April 6/Huge rise in OI for both gold and silver necessitated a banker raid today/Silver OI now at multi year highs at 179900 contracts/USA:Yen cross falls below 110. Yen strength killing the yen carry traders as well as Japanese banks. Kuroda will no doubt act tonight when he wakes up/Another headache for China has Peer to Peer loans are becoming non performing/Europe has its headaches as well as bonds are disappearing due to traders front running the ECB/ The euro is rising causing lower earnings for our European companies and banks/Pfizer walks away from Allergan deal causing 100 million losses for the banks/Beige book out and it signals extreme dovish by most of the voters and the key section highlights global risks: Hint China/

Gold:  $1,222.50 down $5.90    (comex closing time)

Silver 15.05  down 7 cents

In the access market 5:15 pm

Gold $1223.00

silver:  15.06

Let us have a look at the data for today.

 

At the gold comex today, we had a good delivery day, registering 142 notices for 14,200 ounces  for gold,and for silver we had 0 notices for nil oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 212.603 tonnes for a loss of 90 tonnes over that period.

In silver, the open interest ROSE by 2065  contracts UP to 179,913 as the silver price was UP 18 cents with respect to yesterday’s trading. In ounces, the OI is still represented by .899 billion oz or 128% of annual global silver production (ex Russia ex China).

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

In gold, the total comex gold OI rose by 3,252  contracts up to 474,094 contracts as the price of gold was UP $10.40 with yesterday’s trading.(at comex closing).

We had another  change in the GLD, a withdrawal of 0.29 tonnes / thus the inventory rests tonight at 815.43 tonnes and the withdrawal was no doubt  for fees to the custodian and insurance. 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  changes,  and thus the Inventory rests at 334.724 million oz.

.

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

 

1. Today, we had the open interest in silver rose by 2065 contracts up to 179,913 as the price of silver was UP 18 cents with yesterday’s trading.Investors continue to flock into silver on the dovish Yellen speech where she indicated that she is reticent to raise rates All global mints are recording record silver sales. The total OI for gold rose by 3252 contracts to 474,094 contracts as gold was UP $10.40 in price from yesterday’s level a

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

3. ASIAN AFFAIRS

i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed DOWN 2.47 POINTS OR 0.08% DESPITE LAST 2 HR RESCUE /  Hang Sang closed UP 29.67 OR 0.16%. The Nikkei closed DOWN 17.46 POINTS OR 0.11% . Australia’s all ordinaires  CLOSED UP 0.67%. Chinese yuan (ONSHORE) closed DOWN at 6.4833.  Oil ROSE  to 36.97 dollars per barrel for WTI and 38.73 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4742 yuan to the dollar vs 6.4833 for onshore yuan. lAST WEEK:Japanese INDUSTRIAL PRODUCTION plunges the most in almost 5 years as negative interest rates ARE KILLING BUSINESS./JAPANESE TANKEN CONFIDENCE INDEX PLUMMETS/JAPAN HAS NEVER RECOVERED FROM THOSE BAD DATA RELEASES

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN  

ii)After Japan closed, the USA/Yen plummeted to below 110.  Then somebody intervened. Also the Euro/USA surged as the dollar is getting battered putting huge losses on European stocks.

( zero hedge)

 

iii)A terrific commentary by Wolf Richter on the failed policies of the Abe government. He describes the Bank of Japan’s new fangled attempt to buy newly created ETF’s on companies trading on the Nikkei.  With the Japanese 10 yr bond yield at -.07%, banks and insurance companies are being killed. These guys are offloading their bonds for foreign bonds as the Nikkei continues to falter.

( Wolf Richter/WolfStreet)

 

b) REPORT ON CHINA

iv) We brought this to your attention last week.   In its attempt to spur the housing market due to huge numbers of vacant properties, the government relaxed rules on purchases of homes.  Now typically the Chinese home buyer puts up 30% of the money for the home and the banks provide the rest in a mortgage.

Now the big question:  who provides the 30%

Answer:  Peer to Peer lending and this is now getting out of control as NPL’s increase dramatically. Chinese citizens are also using their credit cards for the downpayment

This is an accident waiting to happen:

( zero hedge)

 

4.EUROPEAN AFFAIRS

i)A very important commentary from zero hedge this morning. It seems that Mario’s bazooka is not helping those he intended to help.  The fact that he stated that he was going to monetize corporate boards has caused an unprecedented scramble for European bonds leading to a huge illiquidity.  The result has seen the Euro rise against the Dollar as Yellen becomes more dovish. Thus European stocks have suffered greatly. Also the dollar weakness has hurt the Japanese economy by causing the Yen to rise to 110 to the dollar and this has caused huge losses in the Nikkei.  This was done to placate China as a rising dollar will hurt China which in turn would force them to devalue.  For now they are hold

a must read…

( zero hedge)

 

ii)The following story is extremely important.  Today was the vote on a referendum on the Euro bloc’s association agreement with Ukraine.  This could lead to a crisis if the voters reject the treaty.  On exit polls, the “no association” is clearly winning. The Eurospectics  Dutch party, the Freedom party  are urging their  citizens to vote no and if this happens it could send the entire euro area into a frenzy especially when the BREXIT vote is two months away:

( zero hedge)

5.OIL MARKETS

i)Oil rises after the DOE confirms the biggest oil inventory draw since January.  However inventories at Cushing Oklahoma and distillates rises

( zero hedge)

ii)And the big drawdown provided the momentum for the stocks in the NY to rise:

( zero hedge)

6.PHYSICAL MARKETS

i)THE ARRESTING OF THESE TWO GUYS (TRADERS) FOR SPOOFING IS INSANE SINCE THE BIG BOYS DO IT EVERY DAY

( London’s Financial Times/GATA)
ii)Mike Kosares describes that finally private investors will gain the upper hand in gold( Kosares/GATA)

iii)Robert Appel comments that the Fed is losing control over the manipulation of gold

(Appel/Profit Confidential/GATA)

  iv)This is interesting. We had 33 kilos of gold confiscated at the border between Greece and Turkey.  The big question is to whom was this gold intended:

( zero hedge)

7.USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD/SILVER

i)Pfizer walks away from Allergen deal.

( zero hedge)

 

ii)David Stockman talks about the Donald:

( Stockman/ContraCorner)

 

iii)Beige book is out and many favoured no rate hike, only two wanted a hike.  What happened to the third member who days before suggested a rate hike?  The real problem is of course China.  They warned that if they went ahead with a rate hike, they would devalue hugely (maybe by 20%) which would send a massive deflationary force around the world, destroying commodities, destroying emerging markets and the banking sector.  The Fed paid attention to China!!

(courtesy zero hedge)

 

iv)The following is troubling:  median home prices in San Francisco skyrocking. One needs an income of $250,000 to qualify for a purchase of a home:

( zero hedge)

 

v)Let us close with this interview of Jim Rickards with Greg Hunter of USA Watchdog

( Jim Richards/Greg Hunter)

 

Let us head over to the comex:

The total gold comex open interest was up to 474,094 for a gain of 3252 contracts as the price of gold was UP $10.40 in price with respect to yesterday’s trading.  We are now entering the active delivery month of April. 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 or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month. We certainly witnessed both parts today . In the front month of April we lost 170 contracts from 4071 contracts down to 3901.  We had 145 notices filed so we lost 25 contracts or an additional 2500 gold ounces that will not stand for delivery. The next non active contract month of May saw its OI rise by 54 contracts up to 2641. The next big active gold contract is June and here the OI rose by 2913 contracts up to 358,168. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 132,581 . The confirmed volume yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 166,095 contracts. The comex is not in backwardation.  .

Today we had 142 notices filed for 14,200 oz in gold.

 

And now for the wild silver comex results. Silver OI rose by 2065 contracts from 177848 up to 179913 as  the price of silver was UP 18 cents with yesterday’s trading. With both silver and gold OI rising, no wonder the bankers orchestrated a raid today. We are now in the next contract month of April and here the OI  fell by 8 contracts down to 76. We had 0 notices filed yesterday so we lost 8  silver contracts or an additional 40,000 ounces will not stand for delivery. The next active contract month is May and here the OI fell by 1036 contracts down to 110,711. This level is exceedingly high. The volume on the comex today (just comex) came in at 36,208 , which is fair. The confirmed volume yesterday (comex + globex) was very good at 44,133. Silver is not in backwardation.    In London it is in backwardation for several months.
 
 
We had 0 notices filed for nil oz.
 

April contract month:

INITIAL standings for APRIL

April 6/2016

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil 9,355.65oz

Manfra, SCOTIA

Deposits to the Dealer Inventory in oz nil
Deposits to the Customer Inventory, in oz  nil oz
No of oz served (contracts) today 143 contracts
(14,200 oz)
No of oz to be served (notices) 3758 contracts 375,800 oz/
Total monthly oz gold served (contracts) so far this month 1074 contracts (107,400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 55,954.4 oz

Today we had 0 dealer deposits

Total dealer deposits; nil oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 0 customer deposit:

total customer deposits:  nil oz

CAN SOMEBODY GIVE ME A REASONABLE EXPLANATION TO THE FACT THAT WE HAVE OVER 15 TONNES OF GOLD STANDING AND NO GOLD ENTERS THE COMEX

Today we had 2 customer withdrawals:

i) Out of Scotia:9323.500 OZ  (290 KILOBARS)

ii) Out of MANFRA:  32.15 oz (1 KILOBAR)

total customer withdrawals; 9355.65  oz (291 KILOBARS)

Today we had 1 adjustments:

From BRINKS AND IT WAS A DILLY:  3,500.000 oz was adjusted out of the customer and this landed into the dealer account of BRINKS.  This lot of exactly 3,500.000 oz is for sale.  How could we have another exact weight like this?????? AND IT IS NOT DIVISIBLE BY 32.15 AND THUS NOT KILOBARS

.
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 145 contracts of which 39 notices was stopped (received) by JPMorgan dealer and 43 notices were stopped (received)  by JPMorgan customer account. 
 
To calculate the initial total number of gold ounces standing for the Mar contract month, we take the total number of notices filed so far for the month (1074) x 100 oz  or 107,400 oz , to which we  add the difference between the open interest for the front month of April (3901 contracts) minus the number of notices served upon today (142) x 100 oz   x 100 oz per contract equals the number of ounces standing.
 
Thus the initial standings for gold for the April. contract month:
No of notices served so far (1074) x 100 oz  or ounces + {OI for the front month (3901) minus the number of  notices served upon today (142) x 100 oz which equals 483,300 oz standing in this non  active delivery month of April (15.03 tonnes).
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
 
We thus have 15.03 tonnes of gold standing for April and 10.773 tonnes of registered gold for sale, waiting to serve upon those standing.  The bankers are still doing their best in cash settling as there is not enough registered gold to satisfy those that are standing.
We now have partial evidence of gold settling for last months deliveries We now have 15.03 tonnes (April) +2.2311 tonnes (March) + 7.99 (total Feb)- .940 (probable delivery on March 1) tonnes -.0434 tonnes (March 11,12,17,18) + March 31: 1.2470 and then  April 1,2: – .0006 tonnes   = 23.011 tonnes still standing against 10.773 tonnes available.  .
 
Total dealer inventor 346,358.291 oz or 10.773 tonnes
Total gold inventory (dealer and customer) =6,835,208.989 or 212.603 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 212.603 tonnes for a loss of 90 tonnes over that period. 
 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
 end
 
And now for silver
 

APRIL INITIAL standings

/April 6/2016:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,011.69 OZ. CNT
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 583,750.140 OZ

Delaware,

Scotia

No of oz served today (contracts) 0 contracts nil oz
No of oz to be served (notices) 76 contracts)(380,000 oz)
Total monthly oz silver served (contracts) 121 contracts (605,000 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 1,336,403.6 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

 

we had 2 customer deposits:

i) Into Delaware:  4946.900 oz

ii) Into Scotia: 578,803.24 oz

total customer deposits: 583,750.140 oz

 

We had 1 customer withdrawal:

i) Out of CNT:1011.69 oz

 

:

total customer withdrawals:  1011.69 oz

 
 

 

 we had 1 adjustments and it too was a dilly!!

 

Out of our good friends over at JPMorgan:

 455,789.300 oz was adjusted out of the dealer JPMorgan and only

455,791.758 oz arrived at JPMorgan.  Thus 2.458 oz of silver evaporated into the atmosphere!!

 

The total number of notices filed today for the April contract month is represented by 119 contracts for 595,000 oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (121) x 5,000 oz  = 605,000 oz to which we add the difference between the open interest for the front month of April (76) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the April. contract month:  121 (notices served so far)x 5000 oz +(76{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 985,000 oz of silver standing for the March contract month.
we lost 8 contracts or an additional 40,000 oz will not stand for delivery and these ounces were probably cash settled.
 
Total dealer silver:  32.452 million
Total number of dealer and customer silver:   155.446 million oz
The open interest on silver continues to rise despite the low price of silver. It looks like we are heading for a commercial failure.
 
end

And now the Gold inventory at the GLD

APRIL 6/a withdrawal of .29 tonnes of gold and probably this was to pay for fees for the custodian and insurance/inventory rests at 815.43 tones

April 5/ a withdrawal of 2.37 tonnes of gold from the GLD/Inventory rests at 815.72 tonnes

APRIL 4/a withdrawal of 1.19 tonnes from the GLD/Inventory rests at 818.09 tonnes of gold

April 1/no changes in gold inventory at the GLD/Inventory rests at 819.28 tonnes

MARCH 31/a small withdrawal of 1.19 tonnes/inventory rests tonight at 819.28 tonnes

MARCH 30/no changes in inventory/inventory rests tonight at 820,47 tonnes

March 29/a withdrawal of 3.27 tonnes of gold from the GLD/Inventory rests at 820.47 tonnes.  (No doubt we will see a rise in gold inventory with tomorrow’s reading)

March 28/no change in inventory at the GLD/Inventory rests at 823.74 tonnes

March 24.2016: a deposit of 2.08 tonnes of gold into its inventory/and this after a big drubbing these past two days??/Inventory rests at 823.74 tones

March 23/no changes at the GLD today despite the gold drubbing. Inventory rests at 821.66 tonnes

March 22./no changes in inventory at the GLD/Inventory rests at 821.66 tonnes

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 6.2016:  inventory rests at 815.43 tonnes

 

end

 

Now the SLV Inventory
April 6/no change in silver inventory/Inventory rests at 334.724 million oz
April 5/ a deposit of 2.146 million oz of silver into the SLV/Inventory rests at 334.724 million oz/
APRIL 4/no change in silver inventory tonight/inventory rests at 332.578 million oz
Apri 1: we had a huge deposit of 2.189 million oz of silver into the SLV (with silver badly down?)/.Inventory rests tonight at 332.578 million oz
MARCH 31/ no change in silver inventory at the SLV tonight/inventory rests at 330.389 million oz
MARCH 30/no change in inventory/inventory rests at 330.389 million oz
March 29.2016: a huge deposit of 1.475 million oz of silver into the SLV/Inventory rests at 330.389 million oz
March 28/no change in silver inventory at the SLV/Inventory rests at 328.914 million oz
March 24.2016/no change in inventory/rests tonight at 328.914 million oz/
March 23/we lost 1.428 million oz as a withdrawal today/SLV inventory rests at 328.914 million oz
.
April 6.2016: Inventory 334.724 million oz
.end
1. Central Fund of Canada: traded at Negative 6.6 percent to NAV usa funds and Negative 6.9% to NAV for Cdn funds!!!!
Percentage of fund in gold 64.1%
Percentage of fund in silver:35.9%
cash .0%( April 6.2016).
2. Sprott silver fund (PSLV): Premium to NAV rises to  5.90%!!!! NAV (April 6.2016) 
3. Sprott gold fund (PHYS): premium to NAV rises  to -0.31% to NAV  ( April 6.2016)
Note: Sprott silver trust back  into positive territory at +5.90%/Sprott physical gold trust is back into negative territory at -0.31%/Central fund of Canada’s is still in jail.
 
 
 end

And now your overnight trading in gold, WEDNESDAY MORNING and also physical stories that may interest you:

Trading in gold and silver overnight in Asia and Europe
 

By Mark O’Byrne

Perth Mint Silver Coins Have Second Highest Monthly Demand

The Perth Mint’s sales of silver coins and especially Silver Kangaroos surged again in March and saw the second highest levels of silver coin demand on record as silver buyers in the western world continue to accumulate silver at what they believe to be depressed silver prices.

perth_mint-silver

Silver stackers continued to accumulate silver coins and bars and the new silver nugget or kangaroo coins (1 oz and 5 oz) saw very high levels of demand.

To keep up with very robust global demand, The Perth Mint has produced 7.5 million Australian Kangaroo 1oz silver bullion coins since it was released less than 8 months ago.

The first Australian bullion coin to be made from 99.99% pure silver, the iconic release comes with an innovative authentication feature in the form of a micro-laser engraved letter ‘A’. Representing exceptional value for money, the coin has attracted attention from investors around the world for whom the press is currently running flat-out according to the Perth Mint themselves.

Silver_Kangaroo
Bullion buyers continue to accumulate and see silver at below $16 per ounce as great value vis a vis gold ($1,225 per ounce), stocks and many other investments. GoldCore can attest to that fact as we are seeing record demand for silver coins (now VAT free) in Ireland, the UK and EU.

Gold Prices (LBMA)
6 April: USD 1,225.75, EUR 1,079.76 and GBP 868.38 per ounce
5 April: USD 1,231.50, EUR 1,083.59 and GBP 866.32 per ounce
4 April: USD 1,215.00, EUR 1,068.80 and GBP 854.58 per ounce
1 April: USD 1,232.10, EUR 1,080.69 and GBP 860.20 per ounce
31 Mar: USD 1,233.60, EUR 1,085.50 and GBP 857.62 per ounce

Silver Prices (LBMA)
6 April: USD 15.19, EUR 13.37 and GBP 10.69 per ounce (Not updated yet)
5 April: USD 15.19, EUR 13.37 and GBP 10.69 per ounce
4 April: USD 15.58, EUR 13.92 and GBP 10.99 per ounce
1 April: USD 15.58, EUR 13.92 and GBP 10.99 per ounce
31 Mar: USD 15.38, EUR 13.52 and GBP 10.68 per ounce


Gold News and Commentary

Royal Canadian Mint: First Ever $1 Million Face Value Gold Coin for Sale (Coin Week)
Gold Rises Most in a Week as Equities Drop Boosts Haven Demand (Bloomberg)
Gold keeps gains on safe-haven demand as stocks tumble (Reuters)
U.S. trade data points to weak first-quarter growth (Reuters)
ICBC Standard Bank reclassified as LBMA market maker (Bullion Desk)

Gold is the best way to shield your portfolio from a recession (Fox Business)
China, Russia preparing for next crisis by buying gold – Rickards (Marketwatch)
Gold – Still the Best Insurance (WSJ)
Mystery Buyer Of US Treasurys Revealed (Zero Hedge)
“Markets Are Being Destroyed” (Bloomberg)

Read More Here

7RealRisksBanner

‘7 Real Risks To Your Gold Ownership’ – Must Read Gold GuideHere

Please share our website with friends, family and colleagues who you think may benefit from it.

Thank you

Mark O’Byrne
Executive Director

END

 

(courtesy Lawrence Williams/Sharp Pixley)

 

Does ANY central bank hold the physical gold it says it does?

Most gold analysts tend to disbelieve Chinese figures for its central bank gold holdings.  China has a track record of holding physical gold in other accounts than those it reports monthly to the IMF – and then from time to time moving some of this gold into the reporting account – the last such occasion being in July last year when its reported reserves rose from 1,054 tonnes overnight to 1,658 tonnes – a rise of 57%.

Since then China has been reporting official gold reserve purchases monthly – but again no-one outside the Chinese government system knows whether this is an accurate representation of what China is buying on the open market, or perhaps just a part of it, or whether the country has a further enormous stash of physical gold lodged in other non-reported accounts, or perhaps even in the vaults of the state-owned commercial banks, which are believed to hold perhaps as much as 2,000 tonnes of the yellow metal.

But at least China has been partly honest in telling the world that it has been somewhat economical with the truth over its real gold reserve levels in the past – and may still well be holding much more than it officially admits.  But what about other nations and their gold holdings?  Do we have any real reason to believe they are what they say they are?  Many central banks are known to have entered into gold swaps with commercial entities which allows them to retain the accounting fiction that they still possess this physical gold, yet it is actually held elsewhere and may not be returnable in a tight supply situation.  The latest such central bank to do so is almost certainly that of Venezuela, officially the world’s 16th largest holder of gold, which has exported over 48 tonnes of gold to Switzerland over the past few months, yet still apparently reports an unchanged central bank gold holding of 361 tonnes to the IMF.

Regarding Venezuela specifically, gold researcher Koos Jansen published his analysis on bullionstar.com  which showed firstly that the IMF published holding differed from that reported by the Venezuelan central bank by some 65 tonnes as far back as in November last year (See: Venezuela Exported Another 12t Of its Official Gold Reserves To Switzerland In February) and presumably the difference is now greater still.  So much for IMF gold reserve statistics for Venezuela alone.  How many more countries misstate their reserves in the interests of economic status and perception?

For some years there have, for example, been a considerable number of articles, admittedly written mostly by strongly pro-gold advocates, suggesting that the biggest gold reserve of all – that held by the USA of 8,133.5 tonnes – is bogus.  A link to a recent such is here: FORT KNOX Gold Paradox which sets out some of the thinking behind the doubts expressed over the U.S. gold holdings.  While some of the article is undoubtedly valid in terms of the anomalies in resisting any audit of the gold holdings, one of the reasons expressed for blocking such a Fort Knox audit – that “Fort Knox Bullion Depository is essentially empty of real gold – say it contains less than ten million ounces of gold but also contains perhaps 140 million ounces of gold plated tungsten”, is perhaps stretching the bounds of credibility a little too far.

But is this just the tip of the iceberg?  Gold could be beginning to play an advancing role in the global economic system – at least mega powers Russia and China appear to believe so, among others.  And they may be two of the players who might contribute most strongly.  Both are announcing official purchases of gold month in-month out to try and build their reserves but both have a huge way to go before they match those of the world’s top gold holders – the USA, Germany, Italy and France – and as a proportion of their forex reserves gold still accounts for only just over 15% for Russia and a minute 2.2% for China.  That compares with over 75% for the USA, 69% for Germany, 63% for France and 68% for Italy – at least on the figures as reported to the IMF.  For the latest IMF Official Gold Holdings click here.)

But as will be pretty obvious to most of our readers, so much financial data put out there is at best mostly misleading and at worst totally dishonest.  In today’s financial world it is perception which rules and it is almost certainly in a country’s interests (at least among the major gold holders) to keep their gold reserves as looking as strong as possible.  A bit of statistical manipulation, or even misreporting, may help them achieve this aim and keep all appearing well on the financial and economic fronts.

end
THE ARRESTING OF THESE TWO GUYS (TRADERS) FOR SPOOFING IS INSANE SINCE THE BIG BOYS DO IT EVERY DAY:
(courtesy London’s Financial Times/GATA)

Two traders fined over gold spoofing

Submitted by cpowell on Wed, 2016-04-06 01:31. Section: 

From the Financial Times, London
Tuesday, April 5, 2016

A US financial regulator has slapped two more traders with fines in a widening crackdown on “spoofing,” a form of market trickery. The traders, Heet Khara and Nasim Salim of the United Arab Emirates, were each ordered to pay more than $1.3 million in civil penalties to settle charges that they spoofed New York gold and and silver futures markets, the Commodity Futures Trading Commission said.

Spoofing — rapidly placing and cancelling orders to mislead others into buying higher or selling lower than actual market prices — was made illegal by the 2010 Dodd-Frank financial reform law. The rise of spoofing reflects the speed, anonymity, and geographic reach of electronic markets, reports Gregory Meyer in New York. …

… For the remainder of the report:

http://www.ft.com/fastft/2016/04/05/two-traders-fined-over-gold-spoofing…

END

 

Mike Kosares describes that finally private investors will gain the upper hand in gold

(courtesy Kosares/GATA)

Mike Kosares: Quietly the advantage in gold goes to private investors

Submitted by cpowell on Wed, 2016-04-06 01:52. Section: 

Big Banks, Hedge Funds Key Factors in 2016 Gold Surge

By Michael Kosares, Editor
USAGold’s News & Views
USAGold, Denver
Tuesday, April 5, 2016

I can remember only one other time when market factors lined up as favorably for gold as they do now and that was in the spring of 2008. There are a great many similarities to gold market dynamics between now and then, but there are also great differences. One of those differences is the huge influx of interest from institutional investors led by hedge funds and big banks. In 2008 institutional interest was light.

Now HSBC, JP Morgan Chase, Bank of America Merrill Lynch, ABN Amro, UBS, and Deutsche Bank, PIMCO, and BlackRock head a growing list of investment houses that view gold favorably. In what could turn out to be the first among many such announcements, Munich Re, the giant German reinsurer, said it was adding gold to its reserves in the face of negative interest rates. Chief Executive Nikolaus von Bomhard told a news conference, “We are just trying it out, but you can see how serious the situation is.” …

The fact of the matter is that there is not enough gold in size available to accommodate a doubling of already strong central bank demand. At current prices the availability of metal comes nowhere near matching the availability of capital. China, for example, is hoping against hope that it will have enough time to beef up its holdings sufficiently before a full-blown currency crisis. Barring a miracle on the supply side of the fundamentals ledger, the likelihood is that they will come up short.

This is a case where, for once, the private investor has the advantage. Individuals can still buy gold and silver in sufficient quantity to achieve their portfolio goals (and quickly if so required). What we do not know is how long under the circumstances that advantage will remain on the table. …

… For the remainder of the commentary:

http://www.usagold.com/publications/NewsViewsApril2016.html

 

 

END

 

 

Robert Appel comments that the Fed is losing control over the manipulation of gold

(courtesy Appel/Profit Confidential/GATA)

Robert Appel: Here’s what the Fed doesn’t want you to know about gold prices

Submitted by cpowell on Wed, 2016-04-06 02:34. Section: 

10:33a HKT Wednesday, April 6, 2016

Dear Friend of GATA and Gold:

Lawyer and journalist Robert Appel, writing for Profit Confidential, describes the history and mechanisms of central bank gold price suppression policy and sees indications that the gold market is starting to give central banks trouble again. Appel’s analysis is headlined “Gold Prices: Here’s What the Federal Reserve Doesn’t Want You to Know” and it’s posted at Profit Confidential here:

http://www.profitconfidential.com/gold/gold-prices-heres-what-the-federa…

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

 

END

 

This is interesting. We had 33 kilos of gold confiscated at the border between Greece and Turkey.  The big question is to whom was this gold intended:

(courtesy zero hedge)

Greeks Confiscate Largest Amount Of Gold Ever Smuggled

To some gold may not be “money”, but to a group of Greeks it was worth far more than merely pet rocks.

According to Ekathimerini, customs officials at the Greek-Turkish border crossing of Kipoi have confiscated the largest amount of gold that anyone has ever attempted to smuggle out of the country.

The loot was found hidden in a taxi and consisted of 18 bars of unrefined gold, weighing 33.5 kilos, along with four crosses made of oure gold (11.6 grams). The gold was found last Friday during a police check on cars planing to cross the border.

The suspects hid seven gold bars and the four crosses in the car’s passenger armrest while the other 11 bars were concealed in their luggage.

 According to Greek media, the value of the gold is estimated at 800,000 euros, which translates into 200,000 euros in unpaid tax revenue for the Greek state.

The undisclosed number of suspects, whose identity was not revealed, have appeared before a prosecutor, authorities said.

It is unclear if Greece will sell the confiscated gold to repay creditors.

This is not the first time a major gold smuggling attempt was busted in Greece. in April 2013, a German was caught at the Athens International Airport after allegedly trying to smuggle nearly half a ton of gold and silver out of Greece, according to airport officials.

The suspect was preparing to board a Lufthansa flight for Germany. The airline uncovered silver tablets in a cargo container and customs officials then found gold and banknotes.

The man arrested at Athens International Airport was said to be carrying 7kg (15lbs) of gold tablets and almost 300,000 euros (£255,000) in cash in his luggage.

Customs officials also believe he attempted to smuggle out another 425kg of silver.

A source within the Greek police told the BBC that their investigation would focus on the man’s links to any gang involved in money-laundering.

In the most recent case, it is unclear, but would be interesting to find out, who in Turkey the smuggled gold was intended for, and where it would proceed from there. Recall that as reported here last year, Turkey was an instrumental cog in the massive gold-for-oil triangle that involved Iran, Turkey and Dubai, when during the peak of the Iran embargo, Tehran bartered oil in exchange for gold which was then used to pay for various critical imports.

end

Your early WEDNESDAY morning currency, Asian stock market results,  important USA/Asian currency crosses, gold/silver pricing overnight along with the price of oil Major stories overnight

 
 

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.4833 / Shanghai bourse  CLOSED DOWN 2.47  OR 0.08% / HANG SANG CLOSED UP 29.67 OR 0.16% 

2 Nikkei closed down 17.46  or down 0.11% (STILL REACTING TO POOR INDUSTRIAL PRODUCTION/POOR RETAIL SALES/TERRIBLE TANKEN CONFIDENCE INDEX)

3. Europe stocks opened MIXED /USA dollar index UP to 94.86/Euro DOWN to 1.1353

3b Japan 10 year bond yield: FALLS   TO -.057%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.37

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  36.82  and Brent: 38.73

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 UP for WTI and UP 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 0.100%   German bunds in negative yields from 9 years out

 Greece  sees its 2 year rate RISE to 11.09%/: 

3j Greek 10 year bond yield RISE to  : 9.11%   (YIELD CURVE NOW INVERTED)

3k Gold at $1221.50/silver $15.00 (7:15 am est) 

3l USA vs Russian rouble; (Russian rouble DOWN 13/100 in  roubles/dollar) 68.65

3m oil into the 36 dollar handle for WTI and 38 handle for Brent/

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/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9603 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0903 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 STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 9 Year German bund now  in negative territory with the 10 year FALLS to  + .10%

/German 9 year rate negative%!!!

3s The Greece ELA NOW a 71.4 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 1.74% early this morning. Thirty year rate  at 2.57% /POLICY ERROR)

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

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

Stocks Rebound In Calm Trading On Back Of Stronger Crude, Dollar

Unlike yesterday’s overnight session, which saw some substantial carry FX volatility and tumbling European yields in the aftermath of the TSY’s anti-inversion decree, leading to a return of fears that the next leg down in markets is upon us, the overnight session has been far calmer, assisted in no small part by the latest China Caixin Services PMI, which rose from 51.2 to 52.2 (even if the employment index dropped to a three year low, suggesting China’s labor problems are only just starting).

Adding to the overnight rebound was crude, which saw a big bounce following yesterday’s API inventory data, according to which crude had its biggest inventory draw in 2016, resulting in WTI rising as high as $37.15 overnight. The oil market is now looking at today’s more definitive EIA report, which is also expected to show an inventory build. “The API surprised the market at a time when it was looking to move higher after several days of losses; the API provided this trigger,” says Saxo Bank head of commodity strategy Ole Hansen. “Kuwait saying a deal is still a possibility at the Doha meeting has also helped.”

Curiously, the rebound in oil took place even as the BBG Dollar index saw a sharp increase overnight.

But while the dollar rose, the Yen failed to drop, and as a result, the USDJPY has remained just barely above 110, leading to another session in the red for Japan’s Nikkei: surely by now Abe and Kuroda must be asking themselves if complying with the Shanghai Accord was really worth it. A few more percent drop, which wipes out a few dozen trillion in local pensions, and the Japanese people may ask themselves too.

“It is still difficult to buy stocks because of the yen. There are hardly any positive factors for stocks,” Chihiro Ohta, general manager of investment information at SMBC Nikko, told Bloomberg. “Investors are concerned about the global economy again and are turning to risk-off as the IMF may downgrade its growth forecasts.”

Meanwhile in China, good news was bad, as the better than expected Services PMI led to a 0.1% drop in the Composite after the benchmark index hit a three-month high on Tuesday. Data released on Wednesday by Caixin Media and Markit Economics showed their services purchasing managers’ index increased to 52.2 in March. An official factory gauge last week showed improving conditions for the first time in eight months, while industrial profits halted a seven-month losing streak.

E-mini futures on the S&P 500 Index rose 0.3 percent. The underlying U.S. equity benchmark index slipped 1 percent on Tuesday. The rally that lifted the S&P 500 as much as 13 percent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. The U.S. central bank releases the minutes from its latest meeting on Wednesday.

E-mini futures on the S&P 500 Index rose 0.3 percent. The underlying U.S. equity benchmark index slipped 1 percent on Tuesday. The rally that lifted the S&P 500 as much as 13 percent from a 22-month low in February has started to lose momentum, with sentiment shifting as investors assess whether central banks can fend off weakness in the global economy. The U.S. central bank releases the minutes from its latest meeting on Wednesday.

This is where all key markets stood as of this moment.

  • S&P 500 futures up 0.2% to 2042
  • Stoxx 600 up 0.4% to 329
  • FTSE 100 up 0.5% to 6122
  • DAX down less than 0.1% to 9563
  • German 10Yr yield up 3bps to 0.13%
  • Italian 10Yr yield up less than 1bp to 1.27%
  • Spanish 10Yr yield up less than 1bp to 1.5%
  • S&P GSCI Index up 0.9% to 313.2
  • MSCI Asia Pacific down less than 0.1% to 124
  • Nikkei 225 down 0.1% to 15715
  • Hang Seng up 0.1% to 20207
  • Shanghai Composite down less than 0.1% to 3051
  • S&P/ASX 200 up 0.4% to 4946
  • US 10-yr yield up 3bps to 1.75%
  • Dollar Index up 0.25% to 94.87
  • WTI Crude futures up 2.8% to $36.88
  • Brent Futures up 2% to $38.64
  • Gold spot down 0.5% to $1,226
  • Silver spot down 0.1% to $15.12

Top Global News

  • Pfizer Said to Terminate $160 Billion Merger With Allergan: Pfizer decided to terminate largest-ever health-care acquisition as officials in Washington crack down on corporate inversions, according to a person familiar with the matter; Bankers Risk Losing Millions If Pfizer-Allergan Deal Falls Apart; Shire May Become Target If Pfizer-Allergan Deal Blows Up: BofAML; Shire/Baxalta Deal Risk Increased on U.S. Inversion Rules: HSBC
  • Glencore Sells $2.5b Agriculture Stake to Canadian Fund: Canada’s largest pension fund to acquire 40% in unit; Glencore selling assets to help curb $25.9b of debt
  • Cruz, Sanders Win Wisconsin Vote in Setback to Front- Runners: Trump’s loss makes delegate math for nomination more difficult; Clinton had downplayed contest as not affecting delegate math
  • Mitel Networks, Polycom Said to Be in Advanced Merger Talks: agreement is said to be possible as soon as next week; deal would value Polycom at about $1.7b
  • Staples Merger Hearing Ends With Skeptical Judge Urging Accord: office supply retailers ask judge to reject FTC injunction bid; government seeks to block merger, citing loss of competition
  • Puerto Rico’s House Approves Moratorium on Bond Payments: general obligations, Cofina debt would stop paying investors; measure would give governor authority to suspend payments
    Bill Ackman’s Pershing Square holds 1Q investor call; follow TOPLive for our blog coverage starting 10am
  • Pfizer Wins Dismissal in Zoloft Birth-Defect Warning Cases: a federal judge in Philadelphia granted co.’s request to dismiss more than 300 lawsuits attempting to link the antidepressant Zoloft to heart defects in newborns

Looking at regional markets, we start as usual in Asia, where equities shrugged off the negative lead from Wall St. with the region mostly positive as an improvement in Chinese PMI data provided some reprieve. Nikkei 225 (-0.1%) saw choppy price action driven by JPY movements, with the index extending on its recent losing streak. ASX 200 (+0.4%) was underpinned by gains in energy following an unexpected drawdown in API Inventories, which pushed WTI crude futures towards the USD 37/bbl level. Elsewhere, Shanghai Comp (-0.1%) recovered off its worst levels following an improvement in Chinese Caixin Services and Composite PMI’s with the latter returning to expansionary territory and matching a 1-year high. Finally, 10 year JGBs were flat amid similar range-bound trade in riskier Japanese asset classes, while the result of the BoJ’s JPY 1.24tr1 buying operation also provided no surprises.

Asian top news:

  • China Forex Losses Jump 13-Fold as Investors Brace for More: Air China, Agile Property to cut exposure to dollar debt
  • Yen at Strongest in 17 Months Probing Limit of Japan’s Tolerance: More jawboning would be “meaningless,” JPMorgan’s Sasaki says
  • Chinese Online Property Site Said Raising $1b in Funding: Beijing Homelink plans to expand its reach across China; Tencent, Baidu said to take part in Homelink fundraising
  • Rajan Supercharges India Rate Cut by Easing Bank Funding Squeeze: Central bank lowers benchmark, takes measures to boost cash
  • Samsung Rewrites Playbook to Juice S7 Sales Before IPhone: Estimates of S7 sales raised to 9m units from 7m
  • Amid 1MDB Probes, BSI Suffers Exits and Wrangling Over Liability: Departing Asia staff said to include trio vetting big clients

European equities trade mostly higher with the move to the upside propelled by energy names after WTI crude futures reclaimed USD 37.00/bbl to the upside. Bucking the trend however, is the DAX which trades relatively flat given the lack of energy names in the index, with newsflow otherwise relatively light from a European perspective. Alongside the modest upside in European stocks, fixed income markets have ebbed lower with Bunds breaking back below 164.00 to the downside. Furthermore, prices have also edged lower in tandem with USTs as market participants continued to keep a close eye on the price action of USD/JPY where the BoJ is yet to stem the recent sell-off.

European top news:

  • H&M Sees Dollar Sourcing Headwinds Easing by End of Year: headwinds from strong dollar will ease by end of year as co. reported 1Q profit that slightly beat analysts’ estimates
  • Panama Secrecy Leak Claims First Casualty as Iceland PM Quits: decision follows protests that drew thousands of Icelanders
  • Air France-KLM Shares Fall as De Juniac Steps Down: shares decline after surprise departure of CEO, who’s stepping down to take IATA job
  • BTG Pactual, Generali at Odds on Indemnity Linked to 1MDB Case: cos. in disagreement over which firm should bear potential losses tied to Swiss bank BSI’s dealings with a Malaysian fund

In FX, in the absence of any data or news, it is no surprise to see FX markets in range bound mode today. Commodities have seen a small recovery, while equities stabilise, but this has failed to spark any significant moves in the majors. The FOMC minutes this evening is the perfect excuse to stand pat on for now, and in that respect, USD/JPY is holding off any notable recovery, despite having held the key 110.00 level in Asia. More warnings from Japanese government spokesmen that markets are being monitored, but to little effect. Some signs that the market is primed for fresh GBP weakness, but EUR/GBP continues to hold off the top end of the .8030-65 resistance zone, with Cable defensive against the key support area at 1.4050-55. EUR/USD naturally tight in the mid 1.1300’s, with the broader USD perspective key here today, but also likely to hold off committing to any major direction ahead of the ECB meeting account Thursday. DoE report later today could see a little Cad shakeout — API last night saw an unexpected drawdown.

In commodities, oil prices have extended on yesterday’s advances following an unexpected drawdown in API Inventories which lifted WTI crude futures above the USD 37/bbl level with prices shrugging off upside seen in the USD-index this morning. Gold (-0.2%) trades modestly lower alongside broad strength in the USD with newsflow otherwise relatively light thus far. Elsewhere, copper prices benefited from the improvement in risk-sentiment while iron-ore remained pressured on rising stockpiles as Chinese port inventories are at its highest level in a year.

There’s no data out of the US expected but the main focus will of course be on the release of the March FOMC minutes which we’ll get at 2.00pm. Yellen’s dovish comments last week mean the minutes perhaps take on slightly less importance than usual, particularly with the Fed Chair due to speak tomorrow, but it’s still worth keeping a close eye on any interesting snippets. Away from this the Fed’s Mester is due to speak along with Bullard later on.

Bulletin Headline Summary from Ransquawk and Bloomberg

  • European equities trade modestly higher as upside in energy prices supported sentiment with newsflow otherwise relatively light
  • FX markets have been largely rangebound with USD/JPY holding off any notable recovery, despite having held the key 110.00 level in Asia
  • Looking ahead, today sees the release of the FOMC Meeting Minutes and potential comments from Fed’s Mester (Voter, Soft Hawk) and Bullard (Voter, Neutral)
  • Treasuries drop in overnight trading as global equity markets mostly higher along with crude oil after Kuwait claims producers can reach an agreement to arrest output even if Iran doesn’t join in.
  • Global regulators are considering how to raise capital requirements for the world’s biggest banks as they implement tougher debt-financing limits designed to rein in too-big-to fail lenders
  • Germany is on a collision course with the European Commission over enforcing bank-failure rules the EU introduced two years ago to end an era of taxpayer bailouts. The finance ministry in Berlin is warning against “watering down” the rules
  • Negative rates have become counter-productive, since they have produced uncertainty by signaling that something is wrong with the economy. Moreover, the Riksbank’s unprecedented government bond buying program has also sparked liquidity concerns
  • Puerto Rico’s Government Development Bank is on the verge of a collapse as the lender in recent years saw politicians turn it into a piggy-bank that lent to the government and its agencies
  • Puerto Rico’s House of Representatives approved a bill calling for a moratorium. The measure would give Governor Padilla authority to suspend payments on debt backed by the government
  • A funny thing has happened in the U.S. stock market, where rather than loosen their grip bears have grown ever-more impassioned. They’ve sent short interest to an eight-year high and above $1 trillion
  • When the next corporate default wave comes losses on bonds from defaulted companies are likely to be higher than in previous cycles because U.S. issuers have more debt relative to their assets
  • The Chinese central bank’s appetite for trade-weighted weakness in the yuan appears to be increasing, according to Australia & New Zealand Banking Group Ltd., spurring warnings of increasing risks to emerging-market currencies
  • India’s central bank governor renewed his criticism of unorthodox monetary policy. “I don’t think this is a stable situation,” Governor Rajan said. “Either we need stronger growth or we need to recognize we’ve reached the limits of monetary policy”
  • Pfizer Inc. decided to terminate its $160 billion merger with Allergan Plc, a person familiar with the matter said, marking an end to the largest-ever health-care acquisition as officials in Washington crack down on corporate inversions
  • Sovereign 10Y bond yields mostly higher; European and Asian equity markets rise; U.S. equity-index futures rise. WTI crude oil rallies; gold and copper drop

DB’s Jim Reid concludes the overnight wrap

Notwithstanding the current weaker sentiment we’d conclude that a softer dollar is probably better for reducing global systemic risk (not least as it helps China), even it causes headaches for the likes of Europe and Japan. Much attention was yesterday focused on the fact that the Yen briefly strengthened below $110 for the first time since October 2014 and also that the Nikkei is now down -16.7% YTD. The chatter is increasingly that this is a strong signal Japanese policy isn’t currently working in spite of seemingly aggressive action. Recent economic data out of Japan has been soft (Tankan and PMI’s in particular) and the question everyone is starting to ask is what the policy response from the BoJ may be. Further equity purchases have been mentioned while yesterday the former BoJ Governor Iwata suggested that the Central bank will hit its limit of government bond purchases in 2017 and suggested that further deeper negative rates would be more likely instead. The next BoJ meeting is the 28th of April and away from that another key decision is on the fiscal side and whether PM Abe will delay the upcoming hike in the consumption tax, a decision he has sounded ambivalent on so far.

Meanwhile the Stoxx 600, the DAX and European banks are now down -9.5%, -11.0% and -23.7% respectively YTD so there is a fear that Japan and Europe are becoming more resistant to central bank policies. Before getting too concerned, despite a -1.01% fall yesterday we should remember that the S&P 500 is +0.7% YTD and was at YTD highs only 2 days ago. So a softer dollar helps the US, leads to lower systemic risk but causes growth and asset return problems elsewhere.

Indeed the moves yesterday underscored what was a pretty rough day all round for risk assets with some soft European data, downbeat comments the IMF’s Lagarde and concerns emanating from the new US Treasury Department rules on corporate inversions. European DM bond markets were the biggest winners in the risk-off move with evidence no more obvious than the move across the Bund curve where 10y Bunds closed yesterday at 0.098% and the lowest in nearly 12 months. That all-time intraday low of 4.8bps this time last year is creeping closer.

Before we deep diver on some of the above, this morning in Asia we’re seeing a bit more of mixed performance relative to that of the past 24 hours. The Nikkei (+0.04%), Hang Seng (+0.35%), Kospi (+0.56%) and ASX (+0.37%) are all up modestly with just China currently unchanged. That’s despite some improvement in the March Caixin PMI’s for China where the services number has increased 1pt to 52.2, helping to take the composite up to 51.3 from 49.4 in February and to the highest level since April last year.

Meanwhile the other breaking news this morning is that, according to the WSJ, Pfizer has announced that it intends to walk away from the proposed $150bn mega-merger with Allergan. This comes after the news out of the Treasury yesterday regarding the proposed inversion rules. The overall feeling was that the new rules were stricter than previously assumed. Specifically the rules focus on two main parts, the first focusing on a three-year lookback period in calculating the size of the inversion and disregarding assets acquired in the previous 36 months, while the second action would be to limit earnings stripping. Those changes had investors concerned about the putting the aforementioned merger in jeopardy which appears to now to be confirmed. US equity index futures are modestly firmer this morning.
Back to yesterday and firstly those comments from Lagarde in the morning. The IMF Chief warned that global growth remains too slow, too fragile and risks to its durability are increasing. She also noted that downside risks have increased and that the Fund does not ‘see much by the way of upside’. Lagarde also made mention to threats of a geopolitical nature as also underlining the uncertainty globally at the moment. Specifically she referred to the uncertainty concerning Brexit which was something also mentioned by the Fed’s Evans too who highlighted this and also the US Presidential election race as complicating decisions for policymakers. While both events still have a way to run, the various headlines linking PM David Cameron with the Panama Papers have the potential to have an indirect bearing on theBrexit debate, particularly from a credibility perspective.
Meanwhile, yesterday’s economic data in Europe saw some disappointment in the final March PMI revisions. The Euro area composite reading was revised down 0.6pts to 53.1 after the services number fell to its softest since January 2015, down 0.9pts from the flash reading to 53.1. Much of the weaker read-through in the services number was attributed to a big downward revision for France (-1.3pts to 49.9) and a 2.6pt monthly decline in Italy. Our European economists noted that the Euro area composite PMI points to GDP growth of around 0.4% qoq in Q1 which is in line with their projection. Also of note was a much softer than expected February factory orders print out of Germany where orders were unexpectedly down -1.2% mom in the month (vs. +0.3% expected).

The US data was a little bit more mixed. Notably and for the first time since September, we saw the ISM non-manufacturing reading strengthen after rising 1.1pts last month to a slightly higher than expected 54.5 (vs. 54.2 expected). The details also showed encouraging gains for the employment and new orders components and it means the spread between the two ISM series is now 2.7pts which is the least since December 2014 (albeit the overwhelming contributor to that being a move lower in the services component). In any case yesterday’s data was also backed up by a slight upward revision in the final March services PMI to 51.3 (from 51.0). Away from that the February trade balance reading revealed a slightly wider than expected deficit in the month ($47.1bn from $45.9bn), while the IBD/TIPP economic optimism reading for April was down 0.5pts from March to 46.3 (vs. 47.0 expected). Finally the February JOLTS job openings showed openings fell to 5.45m in the month from an upwardly revised 5.60m in the month prior. Also of note was the news that the Atlanta Fed had revised down their Q1 GDP growth forecast by three-tenths to 0.4% although this appeared to be more of a reflection of that softer US auto sales data from Friday.

Back to bonds, along with those moves for Bunds, we also saw similar moves lower in yield for the bulk of DM sovereign bond markets in Europe, while 10y Treasury yields closed over 4bps lower at 1.721% and the lowest since the end of February. Peripheral assets were the notable underperformer (Italy 10y +3bps, Portugal 10y +21bps) with Greece back in focusThe latest news there being that German Chancellor Merkel has reinforced her position that the IMF should remain a part of the Greek bailout program and that a debt haircut for Greece is not possible. These headlines are all starting to feel a bit 2015 again.

Credit markets were not immune to be the risk off move yesterday and it was European indices in particular which were under most pressure. The iTraxx Main and Crossover indices finished 4bps and 14bps wider respectively with senior and subs fins underperforming and closing 5bps and 17bps wider respectively.

Bucking the weaker trend for risk yesterday were the moves into the close for Oil. In fact, after trading lower for the bulk of the day and contributing to part of the selloff certainly in Europe, WTI has rallied back close to $37/bbl this morning after hovering in the low $35’s yesterday. As well as some supportive output numbers, again the move has come about on the back of more headlines concerning the upcoming Doha meeting, this time out of Kuwait where the OPEC Governor there suggested that a production freeze pact is still possible between producers even without the agreement from Iran.

END

ASIAN AFFAIRS

 

i)Late  TUESDAY night/ WEDNESDAY morning: Shanghai closed DOWN 2.47 POINTS OR 0.08% DESPITE LAST 2 HR RESCUE /  Hang Sang closed UP 29.67 OR 0.16%. The Nikkei closed DOWN 17.46 POINTS OR 0.11% . Australia’s all ordinaires  CLOSED UP 0.67%. Chinese yuan (ONSHORE) closed DOWN at 6.4833.  Oil ROSE  to 36.97 dollars per barrel for WTI and 38.73 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4742 yuan to the dollar vs 6.4833 for onshore yuan. lAST WEEK:Japanese INDUSTRIAL PRODUCTION plunges the most in almost 5 years as negative interest rates ARE KILLING BUSINESS./JAPANESE TANKEN CONFIDENCE INDEX PLUMMETS/JAPAN HAS NEVER RECOVERED FROM THOSE BAD DATA RELEASES

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

After Japan closed, the USA/Yen plummeted to below 110.  Then somebody intervened.

Also the Euro/USA surged as the dollar is getting battered putting huge losses on European stocks.

(courtesy zero hedge)

“Someone” Intervenes To Hold USDJPY Above 110

Update: literally seconds ago, when the USDJPY tumbled below 110, we asked “how much longer will Kuroda sustain this battering before Japan is forced to do something even more ridiculous” and we may have gotten the answer when minutes after the USDJPY dipped below 110, some unknown “buying force” emerged out of nowhere and pushed the pair right back up over the critical support level.

Is the BOJ telegraphing that “you shall not pass” the 110 support?

* * *

Yesterday, a concerted seller of the USDJPY tried, and briefly succeeded, to push this all-important carry pair below 110. It promptly rebounded, however, once stops were forcefully activated to the short side at this key support level. Moments ago 110 was once again tested, and as of this moment, there has been no snap back rebound as the USDJPY has now tumbled to levels last seen in October 2014, and may continue sliding without any support levels in sight.

While we understand that it may be critical for “global stabeeleetee” as per the Shanghai Accord, to keep the USD weak, we wonder how much longer will Kuroda sustain this battering before Japan is forced to do something even more ridiculous than his January foray into NIRP.

Meanwhile, the dollar, after spiking in the overnight session is suddenly tumbling, putting pressure on European stocks as the EURUSD surges once again, putting just as much pressure on Mario Draghi who too will have to ask himself how long before the ECB has to intervene again.

end

A terrific commentary by Wolf Richter on the failed policies of the Abe government.

He describes the Bank of Japan’s new fangled attempt to buy newly created ETF’s on companies trading on the Nikkei.  With the Japanese 10 yr bond yield at -.07%, banks and insurance companies are being killed. These guys are offloading their bonds for foreign bonds as the Nikkei continues to falter.

(courtesy Wolf Richter/WolfStreet)

BOJ’s Kuroda Threatens More Easing, Stocks Tank, Absurdity Reigns

Submitted by Wolf Richter via WolfStreet.com,

“Negative interest expense” or some such absurdity yet to be coined.

“For now, the effect of negative interest rates is very strong, so we’d like to steadily proceed with this policy,” Bank of Japan Governor Haruhiko Kuroda told parliament today, to reassure the nervous politicians that the economy was on the right track under his fearless and wise leadership.

Alas, the BOJ’s “tankan” survey, released on Friday, showed that confidence plunged among manufacturers to the lowest point since 2013, while inflation expectations weakened further. The economy in the January-March quarter is likely to shrink again, after having already shrunk in the prior quarter, to form another technical recession. Despite government and BOJ exhortations, wage increases remain elusive, now an imperceptibly small 0.4% from a year ago.

But just in case the BOJ’s scorched-earth policies of negative interest rates and asset purchases – mostly Japanese Government Bonds, Japanese REITs, and equity ETFs – haven’t accomplished the desired miracles yet, the BOJ would be willing to accelerate the same failed policies, such as pushing interest rates deeper into the negative, and try some new things too, such as diving into riskier assets, he said.

But it won’t be predictable. The BOJ could mix and match the next policy steps, depending on the economy, prices, and “market moves, particularly those in Japan,” he said. At least, he’s admitting that the BOJ is slave to the financial markets.

“We won’t necessarily choose a rate cut just because it’s easier to do so,” he said. It could be anything.

Turns out, Japan Inc., which has been coddled and favored by Abenomics even more so than by prior administrations, is not investing enough in Japan despite tax incentives for investments, but instead is focusing capital investments on its projects in other countries. Capital expenditures in Japan, which would boost the economy, are lagging.

So the BOJ has kicked off yet another way to coddle and favor Japan Inc. with a special incentive: another stock market pump-up scheme that is now coming to fruition.

Back in December it promised to buy shares of ETFs that would have to be created for just this purpose. They would incorporate shares of companies that follow the BOJ’s dictum: boost wages, employment, and capital spending.

So Daiwa Asset Management in partnership with index provider MSCI will develop a special stock index for these anointed companies. Nomura Asset Management and other firms in the Nomura group plan to put their own index together. It’s up to them to decide which companies are doing what the BOJ wants them to do to the extent that they deserve being included. And the special ETFs will track those indices.

Nomura Asset Management and Daiwa Asset Management have now completed setting up their ETFs that fit this mold. On April 1, both asset managers filed applications with the Tokyo Stock Exchange for listing these ETFs. They’re expected to make their debut on the TSE in mid-May. Nikko Asset Management, DIAM, and Mitsubishi UFJ Kokusai Asset Management are also working on ETFs to that effect.

Once they start trading, the BOJ will buy shares of these newfangled ETFs at a rate of ¥300 billion ($2.7 billion) a year with the explicit goal of driving up the stock prices of the companies in the ETF. If it works out that way, which is doubtful since practically nothing in the Japanese stock market has worked the way the BOJ had planned, it would be the reward for those companies that asset managers deem obedient to the BOJ’s wishes.

So just how helpful is all this?

Stocks tanked, again. There’s a reason why the Japanese stock market has become a hedge-fund hotel, and why Japanese retail investors try to stay away from it. The Nikkei dropped 2.4% today to 15,733. It has plunged 24.6% from its recent peak in June and is sinking deeper into its bear-market mire.

One thing is clear: While the BOJ has failed in propping up stocks, it has totally succeeded in suffocating the once vast Japanese Government Bond market by buying up every JGB that isn’t nailed down. It’s a marvel, actually. The BOJ’s primary dealers buy the JGBs when the government issues them at a negative yield, knowing that they will soon sell them to the BOJ at an even greater negative yield and thus make a guaranteed profit on the difference.

The 10-year JGB yield is -0.07%. Pension funds, insurance companies, banks, and money managers have begun to unload their JGB holdings. Only the BOJ is buying.

It seems that the BOJ will not stop until it owns most of the JGBs out there. It’s paying the government the negative yield, actually paying the government to borrow money to fund its gargantuan deficits. If this farce continues long enough and more of the older JGBs are rolled over, interest expense in the Japanese budget will turn to income, called “negative interest expense” or some such absurdity yet to be coined. Someday this is going to end in tears. But not tomorrow. Kuroda knows this, hoping that the “after tomorrow” won’t be under his watch. After me the deluge!

All 11 Japanese asset managers that offer money market funds are planning to scuttle them after returning their remaining assets to investors. This marks another big accomplishment of negative interest rates. And the bitter irony? Read…  NIRP Kills Off All Money Market Funds in Japan

END

b) CHINA ISSUES

We brought this to your attention last week.   In its attempt to spur the housing market due to huge numbers of vacant properties, the government relaxed rules on purchases of homes.  Now typically the Chinese home buyer puts up 30% of the money for the home and the banks provide the rest in a mortgage.

Now the big question:  who provides the 30%

Answer:  Peer to Peer lending and this is now getting out of control as NPL’s increase dramatically. Chinese citizens are also using their credit cards for the downpayment

This is an accident waiting to happen:

(courtesy zero hedge)

China’s Latest Problem: Surging Subprime-Housing Loans

Residential real estate is a slippery slope for China (especially when this frequently recurring bubble is in its bursting phase) . A critical problem the country is dealing with right now is the fact that it is now confronted with the realization that blind construction spending, building out ghost cities year in and year out, has resulted in a glut of vacant housing. There are two main issues China faces with an oversupply of vacant housing. First, it means that new construction has been slow, ultimately putting downward pressure on GDP.

Construction growth has plummeted from the highs of just six years ago, and that is helping put a drag on overall GDP.

The second issue, as we discussed earlier, is that real estate makes up a stunning amount of Chinese household assets. As home prices decline, so does investor and consumer confidence, which also ultimately makes its way to the real economy. In fact the impact on the average resident is far greater than when the Chinese stock bubble burst.

The solution for China has been to ease credit conditions, and relax tax laws to help kick start the housing market again. However, this has (predictably) lead to massive sub-prime loan exposure and the accompanying non-performing loans that go with that.

The ease of credit conditions resulted in mind-boggling $520 billion in new loan creation in January.

Of course, much like the US, the drive to inflate housing prices via cheap debt has created an unprecedented amount of NPL’s – NPL’s which incidentally, are eventually going to be part of debt-for-equity swap designed to hide just how insolvent banks really are.

We’d love to stop there, and leave it at your typical bank bailout discussion. Unfortunately, as the Wall Street Journal reports, the problem has become much more wide-spread than just banks.

In China, home buyers typically put down 30% of the cost of a home (as a result of a reduction in down payment requirements in late 2015 when the government decided to once again reflate the housing bubble at all costs). Sometimes, however, the funds to fund even that are unavailable, even with banks dropping helicopter type money. Where are potential buyers getting the money to complete the purchase you ask? Well, from other “investors” of course. As Chinese equities have plummeted, investors have turned to peer-to-peer lending as a way to make money.

Chinese P2P lenders loaned $143mm in January, up from roughly $47mm in July of 2015. The problem is that what these vehicles have done is successfully expose even more people to the world of soured loans in China.

As the following chart shows, P2P lending has exploded higher in recent years.

With all that being said, China has accomplished one thing (other than record bad debt), Tier I housing prices are in fact reflated, however it appears at the expense of the lower tiered markets.

The WSJ has more

Government efforts to tackle a glut of vacant housing in China by spurring home lending have triggered a bigger problem: a surge in risky subprime-style loans that is generating alarm.

* * *

Some economists see parallels between Beijing’s mixed messaging on the housing market and its attempts last year to first talk up a stock-market rally and thencontrol the fallout as shares reversed direction. As a way to help support the broader economy, Chinese regulators made it easier for individuals to borrow to buy stocks, and then scrambled to rein in margin financing.

Now, a sense of déjà vu is looming over the housing market. “Having encouraged borrowing to help reduce the house glut, the government is now realizing the risks and trying to correct itself,” said China economist Zhu Chaoping at UOB Kay Hian Holdings Ltd., a Singapore-based brokerage.

Based on calculations from data from the central bank and consultancy Yingcan, lending from peer-to-peer online firms for down-payment loans made up 0.19% of new mortgage loans in 2015. But that doesn’t give the whole picture, as banks offer the loans under other labels and developers also make such loans.

China Construction Bank Corp., the largest provider of residential mortgages among Chinese lenders, said the rate of nonperforming loans in residential mortgages in 2015 was 0.31%, up from 0.21% in 2014. The bank’s overall nonperforming-loan ratio reached 1.58% last year.

Industrywide, nonperforming loans rose to 1.67% of total loans last year from 1.25% in 2014, according to official data. But analysts estimate the true ratio this year could be 8% or more. In the U.S., 14.6% of subprime loans made in 2005 defaulted, according to the Federal Reserve Bank of Chicago.

Outside China’s megacities, developers offer interest-free down-payment loans to entice buyers. “Our housing sales picked up last year because buyers had a lower down-payment burden to bear, and that is mainly due to us helping to pay for the down payment upfront,” said one Sichuan-based developer.

Housing Minister Chen Zhenggao in mid-March said in some small or midsize cities, rural migrants make up a third of home buyers.

Many home buyers pool the life savings of parents and in-laws to come up with the down payment, setting up for widespread economic pain if price increases fail to materialize.

Down-payment loans are duping young people,” said Jiang Yan, a 32-year-old Shanghai resident, using a term roughly translated as “a greater fool” to describe a spiral of buyers paying irrational prices for assets in the belief they can be sold on for an even crazier price.

All of this goes back to what we wrote about one week ago in “China Tries To “Suddenly” Pop Latest Housing Bubble While Reflating Stock, Car Bubbles

Who knows: perhaps China will be successful. Over the weekend, Suzhou, in the eastern Chinese province of Jiangsu, banned buyers from using credit cards on down payments of property purchases,according to a report in Suzhou Daily, the local-government affiliated newspaper.

Let that sink in for a second: Chinese were using credit cards to fund down payments.

The reason is that new home prices in Suzhou posted their 3rd-biggest monthly surge among 100 major Chinese cities in March, and the city was No. 2 in property-price increases for Feb. The reason why buyers had to use credit cards is because they remain unable to borrow from real-estate agencies, P2P platforms.  The paper adds that banks asked to scrutinize mortgage appliers’ marital status to prevent them securing loans through fake divorce claims, paper said.

Meanwhile, China’s Uwin reported that Shanghai new home sales plunged -60.4% in the past week, with the average new home price dropping -3.4%.

Perhaps the only question is if China has indeed popped its housing bubble (again), which asset class will soar next?

end

EUROPEAN AFFAIRS

A very important commentary from zero hedge this morning. It seems that Mario’s bazooka is not helping those he intended to help.  The fact that he stated that he was going to monetize corporate boards has caused an unprecedented scramble for European bonds leading to a huge illiquidity.  The result has seen the Euro rise against the Dollar as Yellen becomes more dovish. Thus European stocks have suffered greatly. Also the dollar weakness has hurt the Japanese economy by causing the Yen to rise to 110 to the dollar and this has caused huge losses in the Nikkei.  This was done to placate China as a rising dollar will hurt China which in turn would force them to devalue.  For now they are hold

a must read…

(courtesy zero hedge)

For Mario Draghi, None Of This Was Supposed To Happen

Almost exactly one month ago, on March 10,Mario Draghi unveiled his quadruple bazooka, which among other features, included the first ever monetization of corporate bonds (this has unleashed such an unprecedented scramble for European bonds that there are virtually none left in the open market leading to massive illiquidity and forcing yield chasers to sell CDS instead of buying bonds, thus laying the ground work for the next AIG debacle). More importantly, this was Draghi’s latest “whatever it takes” moment, and the “end justifying the means” was for European risk assets to rebound and the Euro to drop. This did not happen.

In fact, none of what has transpired to the assets that Draghi was intent to help, was supposed to happen. Here is DB’s Jim Reid explaining it.

It’ll be four weeks tomorrow that Draghi fired his quadruple bazooka and yet European markets are in apathetic mode. We show the returns of our usual selection of global assets since the cob the night before the last ECB meeting on March 10th. Perhaps markets haven’t been helped by a renewed but unrelated fall in Oil (Brent -9.1%, WTI -6.3%) since this point but it’s noticeable that outside of commodities the worst performers have generally been areas of the market that Draghi tried to help. European banks (-9.5%), FTSE-MIB (-6.0%), IBEX (-4.0%), and the Stoxx 600 (-3.0%) make up most of the other negative returning assets over this period.

The DAX has also slipped into negative territory over the period (-1.6%) after a -2.63% fall yesterday. These five European assets are now down -13.4%, -9.8%, -8.0%, -4.6% and -4.3%, respectively from their post-Draghi highs.

Things haven’t been helped by a +3.5% rally in the Euro over the period as a more dovish Fed and a belief that the ECB might be moving away from further rate cuts have shifted the debate. A more positive reaction has been seen in credit which is comfortably in positive return territory since the announcement and we’d still find it unlikely that many investors will be prepared to short European credit ahead of more details of the ECBs asset purchase plan.

Notwithstanding the current weaker sentiment we’d conclude that a softer dollar is probably better for reducing global systemic risk (not least as it helps China), even it causes headaches for the likes of Europe and Japan. Much attention was yesterday focused on the fact that the Yen briefly strengthened below $110 for the first time since October 2014 and also that the Nikkei is now down -16.7% YTD. The chatter is increasingly that this is a strong signal Japanese policy isn’t currently working in spite of seemingly aggressive action. Recent economic data out of Japan has been soft (Tankan and PMI’s in particular) and the question everyone is starting to ask is what the policy response from the BoJ may be. Further equity purchases have been mentioned while yesterday the former BoJ Governor Iwata suggested that the Central bank will hit its limit of government bond purchases in 2017 and suggested that further deeper negative rates would be more likely instead. The next BoJ meeting is the 28th of April and away from that another key decision is on the fiscal side and whether PM Abe will delay the upcoming hike in the consumption tax, a decision he has sounded ambivalent on so far.

Meanwhile the Stoxx 600, the DAX and European banks are now down -9.5%, -11.0% and -23.7% respectively YTD so there is a fear that Japan and Europe are becoming more resistant to central bank policies. Before getting too concerned, despite a -1.01% fall yesterday we should remember that the S&P 500 is +0.7% YTD and was at YTD highs only 2 days ago. So a softer dollar helps the US, leads to lower systemic risk but causes growth and asset return problems elsewhere.

And there is the post-mortem of the Shanghai Accord (which may or may not have happened): as long as the USD is tentatively weaker and keeps the Yuan contained, Europe and Japan will suffer, not only their capital markets, but also their exports and economies. The alternative is to allow the USD to resume its appreciation and to push both European and Japanese stocks higher, at the risk of inflaming the “Chinese problem” all over again.

How much longer will Draghi (and Merkel) and Kuroda (and Abe) keep their mouths shut and take the punishment unleashed on them by China (and a no longer data-dependent, dovish Yellen) before they snap and unleash the next leg in the global currecny devaluation race. That is the real ¥64 quadrillion question.

END
The following story is extremely important.  Today was the vote on a referendum
on the Euro bloc’s association agreement with Ukraine.  This could lead to a crisis if the voters reject the treaty.  On exit polls, the “no association” is clearly winning. The Eurospectics  Dutch party, the Freedom party  are urging their  citizens to vote no and if this happens it could send the entire euro area into a frenzy especially when the BREXIT vote is two months away:
(courtesy zero hedge)

European “Continental Crisis” Hinges On Critical Threshold In Dutch Referendum

In early January, European Commission President Jean-Claude Juncker warned that a Dutch advisory referendum, which took place today, on the bloc’s association agreement with Ukraine could lead to a “continental crisis” if voters reject the treaty.

In an interview in January for Dutch daily NRC Handelsblad, Juncker said Russia would “pluck the fruits” of a vote in the Netherlands against deepened ties between the European Union and Ukraine. “I want the Dutch to understand that the importance of this question goes beyond the Netherlands,” NRC quoted Juncker as saying. “I don’t believe the Dutch will say no, because it would open the door to a big continental crisis.”

The reason why “When it gets serious, you have to lie” Juncker is so nervous, is that the vote, launched by anti-EU forces, is seen as test of the strength of eurosceptics on the continent just three months before Britain votes on whether to stay in the European Union.

Fast forward to today when the vote has just taken place, and based on initial exit polls, Juncker was dead wrong. According to Reuters, in a rebuke for the government, which campaigned in favor of the EU-Ukraine association agreement, roughly 64 percent voted “No” and 36 percent said “Yes”. 

As a reminder, the political, trade and defense treaty is already provisionally in place but has to be ratified by all 28 European Union member states for every part of it to have full legal force. The Netherlands is the only country that has not done so.

And, it appears, that in a big hit for those who had plotted the Ukraine ascension, the Dutch may have just frozen Ukraine dead in its tracks.

According to Reuters, Eurosceptics had presented the referendum as a rare opportunity for their countrymen to cast a vote against the EU and the way it is run – including its open immigration policies.

But here lies the rub. Although it is non-binding, it will be considered as an advisory referendum by the government if turnout reaches 30 percent. Otherwise it will be considered null and void and need not be taken into consideration by the government.

And while according to some initial exit polls, the turnout was just 28%, or below the required threshold, the most recent data has the turnout as 32%, or sufficient.

Still, this number may change before the night is over, so keep a close eye on this otherwise insignificant vote in the Netherlands as it may have momentuous consequences for the country and the entire European project.

The turnout, far lower than in national or local elections, reflected many voters’ puzzlement at being asked to vote on such an abstruse topic. “Yes” voters were certainly confused: “I think the people who asked for this referendum have made a huge commotion,” said Trudy, a “Yes” voter in central Amsterdam. “It’s nonsense, which cost lots of money, and it’s about something nobody understands.”

Which, of course, is what anyone who is in the vast minority will say.

Meanwhile, Geert Wilders, leader of the eurosceptic Freedom Party, urged voters to send a message to Europe by saying “No”. “I think many Dutchmen are fed up with more European Union and this treaty with Ukraine that is not in the interests of the Dutch people,” he told reporters. “I hope that later, both in the United Kingdom and elsewhere in Europe, other countries will follow.”

As Reuters adds, a clear vote against the treaty in the run-up to Britain’s June 23 referendum on whether to quit the EU could escalate into a domestic or even a Europe-wide political crisis.

Dutch leaders say voting against the treaty would also hand a symbolic victory to Russian President Vladimir Putin.

It is unclear if anti-Russian sentiment swayed voters nearly two years on but increasing resentment among the Dutch at the consequences of the EU’s open-border policies has propelled Wilders – who openly opposes Muslim immigration – to the top of public opinion polls.

In many ways, Wilders is the local Donald Trump.

 

Reuters also notes that the ballot also taps into a more deep-seated anti-establishment sentiment highlighted by a resounding rejection in 2005 of a European Union constitution, also in a referendum.

However, just like in Greece, the gears are already set in motion to ignore the majority vote.  In parliament, Prime Minister Mark Rutte’s conservative VVD party has said it would ignore a narrow “No” vote, while junior coalition partner Labour has said it would honor it, setting the stage for a split.

But ignoring a clear “No” would be risky for Rutte’s already unpopular government — which has lost further ground over Europe’s refugee debate – ahead of national elections scheduled for no later than March 2017.

While we are confident that ultimately the will of the “No” voters will be ignored, just as it was in Greece, the resentment toward an oligarchic class which clearly can only operate under a non-democratic, call it despotic, regime is sure to spread. As for the Netherlands, while nothing may happen for the next 12 months, it will take some very brazen vote tampering next year to perpetuate a status quo which no longer serves the majority of its own country. 

Average:

OIL MARKETS

Oil rises after the DOE confirms the biggest oil inventory draw since January.  However inventories at Cushing Oklahoma and distillates rises

(courtesy zero hedge)

Crude Jumps After DOE Confirms Biggest Oil Inventory Draw Since January; Cushing, Gasoline, Distillates Rise

Following yesterday’s API data, which showed the biggest draw of 2016 with a 4.6 million reduction in oil inventories, everyone was keenly looking forward to today’s DOE data. Moments ago the DOE indeed confirmed the API data, reporting that in the past week oil inventories declined by 4.949MM, more than the API print, down from last week’s 2.3MM and well below the expected 2.850MM increase.

This was the largest draw since the first week of January.

However, while in the recent past the crude builds were offset be declines in gasoline and distillate reductions, this time it was a mirror image, as first Gasoline rose by 1.438MM, above the -1.1MM draw, while Distillate increased by 1.799MM, above the -850K draw expected.

This happened even as Refinery utilization rose 1.0% W/W, above the 0.35% expected, operating at a 91.4% of capacity in the past week.

As a result Cushing holdings rose by 0.3MM, rising to 66.3MM barrels and once again approaching its operational capacity.

Some more headlines from the report:

GASOLINE STOCKS +1.4M TO 244.0M APR 1 WK
CUSHING STOCKS +0.3M TO 66.3M BARRELS IN APR 1 WK
JET FUEL DEMAND -3.1% VS SAME 4 WEEKS LAST YEAR
DISTILLATE DEMAND -6.8% VS SAME 4 WEEKS LAST YEAR
GASOLINE DEMAND +4.2% VS SAME 4 WEEKS LAST YEAR
DISTILLATE STOCKS +1.1% IN APR 1 WEEK, +28.4% YR/YR
CRUDE OIL STOCK EX SPR -0.9% APR 1 WK, +9.8% Y/Y
GASOLINE STOCKS +0.6% IN APR 1 WEEK, +6.1% YR/YR
TOTAL PRODUCT DEMAND +1.5% VS SAME 4 WEEKS LAST YEAR
On the news, oil initially spiked on the draw headline, then erased all gains focusing on gasoline and distillate build, and then soared for the second time rising as high as $37.40 as algos focused on all those things they ignored in previous DOE reports.

end
And the big drawdown provided the momentum for the stocks in the NY to rise:
(courtesy zero hedge)

Stocks Surge From Day’s Lows To Highs In Minutes, Tracking Oil Tick For Tick

In recent weeks, oil traditionally jumped following DOE data that showed inventory builds because, well, gasoline and distillate inventories had gone down. Today, oil jumped… actually jumped for the second time in just over 12 hours on the same exact catalyst first reported by API last night, when DOE confirmed that in the past week there was a substantial drawdown, something previously ignore when it was to the upside; and as we said earlier unlike in recent weeks however, algos decided to ignore the build in all other categories including gasoline, distillates and Cushing, and simply decided to surge higher because finally the one thing they had been waiting for so long, finally took place.

The result: WTI has rose as high as $37.60 before starting to fade.

That however is irrelevant for S&P algos, which soared from today’s lows to intraday highs in the span of minutes, using oil as the momentum ignition catalyst, and never looking back.

And now you know what stocks went from low of the day to highs, in the span of minutes.

end

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

Euro/USA 1.1353 down .0028 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 110.37 DOWN 0.001 (Abe’s new negative interest rate (NIRP)a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP)

GBP/USA 1.4084 DOWN  .0071 (STILL THREAT OF BREXIT)

USA/CAN 1.3168 UP.0026

Early THIS WEDNESDAY morning in Europe, the Euro FELL by 28 basis points, trading now WELL above the important 1.08 level RISING to 1.1353; 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, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Chinese yuan was DOWN in value (onshore) The USA/CNY UP in rate at closing last night: 6.4833 / (yuan UDOWN/

In Japan Abe went BESERK with NEW ARROWS FOR HIS Abenomics WITH THIS TIME INITIATING NIRP . The yen now trades in a NORTHBOUND trajectory RAMP as IT settled UP in Japan by LESS THAN 1 basis points and trading now well BELOW that all important 120 level to 111.66 yen to the dollar. NIRP POLICY IS A COMPLETE FAILURE AND ALL OF OUR YEN CARRY TRADERS HAVE BEEN BLOWN UP/SIGNALS TO THE MARKET THAT THEY MAY DO A U TURN ON  NIRP AND INCREASE NEGATIVITY

The pound was DOWN this morning by 71 basis points as it now trades WELL BELOW the 1.44 level at 1.4084.

The Canadian dollar is now trading DOWN 26 in basis points to 1.3168 to the dollar.

Last night, Chinese bourses AND JAPAN were MIXED/Japan NIKKEI CLOSED DOWN 17.46  OR 0.11%/HANG SANG: CLOSED UP 29.67 OR 0.16%/ SHANGHAI CLOSED DOWN 2.47 POINTS OR 0.08% EVEN WITH  LAST 2 HR RESCUE/    / AUSTRALIA IS HIGHER BY 0.67% / ALL EUROPEAN BOURSES ARE MIXED, as they start their morning/.

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 and the yen carry trade HAS BLOWN up/and now NIRP)

3. Short Swiss franc/long assets blew up ( Eastern European housing/Nikkei etc.

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

The NIKKEI: this WEDNESDAY morning: closed DOWN 17.46 OR 0.11%

Trading from Europe and Asia:
1. Europe stocks MIXED AS THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED IN THE GREEN  . ,Shanghai CLOSED IN THE RED / Australia BOURSE IN THE GREEN: /Nikkei (Japan)CLOSED/IN THE RED/India’s Sensex in the GREEN /

Gold very early morning trading: $1225.25

silver:$15.06

Early WEDNESDAY morning USA 10 year bond yield: 1.74% !!! UP 2 in basis points from TUESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.57 UP 2 in basis points from TUESDAY night.

USA dollar index early WEDNESDAY morning: 94.86 UP 24 cents from TUESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers WEDNESDAY MORNING

end

 

And now your closing WEDNESDAY NUMBERS

 

Portuguese 10 year bond yield:  3.18% UP 3 in basis points from TUESDAY

JAPANESE BOND YIELD: -.058% DOWN 1/5 in   basis points from TUESDAY

SPANISH 10 YR BOND YIELD:1.51% UP 2 IN basis points from TUESDAY

ITALIAN 10 YR BOND YIELD: 1.29  UP 2 IN basis points from TUESDAY

the Italian 10 yr bond yield is trading 22 points lower than Spain.

GERMAN 10 YR BOND YIELD: .119% (UP 2 IN BASIS POINT ON THE DAY)

end

 
IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

 

Closing currency crosses for WEDNESDAY night/USA dollar index/USA 10 yr bond: 2:30 pm

Euro/USA 1.1415 UP .0035 (Euro UP 35 basis points/still represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN ,ESPECIALLY TODAY WITH THE RELEASE OF FOMC

USA/Japan: 109.54 DOWN .820 (Yen UP 82 basis points) and  a CONTINUAL major disappointment to our yen carry traders and Kuroda’s NIRP. They stated that  NIRP would continue.

Great Britain/USA 1.4229  DOWN .0025 Pound DOWN 25 basis points/(POOR ECONOMIC DATA/ Brexit concern.)

USA/Canada: 1.3105  UP  .0.0036 (Canadian dollar UP 36 basis points despite  oil being up (WTI = $37.66)

XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

This afternoon, the Euro was UP by 35 basis point to trade at 1.1415   as the markets STILL REACT TO YELLEN’S DOVISHNESS (BEIGE BOOK TODAY EMPHASIZED DOVISHNESS ON MOST OF FED GOVERNORS/PRESIDENTS

The Yen ROSE to 109.54 for a GAIN of 82 basis pints as NIRP is a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.

The pound was DOWN 25 basis points, trading at 1.4229 ( BREXIT CONCERNS/POOR ECONOMIC DATA)

The Canadian dollar ROSE by 36 basis points to 1.3105, as price of oil was UP today (as WTI finished at $37.66 per barrel)

The USA/Yuan closed at 6.4860

the 10 yr Japanese bond yield closed at -.058% DOWN 1/5 BASIS  points in yield

Your closing 10 yr USA bond yield: UP 2 basis point from TUESDAY at 1.75% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.58 UP 3 in basis points on the day and will be worrisome as China/Emerging countries continues to liquidate USA treasuries ( HUGE POLICY ERROR)

\

Your closing USA dollar index, 94.44 DOWN 18 in  cents on the day at 2:30 pm

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for WEDNESDAY

London:  CLOSED UP 70.40 POINTS OR 1.16%
German Dax :CLOSED UP 61.15 OR 0.64%
Paris Cac  CLOSED UP 34.36  OR 0.81%
Spain IBEX CLOSED UP 10.90 OR 0.13%
Italian MIB: CLOSED UP 131.61 OR 0.77%

The Dow was up 112.73 points or 0.64%

Nasdaq up 76.78 points or 1.59%

 
WTI Oil price; 37.66 at 2:30 pm;

Brent Oil: 39.65
USA dollar vs Russian Rouble dollar index: 67.89 (Rouble is UP 61 /100 roubles per dollar from yesterday)AS the price of Brent and WTI OIL ROSE
end

 

 

This ends the stock indices, oil price, currency crosses and interest rate closes for today

 

Closing Price for Oil, 5 pm/and 10 year USA interest rate:

 

WTI CRUDE OIL PRICE 5 PM: $37.75

BRENT: 39.76

USA 10 YR BOND YIELD: 1.75%

USA DOLLAR INDEX:94.51 down 11 cents on the day

 

END

 

And now your more important USA stories which will influence the price of gold/silver

Trading Today in Graph form:

 

Stocks Soar On Oil Ignition, Biotech Bonanza

In what was shaping up to be a low-volume snoozer of a day, things changed dramatically at 10:30am when the DOE confirmed last night’s API data according to which US crude inventories had their biggest weekly decline since January even as distillates and gasoline stocks rose. That headline sent WTI soaring by [  ]%, the most since March 16.

 

The crude spike was all the “momentum ignition” that futures needed to stage a dramatic surge, soaring from 2035, jumping as much as 20 points higher to 2055 before the slightly more hawkish than expected FOMC Minutes reported pushed ES lower by 10 point. And then, out of nowhere, a massive buying program emerged out of nowhere, and sent the E-mini tofresh highs.

 

It wasn’t just oil: an even more notable notable move took place in the biotech sector, which surged by over 5%, its biggest intraday gain since November 2011, and accounted for nearly half of the S&P500’s gain. The reason was the collapse of the Valeant-Allergan deal. No really: while talking on CNBC, Brent Saunders said that now that the deal has been pulled, Allergan could weigh deals. That is all the slgos needed to hear and unleashed a massive frontrunning spree, buying up every N/M PE company they could find.

 

To be sure, as equity algos were scrambling into risk, the VIX was getting crushed, and while it was a last second VIX slam that prevented the S&P from closing red for the year yesterday, today’s the selling started early, and from 16 the VIX was back at just around 14 at last check.

 

Not everyone was rushing into a Risk On mode, however: while the 10Y sold off modestly, it was at 1.75%, back to Monday’s levels.

 

But that didn’t stop the S&P500 from closing at the day highs, some 1% higher, while the Nasdaq raked in 1.5% on hope the biotech bubble may be rekindled.

All this took place as the dollar tumbled from overnight highs, sending the JPY and the EUR surging, and resulting in even more headaches for Kuroda and Draghi, with the latter now once again forced to think how to create another Bund “hit” like last May as the yield on the 10Y Bund is almost at all time lows.

The USDJPY plunged below the critical support of 110, sliding as low as 119.30, and at last check was trading around 109.70, virtually assuring that the BOJ will have to do something in the coming weeks to push the Japense currency weaker once again.

 

The bulk of the sector moves were summarized by Credit Suisse as follows:

  • Biotech outperforms as investors try and find what companies PFE targets next…and what AGN does next with the $30bn they get from TEVA –likely keeps M&A interest in biotechs, especially smid caps alive
     
  • Asset Managers outperform – DOL Fiduciary Standards less burdensome (Longer phase in time through April 2018…Grandfathering for existing plans …Disclosure requirements were relaxed) – WETF, LPLA, RFJ, SF etc
  • Ferts holding in despite weak MON #s; some debate about whether they would have to update guidance again today (on FX and/or glyphosate) so maybe relief no further guide down but I don’t think many expected a change
  • Energy ripping — Crude at day’s high and Oil E&P, Oil Servs and most subgroups all rallying.  We highlighted Dislocation between HY cash and energy prices this morning – most thought it read bearish for HY (as opposed to bullish for energy) but maybe not
  • Lighting plays hit on CREE (-19% on warning) …ETN read thru
  • Paper names down on BAML call –initiates KS at UP and downgrades UFS to UP
  • Banks underperform;  Several street downgrades (brokers #s continue to get cut)
  • German bunds near record lows on a flight to safety
  • Industrial short cycle names hit on MSM read thru; March Sales being worse than February is driving conversations with clients about “short cycle trends weakening sequentially” as a potential sign that the rally we have seen in short cycle stocks can’t be sustained
  • Casinos weak on WYNN #s – Macau just below expectation

Finally, some observations from CS on what to look forward to as we are about to enter the prime of earnings season: here’s what stands out

One of our favorite ways to gauge sentiment around earnings at the sector and industry group level is by tracking the pace of upward EPS estimate revisions.  At the sector level, revisions weakness has been broad based, with no sectors seeing more than 50% of revisions to the upside in the past 13 weeks. However, two of the weakest sectors – Materials and Industrials – have started to rebound off of post financial crisis lows. Consumer Discretionary revisions trends have also seen an uptick in recent weeks.  Revisions in many defensive oriented sectors – Staples, Telecom and Utilities – had been in decline but have recently begun to show signs of improvement. Banks, Diversified Financials and Real Estate have seen revisions trends fall to levels near or below past lows (post ’09), but the latest data shows signs of an uptick so we are watching for a bottom. Banks in particular recently saw revisions hit extreme lows.  Pharma/Biotech revisions have fallen to post ’09 lows, with no signs of a bottom emerging as of yet.

So it’s all really bad news (but thankfully there are buybacks, and non-GAAP adjustments, and multiple expansion, and of course, the Fed) but because the terrible is becoming a little less terrible for a few companies, just BTFD.

And now we sit back and watch what crazy things Peter Panic may do tonight to offset the collapse in the USDJPY to levels not seen in one and a half years, which have made a total mockery out of Japan’s QQE and NIRP.

end

Pfizer walks away:

(courtesy zero hedge)

Pfizer, Allergan Terminate $160 Billion “Inversion” Merger; Banks Lose Over $100MM In Fees

Less than two days after the US Treasury cracked down on inversion deals, and one deal in particular, Pfizer’s pharma record $160 billion acqisition of Allergan, moments ago the two companies announced the deal is officially over.

From the press release:

Pfizer Announces Termination of Proposed Combination with Allergan

Pfizer Inc. today announced that the merger agreement between Pfizer and Allergan plc has been terminated by mutual agreement of the companies. The decision was driven by the actions announced by the U.S. Department of Treasury on April 4, 2016, which the companies concluded qualified as an “Adverse Tax Law Change” under the merger agreement.

“Pfizer approached this transaction from a position of strength and viewed the potential combination as an accelerator of existing strategies,” stated Ian Read, Chairman and Chief Executive Officer, Pfizer. “We remain focused on continuing to enhance the value of our innovative and established businesses. Our most recent product launches, including Prevnar 13 in Adults, Ibrance, Eliquis and Xeljanz, have been well-received in the market, and we believe our late stage pipeline has several attractive commercial opportunities with high potential across several therapeutic areas. We also maintain the financial strength and flexibility to pursue attractive business development and other shareholder friendly capital allocation opportunities.”

“We plan to make a decision about whether to pursue a potential separation of our innovative and established businesses by no later than the end of 2016, consistent with our original timeframe for the decision prior to the announcement of the potential Allergan transaction,” continued Read. “As always, we remain committed to enhancing shareholder value.”

In connection with the termination of the merger agreement, Pfizer has agreed to pay Allergan $150 million for reimbursement of expenses associated with the transaction.

The biggest losers here, aside from senior AGN management who stood to cash out of their newly vested, debt-propped up shares, are the advising investment banks among which are Goldman, Guggenheim, Centerview, Moelis & Company (advising Pfizer), who were supposed to split $100 million among each other as part of the deal. JPMorgan and Morgan Stanley were advising Allergan and they two will miss out on dozens of millions in banking revenue.

 

end

 

Beige book is out and many favoured no rate hike, only two wanted a hike.  What happened to the third member who days before suggested a rate hike?  The real problem is of course China.  They warned that if they went ahead with a rate hike, they would devalue hugely (maybe by 20%) which would send a massive deflationary force around the world, destroying commodities, destroying emerging markets and the banking sector.  The Fed paid attention to China!!

(courtesy zero hedge)

 

FOMC Minutes: Some “Favored April Rate Hike”, Everyone Blamed “Global” Risks

The FOMC minutes from the uberdovish March meeting were just released. Here are the highlights:

  • SEVERAL ON FOMC ARGUED AGAINST APRIL HIKE AS SOME FAVORED IT
  • PARTICIPANTS HAD ‘RANGE OF VIEWS’ ON APRIL HIKE
  • MOST PARTCPNTS AGREED W/RT HOLD; COUPLE WANTED HIKE
  • MANY ON FOMC SAW BIGGER GLOBAL RISKS WARRANTING POLICY CAUTION
  • SEVERAL NOTED CAUTION WOULD BE PRUDENT IN APRIL DECISN
  • FOMC SAW NEXT MOVE BASED ON DATA ASSESSMENT, NOT CALENDAR DATE
  • MANY ON FOMC SAID PRUDENT TO WAIT BEFORE NEXT TIGHTENING STEP
  • NUMBER PART JUDGED HEADWINDS WOULD SUBSIDE ONLY SLOWLY
  • MANY PARTIC SAID GLOBAL ECON STILL POSED RISK TO US
  • SEVERAL PARTICPNTS ARGUED FOR PROCEEDING CAUTIOUSLY
  • SEVERAL VOTING MEMBERS NOTED CURRENT FFR LOWER THAN DEC

Market reaction is muted, with a modest dip following the headline that some wanted an April rate hike, but the most notable mover is the USDJPY, which just crashed to fresh October 2014 lows of 109.34. Kuroda may want to wake up soon.

But the most notable finding: mention of the word global was approximately 22 times.

Just when did the central bank of the US, where pretty much everyone but the Fed is now talking about stagflation, also become the reserve bank of the world.

* * *

Here is the discussion of April:

In light of this expectation and their assessment of the risks to the economic outlook, several expressed the view that a cautious approach to raising rates would be prudent or noted their concern that raising the target range as soon as April would signal a sense of urgency they did not think appropriate. In contrast, some other participants indicated that an increase in the target range at the Committee’s next meeting might well be warranted if the incoming economic data remained consistent with their expectations for moderate growth in output, further strengthening of the labor market, and inflation rising to 2 percent over the medium term.

The Fed as “global” stock market barometer:

Participants generally agreed that the incoming information indicated that the U.S. economy had been resilient to recent global economic and financial developments, and that the domestic economic indicators that had become available in recent weeks had been mostly consistent with their expectations. Moreover, the sharp asset price movements that occurred earlier in the year had been reversed to a large extent, but longer-term interest rates and market participants’ expectations for the future path of the federal funds rate remained lower. Taking these developments into account, participants generally judged that the medium-term outlook for domestic demand was not appreciably different than it had been when the Committee met in December.

And here is the real reason why there will be no rate hike for a long time: the Fed is now terrified of the world’s (read China’s reaction function):

  • Participants discussed the implications of the globaleconomic and financial developments of the past few months for the medium-term outlook, and they offered different characterizations of the risks to the U.S. economy stemming from these developments.
  • Many participants expressed a view that the globaleconomic and financial situation still posed appreciable downside risks to the domestic economic outlook.
  • Many participants indicated that the heightenedglobal risks and the asymmetric ability of monetary policy to respond to them warranted caution in making adjustments to the stance of U.S. monetary policy.
  • Participants generally agreed that the incoming information indicated that the U.S. economy had been resilient to recent global economic and financial developments.
  • Most participants judged it appropriate to maintain the target range for the federal funds rate at ¼ to ½ percent at this meeting while noting that globaleconomic and financial developments continued to pose risks.
  • Economic activity had been expanding at a moderate pace despite the global economic and financial developments of recent months.
  • They saw global economic and financial developments as continuing to pose risks.
  • Global economic and financial developments continue to pose risks.

Here are the full minutes (link)

 

 

 

end

 

The following is troubling:  median home prices in San Francisco skyrocking. One needs an income of $250,000 to qualify for a purchase of a home:

(courtesy zero hedge)

 

San Francisco Home Prices: “This Is Troubling”

The following chart from the Paragon Real Estate Group, showing median house prices in San Francisco, is troubling, for reasons which do not need an explanation.

 

And here is a bonus chart:it shows the minimum amount of qualifying income one needs to purchase a “median priced house” based on prevailing prices and mortgage interest rates, with 20% downpayment, including taxes and insurance.

Source: Paragon

David Stockman talks about the Donald:

(courtesy Stockman/ContraCorner)

by  • April 4, 2016

Even by The Donald’s standards his 95 minute long interview with the Washington Post was remarkable. He let loose so many stray shots as to leave the establishment press clucking in a chorus of disbelief. It undoubtedly started with the stink bomb he lobbied at the ” all is awesome” meme about the US economy and stock market:

Donald Trump said in an interview that economic conditions are so perilous that the country is headed for a “very massive recessionand that “it’s a terrible time right now” to invest in the stock market, embracing a distinctly gloomy view of the economy that counters mainstream economic forecasts.

The New York billionaire dismissed concern that his comments — which are exceedingly unusual, if not unprecedented, for a major party front-runner — could potentially affect financial markets.

Now there’s an irony. Presumably the last paragraph was written by Bob Woodward who was once the bête noir of the Washington/Wall Street establishment. But like nearly everyone else in the Imperial City he has been drinking the Cool-Aid for so many decades that he was apparently shocked by Trump’s unfiltered bit of truth-telling about an economy that is failing 90% of the American public.

Worse still, Woodward was apparently dumbfounded that Trump didn’t self-censor his thoughts about the economic troubles ahead for fear of unsettling the Wall Street casino.

That’s right. The cult of the stock market and the notion that the Fed literally controls and powers the US economy through the transmission belt of Wall Street and soaring financial asset prices has gotten so deeply embedded in the establishment narrative that even the pedigreed left-wing of the journalistic establishment has been coopted into reflexively chanting the meme.

So imagine Woodward’s consternation when Trump——-the very embodiment of a billionaire financial tycoon—–let loose with the following counterpunch:

“I know the Wall Street people probably better than anybody knows them,” said Trump, who has misfired on such predictions in the past. “I don’t need them.”

Those last five words are what has the Washington GOP establishment in a cold sweat. The fact is, the Washington based apparatus of the GOP is beholden lock, stock and barrel to Wall Street and the broader financial industry for sustenance. That is, PAC funds and the K-street influence peddling rackets which make life in the Imperial City so copasetic for careerist politicians and their apparatchiks.

Indeed, there is an obvious quid pro quo. The job of the Washington GOP leadership amounts to keeping the free market yokels who frequently get sent to Washington from the conservative provinces busy on everything except the core problem. That is, whopping it up about neocon war missions abroad, vastly exaggerated terrorist threats at home, the supposed affliction of illegal immigrants who actually do much of America’s low-skill work and the pro-statist agenda of the right-to- lifers, anti-gays and the various and sundry similarly benighted projects of the red state bible-thumpers.

Meanwhile, capitalist prosperity is in crisis because the central bank’s free money is destroying honest price discovery in the financial markets, deforming the free market allocation of investment and other economic resources, crushing savers, retirees and real entrepreneurs and generating unspeakable windfalls to traders and speculators.

Indeed, if you are partial to tin foil hats you might even believe that the GOP leaderships kid gloves approach to the Fed had in mind the generation of a Bernie Sanders all along. Bernie has arisen because the sum and substance of Fed policy is massive inflation of financial asset values, and therefore a reverse robin hood redistribution of wealth to the 1%.

So what could be more convenient to mobilize the red state base and the blue state left-behinds than a socialist candidacy on the Democratic ticket, or, failing that, a desperate Hillary Clinton who sounds like one?

And do not doubt that the GOP establishment is in league with the Eccles Building and its Wall Street suzerains. Do you remember who was chief economic advisor to Mitt Romney?

None other than a Columbia business professor and Wall Street shill by the name of Glenn Hubbard. During the heat of the campaign he kept the candidate radio silent on the fundamental issue of our times—–the Fed’s usurpation of vast powers of central monetary planning—–and even averred that Bernanke had been doing a fine job. Said professor Hubbard, he should be considered for reappointment!

And don’t even mention the clueless action of Senator McCain in 2008. The man actually suspended his campaign so that he could come back to Washington and help Bush and Paulson bailout Wall Street; and to authorize the Fed to unleash a torrential spree of money printing that has virtually transformed Wall Street into a dangerous and unstable gambling casino.

Woodward’s snarky observation that Trump has “misfired on such predictions in the past” was especially ripe, but absolutely consistent with the establishment meme that all is fixed and getting better by the day.

Actually, when did the Fed and its gaggle of Wall Street camp-followers ever predict a recession and subsequent financial market crash? There was not a peep from those precincts in 2000 or 2007. It was all about tommyrot like goldilocks, the Great Moderation and a supposedly minor subprime disturbance that was “well contained”.

Yes, most of what Trump has thrown into the debate is outlandish, regrettable, outright deplorable and just plain wrong.  The Wall, the ban on Muslims, his call for more torture of enemies, his dog-whistling on race, his cop pandering, his no-nothing position against social security reform and his blatantly sexist name-calling fit some or all of those categories.

And to the outlandish category, now add the blatantly stupid. To wit, Trump’s promise that he will eliminate the national debt in eight years!

Even there, however, he can perhaps be praised with faint damn. At least he recognizes that our current $19 trillion of national debt will be $22 trillion by the time the next President is in the saddle, and that its a short slide to national bankruptcy from there.

At the end of the day, Trump has petrified the Wall-Street Washington establishment for good reason. He loudly rejects the War Party consensus on foreign intervention and has tapped into a deep vein of main street alienation from the phony recovery and economic fixes promulgated by the Fed and its beltway henchman.

We had another jobs Friday celebration by the latter and it amounted to the same old, same old.  That is, purportedly 100,000 new jobs in retail and bars and restaurants, but no progress where it counts. There are still nearly two million fewer full-time, full-pay jobs than there were when Bill Clinton was packing up his bags to leave the White House.

Breadwinner Economy Jobs- Click to enlarge

Even if the likes of Bob Woodward haven’t figured this out, the unschooled Donald Trump apparently has.  No wonder they fear Trump Unbound.

The full Washington Post Interview follows:

https://www.washingtonpost.com/politics/in-turmoil-or-triumph-donald-trump-stands-alone/2016/04/02/8c0619b6-f8d6-11e5-a3ce-f06b5ba21f33_story.html

END

 

Let us close with this interview of Jim Rickards with Greg Hunter of USA Watchdog

(courtesy Jim Richards/Greg Hunter)

 

Biggest Collapse Ever-Get Gold Now-James Rickards

By Greg Hunter’s USAWatchdog.com

Financial expert and best-selling author James Rickards says another economic collapse is coming. Rickards contends, “It’s very clear, and you can prove this scientifically.  The next collapse will be bigger than anything in history or maybe since the Bronze Age or the fall of the Roman Empire.  Why do I say that? . . . We have these things coming together.  The system is larger.  That means systemically it is exponentially more risky.  The central banks don’t have any dry powder, and it is just a matter of time before the collapse comes.  In 1987, the stock market fell 22% in one day, not in a week or a month, but one day.  Today, that would be the equivalent of a 4,000 point drop. . . . In 1998, the Long Term Capital crisis shut almost every stock and bond exchange in the world.  In 2000, the Dot Com; 2007, the mortgage crisis; and in 2008, you had Lehman and AIG (failures).  In other words, these events are not rare, and they happen every three, four or five, six or eight years.  It’s not like clockwork, but nobody should be surprised if it happened tomorrow.  We’ve got the systemic scale.  We’ve got exponential increase in risk.  The central banks are out of dry powder, and it’s been eight years since the last one.  It’s just a matter of time.”

Rickards, whose latest book is called “The New Case for Gold,” says the yellow metal is a necessary survival tool to combat the next crash.  Rickards, explains, “Part of the reason for having gold is, the next time, the response is going to be very different.  The last time, they printed money to bail out the system.  They can’t do that again because they never took the money back.  The balance sheets are still bloated. . . . All the global central banks are in terrible shape.  The central bank balance sheets look like really bad, highly leveraged hedge funds.  So, what are they going to do instead?  . . . . They are going to flood the zone with trillions of SDR’s (Special Drawing Rights currency from the IMF).  That’s going to be highly inflationary.  The other thing that’s going to happen is they are going to lock down the system.  They are not going to bail out the banks.  They are going to close the banks, close the exchanges and suspend redemptions in money market funds.  They will reprogram the ATM’s so you can only get $300 for gas and groceries.  It’s going to look like Greece or Cyprus.”

What is Rickards advice to the man on the street? Rickards says, “This will be a bigger collapse than ever before.  The only rescue will come from the IMF, which will be inflationary, and they will lock you out of the system, which means you won’t be able to get your money.  So, my advice is toget some gold now. Don’t wait for the panic.  Don’t wait for the price spike because you won’t get it when the buying panic kicks in.  So, get your gold now, and put it in a safe place.  Gold is non-digital.  You can’t hack it.  You can’t erase it.  You can’t freeze it.  That will see you through the crisis.”

On top of that, Rickards says, “The Fed wants inflation . . . . They are not getting it, but they have to have it. What does that mean for policy?  That means they are not going to give up . . . . They are going to keep trying until they get inflation, and when that happens, you are going to wish you had your gold.”

How much will gold be in the future? Richards calculates, “$10,000 per ounce with 40% backing . . . if you had 100% backing (of the dollar), that number would be $50,000 per ounce.  The implied non-deflationary price of gold, depending on your assumptions, is between $10,000 and $50,000 per ounce.  If you are going to have a gold standard and you want to avoid the blunder of the 1920’s, you are going to have gold at least at $10,000 per ounce and possibly much higher.  I explain all this in my book.”

Join Greg Hunter as he goes One-on-One with James Richards, the best-selling author of the brand new book called “The New Case for Gold.”  

(There is much more in the video interview.)

end

See you tomorrow night

Harvey

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