Nov 27/Gold smashed in a illiquid market/Proof is given by the Russian Air Force commander that the downing of the Russian SU24 was on Syria soil and the USA gave intelligence as to the timing of its departure and its altitude/ The USA must have passed the information onto Turkey and the Free Syria Army/if true this is an act of war/Russia places the huge SAM 400 missiles into Syria and thus creating a no fly zone/Bilil Erdogan, son of R. Erdogan/President of Turkey has seen over 1000 of his oil tankers vaporized/R Erdogan arrests two journalists who wrote about the ISIS oil funneling through Syria into Turkey plus the smuggling of arms/Dec 1/2015 is D day for Puerto Rico with respect to its defaulting bonds/

Gold:  $1056.20 down $13.80   (comex closing time)

Silver $14.01 down 16 cents

In the access market 5:15 pm

Gold $1058.50

Silver:  $14.08

Today gold was smashed in a very illiquid market, as our banker friends sold 18,000 contracts in a few seconds before the comex opening which set the trend for the rest of the day.  Also remember that we are still in options expiry week which ends Dec 1.2015.

At the gold comex today,  we had a very good delivery day, registering 201 notices for 2100 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 198.17 tonnes for a loss of 105 tonnes over that period.

In silver, the open interest fell by 3,855  contracts despite the fact that silver was unchanged in yesterday’s trading. Generally we are witnessing a massive OI contraction once we approach first day notice. The total silver OI now rests at 166,237 contracts In ounces, the OI is still represented by .831 billion oz or 118% of annual global silver production (ex Russia ex China).

In silver we had 24 notice served upon for 120,000 oz.

In gold, the total comex gold OI was hit again as this time another massive 4,895 contracts were liquidated as the OI fell to 393,110 contracts. Gold was down by $3.80 with respect to Wednesday’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. They are succeeding in gold but not silver. The bankers get very nervous when OI is rising despite awful prices for the metals. We had 0 notices filed for nil today. As I know everybody is aware that we are now in the options expiry for:  a) the comex gold/silver contracts, b)   LBMA contracts and c) OTC contracts.

We had a withdrawal of .89 tonnes of  gold inventory at the GLD/ thus the inventory rests tonight at 654.80 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,  / Inventory rests at 318.209 million oz.

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

1. Today, we had the open interest in silver fall by 3855 contracts down to 166,237  despite the fact that silver was unchanged in price with respect to Wednesday’s trading.   The total OI for gold fell by 4595 contracts to 393,110 contracts as gold was down by $3.80 with respect to yesterday’s trading.

(report Harvey)

2  a)Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

 

 i) i) Last night, 9:30 pm THURSDAY night, FRIDAY morning Shanghai time.  Japan Nikkei closed down, Shanghai falls badly  due to government probes/ Hang Sang falls.  Copper falls slightly and rallies in NY/
ii) Is this why China is nervous?
(zero hedge)
4. EUROPEAN AFFAIRS
i) France’s unemployment rises again signaling this country in trouble again
(zero hedge)
ii)  Spain’s huge derivative energy giant goes into bankruptcy protection suddenly throwing their banking sector into turmoil
(Don Quijones/WolfStreet)
iii) Glencore closed down to 91 pence.
(LSE)
5 RUSSIAN AND MIDDLE EASTERN AFFAIRS
i) Russian air force annihilates rebels on the ground in Syria
(Global Research)

ii)  Russia cuts off Gazprom:

vii)  We now have in detail from the Chief of the Russian Air Force exactly what happened with the downing of the Su24 fighter Russian aircraft.  The details suggest the attack is an act of war as they were in full knowledge of the flight path

(zero hedge/Russian Air Force)

6.GLOBAL ISSUES
An extremely important paper from David Stockman this morning!!
The 4 market signals;
i) central bank regression/ i.e.increasingly going to NIRP
ii) market disorder and volatility
iii) global malinvestment is now coming how to roost.  i.e. huge increases in capacity has caused massive overproduction of commodities/killing emerging markets etc.
iv) lack of demand is running head long into peak debt.  The consumer is run out of income to spend
a must read…

“Four Market Signals That the Crack-Up’s Begun”

David Stockman/Contracorner)

7. EMERGING MARKETS
none today
8.OIL MARKETS
i)  Job loses continue to rise and now total 250,000 and counting.  Texas is still to have massive layoffs coming soon:
(courtesy Charles Kennedy/Oil Price.com)
 9. PHYSICAL GOLD AND SILVER
i) a)Gold plummets today on a massive 18,000 supply orchestrated by our criminal bankers
(zero hedge)
b) Dave Kranzler graphs the above raid
(Dave Kranzler/IRD)
ii) Pimco suing Citibank over faulting mortgages during the early 2000-2007:
(GATA/Reuters)
iii) the LBMA wants to make the gold market in London more transparent. What a laugh
(LBMA/GATA)
iv)  Bron Suchecki’s commentary re the Perth Mint and Australian securities
(Bron Suchecki)
v) Lawrie on Gold;
Latest Chinese demand out of Shanghai: 54 tonnes
(Lawrie on Gold/Sharps Pixley)
vi)  Looks like the LBMA is fudging data on gold leaving for the far east
(Ronan Manly/Bullionstar)
10. USA STORIES
i)  Time running out on Puerto Rico
(zero hedge)
ii) Fox news reports FBI tracking 48 terrorists in the uSA
(Fox news/zero hedge)

Let us head over to the comex:

The total gold comex open interest had a colossal fall from  397,705 down to 393,110  for a loss of 4595 contracts despite the fact that gold was down by only $3.80 with respect to Wednesday’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. We certainly  witnessed the former in spades again today. The November contract went off the board.  We are now entering the big December contract which saw it’s OI fall by a monstrous 36,141 contracts from 60,159 down to 24,018.The next contract month of January saw it’s of rise by 51 contracts up to 456.  The next big active delivery month is February and here the OI rose by 28,993 contracts up to 263,401 and these are all the rollovers from December.  The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was 236,551 which is very good,( however with many rollovers). The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was very good at 267,175 contracts.

Today we had 201 notices filed for 2,100 oz.
And now for the wild silver comex results. Silver OI fell by 3855 contracts from 170,092 down to 166,868 despite the fact that the price of silver was unchanged with respect to Wednesday’s trading and we are entering an active delivery month where we have been witnessing a continual liquidation of OI. For some reason, for the fast few months it has not happened in silver. 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 have now finished off with our the non active delivery month of November. The big December contract month saw its OI fall by 16,868 contracts down to 10,053. The next non active month of January saw it’s OI fall by 27 contracts down to 1827.  The next big active contract month is March and here the OI rose by 12,850 contracts up to 123,896.The volume on the comex today (just comex) came in at 69,755 , which is quite good. The confirmed volume yesterday (comex + globex) was humongous at 97,802. First day notice for both gold and silver is Monday Nov 30. After today,  we have exactly 1 trading days left i.e. Monday.
We had 24 notices filed for 120,000 oz.

November contract month:

FINAL standings for November

Nov 27/2015

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil 66,997.610 oz

Scotia

Deposits to the Dealer Inventory in oz
Deposits to the Customer Inventory, in oz  nil
No of oz served (contracts) today 201 contracts

20,100 oz

No of oz to be served (notices)  oz
Total monthly oz gold served (contracts) so far this month 214 contracts

21,400 oz

Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 334,597.6 oz
 Today, we had 0 dealer transactions
Total dealer withdrawals:  nil oz
total dealer deposit:  nil oz
We had 1 customer withdrawal:
 i) Out of Scotia: a monstrous 66,997.610 oz
total customer withdrawal 66,997.610  oz
We had 0 customer deposits:

Total customer deposits  nil  oz

we had 0  adjustment:

 

 JPMorgan has a total of 10,777.279 oz or.3352 tonnes in its dealer or registered account.
***JPMorgan now has 337,121.339 oz or 10.48 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 201 contracts of which 0 notices were stopped (received) by JPMorgan dealer and 201 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 (214) x 100 oz  or 21,400 oz , to which we  add the difference between the open interest for the front month of Nov. (201 contracts) minus the number of notices served upon today (201) x 100 oz   x 100 oz per contract equals the number of ounces standing.
 
Thus the final standings for gold for the Nov. contract month:
No of notices served so far (214) x 100 oz  or ounces + {OI for the front month (xxx) minus the number of  notices served upon today (201) x 100 oz which equals 21,400 oz standing in this non delivery month of November (0.6656 TONNES)
We thus have 0.6656 tonnes of gold standing and only 4.714 tonnes of registered gold for sale, waiting to serve upon those standing
Total dealer inventory 151,579.179 oz or 4.714 tonnes
Total gold inventory (dealer and customer) =6,371,377.097   or 198.17 tonnes)
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 198.17 tonnes for a loss of 105 tonnes over that period.
 
JPmorgan has only 10.5 tonnes of gold total (both dealer and customer)
end
And now for silver

November final standings/First day notice

Nov 27/2015:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  

nil

Deposits to the Dealer Inventory  

 

nil

Deposits to the Customer Inventory 600,161.08 oz
No of oz served (contracts) 0 contracts  (nil oz)
No of oz to be served (notices) 24 contracts 

120,000 oz)

Total monthly oz silver served (contracts) 81 contracts (405,000 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 10,870,536.7 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 1 customer deposit:

i) Into  Scotia:  600,161.08 oz

total customer deposits: 600,161.08 oz

We had 0 customer withdrawals:

total withdrawals from customer account: nil   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 (81) x 5,000 oz  = 405,000 oz to which we add the difference between the open interest for the front month of November (24) and the number of notices served upon today (24) x 5000 oz equals the number of ounces standing.
Thus the initial standings for silver for the Nov. contract month:
81 (notices served so far)x 5000 oz +(24) { OI for front month of November ) -number of notices served upon today (24} x 5000 oz ,=405,000 of silver standing for the Nov. contract month.
we neither gained nor lost any silver contracts that will stand for delivery in this non active delivery month of November.
Total number of dealer silver:  43.646 million oz
Total number of dealer and customer silver:  down to 158.991 million oz
again, the silver comex sheds considerable silver from its vaults. 
end
 

 

The two ETF’s that I follow are the GLD and SLV. You must be very careful in trading these vehicles as these funds do not have any beneficial gold or silver behind them. They probably have only paper claims and when the dust settles, on a collapse, there will be countless class action lawsuits trying to recover your lost investment.There is now evidence that the GLD and SLV are paper settling on the comex.***I do not think that the GLD will head to zero as we still have some GLD shareholders who think that gold is the right vehicle to be in even though they do not understand the difference between paper gold and physical gold. I can visualize demand coming to the buyers side:i) demand from paper gold shareholders ii) demand from the bankers who then redeem for gold to send this gold onto China
And now the Gold inventory at the GLD:
Nov 27/we had a withdrawal of 89 tonnes of  gold inventory at the GLD/Inventory rests at 654.80 tonnes
Nov 25/no change in gold inventory at the GLD. Inventory rests at 655.69 tonnes
Nov 24/somebody was in great need of gold/GLD withdrawal of 5.06 tonnes today/inventory rests at 655.69 tonnes.
Nov 23 no changes in gold inventory at the GLD/Inventory rests at 660.75 tonnes
Nov 20/a huge withdrawal of 1.19 tonnes of gold at the GLD/Inventory rests at 660.75 tonnes
Nov 19.2015/no change in gold inventory at the GLD/Inventory rest at 661.94 tonnes
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 16.no 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.27.  inventory 654.80 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.
end
Nov 27/no change in silver inventory at the SLV/Inventory rests at 319.209 million oz
Nov 25./no change in silver inventory at the SLV/Inventory rests at 318.209 million oz
Nov 24./no change in silver inventory at the SLV./Inventory rests at 318.209 million oz
Nov 23/we had another addition (deposit) of 1.053 million oz of silver into the SLV tonight/Inventory rests at 318.209 million oz
Nov 20/no change in silver inventory at the SLV/rests tonight at 317.156 million oz.
Nov 19/no change in inventory rests tonight at 317.256 million oz/
Nov 18.2015: no change in inventory/rests tonight at 317.256 million oz
Nov 17.no 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 27/2015:  tonight inventory rests at 318.209 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.
end
 
And now for our premiums to NAV for the funds I follow:
Sprott and Central Fund of Canada.(both of these funds have 100% physical metal behind them and unencumbered and I can vouch for that)
1. Central Fund of Canada: traded at Negative 11.1 percent to NAV usa funds and Negative 11.7% to NAV for Cdn funds!!!!!!!
Percentage of fund in gold 62.2%
Percentage of fund in silver:37.7%
cash .1%( Nov 27/2015).
2. Sprott silver fund (PSLV): Premium to NAV rises to-0.03%!!!! NAV (Nov 27/2015) (silver must be in short supply)
3. Sprott gold fund (PHYS): premium to NAV rises to – 0.64% to NAV Nov 27/2015)
Note: Sprott silver trust back  into negative territory at -0.03% Sprott physical gold trust is back into negative territory at -.0.64%Central fund of Canada’s is still in jail.
end
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
First gold/silver trading courtesy of Mark O’Byrne/Goldcore:

Coming of Age: China’s Yuan To Join SDR Basket As IMF Reserve Currency

Christine Lagarde and the IMF Executive Board recently announced their intention to include the Chinese renminbi (RMB) in the Special Drawing Rights’ (SDR) valuation formula.  This would bring the Chinese currency into an exclusive group – alongsidethe US dollar, the euro, the British pound and the Japanese yen – of 5 global currencies that make up the IMF’s own reserve currency.

So, what will this promotion really mean for the yuan?

GoldCore: Bank teller counts Yuan
A bank teller counts out Yuan

In market terms, not a whole lot it would seem.

The inclusion of the RMB in the SDR basket will not significantly increase demand for the currency. It is simply an acknowledgment that the Chinese currency has fulfilled two of the IMF criteria for inclusion; that it was “widely used” and that it was “freely usable”.

“The reason for there to be little effect is just that reserve currencies, SDRs, even central bank foreign exchange reserves, just aren’t all that important these days. There’ll be a little more demand for yuan than there otherwise would have been…”  Tim Worstall, Forbes

The decision is, however, a significant PR win for the Chinese leadership, both domestically and internationally, who have made their inclusion in the SDR one of their biggest fiscal priorities of the next 5 years.  As Masahiko Takeda, writing for Chinese Spectator put it:

“It is clearly a symbolic victory in China’s efforts to raise its status in the international financial community, commensurate with its growing importance in the global economy”.

It should be noted that inclusion in the SDR is very different from increasing China’s share in the IMF quota, which has also long been pending. The IMF’s quota represents the member country’s voice in the decision making at the IMF and is closely linked to the country’s influence over the IMF.

If approved, as expected, at a November 30 board meeting, it would mark the first significant change to the IMF’s “Special Drawing Rights” (SDR) basket since the inclusion of the euro at its creation in 1999.

In a statement, the People’s Bank of China thanked the IMF for the recommendation and said it was “an acknowledgment of the progress in China’s recent economic development, reform and opening up”.

Sources:

IMF’s Addition Of China’s Renminbi To SDR Basket Won’t Make Much Difference – Forbes
Is RMB in the SDR a blessing for China? – China Spectator

DAILY PRICES
Today’s Gold Prices: USD 1064.65, EUR 1005.79 and GBP 707.73 per ounce.
Yesterday’s Gold Prices: USD 1070.50, EUR 1009.41 and GBP 710.30 per ounce.
(LBMA AM)

GoldCore: Silver in USD - 1 month

 

Silver in USD – 1 Month

From Dave Kranzler on the raid on gold and silver today:

So why not cover up the truth by hiding the “canary in the coal mine” and blasting the price of gold? That’s exactly what happened on Friday morning at 8:00 a.m. EST:

As you can see from the graph to the left, the trading in gold during the Asian and early London hours was largely subdued. At 8:00 a.m. the Comex paper gold contract went into its now-familiar cliff-dive formation. Bare in mind that this is probably one of the most quite, low-volume trading periods of the entire week, as Asia and the Middle East are in bed and London’s paper gold market is starting to doze off the weekend. No one single other commodity or market index exhibited any unusual trading patterns or volume when gold was smashed . Even silver, after an initial “sympathy” sell-off, has held up remarkably well. This was an intentional raid on the gold market.Between 8:00 a.m. and 8:30 a.m., 19,595 contracts were traded, largely dumped into the market. This is many multiples higher than the typical pre-Comex floor open volume. Make no mistake, any seller looking to move, 1.96 million ounces of paper gold – approximately 58 tonnes – would wait for the periods of time when the there’s is a lot more volume in order to mask the amount of paper he needs to sell AND to maximize the sale proceeds.

end

China’s demand for gold keeps on rising  In the latest week, it rose another 54 tonnes:

(courtesy Lawrie on Gold/Sharps Pixley)

Chinese SGE gold withdrawals keep surging. Latest week 54 tonnes

Chinese Shanghai Gold Exchange (SGE) physical metal deliveries are at an all-time high having already this year exceeded the full year total for 2013 – the previous record year.

Furthermore, deliveries out of the SGE are rising again as we draw nearer to the year-end with the latest figure for the week ending Nov 20th at 54 tonnes bringing the year to that date total to a massive 2,313 tonnes (as compared with the previous record 2013 full year total of 2,181 tonnes).  The year to date figure is equivalent to around 80% of current global new mined production on its own.

If gold withdrawals from the SGE continue at the current rate until the year end then the annual figure would come out at just under 2,600 tonnes – nearly 20% higher than in the previous 2013 record year

Readers may recall that SGE deliveries were huge in the run up to the Golden Week holiday in September, hitting well over 60 tonnes a week (over 70 tonnes on three occasions) in several weeks in July, August and September, but following the holiday they dropped back to the 40s although still remaining at a substantial level for the time of year.  But recent weeks have seen deliveries beginning to rise again.  The year end period tends to see strength in SGE withdrawals as jewellers and fabricators start to stock up for the demand that comes ahead of  the Chinese New Year which next year falls on February 8th (a Monkey year in the Chinese zodiac).  The New Year is a time of gift giving and invariably sees a further surge in gold demand so it would not be unreasonable for weekly withdrawals to continue to increas and perhaps peaking again in January.

end

Pimco, others sue Citigroup over billions in mortgage debt losses

Section:

By Jonathan Stempel
Reuters
Wednesday, November 25, 2015

Pacific Investment Management Co. and other investors have sued Citigroup Inc. over the bank’s alleged failure to properly monitor toxic securities backed by more than $13.8 billion of mortgage loans, resulting in $2.3 billion of losses.

According to a complaint filed Tuesday night in a New York state court in Manhattan, Citigroup breached its duties as trustee for the 25 private-label trusts dating from 2004 to 2007 by ignoring “pervasive and systemic deficiencies” in how the underlying loans were underwritten or being serviced.

The investors said Citigroup looked askance at the loans’ “abysmal performance” out of fear it might “jeopardize its close business relationships” with loan servicers including Wells Fargo & Co. and JPMorgan Chase & Co., or prompt them to retaliate over its own problem loans. …

… For the remainder of the report:

http://www.reuters.com/article/2015/11/25/us-citigroup-pimco-lawsuit-idU…

end
LBMA wants to make the London gold market more transparent??
(courtesy Reuters)

LBMA reports strong interest in making London gold market more transparent

Section:

By Clara Denina
Reuters
Wednesday, November 25, 2015

Exchanges, brokers, and data vendors are interested in providing clearing or reporting services to make the gold market more liquid and transparent, the London Bullion Market Association said Wednesday.

Financial market transparency has been a major focus for regulators after evidence of price manipulation in lending rates between banks with the LIBOR scandal in 2012.

A clearing platform or an exchange could increase liquidity in the London gold market, and make it cheaper for users, analysts said.

Twenty entities have submitted 17 responses to a request-for-information process, the LBMA said in a statement. …

… For the remainder of the report:

http://www.reuters.com/article/2015/11/25/lbma-gold-tender-idUSL8N13K3M7…

end

 

(courtesy bron Suchecki/PerthMint)

Nov262015

 

Today the Perth Mint and Australian Securities Exchange (ASX), one of the world’s top-10 listed exchange groups measured by market capitalisation, announced that they would be collaborating on developing new exchange traded precious metals products.

The first product is mostly likely to be a gold futures contract deliverable in Perth. Given the focus the gold community has on futures markets, and Comex in particular, I’m sure there will be a lot of interest is this Aussie gold contract. As we are in the process of talking to the market about what features they would like, it is not possible to get into contract specifications at this time but I can make some general comments about the approach ASX and Perth Mint will be taking.

Firstly, the Perth Mint’s role will be solely on supporting the physical delivery part of the contract – we are not issuing the contract or market making on it. ASX will list the contract and market it to their customers in Australia and Asia and traders worldwide.

While this contract will trade 24 hours a day on ASX’s globally connected network, given Australia is the second largest gold producer in the world and that the Perth Mint refines between 300 to 400 tonnes per year, we are sure that there will be a lot of interest in this contract from the physical traders in the Asian region.

The integrated nature of the Mint’s operations also means that unlike other futures contracts, which only offer warehousing, we will be able to offer shorts and longs flexible physical delivery choices that take advantage of the Mint’s refining and manufacturing capabilities.

The Perth Mint’s Western Australian government guarantee will also give comfort to longs who want to stand for physical delivery and store gold with us. In addition, the fact that ASX backs its clearing with its own capital (which is not something all exchanges offer) will reduce counterparty and systemic risk.

The combination of the Perth Mint’s strength in the physical market and ASX’s vertical integration of trading, clearing and settlement will introduce some real competition into the gold futures space. For more information see the official media release here.

end
Here we go again, another class action lawsuit against the major banks have been filed and this one on interest rate swaps.  The suit claims collusion and anti trust issues.
(courtesy Reuters/GATA)

Class-action suit accuses big banks of interest-rate swap fixing

Section:

By Mike Kentz
Reuters
Wednesday, November 25, 2015

NEW YORK — A class-action lawsuit, filed today, accuses 10 of Wall Street’s biggest banks and two trading platforms of conspiring to limit competition in the $320 trillion market for interest rate swaps.

The class action lawsuit, filed in U.S. District Court in Manhattan, accuses Goldman Sachs, Bank of America Merrill Lynch, JPMorgan Chase, Citigroup, Credit Suisse, Barclays, BNP Paribas, UBS, Deutsche Bank, and the Royal Bank of Scotland of colluding to prevent the trading of interest rate swaps on electronic exchanges, like the ones on which stocks are traded.

As a result, the lawsuit alleges, banks have successfully prevented new competition from non-banks in the lucrative market for dealing interest rate swaps, the world’s most commonly traded derivative.

The banks “have been able to extract billions of dollars in monopoly rents, year after year, from the class members in this case,” the lawsuit alleged. …

… For the remainder of the report:

http://www.reuters.com/article/2015/11/25/us-interestrateswaps-lawsuit-i…

end

Bill Murphy: Is this the Gold Cartel’s end game?

Section:

By Bill Murphy, Chairman
Gold Anti-Trust Action Committee Inc.
The Silver Summit and Resource Expo 2015
Park Central Hotel, San Francisco, California
Tuesday, November 24, 2015

First I would like to thank Haywood Securities for the gracious reception last evening.

Right around the turn of the century (sounds like a long time ago) I toured the South African countryside on behalf of GATA. It was in early 2001 ahead of GATA’s conference in May that year. It was quite a journey as it took me to Cape Town, Johannesburg, Pretoria, and then Durban, where the conference was to be held.

I will never forget it as it was GATA’s first trip abroad to expose the gold and silver price suppression scheme.

During that trip GATA supporters in Cape Town raised the equivalent of $50,000 to put an ad in the newspaper that is the Wall Street Journal South Africa. It was published during the internationally attended Indaba gold conference there. In that ad we decried hedging practices used by Barrick Gold and AngloGold that were major factors suppressing the gold price at the time. The ad caused quite an uproar.Years later Barrick and AngloGold took losses of around $17 billion on their hedges, which severely affected their share price.

During my trip I met with the CEO of South African Airways and the second and third top executives at the South African Reserve Bank in Pretoria.

The South African Broadcasting Co. covered GATA conference, right at a time when gold was making multi-year lows right around $252 an ounce. Representatives of five nations attended.

After hosting two other conferences — in the Yukon Territory and Washington — GATA held its most recent conference at the Savoy Hotel in London in August 2011. It sold out with attendees from 39 countries.

A month later the price of gold topped out at $1,900.

Now there is a reason for rehashing this.

From our first conference when gold was at its bottom, to one month after our last conference, the Gold Cartel — the Fed, U.S. Treasury, Bank for International Settlements, bullion banks, and a few other central banks — allowed a managed retreat in the price of gold. It went up gradually for 12 years in a row.

Then in September 2011 everything began to change.

The Gold Cartel went from managed retreat mode to maniacal attack mode, which included a $200 bombing over a long weekend period in April 2013, engineered when few traders were around.

This attack mode went on steroids close to six weeks ago following release of Federal Open Market Committee minutes, an attack in which gold and silver were slaughtered while the Dow rose 200 points on the same interest-rate news. The Gold Cartel did its thing while the Plunge Protection Team did its thing.

That day I was giving a presentation at the New Orleans Investment Conference when the gold price was $1,175. Until that day the open interest in gold on the Comex (an equal number of total long and short contracts) was soaring as the gold price had been getting pounded. It was clear the Gold Cartel was doing the selling. It was becoming clear that the situation for gold and silver was hopeless until the Gold Cartel blew up.

On the day of my presentation the cartel orchestrated a normally bullish outside day reversal to the upside. It was a sucker trap. The price of gold then fell $110, going straight down over the weeks ahead. During this period silver went down an unprecedented 15 days in a row.

The intensity of the daily selling had “Gold Cartel” written all over it. As a result of what the cartel has done over the last four years, the gold and silver mining industry is reeling with major producers suffering and many junior minors and exploration companies on life support. Those of us who have invested in these firms know that all too well.

So much for the bad news.

This presentation is about some potentially very good news, which has a high probability of kicking in over the not-too-distant future.

But first, let me step back a bit.

Following my presentation at the New Orleans conference, some word was spread that GATA was giving up. Nothing could be further from the truth. It was just that we were being realistic about what was going on:

1. What was so blatant about the price action, which looked so hopeless.

2. For 17 years most of the mainstream financial news media have refused to give GATA the time of day no matter what evidence of market manipulation my colleague Chris Powell sends them. For example, the veteran gold reporter for Bloomberg News told us to our face that she is forbidden to mention GATA.

3. The gold and silver mining industry refuses to deal with the farce that is destroying it. The supposed spokesman for the industry, the World Gold Council, won’t have anything to do with GATA.

Still, GATA is continuing to pound away to get the truth out, but with changed expectations, which I will mention shortly. Quitting is the furthest thing from our minds.

But first, here is what we know about the gold market over the past four plus years

— No amount of quantitative easing anywhere in the world has done the price of gold any good.

— Neither have near-zero interest rates.

— Nor has enormous physical demand from India and China.

— Nor the staggering debt in the United States.

— Nor a race to the bottom in many currencies.

The Gold Cartel has been able to mobilize enough physical gold, via the central banks and other sources, to meet demand. Yes, the shenanigans in the paper/derivatives market set the market tone, but at the end of the day the PM Fix in London is how 90 percent of physical market transactions are priced. If the paper market was totally phony, the physical market would force a phony lower paper market to be rejected.

As for the silver market, the smartest people in our camp can’t figure out where the Gold Cartel and JPMorgan are coming up with enough supply to meet demand. Silver has been the heaviest-acting market that I have seen in 40 years. It trades as if it has an anchor around its neck.

The paper-market selling of gold and silver of late has been the most intense we have seen on a day-to-day basis over the last 17 years. So much so that the Gold Cartel is turning the normally bullish speculators into shorts because of the one-way easy trade so far while the cartel’s members themselves are covering their own short positions. Gold recently broke $1,073, a multi-year low, which has the spec shorts and other market bears encouraging more rallies to be constantly sold.

So where is the good news in that?

The GATA camp has long wondered what the Gold Cartel’s end game would be for the gold and silver price suppression scheme — how they would be able to come up with enough physical supply to keep that scheme going. Because of this scheme, both gold and silver have been taken to artificially low prices. If the price of gold had just kept pace with inflation in the United States, it would be over $2,500 an ounce.

These artificially low prices of late will not stand. The Gold Cartel is going to hit a tipping point some time when they will be unable to carry on.

There is a strong possibility that this tipping point is near and they know it, which is why their day-to-day selling has gone into overdrive. Perhaps recognizing that their day of reckoning is not far off, the Gold Cartel could be concluding their four-year-plus orchestrated takedown. If that is so, the best way to accomplish their goal would be to make the short side trade so obvious, so easy to make money on, that it would turn the specs very short, maybe the most in history, while cartel covers more of its own short positions.

Some in our camp have been calling for the end game to happen with a reset in the West in which the prices of gold and silver go sharply higher overnight. That sort of reset would cause catastrophic losses for many shorts and put the Comex in jeopardy, which would have repercussions for other financial markets dealing in futures. But if a reset is ever to occur, the Gold Cartel would want its camp to be the least short possible, preferably even long. As the latest commitment-of-traders report shows, the commercial traders, many of them in the cartel, have already gone from extremely short to virtually flat, which is extremely unusual.

A reset could cause huge problems. Yet what we are seeing of late could also be setting up something else, which could do a lot to solve any developing physical supply issues, at least over the short term. That is to continue to get the specs as short as they have ever been and then drive the prices of gold and silver up sharply over a brief period for some highlighted reason — similar to driving the price of gold down $200 over that long weekend in April 2013. That move wiped out many spec longs but the Comex survived. It was manageable.

What is critical to appreciate is that if the Gold Cartel is going to solve some looming physical market issues, any sort of action would have to be swift and violent. For a gradual move up would just cause the specs to cover their shorts and go long again, just as before that release of the Fed minutes. That is the way the precious metals markets have always worked. There is no reason for that to change now.

Yes, suddenly sharper higher precious metals prices would encourage retail buying in the West, but it ought to crush Chinese and Indian buying, as the Chinese and Indians like to buy dips and are loath to chase the markets. And after what has happened to the precious metals in recent years, suddenly higher prices probably would also attract a fair amount of normal hedging.

Now the Gold Cartel could make such a raid just a short-term trade and go tight back to what they have been doing. Or it could lead to that end game, with gold and silver soaring, if only to where they should have been in the first place.

Most important to appreciate is that it wouldn’t happen because the cartel wanted it to but because the cartel was forced to let it happen given the worsening limits of the physical market. Obviously the gold and silver scene would change overnight should anything like that scenario happen. And yes, we would like to watch it happen. But this just could be an explanation why the Gold Cartel has gone into such intense selling mode every day lately. Something very strange is going on.

Predicting this sort of dramatic move and jumping up and down about it would be the kiss of death. So let’s just leave this as a reasonable possibility, an exciting one. If it does occur, there will be a lot more smiles on our faces the next time we see each other.

And that leads us back to where GATA is likely to make its most impact in the years ahead, beyond what we have accomplished so far, as when a federal judge ordered the Federal Reserve Board to pay GATA $2,800 for refusing to let GATA see one of the Fed’s gold records when we sued the Fed. A copy of that check is posted at GATA’s Internet site here:

http://www.gata.org/files/FedCheckLegalCosts.jpg

Regarding the gold and silver price suppression scheme, We have come to realize that you either “get it” or you don’t. Of course there is a middle ground occupied by those who simply do not want to hear about it, a “cognitive dissonance” because GATA has taken on the richest and most powerful interests in the world, and who wants to confront them?

And then there are those who disparage us because they are apologists for those doing the dirty deeds.

But there is something coming because of what the Gold Cartel has done that will have to be dealt with and will be very hard for our naysayers to ignore.

Like it or not, the gold price is widely viewed as a measure of U.S. financial market health. The gold price is a thermometer that has turned dysfunctional thanks to the Gold Cartel. It does not work. When feeling very ill, would you want your doctor to take your temperature with a broken thermometer?

The gold price has been suppressed for planned reasons. Those reasons have to do with interest rates, the dollar, confidence in U.S. fiscal policy, etc.

That subject is an entire treatise itself, but suffice it to say gold price suppression went into high gear under U.S. Treasury Secretary Robert Rubin as the key to his “strong dollar” Policy. To achieve their goals the Gold Cartel has secretly rid central banks of much of their claimed gold reserves and has fleeced ordinary investors of their gold, gold that ordinary investors didn’t take possession of, leaving their gold hypothecated and pledged over and over again, gold that investors think they have access to but will not when they try to retrieve it.

The rigging of the price of gold and silver is the lynchpin rigging operation that has set up all kinds of imbalances in the U.S. economy and led to other market manipulations to prop up our economy and financial markets. Everyone knows that our interest rate market has been manipulated and there is the Plunge Protection Team constantly propping up our stock market by buying serious dips. Then you have the bullion banks in the Gold Cartel getting fined for rigging interest rates, the currency markets, the energy markets, the mortgage markets, etc. In recent years JP Morgan alone has paid $30 billion in fines for rigging markets.

This rigging have led to a mirage that “everything is fine,” as in that great line in the movie “The Stepford Wives.” But the odds are that all is not fine behind the scenes. All this market manipulation is leading to serious chaos in our financial markets and economy when all this market management blows up.

When that chaos materializes, it is going to raise the question: How could this have happened?

About the same time, when gold and silver price suppression blow up, a new fear factor will have investors panicking to secure the gold and silver they think they own. Some of them will be turned away due to defaults and failures to deliver, and the ensuing scandal will be epic.

The public will not care much about gold and silver but they will be in an uproar as to how their financial well-being has been so suddenly compromised. They will demand answers from the press and elected officials.

The search for answers will lead to the rigging of the gold and silver markets. The mainstream financial news media will no longer be able to ignore the evil that GATA has been exposing all these years. The media will have no choice then but to air what we have had to say because the public will demand answers.

Then we will be heard then — unfortunately too late for many. But our efforts will not be in vain since, once they are known, they may prevent a repeat occurrence for another generation.

In the meantime, for our generation, let us hope this really is the Gold Cartel’s end game.

end

Ronan Manly: LBMA fudges data to obscure gold shipments to Asia

Submitted by cpowell on 09:43AM ET Friday, November 27, 2015. Section: Daily Dispatches

12:40p ET Friday, November 27, 2015
Dear Friend of GATA and Gold:

Gold researcher Ronan Manly painstakingly reviews gold production and trade data to reinterate his contention that the London Bullion Market Association is fudging the data to obscure the shipment of vast amounts of gold out of London and into Switzerland for reprocessing into smaller and purer bars for shipment to Asia. Manly’s analysis is headlined “From Good-Delivery Bars to Kilobars — The Swiss Refineries, the GFMS Data, and the LBMA” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/from- good-delivery-bars-to…

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

end

And now your overnight FRIDAY 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  6.3945/ Shanghai bourse: in the red , hang sang: red

2 Nikkei closed down 60.47 or .30%   

3. Europe stocks mixed  /USA dollar index up to 100.01/Euro down to 1.0582

3b Japan 10 year bond yield: rises to .305%   !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 122.62

3c Nikkei now just above 18,000

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

3e WTI: 42.09  and Brent:   45.19

3f Gold down  /Yen up

3g Japan 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  .460 per cent. German bunds in negative yields from 6 years out

 Greece  sees its 2 year rate fall to 7.10%/:  still expect continual bank runs on Greek banks 

3j Greek 10 year bond yield falls to  : 7.26%  (yield curve close to being inverted)

3k Gold at $1065.50/silver $14.12 (7:45 am est)

3l USA vs Russian rouble; (Russian rouble down 44/100 in  roubles/dollar) 66.26

3m oil into the 42 dollar handle for WTI and 45 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 1.0300 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0901 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  +.460%/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 2.20% early this morning. Thirty year rate below 3% at 2.97% /

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

 

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

China Plunges Most In Three Months, Pushing “Black Friday” Into The Red For Global Stocks

After several months of artificial, centrally-planned calm in Chinese markets, where “malicious sellers” found out the hard way the Politburo means business, overnight the relative quiet in Chinese stocks since August broke with a bang when the Shanghai Composite tumbled as much 6.1% before closing down 5.5%, the biggest drop in three months and the largest weekly loss since the depth of the Chinese rout in mid-August while a gauge of Chinese volatility surged from the lowest level since March.

China’s market weakness pushed markets around the globe lower, and as a result all the levitation gains in yesterday’s holiday market have been wiped out:

  • S&P 500 futures down up 0.1% to 2089
  • Stoxx 600 down 0.2% to 384
  • FTSE 100 down 0.3% to 6375
  • DAX down less than 0.1% to 11320
  • German 10Yr yield down less than 1bp to 0.46%
  • Italian 10Yr yield down 3bps to 1.4%
  • MSCI Asia Pacific down 0.9% to 133
  • US 10-yr yield down 2bps to 2.21%
  • Dollar Index up 0.11% to 99.91
  • WTI Crude futures down 2% to $42.20
  • Brent Futures down 1.1% to $44.98
  • Gold spot down 0.4% to $1,068
  • Silver spot down 1.1% to $14.12

The Chinese selloff was driven by a trifecta of catalysts: some of China’s largest brokerages (Citic, Guosen) disclosed regulatory probes and quickly plunged limit down while Guotai Junan and Haitong said they are facing anti-graft checks; additionally two companies announced bond payment difficulties and finally, overnight China reported that industrial profits fell 4.6% y/y in October, far worse than the -0.1% decline the month before.

Citic Securities said it received a notice from the China Securities Regulatory Commission on Thursday saying it will be investigated because it allegedly violated regulations on the supervision and administration of securities firms. The brokerage said it will cooperate with the probe and its operations are normal. Guosen Securities also said it was being investigated by the CSRC for similar alleged rule violations. Haitong Securities said after the market close it was being probed without providing details.

And so “China is back again on the table with a huge loss this morning as lots of investors were trying to use the recent lows to invest and the latest data and talk of how difficult it is for brokers to work there scared them off,” said John Plassard, a senior equity-sales trader at Mirabaud Securities LLP in Geneva, cited by Bloomberg.

AS Bloomberg reports, the probe into the finance industry comes as the government widens an anti-corruption campaign and seeks to assign blame for the selloff earlier this year. In doing so, ironically it is setting the stage for the next big selloff.

Authorities are testing the strength of a nascent bull market by lifting a freeze on initial public offerings and scrapping a rule requiring brokerages to hold net-long positions, just as the earliest indicators for November signal a deterioration in economic growth. A Chinese fertilizer maker and a pig iron producer became the latest companies to flag debt troubles after at least six defaults this year.

“The sharp decline will raise questions whether the authorities’ confidence that we are seeing stability in the Chinese markets may be a tad premature,” said Bernard Aw, a strategist at IG Asia Pte. in Singapore. “The rally since the August collapse was not fundamentally supported. The removal of restrictions for large brokers to sell and the IPO resumptions may not have been announced at an opportune time.”

As a result of the broker-led swoon the Shanghai Composite’s pared gains since its Aug. 26 low to 17 percent, while commodities were also impacted which had benefited in the previous session from a report China’s metals association had requested a government bailout as well as a crackdown on “malicious sellers” of metals.

The other top Asian news:

  • China to Ban Derivatives Funding for Stock Trading, CSRC Says: Securities Association of China will ban brokerages from offering financing for stock market trading using derivatives
  • China Calm Shattered as Brokerage Probe Sparks Selloff in Stocks: CSI 300 index closes down 5.4%, most in 3 mos.
  • China’s Bond Stresses Mount as Two More Companies Flag Concerns: Jiangsu Lvling Runfa says it’s unable to repay bonds Dec.
  • Rich Asians Mostly Stick With Dollar Rally UBS Says Near End: Bank starts trade of selling euro against Norway’s krone
  • Aussie’s Slide Spurs Weakest Inflation Response Since Float: Australia importing low inflation keeps RBA easing talk alive
  • Japan’s Government Gets Paid to Borrow at Two-Year Note Auction: Sale of 2.5t yen of the debt had record-low yield of minus 0.004%
  • China Unveils Biggest Army Overhaul in Decades to Project Power: President seeks to tighten political control over military
  • Japan Oct. Core Consumer Prices Fall 0.1% Y/y; Est. -0.1%
  • Japan Oct. Unemployment Rate at 3.1%; Est. 3.4%

In European markets equities kicked off the final session of the week in negative territory before paring losses throughout the European morning to head into the North American crossover in modest positive territory (Euro Stoxx: +0.2%). The most notable underperformers in Europe were material and energy names amid softness in the commodity complex following the aforementioned downbeat sentiment in Asia and USD strength.

Despite the losses seen in Chinese equities, news flow in European hours has been fairly light and as such, Bunds trade modestly higher in tandem with the weakness seen in equities.

European top news:

  • Infineon Soars to 13-Year High After Earnings Beat Estimates: Post growing sales from power management and security products
  • Abengoa’s Bondholders Jumping Ship as Insolvency Concerns Mount: Creditors faced with choice of dumping holdings or taking their chances on eventual settlement (see below/Wolf Street)
  • Novartis Said to Consider Selling Contact Lens Care Division: Seeks to improve growth at its eye-care unit, Alcon
  • Merck KGaA Said to Weigh Allergy Therapy Unit Sale to Trim Debt: Seeks to cut debt after $17b takeover of Sigma- Aldrich
  • Standard Chartered Facing Highest Hurdles in BOE Stress Tests: Investors to find out Dec. 1 if lender has done enough to weather latest round of stress tests
  • Glencore Says Disputed Libyan Oil Deal Has Global Support: Oil chief Beard defended co.’s crude-export contract with Libya’s National Oil Corp. in west of divided country after competing administration in east threatened to block its tankers
  • U.K. Home-Price Growth Slows to Five-Month Low, Nationwide Says: Notes a shortage of properties for sale
  • Euro-Area Confidence at Highest in 4 Years as ECB Mulls Stimulus: Figures are the strongest since May 2011

In FX, amid the light news flow the most significant FX move came in the form of broad based CHF weakness , with USD/CHF reaching its highest level since 2010 and EUR/CHF breaking above the 1.0900 handle and November highs. Given the expected upcoming ECB stimulus, this could potentially spur suggestions of pre¬emptive SNB intervention at some stage, ahead of the ECB rate decision and press conference next Thursday. The European morning saw a bout of strength in the USD index (+0.2%), to move back above the 100.00 level, with Wednesday’s 100.17 the next level of resistance.

In Commodities, oil continues its decline after yesterday’s announcement by the Libyan NOC that it has seen good progress in restarting production from its largest oil field. Furthermore, WITI and Brent have been weighed upon by a firmer USD. In the metals complex, gold has seen downward pressure since European participants came to their desks, in tandem with underperformance in silver, with prices of the yellow metal on course for its 6th consecutive weekly decline, now trading at the lowest levels since February 2010.

Top Global News:

  • Black Friday Retailers Pile on Discounts to Lure Frugal Shoppers: The shaky condition of U.S. retail will be put to the test this weekend, when Wal-Mart Stores, Macy’s and other chains roll out their Black Friday specials
    • EBay Early Thanksgiving Comps Up 11.1% Y/y: ChannelAdvisor
    • Online Sales Surge Ahead of Brick-and-Mortar Retailers’ Big Day
  • Naspers Said to Plan Showmax Expansion to Take on Netflix: Plans to expand video-streaming competitor to Netflix into 3 new continents next year, Samsung to include service on TVs
  • U.S. FDA Warning Poses Threat to Dr. Reddy’s Revenue Outlook: India’s 2nd-largest drugmaker could see sales come under pressure as it faces scrutiny from FDA over manufacturing practices at its factories
  • Oil Pares Weekly Advance as Libya Seeks to Boost Crude Supply: Oil pared first weekly gain in a month
  • Brazil Surprises Analysts With Worst Primary Budget Gap of Year: Underscores administration’s challenges in shoring up fiscal accounts
  • U.K. Domestic Demand Lifts Economy as Net Trade Has Record Drag: Consumer spending up for 17th straight quarter

Bulletin Headline Summary From Bloomberg and RanSquawk

  • Amid the light news flow, the most significant FX move came in the form of broad based CHF weakness, with USD/CHF reaching its highest level since 2010
  • European equities kicked off the final session of the week in negative territory before paring losses throughout the European morning to head into the North American crossover in modest positive territory (Euro Stoxx: +0.20%)
  • Looking ahead, highlights include ECB’s Linde and Knot, although yesterday’s Thanksgiving holiday could lead to another quiet session
  • Treasuries gain amid rout in China shares as some of the nation’s largest brokerages disclosed regulatory probes; volumes light as UST futures trading close at 1pm, cash at 2pm.
  • Citic Securities and Guosen Securities late Thursday announced probes by the securities regulator and Haitong Securities confirmed Friday it was under investigation
  • The Securities Association of China will ban brokerages from offering financing for stock market trading using derivatives, the country’s securities regulator said
  • A Chinese fertilizer maker and a pig iron producer have flagged bond payment difficulties, adding to signs of stress in the nation’s corporate note market after at least six defaults this year
  • Russia’s Vladimir Putin gave a tentative nod toward cooperation with an anti-terror alliance sought by France’s Hollande after the two met for almost three hours in Moscow on Thursday
  • President Xi Jinping announced a major overhaul of China’s military to make the world’s largest army more combat ready and better equipped to project force beyond the country’s borders
  • Portugal’s new Prime Minister Antonio Costa will need to keep a group of anti-austerity radicals onside to sustain his minority Socialist government after his maneuver to seize power tore up a four-decade political convention
  • Euro-area economic confidence matched its highest level in more than four years as the European Central Bank prepares to make a decision on whether to increase stimulus
  • No IG or HY deals Wednesday. BofAML Corporate Master Index OAS widens 1bp to +163, YTD range 180/129. High Yield Master II OAS widens 2bp to +637, YTD range 683/438
  • Sovereign 10Y bond yields lower. Asian stocks plunge, European stocks gain, U.S. equity-index futures higher. Crude oil and gold lower, copper little changed

US Economic Calendar

  • No data
end
ASIAN AFFAIRS
i) i)Last night, 9:30 pm THURSDAY night, FRIDAY morning Shanghai time.  Japan Nikkei closed down, Shanghai falls badly  due to government probes/ Hang Sang falls.  Copper falls slightly.
(courtesy zero hedge)
Let us begin:
China again cracks down
Two commentaries:
First:

After Arresting Hundreds Of Stock Traders, China Cracks Down On “Malicious” Metals Sellers Next

Five months ago, in the aftermath of its biggest market crash since 2008, China unleashed an unprecedented series of measures to stem the selling tide, none more mindblowing than its threat (which was promptly executed) to arrest “malicious short sellers” or even worse. It did just that as the following stories recount:

The result of all these ridiculous interventions was two-fold: China effectively killed the market, as can be seen by the following chart of volume on China’s futures market, until recently the world’s biggest which overnight evaporated after China made it practically impossible to trade anything…

… and as a result of the PBOC being the last standing player, the Chinese “stock market” would now trade precisely as its central planners demanded it to. Too bad nobody else will participate.

But now that China has gotten its stock “market” under control, it was time to focus on a market that is far more important to China’s economy – that of commodities. After all, while several dozen million may have gotten very rich and then very poor over the summer, the implications of the Chinese stock bubble and subsequent burst were mostly contained. However, when it comes to plunging commodity prices, these have a far greater impact on both China, where fixed investment is about 50% of GDP, and as a result impact everyone, as well as the world.

And as we reported yesterday, China will soon commence “fixing” the commodity market (which has seen its worst collapse since 2008 in the past year) by engaging in what will be the first bailout of its domestic metals producers since 2009:

The state-controlled metals industry body, China Nonferrous Metals Industry Association, proposed on Monday that the government scoop up aluminum, nickel and minor metals including cobalt and indium, an official at the association and two industry sources with direct knowledge of the matter said. The request was made to the state planner, the National Development and Reform Commission (NDRC).

 

… while the proposal does not include copper, it is likely to revive memories of 2009, when the State Reserve Bureau (SRB) in Beijing swooped in to buy more than 700,000 tonnes of copper on the domestic and international markets. Prices were languishing at around $3,000 per tonne at the time, and the buying spree reversed the falls and ultimately helped to propel prices to record highs above $10,000 per tonne in February, 2011.

The news spread like wildfire overnight, and sent copper, aluminum, zine, and the rest of the metals complex surging. However, the price spike will hardly last long: “any policy support from the government and smelters subsidies to smelters or joint production cuts, will be short-lived forces and won’t change the bigger picture of a market glut. Prices may be impacted temporarily,” said Qi Ding, Beijing-based analyst at Essence Securities.

So as a plan B, the same metals industry group that is reeling and understands it is one foot in the grave unless commodity prices pick up and which earlier this week demanded a government bailout, or “QEmmodity” soaking up all excess production, has doubled down and according to Bloomberg the China Nonferrous Metals Industry Association has submitted a request to Chinese regulators to probe “malicious” short-selling in domestic metal contracts amid recent price declines.

What is even more insane, is that China will do just that, in the process breaking what little is left of a domestic commodity market next.

Regulators have begun to collect some records of trading activity following a request from the China Nonferrous Metals Industry Association, according to the people, who asked not to be identified because they aren’t authorized to speak publicly on the matter. Nobody answered calls to the industry association’s general office.

Remember: it is always the “malicious” sellers who are the cause of all the world’s problems, never the “malicious” buyers, especially when said buyers are the central banks themselves.

Irony aside, if indeed China does buckle under the demands of its commodity producers and unleashes what is effectively a “commodity QE” while at the same time arresting anyone who sells or shorts commodities, there is no telling what will happen to the prices of commodities which may – if only over the near term – soar to unprecedented levels, unleashing even greater excess production and capacity, which would entail that instead of merely arresting “malicious” sellers one year from now, China’s politburo will have to summarily execute, on prime time TV, each and every one of them.

One thing is certain: since a market in which the government is about to set prices at whim, and where sellers will be “put away” no longer has any price discovery and is anything but a “market”, China’s commodity prices are about to see an unprecedented disconnect from the supply/demand constraints of reality, and even more pent up humor when this latest forced attempt to reflate a bubble finally blows up.

end
Second;
And more probes into various companies sends Shanghai down 5.5%
(courtesy zero hedge)

China Unleashes Perfect Storm Of Bad News Prompting Stock Market Plunge

Earlier this week, we documented the curious case of Guotai Junan International Holdings’ CEO Yim Fung who went “missing” on November 18.

After five days of trying to reach Yim via his cell phone, the brokerage issued a statement saying they simply could not find him. Guotai’s shares took a nosedive, falling 12%, the steepest decline in three months. 

You needn’t have been a sleuth to make an educated guess as to what might have happened. Beginning in July, China embarked on a comically absurd witch hunt to identify and punish those “responsible” for the dramatic bursting of the country’s leverage-fueled equity bubble. The crackdown (known as “kill the chicken to scare the monkey”) ensnared everyone from brokers to journalists. By September, Beijing had even begun arresting employees of the regulatory body tasked with overseeing the plunge protection “national team.” In effect, the CSRC was investigating itself. 

Sure enough, it turned out that Yim Fung was “taken away” in connection with a new graft probe into CSRC vice chairman Yao Gang, who earlier this month became at least the second official from the capital markets regulator to come under scrutiny since September. 

Now, it appears that after a period of relative calm, the Politburo is set to once again crackdown on any type of “malicious” behavior that Beijing thinks contributed to declining stock prices (remember, China isn’t a big fan of the whole “stocks can go down as well as up” thing, which means arresting anyone suspected of selling or, in extreme cases, halting the entire market). On Friday, the SHCOMP plunged nearly 6% after Citic Securities and Guosen Securities disclosed regulatory probes. Shares in both brokerages traded limit down on the news. Haitong Securities’, which is also facing an investigation, had its shares suspended.

Both Citic and Guosen said the new probes centered on alleged “rule violations.” “The finance crackdown has intensified in recent weeks and ensnared a prominent hedge-fund manager and a CSRC vice chairman,” Bloomberg notes, adding that “Citic Securities President Cheng Boming is among seven of the company’s executives named by Xinhua News Agency as being under investigation.”

The hedge fund manager Bloomberg references is  Xu Xiang, who runs Shanghai-based Zexi Investment (profiled here). After his arrest for insider trading and “stock price manipulation,” Beijing froze some $1 billion in accounts belonging to his parents. Xu’s predicament sent shockwaves through an industry already on edge after the crackdown in August. “I don’t want to get arrested,” one Shanghai-based money manager told WSJ.

This isn’t the first time Citic executives have come under scrutiny. The brokerage – which one journalist described over the summer as “like Goldman in China” – said in August that Managing Director Xu Gang had been detained for alleged “illegal trading.”

As we put it at the time, “it’s certainly possible that Beijing is simply out to send a message by arresting a high profile investment banker for no reason at all.” In short:

Amusingly, this comes just days after Beijing removed prop trading restrictions that required brokers to buy more shares than they sell in a given day. So now, you can technically be a net seller, it’s just that you might end up being arrested for it if the Party thinks your selling was particularly malicious or otherwise ill-timed.

But the renewal of the greatest witch hunt in the history of modern capital markets wasn’t the only thing weighing on Chinese shares Friday. We also got the latest indication that the country’s highly leveraged corporate sector has reached its dreaded Minsky Moment. As we detailed a week ago, Chinese borrowers are set to take out some CNY7.6 trillion in new loans this year just to pay interest on their existing borrowings. This comes as over half of commodities companies can’t service their debt with existing cash flow. 

What that means is that the defaults are coming and indeed, 2015 has seen at least a half dozen onshore implosions including, most recently, Shanshui Cement Group. On Friday, Jiangsu Lvling Runfa Chemical (a fertilizer company) and Sichuan Shengda Group (a pig iron producer) both indicated that they would be unable to repay debt coming due next week. As Bloomberg reports, “Sichuan Shengda’s subsidiary’s pig iron production is in halt because of falling prices and the cash shortage, the lender said in a separate statement.”

And of course no story about China’s increasingly hard landing would be complete without a bit of disheartening economic data. In a further testament to how difficult it is to transition from smokestack economy to a consumption and services-led growth model in the midst of a global commodities downturn, industrial profits sank 4.6% Y/Y in October. As Goldman notes, “the deterioration in industrial profits is directionally consistent with the slowdown of month-on-month sequential industrial production growth reported for October (October industrial production growth: +2.9% mom ann sa, vs +8.0% mom ann. s.a. in September.” Bear in mind that this is data from the NBS so it’s exceedingly possible that the situation is actually far worse.

Finally, it appears that the plunge protection team may finally be out of dry powder (as we suggestedweeks ago). “On Friday, there was little sign that government-run funds had stepped in to ease the selloff,” Bloomberg said, in the wake of the selloff. “While government intervention has typically showed up in the last hour of trading, the Shanghai Composite extended losses in the final 60 minutes to close near its lows of the day.”

“I don’t think any government can support the stock market forever,” said Paul Chan, the Hong Kong-based chief investment officer for Asia excluding Japan at Invesco.

Indeed, and the same goes for the bond market.

Then again, there may be another explanation for the lack of CSRC plunge protection: it’s possible everyone on the regulator’s “national team” has been thrown in jail.

 

end
Maybe this is why China is panicking:  Copper set to go below 2.00 per pound:

Why China Hit The Panic Button On Metals Traders (In 1 Simple Copper Chart)

Within the last week China appears to have hit the panic button with regards the seemingly unstoppable collapse of commodity prices. First, desperate Chinese producers began to demand a QE-for-commodities bailout; then, following the well-trodden (and failing) path of China’s equity market maipulation, authorities began tocrackdown on “malicious” commodity short-sellers. So why now? Why focus attention on the commodity markets? Perhaps this chart holds the key…

Having suddenly lost control of the stock market again…

 

Maybe commodities are a renewed focus as, we showed earlier in the week, there is No End In Sight For Commodity Carnage As Chinese Fear Fed Hike Blowback“, a post which can be summarized with the following chart showing that at least for nickel, copper, zinc, iron ore and aluminum it will be a very unhappy holiday season:

 

The one-word reason for this condition, as we explained here: China, which as documented extensively in the past, has clammed down on its unprecedented credit creation now that its debt/GDP is well over 300% and as a result conventional industries are dying a fast and violent death. In fact, months ago we, jokingly, suggested that what China should do, now that it has scared sellers and shorters to death, is to launch QE where it matters – the commodity space.

Which led to demands for a bailout…

That joke has become a reality according toReuters, which reports that China’s aluminum and nickel producers have asked Beijing to buy up surplus metal,sources said, the first coordinated effort since 2009 to revive prices suffering their worst rout since the global financial crisis.

And a crackdown on speculators (the selling ones, not the buying ones)…

So as a plan B, the same metals industry group that is reeling and understands it is one foot in the grave unless commodity prices pick up and which earlier this week demanded a government bailout, or “QEmmodity” soaking up all excess production, has doubled down and according to Bloomberg the China Nonferrous Metals Industry Association has submitted a request to Chinese regulators to probe “malicious” short-selling in domestic metal contracts amid recent price declines.

What is even more insane, is that China will do just that, in the process breaking what little is left of a domestic commodity market next.

Regulators have begun to collect some records of trading activity following a request from the China Nonferrous Metals Industry Association, according to the people, who asked not to be identified because they aren’t authorized to speak publicly on the matter. Nobody answered calls to the industry association’s general office.

Remember: it is always the “malicious” sellers who are the cause of all the world’s problems, never the “malicious” buyers, especially when said buyers are the central banks themselves.

*  *  *

So why now? Why all of a sudden pay attention to what until now has been a never-ending collapse across all commodities…

 

Well perhaps we have the answer… For thre first time since the commodity super-cycle began (read credit-fueled malinvestment mania), copper prices are set to close below the critical 200-month moving average.

The last time copper prices crossed this historical level was in 2008/9 and QE was immediately unleashed to reflate that bubble back to some state of debt-supporting fallacy…

 

On that occasion, the metal rallied hard at month-end to close above.

As Bloomberg notes, LME copper 3-mo rolling forward, currently trading at 4626, needs to rally 9% by Nov. 30 close to finish above 200-MMA, at ~5055, to avoid bearish technical signal.

 

However, some analysts say it is the 233-MMA, linked to the Fibonacci number 233 and currently at ~4610, that may be the more important support to watch, and which looks likely to hold.

 

And as if to runb more salt in the wounds, very recent Chinese data has not been bullish for copper as demand for use in appliances falls 4.6% y/y in October.

*  *  *

So are the momentum-chasing Chinese hitting the panic button on copper (and other metals) because the last level of price support is about to break exposing an entire nation’s growth fallacy to the world? Who knows… but it will certainly indicate yet again just how omnipotent central planners are (or are not).

EUROPEAN AFFAIRS
France just suffered its largest rise in unemployment in 2 years:
(courtesy zero hedge)

As If The French Did Not Have Enough Problems

With bond yields hitting ever-increasingly negative levels and stock prices inexorably rising on a wave of real and promised liquidity from Draghi, one could be forgiven for believing the hype about Europe’s recovery (had we not seen decades of failure for Japanese QE and 6 years for The Fed). So amid all this renewed hope, with its spiralling nationalism and warmongery – France just suffered the largest jump in joblessness in over 2 years to a new record high of 3.5898 million unemployed.

 

 

But then again – what does it matter…

 

Chart: Bloomberg

end

 

The following Spanish derivative energy player, Abengoa has a total debt of 9 billion usa and yesterday they filed for bankruptcy protection.  Spanish banks are owed a little over 4 billion euros  (4.3 billion euros).  The Spanish banking sector just cannot take a hit as their reserves are at rock bottom.  Taxpayers already have 750 million euros invested in the company and it is totally unlikely there will be another bailout.

This is no doubt trouble for the Spanish banking sector

(courtesy Don Quijones/WolfStreet)

Spain Braces for its Biggest Corporate Insolvency… Ever!

Thursday, November 26, 2015 10:40

Blood on the Bourse

By Don Quijones, Spain & Mexico, editor at WOLF STREET.

Spain is about to experience its biggest corporate insolvency ever. Unlike Bankia and all of Spain’s other bankrupt savings banks, Abengoa, a Seville-based multinational specialized in renewable energy and “environmental services,” is unlikely to receive a taxpayer-funded bailout – at least not just yet, not with general elections looming in less than a month’s time.

Following yesterday’s announcement that the company was seeking preliminary protection from creditors, Abengoa’s bonds and shares went into freefall. It was a financial bloodbath. According to S&P Capital IQ LCD, its euro-denominated 8.5% notes due 2016 plunged 38.5 points to 25.5 cents on the euro, after having been up at 93 cents on the euro only two weeks ago.

The U.S. dollar-denominated paper also suffered huge price declines in block trades. The engineering “Finance” unit’s 8.875% notes due 2017 plummeted 42.5 points, to 16.5 cents on the dollar, while the pari passu 7.75% notes due 2020 plunged from 45 before the announcement to 15 cents on the dollar.

On Spain’s benchmark stock index, the IBEX 35, Abengoa’s B shares – valued just over a year ago at €4 – plunged as much as 69% to €0.28 before staging a brief dead-cat bounce. At the time of writing today, the B shares have fallen a further 25%.

With total debt of nearly $9 billion and growing, Abengoa yesterday filed under article 5 bis of the Spanish insolvency law. As WOLF STREET reported a few months ago, the company was undone by its mad rush for growth at any cost as well as its unconstrained embrace of the dark arts of financialization.

Even if Abengoa was to find a last-minute guardian-angel investor to take up some of the slack, the chances of it being able to find enough cash to service its debt pile are rice-paper thin. The company’s losses, slumping shares, and difficulty accessing financing could generate “significant doubts” over its ability to keep operating, warned its chief auditor, Deloitte.

That is putting it mildly. With its primary overseas creditors refusing to refinance its debt and its bonds and shares losing most of their value, the only two things that can save the company now is a massive haircut or a bailout. And with do-or-die general elections scheduled for December 20th – elections that the governing People’s Party is contesting on the basis of its sound economic management and Spain’s Lazarus-like return to robust economic health – a bailout is out of the question, at least until after the elections. And by then it could be too late.

Zero Risk Management

Abengoa’s demise could have serious repercussions for the financial sector, both in Spain and abroad. Most of Abengoa’s debt is owed to Spanish banks, primarily Santander, though other banks exposed to the company include Credit Agricole, Société Generale, Natixis, HSBC, Bank of America, and Citi, Abengoa’s founding Benjumea family’s preeminent bank of choice.

“A financial restructuring would be a very messy and lengthy process,” said Felix Fischer, a credit analyst at independent research provider Lucror Analytics in Singapore. “There are so many different layers of different liabilities.”

This is particularly bad news for Spain’s banks, which are owed €4.3 billion. About 20% is unsecured and will be wiped out first. Spain’s biggest bank, Santander, is at the top of the pile with €1.56 billion of exposure, followed by publicly owned Bankia (€582 million), Catalonia’s biggest bank, Caixabank (€570 million), Catalonia’s second biggest bank Banco Sabadell (€387 million), Banco Popular (€334 million), Bankinter (€210 million) and the state-owned Institute of Official Credit (ICO, €161 million). The list goes on and includes many of Spain’s bailed out saving banks. In fact, the only entity not to have exposure to Abengoa is Spain’s number-two bank, BBVA. Most of the banks have made no provisions whatsoever to hedge their exposure.

If Abengoa is unable to reach an agreement with its creditors in the next four months, the banks will have to begin making their first bad-debt provisions at the end of the first quarter 2016. This could be easier said than done for a financial sector that has just been singled out by the European Banking Association (EBA) as Europe’s most undercapitalized.

Victim of Its Own Success

Given its own indirect financial exposure to Abengoa – through ICO and Bankia – Spain’s (unconsulted) taxpayers have at least €740 million invested in the company. About 7,000 Spanish jobs are on the line, most of them in Andalusia where the unemployment rate is already 31%, and youth unemployment 57%. It’s assumed that the Spanish government will move hell and high water to prevent a total collapse of the company.

In October the central government joined forces with Andalusia’s regional administration and the former King of Spain, Juan Carlos I, who continues to serve as an exemplary account manager for Spain Inc, to pressure Spain’s banks into making one last-ditch effort to save the company. An investor was duly found – the Gonvarri Corporación Financiera, a subsidiary of the Basque industrial group Gestamp – but Abengoa’s international creditors refused to sign off on the deal.

Ironically, it is Abengoa’s ability to repackage and spread its debt around the world that could well be its ultimate undoing. As a result, any eventual haircut will need the approval of myriad financial institutions, many of whom are far less concerned about or affected by the potential blowback of the company’s collapse for Spain’s government or financial system.

And if there’s no haircut, it leaves only one option on the table: a taxpayer bailout, either of Abengoa or its Spanish creditors. Just don’t tell Spanish voters — at least not for the next three and a half weeks. By Don Quijones, Raging Bull-Shit.

And they’re feeding a Monstrous Pile of Debt. Read… The Mad Euro Project Just Got A Lot Madder

end

 

GLEN GLENCORE PLC ORD USD0.01

Price (GBX) 91.88 Var % (+/-) -4.17% (Down -4.00)
High 95.26 Low 90.00
Volume 89,490,178 Last close 91.88 on 27-Nov-2015
Bid 91.99 Offer 92.03
Trading status Market Close Special conditions NONE
As at 27-Nov-2015 21:45:38 –  All data delayed by at least 15 minutes.
end
RUSSIAN AND MIDDLE EASTERN AFFAIRS
Thursday morning:
The Russian airforce annihilates the Turkman situated on the border between Syria and Turkey.  These guys are acting as a conduit to bring in weapons and fighters into Syria and also the extraction of oil from Syria and Iraq by ISIS.  The owner of the oil tanker trucks is non other that Bilal Erdogan, the son of the President of Turkey, Erodgan.  Thus Turkey is in reality a sponsor of terrorism.
(courtesy Global Research/special thanks to Robert H for sending this to us)

Russian Air Force Annihilated Militants In Area Where Su-24 Was Shot Down. Erdogan Ordered Turkish Air Force Planes Be Grounded

Information has come from  Syrian sources that last night (24.11) the Russian Aerospace Defence Forces struck with massive attacks on the positions of militants (including Turkomans) in the region where the Russian Su-24 was brought down.

The source reported that most likely nothing remains of the militants who shot down the Russian MI-8 .

No detailed information has arrived yet.

Meanwhile, there has appeared information that the Turks are not putting their fighters in the air after the majority of them were lit up by Russian radar (the S-300 and, according to early reports, possibly the S-400). After the statement of the Ministry of Defense of Russia, Turkey is afraid that their planes can be destroyed when approaching the border.

In this regard the Syrians reported that the Russia air-space forces can begin the full-scale destruction of camps in the border territory, and also annihilate the retreating militants and the fuel trucks which are moving towards Turkey.

Erdogan did not receive the hoped-for support from NATO. Erdogan has acknowledged that if the Russian plane even violated the border of Turkey, this was for only for 17 seconds, which means that the Turkish Air Force, on purely physical grounds, could not have reacted to it if the provocation was not prepared in advance. This figure of 17 seconds appears in NATO reports.

Members of NATO have been ambiguously treating Erdogan’s action. At present it is difficult to judge how the situation will develop. While it is obvious that Erdogan is attempting to back off, it is already too late, as Vladimir Putin gave to understand at a meeting with the king of Jordan.

Most likely Turkey did not expect such a severe reaction from Russia.

Article originally appeared at Cont.ws, translated by Caraptho-Russian exclusively for SouthFront

Out Of Gas: Gazprom Cuts Off Ukraine, Will Turkey Be Next?

Last month in “Pipeline Politics: Russia, Turkey Clash Over Energy As Syria Rift Shifts Focus To German Line,” we revisited Russia’s recent deal with Shell, E.On and OMV to double the capacity of the Nord Stream pipeline, the shortest route from Russian gas fields to Europe.

The MOU, signed earlier this year, angered the likes of Ukraine and Slovakia. In short, the more gas that can transported via the Nord Stream, the less needs to go through Eastern Europe and that means less revenue for the countries through which the pipelines are built. “They are making idiots of us. You can’t talk for months about how to stabilize the situation and then take a decision that puts Ukraine and Slovakia into an unenviable situation,” Slovak PM Robert Fico exclaimed a few months back.

For those who may need a refresher, here, coutesy of Bloomberg, is a look at the routes by which Russian gas reaches end customers:

Obviously, the conflict in Ukraine has made for a rather awkward situation when it comes to Russian gas supplies. Long story short, Ukraine wants to cut its dependence on Russian gas and if everyone’s telling the truth, Gazprom would probably just as soon not deal with a country that, i) owes Moscow $3 billion on a defaulted bond, and ii) is effectively at war with Russia.

Nevertheless, a couple of months ago the two countries signed an deal ensuring supplies through Q1 of 2016 and guaranteeing Ukraine comparable prices to its neighbors. Well, that looks to have fallen apart, because on Wednesday, Gazprom decided to stop shipments to Ukraine citing a lack of prepayments. Optically, that looks bad for Kiev and so, in the energy equivalent of “you can’t fire me because I quit“, Ukraine announced today that it would stop buying Russian gas.

“The government has decided to order (state energy firm) Naftogaz to stop buying Russian gas. It is not that they are not delivering us gas, it is that we are not buying any,” Prime Minister Arseny Yatseniuk said.

Kiev says it can get cheaper prices elsewhere. “Gazprom CEO Alexei Miller on Wednesday warned Ukraine and Europe of possible gas disruptions following the cut-off,”AP notes, adding that “Russia uses Ukraine’s pipelines to transport a part of its gas deliveries to other European countries.”

“Ukraine’s refusal to buy Russian gas threatens a safe gas transit to Europe through Ukraine and gas supplies to Ukraine consumers in the coming winter,” Miller said.

But the pettiness didn’t stop there. Yatsenyuk went on to announce that Ukraine will be closing its airspace to the Russians due to “security concerns.”

Importantly, it’s not just Eastern European that will suffer because of strained relations with Moscow and the expanded capacity of the Nord Stream. The deal with Shell, E.On and OMV has also put Moscow in a better bargaining position vis-a-vis Turkey, which is the second largest consumer of Russian gas and which paid Gazprom some $10 billion last year.

Prior to the Nord Stream deal and before Russia got directly involved in Syria, Ankara and Moscow were enjoying a burgeoning trade relationship. However, once Russia began flying combat missions from Latakia, relations between Putin and Erogan began to sour. Turkey is a key player in the effort to supply training, guns, and money to the various rebel groups fighting for control of Syria. Indeed, there’s plenty of evidence to suggest that despite Ankara’s conveniently timed “crackdown” on ISIS (which began in late July and just happened to coincide with an AKP election setback), Turkey is perhaps the number one state sponsor of Islamic State (see here for more). Indeed, on Tuesday Putin accused Turkey of facilitating the group’s black market oil trade.

Needless to say, once Russia began to conduct airstrikes on anti-Assad elements, Erdogan was not pleased and it was clear from the beginning that it would only be a matter of time before the border disputes began. Sure enough, Turkey shot down a Russian drone last month and subsequently began to complain loudly about alleged Russian incursions into Turkish airspace. Those complaints led directly to a declaration by Erdogan that Turkey may seek to source its gas from someone else. As Sijbren de Jong, an energy security analyst at the Hague Centre for Strategic Studies told Bloomberg, “Putin is betting on Nord Stream, but that bet is risky.”

As the tension continued to build, many began to wonder about the fate of the proposed Turkish Stream pipeline and now that Turkey has shot down a Russian warplane, everyone wants to know whether Russia may decide to retailiate by simply cutting Ankara off, leaving Erdogan to figure out where to source some 53% of his country’s energy needs.

Of course you can expect the Western media to say that Putin can’t afford to cut Turkey off, but even if the coverage is biased towards the NATO member in the equation, it’s still worth taking a look at the commentary. Here’s what Bloomberg had to say today:

Turkey relies on Russia for about half its natural gas supplies, paying state-controlled Gazprom PJSC as much as $10 billion last year. That makes their energy ties an unattractive target for retaliation.

 

With so much at stake for both sides, Russia may look elsewhere in its response to the downing of its warplane by

Turkey on Tuesday. Russian Deputy Energy Minister Anatoly Yanovsky said that supplies to Turkey would continue in line with the contract. Longer term, Turkey could reduce its dependence on Russian gas through alternative supplies.

 

The relationship between Turkey and Russia was already strained before Russia’s warplane was shot down, and talks over a new gas pipeline had stalled, according to Alexander Kornilov, an Alfa Bank analyst in Moscow.

 

Turkish Stream is redundant because there is already existing transfer capacity to Turkey and the rest of Europe, Sberbank PJSC’s investment bank unit said Wednesday in a report to clients.

 

While Turkey can’t turn away from Russian supplies right away, it still has leverage to fight retaliatory moves, including if Russia takes a hard line on prices or threatens cuts, according to Sijbren de Jong, an analyst at the Centre for Strategic Studies in The Hague.

 

The sales volume from Turkey is equivalent of 17 percent of Gazprom’s total exports outside the former Soviet Union, according to company data. 

 

“The bottom line is militarily, strategically they may want to draw a line and say this has gone too far, but it wouldn’t be wise,” said De Jong. “Essentially if you’ve put so much effort into coveting this burgeoning partnership with Turkey from an energy perspective, that’s all going to be for nothing.”

Perhaps, but it’s not clear that Turkey has as much leverage here as analysts claim. Consider this for instance:

“Turkey will probably not want to halt any existing energy arrangements, but it almost certainly means Turkey will start a renewed look at what alternative energy relations it can have,” said John Roberts, an energy security specialist at Methinks Ltd. in Jedburgh, Scotland. “Two obvious choices are becoming a customer for U.S. LNG; the other is Iran.”

Here’s a look at the breakdown by country in terms of where Ankara sources its gas:

What analysts seem to be discounting here is that ties between Russia and Iran have strengthened materially over the past six months. Russia’s intervention in Syria will not be forgotten in Tehran. As we’ve detailed exhaustively, ensuring that Damascus doesn’t fall to a puppet government of the Saudis is perhaps the most important geopolitical concern for the Iranians. Losing Syria would cut off a supply route to Hezbollah and rollback Iran’s Shiite crescent. It’s probably not an understatement to say that Tehran will be eternally grateful to Moscow for Russia’s participation in Syria on behalf of the government and as we saw when Assad rejected the Qatar-Turkey line but approved the Iran-Iraq-Syria line, these are countries that will, when they feel the situation calls for it, subjegate energy concerns to geopolitics.

Throw in the fact that Russia and Iran are already in talks on a number of energy projects and it seems reasonable to suspect that if Iran believes Turkey is becoming too much of an impediment to the campaign in Syria, Tehran may just decide to drive a harder bargain when it comes to gas supplies. In short: if you’re Turkey, you don’t really want to put yourself in a position where your fallback plan in the event you anger your biggest energy supplier is to try and negotiate for more trade with that supplier’s closest geopolitical ally, especially when you are actively seeking to subvert both of their goals in a strategically important country. As WSJ put it on Wednesday, “diverting the energy trade wouldn’t be easy.”

No, it most certainly would not “be easy”, and the big question going forward is this: is it realistic to believe, given what’s going on in Syria, that Iran will be willing to make it any easier?

END
Thursday morning:
We brought the following to your attention yesterday, namely the William Engdahl commentary which exposed Bilal Erdogan has the conduit for smuggling oil out of ISIL as well as smuggling into the country weapons.  When the Russians blew out 1000 oil tanks, they were no doubt belonging to Bilal Erdogan, the son of President Erdogan
of Turkey. This must have inflammed the President of Turkey to now end and thus the reason to fire upon and knock out the Russian fighter jet.  All of this is now known to the Russians who will for sure take action against Turkey.
(courtesy zero hedge)

Meet The Man Who Funds ISIS: Bilal Erdogan, The Son Of Turkey’s President

Russia’s Sergey Lavrov is not one foreign minister known to mince his words. Just earlier today, 24 hours after a Russian plane was brought down by the country whose president three years ago said “a short-term border violation can never be a pretext for an attack”, had this to say: “We have serious doubts this was an unintended incident and believe this is a planned provocation” by Turkey.

But even that was tame compared to what Lavrov said to his Turkish counterparty Mevlut Cavusoglu earlier today during a phone call between the two (Lavrov who was supposed to travel to Turkey has since canceled such plans).

As Sputnik transcribes, according to a press release from Russia’s Ministry of Foreign Affairs, Lavrov pointed out that, “by shooting down a Russian plane on a counter-terrorist mission of the Russian Aerospace Force in Syria, and one that did not violate Turkey’s airspace, the Turkish government has in effect sided with ISIS.

It was in this context when Lavrov added that Turkey’s actions appear premeditated, planned, and undertaken with a specific objective.

More importantly, Lavrov pointed to Turkey’s role in the propping up the terror network through the oil trade. Per the Russian statement:

“The Russian Minister reminded his counterpart about Turkey’s involvement in the ISIS’ illegal trade in oil, which is transported via the area where the Russian plane was shot down, and about the terrorist infrastructure, arms and munitions depots and control centers that are also located there.”

Others reaffirmed Lavrov’s stance, such as retired French General Dominique Trinquand, who said that “Turkey is either not fighting ISIL at all or very little, and does not interfere with different types of smuggling that takes place on its border, be it oil, phosphate, cotton or people,” he said.

The reason we find this line of questioning fascinating is that just last week in the aftermath of the French terror attack but long before the Turkish downing of the Russian jet, we wrote about “The Most Important Question About ISIS That Nobody Is Asking” in which we asked who is the one “breaching every known law of funding terrorism when buying ISIS crude, almost certainly with the tacit approval by various “western alliance” governments, and why is it that these governments have allowed said middleman to continue funding ISIS for as long as it has?

Precisely one week later, in even more tragic circumstances, suddenly everyone is asking this question.

And while we patiently dig to find who the on and offshore “commodity trading” middleman are, who cart away ISIS oil to European and other international markets in exchange for hundreds of millions of dollars, one name keeps popping up as the primary culprit of regional demand for the Islamic State’s “terrorist oil” – that of Turkish president Recep Erdogan’s son: Bilal Erdogan.

His very brief bio:

Necmettin Bilal Erdogan, commonly known as Bilal Erdogan (born 23 April 1980) is the third child of Recep Tayyip Erdogan, the current President of Turkey.

 

After graduating from Kartal Imam Hatip High School in 1999, Bilal Erdogan moved to the US for undergraduate education. He also earned a Masters Degree in John F. Kennedy School of Government at Harvard University in 2004. After graduation, he served in the World Bank as intern for a while. He returned to Turkey in 2006 and started to his business life. Bilal Erdogan is one of the three equal shareholders of BMZ Group Denizcilik “, a marine transportation corporation.

Here is a recent picture of Bilal, shown in a photo from a Turkish 2014 article, which “asked why his ships are now in Syria”:

In the next few days, we will present a full breakdown of Bilal’s various business ventures, starting with his BMZ Group which is the name implicated most often in the smuggling of illegal Iraqi and Islamic State through to the western supply chain, but for now here is a brief, if very disturbing snapshot, of both father and son Erdogan by F. William Engdahl, one which should make everyone ask whether the son of Turkey’s president (and thus, the father) is the silent mastermind who has been responsible for converting millions of barrels of Syrian Oil into hundreds of millions of dollars of Islamic State revenue.

By F. William Engdahl, posted originally in New Eastern Outlook:

Erdogan’s Dirth Dangerous ISIS Games

More and more details are coming to light revealing that the Islamic State in Iraq and Syria, variously known as ISIS, IS or Daesh, is being fed and kept alive by Recep Tayyip Erdogan, the Turkish President and by his Turkish intelligence service, including MIT, the Turkish CIA. Turkey, as a result of Erdogan’s pursuit of what some call a Neo-Ottoman Empire fantasies that stretch all the way to China, Syria and Iraq, threatens not only to destroy Turkey but much of the Middle East if he continues on his present path.

In October 2014 US Vice President Joe Biden told a Harvard gathering that Erdogan’s regime was backing ISIS with “hundreds of millions of dollars and thousands of tons of weapons…” Biden later apologized clearly for tactical reasons to get Erdo?an’s permission to use Turkey’s Incirlik Air Base for airstrikes against ISIS in Syria, but the dimensions of Erdogan’s backing for ISIS since revealed is far, far more than Biden hinted.

ISIS militants were trained by US, Israeli and now it emerges, by Turkish special forces at secret bases in Konya Province inside the Turkish border to Syria, over the past three years. Erdo?an’s involvement in ISIS goes much deeper. At a time when Washington, Saudi Arabia and even Qatar appear to have cut off their support for ISIS, they remaining amazingly durable. The reason appears to be the scale of the backing from Erdo?an and his fellow neo-Ottoman Sunni Islam Prime Minister, Ahmet Davuto?lu.

Nice Family Business

The prime source of money feeding ISIS these days is sale of Iraqi oil from the Mosul region oilfields where they maintain a stronghold. The son of Erdogan it seems is the man who makes the export sales of ISIS-controlled oil possible.

Bilal Erdo?an owns several maritime companies. He has allegedly signed contracts with European operating companies to carry Iraqi stolen oil to different Asian countries. The Turkish government buys Iraqi plundered oil which is being produced from the Iraqi seized oil wells. Bilal Erdogan’s maritime companies own special wharfs in Beirut and Ceyhan ports that are transporting ISIS’ smuggled crude oil in Japan-bound oil tankers.

Gürsel Tekin vice-president of the Turkish Republican Peoples’ Party, CHP, declared in a recent Turkish media interview, “President Erdogan claims that according to international transportation conventions there is no legal infraction concerning Bilal’s illicit activities and his son is doing an ordinary business with the registered Japanese companies, but in fact Bilal Erdo?an is up to his neck in complicity with terrorism, but as long as his father holds office he will be immune from any judicial prosecution.” Tekin adds that Bilal’s maritime company doing the oil trades for ISIS, BMZ Ltd, is “a family business and president Erdogan’s close relatives hold shares in BMZ and they misused public funds and took illicit loans from Turkishbanks.”

In addition to son Bilal’s illegal and lucrative oil trading for ISIS, Sümeyye Erdogan, the daughter of the Turkish President apparently runs a secret hospital camp inside Turkey just over the Syrian border where Turkish army trucks daily being in scores of wounded ISIS Jihadists to be patched up and sent back to wage the bloody Jihad in Syria, according to the testimony of a nurse who was recruited to work there until it was discovered she was a member of the Alawite branch of Islam, the same as Syrian President Bashar al-Assad who Erdogan seems hell-bent on toppling.

Turkish citizen Ramazan Bagol, captured this month by Kurdish People’s Defence Units,YPG, as he attempted to join ISIS from Konya province, told his captors that said he was sent to ISIS by the ‘Ismailia Sect,’ a strict Turkish Islam sect reported to be tied to Recep Erdogan. Baol said the sect recruits members and provides logistic support to the radical Islamist organization. He added that the Sect gives jihad training in neighborhoods of Konya and sends those trained here to join ISIS gangs in Syria.

According to French geopolitical analyst, Thierry Meyssan, Recep Erdogan “organised the pillage of Syria, dismantled all the factories in Aleppo, the economic capital, and stole the machine-tools. Similarly, he organised the theft of archeological treasures and set up an international market in Antioch…with the help of General Benoît Puga, Chief of Staff for the Elysée, he organised a false-flag operation intended to provoke the launching of a war by the Atlantic Alliance – the chemical bombing of la Ghoutta in Damascus, in August 2013. “

Meyssan claims that the Syria strategy of Erdo?an was initially secretly developed in coordination with former French Foreign Minister Alain Juppé and Erdogan’s then Foreign Minister Ahmet Davuto?lu, in 2011, after Juppe won a hesitant Erdogan to the idea of supporting the attack on traditional Turkish ally Syria in return for a promise of French support for Turkish membership in the EU. France later backed out, leaving Erdogan to continue the Syrian bloodbath largely on his own using ISIS.

Gen. John R. Allen, an opponent of Obama’s Iran peace strategy, now US diplomatic envoy coordinating the coalition against the Islamic State, exceeded his authorized role after meeting with Erdogan and “promised to create a “no-fly zone” ninety miles wide, over Syrian territory, along the whole border with Turkey, supposedly intended to help Syrian refugees fleeing from their government, but in reality to apply the “Juppé-Wright plan”. The Turkish Prime Minister, Ahmet Davutoglu, revealed US support for the project on the TV channel A Haber by launching a bombing raid against the PKK.” Meyssan adds.

There are never winners in war and Erdogan’s war against Syria’s Assad demonstrates that in bold. Turkey and the world deserve better. Ahmet Davutoglu’s famous “Zero Problems With Neighbors” foreign policy has been turned into massive problems with all neighbors due to the foolish ambitions of Erdogan and his gang. 

end

 

Here is more evidence:

How Turkey Exports ISIS Oil To The World: The Scientific Evidence

Over the course of the last four or so weeks, the media has paid quite a bit of attention to Islamic State’s lucrative trade in “stolen” crude.

On November 16, in a highly publicized effort, US warplanes destroyed 116 ISIS oil trucks in Syria. 45 minutes prior, leaflets were dropped advising drivers (who Washington is absolutely sure are not ISIS members themselves) to “get out of [their] trucks and run away.”

The peculiar thing about the US strikes is that it took The Pentagon nearly 14 months to figure out that the most effective way to cripple Islamic State’s oil trade is to bomb… the oil.

Prior to November, the US “strategy” revolved around bombing the group’s oil infrastructure. As it turns out, that strategy was minimally effective at best and it’s not entirely clear that an effort was made to inform The White House, Congress, and/or the public about just how little damage the airstrikes were actually inflicting. There are two possible explanations as to why Centcom may have sought to make it sound as though the campaign was going better than it actually was, i) national intelligence director James Clapper pulled a Dick Cheney and pressured Maj. Gen. Steven Grove into delivering upbeat assessments, or ii) The Pentagon and the CIA were content with ineffectual bombing runs because intelligence officials were keen on keeping Islamic State’s oil revenue flowing so the group could continue to operate as a major destabilizing element vis-a-vis the Assad regime.

Ultimately, Russia cried foul at the perceived ease with which ISIS transported its illegal oil and once it became clear that Moscow was set to hit the group’s oil convoys, the US was left with virtually no choice but to go along for the ride. Washington’s warplanes destroyed another 280 trucks earlier this week. Russia claims to have vaporized more than 1,000 transport vehicles in November.

Of course the most intriguing questions when it comes to Islamic State’s $400 million+ per year oil business, are: where does this oil end up and who is facilitating delivery? In an effort to begin answering those questions we wrote:

Turkey’s role in facilitating the sale of Islamic State oil has been the subject of some debate for quite a while. From “NATO is harbouring the Islamic State: Why France’s brave new war on ISIS is a sick joke, and an insult to the victims of the Paris attacks“, by Nafeez Ahmed:

“Turkey has played a key role in facilitating the life-blood of ISIS’ expansion: black market oil sales. Senior political and intelligence sources in Turkey and Iraq confirm that Turkish authorities have actively facilitated ISIS oil sales through the country. Last summer, Mehmet Ali Ediboglu, an MP from the main opposition, the Republican People’s Party, estimated the quantity of ISIS oil sales in Turkey at about $800 million—that was over a year ago. By now, this implies that Turkey has facilitated over $1 billion worth of black market ISIS oil sales to date.”

Here’s what former CHP lawmaker Ali Ediboglu said last year:

“$800 million worth of oil that ISIS obtained from regions it occupied this year [the Rumeilan oil fields in northern Syria — and most recently Mosul] is being sold in Turkey. They have laid pipes from villages near the Turkish border at Hatay. Similar pipes exist also at [the Turkish border regions of] Kilis, Urfa and Gaziantep. They transfer the oil to Turkey and parlay it into cash. They take the oil from the refineries at zero cost. Using primitive means, they refine the oil in areas close to the Turkish border and then sell it via Turkey. This is worth $800 million.”

Earlier this month, Ediboglu told Russian media that “ISIL holds the key to these deposits and together with a certain group of persons, consisting of those close to Barzani and some Turkish businessmen, they are engaged in selling this oil” (“Barzani” is a reference to Masoud Barzani, President of the Iraqi Kurdistan Region).

But even as Turkey’s ties to the ISIS oil trade have been hiding in plain sight for the better part of two years, the Western media largely ignores the issue (or at least the scope of it and the possible complicity of the Erdogan government) because after all, Turkey is a NATO member.

Unfortunately for Ankara, Erdogan’s move to shoot down a Russian Su-24 near the Syrian border on Tuesday prompted an angry Vladimir Putin to throw Turkey under the ISIS oil bus for the entire world to see. Here’s what Putin said yesterday after a meeting in Moscow with French President Francois Hollande:

“Vehicles, carrying oil, lined up in a chain going beyond the horizon. The views resemble a living oil pipe stretched from ISIS and rebel controlled areas of Syria into Turkey. Day and night they are going to Turkey. Trucks always go there loaded, and back from there – empty. We are talking about a commercial-scale supply of oil from the occupied Syrian territories seized by terrorists. It is from these areas [that oil comes from], and not with any others. And we can see it from the air, where these vehicles are going.”

“We assume that the top political leadership of Turkey might not know anything about this [illegal oil trade although that’s] hard to believe,” Putin continued, adding that “if the top political leadership doesn’t know anything about this, let them find out.”

Obviously, Putin is being sarcastic. He very clearly believes that the Erdogan government is heavily involved in the transport and sale of ISIS crude. In the immediate aftermath of the Su-24 incident, Putin said the following about Ankara:

  • PUTIN: OIL FROM ISLAMIC STATE IS BEING SHIPPED TO TURKEY
  • PUTIN SAYS ISLAMIC STATE GETS CASH BY SELLING OIL TO TURKEY

As part of our continuing effort to track and document the ISIS oil trade, we present the following excerpts from a study by George Kiourktsoglou, Visiting Lecturer, University of Greenwich, London and Dr Alec D Coutroubis, Principal Lecturer, University of Greenwich, London. The paper, entitled “ISIS Gateway To Global Crude Oil Markets,” looks at tanker charter rates from the port of Ceyhan in an effort to determine if Islamic State crude is being shipped from Southeast Turkey.

*  *  *

From “ISIS Gateway To Global Crude Oil Markets

The tradesmen/smugglers responsible for the transportation and sale of the black gold send convoys of up to thirty trucks to the extraction sites of the commodity. They settle their trades with ISIS on site, encouraged by customer friendly discounts and deferred payment schemes.  In this way, crude leaves Islamic State-run wells promptly and travels through insurgent-held parts of Syria, Iraq and Turkey.

Since allied U.S. air-raids do not target the truck lorries out of fear of provoking a backlash from locals, the transport operations are being run efficiently, taking place most of times in broad daylight. Traders lured by high profits are active in Syria (even in government-held territories), Iraq and south-east Turkey.

The supply chain comprises the following localities: Sanliura, Urfa, Hakkari, Siirt, Batman, Osmaniya, Gaziantep, Sirnak, Adana, Kahramarmaras, Adiyaman and Mardin. The string of trading hubs ends up in Adana, home to the major tanker shipping port of Ceyhan. 


Ceyhan is a city in south-eastern Turkey, with a population of 110,000 inhabitants, of whom 105,000 live in the major metropolitan area. It is the second most developed and most populous city of Adana Province, after the capital Adana with a population of 1,700,000. It is situated on the Ceyhan River which runs through the city and it is located 43 km east of Adana. Ceyhan is the transportation hub for Middle Eastern, Central Asian and Russian oil and natural gas (Municipality of Ceyhan 2015).

The port of Ceyhan plays host to a marine oil terminal that is situated in the Turkish Mediterranean and has been operating since 2006. It receives hydrocarbons for further loading in tankers, which carry the commodity to world markets.

Additionally, the port features a cargo pier and an oil-terminal, both of 23.2m depth that can load tankers of more than 500 feet in length (Ports.com 2015). The annual export capacity of the terminal runs as high as 50 million tonnes of oil. The terminal is operated by Botas International Limited (BIL), a Turkish state company that also operates the Baku-Tbilisi-Ceyhan pipeline on the territory of Turkey. 

The quantities of crude oil that are being exported to the terminal in Ceyhan, exceed the mark of one million barrels per day. Putting this number into context and given that ISIS has never been able to trade daily more than 45,000 barrels of oil (see Section 2, ‘The Upstream Oil Business of ISIS’, page 2), it becomes evident that the detection of similar quantities of smuggled crude cannot take place through stock-accounting methods.However, the authors of the present paper believe that there is another proxy-indicator, far more sensitive to quantities of ultracheap smuggled crude. This is the charter rates for tankers loading at Ceyhan.

The Baltic Exchange (2015 a) tracks the charter rates on major seaborne trading routes of crude oil. To render its service more efficient and easily understood, it uses the system of Baltic Dirty Tanker Indices (Baltic Exchange 2015 b). One of these indices used to be the BDTI TD 11, 80,000 Cross Mediterranean from Baniyas, Syria to Laveras, France (see Map VI). Route 11 was discontinued in September 2011, due to Syria’s civil war and soon thereafter, it was replaced by BDTI TD 19(TD19-TCE_Calculation 2015), of exactly the same technical specifications as BDTI TD 11, with the exception of the loading port of Ceyhan instead of Baniyas.

From July 2014 until February 2015, the curve of TD 19 features three unusual spikes that do not match the trends featured by the rest of the Middle East trade-routes (see Graph IV):

  1. The first spike develops from the 10th of July 2014 until the 21st, lasting approximately ten days. It coincides with the fall of Syria’s largest oil field, the AlOmar, in the hands of ISIS (Reuters 2014);
  2. The second spike takes place from the end of October until the end of November 2014, lasting one month. It happens at the same time with fierce fighting between fundamentalists and the Syrian army over the control of the Jhar and Mahr gas fields, as well as the Hayyan gas company in the east of Homs province (International Business Times 2014; Albawada News 214);
  3. The third spike lasts from the end of January 2015 until the 10th of February, stretching roughly ten days. It happens simultaneously with a sustained US-led campaign of airstrikes pounding ISIS strongholds in and around the town of Hawija east of the oil-rich Kirkuk (Rudaw 2015);

 

The authors of this paper would like to make it clear from the very beginning that this has not been the case of a ‘smoking gun’. The evidence has been inconclusive.But even if volumes of ISIS crude found their way, beyond any reasonable doubt, to the international crude oil markets via the Ceyhan terminal, this fact would not conclusively point to collusion between the Turkish authorities and the shadow network of smugglers, let alone ISIS operatives.

However, having clarified such a politically sensitive issue, the authors believe that there are strong hints to an illicit supply chain that ships ISIS crude from Ceyhan. Primary research points to a considerably active shadow network of crude oil smugglers and traders (see section 2.1, page 3), who channel ISIS crude to southeast Turkey from northeast Syria and northwest Iraq. Given the existence of Route E 90, the corresponding transportation of oil poses no unsurmountable geographic and topological challenges.

An additional manifestation of the invisible nexus between Ceyhan and ISIS became evident through the concurrent study of the tanker charter rates from the port and the timeline of the terrorists’ military engagements (see section 3.4 on this page). It seems that whenever the Islamic State is fighting in the vicinity of an area hosting oil assets, the 13 exports from Ceyhan promptly spike. This may be attributed to an extra boost given to crude oil smuggling with the aim of immediately generating additional funds, badly needed for the supply of ammunition and military equipment.Unfortunately, in this case too, the authors cannot be categorical.

*  *  *

No, it can’t be categorical and frankly, if the authors claimed to have discovered indisputable proof, we would be immediately skeptical. What they have done however, is identify a statistical anomaly and develop a plausible theory to explain it.

The key thing to note, is that this is a state-run terminal and it certainly seems as though charter rates spike around significant oil-related events involving Islamic State. Indeed, the fact that the authors mention collusion between Turkish authorities and ISIS operatives (even if they do so on the way to hedging their conclusions) indicates that the researchers think such a partnership is possible.

Finally, note that Ceyhan is less than two hours by car from Incirlik air base from which the US is flying anti-ISIS sorties. In other words, ISIS oil is being shipped to the world right down the road from Washington’s preferred Mid-East forward operating base.

Now that we can add what looks like quantitative evidence that ISIS oil is shipped from Turkey to the voluminous qualitative evidence supplied by ex-Turkish lawmakers, investigative reporters, and the Russian government (to name just a few sources), we can now proceed to consider one final question: where does the crude that helps to fund Bakr al-Baghdadi’s caliphate ultimately end up? More on that over the weekend.

Average:

5

Pepe Escobar explains in detail what Putin and Hollande has discussed and how Edorgan’s oil racket has been busted up:

(courtesy Pepe Esobar/RT)

Pepe Escobar – Putin and Hollande teaming up to bust Erdogan’s oil racket

 

© Alexander Zemlianichenko / Reuters
Russia’s President Vladimir Putin (R) and his French counterpart Francois Hollande speak after a news conference at the Kremlin in Moscow, Russia, November 26, 2015

It all started with French President Francois Hollande, after the Paris attacks, having the temerity to advance the idea of France working together with Russia in the same coalition against ISIS/ISIL/Daesh in Syria.

Turkish President Recep Tayyip “no excuse” Erdogan thought NATO and Russia by this time would be at each other’s – Cold War 2.0 – nuclear throats, while Washington had brushed off Hollande’s idea with a cascade of platitudes and distortions.

And in less than 17 seconds, Prime Minister Ahmet “I ordered it myself” Davutoglu had authorized Turkey to shoot down a Russian Su-24 – only a few hours before Hollande met with President Obama.

So everything seemed to be falling into place. No chance of a new détente between the Atlanticist powers and NATO. On the contrary. Erdogan was sure he had sabotaged for good the Hollande-Putin face-to-face meeting in Moscow.

Not so fast, Sultan.

In Moscow, Hollande and Putin confirmed that France and Russia will not be torn apart. The French leader declared: “What we agreed, and this is important, is to strike only terrorists and Daesh and to not strike forces that are fighting terrorism. We will exchange information about whom to hit and whom not to hit.”

Now that unveils a thrilling horizon. In the “to hit” section we already find Daesh and Jabhat al-Nusra, a.k.a. al-Qaeda in Syria, which the Vienna negotiations have already branded as terrorists.

And considering that al-Nusra has gobbled up, co-opted or instrumentalized an array of Salafi outfits, “moderate” or otherwise, it won’t be hard for the Russians to convince the French these are all legitimate targets.

Also significant is that France will increase support to “rebels” fighting Daesh on the ground; that’s code for the YPG Syrian Kurds – one of Erdogan’s nemeses alongside the PKK.

So the Sultan’s risky shoot down investment is not paying too many dividends. What if Hollande came up with the same old scratched Obama CD, as in “Assad just go”, while Putin re-emphasized that “the fate of the president of Syria must stay in the hands of the Syrian people? Everyone knows this is not the main priority of the Vienna negotiations. The main priority – as reiterated by the declaration of war inbuilt in UNSC resolution 2249 – is to smash ISIS/ISIL/Daesh.

And then the clincher, as Putin and Hollande reached a consensus: there will be a barrage of air strikes against the fuel tanker truck convoys transporting stolen Syrian oil across Daesh-controlled territory on the way to Turkey.

There goes in flames the profitable racket of ‘Sultan’s’ son Bilal Erdogan, a.k.a. ‘Erdogan Mini Me’, one of three shareholders of marine transportation corporation BMZ.

Send in the Sukhois!

Putin delivered a sarcastic cruise missile as he said it was “theoretically possible” that Ankara didn’t know about stolen Syrian oil entering Turkish territory from all points Daesh, but he added that was hard to imagine.

So leaving nothing to the imagination, one of Russia’s S-400 AA missile defense systems is already on combat duty at the Hmeymim airbase, and another one is on the way.

The ‘Sultan’ has been warned. From now on Russia has three major priorities:

1. A de facto no-fly zone already in effect south of the Turkish-Syrian border enforced by the S-400s. Ankara is so scared it grounded even owls and crows.

2. Already in effect; Russia will hit – hard – anything that suspiciously moves on every transport corridor in and out of Turkey. Turkish “humanitarian” convoys – carrying, what else, weapons – were pulverized in Azaz, which is only five kilometers from the Turkish border. And truck distribution points were also bombed near Raqqa.

3. Already in effect; Russia massively bombing the whole wide region where CIA ops run a cash and weapon highway to the Free Syrian Army (FSA) and “innocent” Turkmen. Russia started carpet bombing the Jabal Turkmen area immediately after Russian pilot Lt. Col Oleg Pershin was rescued.

As I detailed here, there is absolutely nothing “innocent” about this whole war theatre crammed with a dozen al-Qaeda-friendly Turkmen militias.

And there’s more.

Not only Russia will smash the Turkmen/Chechen/Uzbek/Turkish Islamo-fascist militia connection in Latakia Province; it will most of all smash the Syrian stolen oil bonanza which benefits ‘Erdogan Mini Me’. Extra bonus: Smash the sea tankers as well. Francois Hollande abides.

So ‘Erdogan Mini Me’ better seek refuge in Dubai. But oops, that does not preclude an “accident” after a wild night in town.

Highway to Hell

By now, Erdogan and ‘Mini Me’ must have gotten the message. They thought they had it covered when they took out the Su-24, which was not“violating” anything apart from the ultra-lucrative dirty oil extravaganza that profits, among others, ‘Mini Me’. Get rid of a sell oil for Daesh program, defying a NATO oil embargo? That’s an offer Russia cannot refuse.

At least two major questions are left unanswered. How come the US-led ‘Coalition of Dodgy Opportunists’ (CDO), in over a year, never – and the operative word is never – bombed any of the wheels in the Syrian stolen oil machine?

And how come no one among the CDO – Americans especially – did anything to prevent ‘Mini Me’ and others from actually funding the Daesh racket for so long? The CIA obviously knows all this and more, with geostationary satellites all over ‘Syraq’ working overtime.

Well, the CIA was too busy running the cash and weapons highway through Turkmen Mountain to be disturbed by a mere oil smuggling op.

But now Russia is going after all of them; the CIA weapon highway, the Turkish-enabled Jihadi highway, the Daesh-to-Turkey stolen oil highway. Sultan and ‘Mini Me’, get ready to embark on a highway to hell.

Pepe Escobar is an independent geopolitical analyst. He writes for RT, Sputnik and TomDispatch, and is a frequent contributor to websites and radio and TV shows ranging from the US to East Asia. He is the former roving correspondent for Asia Times Online. He is the author of Globalistan(2007), Red Zone Blues (2007), Obama does Globalistan (2009) and Empire of Chaos (2014), all published by Nimble Books. His latest book is2030, also by Nimble Books, out in December 2015.

end

 

We now have in detail from the Chief of the Russian Air Force exactly what happened with the downing of the Su24 fighter Russian aircraft.  The details suggest the attack is an act of war as they were in full knowledge of the flight path

(zero hedge/Russian Air Force)

Chief Of Russian Air Force Accuses Turkey Of Coordinated Ambush On Downed Jet

By now everyone is aware of the Turkish side of the story of how a Russian Su-24 was downed by a Turkish F-16 on Tuesday morning, when it allegedly crossed into Turkish airspace for a grand total of 17 seconds, with Turkey supposedly warning the Russian bomber which had been targeting alleged jihadists in the region no less than “ten times.” Turkey even produced an alleged recording of said warning, which Russia implied was faked as the surviving pilot made it very clear no actual warning had been received by the Russian warplane.

So now that Russia has had three days to go through the evidence and assemble the pieces of what it thinks happened, here is the summary as presented earlier today by the Commander in Chief of the Russian air force, Viktor Bondarev, which however presents a very gloomy picture with dire consequences for the peaceful geopolitics of the middle east.

In summary, what Col. Gen. Bondarev said is that Turkey actively sought to ambush and bring down the Russian jet starting long before the actual missile was fired, which can be confirmed by the flight patterns of Turkish warplanes which had taken off well in advance, otherwise they would not have had enough time to reach the battlezone.

The Russian ministry of defense made this grave accusation quite explicit on Twitter an hour ago, when it said that Turkey had engaged in a choreographed ambush.

Here are the details of the Su-24’s final hour as recounted by RT which notes that a pair of tactical bombers took off from Khmeimim airbase in Latakia at 06:15 GMT, with an assignment to carry out airstrikes in the vicinity of the settlements of Kepir, Mortlu and Zahia, all in the north of Syria. Each bomber was carrying four OFAB-250 high-explosive fragmentation bombs.

Ten minutes later, the bombers entered the range of Turkish radars and took positions in the target area, patrolling airspace at predetermined heights of 5,800 meters and 5,650 meters respectively. Both aircraft remained in the area for 34 minutes. During this time there was no contact between the crews of the Russian bombers and the Turkish military authorities or warplanes.

Some 20 minutes after arriving at the designated area, the crews received the coordinates of groups of terrorists in the region. After making a first run, the bombers performed a maneuver and then delivered a second strike.

Immediately after that, the bomber crewed by Lieutenant-Colonel Oleg Peshkov and Captain Konstantin Murakhtin was attacked by a Turkish F-16 fighter jet operating from the Diyarbak?r airfield in Turkey. The time needed to get the aircraft ready at the Diyarbak?r airfield and travel to the attack zone is an estimated 46 minutes.

?

The radar surveillance data confirms that two F-16 fighter jets were patrolling the flight zone for an hour an 45 minutes at an altitude of 2,400 meters [some 7,800 feet], which speaks of a deliberate action and their readiness to attack from an ambush over the Turkish territory,”Bondarev told reporter.

In order to attack the Russian Su-24 with a close-range air-to-air missile, Bondarev said that the Turkish fighter jet had to enter Syrian airspace, where it remained for about 40 seconds. “According to radar tracking data, it was the Turkish warplane that crossed into the Syrian airspace for about 40 seconds to a depth of 2 kilometers [6,560 feet], while the Russian fighter-bomber never violated the Turkish border“, he said.

Having launched its missile from a distance of 5-7 kilometers, the F-16 immediately turned towards the Turkish border, simultaneously dropping its altitude sharply and disappearing from the range of Russian radars at the Khmeimim airbase.

The Russian general again reiterated that at no point preceding the attack did the Russian bomber violated Turkish airspace.

One of Turkish F-16Cs stopped its maneuvers and began to approach the Su-24M bomber about 100 seconds before the Russian aircraft came closest to the Turkish border, which also confirms the attack was pre-planned, said Bondarev.

“At 10.24 Moscow time the crew carried out bombing and after it the plane was shot down by an air-to-air missile launched by a Turkish Air Force F-16 that had taken off from the 8th Diyarbakir airbase on the Turkish territory.”

The launch of a missile was confirmed by the crew of the second Russian Su-24. “[The crew] observed a plume of a white smoke and reported it.”

And this is where the narrative gets even more convoluted because according to Bondarev the Turkish F-16 was guided to its intended target from the ground and launched an air-to-air missile while the Russian warplane was readying to carry out a second attack on terrorist positions.

“The method of guidance of F-16 aircraft into effective engagement zone directly, but not along the pursuit course curve shows that the fighter jet was directed from a ground control station,” Bondarev told reporters.

The fighter jet stopped maneuvers in the area of patrolling and commenced missile launching a minute and 40 seconds before the Su-24 maximum proximity to the Syrian-Turkish border, Bondarev added.

Furthermore, it appears that the jihadist groups on the ground were anticipating an event of this kind playing out above them.

Bondarev called attention to the readiness of the Turkish media, which released a professionally-made video of the incident recorded from an area controlled by extremists a mere 1.5 hours after the Su-24 was downed.

Furthermore, the operation to rescue the surviving navigator took several hours and eventually recovered Konstantin Murakhtin, although one Russian Marine in the team was killed when the rescue helicopter was destroyed by a US-made tank missile launched by the extremists – an incident they filmed and published online within hours of the attack.

He also mentioned the memorandum of understanding regarding the campaign in Syria, signed by Moscow and Washington on October 26. In accordance with this agreement, the Russian side informed its American counterparts about the mission of the two bombers in the north of Syria on November 24, including the zones and heights of operation.

“Taking this into account, the Turkish authorities’ statement on not knowing which aircraft were operating in the area raises eyebrows.

 

Finally, Bondarev also mentioned the memorandum of understanding regarding the campaign in Syria, signed by Moscow and Washington on October 26. In accordance with this agreement, the Russian side informed its American counterparts about the mission of the two bombers in the north of Syria on November 24, including the zones and heights of operation.

This is perhaps the most important accusation, as it ties in with the incendiary remark lobbed by Putin at US “protocols” yesterday:

We told our US partners in advance where, when at what altitudes our pilots were going to operate. The US-led coalition, which includes Turkey, was aware of the time and place where our planes would operate. And this is exactly where and when we were attacked. Why did we share this information with the Americans? Either they don’t control their allies, or they just pass this information left and right without realizing what the consequences of such actions might be. We will have to have a serious talk with our US partners.

To summarize, here is what Russia has implied: the US shared the flight path details of the Russian Su-24 with Turkey in advance of the flight, which then Turkey used to ambush and take down the Russian bomber, with the implicit blessing of the Pentagon. Turkey may have further shared data with “Syria Free Army” US-armed jihadists on the ground, who not only recorded the downing of the bomber and the execution of its parachuting pilot, but also were prepared to attack a Russian rescue helicopter (with US weapons) which led to a second casualty – an attack which was also captured on clip and promptly uploaded!

* * *

If Putin is in indeed onboard with this version, he will deem – perhaps not diplomatically, but certainly in internal circles – Turkey’s aggression to be an act of war, and not only by Turkey but by NATO and the US, which provided Turkey with the data it needed to lead to a Russian loss of life.

What Russia’s next steps will be is unclear, however as we reported previously, we expect far more aggressive provocations on the Syria-Turkey border by both sides, especially now that every Russian bombers will have air support, and now that Russian S-400 missiles can reach any provoking Turkish jet in minutes, in effect Russia establishing a “No Fly Zone” above Syria.

The skies over Syria are getting crowded as Britain is now deciding to join the battlefield in attacking ISIS. No doubt the planes will fly aimlessly attacking where no ISIS exists following the instructions of the USA

what a mess.

 

(courtesy zero hedge)

“The Redcoats Are Coming!” Britain Moves Closer To Launching Anti-ISIS Airstrikes In Syria

Now that France has officially joined the party in Syria in an effort to avenge the 130 people who lost their lives in Islamic State’s brazen assault on Paris, the odds of World War III have increased exponentially.

Sure, The Kremlin has for now instructed the military to treat the French as “allies” and for the time being, Moscow’s pilots are writing “For Paris” on bombs, but as Tuesday’s “incident” between Turkish F-16s and a Russian Su-24 makes clear, crowded skies are dangerous skies, especially when there’s a significant amount of ambiguity surrounding what everyone is up to in Syria on a day to day basis. 

Now that Russia has deployed the S-400s to Latakia and placed the Moskva guided missile cruiser equipped with S-300-like systems off the coast, anything that even looks like a threat to Russia’s air force will be “destroyed” and that, as WaPo noted on Wednesday, “has the potential to create headaches for Turkish and other aircraft in a U.S.-led coalition that are carrying out a separate airstrike campaign in Syria.”


So, to the extent that the Paris attacks served to thaw tensions between Russia and the West, Turkey’s decision to shoot down an Su-24 means it was one step forward and two steps back. 

Now, it appears the already crowded playing field is about to get more cramped as David Cameron, following up on comments made during meetings with Francois Hollande, is pushing British lawmakers to approve RAF strikes on ISIS. As Reuters reports, the PM “told lawmakers on Thursday it was time to join air strikes against Islamic State militants in Syria, saying Britain cannot ‘subcontract its security to other countries’”.

This is the second time Cameron has sought Parliament’s approval for strikes in Syria. He lost a vote in 2013.

This time around, the stakes are higher and the circumstances have changed. ISIS has proven resilient thanks in no small part to, i) what looks like a deliberate effort on the part of The Pentagon to avoid hitting Islamic State’s oil convoys, ii) the CIA’s continued support for the various rebel groups that have, for the better part of five years, ensured that the country remains completely unstable, and iii) support from Turkey, the Saudis, and Qatar. 

“It is wrong for the United Kingdom to expect the aircrews of other nations to carry the burdens and the risks of striking ISIL in Syria to stop terrorism here in Britain,” Cameron said.

In a testament to how close Britain is to joining the fray, Labour leader Jeremy Corbyn will reportedly not use a party whip to influence MP’s decisions. “In these sort of issues of conscience it is better to allow MPs to make their own minds up,” John McDonnell told BBC.

“I don’t think this is a country that lets others like the French or the Americans defend our interests and protect us from terrorist organizations – we should contribute to that effort,” Finance minister George Osborne added, underscoring the perception that Britain’s military prowess is but a shadow of what it once was.

Cameron played down the idea that striking ISIS in Raqqa would increase the extent to which the group targets Britain. “He told MPs the UK was already a target for IS – and the only way to deal with that was to ‘take action’ now,” BBC reports, adding that The Foreign Affairs Committee has said they’ll be “no military intervention without a “coherent international strategy” on tackling IS and ending Syria’s civil war.”

Yeah, well good luck on that. There are two “strategies”, one pursued by Russia and Iran, and the other by the US, Turkey, Saudi Arabia, and Qatar. Moscow and Tehran will simply destroy anyone and everyone battling the Assad government and that includes ISIS, while the US and its regional allies will continue to fund the FSA and, indirectly al-Qaeda while covertly doing what they can to ensure that strikes against ISIS don’t cripple the group’s ability to remain operational and effective in Syria and Iraq. France, frankly, is just flying around aimlessly dropping bombs wherever the US tells it to which is precisely what the UK will end up doing should they decide to get involved directly.

The problem here is that France and Britain are just bolt-on air forces. Unless and until the US decides to drop its support for the programs and countries that are arming and financing the FSA, al-Nusra, and ISIS, adding more planes will do nothing to aid in the fight against terror and will only make the airspace more crowded, making it even more difficult for the Russians to determine who is who and which planes represent a threat and which ones don’t.

Finally, note that the tensions between Turkey and Russia will make the ongoing discussions in Vienna unbearable for Moscow and Ankara which means that any “progress” on a “political solution” probably crashed and burned with the Su-24 that went down near the Turkish border on Tuesday.

*  *  *

Meanwhile, in Aleppo…

end

 

Russia places the SAM 400 into Syria which in essence creates a no fly zone in the country.  Putin issues a warning to Obama stating that the USA was the “hitman” and Turkey pulled the trigger.  He is marking time:

 

(courtesy zero hedge)

Russia Releases Video Of S-400 SAM Deployment In Syria, As Putin Issues Warning To Obama

As reported two days ago, one of the first decisions a very angry Russia took in the aftermath of the shooting down of its Su-24 by a Turkish F-16 was to dispatch a Moskva guided-missile cruiser off the coast of Syria to provide air cover for its jets operating near Latakia, as well as send an unknown number of ultramodern S-400(or SA-21 Growler in NATO designation) SAM batteries to Latakia to make sure that the tragic incident from Tuesday never repeats itself by sending Turkey a very clear message that the next time a Turkish warplane engages a Russian jet, Russia will immediate retaliate using ground forces.

Earlier today, Russia made a very explicit demonstration of the deployment of at least two S-400 batteries at Syria’s Khmeimim airbase, with the Russian Ministry of Defense promptly publicizing the arrival with the following clip.

 

With a range of 250 miles, the S-400 could easily strike Turkish targets, and as the map below shows, Russia could even take down targets over northern Israel. As cited by the Independent, Nick de Larrinaga, Europe editor of the defense magazine IHS Jane’s Defense Weekly, said it would be “a significant increase” in the reach of Russian air-defense capacities. “The message that the Russians are trying to send is that they’re capable of defending themselves in Syria, should the situation escalate.”

 

Needless to say, the US was not enthused and earlier today the US embassy in Moscow said that the “Russian deployment of the S-400 air-defense system to Syria won’t aid the fight against the Islamic State, with the US diplomat adding that the US is hopeful Russia won’t use the system to target planes flown by international coalition since Islamic State doesn’t have air force.” Clearly a warning to Putin not to dare use the rockets against Turkish (or other coalition) jets.

So what is Putin’s intention by escalating the military deployment of Russian weapons in Syria? Conveniently he explained his thinking just a few hours ago during his press conference with Francois Hollande. In answering a question by a reporter from French Le Monde, Putin said the following:

“The S-400 is an air defense system. The reason we didn’t have the system in Syria is because we thought our planes were flying at high enough altitudes where a terrorist could not reach them; they don’t have weapons capable of downing our planes at the altitude of over 3 or 4 thousand meters. And We could never think that we could be stabbed in the back by a country we regarded as our ally. Our planes operated at altitudes of 5-6,000 meters and were completely unprotected against potential attacks from fighter jets – we could never imagine that that could be possible otherwise we would deploy such systems in the area protecting our bombers  against possible attacks.”

 

 

“We never did it because we regarded Turkey as our friend, we never expected an attack from that side. This is why we regard this attack as that of a traitor. But now we that this is possible, and we have to protect our planes. This is why we deployed a modern system, the S-400, it has a pretty long range and it’s one of the most effective systems of this kind in the world. We will not stop there: if we have to we will also deploy our fighter jets in the area.”

Bottom line: another direct engagement by a Turkish fighter will be its last, and in fact now that Russia is prepared we would not be at all surprised to see Russia cross into Turkish airspace on purpose just to provoke Erdogan to repeat the events from last week, only this time with the Russian ready and prepared to retaliate to any engagement. In fact, the odds of Russia doing just that in the next few days are especially high.

But while the reason behind the S-400 deployment was largely known to most, where Putin’s press conference took an unexpected detour was what he said just around 20:30 in, when in not so many words, Putin effectively accused the US of leaking the coordinates of the Russian plane to Turkey, which was merely a hitman acting with the blessing of the Pentagon.

This is what Putin said:

“We told our US partners in advance where, when at what altitudes our pilots were going to operate. The US-led coalition, which includes Turkey, was aware of the time and place where our planes would operate. And this is exactly where and when we were attacked. Why did we share this information with the Americans? Either they don’t control their allies, or they just pass this information left and right without realizing what the consequences of such actions might be. We will have to have a serious talk with our US partners.

In other words, just like in the tragic bombing of the Kunduz hospital by US forces (which has now been attributed to human error), so this time the target was a Russian plane which the US knew about well in advance, was targeted however not by the US itself, but by a NATO and US-alliance member, Turkey.

And while the deployment of the Russian SAM missiles was already known, the real message from today’s presser, the one that will be the topic of a private and “serious talk with Russia’s US partners”, is that Putin indirectly blames Obama for what happened on Tuesday realizing that Erdogan was merely the “executor”, one who is simply motivated to protect his (and his son’s) Islamic State oil routes.

Full press conference below; the discussion of Russia’s S-400 deployment begins 17:30 in:

 end
 how sad@!!
(courtesy zero hedge)

Turkey Arrests Journalists Who Exposed Erdogan’s Weapons Smuggling To Extremist Syrian Rebels

One of Turkish president Recep Erdogan’s key contentions in the ongoing diplomatic spat with Russia is that everything that Russia has accused Turkey of doing, from funding the Islamic State’s oil purchases, to providing weapons for Syrian “rebels” intent on eradicating the Assad regime, is unfounded slander without a shred of evidence.

Here is the problem: evidence does exist, as we showed two days ago, when we presented the role Erdogan’s son Bilal has played in ISIS oil transit, and not only that but also proof that Turkey has been smuggling weapons to Syria as the editor and a reporter from Turkey’s Cumhuriyet newspaper showed some time ago.

And in order to eradicate the evidence against him, yesterday Erdogan did what every dictator does when feeling threatened: he had the editor and his reported detained, jailed and accused of espionage precisely over the controversial story about an alleged arms shipment from Turkish intelligence to Syrian rebels.

The two Cumhuriyet journalists were accused of “political or military spying” by reporting “classified information” and “deliberately aiding a terrorist organization.”

In fact, Erdogan personally sued Dundar and is requesting that he be given a life sentence, an aggravated life sentence and an additional 42-year term in prison on charges related to a variety of crimes, ranging from espionage to attempting to topple the government and exposing secret information.

What the reporters were really doing is their job.

As the WSJ reports, “Turkish authorities on Thursday imprisoned Can Dundar, editor in chief of Cumhuriyet, and Erdem Gul, the newspaper’s capital correspondent in Ankara, on charges of spying and aiding a terrorist organization, the newspaper’s attorney said. If convicted, the two men would face life in prison over the charges.”

Their real offense: presenting the facts about the shady dealings and backroom politics of Erdogan’s now fully-despotic regime.

 

The arrests are part of a renewed crackdown on Turkish media since the political party founded by President Recep Tayyip Erdogan regained one-party rule earlier this month. They come on the heels of a warning from the European Union that Turkey’s clampdown on free media is jeopardizing its hopes of joining the organization.

 

Freedom of the press has been steadily eroding in Turkey under Mr. Erdogan. Police have closed opposition television stations, prosecutors have accused top journalists of writing tweets or columns insulting the president, and reporters have been beaten by mobs. The government is one of the world’s leading censors of Twitter, which is used widely in Turkey to criticize the government.

And this is the ideological banana republic ally of Barack Obama.

In the original Cumhuriyet report from May, the authors wrote a story, with photos and video evidence, suggesting Turkish intelligence was secretly ferrying weapons to extremist Syrian rebels. “The article sparked a major furor in Turkey, which has long been accused by its critics of secretly aiding in the growth of Islamic State militants based in neighboring Syria.”

Mr. Erdogan personally sued Mr. Dundar, accused Cumhuriyet of  spying and releasing false information, warning in a television interview that the journalist who wrote the piece would “pay a heavy price.”

More on the arrests:

The arrests came one week after the Turkish newspaper won this year’s Press Freedom Prize from Reporters Without Borders, the Paris-based press freedom group. On Thursday, Reporters Without Borders said the arrests sent “an extremely grave signal about media freedom in Turkey.”

 

“For the first time, we’ve reached the level (of pressure on media in Turkey) that such a prominent figure in Turkey’s mainstream media and television for over 30 years is targeted,” said Erol Önderoglu, the group’s Turkish representative.

The propaganda from Turkey’s quasi-dicator gets better: “Earlier this week, the Turkish president again lashed out at the newspaper and suggested that it had sabotaged the country’s support for moderate Turkmen rebels in Syria.”

It appears that if one exposes the truth in turkey on is a criminal spy and must be put away.

Naturally, just before his arrest on Thursday, Mr. Dundar rejected the allegation that he was a spy. After three hours of testimony, Mr. Dundar said the prosecutors were focused on the wrong people.

“Who should be judged is who committed the crime, not who wrote about it,” he wrote on Twitter. Mr. Dundar said he and his paper were “defending press freedom” in the face of “lies” by the government.

 

Tora Pekin, one of the newspaper’s lawyers, said the government waited until after the recent parliamentary election to act against a prominent government critic.

 

“After Erdogan’s comments, for six months we waited for the arrests,” he said. “We were 100% certain that Dundar and Gul would be arrested.”

Here are more details on the real crime in question: Turkey’s ongoing arms supply to Syrian rebels, among which very likely members of the Islamic State, courtesy of Turkey’s Today Szaman:

Dundar and Gul arrived at ?stanbul Courthouse on Thursday morning to testify as part of a terrorism investigation. The investigation was launched after Cumhuriyet published photos in May of weapons which it said were transferred to Syria in trucks operated by the National Intelligence Organization (MIT).

 

“We came here to defend journalism. We came here to defend the right of the public to obtain the news and their right to know if their government is feeding them lies. We came here to show and to prove that governments cannot engage in illegal activity and defend this,” Dundar told the press outside the courthouse.

 

The articles, published on the daily’s front page, reported that the trucks in question were intercepted by gendarmes on two occasions in January 2014 after prosecutors received tip-offs that they were illegally carrying arms to Syria. There have been allegations that the arms were going to extremist groups fighting against the Syrian regime. Ankara, on the other hand, insisted that the trucks were carrying aid to Syrian Turkmens and branded their interception as an act of “treason” and “espionage.”

 

Dundar continued, “First the government responded saying: ‘No there is nothing of the sort. This is aid. Then it was revealed that these were guns. Then they said that these were going to the Turkmens. Then the present deputy prime minister, Tugrul Turke? said, ‘I swear to God they [the trucks] were not going to the Turkmens.’ … Then later the Turkmens said they did not receive any arms.”

 

“The president is acting as if this is a personal lawsuit, saying I will be following this, and I will not let it go. He, personally, is the complainant. I do not know why the president alone is the complainant. This secret is a secret that belongs to the state, it is not a secret that belongs to him personally.”

 

President Recep Tayyip Erdogan personally sued Dundar and is requesting that he be given a life sentence, an aggravated life sentence and an additional 42-year term in prison on charges related to a variety of crimes, ranging from espionage to attempting to topple the government and exposing secret information.

 

For the coverage of the M?T trucks, President Erdogan has publicly targeted Dundar, saying: “The individual who has reported this as an exclusive story will pay a heavy price for this,” in a television interview with state broadcaster TRT late in June.

“We are being charged with being spies, the president is saying that we are traitors to the state. We are not spies, we are not traitors, we are not heroes; we are journalists,” Dundar added outside the courthouse.

 

“There is a crime that has been committed by the state that they are trying to cover up,” he said, adding that the state is understandably in panic over the reporting done by the paper for it has the potential to reach an international audience and show the world the crimes committed by the Turkish state.

 

Following the Cumhuriyet report, Prime Minister Ahmet Davutoglu said it is “none of anybody’s business” what the trucks contained. Speaking in a live broadcast on the Haberturk news station in May, Davutoglu said, “This is a blatant act of espionage.”

 

After the publication of video stills as well as video footage, Erdogan lashed out at Cumhuriyet and Dundar for publishing the evidence and publicly vowed that Dundar would “pay a heavy price” for his report.

 

According to the report, the trucks were carrying six steel containers which contained a total of 1,000 artillery shells, 50,000 machine gun rounds, 30,000 heavy machine gun rounds and 1,000 mortar shells. All of this is registered in the prosecutor’s file on the M?T truck case, the report said.

 

The photos, published on the daily’s front page in late May, show steel containers filled with mortar shells and ammunition underneath boxes of medicine. The daily also published a video showing the containers on trucks being opened and searched by gendarmes.

 

Earlier this month, Cumhuriyet was awarded the prestigious Reporters Without Borders (RSF) Prize for its contribution to defending press freedom.

 

There was an outpour of support for the veteran journalists from their colleagues and politicians. Republican People’s Party (CHP) deputies Sezgin Tanr?kulu, Mahmut Tanal, Bar?? Yarkada?, Onursal Ad?guzel, Ali ?eker and Gursel Tekin were among the many CHP representatives that came to the courthouse to show their solidarity; People’s Democratic Party (HDP) deputy Garo Paylan was also present. Journalist Hasan Cemal, writer Pelin Batu and Confederation of Revolutionary Workers’ Unions (D?SK) Secretary-General Arzu Cerkezoglu also came to the courthouse to stand by Dundar and Erdem.

 

The Turkish Journalists’ Association (TGC) and Journalists Union of Turkey (TGS) gave a written statement saying that the Cumhuriyet daily performed its duty of informing the public and that it is not the job of journalists to protect the government.

 

And that’s why Erdogan can claim there is no “proof” of his cabinet’s illegal dealings with ISIS and extremist jihadists: when proof emerges, anyone who revealed it risks spending the rest of their life (and another 42 year on top) in prison.

end

GLOBAL ISSUES
An extremely important paper from David Stockman this morning!!
The 4 market signals;
i) central bank regression/ i.e.increasingly going to NIRP
ii) market disorder and volatility
iii) global malinvestment is now coming how to roost.  i.e. huge increases in capacity has caused massive overproduction of commodities/killing emerging markets etc.
iv) lack of demand is running head long into peak debt.  The consumer is run out of income to spend
a must read…

Four Market Signals That the Crack-Up’s Begun

Four Market Signals That the Crack-Up’s Begun

New York City, New York
November 27, 2015

David StockmanEasy money is always the wrong medicine for what ails the market.

The inflated and unsustainable growth that the Greenspan Fed engineered by encouraging Main Street households to stage a massive raid on their “home ATMs” has sharply reversed… and properly so.

This is no small number. Compared to the peak MEW (Mortgage Equity Withdrawal) rate of 8% of disposal income, today’s negative 2% rate means there has been about a $1 trillion downward swing in household “spending.”

Our Keynesian central bankers lament this as a loss of “aggregate demand.” And they intend to remedy the problem by printing more money. In truth, it was always phony demand. It could not be sustained and had not been earned through production. Its disappearance simply marks the fact that households have been forced back to the old-fashioned virtue of “living within their means.”

Stated differently, the supply side is back in charge after a 30-year spree of one-time debt and leverage expansion. Consumer spending now depends on income, which means production, investment and enterprise are once again the source of growth, jobs and true national wealth.

The implication is that our monetary politburo is out of business. “Monetary accommodation” is nothing more than a one-time parlor trick of central bankers.

Unfortunately, like the politburo in the Kremlin, the incumbents in the Eccles Building will not stop until they are finally chased from office by a massive uprising of the people. That is: Savers, workers and entrepreneurs of America who have been shafted by the bubble finance policies of our monetary central planners.

We’re in the crack-up phase now. As such, four things are going to shape the way the economy and the markets unfold as we go forward

First, you are going to see increasing desperation and extreme central bank financial repression. This is because central banks have painted themselves so deep into the corner that they’re lost and desperate.

Almost week by week, we have another central bank — most recently it was Sweden — lowering their money market rates into negative territory. The Swiss National Bank is already there. Denmark’s Nationalbank is there. The European Central Bank is there on the deposit rate. The Bank of Japan is also there.

All of the central banks of the world now are desperately driving interest rates into negative territory. I believe that they’re lost. They’re in a race to the bottom whether they acknowledge it or not.

The People’s Bank of China, for example, can’t sit still much longer when the renminbi has appreciated something like 30% against the Japanese yen because of the massive bubble of monetary expansion that’s being created by Tokyo.

Central banks are out of control and in a race to the bottom, sliding by the seat of their pants and making up incoherent theories as they go.

The second thing that’s happening is increasing market disorder and volatility. In the last four months, the stock market has behaved like a drunken sailor. But it’s just a bunch of robots and day traders that are mindlessly trading chart points. It has nothing to do with information or incoming data about the real world.

Today we have the 10-year German bond trading at a yield of just 0.61%. The German economy’s been reasonably strong, having been fueled by the Chinese boom. But that export boom is over. The Chinese economy is faltering. And Germany is going to have its own severe problems soon.

But clearly, 61 basis points on a 10-year bond is irrational, even in the case of Germany. This is to say nothing of the 160 or so basis points available today on the 10-year bond for Spain and Italy. (Note: A basis point is 1/100th of a percentage point.)

Both Spain and Italy are in deep, deep fiscal decline. There is no obvious way for them to dig out of the debt trap they’re in. It’s going to get worse over time.

There is huge risk in those bonds. Especially because there’s no guarantee that the European Union will remain intact or that the euro will survive.

Why would anybody in their right mind own Italian debt earning 160 basis points a year?

Maybe those who anticipate the massive purchases that Mario Draghi at the European Central Bank has promised and the Germans have acquiesced to over the next year or two. But that only kicks the can down the road.

One of these days, central banks are going to falter. And the market is going to reset violently to prices that reflect the true risk on all this sovereign debt and the cloudy outlook that’s ahead for the world market.

There is now nearly $3 trillion of sovereign debt spread over Japanese issues and the major European countries that are trading at negative yields. That is irrational. It’s also completely unsustainable. And yet it’s another characteristic of what I call Bubble Finance.

The third thing that’s happening is that global malinvestment, fueled of course, by central banks, is now coming home to roost. It will be driving a huge deflation of commodity and industrial prices worldwide. You can see that in iron ore, which is now barely holding $48 from a peak of almost $200.

You can see this in the oil patch too. Look at the Baltic Dry Index. That’s an index, created by the London-based Baltic Exchange, that tracks changes in the cost to transport raw materials by sea.

This is a result of faltering demand for shipments and overbuilding of bulk carrier capacity as a result of this central bank-driven boom that we’ve had in the last 10 to 20 years. And it is going to be ripping through the financial system and the global economy in ways that we’ve never before experienced.

It will become extremely hard to predict what all the ramifications and cascading effects will be. But the degree of overinvestment and excess capacity in everything from iron ore mines… to dry bulk carriers… aluminum plants… steel mills… and so on is something we have never seen before.

Fourth, demand has run smack up against peak debt.

There was a tremendous study that came out in February from the McKinsey Global Institute. It did an excellent job of trying to calculate, track and total up the amount of global credit outstanding, public and private.

According to the report, we’re now at the $200 trillion threshold. That’s up from only about $140 trillion at the time of the 2008 financial crisis. So we’ve had a roughly $60 trillion expansion worldwide of debt since 2008. Over that same time, global GDP only increased by about $15 trillion (roughly speaking, from $55 trillion to $70 trillion).

Owing to central bank money printing and all of this unprecedented monetary stimulus, we’ve added about $60 trillion of new debt. And we’ve gotten somewhere around $15 trillion of extra output in return. That’s not even one-third of the amount of debt.

The numbers from China are even more startling. In the year 2000, China had $2 trillion of credit outstanding. In 2008, Chinese debt was $7 trillion. It now has an unbelievable $28 trillion of credit outstanding.

And at the time of the 2008 crisis, China had allegedly — if you believe the numbers, which no one really should — $5 trillion of annual economic output. It’s now $10 trillion. So officially it’s doubled its GDP.

But China’s debt is up more than $20 trillion while its GDP is up just $5 trillion.

These are extreme unsustainable deformations. They just scream out, “Danger ahead. Mayhem has happened.” As all of this unwinds and becomes resolved it is not going to be pretty.

When you see that kind of minimal yield from the vast amount of new debt, it should tell you that the boom is over… and that the crack-up is under way.

Best,

DAS

EMERGING MARKETS
NONE TODAY

\

Your early morning currency/gold and silver pricing/Asian and European bourse movements/ and interest rate settings/FRIDAY morning  7:00 am

Euro/USA 1.0582 down .0023

USA/JAPAN YEN 122.62 down .018

GBP/USA 1.5044 down .0053

USA/CAN 1.3328 up.0034

Early this morning in Europe, the Euro fell by 23 basis points, trading now just below the 1.06 level falling to 1.0582; 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:  6.3945  / (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 up again in Japan by 2 basis points and trading now well above the all important 120 level to 122.62 yen to the dollar.

The pound was down this morning by 53 basis points as it now trades well below the 1.51 level at 1.5044.

The Canadian dollar is now trading down 34 in basis point to 1.3328 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 FRIDAY morning: closed down 60.47 or 0.30%

Trading from Europe and Asia:
1. Europe stocks  mixed

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

Gold very early morning trading: $1065.74

silver:$14.11

Early FRIDAY morning USA 10 year bond yield: 2.20% !!! down 3 in basis points from Wednesday night and it is trading well below resistance at 2.27-2.32%.  The 30 yr bond yield falls to  2.97 down 2 in basis point.

USA dollar index early FRIDAY morning: 100.07 up 20 cents  from Tuesday’s close. (Resistance will be at a DXY of 100)

This ends early morning numbers Friday morning

 

OIL RELATED STORIES
 Job loses continue to rise and now total 250,000 and counting.  Texas is still to have massive layoffs coming soon:
(courtesy Charles Kennedy/Oil Price.com)

Oil Jobs Lost: 250,000 And Counting, Texas Likely To See Massive Layoffs Soon

Submitted by Charles Kennedy of OilPrice

Crude oil just capped off a third straight week of declines, as WTI nears the $40 per barrel threshold. Goldman Sachs is once again raising the possibility of oil dipping into the $20s per barrel.

That spells more pain for the energy sector. Many companies have already slashed spending and culled their payrolls, but the total number of job losses continues to climb.

According to Graves & Co., an industry consultant, oil and gas companies have laid off more than 250,000 workers around the world, a tally that will rise if oil prices remain in the dumps.

“I was surprised it’s gotten this far,” Graves & Co.’s John Graves told Bloomberg in an interview. In an eye-catching statistic that highlights who exactly is bearing the brunt of the downturn, Graves says that oilfield service companies account for 79 percent of the job losses.

Still, upstream E&P companies are also being substantially squeezed by another plunge in oil prices. According to an analysis by the Texas Alliance of Energy Producers, a new round of layoffs could be underway in Texas, for example. The Texas Alliance predicted that the first drop in oil prices last year would lead to 40,000 to 50,000 layoffs in Texas. But the renewed drop since the end of the summer could force many more cuts. Right now, the group is putting a conservative estimate at 56,000 job cuts so far, but they say the real tally is probably higher.

Beyond oilfield services and E&Ps are not the only ones feeling the heat. Pipeline companies are also starting to lay off workers as well. Last week Enbridge confirmed that it was laying off 500 workers and leaving 100 positions unfilled, according to the Financial Post. The job losses account for about 5 percent of Enbridge’s North American workforce.

Fellow Canadian pipeline company TransCanada says that it will be issuing pink slips as well. While TransCanada confirmed that it would cut payroll, it declined to put an exact number on how many people would lose their jobs. TransCanada, reeling from the rejection of the Keystone XL pipeline, is struggling to get several major pipeline projects through the permitting phase, although it just won the go-ahead to build a large natural gas pipeline in Mexico.

Average:
And now for your closing numbers for Friday night: 3:00 pm
Closing Portuguese 10 year bond yield: 2.31% down 11 in basis points from Wednesday
Japanese 10 year bond yield: .308% !! up 1/4 in basis points from Wednesday and extremely low
Your closing Spanish 10 year government bond, Friday down 5   in basis points.
Spanish 10 year bond yield: 1.52%  !!!!!!
Your Friday closing Italian 10 year bond yield: 1.40%  down 3  in basis points on the day: Friday/ trading 12 basis points lower than Spain.
IMPORTANT CURRENCY CLOSES FOR FRIDAY
Closing currency crosses for FRIDAY night/USA dollar index/USA 10 yr bond:  2:30 pm
 Euro/USA: 1.0594 down.0011 (Euro down 11 basis points)
USA/Japan: 122.85 up 0.215 (Yen down 22 basis points)
Great Britain/USA: 1.5040  down .0058 (Pound down 58 basis points
USA/Canada: 1.3369 up .0075 (Canadian dollar down 75 basis points)

USA/Chinese Yuan:  6.3875 (flat on the day (yuan flat)

This afternoon, the Euro fell by 11 basis points to trade at 1.0594.  The Yen fell to 122.85 for a loss of 22 basis points. The pound was down 58 basis points, trading at 1.5040. The Canadian dollar fell by 75 basis points to 1.3369. The USA/Yuan closed at 6.3875
Your closing 10 yr USA bond yield: down 1 in basis points from Wednesday at 2.22%// ( trading at the resistance level of 2.27-2.32%)
USA 30 yr bond yield: 3.00 up 1   in basis points on the day and will be worrisome as China/Emerging countries  continues to liquidate USA treasuries
 Your closing USA dollar index: 100.07 up 19 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:  down 17.98 points or 0.28%
German Dax: down 27.01 points or 0.24%
Paris Cac down 15.88 points or 0.32%
Spain IBEX:down 21.60 points or 0.21 %
Italian MIB: down 16.35 points or 0.07%
The Dow  down 14.90 or .08%

The Nasdaq:  up 11.38 or 0.22%

WTI Oil price; 41.42
Brent OIl:    44.58
USA dollar vs Russian rouble dollar index:    65.45  (rouble is d0wn 1/100 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:

Black Friday Stock Sale Dip-Buyers Ignore China, Credit, Commodity Carnage

After the overnight dip on the back of a bloodbath in China…

 

This was the scene as the stock market opened in America…

 

As the biggest 2-week short-squeeze in 9 months continues…

 

Futures show the exuberance yesterday and the China let-down overnight – followed by dip-buyer delight during the shortened US Session…

 

Trannies were the biggest winners on the day as The Dow struiggled with unch…

 

But on the week – aside from the idiocy of the World War 3 dip and rip – the market was very narrowly traded on no volume…

 

Small Caps up 5 days in a row for first time since March…

 

It appears not everyone in the market is paying attention to Ms. Yellen…

 

The US Dollar rose modestly on the week driven today by some serious shocks in Swissy as chatter of a devaluation hit a thin market…

 

Treasury yields ended the week lower and flatter with 2Y unch and 10s to 30s down 2-4bps… (bonds havent closed yet)

 

Even crude gave back its gain today as the entire commodity complex was slammed…

 

Charts: Bloomberg

end

 

The fun begins next week as Puerto Rico is about to default.  Here is a complete guide to their debt problems:

 

(courtesy zero hedge)

Puerto Rico Is About To Default: Your Complete Guide To An Island Debt Debacle

Last week, we brought you the latest from Puerto Rico’s debt debacle. The commonwealth is desperately trying to restructure some $72 billion in debt while staring down a $354 million bond payment due on December 1.

As we discussed at length on Friday, some $270 million of what’s due next week is GO debtguaranteed by the National Public Finance Guarantee Corp. Defaulting on that is bad news and as Moody’s warned earlier this month, a missed payment on the commonwealth’s highest priority obligations “would likely trigger legal action from creditors, commencing a potentially drawn-out process absent swift federal intervention.” 

Make no mistake, federal intervention is likely to be anything but “swift.”

A Senate judiciary committee headed by Iowa Republican Charles Grassley will meet on December 1 to discuss a legislative proposal to assist the Padilla government, but it’s hard to imagine that a decision will be made in time to avert at least a partial default.

Ultimately, the decision will be between paying bondholders and ensuring that the government can continue to provide public services, and just as Greece prioritized pensions over IMF payments last summer,Padilla isn’t likely to sacrifice the public interest at the altar of the island’s debtors. 

So, as the clock ticks, we bring you the following helpful guide courtesy of Bloomberg who has made a “list of the island’s debt, how much is outstanding, when major monthly payments are due, and the source of funds that back the securities.”

*  *  *

From Bloomberg

  • Puerto Rico Sales Tax Financing Corp.: $15.2 billion. The bonds, known by the Spanish acronym Cofinas, are repaid from dedicated sales-tax revenue. A $6.2 billion portion of the debt, called senior-lien, is repaid first. The remaining $9 billion, called subordinate-lien, get second dibs. $1.2 million of interest is due in February and again in May. Senior Cofinas maturing in 2040 last traded for an average yield of 9.5 percent, while subordinate ones yielded 18 percent.
  • General-obligations: $12.6 billion. The debt backed by the commonwealth’s full faith and credit. The island’s constitution says general obligations must be repaid before other expenses. Puerto Rico owes $357 million of interest in January and an additional $805 million of principal and interest is due July 1. Securities due in 2035 last traded for an average yield of 11.5 percent.
  • Puerto Rico Electric Power Authority: $8.2 billion. Prepa, as it’s called, is the island’s main supplier of electricity and repays the debt from what it charges customers. The utility owes $196 million of interest in January and $420 million of principal and interest July 1. Prepa is negotiating with bond-insurance companies after reaching an agreement with some of its bondholders, who agreed to take a 15 percent loss. Bonds maturing in 2040 last traded at an average yield of 9.2 percent.
  • Puerto Rico Government Development Bank: $5.1 billion. The GDB lends to the commonwealth and its localities. When those loans are repaid, the bank can pay off its debt. The bank owes $354 million in December and $422 million in May. Federally taxable bonds maturing in 2019 last traded for an average yield of 57 percent.
  • Puerto Rico Highways & Transportation Authority: $4.6 billion. The highway agency repays its debt with gas-tax revenue. It owes $106 million of interest in January and $220.7 million of principal and interest in July. The commonwealth has the ability to divert revenue that cover some highway bonds to pay its general-obligation securities, if there are no other available resources, according to the island’s most recent financial disclosure. Bonds maturing July 2028 last traded for an average yield of 32 percent.
  • Puerto Rico Public Buildings Authority: $4.1 billion. The PBA bonds are repaid with lease revenue that public agencies pay for their office buildings. The agency owes $102.4 million of interest in January and $208 million of principal and interest in July. Bonds maturing 2042 last traded for an average yield of 10.4 percent.
  • Puerto Rico Aqueduct & Sewer Authority: $4.1 billion. The utility, called Prasa, supplies most of the island’s water. The debt is repaid from water rates charged to customers. The water agency owes $86.5 million of interest in January and $135.1 million of principal and interest in July. Bonds maturing in 2042 last traded at an average yield of 8.7 percent.
  • Puerto Rico Pension-Obligation Bonds: $2.9 billion. The taxable debt was sold to bolster the island’s nearly depleted pension fund. The bonds are repaid from contributions that the commonwealth and municipalities make to the retirement system. The system pays $13.9 million of interest every month in this budget year. Securities maturing in 2038 last traded for an average yield of 22 percent.
  • Puerto Rico Infrastructure Financing Authority: $1.9 billion. Called Prifa, the agency has sold the island’s rum-tax bonds. These are securities repaid from federal excise taxes on rum made in Puerto Rico. Prifa owes $37.2 million of interest in January and $77.8 million of principal and interest in July. Bonds maturing in 2046 last traded for an average yield of 28 percent.
  • Puerto Rico Public Finance Corp.: $1.09 billion.The bonds are repaid with money appropriated by the legislature. The agency has defaulted every month since August on its debt-service payments because lawmakers failed to allocate the funds. It owes interest every month, the largest being a $24 million payment in February. Bond maturing in 2031 last traded for 7 cents on the dollar, according to trade reports. The yield wasn’t disclosed.

*  *  *

As a reminder, Puerto Rico’s Treasury Single Account likely has negative cash balance, which, according to Height Securities analyst Daniel Hanson, “will make it ‘nearly impossible’ to meet all government payroll obligations over the next six weeks.”

In other words, even if the government does default in order to save money for the provision of public services, social unrest may now be unavoidable.

end
Fox news reports:
(courtesy Fox News/zero hedge)

Do Not Panic America – Elite FBI Teams Are Tracking At least 48 “High Risk” ISIS Suspects In The US

They are among us, appears to the message being delivered to America this Thanksgiving holiday. As Fox News reports, elite FBI teams are tracking at least 48 “high-risk” ISIS suspects within the U.S., as Republican Senator Dan Coats, who is on the Select Committee on Intelligence, said “there is avery significant number of people that are on suspicious watch lists, under surveillanceit’s almost overwhelming.”

Surveillance squads are following the men and women, who are believed to be radicalized, 24 hours a day in case they are planning acts of terrorism. At least a dozen highly trained agents work on each case, meaning far more than 500 are involved in tailing the suspicious individuals. As Fox News reports,

“There is a very significant number of people that are on suspicious watch lists, under surveillance,” Republican Sen. Dan Coats said.

 

Coats, who sits on the Select Committee on Intelligence, would not comment on specifics, but said the around-the-clock surveillance is a major commitment for the bureau. “The FBI together with law enforcement agencies across the country are engaged in this. It takes enormous amount of manpower to do this on a 24-7 basis.  It takes enormous amount of money to do this,” Coats explained.

 

These elite FBI teams are reserved for espionage, mob violence and high-priority terrorism cases, like a joint terrorism task force case last June, where a 26 year old suspect Usaama Rahim, was killed outside a Massachusetts CVS. When a police officer and FBI agent tried to question him, the Boston Police Commissioner said Rahim threatened them with a knife, and was shot dead.

 

With at least a dozen agents assigned to each case, providing 24/7 coverage, this high level of surveillance reflects the severe risk associated with suspects most likely to attempt copycat attacks after Paris.

 

“It is a big resource drain. Yes it is. Almost overwhelming,” Coats said when asked about the demand placed on the FBI. “There will be a lot of people over the Thanksgiving weekend that will not be enjoying turkey with their family. They’ll be out there providing security for the American people and the threat is particularly high during this holiday period.”

Last week, in a rare public appearance with Attorney General Loretta Lynch, FBI Director James Comey would only say that “dozens” of suspected radicals have been under “tight surveillance.”

“Together we are watching people of concern using all of our lawful tools. We will keep watching them and if we see something we will work to disrupt it,” Comey said.

Contacted by Fox News, an FBI spokesman had no comment on the high risk cases, nor the use of elite surveillance teams.

*  *  *

But apart from that (and the global terror alert) get out there and spend, spend, spend America – or the terrorists have won!

end

See you on Monday

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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3 comments

  1. Excellent Bill Murphy. Thanks, Harvey.

    Like

  2. […] by Harvey Organ, HarveyOrganblog: […]

    Like

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