up to 169,035 despite the fact that the price of silver was up by only 2 cents with respect to yesterday’s trading. 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. The huge rise in silver OI necessitates  massive raids by the bankers as they had to cover their rather large shortfall.  We now enter the non active delivery month of November. The OI fell by one contract down to 30. We had 0 notices filed yesterday so we  lost 1 silver contract or 5000 oz will not stand for delivery in this non active month of November. The big December contract month saw its OI climb by 1,248 contracts up to 71,593. The volume on the comex today (just comex) came in at 40,372. The confirmed volume yesterday (comex + globex) was excellent at 53,282.
We had 0 notices filed for nil oz.

November contract month:

INITIAL standings for November

Nov 17/2015

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  159,849.80





Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  3858.000



120 kilobars

No of oz served (contracts) today 0 contracts
No of oz to be served (notices) 213 contracts


Total monthly oz gold served (contracts) so far this month 7 contracts

700 oz

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 105,935.4 oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
we had 0 dealer deposits
total dealer deposit:  zero
We had 1 customer withdrawals:
 i) a dandy withdrawal of 159,849.800 oz from JPMorgan
total customer withdrawal 159,849.800  oz
We had 1 customer deposit:
i) Into Scotia:  3858.000 oz
120 kilobars

Total customer deposits  3,858.000  oz

we had 1  adjustments:

 i) 70.80 oz of gold evaporates out of Brinks customer account.
 JPMorgan has a total of 10,777.279 oz or.3352 tonnes in its dealer or registered account.
***JPMorgan now has 497,871.331 oz or 15.48 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 0 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 0 notices were stopped (received) by JPMorgan customer account.
To calculate the final total number of gold ounces standing for the Oct contract month, we take the total number of notices filed so far for the month (7) x 100 oz  or 600 oz , to which we  add the difference between the open interest for the front month of Nov.( 213 contracts) minus the number of notices served upon today (0) x 100 oz   x 100 oz per contract equals the number of ounces standing.
Thus the initial standings for gold for the Nov. contract month:
No of notices served so far (7) x 100 oz  or ounces + {OI for the front month (213) minus the number of  notices served upon today (0) x 100 oz which equals 22,000 oz standing in this non delivery month of November (.6842 TONNES)
we lost 7 contracts or 700 oz will not stand in this non delivery month of November.
We thus have 0.6842 tonnes of gold standing and only 4.708 tonnes of registered gold for sale, waiting to serve upon those standing
Total dealer inventory 151,384.629.079 oz or 4.708 tonnes
Total gold inventory (dealer and customer) =6,590,056.534   or 204.97 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 204.97 tonnes for a loss of 98 tonnes over that period.
 the comex resumes its bleeding of gold.
And now for silver

November initial standings/First day notice

Nov 17/2015:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 940,754.75 oz


Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 520,449.46 oz


No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 30contracts 

150,000 oz)

Total monthly oz silver served (contracts) 5 contracts (25,000 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 5,951,111.9 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 3 customer deposits:
i) Into CNT:  16,387.800 oz
ii) Into HSBC: 304,143.120 oz
iii) Into Scotia:  199,918.540 oz

total customer deposits: 520,449.46 oz

We had 3 customer withdrawals:
i) Out of CNT:  249,965.300 oz
ii) out of HSBC:  600,340.240 oz
iii) out of Scotia:  90,449.210 oz

total withdrawals from customer account: 940,754.75   oz

we had 0 adjustments
Total dealer inventory: 43.340 million oz
Total of all silver inventory (dealer and customer) 161.610 million oz
 * silver starts again to leave the silver comex
The total number of notices filed today for the November contract month is represented by 0 contracts for nil oz. To calculate the number of silver ounces that will stand for delivery in Nov., we take the total number of notices filed for the month so far at (5) x 5,000 oz  = 25,000 oz to which we add the difference between the open interest for the front month of November (30) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the Nov. contract month:
5 (notices served so far)x 5000 oz +(30) { OI for front month of November ) -number of notices served upon today (0} x 5000 oz ,=175,000 of silver standing for the Nov. contract month.
we lost one contract or an additional 5,000 oz will not stand for delivery in this non active delivery month of November.


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:
Nov 17/no change in gold inventory at the GLD/Inventory rests at 661.94 tonnes
Nov change in gold inventory at the GLD/Inventory rests at 661.94 tonnes
Nov 13/no change in gold inventory at the GLD/Inventory rests at 661.94 tonnes/
Nov 12/another huge withdrawal of 1.49 tonnes of gold inventory/rests tonight at 661.94 tonnes/GLD is bleeding gold and the blood flow is heading east.
Nov 11/a huge withdrawal of 3.00 tonnes of gold inventory/rests tonight at 663.43 tonnes
Nov 10/a small deposit of .32 tonnes of gold in gold inventory/rests tonight at 666.43 tonnes
nov 9/another 2.98 tonnes of gold leaves the GLD/Inventory rests at 666.11
Nov 6/another huge 2.68 tonnes of gold leaves the GLD/Inventory rests at 669.09 tonnes
Nov 5/a huge withdrawal of 14.53 tonnes of gold from the GLD/rests tonight 671.77 tonnes
nov 4/ no change in gold inventory at the GLD/Inventory rests at 686.30 tonnes
Nov 3/another huge withdrawal of 2.98 tonnes at the GLD/Inventory rests at 686.30 tonnes. (in 3 days:  total withdrawal 8.04 tonnes)
Nov. 17/2015 GLD :661.94 tonnes*
*this is the lowest level in quite some time.  It looks like physical gold acquired in the past few months have now left the GLD vaults heading for China.
Nov change in inventory/rests tonight at 317.256 million oz/

Nov 16.And now SLV/another huge addition of 2.145 million oz into the silver inventory of SLV/rests tonight at 317.256 million oz

Nov 15/no change in silver inventory at the SLV/inventory 315.111 million oz/

nov 12/surprisingly we had a huge addition of 1.43 million oz of silver into the SLV/Inventory rests at 315.111 million oz/(my bet:  it is paper silver not real silver entering the vaults)

Nov 11/no change in silver inventory at the SLV/rests tonight at 313.681 million oz/

Nov 10/no change in silver inventory at the SLV/rests tonight at 313.681 million oz/

Nov 9/no change in silver inventory/rests tonight at 313.681

Nov 6/ we had a very tiny withdrawal of 136,000 oz (probably to pay for fees)/Inventory rests tonight at 313.681 oz

Nov 5/strange no change in silver inventory/rests tonight at 313.817 million oz/

Nov 4/2015: no change in silver inventory/rests tonight at 313.817 million oz/


Nov 17/2015:  tonight inventory rests at 317.256 million oz***
Note the difference between the GLD and SLV.  GLD sees liquidation of metal but not SLV. Why?  because the SLV has no real silver behind it only paper silver.
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 11.0 percent to NAV usa funds and Negative 11.30% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.4%
Percentage of fund in silver:37.5%
cash .1%( Nov 17/2015).
2. Sprott silver fund (PSLV): Premium to NAV rises to+0.90%!!!! NAV (Nov 17-/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .84% to NAV Nov 17/2015)
Note: Sprott silver trust back  into positive territory at +0.90% Sprott physical gold trust is back into negative territory at -.84%Central fund of Canada’s is still in jail.
And now your overnight trading in gold and also physical stories that may interest you:
Trading in gold and silver overnight in Asia and Europe
(courtesy goldcore/Mark O’Byrne/Steve Flood)
 Total weight of gold coins sold at the mint in Oct:  1.384 tonnes.  Over the last quarter:  14.65 tonnes which is huge.
The total USA  production per year is 180 tonnes or 15 tonnes per month.  Demand for gold coins is still extremely high across the globe.

U.S. Mint Sales of Gold Coins Fall In October After 234% Surge in Q3

by Dr Constantin Gurdgiev

Total sales of U.S. Mint gold coins came in at 44,500 oz per 94,500 coins sold – including both Eagles and Buffalos. This marked a significant decline in sales y/y, with volume by weight down 49.7% y/y and the number of units sold down 33.7%. Average weight of coin sold was down 24.2% y/y to 0.4709 oz per coin.

[Click to expand]
GoldCore: Total Sales of US Mint Coins
Total Sales of US Mint Coins since 2006

As chart above indicates, October fall-off in demand came after the end of 3Q that saw total volume of coding gold sold by the U.S. Mint rising incredible 234% y/y (compared to 3Q 2014) by weight and 305% y/y in terms of number of units sold.

At a total of 471,000 oz sold over 934,500 units in 3Q 2015, last quarter was the best one since 2Q 2010 in terms of volume by weight sales and the best in history of the series (from 1Q 2006) in terms of number of coins sold.

[Click to expand]
GoldCore: Total Sales of Mint Gold Eagles and Buffalo Coins
Total Sales of US Mint Gold Eagles and Buffalo Bullion Coins since 2006


Not surprisingly, scale fall off in demand in October can be explained by the moderation in demand back to cyclical normal. As shown in the chart above, overall October sales figures came in below the period average for May 2013 through present. However, stripping out three main outlier peaks in demand, the average comes to 49,978 oz – closer to the October reading of 44,500 oz. In historical comparatives, demand for gold coins in October was 38th lowest by total weight and 56th lowest by coins counts for any month from January 2006 through present.

Another point worth making is seasonality.  Over 2006-present horizon, October saw significant decline in demand for gold coins in seven out of 10 years, with insignificant changes m/m recorded in one month. In other words, October tends to be a more bearish month of U.S. Mint coins sales.

Final point worth making is that correlation between demand for U.S. Mint coins (by total oz weight) continued to show negative 12 months correlation with gold price. In October, this correlation stood at -0.58, slightly less in absolute value than in September (-0.59) and below -0.72 correlation in October 2014. Overall, negative correlation remained in every month from April 2014 on, suggesting stable demand interest from investors on foot of gold price declines.

Read the excellent research on US Mint gold coin sales in October by Dr Constantin Gurdgiev.

Editor’s Note:

As was seen in the World Gold Council’s Gold Demand Trends Q3 2015 last week, low gold prices in the third quarter saw bargain hunters globally and particularly the U.S. accumulate far more gold bullion coins and bars than they did in any other quarter over the past five years.

According to the report released last Thursday, global gold demand rose 8 percent on-year to 1,121 tons in the third quarter, with the U.S. seeing a new surge in demand.

“There were significant gains in bar and coin demand in China and across Europe, but it was in the U.S. where we saw the most dramatic growth, with U.S. Mint Eagle sales reaching their highest level since the second quarter of 2010,” Alistair Hewitt, Head of market intelligence at the World Gold Council, told media.

Thus, the decline in U.S. Mint sales of gold coins in October was a natural consequence of a decline in the near record demand seen in Q3 and reflects the normal ebb and flow of demand for gold coins and bars.

Last week gold price fell to 5 year lows and weakness again saw canny buyers accumulate on the dip. Sales of U.S. Mint gold coins jumped the most in nearly three months. The 2015 $10 American Gold Eagles actually sold out.

Essential Guide to Storing Gold Offshore

Download Essential Guide To Storing Gold Offshore

Today’s Gold Prices: USD 1080.80, EUR 1013.60 and GBP 710.50 per ounce.
Yesterday’s Gold Prices: USD 1083.75,  EUR 1006.60 and GBP 712.08 per ounce.

GoldCore: Gold in USD - 5 years

Gold closed yesterday at 1083.20 a loss of $1.20 .  Silver was also down slightly by $0.04 to close at $14.27.  Platinum gained $7 to $863.

Gold is on the back foot this morning after declining for a thirteenth out of 14 sessions yesterday, albeit by a modest 0.1%. Gold saw safe haven demand push it to its highest in over a week yesterday in early trade, but failed to maintain those gains in U.S. hours as converted selling in the futures market capped gains and pushed prices marginally lower.

Sellers seemed determined to have gold close lower after the tragic events in Paris. A higher close would have led to increased safe haven demand due to growing concerns about the Eurozone and global economy.

Silver, platinum and palladium are a touch lower today. Palladium is down 1.6% at present, after managing to rise 2.2% yesterday.


GoldCore: 7 Key Storage Must Haves

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Mark O’Byrne
The following is the big story of the day.  Copper is crashing and so is Glencore.  Their covenants are now offside.
This should cause a cascading of all derivatives underwritten by then and their counterparty Deutsche bank
(courtesy zero hedge)

Copper Is Crashing In China

Shanghai Copper is down 4.6%, hitting fresh cycle lows not seen since March 2009. No clear catalyst is evident for now aside from stronger USDollar, Codelco’s cuts, and more chatter of CCFD unwinds. If COMEX Copper holds these losses, it will be down for 10 straight days – the longest on record from what we could tell.

Copper is crashing in China…


To lows not seen since March 2009…


The USDollar is pushing higher, weighing broadly on commodities. Also continued forced liquidations in CCFDsis not helping as hope for a low evaporates. However, it appears the Codelco cuts are the most prescient…

Concerns metals demand is ebbing deepened as Codelco, the biggest copper producer, cut its surcharge for sales to China by 26 percent next year, according to two buyers. The reduction highlighted waning consumption in the Asian country.


Obviously the tragic developments in Paris have caused a capital flight out of metal and into safety. Secondly, collapsing physical premiums for metal being imported into China really underscores how anemic demand is there.”


China is facing an unprecedented drop in refined copper imports as a slowing economy erodes demand, according to one of the country’s largest buyers. Shipments to the country will shrink 10 percent next year, Stephen Huang, chief executive officer of trading house Arc Resources Co., said in an interview.

Charts: Bloomberg


Dave Kranzler on physical demand around the globe:

(courtesy Dave Kranzler/IRD)

Gold Withdrawals On The Shanghai Gold Exchange At A New Record High

For the week ending November 6, gold withdrawals from the SGE were 44.97 tonnes.  This put the YTD total withdrawals at 2,210 tonnes.  Gold withdrawals YTD from the SGE are running 29% higher than last year and 20% higher than 2013, which was a record year for withdrawals:

Untitled has compiled an excellent summary of the gold withdrawal statistics on the SGE plus some data on Central Bank holdings globally. You can read his post here: China and Gold.

China’s “consumption” of gold this year is on track to exceed the total amount of gold produced this year by mines globally.  India is on track to import close to 50% of world gold production this year.  Russia adds to its Central Bank gold holdings every month.  In June alone it added 800,000 ozs, over 23 tonnes.

On the other hand, paper manipulation of all of the markets by western Central Banks – specifically the S&P 500 and gold by the Federal Reserve – is starting to reach an insane extreme.  Today was a prime example as the S&P 500 futures spent most of the overnight session starting Sunday evening down 8-12 points.  Gold was up $12 most of the night.

As the U.S. stock market opened, gold began to get hit and the S&P 500 popped from down 8 into positive territory.  This was after extremely negative economic and earnings reports were released.  Then, as gold faded back to Friday’s closing levels, around 1:30 p.m. EST the S&P went parabolic, rising 30 points on absolutely no news or reported events that would have possibly triggered a sudden surge like this.

As it so happens, on a preliminary basis, it looks like 11,215 gold contracts were added to the Comex futures open interest tally.  This is 1.12 million paper ounces, or 74x more paper gold than the amount of gold reported to be available for delivery on the Comex.  The total paper gold to deliverable gold (as reported) is 290:1.

Given that the appetite for gold from the east exceeds the amount of gold produced to feed that appetite on a “hand-to-mouth” basis, we can only speculate as to the sources being tapped by the BIS/Fed/Bank of England/ECB to feed the gold consuming beast.

What I will say with 100% certainty is that if you want to own gold but do not have possession of it – or at least have it safekept with an extremely trustworthy custodian – you will probably never have a chance to hold that gold in your hand.  It  is gone and it if it’s not gone by now, it will be gone by the time you understand the reasons why it is gone.

The only question now in my mind is how far will the bullion banks have to stretch the paper game in order to keep the price contained and the interest from the hoi polloi in gold subdued.   If the entities holding the long positions in Comex paper do not hold the paper short-sellers accountable, what’s to stop them from taking that 290:1 up to 500:1 if they have to?

The insane degree of intervention in the markets reflects sheer desperation by the manipulators to keep the wheels on the system.  When the intervention fails, the reaction by the markets will be spectacular to watch.


Lawrie Williams on gold demand:
Lawrence Williams/Sharp Pixley)

LAWRIE WILLIAMS: Physical gold demand extremely strong – central bank and retail


Recent omments from Frank Holmes of US Global Investors, in turn based on the latest data from the World Gold Council paint a positive picture in terms of continuing gold purchasing by central banks during the third quarter of the year.  Like all statistics though the true inference could be gleaned from how one looks at them.

We assume the WGC figures are, in essence, correct although they relate to what is actually reported by Central Banks to the IMF and this is sometimes open to question.  As we pointed out in a recent article here, most of the world’s biggest gold holding countries have reported absolutely zero change in the holdings over the past 10 years with the only truly significant increases in reported gold holdings coming from Russia and China.  And the latter supposedly came clean on its increases in gold reserves with its big 600 tonne rise in the reported figure back in June – apparently accumulated over the previous six years but not reported to the IMF at the time.  But whether the Chinese figure, or indeed some of the other reported figures, are a true statement of the respective countries’ actual holdings remains open to doubt in some quarters.  A table showing the 5-year change in reported gold reserves for the past five years from the earlier article (Central Bank Gold Purchases. Where we are and will they continue.) is repeated below:

Table:  5 year reported change in gold reserve – Top 20 2010-2015

Holder 2010 2015 %Change
United States 8,133.5 8,133.5 0
Germany 3,406.8 3,381.0 -0.75%
IMF 2,966.8 2,814.0 -5.2%
Italy 2,451.8 2,451.8 0
France 2,435.4 2,435.4 0
China 1,054.1 1,677.4 +59.1%
Switzerland 1,040.0 1,040.0 0
Russia     668.6 1,288.2 +92.7%
Japan     765.2     765.2 0
Netherlands     612.5     612.5 0
India     557.7     557.7 0
ECB     501.4     504.8 +0.7%
Taiwan     423.6     423.6 0
Portugal     382.5     382.5 0
Venezuela     363.9     361.0 0
Saudi Arabia     322.9     322.9 0
United Kingdom     310.3     310.3 0
Lebanon     286.8     286.8 0
Spain     281.6     281.6 0
Austria     280.0     280.0 0


Also the statement that the Q3 figure for central bank purchases is the second highest on record is both true and misleading at the same time.  Since June China has been reporting monthly gold reserve increases, whereas before it had been suppressing them.  Thus we’re not really comparing like with like with the Q3 figure boosted by three successive months of announced Chinese gold purchases totalling 50 tonnes.  Undoubtedly China had already been buying at this kind of level but this would not have appeared in the IMF figures.  Undoubtedly Chinese reported reserve increases will continue at this kind of pace, with China and Russia perhaps accumulating as much as 400 tonnes a year between them for the foreseeable future.

Frank Holmes does note also though that retail demand for gold coins in the US has also shot up and this appears to bebeing repeated elsewhere in the world, perhaps stimulated by the low US dollar gold price.  Added to this withdrawals from China’s Shanghai Gold Exchange this year have already exceeded the record full year total achieved in 2013 (See: China gold demand already passes 2013 annual record.) so overall demand for physical gold from central banks and from gold investors elsewhere in the world appears to be running at a very high level indeed.  But the price is not being positively affected given that this remains almost entirely driven by the U.S. futures markets which seem to bear no relation to supply/demand fundamentals.

Frank Holmes’ comments are set out below:

Judging from a new report from the World Gold Council (WGC), global central banks’ appetite for gold remains insatiable. In the third quarter, net purchases rose to 175 tonnes. This is the second-highest level ever recorded, nearly equaling the all-time high of 179.5 tonnes in the same period last year.

click to enlarge

Russia and China were the top buyers, but we also saw some central banks return to the list of those that hold gold. The United Arab Emirates (UAE), for instance, reports that it now has 5 tonnes of the yellow metal, after holding none since 2003. The only net-seller for the quarter was Colombia.

Relatively low prices no doubt factored into the buying spree, but more than that, central banks recognize gold’s ability to hedge against inflation and monetary instability. It’s probably not appropriate to have 72 percent of your portfolio in gold, as the Federal Reserve does, but investors should nonetheless take note of what the banks are doing.

In fact, this might be what was on U.S. investors’ minds in the third quarter. Sales of American gold eagle coins shot up a whopping 200 percent year-over-year to 32.7 tonnes, a five-year record. I always recommend having around 10 percent: 5 percent in gold stocks, the other 5 percent in bullion or gold jewelry.


(courtesy GATA/Chris Powell)

10 years ago Peter George told you that gold would fall today


3:10p ET Monday, November 16, 2015

Dear Friend of GATA and Gold:

Last night in the aftermath of the terrorist attacks in Paris news organizations were speculating that the price of gold would rise today because of international tensions and turmoil. Longtime followers of GATA might have just laughed, knowing that gold would continue to perform counterintuitively on account of surreptitious crisis intervention by central banks

Of course GATA’s intelligence is not so good that we know exactly how central banks were trading gold and other markets today. But we do know from their own admissions that they are secretly trading gold “nearly every day” —

— and secretly trading all major commodity futures contracts as well:

While this cannot be reported by mainstream financial news organizations, it long has been understood by anyone who wants to understand it.

Among the first to understand it and publicize it was GATA’s late friend Peter George, the foremost gold advocate of his day in South Africa.

Preparing for his presentation at GATA’s Gold Rush 21 conference in Dawson City, Yukon Territory, Canada, in August 2005, George gave an interview to GATA videographer Trevor Johnston, remarking:

“In the last 10 years the central banks have effectively shown that when there’s a real crisis, gold actually goes down, and it’s so blatant, it’s a joke.”

You can watch that excerpt of George’s interview here:

George’s insight, especially relevant as markets resume amid another crisis of terrorism, is a reminder that no analysis of the gold market is worth anything if it fails to address these questions:

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

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

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

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

These are the questions mainstream financial news organizations, market analysts, and most purported analysts of the gold “market” are forbidden to pursue.

Documentation answering those questions can be found here:

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



Gold is lockdown mode until the December when the USA backs off on its rate rise:


(courtesy James Turk/Kingworldnews)


GoldMoney’s Turk says gold is in lockdown until Fed backs off rate rise


8:15p ET Monday, November 16, 2015

Dear Friend of GATA and Gold:

GoldMoney founder and GATA consultant James Turk today describes for King World News how gold’s “safe haven” rally in Asia was stopped in London and New York. Turk suspects that the West’s central planners are keeping gold in lockdown to support the U.S. dollar at least until the Federal Reserve backs away from raising interest rates next month. An excerpt from the interview is posted at the King World News blog here:…

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



Bill Murphy believes that the gold cartel aims at total annihilation of the monetary metals, gold and silver

It won’t happen:

(courtesy Bill Murphy/GATA,

Gold cartel aims at annihilation of monetary metals, GATA chairman says


8:40p ET Monday, November 16, 2015

Dear Friend of GATA and Gold:

Interviewed by, GATA Chairman Bill Murphy discusses the conflict between the futures markets and the physical markets for the monetary metals. Murphy says that the “gold cartel,” the alliance of central banks and bullion banks, has changed its tactics from “managed retreat” on monetary metals prices to the “annihilation” of the metals. Murphy also rebuts assertions that GATA is “quitting.” Instead, he says, the more GATA is proven correct about manipulation of the monetary metals markets, the less anyone wants to hear about it. The interview is 37 minutes long and can be heard at the Silver Doctors Internet site here:…

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




(courtesy London Stock Exchange/Harvey)


Price (GBX) 88.83 Var % (+/-) -0.79% (Down -0.71)
High 93.98 Low 87.01
Volume 83,957,355 Last close 88.83 on 17-Nov-2015
Bid 88.49 Offer 88.57
Trading status End of Post Close Special conditions NONE
As at 17-Nov-2015 18:13:28 –  All data delayed by at least 15 minutes.
And now your overnight TUESDAY morning trading in bourses, currencies, and interest rates from Europe and Asia.

1 Chinese yuan vs USA dollar/yuan falls in value , this  time at  6.3786/ Shanghai bourse: in the red , hang sang: green

2 Nikkei closed up 236.94 or 1.22%

3. Europe stocks all in the green  /USA dollar index up to 99.51/Euro down to 1.0734

3b Japan 10 year bond yield: falls to 30.0%   !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.28

3c Nikkei now just above 18,000

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

3e WTI: 41.22  and Brent:   44.23

3f Gold down  /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 falls to  .532 per cent. German bunds in negative yields from 6 years out

 Greece  sees its 2 year rate fall  to 5.91%/:  still expect continual bank runs on Greek banks 

3j Greek 10 year bond yield falls to  : 7.07%

3k Gold at $1078.75/silver $14.24 (8:00 am est)

3l USA vs Russian rouble; (Russian rouble down 35/100 in  roubles/dollar) 65.68

3m oil into the 41 dollar handle for WTI and 44 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 1.0124 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0797 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/arrests 10 traders for Euribor manipulation

3r the 6 year German bund now  in negative territory with the 10 year falls to  +.532%/German 6 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 2.29% early this morning. Thirty year rate above 3% at 3.08% /

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

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



Global Stocks Soar As Dollar Spot Index Hits Record High; Oil Declines

The kneejerk shock from this weekend’s Paris terrorism, which briefly pushed S&P futures below 2000, is now a distant memory, and has been replaced with another breathless, violent rally for the second day in a row, which has seen global stocks surge after yesterday’s lackluster performance before the S&P500 soared in afternoon trading, and this morning US equity futures launched another push higher the moment Europe opened for trading, just like a day earlier, begging the question just which central bank is pushing this scramble to buy ES futures.

As a result the E-mini is now about 10 points higher driven mostly by the ongoing collapse in the EUR and the the all-important for the carry trade, Japanese Yen, as well as a continuation of the dollar rally, whose Bloomberg Dollar Spot Index just touched a new record high on continued speculation the US economy is strong enough to weather a rate hike in one month even as corporate revenues and earnings continue to plunge.

Bottom line: Who would have thought terrorism is so good for stocks.

Here is where we currently stand:

  • S&P 500 futures up 0.4% to 2056
  • Stoxx 600 up 2.1% to 378
  • MSCI Asia Pacific up 1.1% to 132
  • Nikkei 225 up 1.2% to 19631
  • Hang Seng up 1.2% to 22264
  • Shanghai Composite down less than 0.1% to 3605
  • US 10-yr yield up less than 1bp to 2.27%
  • Dollar Index up 0.09% to 99.53
  • WTI Crude futures down less than 0.1% to $41.70
  • Brent Futures up 0.6% to $44.83
  • Gold spot down 0.2% to $1,080
  • Silver spot up less than 0.1% to $14.27

Perhaps no other place captures the overnight surge better than France, where the CAC40 was up well over 2% at last check.  The STOXX Europe 600 gained for a second day, rising the most in almost four weeks.

The real story, however, remains the dollar, whose ascendancy continues. As Bloomberg notes, a gauge tracking its performance against ten leading global currencies has risen to the highest on record. Hedge funds remain bullish on the greenback: along with other large speculators they’ve boosted bets of dollar gains versus eight major currencies in the last three weeks, according to data from the Commodity Futures Trading Commission. The dollar has risen against all 16 of its major peers in 2015 on expectations the Fed is close to raising interest rates.

The jump in the dollar has been so aggressive, it has even managed to unwind yesterday’s paradoxical trade where both the greenback and oil soared at the same time, a pair trade that under normal conditions makes no sense, but these are not normal conditions. As a result after trading briefly above $42, WTI is now down 1% and sppears set to resume its drop to a 30-handle, ahead of the API inventory data today which is expected to show another build, and a Citi report noting that the US land storage “getting increasingly full” suggesting an overflow may be just a few weeks away.

Without the energy names, which drove the yesterday rally, it may be difficult to sustain the monstrous surge observed yesterday where futures swung some 50 points higher from overnight lows.

Looking at regional markets, European equities (Euro Stoxx: +2.0%) have traded in line with their Asian counterparts to reside firmly in the green this morning, with energy names leading the way higher after the bout of strength seen yesterday afternoon in the energy complex, with industrials also benefitting from commodity strength. In terms of stock specific news, Cable & Wireless (+6.5%) lead the way higher after being bought by Liberty Global, with Smith Group (+10.0%) also among the best performers on the back of their pre-market earnings. Of note, today sees pre-market earnings from Home Depot, Walmart and TJX.

Despite the strength in equities, Bunds also saw a bid in early European trade before coming off their best levels later in the session. The early bid came amid touted Asian demand switching out of French OATs and moving instead to the German benchmark. Meanwhile, the front month Euribor then came off the best levels, weighed on by good size bearish structure that was traded earlier in the session. In terms of the periphery, Greece are the notable mover, with the GR/GE spread tighter by (16.1) bps after reports from Greek Finance Minister Tsakalotos stating that there is a pact with Greece’s lenders on all prior actions and the nation will receive a new tranche of payments.

On today’s calendar in the US will be the October CPI print. As well as this, real average weekly earnings are expected, while the October industrial and manufacturing production prints will be closely watched. Capacity utilization and the NAHB housing market index print for November rounds off the data. Fedspeak wise Governor Tarullo is set to comment on the financial system at around 1.30pm GMT.

European Eco Data:

  • U.K. Oct.
    Inflation Rate Unchanged at -0.1% Y/y; Est. -0.1%
  • U.K. Oct.
    Factory Output Prices Fall 1.3% Y/y; Est. -1.4%
  • Italy
    Sept. Trade Surplus At EU2.19b; Surplus Vs EU At EU 760m

In Asia, both the MSCI Asia Pacific index (up 1.1% to 132) and the Nikkei (+1.2%) jumped pigybacking on US strength, but China drooped as a rally for Chinese stocks fizzled as technology and small-company shares plunged on concern the resumption of initial public offerings will lure investors away from the nation’s priciest equities.

The Shanghai Composite Index slipped 0.1 percent to 3,604.80 at the close, erasing a gain of as much as 2 percent. Technology stocks, the best performers this year, posted the steepest loss among industry groups, while the ChiNext index dropped the most in a month. The small-caps index is four times more expensive than the large-cap Shanghai gauge. Brokerages rallied on speculation a jump in trading since the nation’s equities entered a bull market this month will bolster their earnings prospects.

“IPO shares will take some funds from the market as some investors are looking for cheaper assets,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. “Small caps seem to be expensive now and some investors have started to take profits.”

Asia Top News:

  • ‘Devastating’ Blow for Abe Seen in Japan Inc. Spending Cuts: Business investment blamed for GDP shrinking in 3Q
  • China Roller-Coaster Market Ride Rewards Hedge Funds Who Held On: Greenwoods, Marco Polo funds post double-digit returns
  • Standard Chartered’s Unraveling India Bet Means More Pain Ahead: ~$5b of India loans on internal watch list
  • BofA-Merrill Starts VIP Program for Asia Hedge-Fund Startups: Emerging-manager platform to add five Asia startups each yr
  • Citic Securities Said to Face Controls, Possible Restructuring: Chairman Wang to step aside; Citic Group’s Zhang to join

Overnight in FX, AUD was in focus in the wake of the RBA’s November meeting minutes whereby the central bank remained optimistic in regards to the outlook for the economy, but also left the door open for further easing. Subsequently, AUD/USD broke above 0.7100 , however, gains were not sustained as the USD-index was kept bid amid expectations that the Fed is on course to raise rates next month. Once European participants came to their desks the USD came off highs, and the pair retook the 0.7100 handle.

In Europe, FX markets were dominated early on in the session by softness in the EUR, with EUR/GBP falling to its lowest level since August , while EUR/USD resides below the 1.0700 handle. However, later in the European morning, data dictated price action as GBP saw a bid on the back of the higher than expected UK CPI Core Y/Y (1.10% vs. Exp. 1.00%) with the majority of other readings coming in line with expectations. Separately today saw the latest release of German ZEW Survey Expectations (10.4 vs. Exp. 6), with the higher than expected number failing to see a sustained reaction on any major EU asset class.

The commodity complex has seen relatively choppy price action overnight with copper the notable  underperformer in terms of metals to continue the recent downward trajectory and trade at its lowest level since May’09, with much of the decline being attributed to indications of slowing demand for metals in China. Separately, gold saw a paring of some of yesterday’s gains after the post-Paris attack safe haven bid, with prices pressured by the USD¬index remaining firm on Fed-hike expectations.

On the now daily central bank speaker calendar, we had ECB’s Praet who saw risk of inflation expectations de-anchoring and forecasts credibility risk in regards to the central bank’s inflation path. Also, notes that there are indications that inflation expectations remain fragile, hence that the central bank are considering further action. The result: an even weaker Euro.

In the US we have Fed’s Powell speaking in New York at 1:15pm; and Fed’s Tarullo speaking along with Bernanke, in Washington at 1:30pm.

Top Overnight News:

  • French Jets Bomb Islamic State Targets in Syria for Second Day: bombing destroys a command center and a training site at the terror group’s stronghold in Raqqa, Syria
  • Weakened Hollande Faces Election Backlash in Wake of Attacks: polls show socialist rout in next month’s regional vote
  • Belgium Raises Terror Threat Level, Cancels Soccer Game vs Spain: two suspects charged with taking part in Paris attacks
  • Putin Vows Revenge as He Blames Terrorists for Russian Air Crash: explosive traces found in Egypt plane wreckage, FSB chief says
  • Global Economic Cost of Terrorism at Highest Since Sept. 11: nearly 10 times as many killed in attacks than 15 years ago
  • Obama Takes Pacific Trade Agreement Momentum to Asia Summits: U.S. president may use TPP success for leverage with China as Asia-Pacific leaders gather in Manila for APEC summit
  • Obama Raises Sea Spat at APEC With Philippine Warship Tour: U.S. president tours naval vessel that has come to represent Philippine resistance to China over disputed South China Sea
  • U.K. Inflation Rate Stays Below Zero for a Second Month: Bank of England expects low inflation to continue into 2016
  • ECB’s Praet Sees Risk of De-Anchored Inflation Expectations: executive Board member, chief economist comments in interview
  • Liberty Global to Acquire Cable & Wireless in $5.3 Billion Deal: Liberty Global agreed to buy Cable & Wireless Communications in cash-and-stock transaction valued at GBP3.5b
  • Don’t Move On From the BRICs Just Yet: Mohamed A. El-Erian says Goldman Sachs was right to end its fund, but the concept still has value for investors

Bulletin Headline Summary from RanSquawk and Bloomberg

  • FX markets in Europe have been dominate by broad based EUR weakness, with GBP supporter by UK inflation data
  • European equities reside firnly in the green in a continuation of the trend seen in the US, with energy names leading the way higher
  • Today see the release of US CPI and Real average wage earnings, API crude inventories and comments from Fed’s Powell and Tarullo
  • Treasuries decline led by 5Y amid global rally in stocks as market participants bet on additional stimulus from ECB and tightening by Fed in December.
  • Vladimir Putin vowed to retaliate against terrorists who blew up a Russian airliner last month as the interests of Russia and western powers in Syria began to align following a wave of Islamic State attacks from Beirut to Paris
  • For France’s Hollande, the failure to stop the Paris attacks may have inflicted a mortal wound on a leader weakened by record joblessness and a mounting threat from Marine Le Pen’s populist National Front party
  • The European Central Bank sees a risk that investors and consumers will lose faith in policy makers’ projections for reviving inflation, Executive Board member Peter Praet said
  • German investor confidence rose in Nov., with the ZEW index increasing to 10.4 from 1.9 the previous month, the first increase in eight months
  • U.K. inflation stayed below zero for a second month in October, extending the weakest run in more than half a century
  • A “devastating” blow is seen for Abe in spending cuts by Japanese firms; just as before, manufacturers continue to shun building factories or spending on machinery in the world’s third-largest economy as companies hoard record levels of cash
  • Last week’s appointment of Neel Kashkari to run the Minneapolis Fed means a third of the 12 district banks will soon be run by officials with past ties to Goldman; studies suggest trend may mean increased bias toward tighter policy
  • Obama’s characterization of Canadian oil as dirty is “rhetoric” prompted by Canada’s inaction on environmental issues, Prime Minister Justin Trudeau said, in effect placing the blame on Canada’s past environmental policy
  • Financial firms are preparing to lavish this year’s biggest raises on health-care bankers, who will probably see a 20% bump on average, according to an Options Group Inc. report projecting this year’s biggest pay swings
  • Sovereign 10Y bond yields mostly higher. Asian and European stocks gain, U.S. equity-index futures rise. Crude oil steady, gold falls, copper extends recent losses


US Event Calendar

  • 8:30am: CPI m/m, Oct., est. 0.2% (prior -0.2%)
    • CPI Ex Food and Energy m/m, Oct., est. 0.2% (prior 0.2%)
    • CPI y/y, Oct., est. 0.1% (prior 0%)
    • CPI Ex Food and Energy y/y, Oct., est. 1.9% (prior 1.9%)
    • CPI Index NSA, Oct., est. 237.738 (prior 237.945)
    • CPI Core Index SA, Oct., est. 243.692 (prior 243.206)
    • Real Avg Weekly Earnings y/y, Oct., (prior 2.2%, revised 2.3%)
  • 9:15am: Industrial Production, Oct., est. 0.1% (prior -0.2%)
    • Capacity Utilization, Oct., est. 77.5% (prior 77.5%)
    • Manufacturing (SIC) Production, Oct., est. 0.2% (prior -0.1%)
  • 10:00am: NAHB Housing Market Index, Nov., est. 64 (prior 64)
  • 10:00am: Mortgage Foreclosures, 3Q (prior 2.09%)
    • Mortgage delinquencies, 3Q (prior 5.3%)
  • 4:00pm: Net Long-term TIC Flows, Sept. (prior $20.4b); Total Net TIC Flows, Sept. (prior -$9.2b)


Let us begin….
Last night, 9:30 pm MONDAY night, TUESDAY morning Shanghai time. Japan Nikkei closed up and Shanghai fell slightly.  Initial fix on yuan lower. Copper down again for 10th straight session/
(courtesy zero hedge)

Japan’s Problems Will Not Be Solved By More QE, RBS Warns

One thing that became abundantly clear about QE long ago even if it hasn’t yet dawned on Mario Draghi or Haruhiko Kuroda, is that the practice of monetizing anything and everything that isn’t tied down (or that you can’t pry from the cold dead hand of an institutional investor), is subject to the law of diminishing returns. 

Put simply: eventually it just stops working in terms of stimulating aggregate demand and/or boosting growth and inflation expectations.

Unfortunately, the deleterious effects of QE are notsubject to the same dynamic.

That is, when you print another say, €750 million to monetize everything from periphery EGBs to SSAs to munis, you invariably impair market liquidity on the way to creating the conditions for dangerous bouts of volatility (see the great bund VaR shock for instance).

Of course when you go full-Kuroda and simply corner the market for ETFs by stepping in to provide plunge protection at the first sign of Nikkei weakness, there’s no telling what kind of chaos you’ve set everyone up for once you step out of the market. Meanwhile, the mad dash to inflate the value of stocks and bonds has served to create enormous bubbles not only in those assets, but also in the things people who hold those assets are likely to buy when they get bored – like real estate and high end art.

In short, the drug addiction analogy (as cliche as it now is) still holds up remarkably well. For a drug addict, the benefits (i.e. the high) diminishes the more the addiction grows, but the harmful effects on the body do not. It’s the same thing with QE. The initial “high” wears off, but the asset bubbles only grow. 

Nowhere is this more apparent than in Japan where just last night, we witnessed the unprecedented “quintuple recession”:

As if that wasn’t bad enough, Japanese business spending dropped 1.3% QoQ – its worst drop since Q2 2014.

Of course the Nikkei is doing just fine, surging right alongside the BoJ’s balance sheet.

In honor of Kuroda and his special brand of Peter Pan-inspired, neo-Keynesian madness, we present a bit of color from RBS’ Alberto Gallo on Japan and QQE.:

QE infinity? Japan re-enters into recession; the Economy Minister suggests that labour unions are still stuck in a deflationary mind-set. The Japanese economy suffered a technical recession again in Q3, contracting -0.8% QoQ on an annualised basis, following a -0.7% drop in Q2.

Inflation has also fallen back again, reaching 0% in September (below). One major reason for this is weak wage growth. 


Why has QQE failed to boost growth and inflation for Japan? Cyclical tools are insufficient to tackle the country’s structural issues. Japan’s problem started in the 1980s, when firms increased debt by 14% of GDP per year to reach 130% of GDP by 1995 (BoJ). This was followed by two decades of slow corporate deleveraging, deflation/weak inflation, near-zero interest rates and compressed bond yields, albeit with few bond defaults. Under PM Abe, the Bank of Japan has stepped up monetary easing by initiating the Quantitative and Qualitative Easing (QQE) programme in April 2013 and expanding it in October 2014. 

However, the issues faced by Japan are more structural, including an ageing population, low investment appetite for corporates and a widespread deflationary mindset as suggested by Amari. 


Japan’s experience suggests that QE has its limits, and could bring a range of side effects, in our view. These include years of tepid growth (see below), the reduction in secondary trading liquidity, an increase in asset ownership by central banks (the BoJ now owns half of the national ETF market), potential formation of asset bubbles and social problems like inequality.



Ok, so in other words: Kuroda isn’t going to be able cure the country’s structural problems which include the well worn issue of Japanese demographics as well the much maligned “deflationary mindset” which seems largely immune to the hum of the BoJ’s prinitng press. Nevertheless, Japan is all-in and is apparently prepared to keep the pedal to the floor until 2018 when, as we’ve documented extensively, the game will officially be up (see here for instance).

In the meantime, as Gallo rightly points out, you can expect an impaired secondary market for JGBs, asset bubbles, and rising inequality (all outcomes we’ve discussed at great length) as Kuroda triples, quadruples, and quintuples down on policies that now seem to be producing around one recession per QE iteration.

Summed up…

Explosion, Fire Reported At Chinese Chemical Factory (Again)

Here we go again. 

Count us incredulous at this point (and we’re sure we aren’t the only ones), but it looks as though there has been yet another explosion at a Chinese chemical facility, this time in Liaoning.

The blast triggered what looks like a sizable fire and the cause is under investigation. Allow us to speculate: either some factory owners with Party connections were able to skirt safety restrictions again possibly leading to the catastrophic loss of life and the release of untold pollutants into the air and water or else someone had some excess inventory they needed to vaporize.

Images are below from CCTV:

 Hollande unleashes a 2nd day of ISIS strikes but strangely they are targeting abandoned areas.  Most of the damage is done by the Russians
(courtesy zero hedge)

“France Is At War”: Hollande Unleashes 2nd Day Of ISIS Strikes, Mobilizes 115,000, Moves To Change Constitution

France, still reeling from the carnage that unfolded in the streets of Paris last Friday, conducted dozens upon dozens of police raids on Tuesday, after more than 160 similar operations carried out on Monday led to the discovery of numerous weapons including a rocket launcher, Kalashnikov, and a bulletproof vest.

French authorities are still largely in the dark regarding how many people were ultimately involved in the attack and with suspected “mastermind” Abdelhamid Abaaoud out of reach in Syria, police are focused on locating Salah Abdeslam who allegedly helped with logistics and rented a black Volkswagen Polo used by the gunmen who stormed the Bataclan concert hall.

Of course really, the raids are a frantic attempt to track down and neutralize anything and everything before something else bad happens. As Prime Minister Manuel Valls said on France Inter radio, “we don’t know if there are accomplices in Belgium and in France… we still don’t know the number of people involved in the attacks.”

Interior Minister Bernard Cazeneuve says more than 100 people have been placed under house arrest and dozens have been arrested in the sweeping crackdown. “Under a state of emergency – which has been in place since the attacks on Friday – security services, police have extra powers and freedom to make arrests, search houses and confiscate weapons without judicial oversight,The Sydney Morning Herald notes.

President Hollande told a joint session of the French parliament on Monday that “France is at war” and that he wants the state of emergency extended by three months. Hollande also proposed constitutional changes. As The Herald put it on Tuesday, Hollande wants “to create a new version of ‘exceptional measures’, giving the government some emergency powers available under martial law.” Here’s Le Monde (translated), noting that Hollande’s proposals mirror George Bush’s Patriot Act:

But that wants Francois Hollande, is “to provide an appropriate tool for founding taking exceptional measures, for a certain period without going through the state of siege nor deny civil liberties”. Clearly, this would be a somewhat state of emergency “light” in terms of the powers granted to the State, but may last longer. A proposal which is not without recalling the “Patriot  Act” that the Bush administration had vote after September 11, 2001.

Here’s the bullet point summary from BBC:

  • Extension of state of emergency by three months
  • Changes to the constitution to allow the government to revoke citizenship of any convicted terrorists of dual nationality.Currently only those born outside France and naturalised can lose their citizenship
  • Measures to speed up expulsion of foreign nationals considered a threat to public order
  • Budget increases and extra recruitment to security forces and judiciary

If some of that sounds like it could be a slippery slope to you, you’re probably correct. “Those returning from Syria could be placed under house arrest,” AFP reported, citing a government source.

Cazeneuve also said 115,000 security personnel have been mobilized in order to “ensure Frances security.” The police officers, gendarmes and soldiers are being deployed across France. Hollande also evoked a never before used clause in the Treaty on EU which compels member nations to provide France with “aid and assistance by all means in their power”

Meanwhile, the aircraft carrier Charles de Gaulle will be deployed to the eastern Mediterranean while French fighter jets pounded Raqqa for the second day in a row. Residents of the city (or “captives” as they might more appropriately be called given the fact that between ISIS and airstrikes they live in a perpetual state of paralysis), describe the last two nights as “insane.” On activist who spoke to al-Jazeera described two “insane” nights and interestingly, also said that the French aren’t really bombing anything and the only real damage is being done by the Russians:

However, a media activist in Raqqa, who spoke on condition of anonymity, told Al Jazeera on Tuesday that French air strikes had targeted abandoned ISIL bases in the suburbs of the city where there are no civilians or ISIL fighters. 


“It has been two insane nights. Abandoned ISIL posts were targeted at the entrance of the city, along with ISIL checkpoints and several other points. Electricity and water have been cut off as supply lines were hit too.


“We can confirm that there were no civilians killed or injured in the latest French air strikes.


The Syrian activist in Raqqa said that in the past few days Russian air strikes had caused the most destruction.


“Last week, Russian air strikes destroyed one of the main bridges in the city in addition to the national hospital. Most hospitals in the city have been destroyed in Raqqa,” he said.


“Russian air strikes have resulted in so much destruction. If these countries wanted to bomb the heartland of ISIL, they could have done so. But they still have not targeted the group’s most important bases.


“This is what we do not understand. The targets bombed by French warplanes were mostly abandoned by ISIL fighters.


“Raqqa is devastated. Raqqa has endured the unbearable and we live in fear under ISIL’s dictatorship.


“A lot of people fled the the city. In fact, most refugees heading to Europe are from Raqqa.

This is al-Jazeera so you have to consider the source, but a couple of things stand out. First, the notion that the French, using US “intelligence” are hitting targets where there are no fighters. The Russians, on the other hand, are hitting anything and everything which could hint at what many have alluded to all along – namely that the US is either i) intentionally avoiding ISIS, ii) scared of collateral damage, or iii) some combination of both and that’s now finding its way into French strikes via the provision of intelligence from Washington to Paris. Second, the Russians are the ones doing the real damage to ISIS although there is of course the allegation that they are targeting hospitals because now days, everyone has to accuse everyone else of bombing hospitals.

Finally, note that now, the French are doing exactly what they and other Western powers accused Russia of doing last month at Aleppo: exacerbating the migrant crisis by wreaking havoc on populated areas.

But we suppose they had no choice…

Hannover Police Warn “Find Safety, Don’t Stay In Groups” After Ambulance Full Of Explosives Discovered

Latest (via

Four days after the terrorist attacks in Paris was canceled shortly before the scheduled kick-off in Hannover the international football match between Germany and the Netherlands. According to information from the local paper, an ambulance has been discovered with explosives.


In the field of the stadium in Hanover is a so-called troublemaker have been seen, which is known to the authorities. Security forces have also discovered an ambulance, which housed explosives

The officers at the roadblocks near the stadium now control also police cars and ambulance stations who want in the area. There are rumors that an emergency vehicle was loaded with explosives.




Recent Update:



The soccer stadium in Hannover, Germany, is being evacuated and stadium loudspeakers say the game has been cancelled.


The stadium was hosting a match between Germany and the Netherlands. Many top German officials, including Chancellor Angela Merkel, were scheduled to attend the match to show they will not bow to terrorism.

On Friday, a match between Germany and France in Paris was the site of numerous explosions in a terror attack that killed at least 129 people throughout the city. One of the attackers reportedly attempted to enter the stadium with a ticket after the game had begun but was turned away. He then detonated his explosive vest.
In addition to the game in Germany, France and England are scheduled to play a friendly at Wembley Stadium on Tuesday afternoon.
However, Tuesday’s scheduled match between host Belgium and Spain was cancelled on Monday amid security concerns, and many fans were worried that it might mean the disruption of Euro 2016 next year. Tournament organizers said earlier in the day (before the Hanover evacuation) that the event would go on, however.
We will update this post as news comes in.
As we detailed earlier,
Anxiety remains high across Europe. The Germany-Netherlands soccer exhibition match scheduled to be held in Hanover tonight has been canceled, city police spokeswoman Stephanie Weiss says by phone. While no reason was confirmed, DPA reported the discovery of a suspicious suitcase earlier (which police said posed no threat).


Police sealed off the stadium for the friendly international between Germany and the Netherlands for half an hour Tuesday after the discovery of a suspicious suitcase.


The stadium and some roads in the area were closed before police said little over two hours before kick-off that the object posed no threat.


Extra police, many armed with automatic weapons, has been deployed for the game as security was beefed up after the terror attacks in Paris on Friday. All available police officers were being deployed in Hanover, a police spokeswoman said without giving further details.


The German football federation (DFB) had considered calling off Tuesday’s match as Germany were playing France at the Stade de France north of Paris when the attacks occurred.


However federation and team officials agreed to go ahead with the friendly international in solidarity with France and the relatives and victims of the Paris attacks.


Chancellor Angela Merkel and several senior cabinet members are due to attend the match at the HDI Arena.


Several thousand tickets for the game remained unsold at midday and unlike previous internationals or Bundesliga games in Hanover few fans were seen in the city centre hours before the game.

But now:

Putin Confirms Egypt Plane Crash Due To Bomb Explosion, Offers $50 Million Reward For Info On Terrorists

The world may have moved on from the tragic terrorist attack that took place just three weeks ago above Egypt’s Sinai peninsula, which killed all 224, but for some inexplicable reason Russia refused to admit what was obvious to most from the first minutes since ISIS released a video clip of the midair explosion: that the crash was the result of a bomb set to go off shortly after take off. But no longer.

Moments ago the Kremlin confirmed for the first time on Tuesday that a bomb did bring down a Russian passenger plane that crashed over the Sinai Peninsula in Egypt on Oct. 31, killing all 224 people on board.

“One can unequivocally say that it was a terrorist act,” Alexander Bortnikov, the head of Russia’s FSB security service, told a meeting chaired by President Vladimir Putin, according to a transcript published on the Kremlin’s web site.

Bortnikov added that during the flight, a homemade device with the power of 1.5 kilograms of TNT was detonated. “As a result, the plane fell apart in the air, which can be explained by the huge scattering of the fuselage parts of the plane.”

This not the first time that Russia has faced “barbarous terrorist crimes, more often without apparent causes, outside or domestic, as it was with the explosion at the railway station in Volgograd at the end of 2013.” Bortnikov added: “We haven’t forgotten anything or anyone. The murder of our nationals in Sinai is among the bloodiest crimes in [terms of] the number of casualties.”

Putin also spoke, vowing to find and punish the culprits behind the Sinai plane attack. “Our military work in Syria must not only continue. It must be strengthened in such a way so that the terrorists will understand that retribution is inevitable.”

“The murder of our people in Sinai is among the bloodiest crimes in terms of the number of victims. We won’t wipe the tears out of our souls and hearts. This will remain with us forever. But it won’t stop us from finding and punishing the perpetrators.”

According to RT, Russia will act in accordance with Article 51 of the UN Charter, which provides for countries’ right to self-defense, Putin said. “Those who attempt to assist criminals should be aware that the consequences of such attempts will be entirely their responsibility,” he added.

Finally, just to make sure Russia gets its blood debt repaid, The Russian Federal Security Service director also announced a reward of $50 million for information on those behind the terror attack on the A321.

And in a parallel development, of which there will soon be many more, Independent reported that Egyptian security forces shot dead 24 Isis militants in central Sinai, 70 km from the crash site of the Russian passenger plane the group claimed it brought down, security sources have said.

Security sources said they killed the militants as they hid inside a cave in a mountainous area and that they arrested eight of them.

Sinai Province, Isis’s Egypt branch, is active in North Sinai where two years ago it launched an insurgency and has since killed hundreds of soldiers and policemen. It is rarely active outside that area.

Assuming there were higher powers behind the Russian plane bombing than just a bunch of cave-dwelling a la carte terrorists, those arrested may just be tempted enough by the $50 million award to reveal who the mastermind behind this particular terrorist attack was.


Petrobras cannot keep its debt problems under control
They just might not make it.
(courtesy Nick Cunningham/

Future Of Brazil’s Oil Industry In Serious Doubt

Submitted by Nick Cunningham via,

Oil market analysts keep a close watch on the weekly and monthly production figures from the U.S. EIA, watching for a sign that a contraction in output will help to balance global supply and demand.

There are a few reasons why so much attention is paid to the U.S., rather than other places around the world. First, the U.S. has consistent and reliable data, unlike a lot of other places, which makes analysis easier. Second, the U.S. is the principle culprit behind the collapse in oil prices, as its rapid run up in production pushed supplies well beyond demand. Third, U.S. shale, the source of the recent uptick in supply, rises and falls much more quickly than conventional oil fields, especially large-scale projects such as deep offshore.

Still, it is useful to pay attention to supply changes from outside the U.S. For example, in its Novemberreport, OPEC raises a few red flags on Brazil, where a deteriorating economy, a simmering corruption scandal, and a major pullback in the state-owned oil firm Petrobras, could all conspire to cut into Brazil’s oil output.

Brazil’s inflation has jumped to its highest level since 2003, running over 10 percent according to the latest figures. The central bank hiked interest rates to 14.25 percent, the highest in nine years to combat inflation, but so far it has been unsuccessful. Meanwhile, GDP is shrinking, with an expected contraction of 2.2 percent in 2015. And the unemployment rate has hit 7.6 percent, the highest since 2010.

Brazil is expected to increase oil production by 180,000 barrels per day in 2015, hitting 3.04 million barrels per day (mb/d). But 2016 is a different story. Petrobras has been embroiled in a corruption scandal since last year, which has cost the company tens of billions of dollars. Given that Petrobras was already the most indebted oil company in the world, major cut backs in spending were in order.

OPEC sees Brazilian oil production plateauing as soon as next year. That is a pretty significant development considering the fact that, not too long ago, Petrobras thought output would continue rising rapidly through the rest of the decade. But Petrobras is slashing investment in its mature oil-producing assets in the Campos Basin, where much of Brazil’s output comes from. These large fields have steep decline rates, and the losses are starting to show up in the data. OPEC cites the Marlin field, a field that produced 240,000 barrels per day in 2014, but suffered a staggering decline in output this year, dropping 30 percent (although some of that is due to maintenance). Several other significant fields, including Roncador in the Campos Basin, have also posted declines recently, even though, again, Petrobras attributes the slump to maintenance.




The significant slowdown in capital investment on behalf of Petrobras means that the depletion from maturing fields could at some point overwhelm new production. Brazil increased production this year, but that was because it still had a backlog of new projects coming online. But the project pipeline is drying up. “[D]ue to few Brazilian projects coming online in 2016, remarkable growth is not foreseen,” OPEC concluded in its latest report.

The strike of oil workers in early November impacted at least 450,000 barrels per day of production. Unions are upset about Petrobras’ planned asset sales, which they see as a backdoor move at privatization. Petrobras, desperate to slash its debt burden, sees asset sales as a necessary evil. The work stoppage impacted output at 50 oil platforms. The two sides recently reached an agreement on November 13 to end the strike, which will include a pay raise of 9.53 percent, and the company will also produce a report within 60 days that studies alternatives to cuts in investment. However, it is unclear how Petrobras can turn around its debt situation while still satisfying worker demands to resist spending cuts.

That puts Brazil’s oil future in serious doubt. For years, Brazil and Petrobras hailed the country’s pre-salt fields as a ticket to its elevation on the global stage. To be sure, pre-salt production is slowly ticking upwards. But pre-salt oil fields will only breakeven at $55 per barrel, according to OPEC, despite Petrobras assurances that it can be profitably produced at $45 per barrel. “Some of its most important and highest producing fields may be operating at a loss,” OPEC concluded.

 Baltic dry index crashes again
(courtesy Baltic Dry Index/zero hedge)

Baltic Dry Index Crashes Near Record Low

The Baltic Dry Index staged a recovery mid-year, hopefully rising amid promises of stability in China and an ‘escape’ velocity USA. All that centrally-planned hope and hype faith has been eviscerated on the altar of economic reality. With no ability to directly manipulate the Baltic Dry Index to ‘pretend’ everything is awesome, it remains among the best ‘real’ indicators of the state of the global economy… and it’s in the toilet…


From hope to nope…


The Batlc Dry nears all-time record lows once again…


In fact, for this time of year, it has never been lower…


But apart from that, buy stocks because terrorism rocks and The Fed would not be raising rates unless everything was awesome, right?


Charts: Bloomberg




Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/TUESDAY morning  7:30 am

Euro/USA 1.0664 down .0022

USA/JAPAN YEN 123.28 up .021

GBP/USA 1.5210 up .0012

USA/CAN 1.3325 down .0006

Early this morning in Europe, the Euro fell by 22 basis points, trading now just above the 1.06 level falling to 1.0664; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore,and now Nysmark and the Ukraine, along with rising peripheral bond yield. Last night the Chinese yuan down in value (onshore). The USA/CNY up in rate at closing last night:  6.3786  / (yuan down) 

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  southbound trajectory  as settled down again in Japan by 2 basis points and trading now well above the all important 120 level to 123.28 yen to the dollar.

The pound was down this morning by 12 basis points as it now trades just above the 1.52 level at 1.5210.

The Canadian dollar is now trading up 6 basis point to 1.3325 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 TUESDAY morning:closed up 236.94 or 1.22% 

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

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

Gold very early morning trading: $1079.10


Early TUESDAY morning USA 10 year bond yield: 2.29% !!! up 2 in basis points from Monday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield falls to  3.08 up 1 in basis point.

USA dollar index early Tuesday morning: 99.51 cents up 13 cents  from Monday’s close. (Resistance will be at a DXY of 100)

This ends early morning numbers Tuesday morning

Oil is not buying the rally on NYSE/Nasdaq
(courtesy zero hedge)

Oil Ain’t Buying It

Yesterday’s surge-pricing in US equities driven tick-for-tick by a remarkable rip in WTI crude prices (as despite 3 billion barrels of excess inventory, decided to rip on Mid-East war tensions) appears to be losing its anchor. Once again, USDJPY 123.00 will be all that matters…


There is simply no land storage for oil:
(courtesy zero hedge)

Beware Buying Crude: Oil Storage Is “Increasingly Full”

If you follow geopolitics and the oil market (and really, you can’t follow the latter without following the former) you might be wondering whether the tragedy that took place in Paris last Friday may be enough to override the fundamentals for a while.

That is, if ever there were a catalyst that had a chance of bringing about a sustained rally in crude, surely the prospect of World War III starting in the Middle East is it.

Well, before you get any ideas about BTFD-ing via some nightmare of a triple leveraged crude ETF, you might want to consider that no matter how close we get to a global conflict in Syria, the world is simply awash in black gold and with more Iranian supply set to come online starting as early as Q1, the fundamental picture will likely overshadow all other concerns.

Or at least that’s Citi’s take. 

“The Paris tragedy may warrant some uptick in geopolitical premia but this is likely trumped by near-term negative impacts on European air travel and/or economic blowback, adding further weight to the market,” Chris Main writes, in a note out Tuesday.

As Main goes on to note, there simply isn’t much on-land storage left and once the Iranians are up and running at full capacity, the “problem” will only get worse. Consider the following:

On-land storage is getting increasingly full, with Citi estimating around 47-m bbls of available ex-US commercial storage left.

Oil in “quasi-storage”, which is oil on the water that is yet to be delivered but has not been earmarked for floating storage, is on the rise at ~100-m bbls of combined crude and oil products.



Up-to-date observed stock data and capacities have always been hard to come by, but our best estimations put available crude storage in Europe, Japan, South Korea, China and Saldanha Bay at 46-m bbls. Table 2 shows the availability and current levels of crude in-tank by region. Europe, Japan and South Korea are benchmarked vs. previous maximums, which given refinery closures may even estimate on the high-side. 



The overhang of WAF barrels and current levels of crude on the water mean on-land storage getting full in 1H’16, particularly if Iranian barrels come back earlier in the year. 


In short: “The US is the last place with significant onshore crude storage space left.”

Which leads directly to Citi’s conclusion: “‘Sell the rally’ near-term as fundamentals remain very sloppy and inventory constraints are becoming increasingly more binding.”

API shows a modest inventory draw but Cushing reports a big buildup
(courtesy zero hedge)

Crude Jumps After API Reports Modest Inventory Draw (First In 8 Weeks) Despite Another Big Build At Cushing

After seven straight weeks of significant inventory builds, API reported a modest 482k draw. That was all the algos needed and WTI immediately ramped back above $41.00. However, what they likely missed was the 2nd weekly (huge) build in Cushing (1.5mm barrels) as we warned earlier on land storage starting to really fill…

Cushing saw another big build…


And crude reacted…


As we noted earlier,

In short: “The US is the last place with significant onshore crude storage space left.”


Which leads directly to Citi’s conclusion: “‘Sell the rally’ near-term as fundamentals remain very sloppy and inventory constraints are becoming increasingly more binding.”

Charts: Bloomberg


And now for your closing numbers for Tuesday night: 3:00 pm
Closing Portuguese 10 year bond yield: 2.57% down 11 in basis points from Monday
Japanese 10 year bond yield: .299% !! down 4/10 in basis points from Monday and extremely low
Your closing Spanish 10 year government bond, Tuesday down 3   in basis points.
Spanish 10 year bond yield: 1.77%  !!!!!!
Your Tuesday closing Italian 10 year bond yield: 1.56% down 1  in basis points on the day: Tuesday/ trading 21 basis points lower than Spain.
Closing currency crosses for TUESDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 Euro/USA: 1.0653 down .0032 (Euro down 32 basis points)
USA/Japan: 123.37 up 0.109 (Yen down 11 basis points)
Great Britain/USA: 1.5212  up .0014 (Pound 14 basis points
USA/Canada: 1.3315 down .0017 (Canadian dollar up 17 basis points)

USA/Chinese Yuan:  6.3700 up .0000 on the day (yuan flat)

This afternoon, the Euro fell by 32 basis points to trade at 1.0653.  The Yen fell to 123.37 for a loss of 11 basis points. The pound was down 14 basis points, trading at 1.5212. The Canadian dollar rose by 17 basis points to 1.3315. The USA/Yuan closed at 6.3700
Your closing 10 yr USA bond yield: down 1 in basis points from Monday at 2.26%// ( trading at the resistance level of 2.27-2.32%)
USA 30 yr bond yield: 3.04 down 3  in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 Your closing USA dollar index: 99.62 up 23 cents on the day  at 2:30 pm
European and Dow Jones stock index closes:
London:  up 122.38 points or 1.99%
German Dax: up 257.81 points or 2.41%
Paris Cac up 133.00 points or 2.77%
Spain IBEX: up 239.30 points or 2.36 %
Italian MIB: up 498.03 points or 2.28%
The Dow: up 6.49  or .04%
The Nasdaq: up 1.40 or .03%
WTI Oil price;  40.70
Brent OIl:    43.64
USA dollar vs Russian rouble dollar index:  65.03 up 29/100 roubles 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:

One Terror Attack Too Many? Equity Exuberance Fizzles On Late German Bomb Scare

Yesterday terrorism was awesome for stocks… today not so much…


Seems like it’s all about Europe again…


Mainstream media explains…


But bonds saw an aggressive safety bid…


Decoupling from stocks…


And crude gave up yesterday’s excited gains… (as precious metals caught no bid)


And Crude decoupled from stocks…


Stocks ended the day mixed – giving up early gains. Remember we saw the weakest Industrial Production growth since 2009 today!!!


But some individual names were utterly destroyed…

SunEdison… (hedge fund liquidation)


VRX ended with a 60 handle…


GNC was crushed down 27% before boucing back (govt probe)


VXX (the VIX ETF) surged…


As VIX and Stocks decoupled… note that everything ramped when the NYSE options broke…


The dollar kept rising…


In fact the Trade-Weighted Dollar hit a 12 year high…


Gold closed at new Feb 2010 lows, down 14 of the last 15 days…


China Copper has collapsed to 2009 lows…


Crude ended the day with the lowest close since August 26th…


Charts: Bloomberg

The two biggest rises in consumer prices were healthcare costs and housing costs (rents)
(courtesy zero hedge)

Healthcare & Housing Cost Surge Sparks Biggest Rise In Core Consumer Prices Rise In 16 Months

Following September’s strongest Core CPI gain since June 2014, October accelerated that modestly withCPI ex food and energy rising 1.9% YoY. Broad CPI rose 0.2% YoY (slightly better than the 0.1% expected rise) – the highest sicne December. Month-over-month saw new and used vehicle prices drop,Apparel prices drop 0.8% (most since Dec 2014), PCs drop 0.9%, but was notably offset by the bigger-weighting in Medical Care which rose 0.7% MoM (3.0% YoY) and Shelter rose 3.2% YoY.



The Breakdown….


The index for all items less food and energy increased 0.2 percent in October, the same increase as the previous month.

  • The shelter index continued to rise, increasing 0.3 percent for the second consecutive month. The rent index rose 0.3 percent and the index for owners’ equivalent rent advanced 0.2 percent. The index for lodging away from home increased 0.8 percent, the same increase as in September.
  • The medical care index rose 0.7 percent in October, its largest increase since April. The hospital services index increased 2.0 percent, the index for prescription drugs rose 0.1 percent and the physicians’ services index was unchanged. The index for personal care increased 0.5 percent in October, its largest increase since January.
  • The index for airline fares turned up in October, rising 1.5 percent and ending a string of three consecutive declines. The index for recreation increased 0.2 percent, the index for alcoholic beverages rose 0.6 percent, and the tobacco index advanced 0.4 percent.

In contrast to these increases, the apparel index declined in October, falling 0.8 percent, its largest decline since December 2014. The index for new vehicles, which fell 0.1 percent in September, fell 0.2 percent in October. The index for used cars and trucks declined for the sixth month in a row, falling 0.3 percent. The index for household furnishings and operations also declined in October, falling 0.1 percent.

The index for all items less food and energy has risen 1.9 percent over the past 12 months; this is the same figure as the 12 months ending September. Indexes that have increased more rapidly include
shelter (3.2 percent) and medical care (3.0 percent). Among the indexes that posted smaller increases are recreation (0.6 percent) and new vehicles (0.1 percent). Indexes that declined over the past year include airline fares (-5.2 percent), apparel (-1.9 percent) and used cars and trucks (-1.4 percent).

Indexes that have increased more rapidly include shelter (3.2 percent) and medical care (3.0 percent).


Charts: Bloomberg

The cost of renting rising at an extremely fast pace:
(courtesy zero hedge)

Thanks Janet – The Cost Of ‘Renting’ In America Is Rising At Its Fastest Pace In 8 Years

The cost of ‘living’ in America in anything but a cardboard box under an overpass is rising at its fastest rate in 8 years. Both overall “shelter” and “rent” inflation are running at their hottest pace of the ‘recovery’... and this is happening as wage growth remains stagnant despite the promises that any minute now it will rise. Well done Janet…

Neofeudalism rules…


Of course, we already knew this:


And as to why this is a concern:

Which is why the market reacted the way it did, and pushed the USD promptly higher in a kneejerk reaction – because while the Fed is boxed in all other fronts, if Yellen is indeed worried about that most important concern to all Americans, namely affording the roof over their heads, then now is clearly the time to hike rates and prick the rental bubble before it gets so big, the primetime news are flooded with coverage of Americans sleeping under bridges because they can no longer afford rent (forget mortgage).

(zero hedge)

US Industrial Production Growth Slumps To Weakest Since January 2010

Following September’s 0.2% MoM drop, October’s Industrial Production dropped a further 0.2%(missing expectations of a 0.1% rise by a mile). This is the 9th MoM drop in the 10 months of this year. Utilities (-2.5%) and Mining (-1.5%) were big drivers, as year-over-year, IP rose just 0.34% – the weakest growth since January 2010 – is flashing recessionary signals loud and clear.


9 of the last 10 months have seen declines in Industrial Production… (not seen outside of a recession)


And YoY, these levels have not occurred outside of a recession…


We know, we know – ignore it! Means nothing because US is a Service Economy, right?!! ok.


Charts: Bloomberg

After a rise in October, we now have homebuilder sentiment fall for the first time in over half a year:
(courtesy zero hedge)

Homebuilder Sentiment Drops For First Time In 6 Months

Despite plunges in new and pending home sales (current) and lumber prices (forward-looking),Homebuilder Sentiment surged in October to its highest in over 10 years. November appears to be ushering in some sense of reality check. Having revised up October to 65 (from 64), November saw sentiment drop to 62 – the first drop since May. The Southern and Midwest regions saw overall drops in sentiment as The West rose to new cycle highs. Both current and future sales expectations dropped notably but – despite all the blather about weather – prospective buyer traffic rose to its highest sicen October 2005!



Charts: Bloomberg


Charts: Bloomberg

Oh oh!!  Gartman is bullish on the market spells trouble;
(courtesy zero hedge)

Dennis Gartman Is Shocked That Terrorism Is Bullish, No Longer Bearish; Covers Shorts

Yesterday, just before the market open, to help allay any confusion about what the market would do we provided the perspective of the biggest fade in market history, Dennis Gartman, who was quite bearish.

Clearly we wish that we had had the presence of mind to have been aggressively net short of equities, but we did not, nor are we that lucky. We shall, however, look upon any intra-day rally in the market as a point at which to become modestly shorter of the market. That is, given the range thus far with the low in the S&P futures just below 2000 in early trading, and given that the futures are now 2015, this is sufficient to sell into to become slightly net shorter of the market. This shall be especially worthy of selling into given that the futures “gapped” lower of course and given that the “gap” has been closed on this modest rally from the lows.

As we further said, “we note this just in case the BOJ needed one more reason to buy a few yards of USDJPY and send the S&P right back up to 2100.”

Sure enough, the BOJ, both directly and indirectly via Trust banks, proceeded to unleash an unprecednted rally in the USDJPY carry, dragging the E-mini 50 points higher from its overnight lows.

So where is Gartman now?

Well, just as yesterday was a warning to the bears, today we have a warning to the bulls because, you guessed it, Gartman just covered all is virtual money “shorts.”

But first, here is Gartman’s shocked amazement that in a rigged, centrally-planned market where every uptick is meant to inspire nothing more than confidence in a failing system, a terrorist event could lead to a market surge:

SHARE PRICES HAVE FLOWN HIGHER, MUCH TO OUR SURPRISE for we had no idea that when terrorists kill nearly 130 people in Paris and wound several hundred more, with more than 150 of those wounded in critical condition, that that is very bullish of stock prices, but apparently it is. Apparently terrorist attacks are supportive of stocks… apparently! We have been wrong in times past, and we have been wrong badly before, but we cannot recall every having been as wrong as we were yesterday for we were certain that terrorism is a bad thing for equity investment. We were certain that when cultures clash, as Islam and the West are clashing, stock prices should weaken. We were certain that terror is detrimental to business conditions. We were wrong. Apparently all of these things are marvelously supportive of stock prices. Apparently, terror is stimulative to the economy, and apparently any thoughts on the part of the monetary authorities in the reserve currency nation to raise the o/n base rate by the barest of minimums can now be pushed aside because terror trumps any and all other investment concerns.

That said, it is somewhat disheartening to see even Gartman lose faith in central-planning.

We learn new things every day. Hence, if we are bullish of equities apparently we need to ask for more terror to be wrought upon us; we need to see thousands of deaths, rather than mere hundreds, to push stock prices even higher. We are indeed in a brave new world. It is a world we are not particularly fond of, however, if this is the new reality.

It’s all good Dennis; Just sit back and laugh – we do it every day.

Finally, for those looking to fade the next Gartman trade, here it is:

So what have we done in our retirement funds here? Initially as reported, having come into yesterday’s market slightly… very, very slightly… net short, we got a bit shorter very early in the session. However, by mid-morning we knew we were wrong. How did we know that? We knew that because that which we sold had moved a full percentage point against us, and the market is the final arbiter of positions. We were wrong. We were clearly and obviously wrong, and when wrong the only possible action to take is to get less wrong; to cover that which had been done and to retreat to the sidelines. We did precisely that, covering in the short positions we had had in the derivatives markets and buying a bit more of that which we had been long of… tanker stocks… to end the day net neutral, or as close to net neutral as we could get ourselves.


Do we believe this rally? No, we do not. We refuse to believe that “terror” is bullish. We refuse to believe that the deaths of 129 innocent people by madmen are materially supportive of stock prices. We refuse to accept the notion that the odds of a Fed tightening are reduced modestly and that that is massively supportive of stock valuations. We refuse to believe that common sense has been cast overboard entirely, and so neutral we are and neutral we shall be. We are wise enough not to stand astride of the market and scream aloud that the market is wrong and that we are right, and so we’ll not be short, but neither shall we accept the notion that what happened in Paris on Friday is equity bullish. Sometimes it is just best to hove to the sidelines and watch; we’ve hoved! We’re watching.

Don’t forget laughing, Dennis..




My goodness:  now 27 states oppose entry of Syrians:

(courtesy zero hedge)

Refugee Blowback: More Than Half Of America’s Governors Oppose Entry Of Syrians

First it was Texas. Then five other states – Louisiana, Alabama, Arkansas, Indiana, and Michigan – promptly followed in the footsteps of the Lone Star State in refusing to admit any Syrian refugees, despite the Obama administration promises to “carefully vet” any Syrian asylum seekers who may be headed to the US in 2016, some 10,000 according to early estimates.

It has since became an avalanche, and at last check, at least 27 states – represented by more than half the nation’s governors – say they oppose letting Syrian refugees into their states.

According to the count done by CNN, states protesting the admission of refugees range from Alabama and Georgia, to Texas and Arizona, to Michigan and Illinois, to Maine and New Hampshire. Among these 27 states, all but one have Republican governors.

Some leaders say they either oppose taking in any Syrian refugees being relocated as part of a national program or asked that they be particularly scrutinized as potential security threats.

Only 1,500 Syrian refugees have been accepted into the United States since 2011, but the Obama administration announced in September that 10,000 Syrians will be allowed entry next year.

The Council on American-Islamic Relations said Monday, “Defeating ISIS involves projecting American ideals to the world. Governors who reject those fleeing war and persecution abandon our ideals and instead project our fears to the world.”

* * *

A sampling of governor comments:

In announcing that his state would not accept any Syrian refugees, Texas Gov. Greg Abbott tweeted Monday on his personal account, “I demand the U.S. act similarly,” he said. “Security comes first.” In a letter to President Barack Obama, Abbott said “American humanitarian compassion could be exploited to expose Americans to similar deadly danger,” referring to Friday’s deadly attacks in Paris.


In a statement from Georgia’s governor, Republican Nathan Deal, he said Georgia will not accept Syrian refugees “until the federal government and Congress conducts a thorough review of current screening procedures and background checks.”


Alabama Gov. Robert Bentley also rejected the possibility of allowing Syrian refugees into his state and connected refugees with potential terror threats. “After full consideration of this weekend’s attacks of terror on innocent citizens in Paris, I will oppose any attempt to relocate Syrian refugees to Alabama through the U.S. Refugee Admissions Program,” Bentley said Sunday in a statement.


As the list of states blocking refugees grows, at least one state, Delaware, announced that it plans to accept refugees. “It is unfortunate that anyone would use the tragic events in Paris to send a message that we do not understand the plight of these refugees, ignoring the fact that the people we are talking about are fleeing the perpetrators of terror,” Gov. Jack Markell said in a statement.

Here is the full map and list of states that have opined either way toward future acceptance of refugees.


States whose governors oppose Syrian refugees coming in:

  • Alabama
  • Arizona
  • Arkansas
  • Florida
  • Georgia
  • Idaho
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Louisiana
  • Maine
  • Massachusetts
  • Michigan
  • Mississippi
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • North Carolina
  • Ohio
  • Oklahoma
  • South Carolina
  • Tennessee
  • Texas
  • – Wisconsin

States whose governors say they will accept refugees:

  • Colorado
  • Connecticut
  • Delaware
  • Hawaii
  • Pennsylvania
  • Vermont
  • Washington

* * *

All that said, the governatorial antics are purely for populist theater purposes: CNN quotes Kevin Appleby director of migration policy at the U.S. Conference of Catholic Bishops, according to whom “when push comes to shove, the federal government has both the plenary power and the power of the 1980 Refugee Act to place refugees anywhere in the country.” He adds that “one tactic states could use would be to cut their own funding in areas such as resettling refugees. The conference is the largest refugee resettlement organization in the country.”

WaPo confirms as much when it says that “state and local officials cannot physically prevent refugees from being resettled in their areas. All refugees who arrive in the United States must first be approved for legal entry by the federal government after a lengthy screening process and that their housing arrangements are made through long-term contracts and relationships with city, county and state governments.”

Governors and state officials do not have the capability to prevent a refugee who is here and admitted lawfully to the U.S. from residing in their state. It is not something they can do,” said Lucy Carrigan, a spokeswoman for the International Rescue Committee. “There is a close collaboration with governors and mayors and community leaders about the capacity of the area for refugees and where they can go, but once they have legal status, you cannot impede their transit between different states.”

A total of about 1,900 Syrian refugees have been resettled in the United States in the past two years, all of them brought directly from camps and settlements in countries surrounding Syria. Carrigan and others said none of them had been part of the wave of migrants coming through Europe. The 1,900 are a tiny fraction of the 4 million refugees who are waiting in camps and settlements outside Syria. The International Rescue Committee, a nonprofit based in New York, has resettled about 250 of these Syrian refugees.

Still, the sense of ill-will toward the aliens will hardly set a welcome setting for new arrivals:

One former resettlement agency official, who asked not to be named, said there have been instances when some state governors declared they would not accept any more refugees, including some from Iraq, and that in those cases the agencies found them housing in a more welcoming region. “It has happened before,” the former official said.


Carrigan said her agency hopes that Americans will “look at what happened in Paris and recognize that this kind of terrorism is exactly what the Syrian refugees are fleeing. They are the most vulnerable of the most vulnerable.”


Matthew Soerens, president of World Relief, noted that refugees sent to the U.S. for resettlement are “completely different” from those “showing up in huge numbers at the borders of Europe.”


They have been vetted by U.S. law enforcement and intelligence agencies and have to wait at least 18 months – sometimes years — before being admitted.


“It would be very short-sighted for a terrorist who wanted to do harm to the U.S. to try and come through a refugee resettlement program,” Soerens said. “They wouldn’t make it in.”

And with that we now know just what the “careful vetting” process involved: the assumption that any potential suicide bombing terrorists are rational and would not be “short-sighted” to do harm to the U.S. by coming through a refugee resettlement program.

In other words, the US government is confident potential terrorists can just police themselves, thank you.

As for the charade of state governors who are screaming against Syrian refugees hoping to score political brownie points, yet who have no authority but to do as the Federal government  instructs them, expect the theatrical status quo to go on and end with a bang when one day a suicide bomber, with a conveniently placed fake Syrian passport next to his mangled body, ends up killing a few hundred Americans in a rural city, or better yet for the second coming of the Patriot Act and the biggest US government apparatus ever, New York City once again.




This is telling!!  The banks pull the deal to purchase Veritas because the cost to the new company is just too great and they would probably go under//LBOs start to lose their efficiency as cost of funding soars…


Buyout Bubble Bursts As Banks Pull Carlyle’s ‘Biggest LBO Of The Year’ Bond Deal Amid Soaring Costs

Ten years after Symantec paid $13.5bn for Veritas, Carlyle Group agreed in August to buy the data-storage business for just $8 billion (the biggest LBO of the year). Of course, the buyout deal made sense when the cost of funding was negligible and The Fed had your back but, as Bloomberg reports, amid soaring borrowing costs, banks have pulled the $5.5 billion debt offering for Veritas signaling a clear end to the reach-for-yield, nothing is a problem, bond market’s risk appetite.. and if ‘growthy’ deals like this are being killed, what does that say for distressed bets on Energy M&A deals?

As Bloomberg noted earlier,

The banks backing Carlyle Group LP’s $8 billion buyout of Symantec Corp.’s data-storage business are facing one of the costliest debt deals of the year to offload part of the financing in the corporate-bond market.


As investors squirm at the amount of debt being piled onto the unit, known as Veritas, underwriters are discussing yields of 11.5 percent to 12.5 percent to lure potential buyers to a $1.775 billion junk-rated portion of the debt, according to people with knowledge of the talks. That would be one of the highest bond yields of 2015 and shows just how risk-averse fixed-income investors have become as the global economy cools and the U.S. Federal Reserve moves to raise interest rates for the first time in almost a decade.


Borrowing costs on junk bonds are soaring back toward a three-year high set last month as investors grow wary of increasing their exposure to risky assets in the credit markets. That is beginning to impact banks that have committed to finance buyouts in the last few months and are now finding it difficult to syndicate the debt.

And it seems the costs were just too much…


This is the 24th loan pulled year-to-date, according to Bloomberg – and by far the largest having already been downsized.

Veritas, which postponed its debt offering due to market conditions, is the second LBO deal to retreat from the market this year after Presidio Inc’s $400m 8NC3 sr notes in Jan.

LBOs start to lose their efficiency as cost of funding soars…


And with broad-based corporate leverage already at record highs, it appears the credit cycle has well and truly turned.


The large hedge fund Sun Edison is collapsing:

SunEdison Is Collapsing (Again)

The bloodbath in hedge fund hotel SunEdison continues but judging by the massive volumes this is those same funds liquidating en masse (following Dan Loeb’s exit and Einhorns’ negative comments)…


Down 57% in the last week alone…


SUNE is back at levels where it cliff-dived in 2012…


Plenty of funds have already liquidated… but there are lots left.


Well that about does it for today

I will see you tomorrow




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