nov 18/Open interest rises for both gold and silver/Base metals fall for the 11th straight day/Glencore rises/OIl breaks into the 39 dollar column/FOMC beige book indicates rate hike a go if data ok/1/3 of Fed voters not sure/1/3 of Fed voters want a rate hike and 1/3 voters are not sure/Hedge fund Sun Edison in trouble/

Gold:  $1068.80 up $0.10   (comex closing time)

Silver $14.08 down 9 cents

In the access market 5:15 pm

Gold $1071.00

Silver:  $14.18

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 205.20 tonnes for a loss of 98 tonnes over that period.

In silver, the open interest surprisingly rose by a huge 1686 contracts despite silver being up by only 2 cents in yesterday’s trading (and gold battered). The total silver OI now rests at 170,721 contracts In ounces, the OI is still represented by .853 billion oz or 122% 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 surprisingly rose by 368 contracts to 435,376 contracts despite gold being down by  $15.00 in yesterday’s trading. It seems the modus operandi of the bandits is to try and liquefy gold/silver OI as we approach first day notice on Monday, November 30. It does not seem to work. 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 1686 contracts up to 170,721  despite the fact that silver was up by only 2 cents with respect to yesterday’s trading.   The total OI for gold surprisingly rose by 368 contracts to 435,376 contracts despite the fact that gold was down by $15.00 with respect to yesterday’s trading.

(report Harvey)

2.  a)Gold trading overnight, Goldcore

(/Mark OByrne)


 i) Last night, 9:30 pm TUESDAY night, WEDNESDAY morning Shanghai time.  Japan Nikkei rises, Shanghai falls slightly.  Base metals falter however Glencore rises to 93 pence.
i) Glencore rises to 93 pence  (LSE)
ii) Greek farmers take to the streets angry at measures passed by Syriza
(zero hedge)
iii) a) Raid on the suspects in Paris suburb, 2 dead/7 arrested
Mastermind A. Abaoud got away
iii b)  German interior minister;  the passport next to the suicide bomber may have been planted!
Amazing that it took them this long to figure this out
iii  c) the killers were targeting the biggest Mall in Paris




i)  Russia now using strategic long range bombers as it targets ISIS.  These bombers can deliver cruise missiles with accuracy and if needed nuclear weapons.  There are reports that key ISIS family members are fleeing Raqqa.

ii) With respect to the Russian airliner downed last month, ISIS now publishes a magazine and they explain how they smuggled a bomb onto the plane
(courtesy zero hedge)
i) Watch for weather patterns to change as El Nino is back!
(Bruce Krasting)
ii) just look at what El Nino did to the California electrical grid
(courtesy zero hedge)



Zero hedge takes a look  at the devastation inside one of the USA’s largest bond fund PIMCO.  In 2002 it invested big time in emerging markets for yield as USA rates were plummeting to zero.   The problem here is that they did not get out and now the Funds Emerging Market Fund has tumbled 62%.
Included in this commentary is the devastation inside the emerging markets with respect to earnings, huge outflows and collapsing currencies:  a catastrophic blend which is creating havoc to those funds which invested in emerging markets.
i) a We warned you yesterday that this was coming with the huge buildup in inventories at Cushing OK.
Oil breaks again into the 40 dollar column early in the morning.
i) b Then it breaks into the 39 dollar column
(courtesy zero hedge)

9 USA stories/Trading of equities

i)  Housing starts collapsed by 11% in October, comfirming a lacklustre homebuilder’s sentiment and collapsing pending sales.

With retail sales plummeting, you can safely say that the USA economy is in a recession or in the beginning of a depression

(courtesy zero hedge)

ii)  Black Rock liquidates a huge Macro fund as redemptions rise and losses increase

(zero hedge)

iii ) Big trouble for hedge fund darling Sun Edison/real assets are worth only 2 dollars per share

(zero hedge)

iv) Criminal charges being contemplated against JPMorgan and others in the 2007-2008 financial mortgage scandal

(zero hedge)

v)   FRBNY Fed governor Dudley states that he expects the Fed rate hike in December as the Fed wants to state that they have confidence in the economy:

which part of the economy?
(courtesy zero hedge)

vi  Fed Governor Lacker is Dow Jones data dependent and now believes that the market has not panicked and thus the fed hike in December is OK with him:


i) Goldcore blog/Mark O’Byrne

ii) Bill Holter’s paper tonight is entitled: “The Economic Pie is Shrinking!” and it is a must read…

iii) Dave Kranzler of IRD reports on that huge withdrawal of 159,000 oz of gold removed from the customer (eligible account) of JPMorgan yesterday that  I reported on to you

(courtesy Dave Kranzler/IRD)

iv)   How the crooks manipulate gold and silver

(courtesy Dave Kranzler/IRD)

vi) Silver mine production to stagnate at around 870 million oz/demand remaining constant despite lower demand for jewelry from China/silver deficit of demand/supply at 42.7 million oz

(Thomson Reuters/Mineweb)

Let us head over to the comex:

The total gold comex open interest rose from 435,008 up to 435,376  for a gain of 376 contracts despite the fact that gold was down $15.00 in 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. For today, the latter stopped.  The November contract lost 0 contracts remaining at 213 contracts. We had 0 notices filed yesterday, so we neither lost nor gained gold contracts that will stand for delivery in this non active delivery month of November. The big December contract saw it’s OI fall by 5,343 contracts from 194,026 down to 188,683. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 152,953 which is  good. The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 208,791 contracts.

Today we had 0 notices filed for nil oz.
And now for the wild silver comex results. Silver OI rose by a huge 1686 contracts from 169,035 up to 170,721 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 rose by 2 contracts up to 32. We had 0 notices filed yesterday so we gained 2 silver contract or an additional 10,000 oz will stand for delivery in this non active month of November. The big December contract month saw its OI fall by only 1,272 contracts down to 70,321. The volume on the comex today (just comex) came in at 44,793, which is good. The confirmed volume yesterday (comex + globex) was excellent at 57,517.
We had 0 notices filed for nil oz.

November contract month:

INITIAL standings for November

Nov 18/2015

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  

353.66 oz  manfra

Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  7716.000


240 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 106,289.1 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) Out of Manfra:  353.66 oz
total customer withdrawal 353.66  oz
We had 1 customer deposit:
i) Into Scotia:  7716.000 oz
240 kilobars

Total customer deposits  7716.000  oz

we had 0  adjustments:

 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 neither gained nor lost any gold contracts or ounces today standing 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) =6,597,418.874   or 205.20 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 205.20 tonnes for a loss of 98 tonnes over that period.
And now for silver

November initial standings/First day notice

Nov 18/2015:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 633,670.700 oz


Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 4980.300 oz


No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 32 contracts 

160,000 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 6,584,782.6 oz

Today, we had 0 deposit into the dealer account:

total dealer deposit; nil oz

we had no dealer withdrawals:

total dealer withdrawals:  nil

we had one customer deposit:

i) Into JPMorgan 4980.300 oz

total customer deposits: 4980.300 oz

We had 2 customer withdrawals:
i) Out of CNT:  28915.700 oz
ii)Our of JPM:  604,755.000 oz??? exactly x.000 oz???

total withdrawals from customer account: 633,770.700   oz

we had 0 adjustments
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 (32) 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 +(32) { OI for front month of November ) -number of notices served upon today (0} x 5000 oz ,=185,000 of silver standing for the Nov. contract month.
we gained 2 contracts or an additional 10,000 oz will stand for delivery in this non active delivery month of November.
again the comex bleeds silver


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 18/no change in gold inventory at the GLD/Inventory rests at 661.94 tonnes
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.18.  inventory 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 18.2015: no change in inventory/rests tonight at 317.256 million oz
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 18/2015:  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 10.4 percent to NAV usa funds and Negative 10.60% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.3%
Percentage of fund in silver:37.6%
cash .1%( Nov 18/2015).
2. Sprott silver fund (PSLV): Premium to NAV falls to+0.23%!!!! NAV (Nov 18-/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV falls to – .84% to NAV Nov 18/2015)
Note: Sprott silver trust back  into positive territory at +0.23% 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)

Bitcoin and The Blockchain – Banks Must Embrace Or “Die”

Editors Note: GoldCore believe that blockchain technology will revolutionise the world of finance, payments and money and may have an impact on the world on a scale of that of the internet.  Hence, the need to keep an eye on this very important evolving technology that has ramifications for us all.

If you thought the internet was disruptive, well you ain’t seen nothing yet … the blockchain cometh!

Charlie Morris is the editor of Atlas Pulse – a newsletter focusing on gold, bitcoin, blockchain and disruptive technology.. He has written an excellent article looking at bitcoin, the blockchain and the ramifications for banks and our financial system.

Symbols for Gold Silver and Bitcoin
Symbols for Gold, Bitcoin and Silver – Atlas Pulse

by Charlie Morris

Bitcoin’s had one hell of a year.

The price of a single bitcoin recently touched $500, which is three times higher than it was in August this year. That’s one hell of a move in a short space of time and I’m going to try and put that into context.

In November 2013, there were just over 12 million bitcoins in circulation and the price touched $1,200, meaning the network was briefly worth $14.4bn. This new form of electronic money had high hopes and some felt it would genuinely catch on as it had the potential to challenge the existing system in global payments.

Bitcoin clearly got ahead of itself and the excitement about the future of money took a turn for the worse.

There were scandals such as the loss of bitcoins at the MT Gox exchange (a bitcoin trading platform), the closure of the Silk Road website (drugs and other bad things) and the banning of bitcoin wallets by Apple (users could no longer transact on their phones).

The lowest ebb came in January this year when the network value briefly dropped below $ bn, a 77% contraction. Many high profile commentators wrote off bitcoin and predicted a future value below $1.

Today the bitcoin network appears to be alive and well. It recently saw total daily transaction volumes rise above $300m. This growth in usage from $50m per day in the summer has caused the price to surge. At $500 per bitcoin, the network value recently touched $7.4bn.

This resurgence is all the more surprising because there have been so many barriers in its path. Regulators have put bitcoin businesses under heavy scrutiny and most banks have refused to deal with them, despite being legitimate and innovative enterprises. In fact, George Osborne showed public support for bitcoin and wants Britain to be a hub for these disruptive technologies.

Before we go into further detail, let’s take a step back and remind ourselves what bitcoin actually is.

In simple terms, bitcoin is electronic cash. It was created on the Internet by ‘miners’ and can be transacted with anyone else who has a bitcoin ‘wallet’. It can’t be copied, cut or pasted, nor can they be minted to infinity.

As I said, there are 14.8 million bitcoins in circulation, and each day approximately 4,000 new coins are created. In exchange for validating all of the transactions carried out by the community, the miners receive the new coins plus some transaction fees. Yesterday’s payout to the miners was roughly $2m. Yes, you read that correctly.

GoldCore: Bitcoin

Given the vast rewards, this process is highly competitive and if you want to mine bitcoins, you’ll need a super computer bigger than GCHQ’s and Nasa’s combined; I’m not exaggerating.

The miners work hard for their money and their primary task is to validate a ‘block’ of transactions every ten minutes (or by my calculations, every 9 minutes and 41 seconds on average). In financial terms, they carry out the ‘settlement’ for bitcoin and perform record keeping functions.

There are roughly 153 blocks created each and every day. They stack up on top of each other and, since bitcoin’s birth on 3rd January 2009, this process has occurred over 382,000 times. Hence the phrase ‘blockchain’ as the transaction data is stored as a ‘chain of blocks’.

The true genius of bitcoin is that it has been built using a database that was designed to transact, whereas a traditional database was designed to store information.

Financial transactions use traditional databases that were invented decades ago. In order for them to transact, they dive inside the computer, find the data they are looking for, change it and then climb back out. That system has worked well, but now the world has something better.

With a blockchain, instead of finding and changing the data, the system continuously adds new layers whilst the past records remain unchanged. This has improved speed, security, transparency and record keeping whilst simultaneously slashing costs.

Crucially, the bitcoin ecosystem is operated by the ‘invisible hand’. There are no employees or maintenance staff behind it. Ask a bank how many people sit in their IT department and the answer will be in the tens of thousands. Bitcoin has survived for nearly seven years with no employees whatsoever, just an open-source community of coders who implement periodic improvements.

Crucially, the bitcoin network is ‘de-centralised’. A bank may backup its database several times, but for bitcoin, there are 5,625 copies (at the last count), known as ‘nodes’. In order to shut down bitcoin, you would need to destroy every single one. That would mean a coordinated effort from 90 different countries including Zimbabwe, Russia and Iran. Good luck with that; the bitcoin network is here to stay.

What can you do with bitcoin?

You can spend it in a growing list of places although, I readily admit, it is far from mainstream. As I said on my recent podcast, I managed to buy a glass of wine in Chamonix and a cup of coffee in Shoreditch, but little else.

That has hardly changed the face of money, but entrepreneurs have created credit cards that transact using bitcoin. That means it is potentially acceptable whenever you see the Visa or Mastercard symbol.

Wall Street has seen this blockchain technology and has taken it into the fold. The banks that intend to survive know that if they don’t take the lead, they’ll die. Those that fail to take an interest will get left behind and so there’s much at stake.

The recent surge in price from $160 in August to $500 was an explosive move. The FT has attributed this to a Russian pyramid scheme called MMM, that has taken off in China. I’m sure this explains much of the recent exuberance, but underlying that, is a self-sustaining network that enjoys underlying growth.

Speculative flurries will come and go but what I am interested in is the trend. If the real usage of bitcoin grows, the price can only rise. We should think of bitcoin like a technology stock where the value is directly related to the size of the network.

This article is from the free daily email Capital & Conflict as published by Money Week. Charlie Morris is the editor of Atlas Pulse; a newsletter focusing on gold, disruptive technology and blockchains.

GoldCore: Your savings in the coming Bail-in Era

Protecting Your Savings In The Coming Bail-In Era – Download Must Read Guide


Today’s Gold Prices: USD 1070.50, EUR 1005.95 and GBP 702.74 per ounce.
Yesterday’s Gold Prices: USD 1080.80, EUR 1013.60 and GBP 710.50 per ounce.

Gold in USD - 10 Years

Gold in USD – 10 Year

Gold closed yesterday at $1069.50, down $13.70 for the day.  Silver was down $0.06 closing at $14.21. Platinum lost $12 to $851.

Gold is steady but set a fresh near six-year low overnight  – the lowest since Feb 2010 – at $1,064.95/oz, after falling 1.2% yesterday. It was gold’s biggest one-day drop in more than a week, and its 21st down day in 24. Gold’s 14-day relative strength index (RSI) remains in oversold territory (below 30) for a tenth session, at 22.5.

Silver is 0.1% higher, platinum‘s a touch lower, and palladium is down 0.4%.

Global silver supplies in 2015 are in deficit for the third straight year as mine production sees its smallest rise in more than a decade, scrap returns drop and miners reduce their hedge positions, a Thomson Reuters GFMS analyst said on Tuesday.

Total silver supply is forecast to fall to 1.01 billion ounces in 2015 – down 3.3 percent from 2014 – with physical demand falling to a lesser degree, down 2.5 percent to 1.06 billion ounces, said Erica Rannestad, senior analyst on the GFMS team presenting the report at a Silver Institute dinner in New York. This brings GFMS’ 2015 silver supply/demand forecast to an annual physical deficit of 42.7 million ounces.

Gunfire and explosions shook the Paris suburb of St Denis early on Wednesday as French police surrounded a building where a Belgian Islamist militant suspected of masterminding last week’s attacks in the French capital was believed to be holed up. Two assailants were killed, including a woman who detonated a suicide bomb, a source close to the case said, adding that the police operation was continuing to flush out two other suspects. The target of the raid, which filled the streets of St Denis with heavily armed police and soldiers, was Islamic State militant Abdelhamid Abaaoud, who was initially thought to have orchestrated the Paris attacks from Syria, police and justice sources said. (Reuters)

Air strikes carried out by French jets and other forces have killed at least 33 Islamic State militants in the group’s Raqqa stronghold in Syria over the past three days, the Syrian Observatory for Human Rights monitoring group said on Wednesday. Citing activists, the Observatory also said that Islamic State members and dozens of the families of senior members had started leaving Raqqa city to relocate to Mosul in Iraq because of security concerns. Mosul is also controlled by Islamic State. (Reuters)

Mark O’Byrne
Mine production stagnates to around 867 million oz/demand remains relatively constant/again we have 42.7 million oz deficit//
(courtesy Thomson Reuters/Mineweb)

Silver mine production stagnates – Thomson Reuters

But silver coin demand hits a record high.

Thomson Reuters | 18 November 2015 12:15

American Silver Eagle

At the Annual Silver Industry Dinner hosted by the Silver Institute, Erica Rannestad, Senior Analyst in the GFMS team at Thomson Reuters, presented the Interim Silver Market Review, which included provisional supply and demand forecasts for 2015. The following are highlights from the report.

Total silver supply is forecast to fall to 1,014.4 Moz in 2015, down 3% from the previous year. This decline is expected to be driven by flat mine production, a 5% drop in scrap return, and net de-hedging of 12.6 Moz. Mine production is slated to total 867.2 Moz this year, up 0.3% from a year ago. This would be the weakest performance since 2002, when mine production fell by 2%. Healthy increases in primary silver mine production, particularly in Mexico, were partially offset by losses in silver output from base metals mines. Scrap supply is expected to fall for the fourth consecutive year, continuing a downward trend that began after annual average prices and scrap levels peaked in 2011.

• Silver bullion coin sales reached a fresh record high in the third quarter of this year, totaling 32.9 Moz, and are up 95% year-on-year, according to GFMS’s bullion coin survey. The slide in silver prices in July and August to six-year lows triggered a surge in buying in the silver coin market, particularly in North America where coin sales increased by 103% to a total of 23.6 Moz in the third quarter. This largely unexpected surge resulted in an unprecedented shortage of current year silver bullion coins among the world’s largest sovereign mints. Silver coin demand is forecast to increase 21% in 2015 to total a record high of 129.9 Moz. Coin demand should account for 12% of physical demand this year, up from 10% in 2014 and just 4% ten years ago.

• Silver demand from the photovoltaics industry is forecast to increase by 17% to total 74.2 Moz this year, just shy of the record 75.8 Moz in 2011. Solar will make up 13% of total industrial demand, up from 11% in 2014 and just 1% a decade ago. Silver demand from ethylene oxide producers is predicted to increase 49% to total 8.0 Moz in 2015, the highest since 2010. Despite increased demand from these industries, total industrial demand is forecast to fall by 4% to 570.7 Moz, and to account for 54% of physical demand in 2015.

Total physical demand is forecast to contract by 2.5% in 2015, to 1,057.1 Moz, primarily driven by a 12.9 Moz drop in electronics demand. Demand from the electronics sector has been falling since 2011, largely owed to thrifting and the trend towards consumer electronics miniaturization. While these trends remain intact in 2015, the decrease has been precipitated by a weaker economy in China, where silver electronics demand is expected to decrease by 7.9 Moz, as well as in other developing countries such as India. China accounts for 28% of silver demand in global electronics fabrication.

• Jewelry fabrication is forecast to total 218.9 Moz, a 2.5% decrease from last year’s level. Jewelry fabrication has increased at a healthy pace in Thailand (14%), the United States (9%) and Italy (8%), while Chinese jewelry fabrication has dropped 25%. This sharp decline is largely attributed to offshoring of jewelry manufacturing to Southeast Asian countries and weaker domestic silver jewelry consumption.

• The silver market is expected to be in an annual physical deficit of 42.7 Moz in 2015, marking the third consecutive year the market has realized an annual physical shortfall. While such deficits do not necessarily influence prices in the near term, multiple years of annual deficits can begin to apply upward pressure to prices in subsequent periods. This year, however, net outflows from ETF holdings and derivatives exchange inventories on a year-to-date basis have lessened the impact of the physical deficit, bringing the net balance to -21.3 Moz.

• Silver prices this year through 13th November averaged $15.91/oz, which was 18.3% lower than in the same period in 2014. The GFMS team at Thomson Reuters forecasts silver prices to average $15.51/oz for the full calendar year.





Dave Kranzler of IRD reports on that huge withdrawal of 159,000 oz of gold removed from the customer (eligible account) of JPMorgan yesterday that  I reported on to you


(courtesy Dave Kranzler/IRD)

24% Of The Eligible Gold Was Removed From JP Morgan’s Comex Vault

I have to give credit to my friend/colleague Craig “Turd Ferguson” Hemke – TF Metals Report – for tweeting this piece of information.  I don’t monitor the Comex precious metals vault reports everyday.

Yesterday 24% of the “eligible” gold being held – supposedly – in JP Morgan’s Comex gold vault left the premises (click to enlarge):Untitled

Briefly to review, the “eligible” gold is the gold that is being “safe”kept at the Comex by investors who took delivery of gold. The Comex actually offers a big discount to the market rate charged for safekeeping to investors who keep their gold in the confines of Comex bank vaults.

I think it’s safe to say that either a big investor who took delivery of the gold and was “safe” keeping it in JPM’s vault decided he would rather provide his own means of safekeeping – understandably so.  OR, it’s entirely possible that the gold was hypothecated and the 100 oz. Comex bars were shipped to Swizterland where they will be refined into the kilo bars used on the Shanghai Gold Exchange.

Whatever the case might be,  the amount removed was 158k ozs, or a little over 4 tonnes. It’s amusing to contemplate this in the context of when Germany asked for its gold being held at the Fed, it took a year for the Fed to ship 5 tonnes…

Craig points out the amount of gold removed from JP Morgans eligible vault is greater than the total amount of gold in all Comex vaults – as reported – that is classified as being “registered,” or available for delivery.   You may note that I keep using the modifier, “as reported.”  If you read the area shaded in yellow at the bottom of the Comex report above, you’ll understand why.

With the bubble in Comex paper gold that has formed this year, there is a high probability that anyone who “safe”keeps their gold at the Comex is facing the increasing likelihood of losing the ability to get that gold delivered upon request.  Just ask Angela and Jens Weidmann (head of the Bundesbank)…



How the crooks manipulate gold and silver

(courtesy Dave Kranzler/IRD(

Gold (Silver) Is The Most Manipulated Market In History

Our fractional reserve financial system is just a gigantic Ponzi scheme. It can only survive as long as it expands, which is to say, as long as new debt is flushed through the system to finance old debt. But like all Ponzi schemes, the larger it grows the more unstable it becomes. Eventually, it collapses of its own weight.  -James Sinclair in 2009

The western Central Bank/bullion bank paper gold manipulators have become obvious. The reason is that the there is nothing stopping them from manipulating the market. Eventually the physical demand from Asia will undermine their paper gold manipulation activities, but big buyers of physical who demand delivery have no reason to stop the price capping, obviously.

James Turk discussed the various factors driving the manipulation in a King World News interview. I’ve created a graphic to illustrate the manipulation of the gold market as it occurred from Sunday into Monday:

This rally in the precious metals was the result of investors moving out of currencies to a safe-haven. It was an expected and natural reaction after the Paris attacks. Then came the unnatural, second and completely different precious metals market. Gold and silver ran into a solid brick wall when London opened. The difference between the way gold and silver traded in Asia and what happened in London was as stark as the difference between night and day.

Are we to believe that in striking contrast to what we saw in Asia, there were no safe-haven buyers in Europe?

The reality is that the central planners were out in full force with their market interventions in London, selling persistently and using their algorithms to prevent gold and silver from climbing any higher.


The price of gold jumped at the open of Globex trading on Sunday evening. This would be expected after a string of bad economic and earnings reports littered the news wires late Friday. And then, of course, the event in Paris. But as you can see, after Asia was done feeding on the cheap gold provided to them from the fierce manipulation last week that drove the price of gold back under $1100, the typical Asia closed/London opens sell-off began.

The massive manipulation has taken on “shock and awe” proportions.  The fact that is has become so blatant and extreme reflects the growing sense of desperation by the elitists to keep the entire western financial/economic system from collapsing.

If gold were allowed to trade free from the control imposed using western paper derivatives, the price would shoot higher and send the warning to everyone that the system is on the verge of collapse.

Several friends and colleagues recently have expressed a high degree of frustration and have asked me when I thought the suppression of gold would end.  I point out them, and I believe correctly so, the the criminals looting our system have no choice but to use any means at their disposal in their attempt to keep gold from moving higher and to keep the stock market aloft.

They have no choice.   A falling price of gold and a rising stock market are the only cover stories they have left in their cabalistic effort to hide the absurd lies which belie the flood of propaganda about the economy, inflation and unemployment.

But at some point their ability to keep the wheels on the fraud that is the United States is going to fail.  Every Ponzi scheme in history eventually collapses.  It’s impossible to predict when this will occur.  I do believe that there is a growing sense of awareness among the population that something is wrong.  This is reflected in the fact that US Mint gold coin sales hit a 29-year high in the third quarter this year.   For those wallow about in the cesspool of blind hope and have not prepared for what’s coming, their lives will be shattered.


(courtesy Bill Holter)
The Economic Pie is Shrinking!
No matter how you look at it, the global economic pie is shrinking.  One might be able to argue this is not so based on individual statistical reports issued by various nations.  The problem though is this, many reports do not line up with real world reports.  For instance, how can “retail sales” in the U.S. grow when retailer after retailer reports worse than expected and contracting sales?  The answer is what your own eyes, common sense and of course “individual companies” added together tell you.
  On a broader scale, we are told the world is in recovery.  Never mind contraction in Europe or bogus reporting in the U.S., China and elsewhere, “we are in recovery dammit!”.  The best way to look at this fallacy for yourself to divine the truth is to look at trade.  Or better, “trade rates”.  I have mentioned this before, the Baltic dry index has been crashing and now is very close to where it was back in the late 1980’s.
  If you look at nearly any freight index, you will see weakness and contraction.  Whether it be total trade, shipping rates or even the amount of “empty containers” moving around the world, you will see weakness.  The picture of trade is that of contraction, not concentrated in any one particular region but globally!
Why is this important you ask?  In one word “DEBT“!  We have lived in a world for most all of our lives where “debt” has done nothing but grow.  It used to be that (bad) debt would be liquidated in recessions, a natural cleansing if you will.  We have not been allowed to have any real recession to cleanse malinvestment since 1982.  Each and every recession in the U.S. has been either avoided or aborted early by fiscal or monetary policy means.
The last such instance was 2008 until present.  The Great Financial Crisis was aborted and the cleansing process postponed.  The problem is this, we (the world) reached what I call “debt saturation” levels where more debt could either not be taken on or was “chosen” to not be taken.  This was the true cause of the crisis.  Sovereign treasuries around the world and their central banks then stepped in to pick up the debt growth void …and have now reached their own debt saturation levels.  You see, all Ponzi schemes need new and more investment to survive …which has for all these years been provided by new and growing debt levels!
As for the chart above and the “shrinking pie”, this is a very big problem.  In the old days it would not pose the current problem but current debt levels and ratios are collectively higher than they ever have been …while the underlying economies to create cash flow have stopped growing and are beginning to shrink!  Part of “the game” was to lower interest rates to make the debt serviceable.  Now, even with zero percent rates the debt service is beginning to pinch.  Can interest rates actually go negative to accommodate more debt?  Maybe, but not in any credible world I know of.  The next question of course would be “how credible is it to believe we will have higher interest rates”?  Or better said, higher rates “by choice”?
  My point is this, we live in a world where by definition we must grow debt levels just to survive financially.  However, the real economy which is already being choked off by too much debt …does not generate enough cash flow collectively to support current debt levels let alone higher ones.  Everything today is supported by (or is) debt.  All assets values are supported by debt.  All currencies are actually themselves debt.  In fact, there are very few unencumbered assets left to borrow against.  It is THIS very reason that stock markets cannot be allowed to falter.  Neither can real estate markets be allowed to fall.  As for the global credit markets, these are the foundational lynchpin to everything and why interest rates cannot be allowed to rise in any meaningful manner …the underlying collateral cannot be allowed to shrink in any size nor for any length of time or it is over!
  I know this writing is very basic and some of you are saying “well duh”, but we have gotten so far from the basics that many can no longer even see the trees, save the forest.  I say this because a real economy with real markets should work for the betterment of the standard of living and Main St..  We now live in a world where nothing matters other than financial assets and Main St. be damned.  We are now very close to the point where Main St. will matter again because without it, Wall Street won’t be able to pay their monthly credit card bill!  Those sitting on the most unencumbered and immediately liquid assets (money) will be greatly sought after (and hopefully not by a mob)! 
Standing watch,
Bill Holter
Holter-Sinclair Collaboration
Comments welcome,
And now your overnight WEDNESDAY morning trading in bourses, currencies, and interest rates from Europe and Asia.

1 Chinese yuan vs USA dollar/yuan falls in value , this  time at  6.3872/ Shanghai bourse: in the red , hang sang: red

2 Nikkei closed up 18.55 or 0.09%

3. Europe stocks all in the red  /USA dollar index up to 99.62/Euro up to 1.0645

3b Japan 10 year bond yield: falls to 30.0%   !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 123.37

3c Nikkei now just above 18,000

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

3e WTI: 41.27  and Brent:   44.41

3f Gold up  /Yen up

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund falls to  .511 per cent. German bunds in negative yields from 6 years out

 Greece  sees its 2 year rate rise to 6.52%/:  still expect continual bank runs on Greek banks 

3j Greek 10 year bond yield falls to  : 6.91%  (yield curve close to inversion)

3k Gold at $1070.30/silver $14.18 (8:00 am est)

3l USA vs Russian rouble; (Russian rouble up 22/100 in  roubles/dollar) 64.93

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 1.0143 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0826 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  +.511%/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 2.26% early this morning. Thirty year rate above 3% at 3.05% /

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

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


Global Stocks Tread Water After Two Consecutive Terrorist Scares; Oil Rises, Industrial Metals Tumble

If this weekend’s gruesome terrorist attack on Paris ended up being hugely bullish for stocks, then two subsequent events, a stadium-evacuation scare in Hannover (where Angela Merkel was supposed to be present) and a raid in north Paris which left several dead in the ongoing manhunt against the alleged ISIS mastermind, appear to have but some question into if not stocks then algos whether a rising wave of terrorist hatred across Europe is truly what central bankers need to unleash more QE. That said, we expect the current weakness to last only until the traditional USDJPY carry ramp pushes stocks traditionally higher.

Quick summary of overnight events: European, Asian shares fall after a shootout between police and suspects in Friday’s Paris terror attacks; U.S. futures also slide while oil, gas rise. Fed meeting minutes due later today. Traders snuffed out an early rally in Asian stocks, sending the benchmark index lower before end of Bank of Japan policy; In China stocks fell for a second day, led by industrial and technology companies, after President Xi Jinping said the nation’s economy is facing “considerable downward pressure.” Additionally, there was an unexpected weakness in Chinese housing, where home prices rose in 27 cities in October, down from 39 in September.

Market Wrap

  • S&P 500 futures unchanged at 2050
  • Stoxx 600 down 0.6% to 378
  • MSCI Asia Pacific down less than 0.1% to 132
  • S 10-yr yield down less than 1bp to 2.26%
  • Dollar Index down 0.2% to 99.43
  • WTI Crude futures up 1.5% to $41.28
  • Brent Futures up 2% to $44.42
  • Gold spot down less than 0.1% to $1,070
  • Silver spot down 0.2% to $14.21

The key event on the calendar today will be the Fed’s October minutes, which while dated, are expected to validate the December rate hike message. Expectations for a U.S. rate hike have shot up from 35 percent on Oct.27 to 66 percent, according to Bloomberg data. Elsewhere, the Bank of Japan starts a two-day meeting just days after it was revealed the economy sank into a recession. Don’t expect any change in stimulus. That’s the view of all 41 economists surveyed by Bloomberg News.

As Bloomberg notes, the widening spread – or difference – between the yield of U.S. two-year notes and their G-7 peers is now 76 basis points, the widest since July 2007. That reflects the view the Federal Reserve is ready to raise interest rates for the first time since 2006. It also highlights a divergence in monetary policy between the world’s biggest economies. While the Fed contemplates tighter policy, the European Central Bank has signaled it’s ready to boost stimulus next month, while the Bank of Japan has pushed back its deadline to achieve stable 2 percent inflation, raising the possibility of more bond-buying.

Elsewhere the commodity carnage continues, and the sell-off in industrial metals continues unabated. Zinc has fallen to its lowest since July 2009 as concerns persist about slowing demand from China. The dollar’s strength is also weighing on the metal used to galvanize steel. The Bloomberg Dollar Spot Index has risen to its highest in a decade ahead of next month’s Fed meeting, making dollar-denominated commodities more expensive for buyers in other currencies. Output cuts from miners including Glencore have failed to halt the rout in industrial metals, which have plunged 25 percent in 2015, according to a London Metal Exchange index.




Looking at markets, Asian equities rose, albeit mildly so following the lacklustre lead from Wall Street as gains in US bourses reversed late in the session due to geopolitical concerns. Nikkei 225 (+0.1%) traded in positive territory with Japanese exporters benefitting from a weaker JPY, while the ASX 200 (+0.5%) pared initial losses as gains in financials offset the weakness in mining large caps. Shanghai Comp (-1.0%) swung between gains and losses amid reports for the first time that the Shanghai-Shenzhen stock link will not go ahead this year. JGBs traded sideways overnight with a lack of news flow to instigate significant price action.

With the week so far seeing substantial gains in European equities, today has so far seen weakness go through Euro Stoxx (+0.9% ), in line with their Asian counterparts to pare some of the recent strength. In terms of stock specific news, Air Liquide (-6.7%) are the notable laggard in Europe after the announcement of the USD 13.4bIn purchase of Airgas. In line with weakness in equities, Bunds have traded in positive territory today, with the German benchmark also benefitting from the geopolitical situation, with concerns over France remaining ongoing and as such, today has seen the FR/GE spread marginally wider in early trade.

in FX, ECB’s Mersch downplayed the financial consequences of the attacks in Paris while also failing to mention anything regarding further ECB easing and as such contributed to the bid seen in EUR as European participants arrived at their desk this morning to see EUR/USD retake the 1.0650 level, however failed to reach the psychological 1.0700 handle. Separately, GBP has also seen a bout of strength today in the wake of comments by BoE’s Broadbent, who avoided any dovish rhetoric and suggested that focus USD-index trades in negative territory as participants keenly await the FOMC minutes to gain clarification on the viability of a December lift-off . The USD has been firm for the last few days and came off highs overnight.

The energy complex has continued the volatile price action seen in recent weeks, with yesterday’s API crude oil inventories showing a drawdown of 482k, the first drawdown since the first week of October and as such seeing a bid in both WTI and Brent. In terms of the metals complex, gold has come off its lows, whereby earlier in the day the yellow metal touched its lowest level since Feb’10 having fallen for a 7th consecutive session, while elsewhere zinc has fallen to 6 year lows and iron ore has slumped to a 7 year low, both suffering from continued weakened Chinese demand. Of note, today sees the release of DoE crude oil inventories.

Bulletin Headline Summary From Bloomberg and RanSquawk

  • Today has seen some paring of this week’s gains for European equities, with Eurostoxx (-0.9%) trading in negative territory
  • GBP has witnessed a bout of strength today in the wake of comments by BoE’s Broadbent, with EUR bid on the back of comments from ECB’s Mersch and a broadly softer USD
  • Looking ahead today: US Housing Starts and Building Permits, DOE Inventories, FOMC Minutes, ECB’S Lautenschlager, Fed’s Dudley and Kaplan
  • Treasuries steady amid global equity market declines, further drop in metals before FOMC releases minutes of its October meeting.
  • Heavily armed police and military descended on a Paris suburb before dawn, targeting what they believed was the hideout of the architect of last week’s terrorist violence in a raid that led to at least two deaths and seven arrests
  • China’s economy faces “considerable downward pressure,” President Xi Jinping said, while assuring fellow Asian leaders that the economy is resilient and will remain on path of reform
  • Germany sold EU4.07b 2Y notes at all-time yield of -0.38%, suggesting investors are confident ECB will boost stimulus at next month’s
  • The families of Islamic State leaders were fleeing Raqqa, the group’s stronghold in Syria, as France and Russia intensified airstrikes after attacks in Paris, a group that monitors the war said
  • For the second time this week, Obama lashed out at lawmakers and U.S. governors, most of them Republicans, who are pushing to block the administration from allowing 10,000 Syrian refugees to resettle in the country
    $14.8b IG priced yesterday, $1b HY. BofAML Corporate Master Index OAS narrows 1bp to +162, YTD range 180/129. High Yield Master II OAS narrows 9bp to +619, YTD range 683/438
  • Sovereign 10Y bond yields mostly lower. Asian and European stocks mostly lower, U.S. equity-index futures decline. Crude oil rises, copper falls, gold little changed

US Event Calendar

  • 7:00am: MBA Mortgage Applications, Nov. 13 (prior -1.3%)
  • 8:30am: Housing Starts, Oct., est. 1.160m (prior 1.206m)
    • Housing Starts m/m, Oct., est. -3.8% (prior 6.5%)
    • Building Permits, Oct., est. 1.147m (prior 1.103m, revised 1.105m)
    • Building Permits m/m, Oct., est. 3.8% (prior -5%, revised -4.8%)

Top News:

  • Paris Raids Target Terrorist Ringleader, Leaving at Least 2 Dead: Abdelhamid Abaaoud believed holed up in Saint Denis flat?Russia, France Put Aside Syria Disputes to Hit Islamic State: Putin ordered Russian navy to work with French vessels
  • German-Dutch Soccer Game Canceled Over Stadium Bomb Threat: game in Hanover called off ~90 mins before start after police get tip that bomb attack planned
  • The Imam Who Wants to Purge France’s Mosques: Marc Champion says Abdelali Mamoun agrees with France’s plan to shut down radical mosques in response to Paris terror attacks
  • Obama Says Debate on Syrian Refugees Feeds Anti-U.S. Propaganda: criticizes those seeking to block Syrians from U.S.; speaks at news conference in the Philippines
  • Nigeria Orders Criminal Probe of $5.5b in Defense Outlays: probe into weapons deals found total “extra-budgetary interventions” of 644b naira in local currency and $2.2b in foreign funds
  • Jonah Lomu, Rampaging Wing Who Transformed Rugby, Dies at 40: Lomu died unexpectedly in Auckland Wednesday, New Zealand Rugby said in statement
  • India to Sell 10% Stake in Coal India Valued at $3.2b: Govt stake in Coal India to drop to about 69% post sale
  • BOE’s Broadbent Sees Argument for Looking Through Price Shocks: says yield curve is very flat; officials shouldn’t rush to return inflation to target
  • Fairchild Semi to Be Bought by ON Semi for $20-Shr
  • Lowe’s Reaffirms Yr Forecast; 3Q EPS, Rev., Comps Top Estimates
  • Air Liquide to Buy Airgas for $10.3 Billion in U.S. Expansion: French co. makes cash offer of $143/shr; plans capital increase of up to $4.3b?Airgas Founder McCausland to Receive $958 Million in Takeover
  • Monsanto Says It’s Evaluating Another Syngenta Takeover Bid: is discussing internally merits of a new offer, other potential acquisitions, COO Brett Begemann told reporters in St. Louis
  • Citrix to Cut About 1,000 Jobs, Plans Spin-Off of GoTo Business: sees 2016 adj. EPS $4.40-$4.50, est. $4.22
  • Barclays Said to Pay $100 Million to End Currency-Rigging Probe: accord over currency-trading platform with NY bank regulator

DB’s Jim Reid completes the overnight wrap


It’s hard to pinpoint the overall tone of markets now after some contrasting moves over the past 24 hours. On the back of a strong session in Asia and some dovish ECB commentary the previous night, risk assets in Europe rallied through the day with equity markets up 2-3% and European credit sharply tighter (Crossover -15bps), while the positive news that Greece had reached an agreement with creditors which should release a €2bn aid tranche (more later) also helped boost sentiment. US markets started in a similar positive fashion, before a reversal in Oil markets (WTI closing -2.56%) along with Copper touching a six-year low and concerning headlines emerging of a bomb threat in Germany saw US equities stumble into the close with the S&P 500 (-0.13%), Dow (+0.04%) and Nasdaq (+0.03%) all finishing close to unchanged in the end.

US 10y Treasury yields finished little moved at the close too at 2.267%, although that also masked what was a fairly roundabout session which saw yields hit as high at 2.312% intraday before then tumbling into the close. Some of the blame for the change in tone midway through the afternoon is also being attributed to the postponement by the underwriters of a $5.5bn LBO by Carlyle Group of data-storage business Symantec, raising concerns of investor appetite for larger leveraged deals into year-end.

The focus of today will be on the FOMC minutes from the October 27th and 28th meeting, due out at 7pm GMT. Remember that the hawkishness of the statement that followed that meeting was the start of a big swing in December liftoff expectations. In fact, prior to that meeting December hike expectations were sitting at around 35%, before rising to 50% or so immediately after the statement. Currently we’re sitting at 66% which is just shy of the 69% high point earlier this month. It’s worth keeping in mind that while the minutes refer to the October meeting, asset prices have certainly moved fairly materially since that meeting. The S&P 500 is down -1.91% from the close of the 28th October and has declined on 10 of the 14 trading days in that time. The VIX is up over 30% in the same time frame, the US Dollar is nearly 2% stronger, 10y and 2y Treasury yields are up +9.4bps and +12.7bps respectively, while WTI has fallen over -11%. Clearly the moves in the US Dollar and Oil the most significant here.

Our colleagues in the US expect the minutes to be more balanced and much less committed to a December hike than what was inferred from the October communiqué. Clearly there is a lot of data left between now and the December 15th/16th meeting (including the November payrolls number) and while the latest employment report was encouraging, our colleagues note that growth and inflation numbers could be slipping given the latest retail sales and import price figures. They expect the probability of a December rate hike to fall closer to 50/50 over the next couple of weeks.

Yesterday’s US CPI data didn’t offer a whole lot of surprises after coming in pretty much in-line with expectations. Headline inflation rose +0.2% mom last month as expected, while the YoY rate nudged back up to +0.2% (vs. +0.1% expected) and back to where it was in the summer having briefly dipped to 0.0% in September. The core also came in at +0.2% mom (vs. +0.2% expected) last month with the YoY rate staying unchanged at +1.9%. The details revealed that core goods inflation in particular came out soft in October, but that a big rise in medical costs helped the print meet expectations.

Meanwhile, there was some disappointment to be had in the October US industrial production data, with the reading down -0.2% mom last month (vs. +0.1% expected) to mark the second consecutive monthly decline. There was better news to be had in the manufacturing production read however, which was up +0.4% mom (vs. +0.2% expected) last month. Capacity utilization edged down two-tenths as expected to 77.5%, while finally the NAHB housing market index dropped 3pts in November to 62 (vs. 64 expected) and off the recent highs.

Price action has been fairly subdued in the Asia session this morning. The Nikkei (+0.28%), Kospi (+0.13%) and ASX (+0.29%) while the Hang Seng (-0.11%) is a touch lower and Chinese equities broadly unchanged. Oil markets are around half a percent better off this morning, while Asia credit is generally unchanged. The only data of note this morning has come from China where the October home price data is out. The data showed that, relative to September, prices for new residential apartments rose in just 27 cities last month (compared to 39 and 35 in September and August respectively). At the same time fewer cities also reported a rise in existing residential apartment prices last month relative to September.

Moving on, the HouseView team has published their November edition overnight called “Policy divergence ahead”. They highlight that macro data over the last month have helped reduce global growth concerns. A rate cut in Europe soon followed by a rate hike in the US would at last crystallise the Fed-ECB policy divergence theme. Markets have welcomed the additional clarity about global growth and monetary policy. Going forward positive data would reinforce Fed hike expectations and support risk assets.

Greece was back in the headlines yesterday with the positive news of a successful negotiation with creditors after agreeing on a set of prior actions which will unlock the disbursement of the €2bn sub-tranche of aid (subject to parliament ratification tomorrow). Importantly, the agreement will allow the bank recap to move ahead with the aim of completion by year end.

Rounding up the remaining news yesterday, data wise in Europe yesterday the November German ZEW survey revealed a 0.8pt fall in the current situations index to 54.4 (vs. 55.2 expected). However the expectations survey was up a robust 8.5pts to 10.4 (vs. 6.0 expected). In the UK we saw the October headline CPI print come in as expected at +0.1% mom which kept the YoY at -0.1%. The core rate did however edge up a tenth to +1.1% yoy (vs. +1.0% expected). Core PPI output was down -0.1% mom (vs. 0.0% expected) last month in the UK, while RPI (0.0% mom vs. +0.1% expected) also came in a tad below market.

Looking at the day ahead now. It’s a quiet start to the day this morning in Europe with no notable releases expected. This afternoon in the US session the October housing starts and building permits readings will be out shortly after lunch before we then get the aforementioned FOMC minutes at 7pm GMT. In terms of Fedspeak, Dudley, Mester and Lockhart are due to speak on a panel at around 1pm GMT on the financial payments system, while the more interesting comments may come from the Fed’s Kaplan who is due to speak before the FOMC minutes on economic conditions.



Let us begin:



 i) Last night, 9:30 pm TUESDAY night, WEDNESDAY 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


 Early morning raid in France:
(courtesy zero hedge)

“We Could See Bullets Flying And Laser Beams”: Full Paris “Mastermind” Raid Summary

Initially, officials assumed the alleged “mastermind” behind last Friday’s attacks in Paris was already back in Syria.

After all, Abdelhamid Abaaoud had already alluded authorities once this year when, in the wake of the January raid in Verviers, Belgium that killed two of his operatives, the 27-year old escaped to “Sham” when “Allah blinded the vision” of the legions of intelligence operatives that he imagines were chasing him.

To whatever extent Abaaoud dramatized his great Belgian escape in an interview that appeared in the February issue of Dabiq, this time around he really was one of the most wanted men in the world and as it turns out, Allah might have forgotten to “blind” the infidels in the four days since the attacks in France.

Although details are still sparse, we know that Abaaoud was the target of a pre-dawn raid in the Paris suburb of St. Denis and we also know that French police had “intelligence” which led them directly to the flat where they believed Abaaoud was likely to be hiding.

Just before 4:30 am local time, SWAT and anti-terror units descended on an apartment about 2km from the Stade de France.

Five people were barricaded inside the flat and when police moved in, a gun battle ensued, as neighbors reported prolonged exchanges of automatic gunfire and explosions.

“We could see bullets flying and laser beams out of the window. There were explosions. You could feel the whole building shake,” a neighbor told Reuters. “I tried to hide my son beneath me but each time there was shooting he was clawing at my skin,” she added.

The raid lasted some seven hours and in the end, two people were killed and seven people were arrested, three in the apartment itself, two nearby, the landlord, and the landlord’s female “friend.” At least one French media source says the landord had a previous eight-year murder sentence.

One of those killed was a woman, who detonated a suicide vest. According to BFMTV, police sources had placed a woman under surveillance “days ago” who they thought might be hiding Abaaoud. BFM also says she may have been Abaaoud’s cousin. For his part, interior minister Bernard Cazeneuve told reporters that police had intelligence which led them to believe that “Abu Oud was likely to be [at the apartment].”

Cazeneuve also said there were 110 total security personnel involved in the raid.

According to French prosecutor Francois Molins, police also had tapped phone conversations which corroborated the surveillance which initially led them to believe that Abaaoud was in the building. Still, Molins was non-committal about whether he was indeed there when police arrived. “Paris prosecutor Francois Molins has told journalists that it is still unclear whether alleged mastermind of the Paris attacks, Abdel-Hamid Abu Oud, was in the apartment after the seven-hour police raid,” The Guardian says.

For his part, St. Denis mayor Didier Paillard was shocked: “We were not prepared for this discovery. This is a city that has 130 different nationalities, including people who come from war zones. We are a population that needs serenity. This is an old area which is in the process of being renovated.” Well Mr. Paillard, ISIS and SWAT did a bit of free demolition work for you overnight, so feel free to “renovate” that flat.

While it’s still too early to draw any conclusions, it would certainly appear as though Abaaoud might have gotten away again. After all, it’s probably safe to assume that police have determined he was not one of the two people killed nor one of the seven people arrested, so either he’s hiding in a closet somewhere or he escaped.

But who knows, we suppose it’s possible authorities just aren’t ready to make an announcement yet, although given the atmosphere in France, one would certainly think that if Abaaoud were either killed or captured, officials would want to inform Parisians immediately as it would presumably serve as a morale booster for a civilian population still reeling from Friday’s massacre. But again, that’s just speculation as Molins told reporters that “it is currently impossible to give the identify of those arrested, which is being verified. Everything will be done to work out who is who and thanks to forensics who was in the apartment.”

Just moments ago The Telegraph, citing Le Monde, saysAbaaoud was not among those arrested this morning. “Was he among the dead? It is unclear [and although] details are sketchy, experts suggest this could have been a cell in the final stages of preparing another strike.”

We shall see, but one thing is for sure, if Abaaoud was there and is now loose in Paris, you can bet you’ll see more raids just like this one in the days and weeks ahead.



Terrorists Planned Thursday Attack On Paris Mall; “Mastermind” Killed In Raid, WaPo Says

Moments ago, French prosecutor Francois Molins gave an update regarding the early morning raid in the Paris suburb of St-Denis that resulted in two deaths and the arrest of seven suspects. The target: the alleged mastermind of the Paris attacks, Abdelhamid Abaaoud.

French authorities reportedly had Abaaoud’s cousin under surveillance and suspected she was hiding him an apartment about two kilometers from the Stade de France. Here is an eyewitness account of how she died:

During a ten or fifteen minute lull in the shooting I heard a woman shouting: ‘Help, help, help me!’ The police asked her to identify herself and to show herself. She showed her hands but she didn’t reveal her face.


She withdrew them and then put them up again several times. They shouted at her: ‘Keep your hands in the air!’


They told her: ‘We’re going to shoot.’


The shooting resumed. The police were firing from the roof of the building opposite.Suddenly there was an enormous explosion [from the window, inside the flat]. It was probably the woman who blew herself up.


The windows shattered. Lots of objects from the apartment were thrown into the street, pieces of human flesh as well. They are still there. You can see a bit of the head, of skin, of ribs.

Three people were arrested in the apartment itself, while two additional suspects, along with the landlord and his “female friend” were also taken into custody.

At this afternoon’s press conference, Molins confirmed that Abaaoud was not among those arrested. 

However, he also said he could not identify those who had been killed, which suggested that perhaps Abaaoud was among the dead. After Molins spoke to the press,Washington Post reported that according to European intelligence officials, Abaaoud was killed. 

Here are three images from the scene:

Molins went on to say that some 5,000 rounds were fired in the battle between militants and elite police forces on Wednesday morning. Here’s his account of the arrests:

There are two people dead but it will take a bit longer to get the additional details, because the building had to be propped up because it was threatening to collapse.


Police found in the rubble of the attack two men, one injured. They were immediately arrested.


Two other people were arrested outside, including person who let the militants use and a woman next to him.

Perhaps the most unnerving thing about the raid (especially if you live in Paris) is that according to officials, this “cell” was very close to carrying out another attack in the city. According to Reuters, that attack was set to unfold on Thursday in the business district. Here are the details:

Suspected Islamist militants flushed out of a Paris suburb by police in a shootout on Wednesday were planning to attack the French capital’s La Defense business district, three sources told Reuters.


A source close to the investigation source said the attack was being prepared for Thursday in the district that is home to some of France’s biggest companies such as the oil major Total and the main trading room of Societe Generale bank.


Several police sources said the targets were the Quatre Temps shopping centre and the main square of the district of high-rise office buildings on the western edge of Paris.


“The police forces were looking for terrorists who were preparing another attack on the basis of information from the (local) counter-terrorism services and overseas,” said the source close to the investigation.


“This new team was planning an attack on La Defense,” the source said

To give you an idea of how bad this could have been, consider that this is the most visited shopping center in France. Here are some bullet points (no morbid pun intended):

  • Four levels of shops
  • Four levels of parking, 6500 spaces parking
  • 230 shops (30 shops without Cnit nor the 50 stores of the mall from the station, which is managed by another company and is not the mall)
  • The eleventh Apple Store in France was open to Quatre Temps May 25, 2012
  • Les Quatre Temps is the first French shopping center by turnover (824.1 million euros in 2009) to large Vélizy 2 2, the second in size behind Belle Thorn (140 900) and its first attendance (45.7 million visitors in 2012 3) before the Forum des Halles. The expansion and renovation allowed him to take first place.

And here are two videos, the first depicts La Defense and the second is a kind of POV tour through the shopping center.

As you can see, if Abaaoud’s operatives were looking for so-called “soft targets”, there would have been plenty.

The obvious question now, is how many more “safehouses” and “cells” there are hidden in the suburbs of Paris and, additionally, what kind of “intelligence” France is sitting on regarding what might be coming next.

For now, it looks like Hollande has all the support he needs to escalate attacks in Syria, but should public opinion need that little extra push over the edge in terms of supporting the deployment of ground troops to take Raqqa (and subsequently “assist” in facilitating a “transition” away from the Assad government), don’t be surprised if a few more Syrian passports are found in a safe house or worse, on what’s left of the body of a suicide bomber.

Meanwhile in Greece:  Farmers protesting austerity brought onto them by the Troika.
(courtesy zero hedge)

Meanwhile In Greece… Farmers Throw Oranges, Police Toss Teargas Grenades

In the first major protest by farmers in several years, bus-loads of men and women arrived from across Greece to protest the looming over-taxation and social security changes exclaiming that these government-enforced, Quadriga-mandated changes will affect the country’s primary production and crash those who sole income comes from farming, breeding and fishing. The infamous Syntagma Square saw oranges and water bottles met with police tear gas and sound cannons as European social tension continues to roil…


Via KeepTalkingGreece,

eering, tear gas, sound flares, water bottles and oranges were the highlights of the farmers’ protest outside the Greek Parliament at Syntagma Square on Wednesday. More than 3,500 farmers, breeders and fishermen from all over Greece had gathered in Athens to protest taxation and social security reforms in their sector.

Tension went high short after 12 o’clock noon, when a farmers’ delegation tried to break the police ‘fence’ consisting of several police vehicles. and enter the Parliament in order to submit a protest resolution.

farmers athens

When the farmers entered the parliament yard, police repelled them with teargas, the farmers picked up bitter oranges from the decorative trees outside the parliament and started to throw them at their “attackers”. Water bottles flew through the air as well.

Video: police – farmers clash. Somebody shouts “Heads!” apparently urging others to lower their heads for protection.

Within 10 minutes, a thick cloud of chemicals had covered the area, suffocating protesters and passersby like men, women, children and seniors, in one of the most vibrant spots of daily life in Athens.

Amid tension with police, farmers also verbally attacked and booed former ministers of first Syriza government, Panagiotis Lafazanis and Dimitris Stratoulis, now founding members of Popular Unity party. Some farmers threw at them water bottles and jeered them. “We don’t want politicians here,” they reportedly told the former ministers.

Video: angry farmers tell Lafazanis “Go!Go!”

Farmers threaten with further actions stressing that the upcoming overtaxation and the changes in  the social security will affect the country’s primary production and crash those who sole income comes from farming, breeding and fishing.

It was the first massive farmers’ protest after several years, the men and women had arrived from across the country with buses and ferries.

It took them this long to figure this out?
(courtesy zero hedge)

German Interior Minister Says Suicide Bomber’s Syrian Passport “May Have Been Planted”

As we reported extensively over the weekend, the biggest false flag clue that has emerged so far from the Paris attack was the discovery of a fake, fully intact Syrian passport next to one of the suicide bombers. The question which we posed is who would benefit from this and whether the authorities would entertain such a “preposterous” suggestion.

It appears the answer is yes. Overnight none other than the German Interior Minister Thomas de Maiziere said that the “Syrian passport found next to a suicide bomber in the Paris terror attacks may have been planted.”

Bloomberg adds that reports that the identity in the passport may have been registered in several countries along the so-called Balkan route raise the suspicion that it could be a deliberate attempt to implicate refugees and “make people feel unsafe,” de Maiziere said.

“There are indications that this was a planted lead, but it still can’t be ruled out that this was indeed an IS terrorist posing as a refugee,” he told reporters in Berlin on Tuesday, referring to Islamic State, which France blames for organizing the violence.

Any link between France’s worst terror attack since World War II and Europe’s refugee crisis would raise the stakes for Chancellor Angela Merkel as she defends her open-door policy for asylum seekers in Germany’s debate over immigration and security.

“It’s certainly unusual that such a person would have been faithfully registered in Greece and Serbia and Croatia, while we’re constantly pressing for registration and aren’t happy that it isn’t happening to the necessary extent,” de Maiziere said.

And with that the story on whether the passport was “planted” by someone else is effectively closed. The only open question remaining: who was so quick to plant the passport in the aftermath of the suicide bombing, and just whose agenda is in play?

Glencore stock up today despite the fall in copper, oil and zinc
closed up 4.17 pence to 93 pence
(courtesy London’s Financial Times)


4.17 / 4.70%
71.82 %

Russia now using strategic long range bombers as it targets ISIS.  These bombers can deliver cruise missiles with accuracy and if needed nuclear weapons.  There are reports that key ISIS family members are fleeing Raqqa.
(courtesy zerohedge)

Caught On Tape: Russian Cruise Missile Flies Above Syria As Moscow Deploys Strategic Bombers

Putin wasted no time to expand Russian military presence over both Syria and the middle east, when as reported earlier today, the Russian president expanded the military campaign against ISIS bombing targets in conjunction with the French air force.

That was not the surprise.

What was, is that for the first time since the launch of the Russian air campaign Russia used strategic, long-range bombers, the kind that can deliver not only cruise missiles but tactical nuclear weapons. The Russian Defense Minister Sergei Shoigu confirmed as much when he said that Tupolev Tu-160, Tu-95MS strategic bombers are used in the strikes on ISIL targets in Syria.

According to Interfax, “Tu-160, Tu-95MS, Tu-22 long-range aviation warplanes are used in the destruction of the gangs in addition to operational tactical aviation from the Russian territory,” Shoigu said at a meeting in the Defense Ministry chaired by Russian President and Supreme Commander-in-Chief Vladimir Putin on Tuesday.

The Russian strategic bombers are using the Hmeimim airbase in Syria as their primary base.

The commander of the Russian Long-Range Aviation Lt. Gen. Anatoly Zhikharev reported to Putin that all types of attack planes, which the Long-Range Aviation is armed with, are used, namely Tu-160 and Tu-95MS strategic missile carriers and Tu-22M3 long-range bombers to perform combat tasks in Syria.

“The crews of strategic and long-range bombers are accomplishing the tasks to strike the sites in strict compliance with the plan of delivering the first massive air strike. Tu-160 and Tu-95MS strategic missile carriers have landed on their airfields upon accomplishing the combat mission. The maintenance and preparations of aircraft for future sorties are being conducted, the objective control materials are being analyzed,” Zhikharev said.

The Aviationist blog adds that according to one of its sources “the long-range bombers the Russian Air Force has used against ground targets in Syria early in the morning on Nov. 17 were Tu-22M Backfire strategic bombers.” It adds that “the aircraft were allegedly launched from Mozdok airbase, in Ossetia, where as many as 6 Tu-22 Backfires were spotted on a recent deployment.”

Curiously, Russia appears to have left a calling card that it has deployed strategic bombers: earlier today, social networks were abuzz showing images which were the alleged remains of a KH-555 missile found in Syria, the type of air-launched missile which, according to the Aviationist, “is mainly carried by Tu-95 Bear and Tu-160 Blackjack bombers (Tu-22s have been tested with the KH-555 but full integration is not completed or at least unknown), the long-range bombers that launched the attack on ground targets using those missiles may have been the Tu-95s or Tu-160s flying alongside the Backfires.”

And here a clip of what is a Russian cruise missile (it may or may not have been the one whose remains are shown above) launched by one of the Russian strategic bombers currently operating above Syria.

With respect to the Russian airliner downed last month, ISIS now publishes a magazine and they explain how they smuggled a bomb onto the plane
(courtesy zero hedge)

ISIS Posts Photo Of Bomb That Brought Down Russian Plane

Moments ago, ISIS released the 12th issue of its magazine profiled here previously, which had a cover page with a clear enough title: “Just Terror


But while it has the usual content full of pro-Jihad propaganda, some 66 pages of it, as well as numerous images to commemorate the martyrs for the ISIS cause, what was most stunning about this edition was ISIS admission of how it brought down the Russian airplane above Egypt’s Sinai peninsula, which as even Russia admitted yesterday, was the result of an ISIS bomb.

On page 3, we find the following two photos: one shows what Dabiq alleges are passports belonging to the “dead crusaders obtained by mujahidin”…

… and more troubling, is the image of the IED used to bring down the Russian airliner: a bomb concealed in a can of Gold beer.

This corroborates what Russia FSB chief Aleksandr Bortnikov said: “traces of a foreign-made explosive substance” have been found.  “During the flight, a homemade device with the power of 1.5 kilograms of TNT was detonated.”

And something else which is perhaps just as surprising: in the foreword to its magazine, ISIS says it had originally planned to bring down a plane “belonging to a nation in the American-led alliance” but changed its mind to blow up the Russian plane instead.

On “30 September 2015,” after years of supporting the Nusayr in the war against the Muslims of Sham, Russia decided to participate directly with its own air force in the war. It was a rash decision of arrogance from Russia, as if it held that its wars against the Muslims of al-Qawqz were not enough offence. And so after having discovered a way to compromise the security at the Sharm el-Sheikh International Airport andresolving to bring down a plane belonging to a nation in the American-led Western coalition against the Islamic State, the target was changed to a Russian plane. A bomb was smuggled onto the airplane, leading to the deaths of 219 Russians and 5 other crusaders only a month after Russia’s thoughtless decision.

For those curious about the authenticity of the photo, or to learn more about ISIS’ propaganda, the complete latest edition of the magazine can be found here, and is reposted below.



Your humour for today:

Humpday Humor: Obama’s “Very Rigorous” Syrian Refugee Entrance Form


We thought some help with the “highest security checks” form may be helpful…

Source: @Jenn_Abrams


El Nino is back and this will be followed by El Nina
Expect havoc on the west coast this summer and hurricanes next summer on the east coast.  Also drought conditions in Australia and the West coast next year
(courtesy Bruce Krasting)

It’s Official – Biggest Nino Ever – Killer La Nina to Follow

Bruce Krasting's picture

 And look what El Nino did to California already in Oct.  I was in northern California in October and the weather was unusually hot above 80 degrees F.  It has created spikes with the California grid forcing prices up 25 x normal.
(courtesy zero hedge)

“Record” El Nino Already Wreaking Havoc With California Electricity Prices

Just three weeks ago we warned of “all kinds of mayhem” about to be let loose as scientists feared this year’s El Nino may be among the biggest ever, and as Bloomberg reports, the impact is already being felt in California… but not in much needed rain or snow.California has yet to see the full force of El Nino, and it’s already tripping up the state’s power-demand forecasters. The state saw “significant” electricity price spikes in the third quarter as El Nino made it difficult to predict how much power would be needed with a “relatively high percentage of intervals” when prices spiked above $1,000 a megawatt-hour in the 5-minute market… 25 times normal costs!


As we detailed previously, in the simplest terms, an El Nino pattern is a warming of the equatorial Pacific caused by a weakening of the trade winds that normally push sun-warmed waters to the west. This triggers a reaction from the atmosphere above.

Its name traces back hundreds of years to the coast of Peru, where fishermen noticed the Pacific Ocean sometimes warmed in late December, around Christmas, and coincided with changes in fish populations. They named it El Nino after the infant Jesus Christ. Today meteorologists call it the El Nino Southern Oscillation.



The last time there was an El Nino of similar magnitude to the current one, the record-setting event of 1997-1998, floods, fires, droughts and other calamities killed at least 30,000 people and caused $100 billion in damage, Trenberth estimates. Another powerful El Nino, in 1918-19, sank India into a brutal drought and probably contributed to the global flu pandemic, according to a study by the Climate Program Office of the National Oceanic and Atmospheric Administration.

*  *  *
While the effect on the U.S. may not reach a crescendo until February, much of the rest of the world is already feeling the impact, Trenberth said.

“It probably sits at No. 2 in terms of how strong this event is, but we won’t be able to rank it until it peaks out and ends,”said Mike Halpert, deputy director of the Climate Prediction Center in College Park, Maryland.

Its effects are just beginning in much of the world — for the most part, it hasn’t really reached North America — and yet it’s already shaping up potentially as one of the three strongest El Nino patterns since record-keeping began in 1950. It will dominate weather’s many twists and turns through the end of this year and well into next. And it’s causing gyrations in everything from the price of Colombian coffee to the fate of cold-water fish.

Expect “major disruptions, widespread droughts and floods,” Kevin Trenberth, distinguished senior scientist at the National Center for Atmospheric Research in Boulder, Colorado. In principle, with advance warning, El Nino can be managed and prepared for, “but without that knowledge, all kinds of mayhem will let loose.

*  *  *

But as Bloomberg reports,

“California load models have not experienced weather patterns like we have seen this past year, especially the high temperatures of October,” Steven Greenlee, a spokesman for the California ISO, said in an e-mail statement. The grid operator is “retraining” its forecasting models, Greenlee said.


The Northern California hub, which includes San Francisco, continued to see brief price surges in October and November, grid data show.

The good news…

On average, power prices slumped in the third quarter from a year earlier due in large part to cheaper natural gas, the report showed. Spot on-peak power at the Northern California hub averaged $38.15 a megawatt-hour from July through September, down 23 percent from the same period last year and the lowest average for the quarter since 2012.


The state saw “significant” electricity price spikes in the third quarter as El Nino made it difficult to predict how much power would be needed on hot summer and fall days, the California Independent System Operator Corp. said Monday in a report.


Record rainfall and regional cloud cover in Southern California also perplexed forecasters, the grid operator said.


“With El Nino, California and the Southwest tends to get more storminess and that is inherently more challenging to forecast,” Matt Rogers, president of Commodity Weather Group LLC, said in an e-mail Tuesday. “The extra cloudiness and sporadic storminess this autumn as well as some heat spikes early in the third quarter can be attributed to El Nino influences.”



In California power markets, the odd weather led to “load forecast errors on several days with particularly high loads,” according to the report. In September, there was a “relatively high percentage of intervals” when prices spiked above $1,000 a megawatt-hour in the 5-minute market.

*  *  *
So already electrcity prices are spiking 25x normal… and the biggest effects of El-Nino are yet to hit…


Just look at the devastation inside the USA’s largest bond fund PIMCO.  In 2002 it invested big time in emerging markets for yield as USA rates were plummeting to zero.  The problem here is that they did not get out and now the Funds Emerging Market Fund has tumbled 62%.
Included in this commentary is the devastation inside the emerging markets with respect to earnings, huge outflows and collapsing currencies:  a catastrophic blend which is creating havoc to those funds which invested in emerging markets.
(courtesy zero hedge)

“People Are Voting With Their Feet”: PIMCO No Longer EM Bond King As Fund’s AUM Tumbles 62%

There’s no question about it, it’s been tough sledding for anyone long EM anything over the last few years.

A veritable perfect storm of collapsing commodity prices, slumping demand from China combined with an unexpected yuan deval, and the incipient threat of a Fed hike (and thus an even stronger USD) have conspired to wreak havoc across the space.

Exacerbating the situation are a collection of idiosyncratic political crises in Brazil (where Dilma Rousseff is battling impeachment, her main political opponent faces corruption charges, and the fate of FinMin Levy is a constant source of uncertainty), Turkey (where Erdogan has effectively launched a civil war in order to bolster AKP’s iron grip on politics), and Malaysia (where Najib faces intense scrutiny over 1MDB, the development bank turned shadowy slush fund) – all well documented in these pages over the past six or so months.

Here are a few visuals from Barclays’ latest chart pack that should give you an idea about the scope of the turmoil.

First, a look at the fiscal and corporate sector picture…

…and here’s the ratings trend…

…and perhaps most importantly, here’s a look at the flows…

Amid the chaos, it hasn’t been easy being a dedicated EM fund manager and if you happen to be running a fund that operates under the banner of an asset management firm that’s lost two of the most high profile names in the business in the space of just two years, well, that makes it even worse.

We are of course referring to PIMCO which, as Bloomberg reports, was just dethroned as the EM bond king. Here’s more:

Pacific Investment Management Co. has lost its title as manager of the world’s largest emerging-market bond fund, battered by ill-timed bets that fueled an investor exodus.


Assets managed by Pimco Emerging Local Bond Fund have tumbled 62 percent from an April 2013 peak to $6 billion at the end of October. It was about $150 million smaller than an Ireland-incorporated fund run by Stone Harbor Investment Partners LP.


After attracting more assets than any of its rivals in the wake of the 2008 financial crisis, Pimco’s outsized investments in places such as Brazil left it trailing its benchmark. Power struggles at Pimco shook investors’ confidence further as former Chief Executive Officers Bill Gross and Mohamed El-Erian left the firm.



“Certainly performance at Pimco has been challenged in the last few years,” said Philip Schmitt, senior research analyst at consulting firm Verus Investments in Seattle. “People are voting with their feet,” he said, while adding that emerging-market funds overall have suffered from a strengthening dollar.


Pimco’s local bond fund, managed by Michael Gomez in Newport Beach, California, lost 25 percent in three years through Nov. 16 on a total return basis, compared with a 22 percent drop in JPMorgan Chase & Co.’s benchmark for emerging market bonds. The fund, which invests in local-currency bonds in developing nations, lagged 69 percent of its peers tracked by Bloomberg.


Assets in the Pimco local currency fund surged to $15.6 billion in April 2013, from $778 million in July 2009, a period when developing nations led global growth while interest rates in the U.S. and Europe plummeted toward zero. When the Federal Reserve signaled plans to withdraw monetary stimulus in May 2013, it touched off a stampede out of developing nation funds.


“There’s a double whammy on EM debt,” Fulton Chief Investment Officer Keith Aleardi said by phone from Lancaster, Pennsylvania. “You have emerging markets and companies in them having borrowed way too much and commodity prices have come down. And then you’ve had a strengthening dollar. It’s a bad opportunity now.”


Adding to Pimco’s woes, the surprise resignation of El-Erian in January 2014 exposed a power struggle that culminated with the ouster of Gross eight months later. 


Big investments in Brazil have been at the heart of the Pimco funds’ roller-coaster ride. A 2002 contrarian bet led by El-Erian in Latin America’s largest economy helped burnish Pimco’s emerging market reputation. This year, Brazil’s bonds have lost 28 percent in dollar terms as a corruption scandal paralyzed President Dilma Rousseff’s government and held back efforts to rein in runaway deficit and debt.

Needless to say, the outlook for Brazil isn’t getting any brighter and, we might add, things are far from stable in Turkey and Malaysia. In fact, as we highlighted on Sunday, Turkey could be in for balance sheet trouble going forward in the event the dollar continues to rise.

Consider that along with what we said at the outset regarding idiosyncratic political risk and then consider the following, which shows you the top 10 currency exposures for PIMCO’s EM Local Bond Fund:



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

Euro/USA 1.0645 up .00203

USA/JAPAN YEN 123.37 down .066

GBP/USA 1.5195 down .0021

USA/CAN 1.3318 flat

Early this morning in Europe, the Euro rose by 3 basis points, trading now just above the 1.06 level falling to 1.0645; 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:  6.3872  / (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 northbound trajectory  as settled down again in Japan by 7 basis points and trading now well above the all important 120 level to 123.37 yen to the dollar.

The pound was down this morning by 21 basis points as it now trades just below the 1.52 level at 1.5195.

The Canadian dollar is now trading par in basis point to 1.3318 to the dollar.

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

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

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

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

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

The NIKKEI: this WEDNESDAY morning:closed up 18.55 or 0.09% 

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

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

Gold very early morning trading: $1070.20


Early WEDNESDAY morning USA 10 year bond yield: 2.27% !!! up 1 in basis points from Tuesday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield falls to  3.05 up 1 in basis point.

USA dollar index early Wednesday morning: 99.47 cents 20 cents  from Tuesday’s close. (Resistance will be at a DXY of 100)

This ends early morning numbers Wednesday morning


We warned you yesterday that this was coming with the huge buildup in inventories at Cushing OK
(courtesy zero hedge)

Crude Tumbles To $40 Handle After DOE Confirms Significant Cushing Inventory Build

Following last night’s API-reported surprise inventory draw (but major Cushing build), DOE reports a modest (as expected) inventory build (of 252k barrels) – the 8th week in a row. Most crucially, given rising fears of the fullness of land storage capabilities, is DOE confirmed a significant 1.495mm barrel inventory build at Cushing. WTI Crude oscillated a little before timbling back to a $40 handle once again – erasing the API kneejerk gains.




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


Now into the 39 dollar column:

(courtesy zero hedge)

WTI Crude Plunges Below $40 – Erases Post-Paris Gains

Massive excess supply, storage filling rapidly, production near record levels all appear to be trumping any ‘war’ premium as WTI has now erased all of the post-Paris gains after DOE confirmed surging inventories continue…



Charts: Bloomberg

And now for your closing numbers for Wednesday night: 3:00 pm
Closing Portuguese 10 year bond yield: 2.47% down 10 in basis points from Tuesday
Japanese 10 year bond yield: .300% !! par in basis points from Tuesday and extremely low
Your closing Spanish 10 year government bond, Wednesday down 4   in basis points.
Spanish 10 year bond yield: 1.73%  !!!!!!
Your Wednesday closing Italian 10 year bond yield: 1.52% down 4  in basis points on the day: Wednesday/ trading 21 basis points lower than Spain.
Closing currency crosses for WEDNESDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 Euro/USA: 1.0650 up.0008 (Euro down 8 basis points)
USA/Japan: 123.53 up 0.095 (Yen down 10 basis points)
Great Britain/USA: 1.5224  up .9 (Pound 14 basis points
USA/Canada: 1.3342 up .0025 (Canadian dollar down 25 basis points)

USA/Chinese Yuan:  6.3834 up .0000 on the day (yuan flat)

This afternoon, the Euro rose by 8 basis points to trade at 1.0650.  The Yen fell to 123.59 for a loss of 10 basis points. The pound was up 9 basis points, trading at 1.5224. The Canadian dollar fell by 25 basis points to 1.3342. The USA/Yuan closed at 6.3834
Your closing 10 yr USA bond yield: up 1 in basis points from Tuesday at 2.27%// ( trading at the resistance level of 2.27-2.32%)
USA 30 yr bond yield: 3.04 par  in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 Your closing USA dollar index: 99.65 down 5 cents on the day  at 2:30 pm
Your closing bourses for Europe and the Dow along with the USA dollar index closings and interest rates
London:  up 10.21 points or 0.16%
German Dax: down 11.09 points or 0.10%
Paris Cac up 30.59 points or 0.62%
Spain IBEX: up 102.70 points or 0.99 %
Italian MIB: up 217.83 points or 0.98%
The Dow: up 247.66  or 1.42%

The Nasdaq: up 89.19 or 1.79%

WTI Oil price;  40.76
Brent OIl:    44.18
USA dollar vs Russian rouble dollar index:  64.76 up 39/100 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:


“Buy The Terror Attack Dip” Continues: Dow Recovers Post-FOMC Losses As Crude Bounces Back

While initially the market’s reaction to The FOMC Minutes was summed up in 1 perfect clip…

We forecast the market’s reaction ahead of the minutes…

And as one can see…that’s what we got…

So if everything is awesome – why did The USD drop and 30Y bonds rally?

But did manage to push stocks into the green post-October-FOMC…

But the Buy The Fucking Paris Terror Attack Dip(BTFPTAD) rally continues to extend…

The Nasdaq is up 2% today!!!!!

Oh – and a Fed rate-hike is now bullish for EM stocks!!!! WTF!

VXX was headed downhill all day…

Treasuries were mixed today with the long-end rallying and short-end selling off, espcially after the minutes…

As the 2s30s curve and stocks decoupled again…

After an initial kneejerk higher, The USDollar faded lower after the minutes were released…

Commodities mixed with silver, gold, and crude all practically unchanged as copper drifted to new cycle lows…

Crude did its usual heavily manipulated v-shaped recovery after the minutes (despite soaring inventories)…

Charts: Bloomberg

Bonus Chart: Deja Vu again…

Bonus Bonus Chart: Remember stocks have gone nowhere in 15 years absent FOMC days…

Bonus Bonus Bonus Chart: Certainly looks like time to raise rates!!!



<Housing starts collapsed by 11% in October, comfirming a lacklustre homebuilder’s sentiment and collapsing pending sales.

With retail sales plummeting, you can safely say that the USA economy is in a recession or in the beginning of a depression

(courtesy zero hedge)

Housing Starts Plunge To 7-Month Lows As Rental Units Tumble

With new and pending sales tumbling and lumber prices down, yesterday’s drop in homebuilders sentiment – from 10 year highs! – appears justified entirely now as Housing Starts collapsed 11% in October to the weakest level since March. This is the biggest miss (and MoM drop) since Feb. Multi-family  unit starts plunged 25.5% MoM as single-family dropped just 2.5%. Starts in The West and South plunged as The Midwest saw a 30.8% collapse in housing completions. Building Permits rose 4.1% after tumbling 4.8% in September but SAAR remains notably below the Q2 cycle peak levels (1.337mm) at around 1.15mm homes (with multi-family permits rising 6.8% MoM).

Weakest Starts print since March…


Driven by a plunge in Multi-Family units…


Is this where it is heading? If Permits are so bullish, why are lumber prices still in freefall?


Charts: bloomberg

The huge Black Rock liquidates one of its Macro Hedge Fund following losses and a surge in redemptions:
(courtesy zero hedge/Black Rock)

BlackRock Liquidates Its Macro Hedge Fund Following Worst Loss Since Inception, Surge In Redemptions

First it was Fortress’ once-gargantuan, peaking at over $8bn in AUM in 2007 “macro” hedge fund (which really was an FX trading desk betting on the ‘acumen’ of a rather dubious former employee from Citi, Jeff Feig, who has been implicated in the endless currency manipulation story) which unexpectedly shut down a month ago on massive losses mostly in Brazil, and now – moments ago – we learned that another just as vaunted hedge fund is liquidating.

According to Bloomberg, BlackRock Inc., the world’s largest asset manager, is winding down a global macro hedge fund after losses and investor redemptions eroded assets.

The reason for the liquidation: losses of 9.4% this year, cited by Bloomberg according to an October investor document, leading to the worst year for the asset manager since inception in 2003. The fund, which had $4.6 billion in assets just two years ago, has shrunk to less than $1 billion as of Nov. 1.

As noted above, BlackRock, best known for its ETFs and Larry Fink’s crusade against stock buybacks, is joining money managers including Fortress Investment Group LLC and Bain Capital that shuttered macro funds this year.

Bloomberg notes what we have known for a long time, namely that “many investors have struggled to navigate market turns that included an unexpected surge in the Swiss franc in January, a rally in European government bonds in April, a surprise devaluation of the Chinese yuan in August, falling oil and gold prices and a third-quarter selloff in stocks that were popular with hedge funds.”

More details:

“We believe that redeeming the Global Ascent Fund was the right thing to do for our clients, given the headwinds that macro funds have faced,” the firm said in an e-mailed statement.


Global Ascent, run by Paul Harrison, sought to profit from inefficiencies in global currency, fixed income, credit, equity and commodity markets. The fund lost 12.3 percent in the first quarter, extended losses to 14.5 percent through May, before paring declines, according to investor documents.


Harrison had been on the investment team of the fund since 2006 and ran it as lead manager since 2010. Most of the fund’s position have been closed out and converted to cash, said one of the people. BlackRock expects that a number of the fund’s managers will join other investment teams within the firm.


The fund had three losing years before this year, declining 2.9 percent in 2004 and about 7 percent in 2008 and 2011. Over the past four years, returns haven’t exceeded 1.4 percent.

BlackRock’s global macro fund is part of the firm’s direct hedge fund business, which oversaw $31 billion as of June. The unit, which started its first strategy in 1996, runs more than a dozen funds, including a $2 billion fundamental global fixed-income pool and $1.3 billion multi-strategy fund.

“We are committed to our macro investment capabilities,” BlackRock said in its statement. “Many of our multi-asset and single-asset class strategies combine top-down (macro) techniques with bottom-up (security level) capabilities and we believe macro factors can be important contributors to successful performance.”

At the end of the day, Blackrock’s admission of defeat in the macro investment arena will be nothing but a drop in the bucket: the company oversees $4.5 trillion globally, though much of it is in low-fee exchange-traded funds. The firm this month cut fees on some ETFs to as low as 0.03 percent of assets. The hedge funds, while small by comparison, carry much higher fees — in the case of the macro fund, a 2 percent management fee and 20 percent of profits.

But while the loss of Global Ascent will not impair Larry Fink’s gargantuan year end bonus, other hedge fund managers, many of whom are suffering far greater losses than BlackRock, are fighting tooth and nail to avoid the same fate even though the S&P is trading about 3% below its all time high.

They will fail.

It sure looks like this once darling hedge fund will be toast:
(courtesy zero hedge)

It Will SUNE Be Over: Axiom Says SunEdison “Credit Event Appears More Likely”, Sees Price Dropping To $2/Share

Back in the summer, SUNE was a hedge fund darling and in the portfolio of virtually every aggressive asset manager: a true hedge fund hotel.

Since then it has plunged by 90% on both concerns about fundamentals and hedge fund liquidations and margin calls. Just yesterday, the stock plunged another 34% beginning the question which hedge fund is still long and is about to get another major margin call.

In any event, as @the_real_fly says, “it will SUNE be over” and perhaps catalyzing the ending is a brand new note by Axiom Capital Research titled “The Nightmare Before Christmas” – Credit Event Appears More Likely than Presaged, in which the analyst Gordon Johnson sees at least another 33% of downside before the stock finally stabilizes at something resembling a fair value of $2.00

Here are the highlights:

  • Credit Risk Appears Worse-than-Forebode. After some pressure from a number of SUNE pundits following our downgrade of the shares last week (given SUNE’s shrs had already moderated -75% vs. +1% for the S&P 500 over the same timeframe), we decided to do another “scrub” of the company’s 10-Q published 11/9. Following this exercise, we are even more resolute in our subdued outlook, SELL rating, and yr-end C16 PT of $2/shr (34% downside). Why? Five reasons, namely:
    • (1) when excl. cash committed for construction projects, SUNE has just ~$600mn in cash for general corporate purposes (which we now blv may not be enough to sustain SUNE through 2Q16) – Ex. 2,
    • (2) SUNE’s decision to borrow $169mn in 1yr paper from Goldman Sachs (GS; NR) in 3Q15 at a 15.4% interest rate (incl. $9mn prepayment) to put up collateral, we blv, for the 8/11/15 $152mn margin call on its $410mn Deutsche Bank (DB; NC) loan (an addtl. $91mn of collateral was required from SUNE 10/15 [Ex. 3], and we surmise more since then with the fall in Terraform Power’s shrs [TERP; NC]), pointing to emergency cash needs as recently as 3Q15 – who borrows 1yr paper at 15.4%?, (Ex. 4), other than a distressed company,
    • (3) Renova’s right to put 7mn of GLBL shares to SUNE at a price of $15/shr 3/31/16 (a $105mn liability) – Ex. 5,
    • (4) SUNE’s potential obligation to buy ~16% of Renova for $250mn using its own shares (i.e., 83mn shrs), suggesting sig. dilution to equity holders in the offing – Ex. 6, &
    • (5) TERP’s recent revelation that it put up ~27% (i.e., $388mn) of the capital necessary to fund the Invenergy Warehouse, implying SUNE’s aspirations for ~$6bn in Warehouse funds to “house” its ~3GW in projects being developed may require a ~$1.65bn cash infusion (Ex. 7). Barring unforeseen incremental cheap funding in the offing, we see a credit event as likely before 3Q16.
  • Valuation. Our yr-end C16 PT remains $2/shr (34% downside). While more valuation detail is below, with acute stress on its core biz at present, & shortcomings selling huge amounts of projects into the secondary mrkt over a short period of time thus far, we blv SUNE will miss ~3.5GW developed in C16. Using ([1.42GW × $0.18 (op. prof.) – $150mn interest × 70% (tax)] ÷ 316mn shrs) = $0.23/shr in dev. co. EPS, & applying a 9x P/E multiple (assumes 15% DevCo GM into perpetuity; likely high given 9.6% 2Q DevCo GM), SUNE is worth $2.




Chances are nothing will happen as the bankers are well protected;

(courtesy zero hedge)

US May Bring Criminal Charges Against JP Morgan, RBS Executives, Prosecutors Pretend

In the aftermath of the financial crisis, it was truly amazing to watch as the world slowly came to grips with the reality that the vaunted institutions entrusted with promoting and preserving the stability of the global financial system were not only responsible for its collapse, but had for years engaged in the rigging of everything from benchmark rates to FX to gold.

It wasn’t so much that the public completely trusted Wall Street. Rather, it was the blatant character of the manipulation and the sheer scope of the endemic corruption and greed that took average investors off guard. The public, for instance, couldn’t understand how a Wall Street firm could create a product based on mortgages for the sole purpose of betting against that product even as it encouraged investors to take the other side. Similarly, the notion that there were cabals of bankers calling themselves things like “The Cartel” working in concert to rig the very benchmarks on which trillions in lending is based was beyond the imagination of the naive masses.

To be sure, the novelty has worn off at this point. Everyone knows it was all rigged and indeed, it doesn’t even seem like anyone is amused by the ridiculous “cartel” chat room transcripts anymore.

Part of the reason the public has become so numb to the nefarious activities of bulge bracket bankers is that none of them are ever held accountable. As we’ve joked on a number of occasions, Washington’s inept regulators (who are for the most part in Wall Street’s pocket anyway) routinely put bank logos in jail and levy token fines that amount to a fraction of firms’ operating profits, but no real people are ever punished.

Recently, London took the unprecedented step of sending a banker to jail, when the “Rain Man” Tom Hayes was sentenced to 14 years, but that’s a far cry from an Iceland-style situation where the government embarks on a serious effort to punish those responsible for financial chicanery.

Could the US be about to change course and actually go after bank executives? We doubt it, but as WSJ reports, Federal prosecutors are actively pursuing criminal cases against executives from RBS and JP Morgan in connection with their roles in packaging shoddy mortgages. Here’s more:

Federal prosecutors are actively pursuing criminal cases against executives from Royal Bank of Scotland Group PLC and J.P. Morgan Chase & Co. for allegedly selling flawed mortgage securities, people familiar with the probes said, as the clock ticks down for bringing cases from the 2008 financial crisis.


Officials are working to establish that the bankers ignored warnings from associates that they were packaging too many shaky mortgages into investment offerings and are weighing whether they can prove that constituted fraud, the people said.


At RBS, prosecutors are scrutinizing a $2.2 billion deal that repackaged home mortgages into bonds in 2007, the people said. In a 2013 civil settlement with RBS, the Securities and Exchange Commission described the lead banker on that deal, whom it didn’t name, as trying to push it through over concerns of the diligence department.


At J.P. Morgan, prosecutors are focusing on two people who worked on a different residential-mortgage deal, the people said.


J.P. Morgan noted the existence of a criminal probe in a Nov. 2 quarterly securities filing. A spokesman declined to comment beyond that document.


Some Justice Department officials said they believe they have a viable criminal case in the RBS probe, although a decision on whether to bring charges isn’t expected until early next year, the people said. The J.P. Morgan probe has long been stalled because officials have been divided over whether they have sufficient evidence to charge anyone with a crime but it has recently picked up steam, they said.


If filed, the charges would be among the first pursued against specific employees of the largest Wall Street firms over the housing collapse. Since the crisis, big banks have paid billions of dollars in settlements, but the lack of convictions has sparked political controversy. 


Several U.S. attorney’s offices have used funds from the bank settlements to hire additional temporary staff for mortgage-backed securities investigations. The Brooklyn, N.Y., office recently advertised four such positions that are expected to end in September 2017.


The RBS and J.P. Morgan probes are the most concrete criminal investigations currently active under the effort.


The J.P. Morgan criminal probe flows directly from the Sacramento civil investigation, in which prosecutors unearthed a 2007 memo written by a bank employee warning her bosses before the financial crisis hit that they were putting bad loans into securities—warnings that were ignored. That memo helped the Justice Department develop a legal basis for the then-record 2013 settlement.


The RBS investigation by the U.S. attorney’s office in Boston mirrors a November 2013 civil settlement in which the bank agreed to pay $150 million to resolve SEC claims that it misled investors on a $2.2 billion subprime-mortgage offering in 2007, people familiar with the probe said.

So there you go America. Just hold your breath and wait for federal prosecutors to haul away some folks in handcuffs nearly a decade after they made billions selling you on a mortgage you couldn’t afford so they could package it and sell it back to you in the form of a security they knew was bad.

And while the US Attorney’s office debates whether to open Pandora’s Box by actually holding real people accountable for their actions, we’re sure they’ll be plenty of lobbying and campaign donations and perhaps a few regulatory appointments which should help to ensure that at the end of the day, crime on Wall Street does indeed still pay.

FRBNY Fed governor Dudley states that he expects the Fed rate hike in December as the Fed wants to state that they have confidence in the economy:
which part of the economy?
(courtesy zero hedge)

Fed’s Dudley Admits Fed ‘Liftoff’ Is All About Inspring Confidence (Not Data)

he Fed’s Bill Dudley confirmed this morning why The Fed is so keen to raise rates no matter what –“liftoff will signal The Fed’s confidence in the US economy.” In other words, the ‘con’ continues… We have two simple questions – 1) Given the chart below, which ‘economy’ is The Fed confident in?and 2) What is The Fed going to say when they reverse the rate hike (as we have seen with every nation who has tried to raise rates since 2010)?


Which economy is Dudley ‘confident’ about?


Can The Fed do what everyone else has failed to do?


As a reminder, all these countries also wanted to “signal confidence” in the economy. They lasted on average a few months before they had to unsignal…

As we noted previously, the question then becomes: if the Fed does hike in December as over 90% of economists predict, will it be the first bank that avoids having to promptly “unhike”, which is unlikely or far more realistically – how long until the Fed is forced to admit “policy defeat” and go right back to ZIRP, or perhaps even NIRP, ultimately sliding right into QE4.

Alas, by now the script of hiking just to have an alibi to ease has become so trite even Deutsche Bank recently had the temerity to ask “Is The Fed Preparing For A “Controlled Demolition” Of The Market“?

Lacker is Dow jones data dependent and now believes that the market has not panicked and thus the fed hike in December is OK with him:
(courtesy zero hedge)

Fed’s Lacker Admits Fed Is “Market” Data-Dependent

And now the minutes of the FOMC meeting  (beige book)

what a complete joke!!!

(courtesy zero hedge)

FOMC Minutes Show Fed Is All-In For December Rate Hike (But Depends On Data)

With everything red since the October 28th “hawkish” FOMC meeting – which greenlit a December rate hike and convinced the world that everything is awesome in America (well why else would The ‘smart’ Fed raise rates?) – today’s minutes suggest an FOMC that is perhaps not quite as “whatever it takes” committed to a December liftoff…

But bear in mind there is a lot of data between now and December 16th (including payrolls) and what if stocks drop?

And not everyone is gung-ho…

Pre-Minutes: 68% rate-hike odds, S&P Futs 2064, 10Y 2.28%, EURUSD 1.0640, Gold $1070, WTI $40.45

Bear in mind that The Fed’s new man from Dallas , Kaplan hinted earlier:

Everything red post-FOMC… even stocks (for now) as commodities get crushed…

As rate hike odd soared…

Despite weakness in macro and micro data…

* * *

Key sections:

Hike in December… unless the S&P500, er data changes.

Some participants thought that the conditions for beginning the policy normalization process had already been met. Most participants anticipated that, based on their assessment of the current economic situ-ation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting. Nonetheless, they emphasized that the actual decision would depend on the implications for the medium-term economic outlook of the data received over the upcoming intermeeting period. Some others, however, judged it unlikely that the information available by the December meeting would warrant raising the target range for the federal funds rate at that meeting.
The Fed’s 102,345th mandate: Chinese unemployment, and of course risk management, i.e., the S&P 500:

Several participants indicated that, despite lessening concerns about the implications of recent global economic and financial developments for domestic economic ac-tivity and inflation, appreciable downside risks to the outlook remained. They were concerned about a poten-tial loss of momentum in the economy and the associ-ated possibility that inflation might fail to increase as ex-pected. Such concerns might suggest that the initiation of the normalization process may not yet be warranted. They also noted uncertainty about whether economic growth was robust enough to withstand potential adverse shocks, given the limited ability of monetary policy to offset such shocks when the federal funds rate is near its effective lower bound, and concern that the begin-ning of policy normalization might be associated with an unwarranted tightening of financial conditions. They believed that in these circumstances, risk-management considerations called for a cautious approach. They judged it appropriate to wait for additional information providing evidence of further improvement in the labor market and increasing their confidence that inflation was on a path to return to 2 percent over the medium term before raising the target range for the federal funds rate. In addition, a couple of participants cited concerns that a premature tightening might damage the credibility of the Committee’s inflation objective if inflation stayed be-low 2 percent for a prolonged period.
And the Fed’s latest forward guidance: the inclusion of the language that it “may very well become appropriate” to hike in December… barring no “unanticipated shocks”

In its postmeeting statement, rather than framing its near-term policy path in terms of how long to maintain the current target range, the Committee decided to indi-cate that, in determining whether it would be appropriate to raise the target range at its next meeting, it would assess both realized and expected progress toward its objectives of maximum employment and 2 percent in-flation. Members emphasized that this change was intended to convey the sense that, while no decision had been made, it may well become appropriate to initiate the normalization process at the next meeting, provided that unanticipated shocks do not adversely affect the economic outlook and that incoming data support the expectation that labor market conditions will continue to improve and that inflation will return to the Committee’s 2 percent objective over the medium term.
Full Statement below (link)

let us close today with this offering conversation between Mike Maloney and Greg Hunter
(courtesy Mike Maloney/Greg Hunter/USAWatchdog)

Bond Bust Will Be Biggest Crash in History-Mike Maloney

1By Greg Hunter’s

Precious metals expert Mike Maloney says we are experiencing a“rollercoaster crash.” Maloney explains, “The second half of the economic storm that started in 2007 and crashed in 2008, we’ve been in the eye of the hurricane from 2009 until today.  The second half of this economic storm is about to start.  I believe in 2016, we are going to see something happen, and 2017 will probably be pretty bad for the general economy.  . . . If we have a currency crisis, a recession, and this changing monetary system all together, it will be absolute chaos.”

Maloney says you can blame a lot of this wild ride on the Federal Reserve. Maloney contends, “We’re going into the Bernanke bust.  The 2008 global financial crisis was of Alan Greenspan’s making.  Ben Bernanke just reacted to it.  It was caused by Alan Greenspan’s reaction to the crash of the NASDAQ.  So, we had a crash of the stock market in 2000.  Alan Greenspan over reacted and held interest rates down too long to try and get the stock market reflated and get it back up.  He accidentally created a real estate bubble.  The next crash was both stocks and real estate.  This time, it will be stocks, real estate and bonds.  So, this is going to be the biggest crash in history.  This bond market bubble is something that has been constantly inflated for the past 35 years.  When it pops, it’s going to be devastating.  A bond bubble bursting is deflationary.”

Where does that leave gold and silver? Maloney says, “In the last great deflation, which was well studied, the Great Depression, gold rose 70%. . . . If you owned gold, you ended up with two and a half times more purchasing power. . . . One of the few assets that actually did well in the last great deflation was gold.”

Join Greg Hunter as he goes One-on-One with Mike Maloney of

(There is much more in the video interview.)


Well that about does it for tonight

I will see you tomorrow night



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