April 18/Huge 6.38 tonnes of gold added to the GLD/Open interest on silver continues to rise/In DOHA no agreement and strangely after oil plummets, it reverses and rises and it eliminates most of its losses/Gold eagles sales skyrocket on the secret Fed meeting/United Health abandons two more states, Michigan and Oklahoma/In Brazil the impeachment process begins/

Good evening Ladies and Gentlemen:

Gold:  $1,233.60 up $0.50    (comex closing time)

Silver 16.25  down 6 cents

In the access market 5:15 pm

Gold $1233.00

silver:  16.24

I hope you all watched a very important video where Rob Kirby and Greg Hunter discuss the purchase of the Chinese of the SWIFT system.  Now the Chinese can combine their CIP with the new SWIFT system and bypass the USA altogether.  Rob Kirby describes this as a knife into the heart of the USA.  (CIP transfers money/Swift provides the information packet. Up until now you had to settle in dollars as there was no way around the SWIFT system.)


Let us have a look at the data for today


At the gold comex today, we had a fair delivery day, registering 35 notices for 3500 ounces  for gold,and for silver we had 18 notices for 90,000 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 218.990 tonnes for a loss of 84 tonnes over that period.


In silver, the open interest rose by another 1447  contracts UP  to 194,076 as the silver price was UP 14 cents with respect to FRIDAY’s bullish trading. In ounces, the OI is still represented by .970 billion oz or 138% 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 18 notices served upon for 90,000 oz.

In gold, the total comex gold OI fell BY A rather small  2675 contracts DOWN to 494,212 contracts DESPITE THE FACT THAT the price of gold was UP $8.10 with FRIDAY’S TRADING(at comex closing).

We had another huge change in gold inventory at the GLD,this time a deposit of 6.38 tonnes thus the inventory rests tonight at 812.46 tonnes. (Yesterday we also had 3.26 tonnes removed)    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 another withdrawal of .951 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 333.297 million oz.


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

1. Today, we had the open interest in silver RISE by 1447 contracts UP to 194,076 as the price of silver was UP 14 cents with FRIDAY’S trading. The gold open interest fell by small 2675 contracts.Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)




i)Late  SUNDAY night/ MONDAY morning: Shanghai closed DOWN 44.46 POINTS OR 1.44%  /  Hang Sang closed DOWN 154.97 OR 0.73%. The Nikkei closed DOWN 572.08 POINTS OR 3.40% . Australia’s all ordinaires  CLOSED DOWN 0.40%. Chinese yuan (ONSHORE) closed DOWN at 6.4777.  Oil FELL  to 38.92 dollars per barrel for WTI and 41.65for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4888 yuan to the dollar vs 6.4777 for onshore yuan.



ii)Just in time inventory is now killing the Japanese economy as everything grinds to a halt due to critical supply chains hurt by the earthquake:

( zero hedge)


iii)China’s GDP just does not add up!

( zero hedge)



i) We now have 3 countries were we are witnessing negative mortgage rates:

( zero hedge)

ii)Buba’s Thiel warns against the abolishment of cash: and criminalizing cash hoarind is out of line with one’s freedom:

( zero hedge/Buba)

5.Global issues

With the news of  no deal in the oil patch: the Cdn loonies plunges by a considerable .01418 or 1.11%

( zero hedge)



The impeachment process begins in Brazil:

( zero hedge)


i)Late Friday night:  Saudi Prince announces that there will be no deal with Iran

( zero hedge)

ii)Saturday morning: Iran pulls out of the DOHA meeting altogether

( zero hedge)

iii)Sunday afternoon: is there a deal or isn’t there?

( zero hedge)

iv)Sunday afternoon: is there a deal or isn’t there?

( zero hedge)

v) No deal Sunday night:  Oil futures crash by the most in 7 months/stocks also tumble!

( zero hedge)

vi)Unbelievable oil soars 8% off its lows and erases the entire post DOHA drop

( zero hedge)
vii)Late in the we heard the Kuwait is back to normal production and that spooked oil:

( zero hedge)


i)NY POST picks up on the DB confession:  where are the rest of the news organizations?

( post/GATA

ii)The following is self explanatory:  what the Deutsche bank’s confession means for gold and silver investors.

From my perspective, I want the emails between them and also BAFIN”s

( Chris Powell/GATA)

iii)Jim Rickards is stating that gold is haunting our monetary system as it is the only true form of money

( zero hedge)

iv)Two big billion dollar lawsuits are filed in Ontario following Deutsche bank’s admission of gold and silver rigging;

( zero hedge)

v)The gold and silver scam is really made up of two parts:

a) the fraudulent fix where the crooks lower the price on the morning and afternoon fix

b) the lending and selling of non existent gold into the market.

the latter is far worse and I am sure we will get emails on both:

( John Rubino/DollarCollapse.com)

vi)China has been buying gold by the bucketful to support RMB internationalization:

( Koos Jansen)

vii)Kyle Bass states that negative interest rates in the real world do not make sense

And that explains the resurgence of gold:
( GATA/zero hedge/Kyle Bass)
viii)Steve St Angelo reports that the secret Fed meetings have spooked investors into purchasing record gold eagles:

(courtesy Steve St Angelo/SRSRocco report)


i)Morgan Stanley relies almost entirely on marginal trading revenue and its important wealth management unit.  They disappointed the street with trading revenue down 40% and profits down more than 50%

( zero hedge)


ii)Over the weekend we saw the Saudi threat to dump all of its treasuries if it is deemed that they had a role in the Sept 11 attack: There are 28 pages redacted.  The bill wants those 28 pages in the clear;

( zero hedge)

iii)Two weeks ago we brought you the story that United Health will back out of providing policies next year in Arkansas and in Georgia.  Today you can two more states to the list: Michigan and Oklahoma

( zero hedge)

Let us head over to the comex:

The total gold comex open interest FELL SLIGHTLY to an OI level of 494,212 for a loss of 2675 contracts DESPITE THE FACT THAT the price of gold UP $8.10 with respect tO FRIDAY’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 109 contracts from 2307 contracts down to 2198.  We had 91 notices filed ON FRIDAY so we LOST  18 CONTRACTS or an additional 1800 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI RISE by 170 contracts UP to 2934. The next big active gold contract is June and here the OI FELL by 5,020 contracts DOWN to 366,827. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was POOR at 173,030 . The confirmed volume YESTERDAY (which includes the volume during regular business hours + access market sales the previous day was POOR at 127,597 contracts. The comex is not in backwardation.

Today we had 35 notices filed for 3500 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by a considerable 1447 contracts from 192,629 UP to 194,076 DESPITE THE FACT THAT the price of silver was UP 14 cents with FRIDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 44 contracts falling to 24. We had 48 notices filed on FRIDAY so we  gained 4 silver CONTRACTS  or an additional 20,000 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 ROSE by 614 contracts UP to 97,642. This level is exceedingly high AS WE ONLY HAVE 2  weeks before first day notice on Friday, April 29.The volume on the comex today (just comex) came in at 51,060, which is huge. The confirmed volume yesterday (comex + globex) was EXCELLENT at 57,214. Silver is not in backwardation. London is in backwardation for several months.
We had 18 notices filed for 90,000 oz.

April contract month:

INITIAL standings for APRIL

April 18/2016

April 18/2016

Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  64.30 oz (Manfra)

2 kilobars

Deposits to the Dealer Inventory in oz nil


Deposits to the Customer Inventory, in oz  nil


No of oz served (contracts) today 35 contracts
3500 oz)
No of oz to be served (notices) 2163 contracts 216,300 oz/
Total monthly oz gold served (contracts) so far this month 2317 contracts (231,700 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 103,123.5 oz


Today we had 0 dealer deposit

Total dealer deposits; NIL oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 0 customer deposit


Total customer deposits:  nil oz

Today we had 1 customer withdrawal:

i) Out of Manfra: 64.30 oz

Today we had 1 adjustment:  JPM

We had 201.489 oz adjusted out of the dealer and this landed in the customer account of JPMorgan

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 35 contracts of which 11 notices was stopped (received) by JPMorgan dealer and 9 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 (2317) x 100 oz  or 231,700 oz , to which we  add the difference between the open interest for the front month of April (2198 CONTRACTS) minus the number of notices served upon today (35) 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 (2317) x 100 oz  or ounces + {OI for the front month (2198) minus the number of  notices served upon today (35) x 100 oz which equals 448,000 oz standing in this non  active delivery month of April (13.930 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 13.930 tonnes of gold standing for April and 15.545 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 13.930 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   = 21.92 tonnes still standing against 15.545 tonnes available.  .
Total dealer inventor 499,594.592 oz or 15.53 tonnes
Total gold inventory (dealer and customer) =7,040,647.179 or 218.99 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 218.99 tonnes for a loss of 84 tonnes over that period. 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)


And now for silver


/April 18/2016:

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 653,507.47 oz

CNT, JPM, Scotia


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


No of oz served today (contracts) 18 contracts

90,000 oz

No of oz to be served (notices) 6 contracts)(30,000 oz)
Total monthly oz silver served (contracts) 189 contracts (945,000 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 4,100,499.2 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 3 customer withdrawals

i) Out of CNT: 25,332.39 oz

ii) Out of JPMorgan:  599,999.700 oz

iii) Out of Scotia: 28,175.360 oz



total customer withdrawals:  653.507.47   oz



 we had 0 adjustments



The total number of notices filed today for the April contract month is represented by 18 contracts for 240,000 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 (189) x 5,000 oz  = 945,000 oz to which we add the difference between the open interest for the front month of April (24) and the number of notices served upon today (18) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the April. contract month:  189 (notices served so far)x 5000 oz +(24{ OI for front month of April ) -number of notices served upon today (18)x 5000 oz  equals 975,000 oz of silver standing for the March contract month.
we gained 4 contracts or an additional 20,000 oz will stand for delivery.


Total dealer silver:  32.477 million
Total number of dealer and customer silver:   153.455 million oz
The open interest on silver is now at multi year highs and silver is slowly disappearing from the comex vaults.
And now the Gold inventory at the GLD
April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46
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


April 18.2016:  inventory rests at 812.46 tonnes



Now the SLV Inventory
April 18./no change in inventory at the SLV. Inventory rests at 333.297 million oz
April 15./we had a withdrawal of 951,000 oz of silver from the SLV/Inventory rests at 333.297
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 18.2016: Inventory 333.297 million oz
1. Central Fund of Canada: traded at Negative 4.4 percent to NAV usa funds and Negative 4.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 62.7%
Percentage of fund in silver:37.4%
cash .-.1%( April 15.2016).
2. Sprott silver fund (PSLV): Premium to rises falls to -.59%!!!! NAV (April18.2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls to .-.22% to NAV  ( April18.2016)
Note: Sprott silver trust back  into negative territory at -.01%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into negative territory at -22%/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 -.01%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.

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

Trading in gold and silver overnight in Asia and Europe

By Mark O’Byrne

By Mark O’Byrne

Marc Faber: “Messiah” Central Banks Helicopter Money Printing “Will Not End Well”

Marc Faber has warned that a new financial crisis is coming and will be worse than the 2008 one and told Bloomberg TV that the “messiah” central banks “helicopter money ” policies “will not end well.”


Marc Faber

Faber warns that ultimately “you cannot grow an economy by just throwing money at people” and that “QE for the people” will be like “throwing gasoline on a fire.”

Faber is entertaining, has a good chuckle at the central banks and IMF’s monetary policies and laughs at the idiocy of the IMF’s recent counterfactual statement when Lagarde said the world economy would be worse off without negative interest rates:

… they will always say, if we hadn’t done this and hadn’t done that, it would be much worse. They have no proof for this assertion. In my view, it would have been better to let the crisis, already the first one in 2000, run its course and prevent the colossal credit bubble that was built up that then led to an even bigger crisis, and now they’re doing the same mistake.

According to Faber, credit as a percent of the global economy is up “very strongly” since 2007.

“[M]ost of the credit is now for transfer payments, and that is very negative for long term structural economic growth because it allows, actually, the government to become bigger and bigger and to have more regulations,” Faber said. “And I can tell you, I’m in the financial sector and I talk to people in the financial sector. Half the time is nowadays consumed with filling out forms by regulators.”

The financial crises in 2000 and 2008 would have been better if central banks hadn’t intervened, Faber said. He warns against the upcoming “helicopter money” policies:

“… the magicians at central banks, they always come out with a new trick and these negative interest rates that we have today, this is for the first time in recorded human history from the times of Babylon up to today that we have negative interest rates, and it’s not going to end well. That, I can tell you. But the sequence of how it will not end well, I’m not so sure. But they still have a lot of ammunition. What they can do is helicopter money. In other words, they can send you and Mr. Bloomberg and me and everybody, say a check for $10,000, and that is like throwing gasoline into a fire…. will it help the economy? That is the question. It won’t help in the long run. You cannot grow an economy by just throwing money at people.”

“… the less policies, the better it would be. We all learned at school that the free market and the capitalistic system is the best allocator of resources, and now what we have is the worst allocation of resources because it’s the government that tells you how these resources are allocated and they continuously expand their interventions, and I can tell you, I started to work in 1970. In the 70’s and early 1980’s, central banks actually never came up in discussions. They have now become like the messiah, and everybody watches what the central banks do and in the end, in my view, they will have, from a long term perspective, no impact whatsoever. Now can they move markets short term? Yes, but maybe not in the direction they want to.”

Faber recently told GoldCore in a webinar how he will “never sell his gold”, he buys “more every month” and believes owning gold in vaults in Singapore “is safest.”

Faber’s interview with Bloomberg (recorded 18/03/16) can be watched here

Faber’s interview with GoldCore and storing gold in Singapore can be watched here

Gold Prices (LBMA)
18 April: USD 1,240.30, EUR 1,101.04 and GBP 874.96 per ounce
15 April: USD 1,229.75, EUR 1,092.16 and GBP 867.46 per ounce
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

Silver Prices (LBMA)
18 April: USD 16.20, EUR 14.33 and GBP 11.41 per ounce
15 April: USD 16.17, EUR 14.33 and GBP 11.40 per ounce
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

Gold News and Commentary
Gold Advances on Haven Demand as Oil, Shares Retreat After Doha (Bloomberg)
Safe-haven bids buoy gold as oil slides on failure to freeze output (Reuters)
Asian shares drop, crude tumbles after Doha deal fails (Reuters)
Doha oil-freeze pact fails as Saudis insist that Iran participate (Marketwatch)
Funds Are Betting the Gold Rally Isn’t Over Yet (Bloomberg)

Silver overtakes gold as best precious metal – Up 17% YTD (Mineweb via Bloomberg)
Silver Hasn’t Flashed This “Buy” Signal in Almost a Decade (Casey Research)
“Monetary Bankruptcy, Groupthink & Hubris of Central Banks (Price of Everything)
Wishes Aside, Gold Is Going To Fly (Zero Hedge)
Gold “Is Not Overpriced Enough” – Dizard (FT)

Read More Here

GoldCore: Storing Gold in Singapore

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

Mark O’Byrne
Executive Director



NY POST picks up on the DB confession:  where are the rest of the news organizations?

(courtesy post/GATA


NY Post picks up on Deutsche’s confession but where are other news organizations?


4:28p ET Sunday, April 17, 2016

Dear Friend of GATA and Gold:

While the New York Post yesterday took note of Deutsche Bank’s confession to gold and silver market manipulation and its pledge to incriminate other banks — see the report appended — as far as your secretary/treasurer can determine, only Reuters and Bloomberg News, among mainstream financial news organizations, have yet reported the story, not counting the predictably snarky and beside-the-point commentary Friday in the Financial Times by its columnist John Dizard:


GATA has alerted most major Western financial news organizations to the Deutsche Bank story, though they were almost certainly fully aware of it already.

While Deutsche Bank’s confession makes gold and silver market rigging impossible to deny, financial news organizations remain willing to suppress the story as they have been doing for years, lest they aggravate their advertisers and governments. So while the struggle is slowly breaking our way, it very much continues, with financial news organizations and gold and silver mining companies bearing much responsibility for the injustice they won’t acknowledge.

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

* * *

Investors Get the Gold off of Banks’ Precious Metals Manipulation

By Michael Gray
New York Post
Saturday, April 16, 2016


For many years, precious metal commodity investors have screamed over certain price movements.

Then came the convictions and penalties for the banks involved in the Libor rigging scandal, which gave the gold and silver traders some ammo for their own challenge.

In 2014 these precious metal future traders sued a group of banks including Deutsche Bank, HSBC, Scotiabank, and UBS, alleging in a number of civil suits that they unlawfully manipulated the price of gold and silver and their derivatives.

Investors accused the banks of abusing their power as three of the world’s largest silver and gold bullion banks by dictating the price of the precious metals through a secret, once-a-day meeting known as the Silver Fix and Gold Fix.

No one involved thought the case had much of a chance — despite getting class-action status last year.

Yet last week Deutsche Bank agreed to settle US litigation over the allegations that it illegally conspired with others to fix precious metal prices at the expense of investors, according to a court filing.

Although terms were not disclosed, Deutsche will include a monetary payment to the plaintiffs, a letter filed in Manhattan federal court by lawyers for the investors said.

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

A Deutsche spokeswoman declined to comment. Lawyers for the investors did not respond to requests for comment.

According to the lawsuit, the defendants distorted prices on the roughly $30 billion of silver and silver financial instruments traded annually, violating US antitrust law. Deutsche is also cooperating with the investor group to release further information regarding correspondences with other banks on the fix.

Spokesmen for HSBC and Scotiabank declined to comment, saying they could not discuss pending litigation. A spokeswoman for UBS did not respond to requests for comment.




The following is self explanatory:  what the Deutsche bank’s confession means for gold and silver investors.

From my perspective, I want the emails between them and also BAFIN”s

(courtesy Chris Powell/GATA)

What does Deutsche Bank’s confession mean for gold and silver investors?


For the time being, probably just a lot more litigation.

* * *

10:14p ET Sunday, April 17, 2016

Dear Friend of GATA and Gold:

What do Deutsche Bank’s confession to gold and silver market rigging and its pledge to incriminate other bullion banks mean?

Almost certainly they mean more litigation on top of the federal class-action lawsuit in New York that prompted the confession and pledge. Beyond that it’s anyone’s guess.

Of course gold traders, investors, and gold and silver mining companies and their investors are wondering what’s in it for them. That’s hard to say.

Ordinarily in a successful class-action lawsuit the court devises remediation that is available to everyone affected by the misconduct at issue in the suit — available not just to the plaintiffs named in the suit but to everyone similarly situated, everyone damaged by the misconduct. Once the court settles on such remediation, its availability is publicized to potential members of the class and they are invited to register with the court so they may be paid. So no one has to become a plaintiff in the suit to receive damages.

.But the focus of the Deutsche Bank class action seems to be narrow; it involves those who traded gold and silver on exchanges like the New York Commodities Exchange. It does not seem to cover trading and valuations that took place outside such exchanges, though of course other gold and silver transactions and the trading of the shares of gold and silver mining companies well may have been heavily influenced by the trading covered in the lawsuit.

For example, shareholders who were wiped out by the bankruptcy of Allied Nevada Gold Corp. a year ago have to be wondering whether the gold and silver market manipulation to which Deutsche Bank has admitted and in which the bank’s associates also may have been involved harmed their investment and entitles them to damages. Indeed, shareholders of anygold or silver mining company must wonder whether Deutsche Bank and the other banks should be liable to them for damages as well.

Those concerns seem to go beyond the scope of the current class-action lawsuit. But once the court in that lawsuit puts substantial evidence on the record or makes a formal finding, all sorts of gold and silver investors and mining companies may do well to engage their own legal counsel to explore their options.

(If only gold and silver mining companies cared about the rigging of the markets for their products, or even understood the true nature of their products as money. If any mining company has even noted the development with Deutsche Bank, there is as yet no evidence of it.)

Deutsche Bank may not be culpable enough to be obliged to make whole every gold and silver investor and mining company in the world, but if enough other big banks are incriminated, they may create a target rich enough to invite many other lawsuits, individual and class-action.

Of course the bigger issue for GATA is whether the class-action suit against Deutsche Bank and the other banks alleged to have manipulated the gold and silver markets will expose the intervention of central banks, directly or through intermediaries. That is, for example, were Deutsche Bank and the other accused banks ever trading on behalf of central banks and front-running those central bank trades?

For reprehensible and illegal as it is, market rigging by big traders is not so unusual and tyrannical as surreptitious trading by central banks. For the world’s sake, the latter sort of market rigging needs far more exposure.

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




Jim Rickards is stating that gold is haunting our monetary system as it is the only true form of money

(courtesy zero hedge)

Jim Rickards: Gold is the spectre haunting our monetary system


7:10p ET Sunday, April 17, 2016

Dear Friend of GATA and Gold:

The ubiquitous Jim Rickards has broken into the Telegraph and London with an essay explaining why gold just won’t go away and why various nations have an interest in continuing to recognize it as the best sort of money even as others are determined to stamp it out. Rickards’ essay is headlined “Gold Is the Spectre Haunting Our Monetary System” and it’s posted at the Telegraph here:


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




Two big billion dollar lawsuits are filed in Ontario following Deutsche bank’s admission of gold and silver rigging;

(courtesy zero hedge)

Billion Dollar Lawsuits Filed Following Deutsche Bank’s Admission Of Gold, Silver Rigging


Overnight, two class action lawsuits seeking $1 billion in damages on behalf of Canadian gold and silver investors were launched in the Ontario Superior Court of Justice.

The first class action alleges that the defendants, including The Bank of Nova Scotia, conspired to manipulate prices in the silver market under the guise of the benchmark fixing process, known as the London Silver Fixing, for a fifteen-year period.

More from the suit:

It is further alleged that the defendants manipulated the bid-ask spreads of silver market instruments throughout the trading day in order to enhance their profits at the expense of the class. This alleged conduct affected not only those investors who bought and sold physical silver, but those who bought and sold silver-related financial instruments.


Law enforcement and regulatory authorities in the United States, Switzerland, and the United Kingdom have active investigations into the defendants’ conduct in the precious metals market.


The case is on behalf of all persons in Canada who, between January 1, 1999 and August 14, 2014, transacted in a silver market instrument either directly or indirectly, including investors who participated in an investment or equity fund, mutual fund, hedge fund, pension fund or any other investment vehicle that transacted in a silver market instrument.


A copy of the Notice of Action can be found at sotosllp.com. Potential class members can register on the website to obtain more information as the case progresses.


The plaintiffs and the proposed national class are being represented by a national team of lawyers from Sotos LLP (www.sotosllp.com), Koskie Minsky LLP (www.kmlaw.ca) and Camp Fiorante Matthews Mogerman (www.cfmlawyers.ca) with offices in Ontario and British Columbia.

An identical class action lawsuit was also launched for gold manipulation.

This is just the tip of the iceberg: with DB’s official “admission”, countless other plaintiffs will step up, and everyone who may have “lost” money trading gold over the noted 15 year period will surely demand to be made whole.

More importantly, we are curious to see what if anything the discovery process will unveil.  This is what we said on Thursday:

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.

Now that Canada has broken the seal, we expect similar lawsuits to follow in the U.S.

* * *

As a reminder, this is what the gold and silver settlement terms sheets looked like.



China has been buying gold by the bucketful to support RMB internationalization:


(courtesy Koos Jansen)




China Embraces Gold In Advance Of Post-Dollar Era

Submitted by Koos Jansen via AllChinaReview.com,

To challenge the US dollar hegemony and increase its power in the global realm of finance, China has a potent gold strategy. Whilst the State Council is preparing itself for the inevitable decay of the current international monetary system, it has firmly embraced gold in its economy. With a staggering pace the government has developed the Chinese domestic gold market, stimulated private gold accumulation and increased its official gold reserves in order to ensure financial stability and support the internationalisation of the renminbi.

“The outbreak of the crisis and its spillover to the entire world reflect the inherent vulnerabilities and systemic risks in the existing international monetary system…. The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run…”


Quote from Governor of the PBOC Zhou Xiaochuan 2009.

In the present zeitgeist we find ourselves on the verge of a shift in the global monetary order. The shocks through the financial complex in 2008 that reaffirmed the innate fragility of the US dollar as the world reserve currency have sparked China to become a vocal proponent of de-Americanization, although its end goal is communicated less clearly. Being the second largest economy of the world but relatively in arrears regarding physical gold reserves, China has a strong motive to surreptitiously work on its gold program until completion. For, if it would be candid in its gold ambitions, the price would significantly run higher, potentially disturbing financial markets and narrowing its window of opportunity to prepare for the next phase.

State Council Rapidly Developed Domestic Gold Market And Stimulated Private Hoarding

China has been infatuated with gold for thousands of years. In the mainland, gold mining and use can be traced back to at least 4,000 years ago, and the metal has always represented economic strength and was regarded as the emperors’ symbol of power. Although the Communist Party of China captured the monopoly in gold trade and heavily restricted private gold possession since 1949, in lockstep with the gradual liberalisation and the ascend of the Chinese economy the state started to develop the domestic gold market in the late seventies, which accelerated in 2002.

A new page was turned when the Gold Armed Police started operating in 1979, not coincidentally a few years after the US detached its dollar, the world reserve currency, from gold. This army division was initially assigned to gold mining exploration and has done so quite fruitfully. Since 1979, Chinese domestic mining output has grown 2,137 % from an annual 20 tonnes to an estimated 467 tonnes in 2015. In 1982, the first steps were taken in reviving China’s gold retail channels. For the first time since 1949 people were allowed to buy jewelry and the China Gold Coin Incorporation started issuing Panda coins. The Peoples Bank Of China (PBOC) continued to be the primary gold dealer that fixed the price and controlled all supply flows.

The real reform of the Chinese gold market was implemented on 30 October 2002 by the launch of the Shanghai Gold Exchange, erected to serve the full liberalisation of the domestic gold market. From that date the fixing of the gold price in China was transmitted from the PBOC to the free market. In 2004, the State Council approved gold as an investment for individuals and the PBOC slowly repelled control over supply flows. The Chinese gold market fiercely rose from its ashes. By 2007 the market was functioning as intended when nearly all gold supply and demand was flowing through the SGE system6. A year later, in 2008, the Shanghai Futures Exchange launched a gold futures contract supplementing existing derivatives at the SGE.

The Shanghai Gold Exchange (SGE), which is a subsidiary of the PBOC, is the very core of the Chinese physical gold market. Its infrastructure provides a single liquid exchange overseen by the state, granting all participants a trusty venue that can be efficiently developed and monitored. The mechanics of the Chinese market incentivise nearly all supply and demand to connect within the SGE system. As a consequence, by the amount of gold withdrawn from the vaults of the SGE – data that was published up until December 2015 in the Chinese Market Data Weekly Reports – we could gauge Chinese wholesale gold demand.

After the crisis in 2008, it became apparent in the higher echelons of the Chinese government that the development of the gold market and private accumulation had to accelerate to protect the Chinese economy from looming turmoil. Through state owned banks and media wires the citizenry were stimulated to diversify savings into physical gold. Currently, at Chinese banks, numerous gold saving programs can be entered into, or individuals can open an SGE account and purchase gold directly in the wholesale market.

“Individual investment demand is an important component of China’s gold reserve system, …. Practice shows that gold possession by citizens is an effective supplement to official reserves and is essential for our national financial security.”


Quote by the President of the China Gold Association 2012.

When the gold price came down sharply in April 2013, Chinese gold demand literally exploded as in a once in a lifetime event. In between 22 and 26 April, 117 tonnes of physical gold were withdrawn from the vaults of the SGE.





China has been a gigantic gold buyer ever since. Withdrawals from the vaults of the SGE in 2015 accounted for 2,596 tonnes (90 % of global annual mine output), up from a mere 16 tonnes in 2002. SGE withdrawal data correlates with elevated gold import by China.

Whilst clearly enjoying their bargain purchases, China has established a trend of increasingly obfuscating the true size of its gold demand. Not long ago several reports were released in the mainland that disclosed total gold demand to be the equivalent to SGE withdrawals. Since 2012 these reports have been hidden from public eyes and in January 2016 the SGE ceased publishing withdrawal data10. Although annual SGE withdrawals have exceeded 2,100 tonnes since 2013, what is generally publicised as gold demand is roughly half of this, merely the demand at jewelry shops and banks that excludes direct purchases from individual and institutional clients at the SGE. As a result, the global consensus is that Chinese gold demand is approximately 1,000 tonnes a year though in reality it’s twice this volume.

PBOC Accumulating Gold To Support Renminbi Internationalisation

To free itself from US dollar supremacy and force the sequent monetary system, China’s goal is to internationalise the renminbi. For achieving its target, gold is identified as the key. It is the absolute monetary asset to support the renminbi, the dollars’ Achilles heel and a hedge during monetary stress. Next to the swift progression in the Chinese private gold market we can observe the PBOC is covertly buying gold and has launched the Shanghai International Gold Exchange to prepare renminbi internationalisation.

For China the strategic mission of gold lies in the support of renminbi internationalization, and so let China become a world economic power…. Gold is both a very honest asset and forms the very material basis for modern fiat currencies…. Gold is the world’s only monetary asset that has no counter party risk, and is the only cross-nation, cross-language … and cross-culture globally recognized monetary asset.


That is why in order for gold to fulfill its destined mission, we must raise our gold holdings a great deal, and do so with a solid plan. Step one should take us to the 4,000 tonnes mark, more than Germany and become number two in the world, next, we should increase step by step towards 8,500 tonnes, more than the US.”


Quote by the President of the China Gold Association 2014.

Not surprisingly, China’s strategy is everything but linear. Let us analyse the State Council’s most recent actions with respect to gold and the internationalisation of the renminbi. In addition to gold accumulation, the State Council has aimed to kick start renminbi internationalisation by having it included into the International Monetary Fund’s (IMF) basket of currencies, the Special Drawing Rights (SDR), in 2015. For acceptance, the IMF required openness of China’s international reserves, of which the PBOC hadn’t updated its gold reserves since 2009. Here we found the PBOC stretched between opposing forces; it obviously preferred to hoard gold in concealment not to disturb financial markets, while at the same time it was requested to open its books. In July 2015 the PBOC decided to revise its official gold reserves by 604 tonnes to 1,658 tonnes, which was probably not the whole truth but served both means, as markets barely reacted to the increment – the gold price has not increased since then – and the IMF has granted annexation of the renminbi into the SDR.

How much gold does the PBOC truly hold? Before we make an estimate we must first address the question, how and where does the PBOC buy gold? Some analysts assume the PBOC buys gold in the domestic market at the SGE. According to my research this is not true. My sources in the bullion industry tell me first hand that the PBOC buys gold in the international OTC market using Chinese banks as proxies. And this intelligence fits into the wider analysis, as there are many reasons why the PBOC would not buy gold through the SGE.

A rough estimate suggests the PBOC holds nearly 4,000 tonnes in gold reserves, more than twice the amount they officially disclose. In a quest for any clues we must visit the heart of the gold wholesale market. Data by the London Bullion Market Association points out there have been approximately 1,700 tonnes of monetary gold exported from London between 2011 and 2015. China’s central bank is the foremost suspect for these purchases, given its size and motives, and the tonnage exported from London is consistent with other sources that state the PBOC has bought roughly 500 tonnes a years since 2009. All clues together point to the PBOC holding roughly 4,000 tonnes currently. Although this remains speculation.

More of China’s gold strategy was revealed by the recent launch of the Shanghai International Gold Exchange (SGEI) that offers gold trading in renminbi for clients worldwide, in an attempt by China to strengthen the internationalisation of the renminbi. In itself the SGEI clearly underlines China’s gold ambitions16, but the punch line was added with the launch of the Silk Road Gold Fund in 201517. Led by the SGE(I), the $16 billion fund will boost the gold industry along the Silk Road and in turn “will facilitate gold purchases for the central banks of member states to increase their holdings of the precious metal”, according to the Chinese state press agency Xinhua18. Not only is China trying to persuade all mining and consumption of gold along the Silk Road economic project to be settled through the SGEI in renminbi, additionally the Chinese promote gold as an essential component of central banks’ international reserves going forward.

We must conclude that the State Council views gold as part of the coming international monetary system. Why else does it quickly develop the domestic gold market to be embedded in financial markets, surreptitiously accumulate vast gold reserves and establish a framework to boost gold business on the Eurasian continent around the SGEI? In my view, China contributes significant value to its gold strategy in the shadow of the apparent failure of the current fiat monetary system. And if true, China’s central bank having nearly 4,000 tonnes of gold is well on its way to introduce the next phase.



The gold and silver scam is really made up of two parts:

a) the fraudulent fix where the crooks lower the price on the morning and afternoon fix

b) the lending and selling of non existent gold into the market.

the latter is far worse and I am sure we will get emails on both:

(courtesy John Rubino/DollarCollapse.com)

Is Deutsche Bank’s Gold Manipulation The Main Scam Or Just A Side-Show?

Submitted by John Rubino via DollarCollapse.com,

For years now, the easiest way to finesse a debate over whether precious metals markets are manipulated has been to say, “well, if they’re not manipulated they’re the only market that isn’t.”

That was unsatisfying, though, because as the big banks got caught scamming their customers on interest rates, mortgage bonds, forex and commodities trades, those markets (presumably) began to operate more-or-less honestly. Gold and silver, meanwhile, kept right on acting strangely, for instance plunging in the middle of the night on no news but massive futures volume, to the detriment of honest investors and traders who naively bet their capital on fundamentals. The (already huge) amount of money thus stolen from gold bugs kept rising.

So it is with relief that fans of honest markets have greeted the news that at least one kind of precious metals manipulation has been exposed:

Deutsche Bank Settles Silver, Gold Price-Manipulation Suits

(Bloomgerg) – Deutsche Bank AG has reached settlements in lawsuits over allegations it manipulated gold and silver prices, lawyers for traders of the commodities said in court filings.

Attorneys for futures contract traders in two private lawsuits said in letters filed Wednesday and Thursday in Manhattan federal court that the bank has executed term sheets and is negotiating final details for the accords.

The German financial firm also agreed to help the plaintiffs pursue similar claims against other banks as part of the settlements, according to the letters. Vincent Briganti and Robert Eisler, attorneys for traders in the silver-fixing lawsuit, said Deutsche Bank will turn over instant messages and other communications to help further their case. Financial terms of the settlements weren’t disclosed.

“In addition to valuable monetary consideration to be paid into a settlement fund, the term sheet also provides for other valuable consideration such as provisions requiring Deutsche Bank’s cooperation in pursuing claims against the remaining defendants,” attorneys Daniel Brockett and Merrill Davidoff said in their letter Thursday in the gold-fixing lawsuit.

Silver and gold futures traders sued groups of banks in 2014 alleging they rigged prices for the precious metals and their derivatives. Silver traders brought claims against Deutsche Bank, HSBC Holdings Plc, Bank of Nova Scotia and UBS AG. Gold traders additionally sued Barclays Plc and Societe Generale SA.

The traders alleged the banks abused their positions of controlling daily silver and gold fixes to reap illegitimate profits from trading and hurting other investors in those markets who use the benchmark in billions of dollars of transactions, according to versions of the complaints filed in 2015. Of those banks, only Deutsche Bank has reached a settlement.

Amanda Williams, a spokeswoman for Deutsche Bank, declined to comment on either accord. Rick Roth, a spokesman for Scotiabank, the operating name for the Bank of Nova Scotia, and HSBC spokesman Robert Sherman also declined to comment. Representatives from UBS, Barclays and Societe Generale didn’t immediately respond to requests for comment.

The silver case is In re: London Silver Fixing Ltd. Antitrust Litigation, 1:14-md-02573. The gold case is In re: Commodity Exchange, Inc. Gold Futures and Options Trading Litigation, 14-md-2548, U.S. District Court, Southern District of New York (Manhattan).

Deutsche Bank’s plea is of course just the beginning of the story. It will apparently name its co-conspirators, while providing details on how the scam was run. This will be interesting and amusing (those instant messages promise to be classic), especially at a time when those same banks are also in the news for falling earnings, rising layoffs and exploding loan loss reserves.

But is this gaming of the London precious metals fix the same thing as – or even tangentially related to –the main manipulation of the gold price, which is the practice of central banks “lending” their gold to big commercial banks, which then sell that gold on the open market to depress the price? These seem to be two different frauds, and if only the first comes to light while the second continues unimpeded, there’s no reason to expect precious metals to start trading rationally — which is to say in line with fundamentals like soaring global debt, ever-increasing money creation and general geopolitical and economic instability. At least not until Western central banks run out of gold.

Kyle Bass states that negative interest rates in the real world do not make sense
And that explains the resurgence of gold:
(courtesy GATA/zero hedge)

Kyle Bass On The Resurgence Of Gold And Why “In Reality, Negative Rates Make No Sense”


Hayman Capital founder Kyle Bass sat down recently for a conversation with Maria Bartiromo and Gary Kaminsky on Wall Street Week. He covered a variety of topics such as NIRP, income inequality, and the U.S. presidential race. As our regular readers know, Kyle correctly predicted the housing crisis, and is now calling for the yuan to be dramatically devalued.

On the growing use of negative interest rates as a central bank policy tool, he pointed out that while the central planners have their PhD’s and elaborate excel models, the reality is that not all people behave rationally, and thus in the real world those types of policies won’t necessarily work as intended. He also touched on the fact that a concern that should be on the front of everyone’s mind is the fact that if NIRP goes full Shinzo Abe and banks start charging customers for keeping cash at their banks, that there will be a run on cash.

“I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is.”


“I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.

Regarding what’s going on in Asia, he reiterates his call that there’s a giant credit bubble (as we discussed here, here, and here) that’s reached its breaking point and it’s going to burst over the next two or three years. He says that he believes the implosion of the china credit bubble will have a 40-50% chance of causing a recession in the U.S. within the next year.

“From the perspective of what’s going on in Asia, Asia has a giant credit bubble that they’ve been building for the last ten years or longer that has reached its atrophy level, and it’s going to happen over the next two or three years. Whether that causes the U.S. to have a brief, minor recession, I think it’s kind of forty, fifty percent chance in the next year personally.”

He goes on to hammer the central banks’ monetary policy decisions, saying that they can’t generate true organic growth and that we’ve been doing the same thing for the past eight years and we’re still in the situation we’re in. Something Zero Hedge has been pointing out consistently over the past seven years.

“I don’t buy this idea that monetary policy can generate true organic growth. It can help us out of a crisis, and it’s proven to do so, but listen we’ve had eight years of full out excessive monetary and fiscal policies and here we are today. So when Lagarde goes to the G-20 and says we all need to work together, we’ve been working together. Everybody has been on easy monetary policy, we’ve pulled all the demand forward that we can, and now we’re stuck with kind of stagnation and excess capacity and a lot of debt.


“Economics assumes that everyone is a rational actor, and we all know in this world there aren’t many rational actors. That’s where there’s a divergence between academia and practitioners.”

When the conversation turns to the U.S. presidential race, Bass said that Hillary would be the best choice given everyone that’s running. When Maria mentioned that Hillary would raise taxes, Kyle lambasted the federal reserve easy monetary policy that only made the rich richer.

“So I’ll give you a crazy answer, I think it’s Hillary. I think she’s the most sane actor of them all.”


“Raising taxes, I mean, one thing you have to think about is this divide between the haves and the have-nots. One unintended consequence of Fed easy monetary policy has been this distributive nature where it made the rich richer. How many rich people do you know today that are worse off than they were at the peek of 2006. I don’t know one, minus some of the Lehman people, I don’t know one. What happened is we went to this policy where we went to QE, QE what that did was raise asset prices, well the only people with assets are rich people in general, so they became much more rich.

Steve St Angelo reports that the secret Fed meetings have spooked investors into purchasing record gold eagles:
(courtesy Steve St Angelo/SRSRocco report)

Emergency Fed Meetings Spooked Investors Into Purchasing Record Gold Eagles

by on April 18, 2016

Sales of the U.S. Mint Gold Eagles surged last week as investors were spooked by the emergency Fed meetings.  As several news sources reported last week, this was the first time both the President and Vice President “unexpectedly” met with the Fed Chairman to discuss the state of the American and global economy.

In addition, according to the news release, SuperStation95 – TWO MORE! Closed-Door, Expedited Meetings of Federal Reserve:

Many rumors were spread around the blogosphere as to why there were several emergency Fed meetings.  One such rumor is the U.S. government being force to enact martial law due to a systemic breakdown of the banking industry.  Other rumors floating around are tied to the ramifications of the U.S. Dollar and U.S. Treasury market when China launches its gold-backed Yuan tomorrow, April 19th.

Regardless, the rumors had investors spooked enough to purchase the most Gold Eagles in a week since Jan 11th.  Last week, the U.S. Mint sold 33,000 oz of Gold Eagles and 6,000 Gold Buffalos.  That’s a lot of Gold Eagles sold in a week compared to 38,500 oz sold in the entire month of March:


The majority of Gold Eagle sales were the 1 oz coin which totaled 29,500, followed by 1,000 oz of the 1/2 oz coin, 1,500 oz of the 1/4 oz coin and 1,000 oz of the 1/10th oz coin.  Again, these are shown in total ounces.  For example, the U.S. Mint sold a total of 10,000 of the 1/10th oz Gold Eagle coins which equals 1,000 oz.

Furthermore, the U.S. Mint continues to sell out of its weekly allocation of Silver Eagles as total sales for the year reached 17 million– 26% higher than sales during the same period last year (CoinNews.net):


It will be interesting to see what takes place after the Chinese Yuan-denominated gold benchmark starts tomorrow.  If this wasn’t going to be such a big deal, then why all the emergency Fed meetings?

The U.S. and global financial markets are in serious trouble.  Investors who haven’t taken a position in owning physical precious metals may be running out of time to do so.


Your early MONDAY 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 6.4777 / Shanghai bourse  CLOSED DOWN 44.46  OR 1.44% / HANG SANG CLOSED DOWN 154.97 OR 0.73% 

2 Nikkei closed DOWN 572.08  or 3.40%%/USA: YEN FALLS TO 108.34)

3. Europe stocks opened ALL IN THE RED /USA dollar index DOWN to 94.60/Euro UP to 1.1306

3b Japan 10 year bond yield: FALLS   TO -.123%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.34

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  40.49  and Brent: 42.84

3f Gold UP   /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to 0.121%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 11.17%/: 

3j Greek 10 year bond yield FALL to  : 8.95%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1237.85/silver $16.21 (7:45 am est) 

3l USA vs Russian rouble; (Russian rouble DOWN ONE AND 24/100 in  roubles/dollar) 67.73

3m oil into the 38 dollar handle for WTI and 41 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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9652 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0912 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.


3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .121%

/German 8 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 1.75% early this morning. Thirty year rate  at 2.56% /POLICY ERROR)

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

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

Futures Wipe Out Most Overnight Losses Following Dramatic Rebound In Crude

Following yesterday’s OPEC “production freeze” meeting in Doha which ended in total failure, where in a seemingly last minute change of heart Saudi Arabia and specifically its deputy crown prince bin Salman revised the terms of the agreement demanding Iran participate in the freeze after all knowing well it won’t, oil crashed and with it so did the strategy of jawboning for the past 2 months had been exposed for what it was: a desperate attempt to keep oil prices stable and “crush shorts” while global demand slowly picked up.

As a result what followed was crude’s biggest drop in months, a plunge of some 7% in the early Sunday trading hours, which also dragged down US equity markets and currencies of commodity-exporting nations. Furthermore, as can be seen in the chart below, with oil the most important commodity for global stock prices, many wondered if central banks would allow this drop to persist: after all by now everyone knows central banks’ only mandate is keeping asset prices propped up.

And whether it was central banks, or chronic BTFDers, just 12 hours after oil opened for trading with a loud crash, the commodity has nearly wiped out all losses, and both brent and WTI were down barely 2%, leading to both European stocks and US equity futures virtually unchanged on the session.  Most of the losses were wiped out just after the European open, with WTI Jun’16 futures breaking back above USD 40/bbl to take out USD 40.50/bbl to the upside in the process. Almost as if the market was waiting for the ECB to start buying.

The Stoxx Europe 600 Index was little changed, after earlier sliding 1.4 percent, and U.S. equity-index futures also pared declines.

Whether oil’s dramatic overnight reversal will persist, however, remains to be seen: we expect OPEC nations will desperately try to figure out what the proper “jawboning” headline is to launch algo buying programs, now that “Doha freeze” has been exhausted. One early candidate has emerged:


Then again, Iran once again refuses to comply, and with good reason – it is right to demand to be able to produce as much as it did before the US sanctions.


So for now, all eyes are on oil.

“Oil is the most dominant theme today,” said Thu Lan Nguyen, a currency strategist at Commerzbank AG in Frankfurt. “It is a relatively clear pattern of commodity currencies being under pressure. On the other hand there is general risk aversion on the rise, which is supporting safe-haven currencies like the yen.”

One catalyst that is helping prop up oil prices is Kuwait whose crude production tumbled by 60% to 1.1 million barrels a day and its refineries scaled back operations as the state oil company took emergency measures Sunday to cope with the first day of an open-ended labor strike. Kuwait produced 2.81 million barrels a day last month, making it OPEC’s fourth-largest member.

In the other top story overnight, lawmakers in Brazil’s lower house of Congress reached the threshold of 342 votes needed to advance the motion to impeach Rousseff to the Senate on Sunday.

Morgan Stanley, is among companies reporting earnings on Monday after financial firms led stocks higher last week, with JPMorgan Chase & Co. and Bank of America Corp. climbing after announcing reductions in first-quarter expenses that beat analysts’ estimates. International Business Machines Corp. and Netflix Inc. are also due to release results.

This is where the markets stand now:

  • S&P 500 futures down 0.2% to 2071
  • Stoxx 600 down 0.2% to 342
  • FTSE 100 down 0.2% to 6329
  • DAX down 0.3% to 10024
  • German 10Yr yield up less than 1bp to 0.13%
  • Italian 10Yr yield down less than 1bp to 1.33%
  • Spanish 10Yr yield up less than 1bp to 1.5%
  • S&P GSCI Index down 1.2% to 332.3
  • MSCI Asia Pacific down 1.5% to 130
  • Nikkei 225 down 3.4% to 16276
  • Hang Seng down 0.7% to 21162
  • Shanghai Composite down 1.4% to 3034
  • S&P/ASX 200 down 0.4% to 5137
  • US 10-yr yield down 2bps to 1.74%
  • Dollar Index down 0.1% to 94.6
  • WTI Crude futures down 3% to $39.14
  • Brent Futures down 2.4% to $42.07
  • Gold spot up 0.1% to $1,235
  • Silver spot down 0.3% to $16.19

Global Top News

  • Oil Plunges After Output Talks Fail Amid Saudi Demands Over Iran: no Doha deal as Saudi insists all OPEC members must join
  • Verizon Said to Lead Bids for Yahoo, Wall Street Journal Reports: Time Inc., Alphabet, IAC/InterActiveCorp dropped out
  • McGraw Hill Sells J.D. Power Unit to XIO Group for $1.1 Billion: sale expected to close in third quarter
  • Rousseff Hangs by a Thread After Losing Impeachment Vote: Rousseff open to dialogue, but not demoralized by vote
  • Japanese Stocks Tumble After Oil Talks Deadlock as Yen Advances: insurers, Sony, Toyota drop in wake of deadly earthquake
  • Amazon Rivals Netflix With Stand-Alone Video Subscriptions: Amazon Prime will be available on monthly payment plan of $10.99
  • Disney’s on a roll as ‘Jungle Book’ Opens at $103.6 Million: debut was third-biggest so far this year, ComScore says
  • Autohome Gets Takeover Bid From CEO’s Group, Topping Ping An: takeover proposal follows Ping An offer to buy Telstra’s stake

Looking at regional markets, Asian equities began the week on the back-foot, as oil prices slumped after output freeze talks in Doha failed. Nikkei 225 (-3.4%) underperformed in the aftermath of another earthquake over the weekend which has resulted in losses in insurers and has disrupted several large manufacturers’ operations, while a firmer JPY also added to the tone. ASX 200 (-0.4%) was led lower by energy names following the failure to strike an output freeze deal as Saudi demanded that Iran be included in an agreement, while Iran had shunned the meeting. Shanghai Comp (-1.4%) also conformed to the risk-averse tone despite continued improvement in home prices (Y/Y +4.9% vs. Prey. 3.6%), as the rampant property sector could also encourage inflows from stocks. 10yr JGBs traded marginally higher amid the risk-averse tone and the BoJ in the market for JPY 450b1n 5-10yr JGBs, which 20yr also yields decline to fresh record lows.

Asian top news:

  • China Home-Price Gains Spread as Easing Measures Spur Demand: New-home prices climbed in 62 cities in March, 47 in Feb.
  • Credit Suisse to Halt Earnings Previews in Japan Following Probe: Firm won’t allow analysts to visit cos. to gather information before they report earnings,
  • High-Frequency Trading Chief Lashes Out at Proposed India Probe: Panel advising India’s regulator recommended investigation
  • Alipay Owner Said to Start Shanghai IPO Process as Soon as 2016: Alibaba affiliate said to meet need for 3-years of profit
  • CIMB’s Nazir Takes Leave Amid Audit of Political Fund Transfers: Bank chairman helped distribute funds to politicians in 2013
  • Quake Death Toll Rises in Japan as Economic Impact Spreads: Toyota said oper. profit may drop as supplies disrupted
  • Siliconware Says Tsinghua Unigroup Deal on Hold: possibility of investment depends on interaction between China, Taiwan govts

European stocks began the week under pressure, weighed on by energy names in the wake of the failed Doha meeting. Although equities later pared the majority of their opening losses, given that expectations of a significant deal coming to fruition had been somewhat small. Elsewhere, Italian banks are lower across the board this morning as doubts continue to mount over whether the new bank bailout fund has the means to revive the sector with some of the funds with investors themselves cynical about its prospects

The risk averse sentiment across Europe has sparked flight-to-quality flow into fixed income markets with Bunds remaining in close proximity to 164.00. However, German paper pulled back from their highs by mid-morning amid the turnaround in equities, allied with another heavy bout of supply this week, with an estimated EUR 20bIn worth of issuance.

European top news:

  • Draghi Seen Putting ECB Stimulus Back on Agenda After Summer: analysts say ECB could add asset purchases or cut rates again
  • Osborne Warns of Decades of Economic Pain If U.K. Quits EU: Brexit would knock 6% off U.K. GDP by 2030, Treasury argues
  • World’s Biggest Miner Says Brexit Would Harm China View of U.K.: Obama to say Britain should stay in EU in London this week
  • CaixaBank Bids EU908m for Rest of Banco BPI: offer is subject to scrapping a voting-rights limit at BPI
  • Immofinanz Buying 26% of CA Immo in First Step to Merger: companies revisit last year’s hostile battle on friendly terms
  • Banker Unrest Threatens Credit Suisse, Deutsche Bank Turnarounds: CEOs Thiam, Cryan face rising discontent
  • Hutchison U.K. Mobile Deal Said to Face EU Veto Within Weeks: EU block may halt wave of recent telecoms consolidation

In FX, today has seen a morning of consolidation in the FX markets, with USD/CAD buying seen as the obvious trade in the wake of the collapsed talks in Doha. Given the signals given ahead of the meeting, the Saudi objection to Iran’s omission to an agreement was the clear writing to the wall, so the dip in Oil has been corrected accordingly leading the CAD off its lows. We gapped up to 1.2950 in the spot rate, and after rejecting a move on 1.3000, we have since moved back under 1.2900 to suggest a gap readjustment. AUD and NZD saw similar moves in line with CAD, but we have seen .7700 and .6900 levels reclaimed, but the recent highs look a stretch as yet. The USD index is threatening lower though, so expect a further extension (higher) in the commodity linked currencies, with the EUR and GBP also better bid as a result. USD/JPY is caught in the crossfire, but after more earthquakes in Japan, the pair has been pressured to sub 108.00 again, though briefly so as yet with a modest recovery in the Euro bourses aiding the upturn to just shy of 108.50.

The story of the overnight session so far has been that of commodities and specifically oil, after OPEC and Non-OPEC producers failed to agree to an output freeze deal as Saudi demanded that Iran be part of an agreement and Iran refused to attend the meeting in Doha. (Telegraph) There were comments from several oil ministers including Qatar’s who stated that OPEC needed more time. Furthermore, Russia’s oil minister said that Iran was not the reason behind the breakdown in talks and that the door is not shut for a production freeze, while Nigeria’s oil minister suggested that OPEC should shift to a majority vote system.

The energy complex saw initial downside today after the failed Doha talks, however much of the losses have been paired during the European morning, with WTI Jun’16 futures breaking back above USD 40/bbl to take out USD 40.50/bbl to the upside in the process. In terms of the metals complex, gold prices saw mild support amid risk-averse sentiment, although subdued price action during European hours, while overnight iron ore prices coat-tailed on steel advances which were underpinned by seasonal demand.

Bulletin Headline Summary from RanSquawl and Bloomberg

  • The OPEC/non-OPEC talks in Doha over the weekend failed to lead to an agreement, with the fallout seeing downside in oil, and softness in commodity-linked currencies and energy names.
  • Much of the immediate fallout from Doha saw a paring during European hours, with many suggesting that chances of a significant deal coming to fruition had been somewhat small.
  • Today’s economic calendar is light in data and will see focus fall on potential comments from Fed’s Rosengren, Dudley and Kashkari.

Treasuries little changed in overnight trading even as oil drops below $40/barrel after producers ended talks in Doha without any agreement on limiting supplies; global equity markets drop, gold rises.

Dilma Rousseff’s presidency is hanging by a thread after Brazil’s lower house of Congress voted in favor of her impeachment, a decision that’s likely to cheer investors

As Europe holds its breath over whether or not the U.K. will stay in the union, companies are holding on to their cash. Coming off of an eight-year record for mergers and acquisitions, the U.K. just had its worst quarter for deals since 2010

Leaving the European Union would deliver a blow to Britain’s economy and leave it 6% smaller by 2030, according to a Treasury analysis produced as the government attempts to dissuade the electorate from voting to quit the bloc

Germany’s Finance Minister Schaeuble tells U.K. counterpart George Osborne that Berlin would be tough negotiator on trade agreement if U.K. leaves EU, Financial Times reports

Next ECB head should be from Germany as Mario Draghi’s policies “don’t help anymore,” Markus Soeder, Bavarian finance minister, says in interview with Bild am Sonntag

Something is going on below the surface of earnings that should give bulls pause; quarterly forecasts for the Standard & Poor’s 500 Index show profits are declining at the steepest rate since the financial crisis relative to revenue

China’s home-price gains accelerated last month as the nation’s economic hubs such as Beijing, Shanghai and Shenzhen continued to lead the way amid surging liquidity that underpinned demand

Sovereign 10Y bond yields mixed; European, Asian equity markets lower; U.S. equity-index futures drop. WTI crude oil and copper drop, gold rises


DB’s Jim Reid concludes the overnight wrap

All eyes on oil this morning as the long awaited producers meeting in Doha ended in disappointment last night. Following extended talks, OPEC members and major producers walked away without any agreement on a production freeze. Prior to this, the WSJ had suggested that a draft accord had been circulated calling for a freeze at January levels until the end of October. Saudi Arabia seems to have taken a harder stance however with the major sticking point the lack of participation from Iran, who failed to even send a representative to the meeting. Following the end of the meeting, the energy minister of Qatar was however cited as saying that OPEC members will continue to consult between themselves as well as non-OPEC members up until June with the bi-annual OPEC meeting set to be held on June 2nd.

The immediate reaction when markets opened this morning was for WTI to plunge over 7% and touch a low of $37.61/bbl (after closing at $40.36/bbl on Friday). Oil has since pared part of those heavy losses and is currently hovering just shy of $38.50/bbl (still nearly -5% on the day). The losses have dragged bourses in Asia lower. The Nikkei (-3.08%) is leading the way, not helped by a near +1% safe haven rally for the Yen. Elsewhere the Shanghai Comp is -1.31%, while the Hang Seng (-1.20%), ASX (-0.22%) and Kospi (-0.48%) are all in the red. Commodity sensitive currencies are up to a percent down this morning, while credit markets are unsurprisingly a couple of basis points wider. US equity index futures are also in the red to the tune of half a percent or so.

Meanwhile, the news of the lack of an agreement at yesterday’s meeting is interestingly also coinciding with the news of a forced production cut from Kuwait following a public sector strike which started on Sunday. The Kuwait Oil Company announced in a statement that the OPEC member is to slash production from the usual 3million barrels a day, to just 1.1million barrels a day. Public sector workers are protesting on the back of plans to make cuts to wages and incentives, with the FT reporting that unions had called for the reforms to be cancelled prior to commencing yesterday’s strike. It’s hard to know if this is helping to support a floor on the drop in the Oil price this morning, and ultimately how long this strike will go on for and therefore the overall importance of it, but it’ll be worth keeping an eye on how things progress.

Elsewhere, the other headline grabber this morning is the latest political update out of Brazil where the key lower house vote has happened overnight. Crucially, Congress have voted in favour of President Rousseff’s impeachment, reaching the required threshold of 342 votes. That clears the way for the motion to be passed over to the Senate where it will go in front of a special committee where a simple majority vote (from 81 members) will be taken. Should that majority be reached, then an official impeachment trial is launched, with Rousseff subsequently temporarily removed from office during the trial and Vice-President Temer stepping in.

Moving on to this week now. Although we’ll fully preview it at the end the highlights are tomorrow’s ECB lending survey, the ECB meeting on Thursday, the global flash PMI numbers on Friday and from earnings season as 104 S&P 500 companies and 46 Eurostoxx firms report this week including the remaining banks and also some of the big bellwether tech names. It’ll also be worth keeping a final eye on the Fedspeak tonight (particularly Dudley given his views have been closely aligned with Yellen) with the blackout period kicking in thereafter ahead of the April 26th and 27th FOMC meeting.

With regards to the ECB, their lending survey may offer clues about how Q1 volatility and especially the poor equity performance of banks has impacted lending if at all. Lending rates fell in February and net new lending was positive and while it might still be too early to tell it’s an important release all the same and due out at 9am BST tomorrow.

With regards to their meeting on Thursday, the main focus will likely be on any additional info they can give on their upcoming corporate bond purchasing scheme. They are sure to be asked for more details so it’ll be interesting if they have any. On this topic Michal Jezek in my team has just published a report “How Might Default Risk Shape the ECB Corporate Bond Purchase”. In the report, we explain why we believe the size of the ECB’s corporate bond purchase programme should not be constrained by concerns about default losses, at least not anywhere near current spread levels. We therefore expect the ECB to move all the way down to BBBs rather than keep the programme smaller and stick to higher-rated bonds. However, diversification is a key default-risk-management tool. We estimate that if the ECB aimed to passively buy a slice of the relevant market portfolio but self-imposed a 2% cap on single-issuer exposures, the effective eligible universe would shrink by 12%. With a 1% cap, it would shrink by 38% to about €350bn. Still, we think that even with such a diversification restriction the ECB should be able to build up a portfolio in line with our baseline expectation of monthly purchases averaging €3-5bn, presumably including the primary market. We also think that as long as the ECB can take a portfolio view on default losses, it would make little sense to automatically sell fallen angel corporate debt.

Moving on. Aside from the Doha events, the only other snippet of news from the weekend came from the IMF’s spring meetings, although in truth not much new material appears to have come out of these. IMF Chief Lagarde summed up the mood from officials as having an overall lower level of anxiety relative to their last meeting, with officials demonstrating ‘a collective endeavour to indentify the solution and the responses to the global economic situation’. Some of the talks also focused on FX policy with members reiterating that they would ‘reaffirm previous exchange-rate commitments, including that we will refrain from competitive devaluations’.
A quick recap of how we closed out last week on Friday. Risk assets finished on a bit of a whimper with much of that being attributed to heavy losses in the energy sector as Oil prices moved steadily lower with expectations declining (now justified) ahead of Doha. Some soft US data didn’t help (more on that shortly) while Citigroup became the latest bank to report earnings in the sector. A beat at both the earnings and top line were recorded with the theme being similar to what we’ve seen insofar with much of that profit beat being cost cut driven. The S&P 500 eventually closed with a modest -0.10% loss although the five-day return was still a healthy +1.62%. US credit indices were a smidgen wider while in Europe it was credit which was the relative underperformer on Friday, the iTraxx Crossover in particular ending 10bps wider while the Stoxx 600 closed -0.35% for its first negative day in over a week.

With regards to that data out of the US on Friday, most notable early on was the steeper than expected fall in industrial production last month (-0.6% mom vs. -0.1% expected), the second consecutive monthly decline of that magnitude with the mining and utility sectors leading much of the softness. Manufacturing production (-0.3% mom vs. +0.1% expected) was also down. That said the first factory reading for April was supportive. The NY Fed’s empire manufacturing survey revealed a near 9pt rise to 9.6 (vs. 2.0 expected) and the highest level for that series since January 2015 with new orders, employment and prices paid all strengthening. Elsewhere, the first release of the April University of Michigan consumer sentiment reading revealed an unexpected 1.3pt fall in the index to 89.7 (vs. 92.0 expected) with the expectations component leading much of that. One year inflation expectations were unchanged at 2.7% however it was noted that 5-10y expectations tumbled two-tenths to 2.5%.

Staying in the US, Chicago Fed President Evans was also out with comments on Friday, saying (unsurprisingly) that there is a ‘high hurdle’ for any tightening in policy from the Fed next week. A lot of Evans’ comments were focused on the inflation picture however which he highlighted as informing the Fed’s decisions in the near term.

With the Fed meeting next week, there’s little in the way of Fedspeak although today we will hear Dudley give opening remarks at a conference this afternoon, followed by Kashkari and Rosengren later this evening. The BoE’s Carney is due to speak in Parliament tomorrow afternoon, while on the US election front we’ll get the NY primary tomorrow.

Earnings season ramps up too and we’ll see 104 S&P 500 companies report. The highlights are the tech names and we’ll get reports from IBM and Netflix today, Yahoo and Intel tomorrow followed by Alphabet, Microsoft and Verizon on Thursday. Away from the tech names we’ll also hear from Pepsico (today), Morgan Stanley (today), Goldman Sachs (Tuesday), Johnson & Johnson (Tuesday), Coca-Cola (Wednesday), General Motors (Thursday), Schlumberger (Thursday), Caterpillar (Friday), General Electric (Friday) and McDonalds (Friday). Meanwhile in Europe we’ll get the latest earnings reports from 46 Eurostoxx companies.



i)Late  SUNDAY night/ MONDAY morning: Shanghai closed DOWN 44.46 POINTS OR 1.44%  /  Hang Sang closed DOWN 154.97 OR 0.73%. The Nikkei closed DOWN 572.08 POINTS OR 3.40% . Australia’s all ordinaires  CLOSED DOWN 0.40%. Chinese yuan (ONSHORE) closed DOWN at 6.4777.  Oil FELL  to 38.92 dollars per barrel for WTI and 41.65for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4888 yuan to the dollar vs 6.4777 for onshore yuan.



Just in time inventory is now killing the Japanese economy as everything grinds to a halt due to critical supply chains hurt by the earthquake:


Japan’s Economy Grinds To A Halt After Earthquake Paralyzes Critical Supply Chains

Earlier today Toyota was one of many Japanese companies to announce that it will suspend most car production across Japan as a result of critical supply chain disruptions caused by the recent destructive earthquake and numerous aftershocks. All of the major assembly lines will be shut down across its four directly-run plants, and Toyota will be halting production in stages at other group companies as well.

According to the Nikkei Asian Review, most of the Toyota group in Japan will be effectively shut down through at least the end of this upcoming week, with a production loss of as many as 50,000 vehicles, including brands such as Prius, Lexus, and Land Cruiser.

“Decisions regarding recommencement of operations at plants in Japan will be made on the basis of availability of parts,” the company said in its announcement.

It isn’t just Toyota.

Numerous other manufacturers also announced extended stoppages due to damage to factories. More details from Reuters:

  • Honda Motor said it would keep production suspended at its motorcycle plant near the quake-hit city of Kumamoto in southern Japan through Friday, though Nissan Motor Co 7201.T said it would resume operations at its plants north of the epicenter from Monday.
  • Sony Corp said production would remain halted at its image sensor plant in Kumamoto, as the electronics giant assessed structural and equipment damage. But the company said it had resumed full operations at its plants in nearby Nagasaki and Oita which also produce the sensors – used in smartphone cameras, including Apple Inc’s AAPL.O iPhone.
  • Semiconductor manufacturer Renesas Electronics Corp confirmed it had sustained damage to some equipment at its plant in Kumamoto which produces microcontroller chips for automobiles. Having suspended operations following the first earthquake on Thursday, the chipmaker said it would assess damage at the entire facility before deciding when to resume production.

The earthquakes on Thursday and Saturday, which killed at least 41 people, reflected the vulnerability of Japanese companies to supply chain disruptions caused by natural disasters, and also highlighted the “just in time” philosophy pioneered by Toyota and followed by many others.

The problem is when as a result of a massive unpredictable event, the supply chain grinds to a halt, so does the economy, which incidentally is a topic we covered back in 2012 when we presented a paper on “A Study In Global Systemic Collapse“, where we showed just how little margin of error there is in global supply chains, and how quickly the global economy can devolve into pure chaos if an unanticipated, global event were to strike.

To be sure, as a result of the stoppages, Japan’s GDP will take a substantial Q2 hit as firms such as Toyota are forced to shut down, dealing yet another blow to Abenomics; the good news is that this event may give U.S. carmakers an opportunity to burn through much of the piling up excess inventory that has been building up over time.

But the best news is for none other than Abe and Kuroda: with Japan soon facing another recession, which for those who are keeping count will be approximately the sixth in the past 7 years…


… at least Japan’s authorities will have nature to blame it on, instead of the far more devastating than any Earthquake could ever possibly be Keynesian lunacy that is Abenomics.




China’s GDP just does not add up!

(courtesy zero hedge)

China’s GDP Growth “Just Doesn’t Add Up”

Having already exposed the fakeness of China’s most recent trade data (and implicitly its GDP data), we were not entirely stunned by the fact that, as Bloomberg’s Tom Orlik reports, China’s growth rates for quarter-on-quarter and year-on-year GDP for the past year don’t match.

So to start with, we have this entirely unsustainable “data”

That, combined with confirmation that 1Q output was underpinned by an unsustainable resurgence in real estate, tarnishes the newly acquired shine on the country’s economic prospects.

And now, as Bloomberg’s Tom Orlik and Fielding Chan expose…

The initial reaction to the 1Q GDP data, published Friday, was a sigh of relief. Growth at 6.7% year on year was in line with expectations and comfortably inside the government’s 6.5-7% target range. If anyone noticed that the normal quarter-on-quarter data was missing from the National Bureau of Statistics release, few thought anything of it.

YoY Versus Accumulated Annual QoQ GDP Growth

h/t @S1moncox

Then, on Saturday, the quarter-on-quarter data was published, and some of the relief turned to consternation. Quarter-on-quarter growth in 1Q was just 1.1% — an annualized growth rate of 4.5%, and the lowest print since the data series became available in 2011.Worse, based on the accumulated quarter-on-quarter data over the last year, annual growth in 1Q was just 6.3% — substantially below the NBS’s 6.7% reading for year-on-year growth.

Explaining the inconsistency between the two data points is tough to do. Accumulated quarter-on-quarter growth over four quarters should add up to year-on-year growth. In the past, it has. The divergence in the 1Q readings might reflect something as simple as difficulties with seasonal adjustment. Even so, against a backdrop of concerns about data reliability, it can only add to skepticism about China’s true growth rate.

As The Economist’s Simon Cox sums up:

China’s Q1 growth was either 6.7% y/y, 4.5% q/q saar (1.011^4) or 6.3% y/y (1.018*1.018*1.015*1.011)

But then again – in the infamous words of Hillary Clinton – what difference does it make? Now that manipulation is so exposed and unhidden, why worry?




We now have 3 countries were we are witnessing negative mortgage rates:

(courtesy zero hedge)


Denmark, Belgium, Now The Netherlands: Negative Mortgage Rates Spread Across Europe

In early 2015, after seeing a staggering $1.4 trillion in Euro area government debt trade at negative interest rates (the number has since grown to $6 trillion) we wondered when the bailout of insolvent governments was going to make its way to other debtors. Our question was quickly answered when we found that a negative rate mortgage had been issued by Nordea Credit, a bank in Denmark. Recently, even the WSJ finally stumbled on this bizarre inversion of traditional borrower obligations.

We noted at the time that this this was the first of many such paradoxes, as eventually more and more banks would begin to fall in line with ECB expectations and lend at slightly negative (at first, then progressively more negative) rates, rather than lose even more money as a result of leaving cash in the ECB deposit facility.

This is just the beginning: according the Danish media outlet, as a result of variable-refinancing, as recently as a week from now “a greater share of customers could have a negative rate.”

Earlier this month we got evidence of that when we learned that a bank had issued a negative interest rate on a mortgage in Belgium.

Now, courtesy of news.com, we learn about another bank that is paying customers to take out a mortgage, this time in the Netherlands.

As a result of entering into a variable mortgage agreement that was denominated in Swiss Francs, and set at 0.7% above Swiss Libor, Achmea Bank now finds itself having to pay borrowers to take out a mortgage.

There is more to this story however.

It took a court case to force the bank to pay what it owed. As CHF Libor rates plummeted on the heels of the ECB’s NIRP policy, instead of paying the borrowers their contractual due, the bank tried to get away with simply telling the borrowers that they didn’t owe anything on their interest payment.

In a ruling announced on Monday, the Netherlands’ consumer financial products watchdog, Kifid, said it had sided with the unnamed holders of the variable interest rate mortgage, who brought the case, rather than with lender Achmea NV.


The mortgage was denominated in Swiss francs, with a variable rate set at 0.7 per cent above Swiss Libor, a benchmark rate. When Swiss Libor fell below minus-one per cent in January 2015, the bank should have paid the mortgage holders around 0.3 per cent interest, Kifid said in the ruling.

Financial journalist Alan Kohler had some pointed comments around the policy of NIRP and how it’s devolving into ridiculous things such as negative mortgage rates. He rightfully asserts that central banks will look back on this period as a time in which more harm was done than good (as is always the case).

He begins by comparing the central banks’ use of NIRP with significant global events that haven’t necessarily fared very well, including very creation of the European Union.

“We may well look back ruefully on negative interest rate policy, or NIRP, from our post-apocalyptic dirt-floor humpies as one the greatest idiocies of the 20th and 21st centuries, up there with America’s sack and dump of Iraq in 2003 and 2011, the repeal of the Glass Steagall act and the Maastricht Treaty in Europe,” he wrote.

He then goes on to say what we know all too well, which is that whenever the central banks finally take a break from their textbooks and broken excel models, they’ll realize that nothing they’ve done has worked, and that they’ve caused more damage than otherwise would have been the case.

“Unless a miracle happens and the European and Japanese economic cadavers suddenly sit up and rub their eyes, central banks will eventually have to give up and admit defeat. The hope will be that not too much damage has been inflicted.

He sums it up by pointing out one of the main goals of central banks to begin with, which is of course to take from the savers and distribute elsewhere.

“But that is central banking for you, in the era of leverage: take from the savers and give to the borrowers in the hope that they will ‘do something’.


“Not so far, they’re not … they’re just punting it on real estate.”

Meanwhile, we look forward to finding out how many banks are trying to do what Achmea unsuccessfully tried to, i.e., to not pay borrowers what is owed, as variable rate mortgages continue to go negative, and how many ultimately have to comply with the contractual fine print. But the biggest joke will be on the depositors: because while banks will, grudgingly, pay money to those who live on credit, those funds will be provided by savers, as depositors across Europe will soon be forced to pay to keep their money in the bank.

Sadly, such is the upside down world of the “new normal”, where savers are punished while those living beyond their means, are rewarded.

Buba’s Thiel warns against the abolishment of cash: and criminalizing cash hoarind is out of line with one’s freedom:
(courtesy zero hedge/Buba)

Bundesbank Defies Elites: Warns That “Plans To Abolish, Criminalize Cash Out Of Line With Freedom”

With everyone from ivory tower academics to sin-street hookers proclaiming the need for and benefits of a “war on cash” to save the world from criminals and tax-evaders (oh yeah and to stop NIRP-driven savers from hording cash and crushing central planners’ dreams), it is perhaps shocking that Bundesbank board member Carl-Ludwig Thiele warned at an event this week that the attempt to abolish and criminalize cash is out of line with freedom. He said that citizens should continue to decide how and in what form they want to use their money.

While Kyle Bass warned that

“I think this is where the academics are kind of clashing with the practitioners. I think on paper negative rates make a lot of sense if you’re running academic models, but in reality they make no sense. Having seven or eight trillion dollars of debt trading at negative rates, having thirty year JGB’s trading at fifty basis points is absolutely ludicrous. This experiment that’s going on we all know will end poorly at some point in time, I just don’t know when that time is.”


“I think that one of the fears that they have is a run on cash. If they told you and I that they’re going to tax your deposits by a hundred basis points, well it’s better to put it in a safe or under your mattress. And that’s why you see a resurgence in gold. The more they move to negative rates, the more gold is gonna take off because there’s no carrying cost.

Perhaps Buba’s Thiele is more concerned about the longer-term social unrest that a war on cash will unleash – as opposed to the short-term monetary planners’ “whatever it takes”-ism of today. As Martin Armstrong summarizes, Thiele’s main arguments were:

Every citizen has the right, with his money to proceed as he wants. If action is taken at this point in the right to freedom of the citizen, it must be well-grounded. And so the question arises: How does a cash limit restrict crime in other countries? Thiele said he was not aware of any support where a cash limit, such as Italy or France, prevents crime. Crime should be correspondingly lower than in countries with no upper limit on cash, but that is simply not the case.


The arguments that are made against cash and cash payments, are unconvincing, Thiele said. He went on to argue that cash protects the privacy of the population. That benefit is not a reason to twist into a benefit for criminal ignoring the majority of honest citizens. The right to informational self-determination and respect for private life is a valuable asset which should not be watered down or abandoned. “Cash is coined liberty” – this modified Dostoevsky quote has not lost any of its validity.

It is clear that Schaeuble (abolish EUR500 note), Draghi (ECB consider cash withdrawal limits),academics (abolish cash to save the people) and Japan (fingerprints as currency) – among many others – have an establishment enemy who prizes freedom over repression(perhaps ironic that this is from zee Germans then).

This is an odd position for ‘the establishment’ to be taking, as Charles Hugh-Smith recently explained,

Why are governments suddenly so keen to ban physical cash?

 The answer appears to be that the banks and government authorities are anticipating bail-ins, steeply negative interest rates and hefty fees on cash, and they want to close any opening regular depositors might have to escape these forms of officially sanctioned theft. The escape mechanism from bail-ins and fees on cash deposits is physical cash, and hence the sudden flurry of calls to eliminate cash as a relic of a bygone age — that is, an age when commoners had some way to safeguard their money from bail-ins and bankers’ control.

Forcing Those With Cash To Spend or Gamble Their Cash

Negative interest rates (and fees on cash, which are equivalently punitive to savers) raise another question: why are governments suddenly obsessed with forcing owners of cash to either spend it or gamble it in the financial-market casinos?

The conventional answer voiced by Mr. Buiter is that recession and credit contraction result from households and enterprises hoarding cash instead of spending it. The solution to recession is thus to force all those stingy cash hoarders to spend their money.

There are three enormous flaws in this thinking.

One is that households and businesses have cash to hoard. The reality is the bottom 90 percent of households have less income now than they did fifteen years ago, which means their spending has declined not from hoarding but from declining income.

Median Household Income in the 21st Century

While corporate America has basked in the glory of sharply rising profits, small business has not prospered in the same fashion. Indeed, by some measures, small business has been in a six-year recession.

The bottom 90 percent has less income and faces higher living expenses, so only the top slice of households has any substantial cash. This top slice may see few safe opportunities to invest their savings, so they choose to keep their savings in cash rather than gamble it in a rigged casino (i.e., the stock market).

The second flaw is that hoarding cash is the only rational, prudent response in an era of financial repression and economic insecurity. What central banks are demanding — that we spend every penny of our earnings rather than save some for investments we control or emergencies — is counter to our best interests.

A War on Cash Is a War on Capital

This leads to the third flaw: capital — which begins its life as savings — is the foundation of capitalism. If you attack savings as a scourge, you are attacking capitalism and upward mobility, for only those who save capital can invest it to build wealth. By attacking cash, the central banks and governments are attacking capital and upward mobility.

Those who already own the majority of productive assets are able to borrow essentially unlimited sums at near-zero interest rates, which they can use to buy more productive assets. Everyone else — the bottom 99.5 percent — is reduced to consumer-serfdom: you are not supposed to accumulate productive capital, you are supposed to spend every penny you earn on interest payments, goods, and services.

This inversion of capitalism dooms an economy to all the ills we are experiencing in abundance: rising income inequality, reduced opportunities for entrepreneurship, rising debt burdens, and a short-term perspective that voids the longer-term planning required to build sustainable productivity and wealth.

Physical Cash: Only $1.36 Trillion

According to the Federal Reserve, total outstanding physical cash amounts to $1.36 trillion.

Given that a substantial amount of this cash is held overseas, physical cash is a tiny part of the domestic economy and the nation’s total assets. For context: the US economy is $17.5 trillion, total financial assets of households and nonprofit organizations total $68 trillion, base money is around $4 trillion, and total money (currency in circulation and demand deposits) is over $10 trillion (source).

Given the relatively modest quantity of physical cash, claims that eliminating it will boost the economy ring hollow.

Following the principle of cui bono — to whose benefit? — let’s ask: What are the benefits of eliminating physical cash to banks and the government?

Benefits To Banks and the Government of Eliminating Physical Cash

The benefits to banks and governments by eliminating cash are self-evident:

  1.  Every financial transaction can be taxed.
  2.  Every financial transaction can be charged a fee.
  3.  Bank runs are eliminated.

In fractional reserve systems such as ours, banks are only required to hold a fraction of their assets in cash. Thus a bank might only have 1 percent of its assets in cash. If customers fear the bank might be insolvent, they crowd the bank and demand their deposits in physical cash. The bank quickly runs out of physical cash and closes its doors, further fueling a panic.

The federal government began insuring deposits after the Great Depression triggered the collapse of hundreds of banks, and that guarantee limited bank runs, as depositors no longer needed to fear a bank closing would mean their money on deposit was lost.

But since people could conceivably sense a disturbance in the Financial Force and decide to turn digital cash into physical cash as a precaution, eliminating physical cash also eliminates the possibility of bank runs, as there will be no form of cash that isn’t controlled by banks.

So, when the dust has settled who ultimately benefits by this war on cash, government and the central banks, pure and simple.

*  *  *


Global issues

With the news of  no deal: the Cdn loonies plunges by a considerable .01418 or 1.11%

(courtesy zero hedge)

Loonie Plunges Most In A Month Ahead Of Crude Open

As markets flutter to life following the Doha disappointment, it is clear some turmoiling is to come. Canadian Dollar is down over 1% against the US Dollar – the biggest drop in 4 weeks – erasing all of last week’s gains. Ahead of this evening’s crude futures open, CAD implies a sub-$39 open for WTI



Still, some participants are spinning away…


So no deal is still a big deal? Markets are not buying that for now… but then again we would fully expect some central bank buying here to ensure the narrative remains positive.



The impeachment process begins in Brazil:

(courtesy zero hedge)

Rousseff Party Admits Impeachment Vote Is Lost; Brazil ETF Surges

Update 2: While the official voting process continues and still about another 40 or so votes are needed before the formal threshold to impeach Dilma Rousseff of 342 is crossed, moments ago the leader of Rousseff’s lower house party, Gumaraes, threw in the towel and admitted the vote is lost:


What happens next? The Senate showdown, and Rousseff who as we warned previously, will not go quietly:


For now however, bizarro world continues and as Brazil is about to plunge into an even deeper political crisis, the Brazilian stock ETF has surged 4.5% in Japan trading on hopes the removal of Rousseff will somehow fix the Brazilian economy overnight. It won’t, and if anything the 2016 Olympic games now appear more in jeopardy than ever.

* * *

Update: moments ago the Brazilian Congress began its impeachment vote. 504 members of the lower house of Congress are present for the vote, with nine absent.  It appears that the 500+ members of Brazil’s lower house will vote 1-by-1, giving little mini-speeches each time.As we reported earlier below, newspaper surveys showed the opposition has only a few votes more than the two-thirds majority needed among 513 deputies to put Rousseff to trial in the Senate.

* * *

As reported on Friday afternoon, ahead of Dilma Rousseff’s impeachment vote to be held in Brazil’s Congress later today, a critical threshold was passed when, according to local Folha newspaper, more than the required 342 votes had been gathered.

Sure enough, today all the main Brazilian newspapers dedicate their entire covers to impeachment, with Folha and Estado bringing nominal list of lawmakers’ expected votes for and against, Bloomberg reports. Furthermore, according to the latest tallies from Folha, Estado and Globo the “For” impeachment vote is currently anywhere between 347 and 350 votes, above the 342 needed.

But while the popular sentiment is largely in the pro-impeachment camp (even if many of those standing to benefit from Rousseff’s ouster have been alleged to be as corrupt with participation in either the Carwash scandal, or to have funds parked in various offshore accounts), Rousseff refuses to go without a fight and earlier today Attorney General Jose Eduardo Cardozo wrote an op-ed in Folha saying the impeachment won’t pass if lower house respects constitution, adding that “whatever decision lower house makes today won’t solve Brazil’s political, economic and moral issues” and that many lawmakers show they don’t know the crimes on which impeachment request is based.

He is probably correct.

Meanwhile, PP, the party on which govt was relying on after PMDB split, may have 100% of its votes against Rousseff.

Bloomberg notes that if Rousseff survives the impeachment vote today, Rousseff plans calling meeting with opposition leaders including PSDB’s Aecio Neves and Fernando Henrique Cardoso, and adds that if the govt loses, it will likely focus attacks on Temer to try and stop process in the Senate.

For now however it is all about the Congressional vote, whose impeachment session started moments ago with the following headline:


Expect more of the same for the next several hours.

Live feed from Brazil’s capital Brasilia below where thousands are already gathering ahead of tonight’s session which is expected to continue until around 10pm local time according to Eduardo Cunha, president of the chamber of deputies.





Late Friday night:  Saudi Prince announces that there will be no deal with Iran

(courtesy zero hedge)

Doha Is Done: Saudi Prince Drops Bomb – “No Deal Without Iran…We Are Selling At Every Opportunity”



In what appears to be a Doha party-pooping statement, Saudi deputy crown prince Mohammed bin Salman stated unequivocally that The Kingdom won’t restrain its oil productionunless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha. This a major problem because – if you remember – this week’s melt-up in oil (and thus stocks) was predicated on an anonymous diplomat cited by Interfax saying a deal will get done without Iran (which the Russians refused to confirm). All that hope crushed by a reality that has been painfully obvious that no side will be given in the Iran-Saudi tete-a-tete… and now, as Citi warned “expect a sharp sell-off.”


As Bloomberg reports, the world’s biggest crude exporter would cap its market share at about 10.3 million to 10.4 million barrels a day, if producers agree to the freeze, Prince Mohammed bin Salman said during an interview on Thursday at King Salman’s private farm in Diriyah, the original home of the Al Saud royal family.

“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force.

Adding – rather pointedly that…

“If we don’t freeze, then we will sell at any opportunity we get.”


“If prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development,” Prince Mohammed said. “But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.”


Prince Mohammed also said that Saudi Arabia isn’t concerned because “we have our own programs that don’t need high oil prices.”

Simply put, “no deal,” given Iran is sending a junior minister in a clear message that it will do nothing.

It seems more than a few people “knew” nothing would come of this and that the epic squeeze-fest early this week was all false…



As Citi warned earlier,

If there is no agreement, then expect a sharp oil market sell-off on Monday. If there is an agreement in name but market participants realize it has no teeth, except a slower sell-off. Main oil-producing countries, but especially Russia, have been stirring the market since late 2015 with talks of a potential agreement and the market has responded frequently, creating periodic froth to prices, only to see prices come off when no agreement has been forthcoming.


Money manager net (and gross) length is around record highs on ICE Brent, giving some scope for position liquidation following any ‘disappointing’ headlines and adding to downside risk.


At this rate we may not even get a “gentlemen’s agreement” over efforts to freeze production… and Sunday night will be a bloodbath!


Saturday morning: Iran pulls out of the DOHA meeting altogether
(courtesy zero hedge)

And Scene: In Last Minute Iran Pulls Out Of Doha Meeting

The “Doha oil freeze deal” was a farce from the beginning.

It all started with a February 11 Hail Mary attempt by Venezuela to boost oil prices by launching a rumor that oil production would be frozen (ignoring that both Russia, Saudi Arabia and Iraq are already pumping out a record output).



Zero hedge:



Shockingly, it worked.

First Venezuela, then the U.A.E, then Russia, then the Saudis all piled in with their own “headlines” that an oil production freeze was imminent, in the process unleashing an epic, algo-driven oil short squeeze which pushed prices higher by 60% over the past two months.

We say mostly “algo-driven” because few humans actually believed that any of the “freeze” jawboning out of OPEC nations (and Russia) had any chance of passing. After all, at its very core, Saudi Arabia’s reason to break up the OPEC cartel in its historic November 2014 meeting, when it refused to cut production, was to put as much marginal US shale producers out of business as possible (incidentally, a strategy flawed from the start as even bankrupt, shale companies continue to pump as much if not more, as they did before filing).

The only way it could do that was by keeping the market indefinitely oversupplied (according to the Saudis it is currently oversupplied by about 3 million barrels), which would ultimately crush prices and lead to the liquidation of numerous US producers.

It also also algo-driven, because the Saudi deputy crown prince Mohammed bin Salman made it clear two weeks ago that there would be no production freeze unless everyone joined in, expicitly pointing out Iran, even though Iran has repeatedly said it would not “self impose a production embargo” on itself.

No matter: the algos continued buying after forgetting this critical nuance, because, well, the “OPEC production freeze” headlines kept pouring in.

And then it all came crashing down first last night when, just two days before the Doha meeting, the same Saudi prince said the Saudi kingdom won’t restrain its oil production unless other producers, including Iran, agree to freeze output at a meeting this weekend in Doha.

“If all major producers don’t freeze production, we will not freeze production,” said Prince Mohammed, 30, who has emerged as Saudi Arabia’s leading economic force.

Worse, he also added that “If we don’t freeze, then we will sell at any opportunity we get” and made it quite clear that the next major leg in oil prices is lower: “If prices went up to $60 or $70, that would be a strong factor to push forward the wheel of development,” Prince Mohammed said. “But this battle is not my battle. It’s the battle of others who are suffering from low oil prices.”

It is indeed, and Saudi Arabia will make sure their suffering surges in the coming days.

* * *

And then, the “OPEC production freeze” farce was fully exposed this morning when after pretending whether or not to participate in the Qatar meeting, Iran finally decided it will notattend the Doha meeting, two sources familiar with the situation told Reuters.

Iran’s oil minister had not been scheduled to attend, but Tehran was due to send Iran OPEC Governor Hossein ‎Kazempour Ardebilli, oil ministry news agency Shana reported on Friday.

However, according to Reuters, Iran had been informed that only those countries willing to agree to freeze their output level should attend.

As a result, nobody from Iran will be present, which also means that the Saudi condition that an oil freeze will only work with Iran participating, won’t be met.

Iran has said it supports the freeze but would not join it until it raises its output and market share to their pre-sanctions levels.

Its production has already surpassed 3.5 million barrels per day (bpd) and exports are set to reach 2 million bpd next month, Iran’s deputy oil minister was quoted as saying by state news agency IRNA on Saturday. As a reminder, last week we reported that “Iran’s Massive Oil Fleet Begins To Move: 29 Million Barrels Depart Iran In Past 2 Weeks” and as a result of the 600,000 bpd jump in Iran oil exports, virtually the entire US shale production decline to date has been offset by just one nation.

* * *

And then, just to crush any hope, earlier this morning the Saudi deputy crown prince made arepeat appearance when cited by Bloomberg, he said that “Saudi Arabia could raise crude production by more than a million barrels a day immediately as he reiterated the nation would only agree to freeze production if all major producers including Iran do the same.”

The world’s largest oil exporter could increase output to 11.5 million barrels a day immediately and go to 12.5 million in six to nine months “if we wanted to,” Prince Mohammed bin Salman, who is also Chairman of the Supreme Council of Saudi Arabian Oil Co., said in an interview Thursday. The country pumped 10.2 million barrels a day last month, according to data compiled by Bloomberg.

“I don’t suggest that we should produce more, but we can produce more,” said the prince, who is the king’s son, second in line to the throne and a leading force in the country’s economic policy. “We can produce 20 million barrels of oil per day if we invested in production capacity, but we can’t produce beyond 20 million.”

Which, of course, is just a hint that even all U.S shale production goes offline, Saudi Arabia is more than ready to plug the production gap.

* * *

Finally, for those still hoping that some deal will emerge out of tomorrow’s Doha meeting, you can exhale now.


Sunday afternoon: is there a deal or isn’t there?
(courtesy zero hedge)

“I Am Not Sure You Can Call It A Freeze” – OPEC Deal In Jeopardy As Saudi-Iran Tensions Spike: All The Latest

Following last night’s leaked draft Doha document, which envisions a non-binding, “gentleman-like” oil freeze agreement, that caps production at January levels until October, with zero enforcement or oversight, moments ago the formal Doha talks started:


However, even before the start, things did not look good, when Saudi Arabia delayed the start of the meeting in what seemed to be a redrafting to account for the inclusion of Iran as part of the freeze, something which Iran has clearly said it won’t do.


Furthermore, we already know what the next strawman will be once today’s “deal” disappoints: yet another meeting which will keep the headline scanning algos busy


Or as one commentator put it, “more meetings, more jawboning.It’s OPEC’s OMT program. Freeze won’t happen,but they hope pretending it will, will do the trick” which is exactly the point.

So where are we now?

According to Reuters things are not as “optimistic” as Ecuador, Venezuela and many of the other high-cost, and quite desperate, OPEC producers had hoped ahead of the meeting.

According to the wire service, “a spike in tensions between arch-rivals Saudi Arabia and Iran appeared on Sunday to ruin prospects of the first binding oil output deal in 15 years between OPEC and non-OPEC nations, and looked set to prompt another fall in the price of crude.”

But the meeting was postponed after OPEC’s de facto leader Saudi Arabia told participants it wanted all OPEC members to take part in the freeze, according to OPEC sources.

Riyadh had earlier insisted on excluding Iran from the talks because Tehran had refused to freeze production, seeking to regain market share after the lifting of Western sanctions against it in January.


With the deal running into trouble, oil ministers in Doha met with the Qatari emir, Sheikh Tamim bin Hamad al-Thani – who was instrumental in promoting output stability in recent months.


But a new draft seen by sources thereafter contained none of the binding points of the previous outline. Ministers are due to start talks at around 1200-1230 GMT, according to sources.

“I am not sure you can call it a freeze,” one OPEC source said.

A senior oil industry source said: “The problem now is to come up with something that excludes Iran, makes the Saudis happy and doesn’t upset Russia.”

Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.

And then, someone finally got to the bottom of things:  “If there is no deal today, it will be more than just Iran that Saudi Arabia will be targeting. If there is no freeze, that would directly affect North American production going forward, perhaps something Saudis might like to see,” said Natixis oil analyst Abhishek Deshpande.

We will update this developing story as more news hits.


Sunday evening:  no deal!

No Deal: Doha Talks End Without Agreement

The most anticlimiatic culmination to the most farcical “agreement” of 2016, one which could have been seen a mile away by any carbon-based trader not housed in a collocated, supercooled facility in Secaucus, has taken place and here is the “shocking” result:


Bloomberg has some additional details, even if the endgame had been clear for weeks in advance:

Negotiations between 16 oil producers in Doha ended without any agreement on limiting supplies, a diplomatic failure that threatens to renew the rout in prices.


The summit in the Qatari capital, which dragged on for more than ten hours beyond its initially scheduled conclusion, finished with no final accord, Nigeria’s Petroleum Minister Emmanuel Kachikwu told reporters. Discussions stumbled over whether the agreement should extend to other producers such as Iran, which wasn’t present, according to a person familiar with the matter. The inability to reach consensus will lead to a “severe” drop in prices, Citigroup Inc. predicted before the meeting.


“The Doha meeting was an opportunity for OPEC to polish its tarnished image,” Miswin Mahesh, an analyst at Barclays Plc in London, said on April 15. “After the failure of OPEC’s December meeting, the market was uneasy about its cohesion and Doha was a chance for the group to reassert its relevance and build a circle of trust.”

As reported earlier, and as has been reported for weeks, the failure to reach a deal was as a result of Saudi intervention, who have been the only dominant force among oil producing nations, ever since the Saudis killed OPEC as a cartel in November 2014. Here is the FT regurgitating what is already known:

Delegates said Saudi Arabia had in effect torn up an earlier draft of the deal as it decided it could not be party to an agreement that would give Iran any leeway. Tehran had refused to join the freeze as it rebuilds its oil exports after years of sanctions.

Iraq, to be sure, was quite displeased: “We are very, very disappointed,” said Iraq’s representative. “This will effect the price and our earnings. We wanted a deal.”

But the Saudis – who are about to drink everyone’s milkshake again – did not, despite so much optimism for a deal ahead of the meeting


Of course, one has to keep the dream alive, and sure enough the strawman for more headlines is set:


Will it once again work to fool the idiot algos, with recurring headlines of another “imminent certain deal”, which will ram the shorts for another 2 months of stop hunts? Probably. The only question is whether Venezuela’s regime will survive for another two months.

What happens next? Again here is Citi’s Ed Morse with the obvious next steps:

If there is no agreement, then expect a sharp oil market sell-off on Monday.

And now we begin counting down the hours until oil opens for trading, pardon, selling unless the BOJ decides it will soak up every last drop on offer.

Sunday night:  Oil futures crash by the most in 7 months/stocks also tumble!
(courtesy zero hedge)

Oil Futures Crash Most In 7 Months, Stocks Tumble

With commodity currencies (AUD and CAD) dumping, Yen strength (risk-on carry unwinds en masse), Saudi stocks tumbling, and hedge fund spec crude longs near record highs, it is no surprise that the opening prints in WTI Crude are ugly after Doha’s disappointing climax. Erasing all of last week’s hype hope, WTI printed with a $38 handle (June), $37 Handle (May) and is unable to bounce for now. Dow futures -100.

May crashed most in 7 months…


June plunged…


Dow futures are down around 100 points for now…


Bear in mind that someone was hedging aggressively into the weekend…


And hedge fund net length was at record highs…


More to come we suspect…

Unbelievable oil soars 8% off its lows and erases the entire post DOHA drop
(courtesy zero hedge)

Brent Crude Soars 8% Off Lows – Erases Entire Post-Doha Drop

Sometimes you have to laugh…


While WTI is still not quite there, Brent Crude has erased a 7%-plus decline…


Credit Suisse suggests a few reasons for the Market Bounce – Pain trade higher, Energy covering, Gorman comments, NAHB elevated, HY/Equities decoupling from oil

1-HF exposures remain at 3 year lows + long only cash parked on sidelines – Pain trade higher, dips being bought most cited reason for this morning’s bounce


2-Oil & Gas high short interest vs float names leading higher since open, ranging from 3 – 5% rally off opening lows (WPX QEP, SDRL, CIE, EPE, CNX, NFX, CLR, APC)


3-MS #s good enough, add to continued momentum in financial space.  Gorman comment “M&A pipeline strong” helping


4-NAHB homebuilder sentiment index still elevated, comes in at 58 (same as before)


5-Oil has been decoupling from HY and equities – possibly because earnings expectations have gotten too low for this quarter

Late in the we heard the Kuwait is back to normal production and that spooked oil:
(courtesy zero hedge)

Crude Crumbles Back Into Red As Kuwait Output Returns To Normal

It appears the “excuse” for today’s panic-buying spree in crude – a refineries strike in Kuwait affecting supply – has just been demolished:


Now what excuse will there be? Especially as Venezuela confirms production will not slow.



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




USA/CAN 1.2815 down .00006

Early THIS MONDAY morning in Europe, the Euro ROSE by 41 basis points, trading now WELL above the important 1.08 level RISING to 1.1318; 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 DOWN 44.46 POINTS OR 1.44%/ Hang Sang DOWN 154.97 OR  0.73%   / AUSTRALIA IS LOWER BY 0.40% / ALL EUROPEAN BOURSES ARE  IN THE  RED as they start their morning/ WITH THE EXCEPTION OF GERMANY’S DAX.

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 MONDAY morning: closed DOWN 572.08 OR 3.40%

Trading from Europe and Asia:

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

Gold very early morning trading: $1237.40


Early MONDAY morning USA 10 year bond yield: 1.75% !!! DOWN 1/2 in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.56 DOWN 1 in basis points from FRIDAY night.

USA dollar index early MONDAY morning: 94.60 DOWN 11 cents from FRIDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers MONDAY MORNING




And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.13% DOWN 4 in basis points from MONDAY

JAPANESE BOND YIELD: .110% DOWN 1/2 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.49% DOWN 1 IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.35  UP 2 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 14 points lower than Spain.





Closing currency crosses for MONDAY night/USA DOLLAR INDEX/USA 10 YR BOND YIELD/3:30 PM


Euro/USA 1.1318 UP .0041 (Euro UP 41 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 108.95 up 0171 (Yen down 17 basis points)

Great Britain/USA 1.4276  UP .0089 Pound UP 89 basis points/

USA/Canad 1.2815 DOWN 0.0006 (Canadian dollar UP 10 basis points with OIL (WTI AT $39.81


This afternoon, the Euro was UP by 41 basis points to trade at 1.1318

The Yen fell to 108.55 for a loss of 17 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 UP 89 basis points, trading at 1.4276

The Canadian dollar rose by 6 basis points to 1.2832, DESPITE THE HUGE LOSS IN WTI TODAY:  $39.75

The USA/Yuan closed at 6.4786

the 10 yr Japanese bond yield closed at -.110% up 1/2 BASIS  points in yield/AND THIS IS GETTING DANGEROUS!~!

Your closing 10 yr USA bond yield: up 3 basis points from FRIDAY at 1.78% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.59 up 3 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.71 DOWN 24 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 FRIDAY

London:  CLOSED UP 9.77 POINTS OR 0.16%
German Dax :CLOSED UP 68.74 OR 0.68%
Paris Cac  CLOSED UP 11.67  OR 0.26%
Spain IBEX CLOSED UP 36.70 OR 0.35`%
Italian MIB: CLOSED UP 100.90 OR 0.55%

The Dow was up 106.70 points or 0.60%

NASDAQ UP 21.80 points or 0.44%
WTI Oil price; 39.74 at 3:30 pm;

Brent Oil: 42.78




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:


BRENT: 43.01


USA DOLLAR INDEX:94.48 down 23 cents on the day


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

Trading Today in Graph form:

Dow Tops 18,000 As Doha Dud Didn’t Matter

It’s crazy pills time – no doubt… Doha was a dud and Morgan Stanley’s 52% crash in earnings was better-than-expected…


Did you really expect anything else…?


This means The Fed has a major problem – no turmoil means no excuses for hiking rates. Since Dec FOMC Hike, everything is now awesome:

  • Dow +3.2% (Dow Earnings -3.5%)
  • Inflation – CPI up from 0.6% YoY to 0.9% YoY, Core CPI up from 2.0% YoY to 2.2% YoY
  • Unemployment Rate U6 down from 9.9% to 9.8%, U3 5%, Initial Claims down from 285k to 253k
  • China Stocks +17% in last 2 months
  • China FX vol -4pts to 7.6% in 2 months

But for now – this is the LOL WTF Chart of The Day…Dow tops 18,000 as EPS expectations collapse…


Dow 18,000 was saved atthe second by a quick VIX slam…


Futures markets show the day’s real moves… and the utter buying panic that occurred at VWAP as US stocks opened for gambling… Stocks were bid at the China open, the Europe open, and the US open…


Small Caps ended the day best (squeeze)…


The Energy sector opened down over 2% and ended up 1.6%… sure why not!! Notiuce how everything died when Europe closed…


USDJPY was the first momentum igniter at around 830ET, but that failed – so another bigger move was unleashed at 0930ET when stocks opened did the trick…


Alao notice that Treasuries were dumped at the same time as USDJPY…also notice USDJPy and bonds decoupled from stocks inthe last hour…


By way of interest – today saw “Most Shorted” stocks once again face-ripped from the US open to EU close (+2.5%) back into the green for the year (Shorts havsd soared on 75% of the days in this upsswing off the mid-feb lows after losing during that 0930ET to 1130ET period almost non-stop on the way down…


NFLX had a tough day (thanks to AMZN news) ahead of earnings…except it was utterly panic-bid into the clso


Treasury yields emded the day higher but rolled over in the afternoon session…


The surge in commodity currencies off the opening Doha dump sent the USD index lower on the day…


Gold and Silver ended the day unch. Copper popped but crude was the big story, with its yuuge reversal…


The Crude curve steepened notably…


But we leave you with this…


Charts: Bloomberg




Morgan Stanley relies almost entirely on marginal trading revenue and its important wealth management unit.  They disappointed the street with trading revenue down 40% and profits down more than 50%

(courtesy zero hedge)


Morgan Stanley Profit Plunges By More Than 50% As Trading Revenue Tumbles 40%

Moments ago Morgan Stanley became the fourth major US bank to report earnings which unlike its previously reporting peers, JPM, Wells and Citi, were far more simple to digest due to the lack of bank loan balance sheet arbitrage and reliance on Net Interest Margin. After all, after Goldman Sachs, Morgan Stanley is the closest to relying almost entirely on marginal trading revenue as well as its all important wealth management unit.

The results were quite ugly: total revenue of $7.8 billion barely changed from the previous quarter, and was down 21% from Q1 2015, however due to the sharp drop in consensus estimates in recent months, revenues was a “beat” to the $7.76 billion expected.

Earnings likewise were ugly, tumbling by 53% from $2.4 billion to $1.1 billion, or $0.55 per share. This too was a beat as a result of a sharp plunge in Q1 EPS expectations in recent months.

And while the bank’s wealth management unit, which at March 31 had total client assets of $2 trillion, kept revenues flat, declining just 2% to $2.6 billion in Q1, it was the plunge in trading revenue which raised some eyebrows: plunging 43% from a year ago, the company reported just $2.1 billion in revenue from trading, while investment banking dropped a notable 18% to $1.1 billion in Q1. Hardly the results one would associate with stable growth.

The full breakdown of MS’ income statement:


Some highlights from the press release:

  • Institutional Securities net revenues were $3.7 billion reflecting challenging market conditions in Fixed Income & Commodities sales and trading and underwriting, with strength in Equity sales and trading and M&A advisory.
  • Equity sales and trading net revenues of $2.1 billion decreased from $2.3 billion from a year ago primarily reflecting declines in cash equities in volatile global equity markets, partly offset by continued strength in prime brokerage.
  • Compensation expenses of $1.4 billion decreased from $2.0 billion a year ago on lower revenues. Non-compensation expenses of $1.4 billion for the current quarter decreased from $1.6 billion a year ago primarily reflecting lower litigation costs

And the all important FICC:

  • Fixed Income & Commodities sales and trading net revenues of $873 million decreased from $1.9 billion a year ago. Results reflect lower commodities revenues given the depressed energy price environment and the disposition of the Oil Merchanting business in the fourth quarter of 2015. Results for the current quarter also reflect lower levels of client activity in rates and foreign exchange and a challenging credit environment.

Hint: clients better step up their activity soon.




Over the weekend we saw the Saudi threat to dump all of its treasuries if it is deemed that they had a role in the Sept 11 attack: There are 28 pages redacted.  The bill wants those 28 pages in the clear;

(courtesy zero hedge)


Obama Responds To Saudi Threat To Dump Treasuries If Its Role In Sept 11 Is Probed

This weekend’s biggest, and most shocking story, was the report that in response to a proposed Congressional Bill that would allow a probe into the Saudi role behind the Sept 11 terrorist attack, Saudi Arabia had threatened the US with dumping its roughly $750 billion in Treasury holdings.

What was curious about the story is that while Saudi Arabia implicitly admitted it had a role in the September 11, the Obama administration was actively doing everything in its power to prevent the Bill from passing, and thus to keep the truth under wraps, leading many to wonder if Obama was more concerned about his own people or a handful of uber-wealthy Saudi princes.

Moments ago White House spokesman Josh Earnest chimed in, and validated all of those fears.


And the punchline:


In short: whether due to the Saudi threat, or just because of its default position on the matter, Obama will block the Bill and no further probes into Saudi involvement in the Sept 11 tragedy will be allowed.

And with that any concerns about whether the US president represents not only the interests of the Sept 11 victims and their families, but all all American people, and is intent on discovering who the real culprit behind the deadliest terrorist attack on US soil, as opposed to the interests of few Saudi billionaires and would much rather have the truth remain suppressed in 28 top secret pages and certainly in the public domain, were just answered.

Two weeks ago we brought you the story that United Health will back out of providing policies next year in Arkansas and in Georgia.  Today you can two more states to the list: Michigan and Oklahoma
(courtesy zero hedge)

Obamacare Exodus Accelerates: After Georgia And Arkansas, Biggest Health Insurer Exits Michigan And Oklahoma

Two weeks ago we reported that after its November warning that it may exit certain Obamacare markets as a result of substantial losses, the largest U.S. health insurer UnitedHealth, did just that when it announced it would no longer sell plans for next year in Georgia and Arkansas.

Then over the weekend, UnitedHealth also added Michigan to the list of states whose Obamacare market it would no longer service. As Bloomberg reported, “the insurer won’t sell policies through Michigan’s ACA exchange for next year, according to Andrea Miller, a spokeswoman for the state’s Department of Insurance and Financial Services. Georgia and Arkansas said last week that UnitedHealth will quit their exchanges for 2017.”

And then, moments ago in the latest hit to Obamacare, United added Oklahoma as the 4th state to the growing list of Obamacare markets it refuses to service.

What will the consequences of this exodus be?

According to Bloomberg, “while Michigan and Arkansas can probably weather UnitedHealth’s move, some consumers in Georgia and Oklahoma may feel a lack of choices, according to a Kaiser Family Foundation analysis of UnitedHealth’s offerings across the U.S.”

Michigan should be able to endure the loss of United because the insurer only participates in seven of the state’s 83 counties, and it’s not among the cheapest in any of those counties, according to the Kaiser analysis. United also wasn’t offering cheap plans in Arkansas. In Georgia, however, the loss of UnitedHealth will cut the number of insurers to just one or two in about half of the state’s counties, though those counties account for just 11 percent of the state’s population. The insurer offered one of the cheapest plans in 34 of the state’s 159 counties.

Worse, on the current trend, UnitedHealth will likely announce the exit of more states in the coming days.

The reason is that Obamacare’s success depends on insurers selling plans in government-created markets, called exchanges, in each state. The fewer insurers participating, the harder it is for the program to achieve its goal of extending coverage to more Americans. Other states where consumers would have the most to lose if UnitedHealth drops out include Alabama, Louisiana and Tennessee, according to the Kaiser study.

And since by definition, that is also where UnitedHealth is losing the most money on this foolishly constructed attempt to centralize health insurance, those are the markets where UnitedHealth (and soon others) will likely exit next.

“It’s likely that in places where they were one of the only insurance companies, and they priced low relative to their competitors, they’re important players,” Cynthia Cox, one of the report’s authors, said by phone. “In certain areas, there would be a need for individuals to shop around.”

According to Bloomberg calculations, UnitedHealth offered ACA plans in 34 states for the current year. If UnitedHealth left all those states’ exchanges, about 3 million ACA enrollees would see their choices reduced to just one or two insurers for next year, the Kaiser study shows. About 9 million people would still have three or more plans to pick from.

Naturally, the government is eager to downplay these accelerating defections, alleging that UnitedHealth is at best a marginal player in the state exchanges it has vacated: “the U.S. Department of Health and Human Services said the report shows that UnitedHealth plays a relatively small role in the ACA’s markets. HHS has previously said it expects insurers to enter and exit the ACA each year, and that it expects the ACA’s exchanges to “continue to thrive.”

That, of course, assumes that other insurance providers won’t leave next; and they likely will because the way Obamacare is structured, not only being the “last company standing” in any given market, and thus being the much desired monopoly, will provide incremental benefits to either the top or the bottom line.

As for UnitedHealth, as noted above, it will likely announce more defections in the coming days. Other states where UnitedHealth posted big losses in its individual business include Florida, North Carolina, New York, Alabama and Louisiana, according to Ana Gupte, an analyst at Leerink Partners. She said UnitedHealth will probably take into account those losses as well as its 2017 outlook as it decides which states to exit.

Bloomberg adds that if UnitedHealth left the New York exchange, every consumer in the state would still have at least three plans to pick from. Here’s what a UnitedHealth exit could mean in some other states:

  • Alabama: Two-thirds of the state’s population would have just one choice of insurer, and the rest would have two. United offers one of the least-expensive plans in 66 of the state’s 67 counties.
  • Louisiana: Consumers in most of the state would have just two health plans to pick from. UnitedHealth offered one of the cheapest plans in about three-quarters of the state.
  • Florida: It’s the state with the most Obamacare enrollees. More than a third of them would have a choice of only one or two health plans if UnitedHealth exited.

But the scariest news for the president’s legacy healthcare program is that UnitedHealth is far from the only insurer struggling with selling individual health plans, which includes ACA plans. Industry-wide, insurers spent $1.02 on medical care for every premium dollar they took in last year, meaning they lost even more money when administrative expenses are included, according to Brian Wright, an analyst at Sterne Agee CRT.

It also means as UnitedHealth boldly exits more and more states, many others will shortly follow.

Well I guess that about does it for today
I will see you tomorrow night

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