April 14/Deutsche bank to give evidence on the class action probe on gold and silver/they will provide the necessary emails to the court/ this is huge news/Another 3.26 tonnes of gold leaves the GLD and this “gold” was no doubt used in the raid today/China devalues again by the most in 3 months and thereby sends another message to the USA not to raise rates/Singapore announces that it will ease by not allowing its Singapore dollar to rise/they state economy is in an awful state/

 

Good evening Ladies and Gentlemen:

Gold:  $1,225.00 down $21.80    (comex closing time)

Silver 16.17  down 15 cents

In the access market 5:15 pm

Gold $1226.60

silver:  16.13

 

Last night , I wrote to expect a raid due to the high OI in both gold and especially silver.  The bankers did not disappoint me and despite the fact that Deutsche bank is going to spill the beans on the other banks in both gold and silver, the bankers still had enough chutzpah to attack today.

 

Today’s big news came from Deutsche bank settling a USA class action lawsuit. For once the USA Attorney General will have no say on this. DB must provide and they stated that they would supply all the emails between the parties as per the manipulation of silver and gold.

The real question is what prompted DB to settle? Could they have received a little tap on the shoulder from the Bundesbank, angry that gold is not coming their way these past 3 months from the FRBNY as promised?

Tonight the OI for silver rose dramatically again up to 189,000 contracts and again at multi year highs. The bankers only knocked off a few gold leaves with yesterday’s OI reading in gold.  Today no doubt, more leaves fell with the raid on gold today.  But in silver they are having an awful time!!

We will just have to wait and see what tomorrow brings!.

Let us have a look at the data for today

.

At the gold comex today, we had a HUGE delivery day, registering 860 notices for 86,000 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 218.855 tonnes for a loss of 84 tonnes over that period.

In silver, the open interest rose by another whopping 4,253  contracts UP  to 189,053 as the silver price was UP 10 cents with respect to yesterday’s bullish trading. In ounces, the OI is still represented by .948 billion oz or 135% of annual global silver production (ex Russia ex China). We are now at multi year highs in OI with respect to silver

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

In gold, the total comex gold OI fell BY A rather small  2886 contracts DOWN to 501,637 contracts as the price of gold was DOWN $12.60 with YESTERDAY’S HUGE RAID (at comex closing).

We had another huge change in the GLD,  a withdrawal of 3.26 tonnes of gold / thus the inventory rests tonight at 810.08 tonnes.   I rather suspect that the bankers need to get their hands on physical quickly and the thus raided the GLD cookie jar No doubt this gold was used in the attack today.  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 a rather strange withdrawal of 1.903 million oz of silver despite silver’s rise.  No doubt that this silver was used in the fruitless attempt at knocking down the silver price.  Thus the Inventory rests at 334.248 million oz.

.

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

1. Today, we had the open interest in silver RISE by 4,253 contracts UP to 184,800 as the price of silver was UP 10 cents with YESTERDAY’S trading.Today, the bankers SUCCEEDED IN THEIR ATTACK ON GOLD BUT NOT SILVER. The total OI for gold FELL by 2886 contracts to 501,637 contracts as gold was DOWN $12.60 in price from yesterday’s level.  THE HIGH OI FOR GOLD AND SILVER WAS THE REASON FOR ANOTHER RAID TODAY.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)

 

(Harvey)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed UP 15.72 POINTS OR 0.51%  /  Hang Sang closed UP 179.10 OR 0.85%. The Nikkei closed UP 529.83 POINTS OR 3.53% . Australia’s all ordinaires  CLOSED UP 1.27%. Chinese yuan (ONSHORE) closed DOWN at 6.4829.  Oil ROSE  to 41.87 dollars per barrel for WTI and 44.27 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4939 yuan to the dollar vs 6.4829 for onshore yuan. LAST NIGHT CHINA DEVALUES ITS CURRENCY BY THE MOST IN 3 MONTHS (SEE BELOW)

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

Major earthquake hits southern Japan in the Kumamoto region.  Registers 6.0 on the Richter scale:

( zero hedge)

b) REPORT ON CHINA

Strange events:  First the Fed has an emergency meeting for 3 days. Second: it reports trade data that was basically garbage as the entire world picked up on the impossible 116% game in imports from Hong Kong.  Third: they then devalue their yuan by the most in 3 months despite the “gain” in trade.

Obviously, this was another message to the USA not to engage in any rate hike. This will no doubt force the hand of the USA and thus expect the dollar to fall shortly:

( zero hedge)

GLOBAL ISSUES

Singapore unexpectedly eases monetary policy and they state quite categorically:

“the Economy Grinds to a Halt”

Singapore is the hub where all shipping crosses.  When they state that the economy is in trouble, you can believe them..far better than other nonsense provided by CNBC plus other hacks

( zero hedge)

 

 

OIL MARKETS

i)Oil spikes to 42 dollars after bullish IEA comments

( zero hedge/IEA)

 

ii)Two big problems in the energy patch:

Energy XXI files for Chapter ll and Gulf Keystone delays bond payments.

( zero hedge)

 

iii)

Late in the session, crude craters.  it looks like the short squeeze is over:
( zero hedge)

PHYSICAL MARKETS

i)The day we have all been waiting for:  on April 19, China fixes the gold price in yuan.  This should be the first step in removing the uSA from its criminal manipulation:

( Reuters/GATA)

ii )A very big story that I brought to your attention yesterday but it is worth repeating.  Dave Kranzler believes that the CME group is preparing for a default at the comex.  Maybe CME is worried about a default at the banks and thus they want to keep their money safe at the Fed???

(GATA/Dave Kranzler)

iii)CME closes its outcry options due to lack of demand

( London’s Financial Times/GATA)

iv) The big story of the day/Deutsche bank/3 commentaries

The big story of the day:  Deutsche bank to settle on the huge USA silver price fixing litigation:  3 stories from Reuters, Ronan Manly and Zero hedge

a)First:  the official story from Reuters

( Reuters/ GATA)

b)Ron Manly on the above story

c)Zero hedge provides the detail as to this unbelievable development. Obviously Deutsche bank is very troubled as to what is going on in silver lately and they decided it was best to settle with a USA class action suit and to provide emails etc as to the other guilty parties.

For completeness, I testified against the banks at the CFTC hearings in March 2010

( zero hedge)

v)Chris Powell, on gold and silver market rigging

( Chris Powell/GATA)

USA STORIES WHICH WILL INFLUENCE THE PRICE OF SILVER/GOLD

i)Bank of America misses on Revenue and earnings.  They now build their reserves for energy losses

( zero hedge)

ii)Wells Fargo finally reveals its full energy exposure and it is not pretty:  they have a huge 32 billion in junk related oil and gas exposure.  They produce 5 billion uSA in income:

( zero hedge)

iii)Core CPI now rises to near 8 yr highs:

( zero hedge)

iv)The Atlanta Fed’s own core inflation tracker is now at 6 yr highs:

( zero hedge)

v)More garbage on initial claims report from the BLS/plunge to 43 yr lows:

a real joke:
( BLS/zero hedge)

vi)Main street investors are realizing that these hedge funds are not producing any returns and thus we see huge redemptions:

( zero hedge)

vii)\The bank which will get creamed if we get a BREXIT is Goldman Sachs and that is why they are lobbying against it:

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL SLIGHTLY to an OI level of 501,637 for a LOSS of 2886 contracts WITH the price of gold was DOWN 12.60 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 41 contracts from 3241 contracts down to 3200.  We had 45 notices filed so we GAINED 4 contracts or an additional 400 gold ounces will stand for delivery. The next non active contract month of May saw its OI RISE by 96 contracts UP to 2849. The next big active gold contract is June and here the OI FELL by 4,706 contracts DOWN to 374,821. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was FAIR at 211,396 . The confirmed volume YESTERDAY (which includes the volume during regular business hours + access market sales the previous day was poor at 167,897 contracts. The comex is not in backwardation

Today we had 860 notices filed for 860,000 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 4253 contracts from 184,800  UP to 189,053 as the price of silver was up 10 cents with yesterday’s rise in price.  We are now in the next contract month of April and here the OI ROSE by 0 contracts REMAINING AT 66. We had 0 notices filed on yesterday so we  gained 0 silver CONTRACTS  or an additional NIL ounces of silver will stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by 1507 contracts DOWN to 97,028. This level is exceedingly high.  We do have 2  weeks before first day notice on Friday, April 29.The volume on the comex today (just comex) came in at 75,028, which is huge. The confirmed volume yesterday (comex + globex) was humongous at 86,479. Silver is not in backwardation.    In London it is in backwardation for several months.
The bankers must be getting very anxious as they ORCHESTRATED a raid again today with the obvious objective to loosen many gold and silver leaves from the silver tree as possible.  They failed miserably IN SILVER AND QUITE SUCCESSFUL IN GOLD. The record high OI in silver in concert with a very low silver price has not resolved itself after 5 yrs of trading. It sure looks like we have a major sovereign holding much of the silver OI.
 
We had 0 notices filed for nil oz.
 

April contract month:

INITIAL standings for APRIL

April 14/2016

 

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  12,865.000 oz

MANFRA,SCOTIA

310 KILOBARS

Deposits to the Dealer Inventory in oz 81,985.05 OZ

HSBC

Deposits to the Customer Inventory, in oz  78,769.95 OZ

HSBC

No of oz served (contracts) today 860 contracts
(860,000 oz)
No of oz to be served (notices) 2340 contracts 234,000 oz/
Total monthly oz gold served (contracts) so far this month 2191 contracts (219,100 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 103,059.2 oz

 

 

Today we had 1 dealer deposit

i) Into HSBC: 81,985.05 oz

Total dealer deposits; 81,985.05 oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

 

Today we had 1 customer deposit

i) Into HSBC: 78,769.95 oz

 

Total customer deposits:  78,769.95 oz

Today we had 2 customer withdrawal:

i) Out of MANFRA:  321.5 oz  10 kilobars

ii) Out of Scotia:  9645.000 oz (300 kilobars)

total customer withdrawals:12865.00  oz  310 kilobars

Today we had 0 adjustments:

 

 

.
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 860 contracts of which 241 notices was stopped (received) by JPMorgan dealer and 210 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 (2191) x 100 oz  or 219,100 oz , to which we  add the difference between the open interest for the front month of April (XXXCONTRACTS) minus the number of notices served upon today (860) 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 (2191) x 100 oz  or ounces + {OI for the front month (XXX) minus the number of  notices served upon today (860) x 100 oz which equals 452,700 oz standing in this non  active delivery month of April (14.423 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 14.080 tonnes of gold standing for April and 12.997 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 14.080 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   = 22.070 tonnes still standing against 12.997 tonnes available.  .
 
Total dealer inventor 499,796.081 oz or 15.545 tonnes
Total gold inventory (dealer and customer) =7,036,210.479 or 218.855 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 218.855 tonnes for a loss of 84 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 14/2016:

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 600,000.000 OZ

JPMorgan

 

???.

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory nil OZ

Brinks,CNT

No of oz served today (contracts) 0 contracts

nil  oz

No of oz to be served (notices) 66 contracts)(330,000 oz)
Total monthly oz silver served (contracts) 123 contracts (615,000 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 34464,991.8 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 0 customer deposits:

Total customer deposits: 0 oz.

 

We had 1 customer withdrawal

i)JPMorgan: 600,000.000 oz ????

:

total customer withdrawals:  600,000.000   oz

 
 

 

 we had 1 adjustment

Out of Delaware

We had 9655.900 oz adjusted out of the customer and this landed into the dealer account of Delaware:

The total number of notices filed today for the April contract month is represented by 2 contracts for 10,000 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 (123) x 5,000 oz  = 615,000 oz to which we add the difference between the open interest for the front month of April (66) 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:  123 (notices served so far)x 5000 oz +(x66{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 945,000 oz of silver standing for the March contract month.
we neither gained nor lost any silver ounces standing for delivery.

 

 
Total dealer silver:  32.442 million
Total number of dealer and customer silver:   154.109 million oz
The open interest on silver is now at multi year highs.
 
end
And now the Gold inventory at the GLD
April 14/another big change in gold inventory at the GLD/, a withdrawal of 3.26 tonnes/Inventory rests at 806.82 tonnes
April 13./another withdrawal of 5.06 tonnes of gold from the GLD/no doubt this gold was used in the raid/Inventory rests at 810.08 tonnes
April 12/another huge withdrawal of 2.67 tonnes of gold from the GLD and again despite the rise in gold. The boys must be desperate to get their hands on some physical.
Inventory rests at 815.14 tonnes.
April 11. We had a huge withdrawal of 1.79 tonnes of gold despite the rise in gold. No doubt whatever physical gold the GLD had just went over to China/inventory rests tonight at 817.81 tonnes

APRIL 8/no changes in tonnage of gold/rests tonight at 819.60 tonnes

APRIL 7/ a huge deposit of 4.17 tonnes of “paper” gold was added to our GLD/Inventory rests tonight at 819.60 tonnes

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

 

 

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 14.2016:  inventory rests at 806.82 tonnes

end

 

Now the SLV Inventory
April 14./no change in inventory at the SLV/Inventory rests at 334.248 million oz
April 13/a strange withdrawal of 1.903 million oz with silver rising in price??/Inventory rests at 334.248 million oz
April 12.no change in silver inventory/rests tonight at 336.151 million oz
April 11.2016; a huge addition of 1.427 million oz of “paper” silver entered the SLV/Inventory rests at 336.151 million oz
APRIL 8/no changes in silver inventory/rests tonight at 334.724 million oz
APRIL 7/no change in silver inventory/rests tonight at 334.724 million  oz
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 14.2016: Inventory 334.248 million oz
.end
1. Central Fund of Canada: traded at Negative 5.8 percent to NAV usa funds and Negative 5.7% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.8%
Percentage of fund in silver:37.2%
cash .0%( April 14.2016).
2. Sprott silver fund (PSLV): Premium to rises falls to -.88%%!!!! NAV (April14.2016) 
3. Sprott gold fund (PHYS): premium to NAV falls  to -30% to NAV  ( April14.2016)
Note: Sprott silver trust back  into negative territory at -.88%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into negative territory at -30%/Central fund of Canada’s is still in jail.
It looks like Eric Sprott got on the nerves of our bankers as they lowered the premium in silver to -.88%.  Remember that Eric is to get 75 million dollars worth of silver.
 
 
 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

 

Who Is Buying Gold And Why?

 

Who is buying gold and why is the question posed by The Telegraph today

Queen Elizabeth inpects gold

“After four years of sharp falls, a sudden revival has been taking place in the gold market.

In the first three months of 2016 the price of the yellow metal soared by 20pc – its best quarterly performance since the financial crisis erupted in the final three months of 2008.

The gold price, currently around $1,260 an ounce, is well below its record peak of almost $1,900 achieved in July 2011, at the height of the European sovereign debt crisis.

For investors who have missed out on the rally so far, the big question is: has gold turned a corner, suggesting that it will continue to rise, or will it crash back down to earth?

As gold pays no income, it is difficult to value. Therefore, unlike an individual share or stock market index, it is less clear whether the metal is cheap or expensive at its current price.

To assess whether gold’s resurgence is here to stay, it is important to look at who has been buying it – and their reasons for doing so.”

The Telegraph points out the merits of having an allocation of 5% to 10% as part of diversified investment or pension portfolios.

See article here


Gold Prices (LBMA)

14 April: USD 1,240.30, EUR 1,101.04 and GBP 874.96 per ounce
13 April: USD 1,245.75, EUR 1,100.37 and GBP 875.33 per ounce
12 April: USD 1,259.20, EUR 1,102.15 and GBP 880.18 per ounce
11 April: USD 1,247.25, EUR 1,095.84 and GBP 878.96 per ounce
8 April: USD 1,235.00, EUR 1,085.18 and GBP 877.33 per ounce

Silver Prices (LBMA)
14 April: USD 16.13, EUR 14.32 and GBP 11.39 per ounce
13 April: USD 15.98, EUR 14.14 and GBP 11.21 per ounce
12 April: USD 15.96, EUR 13.98 and GBP 11.15 per ounce
11 April: USD 15.56, EUR 13.66 and GBP 10.93 per ounce
8 April: USD 15.16, EUR 13.34 and GBP 10.78 per ounce


Gold News and Commentary
“Gold is taking a breather after the recent gains” said GoldCore (Marketwatch)
Silver Logs 10-Month High; 2016 Silver Eagles Hit 17M (Coin News)
Deutsche Bank Settles Silver Price-Fix Claims, Lawyers Say (Bloomberg)
Gold Drops From Three-Week High as Dollar, Global Equities Rally (Bloomberg)
5 major banks fail ‘too big to fail’ test; Citi’s plan passes (CNBC)

Global currency wars continue … (Money Week)
“Feeding The Monster” – The Complete Bear Case, In Charts (North Man Trader)
Make Money Great Again! Gold is Monetary Truth (Silver Seek)
Startling Inflation News Illustrates The Failure Of Easy Money (Dollar Collapse)
Endgame For Japan’s 100 Trillion Pyramid Scheme? (Japan Times)

Read More Here

 

GoldCore: Storing Gold in Singapore


Knowledge Is Power. Read Our Most Popular Guides in Recent Months

Mark O’Byrne
Executive Director
 END
The day we have all been waiting for:  China fixes the gold price in yuan.  This should be the first step in removing the uSA from its criminal manipulation:
(courtesy Reuters/GATA)

China’s big four banks, StanChart, ANZ to join yuan gold benchmark

Section:

By A. Ananthalakshmi
Reuters
Wednesday, April 13, 2016

Top Chinese banks, alongside Standard Chartered and ANZ, will be among 18 members to join a new yuan-denominated gold benchmark that signals China’s biggest step toward becoming a price-setter for the metal.

As the world’s top producer, importer and consumer of gold, China has balked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The yuan gold fix, to be launched on April 19, is not expected to pose an immediate threat to the gold-pricing dominance of London and New York, but it could ultimately give Asia more power, particularly if the Chinese currency becomes fully convertible.

The Chinese benchmark price will be derived from a 1 kilogram-contract to be traded by the 18 members on the Shanghai Gold Exchange, which will act as the central counterparty.

The price-setting process will include China’s big four state-owned banks, Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, and China Construction Bank, the SGE said in a statement on its website.

Bank of Communications, Shanghai Pudong Development Bank, China Minsheng Banking Corp., Industrial Bank Co., Ping An Bank, and Shanghai Bank will also participate. …

… For the remainder of the report:

http://www.reuters.com/article/china-gold-fix-idUSL3N17G2W4

 

 

END

 

A very big story.  Dave Kranzler believes that the CME group is preparing for a default at the comex.  Maybe CME is worried about a default at the banks and thus they want to keep their money safe at the Fed???

(courtesy GATA/Dave Kranzler)

Is CME Group preparing for a Comex default?

Section:

3:10a SFT Thursday, April 14, 2016

Dear Friend of GATA and Gold:

Dave Kranzler of Investment Research Dynamics wonders if futures exchange operator CME Group’s opening an account for the funds of clearing members signifies preparations for possible default on gold and silver futures contracts. Kranzler’s commentary is headlined “Is the CME Preparing for an Eventual Comex Default?” and it’s posted at the IRD Internet site here:

http://investmentresearchdynamics.com/is-the-cme-preparing-for-an-eventu…

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

 

END

 

CME closes its outcry options due to lack of demand

(courtesy London’s Financial Times/GATA)

CME calls time on New York open outcry options floor

Section:

By Lindsay Whipp
Financial Times, London
Thursday, April 14, 2016

CHICAGO — Another nail has been knocked into the coffin of commodities pit trading in America, as the Chicago Mercantile Exchange said it is to close its open outcry options floor in New York because of a lack of volume.

The move follows the closure last year of its open outcry futures pits in Chicago and New York. Following its closure at the end of this year after 34 years of operation, there will remain just two open outcry trading pits at the CME: its options pit and its S&P 500 futures contracts floor.

Only oil and metal options were being traded in the New York options outcry pit and much of that was block trading, which is done by phone and instant message. The CME said on Wednesday that it represented just 0.3 per cent of its overall energy and metals trading volume. …

… For the remainder of the report:

http://www.ft.com/intl/cms/s/0/33141038-01b9-11e6-99cb-83242733f755.html

 

END

 

The big story of the day:  Deutsche bank to settle on the huge USA silver price fixing litigation:  4 stories from Reuters, Ronan Manly and 2 from Zero hedge

First:  the official story from Reuters

( Reuters/ GATA)

Deutsche Bank to settle U.S. silver price-fixing litigation

Section:

By Jonathan Stempel
Reuters
Wednesday, April 13, 2016

NEW YORK — Deutsche Bank AG has agreed to settle U.S. litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings to fix silver prices at the expense of investors, a court filing on Wednesday showed.

Terms were not disclosed but the accord will include a monetary payment by the German bank, a letter filed in Manhattan federal court by lawyers for the investors said.

Deutsche Bank has signed a binding settlement term sheet and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. …

… For the remainder of the report:

http://www.reuters.com/article/us-deutschebank-settlement-silver-idUSKCN…

 

END

Ronan Manly: Deutsche Bank will give evidence against other banks in silver rigging

Section:

5:13p SGT Thursday, April 14, 2016

Dear Friend of GATA and Gold:

Elaborating on the draft settlement agreement between Deutsche Bank and the plaintiffs in the U.S. class-action lawsuit charging silver market manipulation, monetary metals researcher Ronan Manly reports that the bank has not only agreed to pay damages but also to provide the plaintiffs with evidence against the other bank defendants in the lawsuit, HSBC and Bank of Nova Scotia.

Manly writes: “Coming on the heels of the unresolved and unexplained fiasco that is the LBMA silver price auction and the broken promises by the London Bullion Market Association about greater auction transparency and wider participation in the new silver auction, it seems difficult to envisage that the LBMA silver price can survive in its current form with its current participants, two of whose remaining five participants are HSBC and Scotia. It will also be interesting to see what the U.K. Financial Conduct Authority will say about this development with Deutsche Bank, especially since HSBC and Scotia are now participating in a ‘regulated benchmark,’ the LBMA silver price, where price manipulation can be criminally prosecuted.”

Manly’s analysis is headlined “Deutsche Bank Agrees to Settle with Plaintiffs in London Silver Fixing Litigation” and it’s posted at Bullion Star here:

https://www.bullionstar.com/blogs/ronan-manly/deutsche-bank-agrees-settl…

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

 

END

 

 

Zero hedge provides the detail as to this unbelievable development. Obviously Deutsche bank is very troubled as to what is going on in silver lately and they decided it was best to settle with a USA class action suit and to provide emails etc as to the other guilty parties.

For completeness, I testified against the banks at the CFTC hearings in March 2010

And anybody wishing to see/hear my testimony it is on the upper right side of my blog.

( zero hedge/Harvey)

Case Closed: Deutsche Bank Confirms Silver Market Manipulation In Legal Settlement, Agrees To Expose Other Banks

Back in July of 2014, we reported that in an attempt to obtain if not compensation, then at least confirmation of bank manipulation in the precious metals industry, a group of silver bullion banks including Deutsche Bank, Bank of Nova Scotia and HSBC (later UBS was also added to the defendants) were accused of manipulating prices in the multi-billion dollar market in a lawsuit filed on Friday.

The lawsuit, which was originally filed in a New York district court by veteran litigator J. Scott Nicholson, a resident of Washington DC, alleged that the banks, which oversee the century-old silver fix manipulated the physical and COMEX futures market since January 2007. The lawsuit subsequently received class-action status. It was the first case to target the silver fix.

Many expected that this case would never go anywhere and that the defendant banks would stonewall indefinitely: after all their legal budgets were far greater than the plaintiffs.

Which is why we were surprised to read overnight that not only has this lawsuit against precious metals manipulation not been swept away, but that the lead defendant, troulbed German bank Deutsche Bank agreed to settle the litigation over allegations it illegally conspired with Bank of Nova Scotia and HSBC Holdings Plc to fix silver prices at the expense of investors, Reuters reported citing a court filing on Wednesday showed.

Terms were not disclosed, but the accord will include a monetary payment by the German bank, a letter filed in Manhattan federal court by lawyers for the investors said.

It goes without saying, that there would have been neither a settlement nor a payment if the banks had done nothing wrong.

According to Reuters, Deutsche Bank has signed a binding settlement term sheet, and is negotiating a formal settlement agreement to be submitted for approval by U.S. District Judge Valerie Caproni, who oversees the litigation. A Deutsche Bank spokeswoman declined to comment. Lawyers for the investors did not immediately respond to requests for comment.

As noted above, investors had accused Deutsche Bank, HSBC and ScotiaBank of abusing their power as three of the world’s largest silver bullion banks to dictate the price of silver through a secret, once-a-day meeting known as the Silver Fix.

None of this will come as a big surprise to readers, most of whom have been aware that this took place for years.

But wait there’s more.

In a curious twist, the settlement letter reveals a stunning development, namely that the former members of the manipulation cartel have turned on each other. To wit:

“In addition to valuable monetary consideration, Deutsche Bank has also agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement. In Plaintiff’s estimation, the cooperation to be provided by Deutsche Bank will substantially assist Plaintiffs in the prosecution of their claims against the non-settling defendants.”

The full shocking letter can be read here:

Since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has “turned” that much more curious information about precious metals rigging will emerge, and will confirm what the “bugs” had said all along: that the precious metals market has been rigged all along.

Finally, we’ll just remind readers that the US commodity “regulator”, the CFTC in 2013 closed its five year investigation concerning allegations that the biggest bullion banks manipulate silver markets and prices.  It proudly reported in September 2013 that it found no evidence of wrongdoing and dropped the probe. This is what it said:

The Commodity Futures Trading Commission (CFTC or Commission) Division of Enforcement has closed the investigation that was publicly confirmed in September 2008 concerning silver markets. The Division of Enforcement is not recommending charges to the Commission in that investigation. For law enforcement and confidentiality reasons, the CFTC only rarely comments publicly on whether it has opened or closed any particular investigation. Nonetheless, given that this particular investigation was confirmed in September 2008, the CFTC deemed it appropriate to inform the public that the investigation is no longer ongoing. Based upon the law and evidence as they exist at this time, there is not a viable basis to bring an enforcement action with respect to any firm or its employees related to our investigation of silver markets.

In light of this confirmation that the CFTC’s probe was “lacking” perhaps it is perhaps time for the so-called regulator who at the time was headed by ex-Goldmanite Gary Gensler, to reopen its investigation?

end
That did not take long: Now Gold is included the the guilty pleas of Deutsche bank
(courtesy zero hedge)

First Silver, Now Gold: Deutsche Bank Admits It Also Rigged Gold Prices

Well, that didn’t take long.

Earlier today when we reported the stunning news that DB has decided to “turn” against the precious metals manipulation cartel by first settling a long-running silver price fixing lawsuit which in addition to “valuable monetary consideration” said it would expose the other banks’ rigging having also “agreed to provide cooperation to plaintiffs, including the production of instant messages, and other electronic communications, as part of the settlement” we said “since this is just one of many lawsuits filed over the past two years in Manhattan federal court in which investors accused banks of conspiring to rig rates or prices in financial and commodities markets, we expect that now that DB has “turned” that much more curious information about precious metals rigging will emerge, and will confirm what the “bugs” had said all along: that the precious metals market has been rigged all along.”

This was confirmed moments ago when Reuters reported that Deutsche Bank has also reached a settlement in US litigation alleging the bank conspired to fix gold prices. In other words, hours after admitting it was rigging the silver market, it did the same for gold.

Some more headlines from Reuters:

  • Reaches settlement in U.S. litigation alleging it conspired to fix gold prices.
  • Plaintiffs’ lawyers, in filing, say Deutsche Bank has signed a settlement term sheet
  • Plaintiffs’ lawyers say are negotiating formal settlement agreement that would be presented for judge’s approval later
  • Plaintiffs’ lawyers say settlement contemplates a monetary payment by Deutsche Bank
  • Gold settlement follows similar accord involving alleged silver price-fixing that was disclosed on Wednesday

We will share more as soon as it becomes available as well as the full details of the settlement.

end
Chris Powell, on gold and silver market rigging
(courtesy Chris Powell/GATA)

Chris Powell: Cowardice of press, miners, financial industry sustains gold market rigging

Section:

Remarks by Chris Powell, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
Mining Investment Asia Conference
Marina Bay Sands, Singapore
Thursday, April 14, 2016

I’m here again this year to update you on the surreptitious manipulation of the gold market by central banks and to explain how this surreptitious manipulation now extends to all major markets around the world.

This is remarkable not in fact but only in degree.

For central banks long have rigged the gold market, usually suppressing gold prices to protect their own currencies and government bonds against a potentially competitive world reserve currency. Central banks used to do this market rigging in the open, through mechanisms like the London Gold Pool in the 1960s, but they lost too much of their gold reserves that way. Now they do their market rigging surreptitiously using derivatives and high-frequency trading, activities underwritten by the leasing and swapping of gold by central banks. In this way central banks have created a vast, imaginary supply of the monetary metal, a supply of “paper gold” for price suppression.

Confirmations of the long-standing policy of gold price suppression by central banks abound in government archives and in the admissions made by central bankers in their communications with each other when they think that no one outside their own circle is paying attention.

The most stunning recent example of these admissions is the interview Kitco News did last October with the executive director of the central bank of Austria, Peter Mooslechner, on the sidelines of the London Bullion Market Association conference in Vienna. Asked what he considers the role of central bank gold reserves, Mooslechner volunteered that larger Asian central banks that are acquiring gold are simultaneously “trading in the market and intervening in the market.”

Let’s watch:

https://www.dropbox.com/s/rtgdc8dkhvabtz2/kitco.mp4?dl=0

Mooslechner’s implication was that the trading and intervention being done by these Asian central banks in the gold market are meant to suppress the price of gold while they are acquiring it. This implication is consistent with the growing speculation that the United States and China are working together to facilitate China’s acquisition of gold so China can protect itself against devaluation of the huge amount of U.S. Treasury debt in China’s foreign exchange reserves.

When a German financial journalist, Lars Schall, attempted to question Mooslechner about his remarks to Kitco News last October, the Austrian central bank refused to make Mooslechner available. The Austrian central bank told Schall that it did not comment on the trading done by other central banks. But of course Mooslechner had commented on that trading, and he had gotten caught when his comments were noticed outside central banking and bullion banking circles.

The really interesting thing about Mooslechner’s interview with Kitco News was that he showed that the Austrian central bank knows exactly what China’s central bank is doing in the gold market. That is, Mooslechner’s comment suggested that all major central banks are cooperating in a reallocation of world gold reserves and cooperating in the market rigging necessary to arrange it.

Market rigging by central banks goes far beyond the gold market. Of course it is already acknowledged that this market rigging encompasses the government bond market and — in certain countries, like Japan — even the stock market. But in fact this rigging is now comprehensive, covering all the major commodity markets as well, as I will demonstrate in a moment.

What does all this market rigging mean? It means that there really are no markets anymore, just interventions.

It means that the fundamentals of supply and demand no longer have much bearing on the price of the products of the industries represented at this conference, the mining and financial services industries. Nor do the fundamentals of supply and demand have much bearing any longer on the price of any other major commodity traded widely around the world.

And since markets are the great engines of progress, prosperity, and liberty, it means that progress, prosperity, and liberty are now terribly impaired.

But while central banks are powerful, they are not all-powerful. Their market rigging succeeds only because it operates in secret. Their market rigging would fail if it was exposed and understood, as too many people would refuse to participate in rigged markets.

This market rigging has not been fully exposed and understood for two reasons. The first is the failure of mainstream financial news organizations to examine and report it. The second is the failure of the mining and financial services industries to examine it and complain about it.

GATA is trying to shake financial news organizations and the mining and financial services industries out of their ignorance, indifference, and cowardice.

As time allows today I will present the images of some of the major documents GATA has compiled about gold price suppression and commodity market rigging by central banks. I can only summarize these documents for you and urge you to examine them yourselves. These documents are posted at GATA’s Internet site, GATA.org, and will be posted again along with my remarks today. But if you need help locating any document or have any questions, please e-mail me at CPowell@GATA.org.

And so to the documents.

1) In July 1998 U.S. Federal Reserve Chairman Alan Greenspan testified to Congress that the true purpose of gold leasing by central banks was to keep the gold price down:

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

2) The U.S. Treasury Department’s Exchange Stabilization Fund is fully authorized by U.S. law to trade secretly in and rig any market in the world:

https://www.treasury.gov/resource-center/international/ESF/Pages/esf-ind…

3) The transcript of a meeting of U.S. Secretary of State Henry Kissinger and Assistant Undersecretary Thomas Enders at the U.S. State Department in April 1974 reveals that the United States sees gold as the great “reserve-creating instrument” of governments and central banks; that whoever has the most gold can revalue it periodically to create more world-reserve currency; that Western Europe has surpassed the United States in gold reserves and thus is in a position to control the gold price and create more monetary reserves; and that, as a result, United States policy must be to push gold out of the world financial system to protect the U.S. dollar’s standing as the world reserve currency:

http://www.gata.org/node/13310

Assistant Undersecretary Enders tells Secretary Kissinger: “It’s a question of who has the most leverage internationally. If they” – that is, Western European nations – “have the reserve-creating instrument, by having the largest amount of gold and the ability to change its price periodically, they have a position relative to ours of considerable power. For a long time we had a position relative to theirs of considerable power because we could change gold almost at will. This is no longer possible — no longer acceptable. Therefore, we have gone to Special Drawing Rights, which is also equitable and could take account of some of the less-developed-country interests and which spreads the power away from Europe. And it’s more rational in. …”

Secretary Kissinger interrupts Enders: “‘More rational’ being defined as being more in our interests or what?”

Assistant Undersecretary Enders replies: “More rational in the sense of more responsive to worldwide needs — but also more in our interest. …”

So there you have it. Whoever has the most gold can control its valuation — and implicitly the valuation of every currency — and thereby create the most “reserves,” the most money, money being power, of course. The interest of the United States, as it was articulated privately at that meeting at the State Department in April 1974, was to dominate the world through the power of money creation by pushing gold out of the monetary system and keeping the world dependent on the dollar.

4) The Bank for International Settlements is the central bank of the central banks. In a speech given at a BIS conference in Basle, Switzerland, in June 2005, the head of the BIS monetary and economic department, William R. White, declared that a primary purpose of central bank cooperation is “the provision of international credits and joint efforts to influence asset prices — especially gold and foreign exchange — in circumstances where this might be thought useful”:

http://www.gata.org/node/4279

5) Its annual reports disclose that the Bank for International Settlements is the gold broker for its member central banks, trading, on their behalf, not only gold itself but also gold futures, options, and derivatives:

http://www.gata.org/node/12717

6) A 24-page PowerPoint presentation prepared by the Bank for International Settlements in June 2008 for potential BIS members actually advertised secret interventions in the gold market as being among BIS services:

http://www.gata.org/node/11012

7) A secret report by its staff to the board of directors of the International Monetary Fund in March 1999 reported that central banks conceal their gold swaps and leases to facilitate their secret interventions in the gold and currency markets:

http://www.gata.org/node/12016

8) A letter written by Federal Reserve Board of Governors member Kevin M. Warsh to GATA’s lawyer in September 2009 confirmed that the Fed has secret gold swap arrangements with foreign banks and refuses to disclose and explain them:

http://www.gata.org/node/7819

9) But Warsh was a little more forthcoming in an essay he wrote for The Wall Street Journal in December 2011. In that essay Warsh wrote: “Policy makers are finding it tempting to pursue ‘financial repression’ — suppressing market prices that they don’t like”:

http://www.gata.org/node/10839

After his essay was published I wrote to Warsh to ask him to specify the prices that “policy makers” were suppressing and whether he had learned about “financial repression” during his service on the Board of Governors of the Federal Reserve System. Warsh cordially urged me to have a nice day.

10) Speaking to the conference of the London Bullion Market Association in Rome in September 2013, the director of market operations for the Banque de France, Alexandre Gautier, said the Banque de France is trading gold for its own account and for the accounts of other central banks “nearly on a daily basis”:

http://www.gata.org/node/13373

In January 2015 a gold dealer in Europe, Fabrice Drouin Ristori of Goldbroker.com, wrote to Gautier to ask for an explanation of the Banque de France’s gold trading. Gautier replied: “The Banque de France does not make public the management of its foreign exchange reserves. Furthermore, we very seldom give interviews.”

Why do you suppose that is?

11) CME Group operates the major futures markets in the United States. Its January 2014 filing with the U.S. Securities and Exchange Commission disclosed that central banks and governments are being given volume trading discounts for secretly trading all futures contracts on the major exchanges in the United States, not just financial futures contracts:

http://www.gata.org/node/14385

12) CME Group’s master “10-k” filing with the U.S. Securities and Exchange Commission for 2013 disclosed that CME Group’s customers include governments and central banks:

http://www.gata.org/node/14411

13) In 2011 the Wikileaks organization disclosed thousands of U.S. State Department cables. Among them were cables from the U.S. embassy in Beijing to the State Department in Washington translating reports published in the government-controlled press in China in 2009 about gold price suppression engineered by the United States and its allies. The Chinese reports said gold price suppression was meant to support the dollar and prevent gold’s re-emergence as the world reserve currency:

http://www.gata.org/node/10380

http://www.gata.org/node/10416

For example, the Chinese newspaper World News Journal wrote: “The United States and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or the euro. Therefore, suppressing the price of gold is very beneficial for the United States in maintaining the U.S. dollar’s role as the international reserve currency. China’s increased gold reserves will thus act as a model and lead other countries toward reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the renminbi.”

14) In April 2013 the Chinese journal Global Finance published a commentary by its deputy editor, Zhang Jie, titled “Gold Leasing Is a Tool for the Global Credit Game”:

http://www.gata.org/node/13314

Zhang wrote: “If one wants to control gold, it is a necessity to have the ability to short-sell the same. A central bank that directly suppresses gold would be suspected as a market manipulator. However, gold leasing by the central bank can take place unnoticed. During a financial crisis gold would have more monetary power as well as greater trust. Countries need to control the trust in their national currencies and thus suppress the actual market price of gold, which will affect exchange rates. Each country carries out its attack on the price of gold according to the method of its own national currency.”

* * *

There are so many more official records and admissions of gold price suppression by central banks in GATA’s archive:

http://www.gata.org/taxonomy/term/21

Please don’t take my word for any of this. Please examine the documents and the admissions yourselves. Then please ask yourselves whether the mining and the financial services industries can have any integrity when the main purpose of central banking is to destroy free markets and deceive investors.

Please also ask yourselves whether the disparagement of complaints about gold market manipulation as “conspiracy theory” is fair. Ask whether central banks are in the gold market surreptitiously or not. If they are in the gold market, ask whether it’s just for fun or if there are important policy purposes behind it.

But if central banks are in the gold market surreptitiously, what’s wrong with calling it “conspiracy”? For central banks and other government officials often meet secretly to decide upon and implement a course of action — the very definition of “conspiracy.” In that case it is not “conspiracy theory” but “conspiracy fact.

Thanks for your kind attention.

 END

Lee Jackson of WallStreet.com writes that Merrill Lynch has raised the price targets on 5 gold stocks.  Without a question, the top pick, Agnico Eagle is the creme de la creme

(courtesy Lee Jackson/WallStreet.com)

http://247wallst.com/commodities- metals/2016/04/13/merrill-lynch-raises-price-targets-on-5- top-gold-stocks-to-buy/2/

Merrill Lynch Raises Price Targets on 5 Top Gold Stocks to Buy

It never fails. Like the call for $20 oil, the “gold is going to $900” story didn’t play out quite like some of the bears wanted it to. High-profile calls like that rarely pan out, and the people who get stuck following the advice are the ones who get shafted. While gold isn’t going back to the lofty highs of five years ago, there is a good chance it can continue the current move higher.

In a new research report, Merrill Lynch raised price targets on many of the gold stocks in the firm’s coverage universe. We zeroed in on the stocks that the firm has rated at Buy, and found five that investors may want to consider now.

Agnico Eagle Mines

This top stock has remained a long-time Wall Street favorite. Agnico Eagle Mines Ltd. (AEM) is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.

The company was the most successful year over year in reducing its all-in sustaining costs in 2015. Agnico Eagle came in 29% lower, at $810 per ounce. It also lowered its cash cost guidance for the second time this year to $850 per ounce (midpoint) from $880 per ounce. The upgrades have mainly been due to higher-than-expected grades and currency tailwinds from the Canadian dollar and the Mexican peso.

This remains one of the top picks on Wall Street as it fits the objectives of having quality mining assets with attractive margins, and it sports a very solid balance sheet.

Agnico Eagle investors are paid a 0.9% dividend. The Merrill Lynch price objective was raised to $43 from $40, and the Thomson/First Call consensus target is $38.97. The shares closed Tuesday at $41.08.

Goldcorp

This is another top company with a solid balance sheet that makes sense for investors to consider. Goldcorp Inc. (NYSE: GG) engages in the acquisition, exploration, development and operation of precious metal properties in Canada, the United States, Mexico and Central and South America. It primarily explores for gold, silver, copper, lead and zinc deposits.

Goldcorp’s principal mining properties include the Red Lake, Éléonore, Porcupine and Musselwhite gold mines in Canada; the Peñasquito and Los Filos mines in Mexico; the Marlin property in Guatemala; the Cerro Negro and Alumbrera mines in Argentina; and the Pueblo Viejo mine in the Dominican Republic.

Wall Street analysts feel that the company deserves a premium valuation to its peers due to its excellent balance sheet, growth profile with lower cost new mines, longer average mine life and a solid dividend yield. Over the past few years, Goldcorp has been altering its mine plans, cutting spending and disposing assets in order to reduce costs and focus on the most profitable production.

Goldcorp investors receive a 1.56% dividend. The Merrill Lynch price target rose to $21 from $19, and the consensus target is $17.64. Shares closed Tuesday at $17.73.

 

Kinross Gold

More aggressive investors may want to consider this is a smaller cap company. Kinross Gold Corp. (NYSE: KGC) engages in the acquisition, exploration, development and production of gold properties. The company’s gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. It also produces and sells silver. As of December 31, 2015, the company’s proven and probable mineral reserves included 34.0 million ounces of gold, 41.0 million ounces of silver and 1.4 billion pounds of copper.

The stock has responded well to the weakening in the U.S. dollar, and it also got a boost this week when the analysts at RBC lifted the stock to Outperform from Market Perform.

Merrill Lynch boosted its price target to $5 from $4. The consensus target is $3.81. The shares closed Tuesday at $4.46.

Royal Gold

This another solid company for investors looking for a gold presence, and the company got a big price increase at Merrill Lynch. Royal Gold Inc. (NASDAQ: RGLD) is a precious metals royalty and stream company engaged in the acquisition and management of precious metal royalties, streams and similar production-based interests. The company owns interests on 193 properties on six continents, including interests on 38 producing mines and 24 development stage projects. The royalty type companies make sense for investors wanting to avoid the actual mining aspect of sector.

Merrill Lynch now has a $67 price target, up from $58, and the consensus target is $53.87. Share closed most recently at $55.93.

Silver Wheaton

This is another top company that many on Wall Street favor. Silver Wheaton Corp. (NYSE: SLW) is the largest pure precious metals streaming company in the world. Based on its current agreements, forecast 2015 estimated annual attributable production is approximately 44.5 million silver equivalent ounces, including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 55 million silver equivalent ounces, including 325,000 ounces of gold.

This anticipated growth is expected to be driven by the Silver Wheaton’s portfolio of low-cost and long-life assets, including precious metal and gold streams on Vale’s Salobo mine and Hudbay’s Constancia project.

Silver Wheaton has 18 long-term purchase agreements and one early deposit long-term purchase agreement associated with silver and gold relating to 27 various mining assets. It has silver and gold interests primarily in the San Dimas, Zinkgruvan, Yauliyacu, Stratoni, Los Filos, Peñasquito, Keno Hill, Neves-Corvo, Cozamin, Minto, Barrick, Aljustrel, 777, Salobo and Sudbury mines, as well as the Rosemont, Loma de La Plata, Constancia and Toroparu projects.

Again, the company fits into the Merrill Lynch metrics for quality assets and royalty streams, and the kind of balance sheet that has protected the company from the pitfalls of miners with huge capital expenditures.

Silver Wheaton shareholders receive a 1.5% dividend. The Merrill Lynch price target was raised to $20 from $19. The consensus target is set at $20.95. The stock closed Tuesday at $17.80.

Your early THURSDAY 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 6.4829 / Shanghai bourse  CLOSED UP 15.72  OR 0.51% / HANG SANG CLOSED UP 179.10 OR 0.85% 

2 Nikkei closed up 529.83  or UP 3.53%/USA: YEN FALLS SLIGHTLY TO 1.0926)

3. Europe stocks opened MIXED /USA dollar index UP to 94.96/Euro DOWN to 1.1265

3b Japan 10 year bond yield: RISES   TO -.078%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.26

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  41.86  and Brent: 44.27

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 0.131%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 12.62%/: 

3j Greek 10 year bond yield RISE to  : 9.27%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1239.90/silver $16.14 (7:45 am est) 

3l USA vs Russian rouble; (Russian rouble UP 12/100 in  roubles/dollar) 66.16

3m oil into the 41 dollar handle for WTI and 44 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. TODAY THE USA/YEN COLLAPSES TO 108.33 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9651 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0873 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

3p BRITAIN STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .166%

/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 1.78% early this morning. Thirty year rate  at 2.60% /POLICY ERROR)

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

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

 

U.S. Futures Flat After Oil Erases Overnight Losses; Dollar In The Driver’s Seat

In another quiet overnight session, the biggest – and unexpected – macro news was the surprise monetary easing by Singapore which as previously reported moved to a 2008 crisis policy response when it adopted a “zero currency appreciation” stance as a result of its trade-based economy grinding to a halt. As Richard Breslow accurately put it, “If you need yet another stark example of the fantasy storytelling we amuse ourselves with, juxtapose today’s Monetary Authority of Singapore policy statement with the storyline that the Asian stock market rally intensified on renewed optimism over the global economy. Singapore is a proxy for trade and economic growth ground to a halt last quarter.” The Singapore announcement led to a sharp round of regional currency weakness just as the dollar appears to have bottomed and is rapidly rising. The Singapore dollar slid 1 percent in the wake of the new stance.

Speaking of the Greenback, the USD rose against most major peers and base metals denominated in the U.S. currency fell to compensate for the appreciation. The dollar’s more than 6 percent drop since late January is starting to meet some resistance amid lackluster euro-area expansion and investor speculation that U.S. economic growth remains intact, strengthening the case for higher interest rates this year. To be sure, none of that speculation was actually confirmed by the data, with both retail sales and inventories missing but when did facts matter over narratives.

“We’ve seen stabilization in macro data in China, but stabilization is one point, re-acceleration is another,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany.

 

After crude dropped as low at $40.84, it rebounded and was trading unchanged after the latest IEA forecast predicted the global supply glut would narrow to just 200k b/d in 2H, down from 1.5m b/d in 1H. Brent mirrors WTI recovery after testing support at 200-day moving avg. “The IEA report bounced the market, being quite positive for when the supply glut will disappear, seeing this happen in 2H based on demand and based on non-OPEC production,” says Saxo Bank head of commodity strategy Ole Hansen. The market also remained keenly focused on any and all “Doha” headlines ahead of the OPEC meeting in Qatar on Sunday.

Also notable are the oil technicals: “We tested the 200-day MA earlier” Hansen added, but bounced back w/ IEA report, says Hansen. “If we close today below the 200-day MA that could trigger a negative technical reaction, but at this stage we are seeing a bit of a fightback.”

In Europe, the Stoxx 600 was little changed as miners and energy producers tumbled, while investors weighed earnings reports from Burberry Group Plc and Nestle SA.  Commodity producers, the best performers among industry groups in 2016, fell for the first time in five days. Anglo American Plc and Randgold Resources Ltd. lost at least 2.7 percent. BP Plc led oil stocks lower. Lenders also declined, paced by Standard Chartered Plc and Barclays Plc, after jumping the most since 2011 on Wednesday. Burberry tumbled 5.9 percent after forecasting a revenue drop at its wholesale unit in the first half of the year. Peer Cie. Financiere Richemont SA lost 1.4 percent. Nestle rose 1.8 percent after its sales beat analysts’ estimates.

S&P500 futures fell 0.1 percent, in a modest retreat from a four-month high. Bank of America Corp. and Well Fargo & Co. are due to report earnings Thursday. Investors also await data on initial jobless claims and inflation for indications on the possible trajectory of interest rates.

Where markets stand right now

  • S&P Futures down 0.1% to 2075
  • Stoxx 600 down 0.2% to 342.5
  • German 10Yr yield up 3bps to 0.16%
  • Euro Stoxx 50 down -0.2%
  • FTSE 100 down -0.2%
  • DAX up 0.1%
  • MSCI Asia Pacific up 1.7% to 132.2
  • Nikkei 225 up 3.2% to 16911.1
  • Hang Seng up 0.8% to 21337.8
  • Kospi up 1.7% to 2015.9
  • Shanghai Composite up 0.5% to 3082.4
  • France 10yr yield up 3bps at 0.5%
  • Greece 10yr yield up 4bps at 9.34%
  • Dollar Index up 0.17% to 94.9
  • US 10Yr yield up 1bps to 1.77%
  • Brent Futures down 0.5% to $44/bbl
  • WTI Futures down 0.6% to $41.5/bbl
  • Gold spot down 0% to $1242/oz

Top Global News

  • IEA Sees Oil Oversupply Almost Gone in Second Half on Shale Drop: surplus to dwindle to 200,000 barrels a day from 1.5m
  • Brexit Chance Seen at 24% by Election Analyst Who Beat the Polls: Matt Singh based forecast on likely movement of polls
  • London Property Prices Feel Pressure of Brexit, Pound’s Slide: RICS says prices in the U.K. capital expected to keep falling
  • U.K. Said to Be Resisting Full Disclosure on Trusts Post- Panama: British official says trusts are commonly-used vehicle in U.K.
  • Burberry Sees Profit Setback Amid Declining Luxury-Goods Demand: Full-year profit will be at low end of analysts’ ests
  • BP CEO’s 20% Jump in Pay Seen Sending ‘Wrong Message’ Before AGM: All shareholders should scrutinize remuneration deal, IoD says

Looking at regional markets, Asia stocks extended on recent gains following the positive lead from Wall St. where the S&P 500 closed at YTD highs, underpinned by strength in financials after JPMorgan earnings. The optimism in the banking sector supported Nikkei 225 (+3.23%) towards 17000, while ASX 200 (+1.26%) was lifted by material names after the continued increase in copper and iron ore prices. Chinese markets have conformed to the upbeat sentiment after further quasi-measures from the PBoC which provided CNY 285.5bIn of funds under its medium term lending facility. 10yr JGBs were initially higher despite the heightened risk-sentiment across the region, with prices gaining in the super long-end as the 30yr and 40yr yields fell to fresh record lows. However, prices then reversed in late trade following a poor 30yr auction in which the lowest accepted price missed expectations, b/c dropped and tail in price significantly widened.

Top Asian News

  • Singapore Adopts 2008 Crisis Policy as Growth Grinds to Halt: Central bank moves to zero appreciation stance on currency
  • China’s Mysterious Stock-Market King Reveals Its Trading Secrets: State rescue fund prefers banks, SOEs, consumer cos.
  • Nomura Reorganizes Asia Equities Team as Nagai Starts Job Cuts: Brokerage said to cut up to 30 jobs in Asia ex-Japan equities
  • RBNZ Says Journalist Leaked Surprise Rate-Cut Move in March: RBNZ to discontinue embargoed lockups for media, analysts
  • TSMC Forecasts Sales Below Estimates Amid Smartphone Slowdown: Chipmaker’s net income fell for 3rd straight qtr

European equities trade mostly on the back-foot albeit in somewhat choppy fashion, with energy names underperforming in the first half of the European session amid weakness in crude futures, which has since been reversed. The initial bout of weakness was in part driven by Russia signalling that there would only be little commitments at the meeting, while the IEA noted that a production freeze will have a limited impact on physical oil supplies, how it was the same IEA comments which hinted at an earlier than expected rabalancing due to a hoped for drop in US supply which then helped oil rebound. The SMI has outperformed for much of the morning following strong earnings from Nestle. Elsewhere, Bunds have reversed the initial upside to trade in the red, underpinned by the weakness in USTs ahead of the 30y bond auction due later today.

Top European news

  • ITV Said to Pursue Takeover of Canada’s Entertainment One: Entertainment One also owns rights to Peppa Pig cartoons
  • Rocket Internet Drops in Frankfurt Amid $222m Net Loss: losses widen at startups including HelloFresh, Lazada
  • Swiss Re, L&G Said to Mull Bids for Deutsche Bank Abbey Life: Abbey Life could fetch about GBP1b in a sale
  • Steinhoff Convertibles Sale Has Interest for 60% of Deal Size: according to an emailed statement from BofAML
  • Kuoni Says EQT Offer Successful as 72.6% of B Shares Tendered: additional acceptance period to start on April 20

In FX, The Bloomberg Dollar Spot Index rose 0.2 percent at 10:43 a.m. in London. The pound fell for a second day against the dollar as investors awaited the Bank of England’s latest policy decision, with analysts forecasting that the central bank will leave its key rate at a record-low 0.5 percent. Investors may focus on whether officials discussed a looser monetary policy to counter the potential economic pain of Britain voting to quit the European Union in a June referendum.  The MSCI Emerging Markets Currency Index fell 0.2 percent, dropping for the first time in six days as Singapore surprised markets by easing monetary policy, spurring speculation other central banks will follow suit. Bank of Canada Governor Stephen Poloz said this week that a stronger loonie may put export growth at risk.

“Everyone else will try to push back,” said Stephen Jen, the co-founder of hedge fund SLJ Macro Partners LLP and a former International Monetary Fund economist. “The global currency war is alive and well. You can see how unhelpful the whole process is.”

Following the latest grind higher in the USD, we have seen some consolidation/profit taking going through, and after hitting lows around 1.1232, EUR/USD is now back around 1.1270 or so, but expected to hold off 1.1300 after yesterday’s break under this level. A data light morning so far, with only the Australian jobs numbers to work off, but the above forecast headline rise was tempered the composition (part time rise much of this). AUD has been relatively well supported in the meantime, and has been edging back towards the high .7600’s again. The USD/JPY recovery has stalled ahead of 109.60 resistance, but positive stocks should support for a 110.00 test unless the US inflation read later today comes in on the weaker side. EUR/JPY sales have also weighed, but recent mid 122.00 lows have held. GBP has also been recovering, with today’s BoE meeting likely to see a familiar cautious tone maintained. Cable back in the mid 1.4100’s after a dip under the figure level lower down. EUR/GBP ranging in the .7900’s for now. CAD unmoved despite a small recovery in Oil.

In commodities, heading into the North American open WTI and Brent crude futures have largely reversed early losses and trade near unchanged on the session, as market participants remain hopeful of a deal between oil producing nations to support prices. On that note, Russian Energy Minister stated that the Doha oil freeze deal will be loosely framed with few detailed commitments, according to two sources at the briefing. While the IEA expects limited impact from any potential freeze deal in Doha. As a guide, energy traders will get to digest the release of the latest EIA natural gas storage change report.

Industrial metals in London declined on concerns that recent price gains could tempt producers to restart capacity and add to global oversupply, while a stronger dollar also weighed on all commodities. Copper dropped 0.5 percent to $4,808 a metric ton, while zinc and nickel lost at least 0.8 percent.

On the US calendar today are the latest initial jobless claims data and more notably the March inflation report. Expectations for the latter are sitting at +0.2% mom for both the headline and core. Away from the data we’ll hear from the Fed’s Lockhart and Powell today, as well the IMF’s Lagarde. The highlight from the earnings releases due today are Bank of America and Wells Fargo, while Delta Airlines will also release their latest quarterly.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Stocks in Europe traded choppy for much of the session as market participants digested a round of mixed earnings, with recovery in oil prices proving positive for the underlying sentiment
  • The USD/JPY recovery has stalled ahead of 109.60 resistance, but positive stocks should support for a 110.00 test unless the US inflation read later today comes in on the weaker side
  • Looking ahead, highlights include BoE Rate Decision & Minutes, US CPI, Initial Jobless Claims, as well as comments from Fed Powell and Lacker
  • Treasuries lower in overnight trading while a stronger dollar weighs on commodity prices; week’s auctions conclude with $12b 30Y bonds, WI 2.59%, last sold at 2.72% in March.
  • Global oil markets will “move close to balance” in the second half of the year as lower prices take their toll on production outside OPEC, the International Energy Agency said
  • Brexit is casting a long shadow over Bank of England policy with more than two months still to go before the referendum
  • Nomura Holdings Inc. is eliminating about 60 jobs at its investment banking division outside Japan as it scales back operations in markets including Switzerland and Eastern Europe
  • Chinese companies canceled almost four times the amount of bond offerings in April compared with a year earlier, as defaults by state-owned enterprises increased financing costs
  • Brazilian President Dilma Rousseff’s political future hangs on a vote that will take place Sunday in the lower house of Congress. Many analysts say it will be difficult for the government to block the motion in the Senate if it passes
  • Hedge funds and private equity firms took the least amount of office space in central London since the start of 2012 in the first quarter as sputtering global growth and increased regulation deterred startups
  • Sovereign 10Y bond yields little changed; European equity markets mixed, Asia higher; U.S. equity-index futures drop. WTI crude oil steady, precious metals and copper drop

 

 

DB’s Jim Reid concludes the overnight wrap

Moving onto markets, China has been much less of a negative influence since the devaluation risk lessened after the PBoC Governors’ remarks a couple of months back calming fears of a big fx move. The weakness in the dollar since has also helped take the pressure off. However yesterday was one of the few days it’s been a positive influence this year as the better than expected trade numbers we reported yesterday gave Europe a big boost at the open which was then aided further by a beat from JP Morgan which calmed some of the worst fears over bank earnings and pushed the rally on further.

Indeed JPM exceeded both earnings and revenue street expectations in its Q1 report as some improved trading conditions in March and better than expected cost control helped the bank to set an early positive tone ahead of the Bank of America and Wells Fargo results today. Combined with a massive rally for Italian banks too – seemingly in further response to the bank bailout fund announcement after PM Padoan weighed in with some positive comments – equity markets surged higher with the Stoxx 600 (+2.52%) rising for the fourth consecutive session and by the most in over a month. The Italian FTSE MIB gained +4.13% (Banks were up over +8%) before the S&P 500 capped off an overall positive day for equities with a +1.00% gain. European credit wasn’t left behind with Crossover rallying 11bps, although a weak late hour of trading across the pond saw credit indices in the US give up early gains to close flat.

In fact and in what feels like a rare occurrence, yesterday’s rally didn’t even get the benefit of an oil-injected boost as WTI retreated back below $42/bbl and down close to 1% on the day after Russia’s oil minister suggested that any deal signed at the Doha meeting this Sunday will be loosely framed. The announcement that coal mining giant Peabody Energy has filed for bankruptcy in the US also did little to dampen the overall mood (but in fairness it was expected), neither did some softer retail sales data which came out in the early afternoon.

More on some of those snippets shortly, but first to the latest in markets this morning where the focus is back on Central Banks and specifically in Singapore after the MAS delivered a surprise easing. The MAS has announced that it is to slow the pace of appreciation in the Singapore Dollar by moving to a neutral policy of zero percent (after the Bank had previously allowed the currency to appreciate) with policy makers warning that the ‘Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in the October policy review’. According to Bloomberg only 6 of 18 economists had expected a change in policy and you have to go back to 2008 to find the last time the MAS moved to a 0% appreciation rate – this is also the first time they have done so outside a recession. The Singapore Dollar has weakened close to 0.9% post the news, the biggest decline in three months while other currencies in the Asia region have weakened similar amounts (with the Kiwi Dollar in particular under pressure after the RBNZ confirmed that the March rate cut announcement was leaked early).

Notably our FX strategists highlight that this Singapore move could have implications for the region giving the forward looking nature of the MAS. They note that MAS’ views on weaker trade-related activity and moderating growth momentum in China could refocus attention on the challenges for Asia, and the need for currency adjustment to be part of policy situations.

Meanwhile, despite our earlier comments regarding China’s calmer FX policy of later, the strength yesterday in the US Dollar has in fact seen the PBoC react by fixing the reference rate for the CNY 0.46% weaker and by the most since January 7th. So let’s hope we haven’t spoken too soon.

Weaker currencies and the positive lead from Wall Street last night has seen Asian bourses extend gains again this morning however. It’s the Nikkei leading the way again, currently up +2.93%, while the Hang Seng (+0.89%), Shanghai Comp (+0.17%), Kospi (+1.32%) and ASX (+1.26%) are also flashing green with another strong bounce for base metals this morning also helping to keep the tone positive. Credit markets in the region are a touch tighter.

Back to those retail sales numbers out of the US yesterday. Headline sales were reported as declining -0.3% mom in March and well below market expectations of +0.1% mom. There were downside misses also for the ex auto (+0.2% mom vs. +0.4% expected), ex auto & gas (+0.1% mom vs. +0.3% expected) and control group (+0.1% mom vs. +0.4% expected) components – the latter of course which goes into the GDP accounts. On the plus side there were upward revisions to those previously weak February numbers but that doesn’t take away from the data this month being clearly disappointing. Also soft were the March PPI data. Headline producer prices came in below market at -0.1% mom (vs. +0.2% expected), with the core of 0.0% also missing by a tenth. That means headline PPI is now back in negative territory (-0.1%) on a YoY basis for the first time since October last year.

The only other data out of the US yesterday was February business inventories which offered no surprises after printing at -0.1% mom. Later in the evening saw the release of the Fed’s Beige Book with a mixed assessment probably being a fair refection. The report showed that ‘economic growth was in the modest to moderate range’ but on a district by district basis there was alot more variation. Labour market conditions were cited as strengthening along with expansion in business spending, although prices were only seen as increasing ‘modestly’. A positive takeaway we noted was the overall pickup in manufacturing which appears to be benefiting from the recent softness in the Dollar.

Staying with the macro, with one eye on the ECB policy meeting in just a week’s time, negative rates appeared to be a topical discussion for ECB officials yesterday. Nowotny played up the impact of how the implementation of a negative deposit rate in Europe has helped spur lending in the Euro area, before later in the evening we heard from Constancio. The ECB official appeared to cool expectations of the overall impact of negative rates in Europe, citing that it is ‘important to recall that there are clear limits to the use of negative deposit facility rates as a policy instruments’ and that ‘tier systems that simply pass direct costs at the margin can mitigate this concern but cannot dispel it altogether’. Constancio also went on to say that the early signs of the ECB’s easing measures are showing positive effects for the Euro area, but that the full effects have yet to fully materialize.

Moving on. Peabody Energy – the world’s largest private sector coal producer by output – became the latest name to buckle under the pressure of tumbling coal prices after the announcement that it has filed for Chapter 11. According to the FT, that announcement now means that 50 US coal miners have filed for bankruptcy protection since 2012. The move now means that the company will look to restructure its roughly $10bn debt load, and seek to reorganize its US operations.

Just wrapping up the data yesterday and specifically in Europe where we saw the Euro area industrial production reading come in a tad softer than expected at -0.8% mom (vs. -0.7% expected). That was in fact the single largest monthly decline in 18 months. Meanwhile, the other data yesterday was out of France where we saw the final March CPI report confirmed at +0.7% mom, unchanged on the earlier initial estimate.

Turning our focus to the day ahead now then, this morning in Europe will see the final confirmation of the March CPI report for the Euro area as well as the inflation numbers out of Italy. Around lunchtime we’ll get the Bank of England rate announcement where we’re not expecting any surprises, before attention turns to the US session with the latest initial jobless claims data and more notably the March inflation report. Expectations for the latter are sitting at +0.2% mom for both the headline and core, while our US economists expect a similar headline number but just +0.1% mom gain for the core. Away from the data we’ll hear from the Fed’s Lockhart (3.00pm BST) and Powell (3.00pm BST) today, as well the IMF’s Lagarde (2.30pm BST). As noted earlier the highlight from the earnings releases due today are Bank of America and Wells Fargo, while Delta Airlines will also release their latest quarterly.

ASIAN AFFAIRS

 

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed UP 15.72 POINTS OR 0.51%  /  Hang Sang closed UP 179.10 OR 0.85%. The Nikkei closed UP 529.83 POINTS OR 3.53% . Australia’s all ordinaires  CLOSED UP 1.27%. Chinese yuan (ONSHORE) closed DOWN at 6.4829.  Oil ROSE  to 41.87 dollars per barrel for WTI and 44.27 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4939 yuan to the dollar vs 6.4829 for onshore yuan. LAST NIGHT CHINA DEVALUES ITS CURRENCY BY THE MOST IN 3 MONTHS (SEE BELOW)

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Major earthquake hits southern Japan in the Kumamoto region.  Registers 6.0 on the Richter scale:

(courtesy zero hedge)

Major Earthquake Hits Japan, Strongest Since 2011; At Least 10 Houses Collapse, Suga Urges “Calm”

Just over 5 years since the massively destructive 2011 Japanese earthquake which unleashed a tsunami and led to the Fukushima disaster, moments ago NHK reported that Japan’s Kumamoto region had been hit with another quake which had a Shindo shaking intensity of 7 and registered a magnitude of apprxoimately 6.4.

According to the Japanese media this is the strongest quake to hit Japan since the 2011 earthquake. The good news is that so far there has been no tsunami alert.

Bloomberg adds that JR trains, incl. bullet trains, have been halted in Kyushu; Kyushu Electric checking impact of quake on the operating Sendai nuclear reactors.

As AP reports, there are no immediate reports of casualties.

Chief Cabinet Secretary Yoshihide Suga told a news conference that damage was being assessed. A number of houses have collapsed, but there was no abnormality at nearby nuclear facilities, Suga said.

“There was a ka-boom and the whole house violently shook sideways,” Takahiko Morita, a resident in Mashiki, a town at the epicenter, told a telephone interview with NHK TV. “Furniture and bookshelves fell down, books were all over the floor.”

Morita said there is no power outage in his neighborhood but water supply was cut off. Some houses and walls collapsed, he said.

Keisukei Urata, an official at nearby Uki city, said he was driving home when the quake struck at 9:26 p.m.

He also said he saw some walls around houses collapsing.

Parts of the ceiling at Uki City Hall also collapsed, windows were broken and cabinets fell to the ground, he said.

Kasumi Nakamura, an official in the village of Nishihara near the epicenter, said that the rattling started modestly and grew violent, lasting about 30 seconds.

“Papers, files, flower vases and everything fell on the floor,” he told NHK. He said there were aftershocks.

One aftershock measuring 5.7 struck about 40 minutes later, according to Japan’s Meteorological Agency.

The U.S. Geological Survey put the quake’s preliminary magnitude at 6.2 and said it was 23 kilometers (14 miles) deep. It said there’s a low likelihood of casualties but some damage is possible.

More updates:

  • SUGA: ASK THOSE AFFECTED BY QUAKE TO ACT IN CALM MANNER
  • JAPAN CHIEF GOVT SPOKESMAN SAYS SEVERAL BUILDINGS HAVE COLLAPSED AFTER EARTHQUAKE: RTRS
  • SUGA: NO NEWS OF DAMAGE AT NUCLEAR REACTORS AFTER QUAKE
  • NHK SAYS NO TSUNAMI THREAT FROM KUMAMOTO QUAKE AFTERSHOCK
  • AT LEAST 10 COLLAPSED HOUSES IN JAPAN EARTHQUAKE: NHK
  • JAPAN SDF SENDING CHOPPERS TO ASSESS QUAKE DAMAGE: YOMIURI
  • JAPAN ISSUES EARLY WARNING QUAKE ALERT FOR KUMAMOTO: NHK

A map of the region from JMA:

According to USGS, the quake is a magnitude 6.0

Another map of the location:

end

b) CHINA ISSUES

 

Following Double-Fed Emergency Meetings, China Devalues Yuan By Most In 3 Months

After weeks of “stability,” and following two emergency Fed meetings in 3 days (and an unexpected ease by MAS), The PBOC decided today was the right time to drastically slash the Yuan fix by 300 pips. This is the largest devaluation of the Chinese currency since January 7th (and second largest since August’s world-market-turmoiling devaluation). Offshore Yuan had been tumbling all day (shrugging off the supposedly better trade data as FX traders saw through the colossal spike in imports from HK as indicative of capital outflows), and is falling further following PBOC’s cut.

 

As Bloomberg’s Tom Orlik notes, China’s March imports from Hong Kong soared an implausible 116% YoY! As it is clearly disguising capital flows…

Trade mis-invoicing as a way to hide capital flows remains a factor. In the past, over-invoicing for exports was used as a way to hide capital inflows.

 

The latest data show the reverse phenomenon, with over-invoicing of imports as a way of hiding capital outflows.

 

And Offshore Yuan – after an initial modest rally on the trade data – plunged all day…

 

Which seemingly prompted PBOC to slash its Yuan Fix…by the most in 3 months…

 

As it appears it is time for the USD to take its punishment (as JPY and EUR has in the last few weeks of divergence between Yuan basket and USDCNY)…

 

All of this chaos amid the biggest short-squeeze in US stocks in 6 months makes us wonder if something serious is not breaking behind the scenes and every effort is being made to put lipstick on this pig.

END

GLOBAL ISSUES

Singapore Unexpectedly Eases Monetary Policy After “Economy Grinds To A Halt”

After a brief hiatus during which central banks refrained from stimulating their economies by the only way they know how, i.e., devaluing their currency through monetary policy, moments ago Singapore broke ranks when its central bank, the Monetary Authority of Singapore, unexpectedly eased monetary policy and drew a line against further appreciation when it announced that it would move to zero-percent appreciation in its currency.

The MAS also said that width of policy band and the level at which it is centered will be unchanged while adding that the Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in the October policy review,” the central bank said. “Core inflation should also pick up more gradually over the course of 2016 than previously anticipated.”

The decision came as a surprise to economists, as 12 of the 18 polled said they expected no change from the central bank. It also surprised the SGD which proceeded to slide against the dollar following the announcement.

As a reminder, the Singapore central bank eased monetary policy twice last year by reducing the slope of band, while retaining “modest and gradual appreciation” of currency against basket.

Why did the MAS feel compelled to ease further? According to Bloomberg, the reason is that the trade-dependent city-state’s economic growth ground to a halt last quarter.

Growth was stagnant on an annualized basis compared with the fourth quarter, the trade ministry said in a separate report. That was in line with the median forecast of 12 economists surveyed by Bloomberg. The city state’s services sector contracted for the first time since the first quarter of 2015.

“As Asia’s financial hub, Singapore is feeling the effects of the global downturn and China’s weakening economy. “More businesses were shut than opened in December and February, while bank loans have dropped every month since October, the longest period of declines since 2000.”

 

As Bloomberg adds, Citigroup Inc. economist Kit Wei Zheng said in a report last month that the decline in net new businesses for the first time since 2009 signals a possible recession. In the past two decades, the only time that business closures exceeded openings was during contractionary periods in 2009, 2001 and 1995 to 1997, he said.

 

More economic weakness was revealed when the services industry contracted an annualized 3.8 percent in the first quarter from the previous three months, when it grew 7.7 percent. Manufacturing and construction rebounded strongly in the quarter, expanding 18.2 percent and 10.2 percent respectively

“The key factors we see here are an absence of a significant pickup in the external front,” Weiwen Ng, an economist with Australia & New Zealand Banking Group Ltd., said by phone from Singapore before the data was released. “The rest of the year will be a function of how the global outlook evolves.”

So now that Singapore has confirmed what the IMF warned about this week, namely that in a time of soaring global debt growth remains elusive and the only way to rent it, is to “beggar thy neighrbor” with monetary devaluation, just which other more prominent central bank will be the next to ease monetary policy because, you know, “global conditions”?

 END

OIL MARKETS

 

Oil spikes to 42 dollars after bullish IEA comments

(courtesy zero hedge/IEA)

Oil Spikes Back To $42 After IEA Comments

Forget Doha, says the International Energy Agency (IEA), bet it all on US production crashing.

First, IEA says Doha Don’t Matter…

A deal to freeze oil production by OPEC and non-OPEC producers will have a limited impact on global supply and markets are unlikely to rebalance before 2017, the International Energy Agency (IEA) said on Thursday.

 

The IEA, which oversees the energy policies of industrialized nations, said even though the decline in U.S. output was gathering pace and Iran was not adding as many barrels as expected, the world would still produce more oil than it consumes throughout 2016.

Then, as Bloomberg reports,IEA says global oil markets will “move close to balance” in the second half of the year as lower prices take their toll on production outside OPEC…

The world surplus will diminish to 200,000 barrels a day in the last six months of the year from 1.5 million in the first half, the agency said in a report on Thursday. Production outside the Organization of Petroleum Exporting Countries will decline by the most since 1992 as the U.S. shale oil boom falters. The glut is also being tempered as Iran restores exports only gradually with financial barriers to sales persisting even after the lifting of international sanctions.

 

“There is no doubt as to the direction of travel for the supply-demand balance,” the Paris-based adviser to industrialized nations said. “There are signs that the much-anticipated slide in production of light, tight oil in the U.S. is gathering pace.”

And the algos love it…

 

So what happens when the rallying oil price enables these zombie glut creators to stay alive longer and re-create the glut in H2?

end

Two big problems in the energy patch:

Energy XXI files for Chapter ll and Gulf Keystone delays bond payments.

(courtesy zero hedge)

More Energy Defaults: Energy XXI Files Chapter 11; Gulf Keystone Delays Bond Payment

Following yesterday’s historic bankruptcy of the world’s largest coal miner Peabody Energy, the defaults continue hot and heavy overnight when first Energy XXI, which had already warned it would unlikely make its bond payments, filed for a prepack Chapter 11, and then Gulf Keystone announced it would delay a bond payment.

This is what XXI posted overnight to explain its prepackaged bankruptcy:

Energy XXI Enters Restructuring Support Agreement With Second Lien Noteholders to Strengthen Balance Sheet and Reduce Debt

Voluntarily Files for Chapter 11 to Implement Financial Restructuring

Energy XXI Ltd (NASDAQ:EXXI) (“Energy XXI” or the “Company”) announced today that it and certain of its subsidiaries have entered into a Restructuring Support Agreement (the “RSA”) with holders of more than 63% of  the Company’s secured second lien 11.0% notes (the “Second Lien Notes”) on the material terms of a balance sheet restructuring plan that will strengthen the Company’s financial position by reducing long-term debt and enhancing financial flexibility. In order to implement the terms of the RSA, the Company commenced cases under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

Through the Chapter 11 restructuring, Energy XXI will eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and position the Company for long-term success.  The RSA eliminates substantially all of the Company’s prepetition funded indebtedness other than its first lien reserve based loan facility, resulting in a significantly deleveraged balance sheet upon the Company’s emergence from the Chapter 11 bankruptcy process.  The RSA also provides that John Schiller will continue as the reorganized company’s Chief Executive Officer and a member of its board of directors.  The Company is also continuing ongoing negotiations with a steering committee of lenders under the Company’s first lien reserve based loan facility that is not party to the RSA at this time.

Notably, as a result of the deleveraging the pumping will continue: “Energy XXI expects operations to continue as normal throughout the court-supervised financial restructuring process, including paying royalty and surety obligations in the ordinary course.  In addition, the Company expects to maintain compliance with its existing long-term plan with the Bureau of Ocean Energy Management throughout the restructuring process.”

This means that as we warned many months ago, as companies enter the bankruptcy process, they will maintain their oil production, in what will likely be a setback to Saudi plans to cut out margina shale producers.

Energy XXI’s President and Chief Executive Officer John Schiller said, “Today’s announcement reflects the next step in our efforts to respond proactively to the challenging market environment.  Over the last several months, we have worked to actively manage our balance sheet, and after thoroughly evaluating our options with the help of our outside advisors, we determined that entering these agreements and implementing them through a court-supervised process is the best course of action for Energy XXI and all our stakeholders.  We are confident that we are taking the right steps to provide Energy XXI a solid foundation for a successful future.”

* * *

Elsewhere, Gulf Keystone Petroleum Ltd. also took its first step to a Chapter 11 filing when it announced it would delay about $26 million of bond payments due next week “as low oil prices and disruptions in Iraq press its finances.”

As Bloomberg reports, “the company intends to use grace periods for payments on convertible bonds and guaranteed notes due on April 18, it said in a statement on Thursday. Shares of the London-based oil explorer tumbled as much as 36 percent to record-low 4.5 pence.

Gulf Keystone, which operates in the Kurdish region of northern Iraq, also intends to hold talks about fundraising and debt obligations after oil prices plunged about 60 percent in two years. Financial difficulties have been compounded by previously erratic export payments from the Kurdistan Regional Government.

“We are working to achieve the best possible way to restructure our balance sheet,” Gulf Keystone’s Chief Executive Officer Jon Ferrier said in the statement. “Addressing our funding needs will ensure the company’s longer-term future.”

Payments on $325 million of October 2017 convertible notes can be delayed until May 2, without risk of default. Those on $250 million of guaranteed notes due April 2017 can be postponed until May 3. The convertible notes are quoted at 13 cents on the dollar, while the guaranteed notes are at 49 cents, according to data compiled by Bloomberg.

Bondholders including GLG Partners, Sothic Capital Management and Taconic Capital Advisors have hired Houlihan Lokey Inc. to advise them on the potential debt restructuring, people familiar with the matter said in February.

It is unlikely that these coupon payments will be paid meaning that the ad hoc creditor committee will likewise end up owning the company, which when delevered, will continue pumping even more oil now that its overall cost of capital slides as it has no more debt payments to worry about.

end
Late in the session, crude craters.  it looks like the short squeeze is over:
(courtesy zero hedge)

Crude Craters Through NYMEX Close As Stock Short-Squeeze Ends

 

Party’s over?

Crude clubbed into and through the NYMEX close…ahead of tonight’s China GDP

 

And as JPMorgan’s trading desk notes, March brought the heaviest net covering seen by the Prime Brokerage in several years. Activity was skewed towards single names but ETF activity also was strong. All sectors experienced net covering, with Energy and Consumer, Cyclicals in the lead.

And the huge squeeze of the last 2 days has ended today…

 

With VIX and USDJPY used to desperately keep S&P green

 

Still plenty of time left in the day yet for a late-day buying panic.

end

Crude Craters Through NYMEX Close As Stock Short-Squeeze Ends

Is the party over?

 

In a shocking day for stock traders, US equity markets were unable to hold any gains today – despite a panic buying ramp in USDJPY at the close…

 

With VIX being slammed incessantly to try to keep S&P green…

 

Trannies & Small Caps rolled over today but remain big winner on the week…

 

The banks continue to lead the week…

 

But Wells Fargo just could not sell the world on how awesome it was…

 

As the short-squeeze seemed to run out of ammo…

 

Notably – not even the biggest quake since Fukushima was able to hold back the JPY carry-mongers…

 

For the 2nd day running, crude and stocks decoupled atthe NYMEX Close…

 

Treasury yields rose on the day but with the week’s bear-flattening continuing…

 

The USD Index eked out a gain for its biggest 3-day rise in 2 months (as China devalued the Yuan fix dramatically overnight)

 

 

Commodities all fell today, with copper best of the bad bunch…

 

Silver continues to outperform gold in the short-term…

 

Charts: Bloomberg

Bonus Chart: Wondering where The Fed “Put” lies? Simple – about 75-100 S&P points below the Fed Balance-sheet-implied level!

 end

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

Euro/USA 1.1265 DOWN .0012 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 109.26 down 0.171 (Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER

GBP/USA 1.4141 DOWN  .0046 (STILL THREAT OF BREXIT)

USA/CAN 1.2835 UP .0015

Early THIS THURSDAY morning in Europe, the Euro FELL by 12 basis point, trading now WELL above the important 1.08 level FALLING to 1.1305; 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 Shanghai composite was UP 15.72 POINTS OR 0.51%/ Hang Sang UP 179.10 OR  0.845%   / AUSTRALIA IS HIGHER BY 1.27% / ALL EUROPEAN BOURSES ARE  IN THE  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 THURSDAY morning: closed UP 529.83 OR 3.53%

Trading from Europe and Asia:
1. Europe stocks MIXED AS WE START THE DAY

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

Gold very early morning trading: $1240.10

silver:$16.13

Early THURSDAY morning USA 10 year bond yield: 1.78% !!! UP 2 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.60 UP 2 in basis points from MONDAY night.

USA dollar index early THURSDAY morning: 94.90 up 12 cents from TUESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING

 

end

 

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.25% UP 2 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -.092% DOWN 2 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.51% UP 5 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.36  UP 6 IN basis points from WEDNESDAY

the Italian 10 yr bond yield is trading 15 points lower than Spain.

GERMAN 10 YR BOND YIELD: .167% (DOWN 4 IN BASIS POINT ON THE DAY)

 

end

 

IMPORTANT CURRENCY CLOSES FOR WEDNESDAY

Closing currency crosses for THURSDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/2:30 PM

 

Euro/USA 1.1262 DOWN .0015 (Euro DOWN 15 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 109.36 DOWN 0.067 (Yen UP 7 basis points)

Great Britain/USA 1.4159  DOWN .0028 Pound DOWN 28 basis points/

USA/Canad 1.2851 UP 0.0033 (Canadian dollar DOWN 33 basis points with OIL (WTI AT $41.42

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was down by 15 basis points to trade at 1.1262 as the markets REACTED TO THE STRONGER DOLLAR

The Yen ROSE to 109.36 for a GAIN of 7 basis points as NIRP is STILL a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.

The pound was DOWN 28 basis points, trading at 1.4159

The Canadian dollar FELL by 33 basis points to 1.2851, WITH THE SMALL GAIN IN WTI TODAY:  $41.95

The USA/Yuan closed at 6.4780

the 10 yr Japanese bond yield closed at -.092% DOWN 2 BASIS  points in yield

Your closing 10 yr USA bond yield: UP 3 basis points from WEDNESDAY at 1.79% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.60 UP 2 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.92 UP  14 CENTS ON THE DAY/4 PM

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

London:  CLOSED  UP 2.21 POINTS OR 0.03%
German Dax :CLOSED UP 67.55 OR 0.67%
Paris Cac  CLOSED UP 21.20  OR 0.47%
Spain IBEX CLOSED UP 41.80 OR 0.46`%
Italian MIB: CLOSED UP 163.50 OR 0.90%

The Dow was UP 18.15 points or 0.10%

NASDAQ DOWN 1.53 points or 0.035%
WTI Oil price; 41.44 at 2:30 pm;

Brent Oil: 43.86

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  66.15 (ROUBLE UP 12/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT FELL AND WTI 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:  $41.45

BRENT: 3.83

USA 10 YR BOND YIELD: 1.792%

USA DOLLAR INDEX:94.94 up 16 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:

Stock Short-Squeeze Party Ends After Wells Worries & Crude Crunch

Is the party over?

 

In a shocking day for stock traders, US equity markets were unable to hold any gains today – despite a panic buying ramp in USDJPY at the close…

 

With VIX being slammed incessantly to try to keep S&P green…

 

Trannies & Small Caps rolled over today but remain big winner on the week…

 

The banks continue to lead the week…

 

But Wells Fargo just could not sell the world on how awesome it was…

 

As the short-squeeze seemed to run out of ammo…

 

Notably – not even the biggest quake since Fukushima was able to hold back the JPY carry-mongers…

 

For the 2nd day running, crude and stocks decoupled atthe NYMEX Close…

 

Treasury yields rose on the day but with the week’s bear-flattening continuing…

 

The USD Index eked out a gain for its biggest 3-day rise in 2 months (as China devalued the Yuan fix dramatically overnight)

 

 

Commodities all fell today, with copper best of the bad bunch…

 

Silver continues to outperform gold in the short-term…

 

Charts: Bloomberg

Bonus Chart: Wondering where The Fed “Put” lies? Simple – about 75-100 S&P points below the Fed Balance-sheet-implied level!

Average:

5
Your rating: None Average:

end

 

Bank of America misses on Revenue and earnings.  They now build their reserves for energy losses

(courtesy zero hedge)

BofA Profit Misses, Tumbles 13% On Trading Revenue Slide, Build In Energy Reserves

Expectations of a “less terrible” first quarter for banks may have been premature following yesterday’s stronger than expected JPM earnings report. First it was both PNC and Blackrock missing on the top and bottom line, but the highlight of the day was Bank of America which moments ago reported $0.20 in EPS, missing expectations of a $0.21 print, while revenue ex-DVA dropped by $1.4 billion to $19.7 billion, also missing expectations of a $20bn print. BofA reported Net Income of $2.68 billion, down from $3.1 billion one year ago.

The breakdown of earnings from the company’s presentation was as follows:

The bank provided the following bridge detailing the components of its net income, which showed a relatively stable picture except for a big drop in the “all other” plug.

But the all important chart table eeryone was focusing on was the bank’s “global markets” trading breakdown which was as follows.

This is what BofA said:

  • Excluding net DVA, sales and trading revenue of $3.3B increased seasonally by 25% from 4Q15, but declined 16% from 1Q15
    • FICC revenue decreased $0.5B, or 17%, from 1Q15, due primarily to a weak trading environment for credit-related products as well as a decline in currencies from a strong year-ago quarter, partially offset by improved performance in rates and client financing
    • Equities revenue decreased $0.1B, or 11% from 1Q15, reflecting a weaker trading performance in a challenging market environment

The total trading revenue of $3.3 billion was in line with the $3.29bn expected, and while FICC’s $2.3bn missed expectations of $2.32bn, equities revenue of $1.0 billion was a modest beat to the $970MM expected.

Perhaps just as troubling is that while BofA reported a pick up in adjusted NIM which rose to 2.31%, its actual Net Interest Margin declined once more, this time to 2.05%, the lowest on record, as the bank generated only $9.4 billion in net interest income, down from $10 billion last quarter.

And while BofA also generated a total of $10.34 billion in non-interest income (vs $9.9bn Q/Q), this was not enough to offset the surprising rebound in noninterest expense, which rose by $800 million Q/Q to $14.8 billion, if down $1 billion from a year ago.

Here is BofA’s expense breakdown:

  • Total noninterest expense of $14.8B in 1Q16 declined $1.0B, or 6%, from 1Q15, driven by lower revenue-related incentives, progress made on LAS costs and the expiration of fully amortized advisor retention awards
  • First quarter expenses included the following compensation costs:
    • Annual retirement-eligible incentive costs of $0.9B and $1.0B in 1Q16 and 1Q15
    • Seasonally elevated payroll tax costs of $0.3B in both 1Q16 and 1Q15
  • LAS expense, excluding litigation 1, declined to $0.7B in 1Q16
  • FTE headcount was down 3% from 1Q15, as continued progress in LAS and other reductions in support staff and operations more than offset increases in client-facing professionals

Things were stable on the consumer banking side as the following chart reveals, with a focus on the continuing increase in loans and leases.

Regarding BofA’s energy and loan exposure, BofA declared a total of $1.1bn in net charge-offs $down from $1.2b y/y, as the net charge-off ratio declined to 0.48% from 0.56%. Also, the provision for credit losses rose to $997m vs $810m in Q4, and up from $765m a year ago; BofA notes increased reserves in commercial portfolio due to energy sector exposure. As a result, net reserve release tumbled to just $71m vs $429m a year ago.

This is what BofA said:

  • Total reported and adjusted net charge-offs  were relatively flat versus 4Q15
  • Provision of $1.0B increased $0.2B from 4Q15, driven by lower net reserve release
  • 1Q16 increase in commercial reserves for Energy was offset by reserve releases in consumer

Finally, Bank of America made the disturbing revelation that 56% of its exposure its utilized exposure within energy is criticized.

  • Commercial net charge-offs decreased $35MM from 4Q15, driven primarily by non-Energy clients
    • Energy net charge-offs of $102MM increased $17MM
  • Allowance for loans and leases increased from 4Q15, driven by an increase in Energy reserves of $0.5B to $1.0B, due primarily to increased allowance coverage for the higher risk sub-sectors (E&P and OFS)
  • Utilized Energy exposure increased $0.5B from 4Q15, due primarily to increases in refining & marketing, partially offset by a decline in higher risk sub-sectors
    • Exposure of $7.7B to higher risk sub-sectors declined 7% and represents <1% of total loans and leases
      • 56% of this utilized exposure is criticized
  • Reservable criticized exposure increased from 4Q15, driven primarily by a $1.6B increase in Energy and $0.2B increase in Metals & Mining

The pain is not over yet for the banks which are only very slowly coming to grips with the full potential fallout.

* * *

Full presentation below:  see zero hedge

end

Wells Fargo finally reveals its full energy exposure and it is not pretty:  they have a huge 32 billion in junk related oil and gas exposure.  They produce 5 billion uSA in income:

(courtesy zero hedge)

Wells Fargo Finally Reveals Its Full Energy Exposure:: $32 Billion To Junk-Rated Oil And Gas Companies

Following its recent critical profile by Bloomberg which earlier this week penned, “Wells Fargo Misjudged the Risks of Energy Financing“, which came about 4 months after we wrote an almost identical report, the biggest US bank by market cap knew it had to reveal more than just the usual placeholder data in its investor presentation today. Sure enough, Warren Buffett’s favorite bank finally opened its books more than usual as concerns built about its $17.4 billion in total outstanding oil and energy loans (at the end of 2015). This is what it revealed.

First, the big picture. As the chart below shows, Wells’ net income has been consistently declining in the past year, with earnings of $5.5BN down from $5.8BN a year ago even as revenues grow 4% over the same period.

Here is the reason: Net Interest Margin continues to decline, as a result of the continued curve flattening.

This ongoing decline in NIM is forcing Wells to issue ever more loans to maintain its average loan/yield constant. As the chart below shows, it is doing just that, with period end loans outstanding soaring by $86BN from a year ago to $947.3BN.

All of that, however has to do with the structural constraints of the economy, and the ongoing collapse in rates.

What about Wells’ overall credit book? Here we find some curious observations here.

Net charge-offs rose to $886 million, up $55 million, or 7%, LQ on $87 million higher oil and gas portfolio losses. And yet, despite the abovementioned $17.8 billion (as of Q1) in loans to oil and energy and despite the deteriorating conditions, Wells only built reserves by a paltry $200 million reserve build in the quarter, resulting in a 0.38% net charge-off rate “as continued improvement in residential real estate was more than offset by higher oil and gas reserves.” Will that reserve

Still it wasn’t just energy related losses: Wells also revealed that commercial losses were 20 bps, up 4 bps LQ. while consumer losses of 57 bps, up 1 bp LQ

Just as interesting was Wells’ disclosure of its Non performing assets, which jumped by $706 million to $13.5 billion, the biggest such increase since the crisis.

This was Wells’ explanation:

  • Nonaccrual loans increased $852 million on $1.1 billion higher oil and gas and $343 million from the addition of GE Capital loans, partially offset by lower residential and commercial real estate nonaccruals
  • Acquired loans and leases from GE Capital acquisitions were marked to fair value in purchase accounting with no Allowance recorded with the closings
  • Future allowance levels will be based on a variety of factors, including loan growth, portfolio performance and general economic conditions

Finally, we get to the real meat – Wells’ Oil and Gas loan portfolio and total exposure. Here are the details:

Oil and gas loan portfolio of $17.8 billion, or 1.9% of total loan outstandings

The total outstanding amount was up $474 million, or 3%, from the $17.4 billion in 4Q15 on drawn lines and the acquisition of $236 million in loans from GE Capital

Outstandings include $819 million second lien and $374 million of mezzanine loans

Wells reports that ~7%, or $1.2 billion, of outstandings to investment grade companies. This means that $16.6 bilion of Wells’ outstanding loans are to junk-rated companies, something we flagged four months ago.

* * *

On the other hand, total exposure of $40.7 billion was down $1.3 billion, or 3%, reflecting declines across all 3 sectors from reductions to existing credit facilities and net charge-offs. As expected, Wells has decided to start trimming it overall exposure by collapsing credit lines.

But the punchline once again, is in the reminder of just how generous Wells has been in lending to junk-rated oil and gas companies in the recent past to compensate for its declining NIM: Wells reported that ~22%, or $8.8 billion, of exposure to investment grade companies, which means $32 billion is to junk-rated companies.

It also means that much more pain is in store for Wells in the coming quarters unless oil stages a dramatic comeback.

* * *

At this point Wells give an update of what it actually did in the first quarter.

First, it increased net chargeoffs by a paltry $204 million in 1Q16, up $87 million from 4Q15, “driven by deterioration in borrower financial performance and collateral values reflecting lower crude and natural gas prices

While it did not need to explain, it adds that “all of the losses were in the E&P and services sectors Nonaccrual loans

More troubling was the spike in Nonaccrual loans which more than doubled to $1.9 billion, up $1.1 billion from 4Q15 on “higher outstandings, weaker expectations for borrower cash flows reflecting lower collateral values, the run-off of hedges, less sponsor support and the closing of external liquidity sources, as well as protective draws” Once again, nearly all nonaccruals were in the E&P and services sectors.

Curiously, about 90% of nonaccruals remain current on interest and principal. This means that if and when the borrowers hit their funding cliff, the consequences will be severe.

Finally, Wells reports that it has taken $1.7 billion of allowance for credit losses allocated for oil and gas portfolio, which amount to 9.3% of total oil and gas loans outstanding.

So, here is the recap: $1.1 billion in reserves provisions (an increase of only $200MM in the quarter), a total of $1.9 billion in non-performing Oil and Gas assets, a $1.7 billion allowance for Oil and Gas credit losses, and a total of $32 billion in junk rated oil and gas exposure?

Something tells us that top chart showing Wells Fargo’s declining net income will not get much better any time soon…

Source: Wells Fargo

end

Core CPI now rises to near 8 yr highs:

(courtesy zero hedge)

Core CPI Hovers Near 8 Year Highs As Shelter/Rent Pops, Autos Drop

Having surged to its highest since 2008 in February, Core CPI’s YoY gain inched back from 2.3% to 2.2% YoY in March hovering at post-crisis highs. The food index declined in March, as did the cost of ‘shelter’ and medical care but used cars and truck prices declined, as we noted previously.

Still above Fed “mandate” levels and near 8 year highs…

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in March on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index rose 0.9 percent before seasonal adjustment.

The food index declined in March, while the indexes for energy and for all items less food and energy rose, leading to the slight seasonally adjusted increase in the all items index. The food index fell 0.2 percent after rising in February, as five of the six major grocery store food groups declined. The energy index rose for the first time since November, with all of its major components except natural gas increasing.

While the index for all items less food and energy increased in March, the 0.1 percent advance was the smallest increase since August. Major component indexes were mixed in March. The indexes for shelter, recreation, medical care, education, tobacco, and personal care were among those that rose, while the indexes for apparel, airline fares, communication, household furnishings and operations, and used cars and trucks all declined.

 end
The Atlanta Fed’s own core inflation tracker is now at 6 yr highs:
(courtesy zero hedge)

Dear Janet: Your Own Atlanta Fed’s “Core” Inflation Tracker Is At Six Year Highs

First the AtlantaFed (with occasional shoulder-tapping exceptions) created a mini revolt in the way GDP was tracked on a day to day basis with its GDP Nowcast, one which pressured the NY Fed to create its own version (influenced by Goldman’s own economic models as the Atlanta Fed’s number are seen as too pessimistic), and now the same Atlanta Fed is casting serious doubt over the government’s official inflation numbers, with its own “sticky-price” CPI tracker.

As it explains, “The Atlanta Fed’s sticky-price consumer price index (CPI)—a weighted basket of items that change price relatively slowly—rose 2.0 percent (annualized) in March, following a 2.7 percent increase in February. The 12-month percent change in the index was 2.5 percent.”

In other words, this is a tracker of core-core CPI.

The components that make up sticky vs flexible price items are revealed in the table below. Once again, the “stick-price” items are largely what the BLS defines as “core.”

Here is a brief summary of what this indicator measures:

Some of the items that make up the Consumer Price Index change prices frequently, while others are slow to change. We explore whether these two sets of prices—sticky and flexible — provide insight on different aspects of the inflation process. We find that sticky prices appear to incorporate expectations about future inflation to a greater degree than prices that change on a frequent basis, while flexible prices respond more powerfully to economic conditions— economic slack. Importantly, our sticky-price measure seems to contain a component of inflation expectations, and that component may be useful when trying to gauge where inflation is heading.

So where is inflation heading? According to the just released update from the Atlanta Fed, sticky inflation is now at a six year high and rising.

Perhaps the FOMC should consider this explanation of why US household spending continues to dwindle (as rising inflation on core purchases continues to eat away at the US household’s purchasing power) when deciding whether “global events” are enough to offset what are now clearly rapidly rising core inflation pressures.

end

More garbage on initial claims report from the BLS/plunge to 43 yr lows:
a real joke:
(courtesy BLS/zero hedge)

Thursday Humor – Initial Jobless Claims “Unexpectedly” Plunge To 43-Year Lows

Having risen along with weakness in broad market surveys (ISM, PMI, NFIB) throughout January, initial jobless claims have plunged twice since (despite the same surveys getting worse) breaking down to 253k in the last week – the lowest since 1973!

Makes perfect sense…

Sometimes you just have to laugh.

 end
Main street investors are realizing that these hedge funds are not producing any returns and thus we see huge redemptions:
(courtesy zero hedge)

Hedge Funds Slammed: Tudor Hit With $1BN In Redemptions; NYC Pensions To Pull $1.5BN From Key Names

In a world in which the average hedge fund has failed to outperform the stock market for 8 years running, many have asked themselves what is the point of paying 2 and (not so much 20) to consistently underperform a global asset class which is now actively micromanaged by central banks themselves. And while redemptions from hedge funds have been growing in recent months, coupled with the first year since the crisis in which more hedge funds shut down than were created, it all culminated moments ago whenBloomberg reported that clients of none other than hedge fund legend Paul Tudor Jones have asked to pull more than $1 billion after three years of lackluster returns.

As Bloomberg reports, “the investor redemption requests were made in recent weeks, according to two people with knowledge of the matter, and follow the exit of several money managers, some of whom spent decades at the firm. Another senior executive,Richard Puma, Tudor’s deputy chief operating officer, is planning to leave, the people said.”

The withdrawals mark a setback for the $13 billion firm, one of the oldest and well regarded in the industry. BVI Global, Tudor’s main fund, which makes wagers on macroeconomic events, added to losses in March, pushing its decline to 2.8 percent in the first quarter, according to an investor document. What is surprising is that PTJ’s returns have not been too bad: gains of 1.4 percent in 2015 and 3.5 percent in 2014.

Still that was not enough for his clients used to seeing double digit returns every year.

As Bloomberg reports, PTJ’s bets during the financial crisis helped investors dodge damage. Tudor’s Tensor Fund gained 36 percent in 2008, and BVI lost just 4.5 percent while stock markets plunged by 37 percent, including reinvested dividends.

Snidely, Bloomberg notes that like most hedge fund firms that make investments based on macroeconomic events, Tudor has had difficulty matching those outsized returns in the years since. The Tensor fund returned cash to investors in 2014 after three years of losses.

Thank the central banks for turning every the logic of finance on its head.

More troubling are the departures: Puma, who reported to Tudor Co-President Michael Riccardi, is leaving after three years, people said. He previously worked at Tudor from 1995 to 2003 as head of U.S. operations, according to his LinkedIn.com profile. Money managers Spencer Lampert and John De Palma left earlier this year, months after the retirement of Mark Heffernan, another money manager who’d spent decades at the firm.

* * *

Tudor is not alone. As Bloomberg also reported last night, New York City’s pension fund for civil employees is weighing exiting its $1.5 billion portfolio of hedge fund investments because of lagging performance, high fees and the riskiness of the asset class. The vote to terminate the funds may come as soon as today. Hedge funds make up 3 percent of the civil employees’ fund’s $51 billion portfolio.

Among the names who will be forced to liquidate are D.E. Shaw & Co., Brevan Howard and Perry Capital.

“Hedge funds are charging exorbitant fees for high-risk and opaque investments” said New York City Public Advocate Tish James. ”Our public employees work hard for their money, and they deserve to know their investments are secure. We can and must invest responsibly and also honor our fiduciary responsibility.”

New York City may follow a September 2014 move by the California Public Employees’ Retirement System, the largest U.S. pension. Calpers divested its $4 billion portfolio saying the asset class was too expensive and complex.

So as even the marquee hedge funds gradually all are converted into family offices as outside money departs, one wonders if investors will seek to park even more money into the one asset class that is rapidly becoming the most dangerous instrument of investing in capital markets, namely ETFs. For a quick reminder of what happens when the ETF class malfunctions, look no further than August 24, 2015.

end
The bank which will get creamed if we get a BREXIT is Goldman Sachs and that is why they are lobbying against it:
(courtesy zero hedge)

Guess Which Major Bank Loses The Most

From Brexit?

Banks have been lobbying intensively against Brexit. Among those leading the charge is Goldman Sachs. For three years, the bank’s executives have publicly warned about the downsides of leaving the EU… and now we know why (hint – it’s not concern for the common man).

As The Wall Street Journal reports,about a decade ago, Goldman launched project “Armada,” a plan for a hulking European headquarters on the site of an old telephone exchange in London.

Unbundling this kind of structure will be expensive and time-consuming,lawyers and bankers say. Goldman is mapping out which jobs might be hit by a loss of this passport, or the right to sell services across the EU, while scoping out European countries where it has existing banking licenses and infrastructure that could quickly be scaled up, according to a person familiar with the matter. Goldman also has a banking license in Germany, for instance.

 

In the event that this passport was lost, derivative and currency trading with EU counterparts would likely be hit hard. A large portion of euro currency and securities trading takes place through London, outside the eurozone. In the event of Brexit, EU authorities may well press for the trading of euro securities to be cleared within the trading bloc, bankers say.

Today, Goldman services Middle Eastern and African customers in London too. Some 90% of its 6,000 staff based in Europe are in London. Europe, the Middle East and Africa accounted for 27% of Goldman’s $33.8 billion of net revenue in 2015.

But faced with the prospect of spending billions of dollars to rejig their operations, banks have been lobbying intensively against Brexit.

Among those leading the charge is Goldman Sachs. For three years, the bank’s executives have publicly warned about the downsides of leaving the EU.

 

The bank has donated around $700,000 to a group which is lobbying against Brexit, according to a person familiar with the matter. Its executives have signed warning letters to major British newspapers. An EU flag currently flutters above its London headquarters. Last fall the bank organized events on the sidelines of opposition Labour and governing Conservative party conferences to debate the role of the U.K. in Europe.

 

During the annual meeting of the World Economic Forum in January in Switzerland, Gary Cohn, president of Goldman Sachs, reiterated a well-rehearsed warning. “It is imperative for the U.K. to keep the financial-services industry in the U.K.,” he said, adding, “I don’t know what would replace that industry.”

The advocacy by U.S. banks has antagonized those, often at smaller brokers or hedge funds, who say the U.K. financial sector would be less heavily regulated outside the EU and thrive.

“Why would the Americans be interested in what is good for the U.K.?” said Howard Shore, executive chairman of Shore Capital Group PLC, an investment group.

 

“They are interested in what is good for their bank.”

Shocking!! So next time you read a research piece proclaiming the catastrophe Brexit would be, consider the above… because fo rnmow it’s all about the “undecided”

end

I will see you tomorrow night

Harvey

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