April 22/Huge rise in silver OI complex at 199,231 contracts plus options expiry week necessitated a 2nd raid by our criminal bankers/Kuroda may loans banks at negative rates (get a load of that) and thus the USA/Yen cross skyrockets/Markets did not respond to that generosity/Caterpillar results awful and guidance is also southbound/Bellwether for the oil patch Schlumberger also shocks the street with guidance downward/

April 22, 2016 · by · in Uncategorized · 2 Comments

 

Good evening Ladies and Gentlemen:

Gold:  $1,228.70 down $20.30    (comex closing time)

Silver 16.90  down 19 cents

In the access market 5:15 pm

Gold $1232.80

silver:  16.97

 

I WROTE THE FOLLOWING YESTERDAY:

“The boys are burning the midnight oil trying to figure out what to do. There is no question that both gold and silver OI’s increased with today’s trading. The reading of OI for tomorrow will represent today’s trading finality.”
The decision was given to raid ( Friday being a great day for the crooks because London is already put to bed for the weekend and thus they are only dealing with paper gold/ no physical problems to deal with).
Two other factors contributed to the decision of the bankers to raid for a second time in a row:
a) options expiry week has begun with Tuesday being the final day for the comex
b) the silver OI was gigantic and that in itself necessitated a raid.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 61 notices for 6100 ounces for gold,and for silver we had 0 notices for nil oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 224.12 tonnes for a loss of 79 tonnes over that period.

 

In silver, the open interest rose by a gigantic 6,698  contracts up  to 199,231 despite the fact that the price was silver was down  by 4 cents with respect to YESTERDAY’s trading. In ounces, the OI is still represented by .996illion oz or 142% of annual globla silver production (exRussia &ex China)We are now at multi year highs in OI with respect to silver

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

In gold, the total comex gold OI ROSE 4,520 contracts to 511,334 contracts even though the price of gold was DOWN $4.20 with THURSDAY’S TRADING(at comex closing).Upon seeing that huge OI number in gold, along with the huge accompanying extreme high OI in silver was enough for our bankers and the decision to raid again was on for today.

We had no changes in gold inventory at the GLD, thus the inventory rests tonight at 805.03 tonnes.The boys loading  gold into and/or removing gold at the GLD must be getting dizzy at the sheer pace of transactions!!   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’s SLV,we had no change in silver inventory.  Thus the inventory rests at 334.724 million oz.

.

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

1. Today, we had the open interest in silver rise by a whopping 6,648 contracts up to 199,231 despite the fact that the price of silver was DOWN 4 cents with THURSDAY’S trading. The gold open interest rose by A LARGE 4,520 contracts despite the fact that gold fell by $4.20 yesterday.   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)

3. ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed UP BY 6.35 POINTS OR 0.22%  ON A LAST HR RESCUE /  Hang Sang closed DOWN 155 OR 0.72%. The Nikkei closed UP 208.87 POINTS OR 1.20% . Australia’s all ordinaires  CLOSED DOWN 0.69%. Chinese yuan (ONSHORE) closed DOWN at 6.4925.  Oil ROSE  to 43.36 dollars per barrel for WTI and 44.867 for Brent. Stocks in Europe ALL IN THE RED (EXCEPT SPAIN) . Offshore yuan trades  6.49607 yuan to the dollar vs 6.49607 for onshore yuan.

 

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

ii)Kuroda thinking of increasing NIRP and also to supply banks with negative rates

(courtesy Bloomberg)

iii)And the resultant action of this total nonsense:

huge rise in the USA/Yen cross.  Houston we have a problem, stocks are not buying the move as earnings are just too awful!!

( zero hedge)

b) REPORT ON CHINA

iv)Two big stories:  Last night

First:  hundreds of Chinese children mysteriously fall ill suffering from nose bleeds, rashes and coughing from East China’s Jiangsu Province.  The school is right next store to huge chemical factories:

( zero hedge)

Second: Early this morning: massive explosion at a Chemical plant in the same Jiangsu province:
( zero hedge)

4.EUROPEAN AFFAIRS

i) Greece is back in the spotlight as they fail to reach a deal with lenders.  Worse still, they lost their “champion” , the IMF, who now state that Greece can survive without debt haircuts. I do not know what planet the iMF is on but Greece is one big basket case

( zero hedge)

ii)Great Britain has politely asked Obama not to interfere in the BREXIT situation.Things must not be going well as he just gave an OP-Ed to Gr. Britain:

( zero hedge)

iii)A very important read today by David Stockman on the ECB.  He basically states that this gentleman is nothing but a charlatan and do not pay attention to his phony statements like the European households are now lending money to finance projects etc…Europe has no growth in that dept. for quite a while.  Basically, Draghi cannot go further into NIRP as this will totally annihilate the European banks and he has very little assets left to monetize.

a must read..
( David Stockman/ContraCorner)

5.GLOBAL ISSUES

New York listed Caterpillar is perhaps the best Bellwether companies to determine global health.  We now witness their sales plunging 26% and they had another earning miss.  However it is their outlook that is looked upon with great earnest:  they are slashing revenue and earnings.  The global picture is not good at all:

( zero hedge)

6.EMERGING MARKETS

Venezuela is without a doubt becoming one complete train wreck: they are now cutting off electricity 4 hrs per day:

( zero hedge)

7. OIL ISSUES

SCHLUMBERGER, THE WORLD’S LARGEST OIL SERVICE PROVIDER HAS COME OUT WITH ok NON GAAP EARNINGS, BUT THEIR NET INCOME PLUNGED NEARLY 50%. THESE GUYS HELP FIND OIL FOR OIL COMPANIES AND THEY ARE STATING THAT OIL DRILLERS ARE CUTTING BACK. AND SLASHING SPENDING BY 50%.  THEY HAVE  GIVEN THEIR GUIDANCE LOWER!

( ZERO HEDGE)

 

ii)Crude rises as rig counts tumbles again:

(zero hedge)

iii)The IEA warns that both the Saudi and the Russians will pump as much oil as they can and will not pay any attention to “freezes”

( IEA/zeor hedge)

8.PHYSICAL MARKETS

i)Chris Powell talks about a possible gold revaluation:
( Chris Powell/GATA)

ii)The Russians are mocking the west’s rigging of the precious metals market”( Sputnik/GATA/Chris Powell)

iii)Dave Kranzler shows the extreme manipulation that is happening and will be happening in the coming week as we go into options expiry week:

( Dave Kranzler/IRD)

9.USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)As expected USA manufacturing PMI flash prints at 50.8 missing expectations of 52.0.  This is the lowest print since 2009.  This is a reading of the entire USA:

( zero hedge/PMI)

 

ii)The Bond king speaketh:

Two points of interest:

a) He feels Trump will win and will be good for the economy

b) The Fed has given up on raising rates

(courtesy Gundlach/zero hedge)

 

iii)We have outlined to your on several occasions that the used car prices are coming down and that this is causing problems for the  new car market as it is much cheaper to buy a used car than a new one.  The Volkswagen car settlement case in NY will create havoc as countless numbers of used Volkswagen cars will flood the market once they are fixed

( zero hedge)

 

iv)Greg Hunter’s weekly wrap up

 

Let us head over to the comex:

The total gold comex open interest ROSE CONSIDERABLY to an OI level of 511,334 for a GAIN of 4,520 contracts despite the fact that the price of gold DOWN  $4.20 with respect to YESTERDAY’S TRADING.However I expected a lot higher OI.  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 209 contracts from 1703 contracts down to 1494.  We had 171 notices filed yesterday so we LOST  38 CONTRACTS or an additional 3800 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI fall by 415 contracts down to 2385. The next big active gold contract is June and here the OI rose by 4514 contracts up to 83,471. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 159,377. The confirmed volume YESTERDAY (which includes the volume during regular business hours + access market sales the previous day was very good at 284,106 contracts. The comex is not in backwardation.

Today we had 61 notices filed for 6100 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 6648 contracts from 192,583 UP to 199,231 DESPITE THE FACT THAT the price of silver was DOWN 4 cents with YESTERDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 0 contracts remaining at 6. We had 0 notices filed on YESTERDAY so we NEITHER  gained NOR LOST ANY SILVER OUNCES THAT will stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by 14,092 contracts DOWN to 5,863. This level is exceedingly high AS WE ONLY HAVE 1  week before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 112,816, which is HUMONGOUS  AND NOT MANY ROLLOVERS. The confirmed volume yesterday (comex + globex) was OUT OF THIS WORLD AT 205,642. Silver is not in backwardation. London is in backwardation for several months.
THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END. 
 
We had 0 notices filed for NIL oz.
 

April contract month:

INITIAL standings for APRIL

Initial Standings for April

April 22/2016

Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  1,221.7oz (Manfra, Scotia)

38 kilobars
Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  643.00 OZ

HSBC

 

20 kilobars
No of oz served (contracts) today 61 contracts
(6100 oz)
No of oz to be served (notices) 1433 contracts 143,300 oz/
Total monthly oz gold served (contracts) so far this month 2672 contracts (267,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 111,298.7 oz

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 1 customer deposit:

i) Into HSBC: 643.000 oz

(20 kilobars)

total customer deposit:  643.000 oz

Today we had 2 customer withdrawals:

i) Out of Manfra;  192.90 oz  6 kilobars

ii) Out of Scotia: 1028.800 oz  32 kilobars

total customer withdrawal:201.489  oz   38 kilobars

Today we had 1 adjustment:

Out of Scotia:

289.77 oz was adjusted out of the dealer and into the customer and this is probably a settlement:   .0009 tonnes

 

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 61 contracts of which 18 notices was stopped (received) by JPMorgan dealer and 13 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 (2672) x 100 oz  or 267,200 oz , to which we  add the difference between the open interest for the front month of April (1494 CONTRACTS) minus the number of notices served upon today (61) 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 (2672) x 100 oz  or ounces + {OI for the front month (1494) minus the number of  notices served upon today (61) x 100 oz which equals 414,300 oz standing in this non  active delivery month of April (12.768 tonnes).
We lost 38 contracts or 3800 oz will not stand.
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 12.768 tonnes of gold standing for April and 17.165 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 12.768 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  and last week April 16 .3203 and April 22 .0009  = 19.8211 tonnes still standing against 17.165 tonnes available.  .
 
Total dealer inventor 551,863.652 oz or 17.165 tonnes
Total gold inventory (dealer and customer) =7,205,549.709 or 224.12 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.12 tonnes for a loss of 79 tonnes over that period. 
 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
 end
And now for silver
 

APRIL INITIAL standings

 april 22

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,269,579.67 oz

CNT, Delaware

HSBC,JPMorgan, Scotia
Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 600,522.159 CNT
No of oz served today (contracts) 0 contracts

NIL  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 7,794,270.7 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 1 customer deposit:

i) Into CNT: 600,522.159 oz

Total customer deposits: 600,522.159 oz.

We had 5 customer withdrawals

i) Out of CNT: 219.806.2

ii) Out of Delaware: 1990.800 oz

iii) Out of HSBC: 75,174.880 oz

iv) Out of JPMorgan; 600,000.300 oz

v)Out of Scotia:  372,607.490 oz

 

:

total customer withdrawals:  1,269,579.67  oz

 
 

 

 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 0 contracts for NIL 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 (6) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the April. contract month:  189 (notices served so far)x 5000 oz +(6{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 975,000 oz of silver standing for the March contract month.
we neither gained nor lost any silver ounces standing in this non active delivery month of April.
 
Total dealer silver:  31.957 million
Total number of dealer and customer silver:   151.135 million oz
The open interest on silver is now at multi year highs and silver is slowly disappearing from the comex vaults.
The total dealer amount of silver remains at multi year low of 31.957 million oz.
 
end
At 3:30 pm we get the COT report beginning the 12 of April, ending Tues April 19
Let us see what damage our commercial and criminal bankers did this week:
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
291,143 74,306 44,240 117,743 357,864 453,126 476,410
Change from Prior Reporting Period
4,802 1,772 -2,729 -4,438 3,896 -2,365 2,939
Traders
183 92 79 41 61 259 199
 
Small Speculators  
Long Short Open Interest  
50,205 26,921 503,331  
1,173 -4,131 -1,192  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, April 19, 2016
Our large specs:
Those large specs that have been long in gold added 4802 contracts to their long side
Those large specs that have been short in gold added 1772 contracts to their short side
Our commercials:
Those commercials that have been long in gold pitched a large 4438 contracts from their long side.
Those commercials that have been short in gold added 3896 contracts to their short side
Our small specs:
Our small specs that have been long in gold added 1173 contracts to their long side
Our small specs that have been short in gold covered a considerable 4131 contracts from their short side.
Conclusions; our criminal bankers went net short by 8334 contracts and that is bearish and usually means continual raids. The boat is getting quite heavy on the long side for the specs and very heavy on the short side for the commercials.
and now for our silver cot:
Silver COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
94,988 23,560 15,772 53,952 138,036 164,712 177,368
7,096 -1,864 -2,106 1,844 13,512 6,834 9,542
Traders
102 65 41 38 42 161 133
Small Speculators  
Long Short Open Interest  
29,798 17,142 194,510  
2,876 168 9,710  
non reportable positions Change from the previous reporting period
COT Silver Report – Positions as of Tuesday, April 19, 2016
WHAT ON EARTH IS GOING ON HERE????
Our large specs:
Those large specs that have been long in silver added a very healthy 7,076 contracts.
Those large specs that have been short in silver covered correctly 1864 contracts from their short side.
Our criminal silver commercials:
 Those commercials that have been long in silver added 1844 contracts to their long side
And now the biggy!!
Those commercials that have been short in silver added a gigantic 13,512 contracts to their short side (as silver went dramatically up)
Our small specs:
Those small specs that have been long in silver added 2876 contracts to their long side
Those small specs that have been short in silver added 168 contracts to their short side.
How on earth does the CFTC allow this criminal behaviour on the banks;
they went net short by 11,668 or 58.34 million oz of silver.
end
And now the Gold inventory at the GLD
April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes
April 21/no change in gold inventory/rests tonight at 805.03 tonnes
April 20/no change in gold inventory/rests tonight at 805.03 tonnes
April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes
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.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

April 22.2016:  inventory rests at 805.03 tonnes

end

 

Now the SLV Inventory
April 22/ no changes in silver inventory/rests tonight at 334.724 million oz
April 21/no change in silver inventory/rests at 334.724 million oz/
April 20/no change in inventory/rests at 334.724 million oz
April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724
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 22.2016: Inventory 334.724 million oz
.end
1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.5% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.5%
Percentage of fund in silver:38.6%
cash .-.1%( April 22.2016).
2. Sprott silver fund (PSLV): Premium to rises falls to -95%!!!! NAV (April22.2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls.+77% to NAV  ( April22.2016)
Note: Sprott silver trust back  into negative territory at -95%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.77%/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 -.95%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
 
 
 end

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

Trading in gold and silver overnight in Asia and Europe
 

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% This Week

By Mark O’ByrneApril 22, 20160 Comments

Silver prices rose again this week and are nearly 6% higher  for the week, while gold quietly eked out a 1% gain.

Today, gold fell 0.18% to $1,247 an ounce after hitting a five-week high of $1,270.10 an ounce yesterday. Silver is up nearly 2% today to $17.36 an ounce. It had rose to a
11-month high of $17.69 yesterday and looks set to test resistance at $18 per ounce.

Palladium and platinum also saw strong gains for the week and were 6.6% and 4.25% higher respectively.

      Market Performance This Week (Finviz)silver_gold_bullion


Market Updates This Week
Gold Price Set To Push Higher As Inflation Picks Up – RBC

Silver Bullion “Has So Much More to Give” – 5 Must See Charts Show

China Gold Bullion Yuan Trading To Boost Power In Gold and FX Markets

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

 

Gold Prices (LBMA)
22 April: USD 1,245.40, EUR 1,104.34 and GBP 868.73 per ounce
21 April: USD 1,257.65, EUR 1,113.21 and GBP 877.01 per ounce
20 April: USD 1,247.75, EUR 1,098.09 and GBP 867.45 per ounce
19 April: USD 1,241.70, EUR 1,095.18 and GBP 867.01 per ounce
18 April: USD 1,237.70, EUR 1,095.02 and GBP 872.45 per ounce

Silver Prices (LBMA)
22 April: USD 17.19, EUR 15.26 and GBP 11.96 per ounce
21 April: USD 17.32, EUR 15.31 and GBP 12.05 per ounce
20 April: USD 16.97, EUR 14.93 and GBP 11.81 per ounce
19 April: USD 16.62, EUR 14.67 and GBP 11.57 per ounce
18 April: USD 16.20, EUR 14.33 and GBP 11.41 per ounce


Gold News and Commentary
Silver slips from 11-month peak, gold off 5-week high as dollar bounces (Reuters)
Gold marks first decline in five sessions (Marketwatch)
ECB Keeps Up Unprecedented Stimulus as Draghi Assesses Impact (Bloomberg)
Germans are revolting over ECB policy (CNBC)
Yen tumbles on renewed rate cut talk (Reuters)

Video: Gold Benefits From Risk-On Sentiment Change: Yardeni (Bloomberg)
“What Is Happening Has Absolutely No “Reasonable” Explanation” (Zero Hedge)
Britain should pay more attention to the Eurozone crisis (Telegraph)
Banning cash would be devastating for the economy (Money Week)
“The more they move to negative rates, the more gold is gonna take off” (Investix)

Read More Here

 

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Mark O’Byrne
Executive Director
end
Chris Powell talks about a possible gold revaluation:
(courtesy Chris Powell/GATA)

Are stars aligned for gold revaluation — and is GATA finished?

Submitted by cpowell on Thu, 2016-04-21 21:54. Section:

6p ET Thursday, April 21, 2016

Dear Friend of GATA and Gold:

Today Zero Hedge posts a couple of items suggesting that central banks are intervening surreptitiously in the markets even more lately to avert deflation or that they should intervene more — items suggesting an end to gold price and commodity price suppression as central bank policy.

The first item is from an anonymous commodity trader who can see no other explanation for the recent rally in commodities:

http://www.zerohedge.com/news/2016-04-20/one-commodity-trader-writes-wha…

.Such speculation is plausible since, as Eric Scott Husander, the founder of the market data firm Nanex in Winnetka, Illinois, disclosed in 2014, CME Group, operator of the major futures markets in the United States, has been offering volume trading discounts to governments and central banks for secretly trading all major futures contracts on CME Group exchanges and counts governments and central banks among its customers:

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

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

The second item at Zero Hedge reports a paper by an analyst for bond house Pacific Investment Management Co., Harley Bassman, advocating that the Federal Reserve should start buying gold to stimulate the economy by devaluing the dollar, as the U.S. government undertook devaluation against gold in 1934:

http://www.zerohedge.com/news/2016-04-21/pimco-economist-has-stunning-pr…

Bassman’s paper is posted in the clear at PIMCO’s Internet site here:

https://www.pimco.com/insights/viewpoints/viewpoints/rumpelstiltskin-at-…

Such thoughts evoke the paper published in 2012 by the American economists and fund managers Paul Brodsky and Lee Quaintance speculating that central banks were surreptitiously redistributing the world’s gold reserves and aimed, upon the scheme’s completion, to revalue the monetary metal substantially upward to reliquefy themselves, a paper GATA often has called to your attention:

http://www.gata.org/node/11373

Indeed, the idea of an upward gold revaluation to avert debt deflation was also broached in a 2006 paper by the Scottish economist R. Peter W. Millar, called to your attention by GATA the following year —

http://www.gata.org/node/4843

— and even by a former member of the Federal Reserve Board, Lyle Gramley, during an interview with Business News Network in Canada in 2008. Though BNN seems to have removed the video of the interview, your secretary/treasurer transcribed the relevant passage when he called it to your attention here:

http://www.gata.org/node/6989

For several reasons your secretary/treasurer long has been inclined to believe that gold price suppression would be followed by an official gold revaluation.

First, of course, as Millar noted in 2006 and as Bassman notes now, official gold revaluations have happened before.

Second, because official market intervention to suppress prices always causes shortages eventually, that being the lesson of the collapse of the London Gold Pool in March 1968:

https://en.wikipedia.org/wiki/London_Gold_Pool

And third, because central banks and governments could not survive any steady erosion of their currencies in favor of gold; their currencies would become vulnerable to quick collapse. As a result central banks and governments would have to get in front of the inevitable and make it seem like their doing and thereby preserve the impression that they remain in control.

So if the stars are aligned for an official revaluation of gold, will this nullify GATA’s work?

Not at all.

For as much as GATA’s research long has implied a huge and uncoverable short position in gold underwritten by central banks and thus a much higher price for the monetary metal, and as much as GATA may be placed in the camp of “gold bugs” and gold investors, GATA’s objectives have not really been a higher gold price. Rather, GATA’s objectives have been free and transparent markets in the monetary metals and commodities; limited, accountable, and democratic government; fair dealing among the nations; and an end to imperialism, whose primary mechanism in recent decades has been currency market rigging, just as it was the primary mechanism of Nazi Germany’s exploitation of occupied Europe during World War II:

http://www.gata.org/node/10457

http://llco.org/hitlers-beneficiaries-2005-by-gotz-aly/

It will gain the world little if gold’s upward revaluation merely begins another, more sustainable round of gold and commodity price suppression and the undermining of free and transparent markets and democracy by central banks and governments, free and transparent markets and democracy being the great engines of human progress and liberty.

That’s why the questions GATA raises are likely to remain compelling, though we may despair of their ever getting posed by mainstream financial news organizations and market analysts:

— Are central banks trading the gold and commodity markets surreptitiously, directly or through intermediaries, or not? (Of course they are, and GATA has summarized much of the documentation of this trading here —

http://www.gata.org/node/14839

— though it can never be addressed by people who suppose themselves respectable.)

— If central banks are trading the gold and commodity markets surreptitiously, directly or through intermediaries, is it just for fun — for example, to see which central bank’s trading desk can make the most money by cheating the most investors — or is it for policy purposes?

— If central banks are trading the gold and commodity markets surreptitiously, directly or through intermediaries, is this trading for the traditional purposes of defeating a potentially competitive world reserve currency, or have these purposes expanded?

— If central banks, creators of infinite money, are surreptitiously trading a market, how can it be considered a market at all, and how can any country or the world ever enjoy a market economy and democracy again?

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

 

 

 

END

 

The Russians are mocking the west’s rigging of the precious metals market”

(courtesy Sputnik/GATA/Chris Powell)

 

Russian government news agency mocks West’s gold market rigging

Submitted by cpowell on 10:00AM ET Friday, April 22, 2016. Section: Daily Dispatches

1p ET Friday, April 22, 2016
Dear Friend of GATA and Gold:

The world news Internet site Sputnik News this week published an unsigned commentary about gold market manipulation by Western investment banks and the Federal Reserve, citing Deutsche Bank’s confession to the scheme. While most mainstream financial news organizations in the West are studiously suppressing the Deutsche Bank story, the remarkable thing about the Sputnik News commentary is that the news organization is owned and operated by the Russian government itself, the successor to the RIA Novosti and Voice of Russia news organizations:

http://tinyurl.com/z86zqd4

That is, like the government of China —

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

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

— and Russia’s own central bank —

http://www.gata.org/node/4235

— the government of Russia knows all about the Western central bank policy of gold price suppression. But while this policy can be reported in Russia and China, it remains a prohibited subject in the supposedly free Western press.

The Sputnik News commentary is headlined “‘Gold-Fix Cartel’: How Western Banks Were Caught With Pants Down” and it’s posted here:

http://sputniknews.com/analysis/20160419/1038265226/gold- deutsche-bank-m…

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

 

end

 

Dave Kranzler shows the extreme manipulation that is happening and will be happening in the coming week as we go into options expiry week:

(courtesy Dave Kranzler/IRD)

Gold/Silver Manipulation: The Foul Smell Of Desperation

April 22, 2016Financial Markets, Gold, Market Manipulation, Precious Metals, , ,

Nearly 40 million ounces of paper silver were launched at the Comex yesterday in the space of seven minutes, which triggered a 92 cent waterfall in the price of silver; over 118 million ounces of paper silver were dumped on the Comex today (April 22) between 11 a.m. and noon EST.  This market intervention typically occurs after the bona fide physical precious metals in the eastern hemisphere have shut down for the day.

The baseline assumption of modern financial theory is that fiat money is sound and markets are efficient.  Neither of those suppositions are valid.  The markets have been completely stripped of any legitimate price discovery function.  You can’t tell me with a straight face that Tesla, which is now burning cash at a rate of half a billion a year is worth $33 billion – or 8x revenues – any more than you can tell me that junior mining stock with $500 million in proved gold/silver resource in the ground is worth only $24 million.

Gold and silver have been “climbing a wall of worry” for several weeks now.  The traditional signs of an imminent manipulative attack on the metals (open interest of shorts vs. longs on the Comex, chart formations, etc)  have defied the behavioral patterns of the past 15 years.   Several “chartists” and Wall Street analysts, notwithstanding their boorish market prediction revisionism, have been been humiliated by the price-action in gold/silver since mid-January.

Several of us who have researched, traded and invested in the precious metals markets since the inception of the precious metals bull market believe that the bullion banks may have a bigger problem with sourcing physical silver for deliveries right now than with gold.  The Comex bullion banks have been hitting the price of silver hard with paper contracts the last two days, in a desperate effort to beat down the priceUntitledappreciation of silver during the overnight physical market activities of the eastern hemisphere bullion markets.
(click image to enlarge)
Currently there are are 56,863 open May silver future contracts representing 284.3 million theoretical ounces of physical silver on the Comex.  Against this is 31.9 million reported ounces of physical silver in Comex vaults that have been designated as available for delivery against these open contracts.  In other words, the bullion banks have thrown nearly nine ounces of theoretical paper silver at the market for every ounce of alleged physical silver that could be delivered into these contracts.

Tuesday is options expiration day for May Comex gold/silver options.  Typically options expiry is one of the triggers for a heavy onslaught of bank manipulation on the Comex.  With a brief glance as the put/call open interest in May silver options, it looks like the bullion banks – i.e. the entities that are short May silver options – are motivated to push silver below $17 (based on the amount of open calls vs puts at $17) by the close of silver trading on Tuesday.

Similarly, “first delivery notices” for Comex gold/silver contracts go out after the close next Thursday.  With the paper open interest in silver as of today 900% greater than the amount of physical silver designated as available for delivery, the Comex bullion banks will make every effort to shock and awe the hedge funds into liquidating their long paper silver positions.  We saw this yesterday with the 92 cent silver smash going into the Comex open.  Silver open interest dropped over 14k contracts yesterday.  This is one of the many manipulation games the bullion banks have been playing with the hedge funds over the last 15 years.

Because the CFTC and the Justice Department look the other way when it comes to enforcing market regulations as they should apply to the Comex – because those same regulations are actively applied to every other CME commodity product – true price discovery in the gold and silver markets has become an impossibility.   But we have 5,000 years of historical evidence which suggests that market interventions always fail.  And when they ultimately fail, they fail spectacularly.

India’s jewelry industry is re-opening after a strike since March 1st that shut down India’s gold import machinery.  A sleeping elephant is waking up starved for metal as India heads into its second largest seasonal buying period of the year.  This will make it more difficult for the banks to manipulate gold/silver prices using paper, which means the illegal trading activity of the next few days may be the banks’ last opportunity to cap the metals until India goes back into hibernation in the summer.

I added to high octane junior mining stock positions in the fund I co-manage today and I will be presenting an insanely cheap junior mining stock with 5 million ounces of proved gold, have of which is in the form of gold-equivalent silver ounces in my next issue of theMining Stock Journal next week.  For a limited time, all new subscribers will have access to the back-issues published since the March 4 debut.

mining-stock-journal-header-border

 

Your early FRIDAY 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 6.4925 / Shanghai bourse  CLOSED UP 6.35  OR 0.22% / HANG SANG CLOSED DOWN 110 OR 0.51% 

2 Nikkei closed UP 301 or 1.75%%/USA: YEN RISES TO 11062

3. Europe stocks opened ALL IN THE RED WITH THE EXCEPTION OF SPAIN /USA dollar index UP to 94.75/Euro DOWN to 1.1175

3b Japan 10 year bond yield: FALLS   TO -.115%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 110.62

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  43.36  and Brent: 44.67

3f Gold DOWN  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to 0.224%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 10.29%/: 

3j Greek 10 year bond yield FALL to  : 8.84%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1245.90/silver $17.16 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 98 /100 in  roubles/dollar) 65.76

3m oil into the 43 dollar handle for WTI and 44 handle for Brent/

3n Higher foreign deposits out of China sees huge risk of outflows and a currency depreciation  (already upon us). This can spell financial disaster for the rest of the world/China forced to do QE!! as it lowers its yuan value to the dollar/expect a huge devaluation imminently from POBC.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN COLLAPSES TO 108.33 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9760 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0947 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .224%

/German 8 year rate negative%!!!

3s The Greece ELA NOW at  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 1.87% early this morning. Thirty year rate  at 2.69% /POLICY ERROR)

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

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

Kuroda To The Rescue: Stocks Rebound After Latest BOJ Rumor Sends Yen Plunging

Just as US equity futures were about to roll over following some very substantial misses yesterday by the likes of Google, Microsoft, Starbucks and a plunge in Visa shares, overnight who came to the markets’ rescue but the BOJ, when shortly after midnight Bloomberg reportedthat “according to people familiar with talks at the BOJ” which is the traditional keyword for a BOJ source testing out the market’s reaction, Japan’s central bank may “help” local banks to lend by offering a negative rate on some loans. This happens just months after the BOJ unleashed negative rates thereby “penalizing” banks who hold too much excess reserves. So just four months after the BOJ went nuclear on its own banks, now it has had a 180 degree change of heart.

The result was immediate: the Yen tumbled, USDJPY spiked and the Nikkei soared by 200 points in the blink of an eye.

More from BBG:

Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the people, who asked not to be named as the matter is private. The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero percent interest, would be the most likely vehicle for this option, they said.

 

The officials said that adding this to the central bank’s arsenal could have a positive impact on the economy, but would also raise questions about giving subsidies to commercial lenders. Financial institutions, who already feel penalized by the existing negative rate, could face demands from borrowers to cut their lending margins further, said the people.

This coupled with rising speculation that the BOJ may announce that it will double the pace of its ETF purchases next week, was enough to send the USDJPY soaring by more than 130 pips, as right after the Bloomberg “market trial balloon” was released, USDJPY spike to 110, at which point it took out all the stops and is now trading about 110.50. Japanese bank shares promptly rallied on optimism the measure could be adopted, with the Nikkei closing up 1.2% on nothing but another rumor of central bank intervention.

However, the BOJ’s trial balloon has not been enough to push European (or global) stocks notably higher and in Europe stocks fell led by carmakers as emission probes loomed over Daimler AG and PSA Group, while Asian equities slid from a four-month high.

Daimler fell 5.3 percent, dragging a gauge of automakers to the biggest drop of the 19 industry groups on the gauge. The Mercedes-Benz maker was asked by the U.S. Department of Justice to investigate the certification process of its cars. It said a U.S. class action lawsuit alleging some of its cars violated emissions standards is “baseless.” Meanwhile PSA Peugeot Citroen fell 3.3 percent after the group’s premises in France were searched by government fraud investigators as part of a probe into vehicle emissions.

Raw materials fell as steel futures slumped in China after exchanges announced measures to cool speculation and Goldman Sachs Group Inc. cut price outlooks metals and crops. “Our expectation is the oversupply in the iron ore market will return,” Christian Lelong, an analyst at Goldman Sachs, said on Thursday. “It’s going to be very hard to have strong enough demand growth in the Chinese steel sector to keep things in balance.”

Initially in the overnight session, commodities trimmed this week’s gains in steel reinforcement bars to soy beans and cotton that had stoked the outlook for inflation around the world. Carmakers are under renewed scrutiny after Volkswagen AG cheated on emissions tests.

But the biggest driver was the major earnings disappointment out of Google and Microsoft on Thursday which dimmed the outlook
for earnings after results from American companies’ suggesting that the disappointing earnings season was not going to any “better” than had been earlier expected.

Caterpillar Inc., McDonald’s Corp., General Electric Co. and American Airlines Group Inc. are scheduled to report earnings on Friday. Analysts are projecting a 9.5 percent decline in first-quarter profit for S&P 500 members, compared with forecasts for flat growth at the start of the year.

Global market summary

  • S&P 500 futures little changed at 2081
  • Stoxx 600 down 0.7% to 347
  • FTSE 100 down 1% to 6321
  • DAX down 0.9% to 10339
  • German 10Yr yield down 2bps to 0.22%
  • Italian 10Yr yield down 1bp to 1.45%
  • Spanish 10Yr yield down 2bps to 1.58%
  • S&P GSCI Index down 0.2% to 347.6
  • MSCI Asia Pacific down 0.4% to 134
  • Nikkei 225 up 1.2% to 17572
  • Hang Seng down 0.7% to 21467
  • Shanghai Composite up 0.2% to 2959
  • S&P/ASX 200 down 0.7% to 5236
  • US 10-yr yield down less than 1bp to 1.85%
  • Dollar Index up 0.25% to 94.84
  • WTI Crude futures up 0.4% to $43.35
  • Brent Futures up 0.2% to $44.61
  • Gold spot down 0.2% to $1,246
  • Silver spot up 0.9% to $17.15

Global Top News

  • BOJ Officials Said to Eye Possible Negative Rate on Loan Program: BOJ may consider offering a negative rate on some loans
  • Schlumberger Cuts More Jobs as CEO Sees Industry Cash Crisis: net income declined to $501 million from $975 million year ago
  • Daimler Probes Diesel Emissions as Quarterly Profit Slumps: carmaker probes emissions at request of U.S. authorities
  • Blackstone Said to Weigh Buyout of Canada’s Concordia Healthcare: Other bidders may also be interested in company
  • Alphabet Profit and Sales Hit Speed Bump on Mobile Costs Traffic Acquisition Costs rise as more searches go mobile
  • Microsoft’s Turnaround Skids as Software Sales Lag Behind Cloud: Nadella’s transition to cloud, subscriptions to take time
  • Obama Praises EU in U.K. Op-Ed Aimed at Swaying Brexit Vote: U.S. president accused of hypocrisy by ‘Leave’ campaigners
  • Starbucks Sales Trail Estimates as Growth Slows in Americas: co. reaffirms annual sales and store-addition targets
  • Visa Alters Terms of Europe Deal and Warns of Delay; Shares Fall: purchase may not be completed until after June
  • Valeant Is Seeking Perrigo’s Papa as New CEO, WSJ Reports: co. had been aiming to announce move as early as next week: WSJ
  • Apple Says ITunes Movies, Book Services Closed Down in China: closings ordered by Chinese regulator, New York Times reports
  • SunEdison Seeking Equity Partners for Operations in India: SunEdison won projects in India with record-low bids
  • SecureWorks Prices IPO of 8 Mln Shares at $14.00/Shr: Shares to begin trading on NASDAQ today
  • Uber Drivers’ $100 Million Deal May Set Pace for Gig Economy: biggest ride-share firm avoids risk of costly trial verdict; Companies reporting earnings today include GE, Honeywell, Caterpillar, McDonald’s

Looking at regional markets, Asia traded with a sombre tone following weak earnings releases in the US, coupled with profit taking seen in the region. Nikkei 225 (+1.2%) initially fell from 2-month highs as participants booked profits while large exporters have been pressured with Sony and Toshiba reeling on impairment losses and Mitsubishi Motors shares crashed to a record low on the fuel efficiency scandal, however the index rallied in late trade after reports the BoJ are said to be considering negative rates for its lending programs. ASX 200 (-0.7%) and Shanghai Comp (+0.2%) are lower amid weakness across the commodities complex, although the region’s bourses briefly attempted a recovery alongside a rebound in oil, which re-approaches USD 44/bbl and after China conducted a large net weekly liquidity injection of CNY 680b1n. 10yr JGBs are marginally higher amid cautious sentiment in Asia and the BoJ also in the market for around JPY 1.2trl in government debt, while yields in the super-long end were pressured with the 40yr yields printing fresh record lows.

Asian Top News

  • Japan Stocks Jump on Report BOJ Considering Support for Banks: yen reverses Thursday’s gain to weaken after the report
  • Sony Delays Annual Forecasts to Assess Earthquake Fallout: co. will disclose its outlook for the year in May instead
  • As Global Stocks Rally, China’s Markets Send More Ominous Signal: Shanghai Composite is world’s worst performer this week
  • From 1MDB Probe, Singapore Charges Former Banker With Laundering: Formal charges among the first to stem from 1MDB probe
  • Singapore Raids Brokers; Exchange Reports Irregularities: MAS and CAD probe possible breaches of securities law
  • Rajan Seen Getting Extension at India Central Bank in Survey: Rajan’s 3-yr term set to expire early Sept.
  • Apple Says ITunes Movies, Book Services Closed Down in China: Closings ordered by Chinese regulator, New York Times reports

European equities have begun the final session of the week on the back foot, with major indices in the red. This follows on from the downside seen across the Atlantic in the US, while equity specific news did little to lift sentiment, with high profile Daimler among the worst performers this morning and Peugeot and Volkswagen also lower as the emissions saga continues to suffocate Co. shares. Despite the downside in equities, Bunds remain relatively unchanged on the day as the German benchmark continues to hover around the 162.50 level after the volatility seen yesterday due to the ECB meeting.

“What we’re seeing today is a bit of profit-taking on the gains we have seen in the past couple of weeks,” said Michael Hewson, a London-based market analyst at CMC Markets Plc. “I’m not convinced we will see it degenerate into a much deeper sell-off in the short to medium term. A lot of pressure that we are seeing in the auto sector is a result of what’s come out of Daimler this morning.”

We certainly wont see it degenerate: after all any time the market turns red, a central bank pops up.

European Top News

  • Lloyds Said to Mull Deeper Job Cuts to Combat Low Interest Rates: co. could accelerate program or give fresh plan in summer
  • ECB Independence Defended by Policy Makers After German Attacks: Draghi says blaming policy weakens its effectiveness
  • Greece Eyes Path to Lifeline as Fiscal Resurrection in Doubt: finance chiefs gather in Amsterdam to assess bailout progress
  • Volvo First-Quarter Earnings Fall on North America Truck Market: Volvo’s first-quarter operating profit fell 3%
  • Credit Suisse Said to Study Novel Bond Sale to Offload Bank Risk: bank seeking to reduce risk from rogue trading, cybercrime

In currencies, the possibility of another negative interest-rate in Japan weakened the yen, which slumped 0.9 percent versus the dollar. The pound headed for its second weekly gain versus both the dollar and the euro as recent polls suggested a stronger chance of the U.K. voting to remain in the European Union in a June referendum. U.S. President Barack Obama weighed in with an op-ed praising the EU.

The lead driver has been USD/JPY. Gains have been largely based on the JPY perspective, where the run up to the BoJ meeting next week has been given an added ‘fillip’ as the central bank is said to be considering applying negative rates to its institutional lending program . USD/JPY rallied from sub 110.00 to 110.75, but in the options market, there has been strike buying for much higher levels.

The MSCI Emerging Markets Currency Index fell 0.4 percent, cutting its weekly gain to 0.4 percent. South Korea’s won led declines, losing 0.9 percent followed by a 0.5 percent drop in the Malaysian ringgit. Russia’s ruble rebounded 1.3 percent, after tumbling on Thursday as oil slid. For the week, the Colombian peso climbed 1.9 percent and South Africa’s rand increased 1.4 percent.

In commodities, oil prices have held on to the gains seen yesterday as investor sentiment remains at high levels, with a strong resistance level at USD 44.00/bbl. Gold sold off heavily after reaching the USD 1270/oz level after strength in the USD dampened sentiment. Elsewhere, copper prices were lower alongside yesterday’s commodity weakness, but are still on track for its best week in over a month, while Dalian iron ore continued on its recent ascent to print its highest level since September 2014.

On the economic calendar, the lone release of note will be the flash April manufacturing PMI print. Away from the data it’s all about earnings with a number of key reports due out. In total 11 S&P 500 corporates are scheduled to release their latest quarterlies including American Airlines, McDonald’s, General Electric and Caterpillar. Keep an eye on the latter in particular given its gauge as an indicator of global demand.

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade lower as further emission scandals hamper Auto names and the FTSE falls victim to losses in materials names
  • JPY is the main mover in FX markets after BoJ source reports suggesting the central bank will add negative rates to its institutional loan programme
  • Looking ahead, highlights include US manufacturing PMI and Canadian CPI as well as comments from ECB’s Constancio and Mersch
  • Treasuries mostly steady in overnight trading, European and Asian equity markets lower and oil little changed; economic data today offers U.S. manufacturing PMI.
  • Chinese speculators have a new obsession: the commodities market. Trading in futures on everything from steel reinforcement bars and hot-rolled coils to cotton and polyvinyl chloride has soared this week, prompting exchanges to boost fees or issue warnings to investors
  • China’s benchmark money-market rate climbed the most since June, reflecting tight cash conditions, even as the central bank injected the most funds in almost three months
  • Having adopted a negative interest rate on some excess reserves to penalize financial institutions for leaving money idle, the Bank of Japan may consider helping them lend by offering a negative rate on some loans
  • Policy makers rallied to defend the European Central Bank’s independence a day after President Mario Draghi hit back at German critics of his monetary strategy as German discontent over the ECB’s ultra-low interest rates erupted this month
  • Lloyds Banking Group Plc is considering deeper cuts, beyond its target to eliminate 9,000 jobs by the end of next year, as the Bank of England keeps interest rates at a record low, hurting earnings
  • Credit Suisse, seeking to free up capital while immersed in a costly overhaul, is pitching a plan to farm out some of its risk from potential losses on events like rogue trading and cybercrime, people with knowledge of the matter said
  • President Barack Obama intervened in Britain’s increasingly bitter Brexit debate Friday, drawing allegations of hypocrisy from lawmakers campaigning for the U.K. to leave the European Union
  • Greece faces a new budget confrontation with its international creditors amid fresh German warnings that its long-term success is far from assured and the International Monetary Fund raising questions about the latest economic data
  • Representatives of more than 150 nations are due to gather in New York on Friday to sign the Paris climate accord which calls for voluntary reductions of fossil-fuel emissions in hopes of limiting global warming
  • Sovereign 10Y bond yields mixed; European, Asian equity markets mostly lower; U.S. equity-index futures mixed. WTI crude oil, metals mostly higher

 

DB’s Jim Reid concludes the overnight wrap

Turning to markets this morning, it’s looking like the bulk of bourses in Asia are set to end the week softer. The Hang Seng (-0.95%) has seen the steepest fall this morning, while the Shanghai Comp (-0.59%), Kospi (-0.47%) and ASX (-0.42%) are all in the red and following the lead from the US yesterday. The Nikkei (+0.91%) has quickly more than reversed losses in the last 20 minutes or so with Bloomberg headlines coming through suggesting that the BoJ is to possibly support banks. Oil has recouped about half of yesterday’s decline, while base metals are a little more mixed. Iron ore futures are also up, while yesterday we saw the commodity rally another 9%, taking the WTD gain to nearly 21% with the commodity trading now above $70/tn and to the highest since January last year.
The early data this morning meanwhile was out of Japan where the flash manufacturing PMI for April was reported as declining a disappointing 1.1pts to 48.0 (vs. 49.5 expected). As we’ll see in the day ahead the other global flash PMIs are today’s highlight. In China the MNI business indicator for this month was reported as rising 0.6pts to 50.5, the first reading above 50 since January.
US equity index futures are also in the red this morning which is partly reflecting some earnings reports out after the close last night. Google’s parent company Alphabet posted earnings well below expectations last night (EPS of $7.50 vs. $7.96 expected) after a big fall in online advertising (or cost per click). It’s worth noting that unlike the banks, street earnings expectations for Alphabet have been relatively consistent all year. Meanwhile Microsoft also came out with slightly disappointing earnings of its own, marginally missing analyst expectations. The end result was for Alphabet shares to trade as much as 7% lower in extended trading, while Microsoft slid 5% also after the closing bell.

Prior to this markets had also reacted negatively to Verizon’s latest quarterly report which weighed on the rest of the telecoms sector. Despite earnings matching expectations for Q1, it was the weak read-through to the next quarter as a result of the ongoing worker strike. We are starting to see critical mass in earnings season now with 119 S&P 500 companies having reported. The early going is positive with an impressive 82% exceeding earnings expectations and 59% exceeding revenue estimates. As we’ve highlighted though the benchmark is clearly a lot lower for this reporting period having seen expectations revised down in recent weeks. We’ll be taking a closer look at this trend next week following some of the bigger reports today.

With regards to the macro, all in all yesterday’s economic data was a bit of a mixed bag. On the positive side, the latest initial jobless claims print showed claims fell another 6k last week to 247k (vs. 265k expected) and marking a new fresh low since 1973. It’s hard to imagine anything other than a positive read-through to the April payrolls number. On the flipside, the Philly Fed manufacturing survey was disappointing after falling 14pts to -1.6 (vs. +9.0 expected). That puts the index back near where it was in January and February this year after last month’s spike higher. Meanwhile the Conference Board’s leading indicator rose slightly less than expected last month at +0.2% mom (vs. +0.4% expected). Finally the FHFA house price index printed in line for February at +0.4% mom.

Over in Europe and away from the ECB focus, retail sales data out of the UK disappointed in March. Excluding auto fuel, sales were down a sharper than expected -1.6% mom (vs. -0.3% expected) while including fuel sales were also down heavily (-1.3% mom vs. -0.1% expected). Meanwhile, in the afternoon we saw a modest improvement in the Euro area consumer confidence reading to -9.3 for this month, an improvement of 0.4pts.

Looking at the day ahead, this morning in Europe the big focus will be on the release of the flash April manufacturing, services and composite PMI’s for the Euro area, Germany and France which are expected to point towards a very modest improvement. Over in the US this afternoon the lone release of note will be the flash April manufacturing PMI print. Away from the data it’s all about earnings with a number of key reports due out. In total 11 S&P 500 corporates are scheduled to release their latest quarterlies including American Airlines, McDonald’s, General Electric and Caterpillar. Keep an eye on the latter in particular given its gauge as an indicator of global demand.

 END

ASIAN AFFAIRS

i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed UP BY 6.35 POINTS OR 0.22%  ON A LAST HR RESCUE /  Hang Sang closed DOWN 155 OR 0.72%. The Nikkei closed UP 208.87 POINTS OR 1.20% . Australia’s all ordinaires  CLOSED DOWN 0.69%. Chinese yuan (ONSHORE) closed DOWN at 6.4925.  Oil ROSE  to 43.36 dollars per barrel for WTI and 44.867for Brent. Stocks in Europe ALL IN THE RED (EXCEPT SPAIN) . Offshore yuan trades  6.49607 yuan to the dollar vs 6.49607 for onshore yuan.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Kuroda thinking of increasing NIRP and also to supply banks with negative rates

 

(courtesy Bloomberg)

 

BOJ Officials Are Said to Eye Possible Negative Rate on Loans

  • Idea would add carrot to the stick of negative benchmark rate
  • Loans to banks to spur lending could be given negative rate

Having adopted a negative interest rate on some excess reserves to penalize financial institutions for leaving money idle, the Bank of Japan may consider helping them lend by offering a negative rate on some loans, according to people familiar with talks at the BOJ.

Such a discussion could happen in conjunction with any decision to make a deeper cut to the current negative rate on reserves, said the people, who asked not to be named as the matter is private. The BOJ’s Stimulating Bank Lending Facility, which now offers loans at zero percent interest, would be the most likely vehicle for this option, they said.

The officials said that adding this to the central bank’s arsenal could have a positive impact on the economy, but would also raise questions about giving subsidies to commercial lenders. Financial institutions, who already feel penalized by the existing negative rate, could face demands from borrowers to cut their lending margins further, said the people.

Bank shares rallied on optimism the measure could be adopted, and the yen dropped. Economists at BNP Paribas SA, Credit Suisse Group AG and Morgan Stanley MUFG Securities are among those who have anticipated the possibility of the BOJ adopting this kind of measure.

Current Size

The BOJ had extended 24.4 trillion yen ($223 billion) of credit under the Stimulating Bank Lending Facility as of April 10. This initiative is separate to the core of the BOJ’s monetary easing initiative, which targets an expansion in the monetary base, mainly through purchases of government bonds. It was initiated under former BOJ governor Masaaki Shirakawa in December 2012.

The BOJ board next meets to set policy April 27-28, and analysts have increasingly seen a likelihood of some sort of action to counter an appreciation in the yen and damage to expectations for inflation; 23 of 41 analysts surveyed by Bloomberg predict some step. Nineteen forecast increased purchases of exchange-traded funds, eight project a boost in bond buying and eight see a cut in the key rate, the survey shows.

Against the dollar, the yen slid 1 percent to 110.58 as of 4:59 p.m. in Tokyo, helping pare some of the currency’s appreciation since BOJ policy makers last gathered. Governor Haruhiko Kuroda flagged his concerns about a strengthening in the yen in an interview with the Wall Street Journal last week. That sentiment is shared by senior officials at the central bank, people familiar with the discussions said earlier this week.

European policy makers also have taken a step toward providing subsidized funds for banks to lend to their customers. In a program set to start in June, the European Central Bank is poised to offer zero-rate funding, which could retroactively be cut to the ECB’s deposit rate — currently minus 0.4 percent — depending on how much the lender extends to companies and households. The facility is known as the TLTRO-II.

Loan Officer Survey

In Japan, where the sub-zero rate became effective in February, a survey of senior loan officers showed this week that banks’ profit margins from lending to highly rated companies dropped to the lowest level in almost a decade. The BOJ’s quarterly survey also showed that demand for credit from large, medium and small-sized firms all dropped.

“This wouldn’t address the underlying structural problem for the banks, which is not a loan supply issue but a demand issue,” Jefferies Group LLC analysts including Mac Salman wrote in a report.

The BOJ said its semiannual financial system report on Friday that its monetary easing with a negative interest rate “will exert further downward pressure on financial institutions’ profits for the time being.”

Bank shares, which were hammered in the wake of the BOJ’s January unveiling of a negative rate on a portion of the cash they park at the central bank, jumped Friday. The Topix Banks Index closed 4.8 percent higher, outpacing the broader Topix index.

The chart below shows which categories of financial institutions are most affected by the existing negative rate.

Takashi Shiono, an economist at Credit Suisse in Tokyo, said he expects the BOJ to introduce the negative rate for lending in conjunction with a cut to the rate on excess reserves.

“The BOJ can say this will help the whole economy because the banking sector is one of the most vital channels for monetary policies,” Shiono said Friday.

UBS AG’s Group’s Daiju Aoki said demand for loans from companies has been weak to begin with, so finding borrowers will remain challenging.

“Such measures by the BOJ alone may not work effectively, unless it works together with the government,” Aoki said. “A policy mix with fiscal spending or the growth strategy which spurs private demand is needed.”

 

end

 

And the resultant action of this total nonsense:

huge rise in the USA/Yen cross.  Houston we have a problem, stocks are not buying the move as earnings are just too awful!!

(courtesy zero hedge)

Stocks Shrug As USDJPY Soars Over 111 After BoJ Rumors

Kuroda, we have a problem. Following rumors overnight, USDJPY is obediently being bid (Yen weaker), with its biggest day since January and pushing above 111 (highest in 3 weeks). Normally this would be all the US equity needed to spike ignorantly to new highs… but it’s not…

Standard 200 pip vertical ram on nothing but rumors… but stocks ain’t buying it…

Not even the power of Central Bank  visible hand can trump a collapse in earnings from US mega caps.

end

b) CHINA ISSUES

Two big stories:  Last night

 

First:  hundreds of Chinese children mysteriously fall ill suffering from nose bleeds, rashes and coughing from East China’s Jiangsu Province.  The school is right next store to huge chemical factories:

(courtesy zero hedge)

 

Hundreds Of Chinese Children Mysteriously Fall Ill Suffering From Nose Bleeds, Rashes, Coughing

Hundreds of school children in East China’s Jiangsu Province have fallen mysteriously ill, suffering from nose bleeds, itching, rashes, coughing, and other complicated symptoms, whose cause has not been determined.

CRI reports that some of the parents alleged that they noticed irritant smells at the school. They suspect that the smell comes from chemical factories near the school, which they believe are the main causes of their children’s symptoms.

This is the second week in a row where students were found to be suffering from the same symptoms in the same province.

As a result, local authorities have mandated that five chemical factories near the school suspend operations. Meanwhile, the school insists on continuing all school activities as usual.

 

Mckinsey estimated in a 2013 study that China would drive roughly 60% of global chemical market demand growth from 2011 to 2020. As firms scramble to get chemical plants up and running in China, it appears that “safety” was conveniently brushed aside and is now leading to dramatic consequences for all those in the vicinity .

 end
Second: Early this morning: massive explosion at a Chemical plant in the same Jiangsu province:
(courtesy zero hedge)

Massive Explosion At Chemical Plant Rocks China’s Jiangsu Province

Just hours after we reported that a “mysterious illness” resulting from inhalation of toxic chemical fumes was causing hundreds of school children to fall ill in China’s Jiangsu Province, we’re now learning that a massive chemical explosion and fire has taken place in the same province.

 

The explosion triggered a blaze, the local news portal 163.com reported. Thick plumes of smoke were seen rising from a reservoir that was used to store chemicals and fuel. There were no immediate reports of casualties or a possible cause of the explosion. Witnesses described a strong smell of chemicals. Seven fire crews are struggling to contain the fire, the Caijing magazine said. Fire has spread to two fuel reservoirs after two cisterns burned out.

Firefighters were still battling a blaze that broke out at a chemical warehouse in Jiangsu province as of 3:30pm following a blast this morning, Xinhua reports.

Reuters confirmed that a fire broke out at a chemical warehouse following a blast around 9am in China’s eastern Jiangsu province. As of right now no casualties have been reported, and the government has said the fire is now under control.

 

end

EUROPEAN AFFAIRS

Greece is back in the spotlight as they fail to reach a deal with lenders.  Worse still, they lost their “champion” , the IMF, who now state that Greece can survive without debt haircuts. I do not know what planet the iMF is on but Greece is one big basket case

 

(courtesy zero hedge)

Greece Fails To Reach Deal With Lenders: Lagarde Flip-Flops, Sees “No Need For Greek Debt Haircut”

Greece was supposed to finalize a deal today with its lenders whereby in exchange for an “agreement” to implement already agreed upon budget cuts it would receive more funds from the Troika. However, asReuters reports, “there will be no deal between Greece and its lenders on Friday that would unlock loans and enable vital debt relief talks, despite some progress on the reforms Athens must implement in exchange, euro zone and IMF officials said on Friday.”

“Don’t expect any deals today,” the chairman of euro zone finance ministers Jeroen Dijsselbloem told reporters, noting however, he was “hearing good news from Athens” on headway made in negotiations on a Greek reform package.

“There is more work to be done. We are determined to continue the work. We’re not there yet,” International Monetary Fund Managing Director Christine Lagarde said.

As has been the case since the third Greek bailout which everyone agreed upon after last summer’s volatile Greek events, the package of Greek reforms is aimed at producing a primary surplus of 3.5 percent of gross domestic product in 2018 “and beyond.” The problem, however, is that Greece has failed to implement it. As a result, there remains disagreement between Greece, the euro zone and the IMF on whether the measures, which include pension and income tax reform and setting up a privatization fund and a scheme to deal with bad loans, will be enough to reach that number.

The IMF believes that as things stand now, instead of 3.5 percent of GDP, Greece will only achieve a primary surplus – the budget surplus before debt-servicing costs – equivalent to 1.5 percent of economic output in 2018. The Fund and the euro zone are also at odds over how long Greece will be able to maintain a primary surplus of 3.5 percent and therefore its ability to service its public debt in the long run. The debt stood at 177 percent of GDP last year.

Germany and several other countries believe that with proper reforms Greece can keep such a surplus for decades and point to the fact that the country does not need to service its debt for the next seven years.

But while until recently the Fund said this was unrealistic, and therefore the euro zone must grant the country debt relief through extending maturities and grace periods, following the recent fallout from a leaked IMF conversation which Greece interpreted as an IMF “blackmail” that could seek another credit “event”, Lagarde appears to have backtracked. From Market News:

  • LAGARDE: BELIEVE NO HAIRCUT IS NEEDED; MAY NEED RE-PROFILING
  • LAGARDE:REPROFILING OF GREEK DEBT WLD BE TRIGGERED WHEN NEEDED

And just like that Greece appears to have lost its biggest outside sponsor when it comes to the much desired credit cut.

Dijsselbloem added fuel to the fire, saying “debt is a discussion we’ve not had before. The only thing we had was a promise that if the Greeks would commit fully and deliver on the program we would look at, if necessary, further debt measures.” For now Greece has yet to deliver on anything.

Germany’s position on the topic has been also clear all along. Finance Minister Wolfgang Schaeuble said debt relief talks were not a priority. “That is not in the foreground. What is in the foreground is what has been agreed last year must be implemented,” he said, referring to fiscal targets set last August.

Officials said differences over reforms in Greece have narrowed substantially in the last few days and have flagged the possibility of calling an extraordinary meeting of euro zone finance ministers on April 28 to clinch a deal.

Still there is hope that a deal will be reached in the near future. One official close to the talks said some differences were as small as 100 euros.

“Right now only immaterial discrepancies remain,” the official said, adding the main difference now was over personal income tax credits, which now stood at 2,100 euros.

The IMF believes that Greece should not raise taxes further, but broaden the tax base by eliminating lots of existing exemptions, which it said now effectively exempted 55 percent of Greek households, while the euro zone average was 18 percent. “The IMF insists on a reduction to 1,800 euros and the Greeks have come down to agreeing to 1,900 euros,” the official said. “The difference is 0.1 percent of GDP, which is less than 200 million euros out of a package of reforms worth 5.4 billion euros,” the official said.

For Greece, however, even the smallest concessions seem virtually impossible, as the Syriza government, already having been overtaken by New Democracy in some recent polls, faces increasing popular anger in pushing through precisely the same “hated” cuts that it promised it would eliminate when it was elected one year ago.

Finally, with summer just around the season, it means more worker strikes are imminent, and with them even greater cuts to economic growth.

end
Great Britain has politely asked Obama not to interfere in the BREXIT situation.
Things must not be going well as he just gave an OP-Ed to Gr. Britain:
(courtesy zero hedge)

 

Obama Writes Op-Ed To “Blood Brother” Britain: Don’t Leave EU (Or Else)

You know the British establishment is in full panic mode when not only do they allow President Obama to visit the nation just a month after throwing Cameron “distracted by other things” and his European neighbors under the bus over the collapse of Libya, but, despite 100 members of Parliament signing a letter telling Obama “not to interfere” with Britain’s domestic affairs, The Telegraph prints an Op-Ed in which the lame-duck president lords it over the British citizenry with a veiled threat that should they “his friends” leave Europe, the “special relationship” could be in jeopardy as “now is a time for friends and allies to stick together.”

Just a month ago, Time.com noted that almost 70 years to the day since Winston Churchill immortalized the term in his historic ‘Sinews of Peace’ address, the “special relationship” between the U.K. and U.S. is looking strained once again.

President Barack Obama threw the diplomatic equivalent of shade at British Prime Minister David Cameron in an interview in The Atlantic published this week. In his conversation with Jeffrey Goldberg, Obama laid the blame for the collapse of Libya in the aftermath of dictator Muammar Gaddafi’s downfall primarily at Europe’s door, saying he had expected his allies to do more to stabilize the situation. Cameron, he said, was “distracted by a range of other things.”

 

The White House hastily put out a statement pronouncing the U.S-U.K. relationship just as special as it had ever been, but the damage was done.The British chattering classes wailed and gnashed their teeth, as they are wont to do whenever the transatlantic bond is called into question.

So now, a month later, on his way back from The Middle-East, President Obama’s apology tour stopped off in Britain today (accompanied by the Op-Ed below) despite more than 100 members of Parliament signing a letter telling Obama “not to interfere” with Britain’s domestic affairs…

The letter states: “With so much at stake, it is imperative that the question of exiting the European Union is not one answered by foreign politicians or outside interests, but rather by the British people who must ultimately live with change or the status quo.

 

The British politicians declare: “issues of national sovereignty must be decided exclusively by the people of the United Kingdom”.

 

They state: “even a passive diplomatic recommendation in the matter of our national decision will receive the opposite of the intended effect.”

 

“The referendum vote is an act of democracy in its most direct form, and the question of whether or not to leave the EU is a rare political topic that is not owned by any one political party. This is a chance for the British people to choose the path of their country. Interfering in our debate over national sovereignty would be an unfortunate milestone at the end of your term as President.”

Furthemore, almost 35,000 Brits have signed a petition to prevent Obama from speaking in Westminster on the Referendum:

And even Obama admitted:

“I realize that there’s been considerable speculation — and some controversy — about the timing of my visit. And I confess: I do want to wish Her Majesty a happy birthday in person.

 

But also I understand that there’s a spirited campaign under way here.My country is going through much the same. And ultimately, the question of whether or not the UK remains a part of the EU is a matter for British voters to decide for yourselves.”

But still he had to say his piece… And so here it is, in all its glory, via The Telegraph, with a few ZeroHedge-ian annotations (in patriotic blood red)to help the casual reader chew through it all…

In 1939, President Franklin D Roosevelt offered a toast to King George VI in the White House. “I am persuaded that the greatest single contribution our two countries have been enabled to make to civilisation, and to the welfare of peoples throughout the world,” he said, “is the example we have jointly set by our manner of conducting relations between our two nations.” [ZH: Indeed The US and Britain have achieved a lot together… but what has that got to do with us being part of EU?]

 

Nearly 80 years later, the United Kingdom remains a friend and ally to the United States like no other. Our special relationship was forged as we spilt blood together on the battlefield. [ZH: So we are blood brothers – Brits and Yanks – but if The Brits leave The EU, then what?]It was fortified as we built and sustained the architecture for advancing stability and prosperity in Europe, and our democratic values around the globe. From the ashes of war, those who came before us had the foresight to create the international institutions and initiatives to sustain a prosperous peace: the United Nations and Nato; Bretton Woods, the Marshall Plan, and the European Union. Their efforts provided a foundation for democracy, open markets, and the rule of law, while underwriting more than seven decades of relative peace and prosperity in Europe.

 

Today, we face tests to this order – terrorism and aggression; migration and economic headwinds[ZH: Indeed, all largely things that either emanated from US actions or from European ignorance]– challenges that can only be met if the United States and the United Kingdom can rely on one another, on our special relationship, and on the partnerships that lead to progress.

 

During my visit to London, Prime Minister Cameron and I will take on the full array of these challenges. We must be resolute and adaptive in our efforts to prevent terrorist attacks against our people, and to continue the progress we are making to roll back the threat posed by Islamic State (Isil) until it is destroyed. We must work to resolve political conflicts in the Middle East – from Yemen to Syria to Libya – so that there is a prospect for increased stability. We must continue to invest in Nato – so that we can meet our overseas commitments from Afghanistan to the Aegean, and reassure allies who are rightly concerned about Russian aggression.[ZH: a ha – so perhaps just a little concern that one crack in the ‘Union’ of Europe and the whole proxy war via NATO argument blows up in America’s neocon face?]And we must continue to promote global growth, so that our young people can achieve greater opportunity and prosperity. [ZH: yeah, that makes sense because all the actions of these nations combined governments and unelected money-fixers has led to dismal living conditions for much of Europe’s youth, devaluation of their currency – and thus living standards, and in some cases death.]

 

…

 

That said, when President Roosevelt toasted to our special relationship that night, he also remarked that we are friends who have no fear of each other. So I will say, with the candour of a friend, that the outcome of your decision is a matter of deep interest to the United States. The tens of thousands of Americans who rest in Europe’s cemeteries are a silent testament to just how intertwined our prosperity and security truly are.[ZH: Can’t help but feel like you just played the “we died for you, you ungratful bastards” card] And the path you choose now will echo in the prospects of today’s generation of Americans as well.

 

As citizens of the United Kingdom take stock of their relationship with the EU, you should be proud that the EU has helped spread British values and practices – democracy, the rule of law, open markets[ZH: Seriously – where to start – democracy – aside from The EU’s clear efforts to counter any sovereign’s actual self-determination, rule of law – ask the Greeks or the Germans how that rule of law is helping the refugee crisis.. and ask the Eu citizenry if they feel safer now? And finally Open Markets – well for one cross-border trade is collapsing as Schengen explodes, but the capital markets of mainland Europe have become a manipulated joke with mario Draghi as the puppetmaster]– across the continent and to its periphery. The European Union doesn’t moderate British influence – it magnifies it. A strong Europe is not a threat to Britain’s global leadership; it enhances Britain’s global leadership. The United States sees how your powerful voice in Europe ensures that Europe takes a strong stance in the world, and keeps the EU open, outward looking, and closely linked to its allies on the other side of the Atlantic. So the US and the world need your outsized influence to continue – including within Europe.

 

In this complicated, connected world, the challenges facing the EU – migration, economic inequality, the threats of terrorism and climate change – are the same challenges facing the United States and other nations. [ZH: All largely blowback from America’s actions and will certainly remain whether in or out of The EU]And in today’s world, even aswe all cherish our sovereignty, the nations who wield their influence most effectively are the nations that do it through the collective action that today’s challenges demand. [ZH: Wait what! Did you just say that the best way to maintain your own sovereignty is to relinquish it for the greater good?]

 

When we negotiated the historic deal to verifiably prevent Iran from developing a nuclear weapon, it was collective action, working together with the permanent members of the UN Security Council and Germany, that got the job done. And the EU’s seat at the table magnified the United Kingdom’s voice. [ZH: And what a deal! But that smells like another veiled threat – leave The EU and lose “your seat at the table”]

 

When the climate agreement in Paris needed a push, it was the European Union, fortified by the United Kingdom, that ultimately helped make that agreement possible.

 

When it comes to creating jobs, trade, and economic growth in line with our values, the UK has benefited from its membership in the EU – inside a single market that provides enormous opportunities for the British people. And the Transatlantic Trade and Investment Partnership with the EU will advance our values and our interests, and establish the high-standard, pro-worker rules for trade and commerce in the 21st century economy. [ZH: So all the trade deals will be torn up if The Brits say ‘up yours’ to Brussels? Just how special is this relationship?]

 

This kind of cooperation – from intelligence sharing and counterterrorism to forging agreements to create jobs and economic growth – will be far more effective if it extends across Europe. Now is a time for friends and allies to stick together. [ZH: Quick question – does that mean that UK will be cutoff from “intelligence sharing and counterterrorism to forging agreements to create jobs and economic growth” should the citizenry exercise their democratic right to maintain control of their sovereignty? Because if not – then why even bring it up?]

 

Together, the United States, the United Kingdom, and the European Union haveturned centuries of war in Europe into decades of peace, and worked as one to make this world a safer, better place. [ZH: Except you mean, of course, for the terrorism plague spreading across the world, the refugee crisis that your wars have created, and the soaring military spending throughout the world?]What a remarkable legacy that is. And what a remarkable legacy we will leave when, together, we meet the challenges of this young century as well.

So there it is – In as passive-aggressive a manner as is possible – Stay in the European Union or all that “special relationship”, security, economic trade, military assistance, and banking goodwill ‘might’ just disappear… and we note, maybe the whole loss of sovereignty to Brussels, dragging them into various wars (of your own making), economic and social unrest due to a refugee crisis created by American neocons, and echoing costs of a banking crisis is a small price to pay.

Vote No To Brexit, Vote Yes To Undemocratic Superstate!

We leave it to two outspoken British MPs to have the final word…

Kate Hoey MP said of the warning: “We felt it is important the President of the United States is aware that feelings will run high in the UK if he chooses to make an intervention. We have chosen to respectfully request he recognises matters of sovereignty are best left to the citizens directly affected.We would certainly never think of visiting the United States and telling the US public how to vote in an election or the amendment of their constitution.”

 

Peter Bone MP said: “Whatever the President perceives the interests of the US to be it would be better for the relationship between our countries and his reputation with the British people if he kept his counsel to himself.”

We cannot wait to see what Nigel Farage has to say on this one.

 END
end
A very important read today by David Stockman on the ECB.  He basically states that this gentleman is nothing but a charlatan and do not pay attention to his phony statements like the European households are now lending money to finance projects etc…Europe has no growth in that dept. for quite a while.  Basically, Draghi cannot go further into NIRP as this will totally annihilate the European banks and he has very little assets left to monetize.
a must read..
(courtesy David Stockman/ContraCorner)

The World’s Greatest Monetary Charlatan Is Nearly Out Of Tricks

Submitted by David Stockman via Contra Corner blog,

Mario had a bee in his bonnet yesterday morning. Apparently, the chorus of German voices pointing to the obvious—- that his policies are killing savers, insurance companies, pension funds and banks—-got his dander up:

“We have a mandate to preserve price stability for the whole of the euro zone, not only for Germany,” he said. “We obey the law, not the politicians, because we are independent.”

There you have in brief the whole rationalization for the monetary madness that Draghi and his kindred central bankers have unleashed on the world. They claim that their rubbery statutory mandates to pursue the equivalent of economic apple pie, such as ‘price stability’, leads in a straight, unbreakable line of logic and monetary science to the lunacy of negative 0.4% money market rates and $90 billion per month of bond-buying.

No it doesn’t.  There is no scientific linkage whatsoever—–just an ideological leap based on a Keynesian demand model that conveniently delegates all power to the central bankers’ soviets.

Just as in the case of the Humphrey-Hawkins Act in the US, the ECB’s enabling statute does not define price stability in quantitative terms—-nor does it specify the inflation index to be used or the duration to be measured. Even when the ECB’s Governing Council attempted to formulate a quantitative definition of ‘price stability’, it only got slightly more specific in defining it as something between zero and 2% over the course of a year.

“Price stability is defined as a year-on-year increase in the Harmonised Index of Consumer Prices (HICP) for the euro area of below 2%.”

By its own definition, therefore, the eurozone does not have a “deflation” problem or even a “lowflation” threat. For the last 16 years, the core HICP has averaged 1.5%, and during the last year when allegedly the deflationary sky was falling, the core consumer inflation index has risen by 1.0%.

Euro Area Core Consumer Prices

So all of Draghi’s arm-waving about the “law” is just risible obfuscation. Surely “Mario and the NIRPs” are not suggesting that monetary policies so radical that they were not even conceivable a decade ago are warranted because core inflation is temporarily tracking at a mere 50 bps below its long-term trend; or that it should be measured in weeks and months, not a year or more; or that the ECB should be fighting the huge blessing to EU consumers of the globally originated collapse in imported oil and materials inflation.

Indeed, the truth is real simple. Virtually all of the sub-trend performance of the consumer price index during the last year is due to the nearly 3% drop in import prices. And that has been an unequivocal benefit to the European economy!

Euro Area Import Prices

So not only was Mario pouting because the phony threat of deflation has not blinded the Germans to the destructive impact of his policies, but he actually let loose a wild pitch that needs no amplification. To wit, Draghi is on a power trip so naked that he actually threatened even greater monetary mayhem if people don’t stop questioning his authority:

“Any time the credibility of a central bank is perceived as being put into question, the result is a delay in the achievement of its objectives — and therefore the need for more expansion,” the ECB president told reporters in Frankfurt, raising his voice. “Our policies work, they are effective. Just give them time.”

There you have it—–school yard bluster. And its all in the name of a primitive economic notion that only someone nurtured in the Italian Treasury and sent off to finishing school at Goldman Sachs could actually believe. To wit, that more debt everywhere and always is the elixir that will create economic growth and wealth.

In fact, Mario believes himself to be in the economic growth business via the agency of pumping more credit into the eurozone economy whether warranted or not. Apparently, there are no interest rates too low if they spur more credit growth:

“Our monetary-policy measures have been supporting growth……. With rare exceptions, monetary policy has been the only policy in the last four years to support growth………Overall, the monetary policy measures in place since June 2014 have clearly improved borrowing conditions for firms and households, as well as credit flows across the euro area…….Credit continues, it’s pretty solid,” he said. “Together with a dramatic fall in rates and increasing volumes, this shows are measures are indeed quite effective.”

Let’s see. Private sector loans outstanding in the eurozone totaled EUR 10.69 trillion in February compared to EUR 10.60 trillion a year earlier. That computes to a gain of exactly……..0.6%!

Put differently, when you are not counting angels on the head of a pin you rarely see one. So it is not surprising that Mario is seeing the debt elixir at work where the statistics show hardly a shadow:

Broad financing conditions in the euro area have improved. The pass-through of the monetary policy stimulus to firms and households, notably through the banking system, is strengthening…..Bank credit has been going up since second quarter of 2014. Rejections have been going down. This shows that our measures have indeed been most effective.”

So even if European households and businesses needed to lug around more debt, which they clearly don’t, the ECB has literally savaged savers and pensioners in the name of a hardly measureable fraction.

Obviously, there is an altogether different issue here. The European private sector is not borrowing because interest rates were too high two years ago when QE incepted, or even four years ago when Draghi delivered his “whatever it takes” ukase.

In fact, since mid-2012 euro LIBOR has essentially been pegged at a rounding error. The notion that the difference between +0.2% on the lending reference rate and -0.2% matters to any actual business or household is preposterous.

Euro LIBOR Three Month Rate

The fact is, lending growth is tepid because the eurozone private sector is impaled on Peak Debt. The boom in lending happened 7-15 years ago. And even after plateauing at Peak Debt, the growth rate since the year 2000 still computes to 5% per annum.

 Euro Area Loans to Private Sector

So there is another reason why Europe isn’t growing and its one the central bank can do nothing about. Namely, the 19 governments of the eurozone and the super-state in Brussels have essentially outlawed it. If you want to know why growth is so tepid just examine the eurozone’s massive barriers to enterprise and work in the form of taxes, regulation, welfare state extravagance, crony capitalist subsidies and privileges and labor law protectionism.

In a word, the problem is not that private sector credit is too niggardly; it’s that the leviathan state has crushed the ingredients of supply side enterprise and growth. When the state budget consumes 50% of GDP, and its tentacles of regulation and intrusion penetrate most of the rest, the central bank’s printing press is impotent.

Euro Area Government Spending to GDP

Nevertheless, when your only tool is a hammer, everything does look like a nail. So Draghi and the NIRPs will undoubtedly keep on printing until they blow the euro-based financial markets sky high.

That the testy Italian is clueless about the massive bond market bubble his policies are creating was starkly evident in another gem from today’s presser. Mario’s message to the Germans was to suck it up and that he doesn’t have anything to do with low rates anyway:

It is clear that pension funds and others, insurance companies, are seriously affected by the low interest rates – I would caution them not to blame on low rates everything that has gone wrong in the sector – but they are seriously affected……Low interest rates are a symptom of low growth and low inflation. If we want to return to higher interest rates we need to return to higher growth and higher inflation. …

Does this blithering fool believe he has repealed the law of supply and demand? That the ECB can plunge into the European bond market to the tune of $90 billion per month and not impact the price of debt?

Worse still, does he not recognize that the ECB massive intrusion into the bond market has also triggered second order dynamics that drastically amplify this artificial bid? To wit, the bond vigilantes of yore have become today’s repo financed front-runners, piling into everything today that Mario and the NIRPs will be buying tomorrow.

As of two days ago, the German 10-year bund was trading at a 13 bps yield and the Italian bond at 140 basis points. Neither of these rates make a wit of economic sense, and most surely they are not owing to “low growth”.

Instead, their prices have been driving into the financial stratosphere by the ECB’s big fat bid and the front runners’ scramble to scoop-up the unspeakable windfall gains that clueless Mario has bestowed on the casino.

Likewise, has Draghi not noticed that while bank loans to households and operating businesses have barely blipped upwards there has been an explosion of high yield bond issuance? Never mind that almost to the last euro the proceeds have been used to fund M&A rollups, buyouts and other financial engineering schemes, not an expansion of productive assets.

But here’s the thing. The world’s greatest monetary charlatan is nearly out of tricks. He pointedly backed off from helicopter money yesterday because the Germans have obviously drawn a line in the sand. And he can’t push NIRP much further without breaking what remains of Europe’s sclerotic socialist banking system. And if he tries even more negative carry money under TLTRO it will assuage the margin pressure on European banks but not make the eurozone’s debt besotted households and businesses a wit more credit-worthy or inclined to borrow.

So this foolishly naïve believer in the elixir of debt is actually pushing on a credit string while inflating the mother of all bond bubbles. There is not a chance that the ECB can extract itself from this dangerous corner, nor continue down the current path much longer.

Indeed, when the casino front runners finally conclude that the Draghi jig is up, the European bond market will plunge into a bidless pit as they race to cash in their capital gains and liquidate their repo borrowings.

Then there will be a whole hive of angry bees in Draghi’s bonnet, German speaking ones in the lead.

end

GLOBAL ISSUES

 

New York listed Caterpillar is perhaps the best Bellwether companies to determine global health.  We now witness their sales plunging 26% and they had another earning miss.  However it is their outlook that is looked upon with great earnest:  they are slashing revenue and earnings.  The global picture is not good at all:

(courtesy zero hedge)

Caterpillar Falls After Sales Plunge 26%, Earnings Miss; Outlook Slashed

One of the most striking recoveries in the first quarter was that of Caterpillar stock, which despite reporting what is now a record 40 consecutive months of declining annual retail sales …

… had soared from below $60 at the February lows, to over $80/share a few days ago as the market bet that China’s massive credit-deluge would benefit the heavy industrial company.

Moments ago we got the first glimpse at how the company officially did in Q1 and the restuls were mixed, with EPS of $0.67 missing expectations of $0.68. This was, of course, the non-GAAP number. GAAP was about a third lower, at just $0.46 per share, but as we know too well by now, it is only when Buffett releases his annual letter bashing non-GAAP adjustment that analysts actually care about the now record divergence between the two “earnings” numbers.Revenue of $9.46bn modestly beating expectations of $9.39bn, but was still a a drop of 26% from a year ago.

“While first-quarter results were about as we expected, sales and profit were well below the first quarter of 2015.  Sales declined across the company with substantial reductions in construction, oil and gas, mining and rail.  While many of the industries we serve are challenged, we remain focused on what we can control: the quality of our products, our market position, safety in our facilities and continued restructuring and cost reduction.  In fact, our period costs and variable manufacturing costs in the quarter were nearly $500 million lower than the first quarter of 2015,” said Caterpillar Chairman and Chief Executive Officer Doug Oberhelman.

And while everyone knows just how bad CAT’s present is, more attention was paid to the future, which was just as bleak after CAT cut the high end of its 2016 EPS guidance forecast from $4.00 to $3.70, almost in line with the consensus forecast of $3.61. It also cut both its top-end sales guidance from $44 to $42, while trimming its sales midpoint guidance to $41bn.

Sales and revenues in 2016 are expected to be in a range of $40 to $42 billion with a midpoint of $41 billion.  The previous outlook was a range of $40 to $44 billion with a midpoint of $42 billion.  The decline in the midpoint of the sales and revenues outlook range is a result of several factors that, while not individually large in the context of the outlook, collectively add up to about $1 billion.  Those factors include lower transportation sales (rail, marine and the ending of production of on-highway vocational trucks), lower mining sales and weaker price realization than previously expected.

 

The profit outlook at the midpoint of the sales and revenues range is now $3.00 per share, or $3.70 per share excluding restructuring costs.  The previous profit outlook was $3.50 per share, or $4.00 per share excluding restructuring costs at the midpoint of the previous sales and revenues outlook. The expected decline in sales and revenues and an increase in expected restructuring costs are the primary reasons for the decline in the profit outlook.

To be sure, this was Caterpillar which has been trading on hope for the future for the past 3 months:

We have seen recent increases in commodity prices, some signs of improvement in construction equipment in China and better order activity than we expected at bauma, the world’s leading trade fair for many of the industries we serve.  While we are seeing a few positive signals, other parts of our business remain challenged.  As a result, we have lowered the midpoint of the outlook for 2016 sales and revenues about 2 percent.

 

Restructuring costs are now expected to be about $550 million in 2016, up $150 million from the previous outlook.  The decision to end production of on-highway vocational trucks is the primary reason for the increase in restructuring costs.

 

“While many of the industries we serve are challenged today, we’re looking ahead and investing for the future.  We’re investing substantially in R&D, driving forward on our Lean journey, continuing implementation of Across the Table with our dealers and accelerating our digital strategy,” said Oberhelman.

One notable feature of Q1: after buying back $400mm shares in Q1 last year, in the current quarter CAT finally stopped stock repurchases. As if it suddenly is worried that it may need all of its cash for the foreseeable future…

The stock was down -1.5% at last check after sliding as much as 3% after the announcement.

end

EMERGING MARKETS

Venezuela is without a doubt becoming one complete train wreck: they are now cutting off electricity 4 hrs per day:

 

(courtesy zero hedge)

 

“It’s Time To Be Patriotic” – Venezuela To Cut Off Electricity Four Hours A Day

The complete train wreck that is Venezuela continues to find ways to one-up itself. Fresh off of the announcement that every Friday in the months of April and May would be designated as non-working holiday’s in order to save electricity, the Socialist utopia is now simply cutting it off for four hours a day.

As Bloomberg reports, Venezuela will be implementing electricity rationing that will cut supplies to every home in the country (surely not President Maduro’s) for four hours a day. After all, it is every citizens patriotic duty to partake in these energy saving measures (it is also their responsibility to deal with the effects of putting Maduro in office).

“We ask for the cooperation of all Venezuelans. It’s time to be patriotic and united to combat and minimize these climatic effects.” Electricity Minister Luis Motta Dominguez said

The measures won’t solve anything of course, and as analyst Miguel Lara points out “with some parts of the country already without electricity for six to eight hours a day, this only makes official what they had already been doing.”

As we reported earlier, the electricity issues stem from the water content (or lack thereof) of Venezuela’s Guri Dam, which supplies as much as 75% of electricity consumed in Caracas, and 40% nationwide. Water levels are at their lowest since 2003, and are 3 meters away from starting the collapse of the national electric system.

Out of all the things currently going wrong in Venezuela (hyperinflation, being bankrupt, having no food, having no electricity, etc), perhaps the most pressing matter is how the country will respond to the looming beer shortage.

end

OIL ISSUES

SCHLUMBERGER, THE WORLD’S LARGEST OIL SERVICE PROVIDER HAS COME OUT WITH ok NON GAAP EARNINGS, BUT THEIR NET INCOME PLUNGED NEARLY 50%. THESE GUYS HELP FIND OIL FOR OIL COMPANIES AND THEY ARE STATING THAT OIL DRILLERS ARE CUTTING BACK. AND SLASHING SPENDING BY 50%.  THEY HAVE  GIVEN THEIR GUIDANCE LOWER!

(COURTESY ZERO HEDGE)

It’s A “Full-Scale Cash Crisis” In Oil Schlumberger CEO Admits

For the latest indication of how bad the recession in the US sector field is, we took a look at last night’s Schlumberger results which were modestly better than expected, beating expectations of $0.37 by one cent, however as usual the non-GAAP adjusted bottom line did not tell the full story. The Company’s net income plunged nearly 50%, to $501 million, or 40 cents a share, from $975 million, or 76 cents, a year earlier.

Profit fell in the first quarter as the company, which helps explorers find pockets of oil underground and drill for it, adjusts to shrinking margins in North America as customers scale back work. Customers are slashing spending by as much as 50 percent in the U.S. and Canada.

“It’s a weak beat mainly because they guided estimates down,” Rob Desai, an analyst at Edward Jones in St. Louis, who rates the shares a buy and owns none, said in a phone interview. “North America came in weaker than we expected.”

The world’s No.1 oilfield services provider said its costs to do business in North America exceeded the revenue it earned there in the quarter, the first time it had negative margins in the region since oil prices started falling in mid-2014.

“North America was the biggest surprise to the downside, with negative margins, which did not occur during 2008-2009 oil drop,” Edward Jones analyst Rob Desai said.

The company was pressured from the collapse in crude prices were seen in North America, the world’s largest hydraulic fracturing market, where Schlumberger reported a loss of $10 million, before taxes. Elsewhere, the company announced earlier this month plans to cut back activity in Venezuela, holder of the biggest oil reserves of any country, due to unpaid bills.

The the real tell of what is coming came from the company’s going forward actions. Not only did SLB cut its 2016 capital spending budget to $2 billion from $2.4 billion, and hinted at further cost cuts.  The company also cut another 2,000 jobs in the first quarter as the world’s largest provider of oilfield services sees the industry in an unprecedented downturn. The global headcount dropped to 93,000 at the end of the first quarter with the reduction, Joao Felix, a spokesman for the company, said by e-mail. More than a quarter of Schlumberger’s workforce, or roughly 36,000, has now been cleaved off since the worst crude-market crash in a generation began in late 2014.

If anything these cuts suggest that the true picture for the US shale space is getting worse not better.

And the punchline was what Chairman and Chief Executive Officer Paal Kibsgaard said: “The decline in global activity and the rate of activity disruption reached unprecedented levels as the industry displayed clear signs of operating in a full-scale cash crisis. This environment is expected to continue deteriorating over the coming quarter given the magnitude and erratic nature of the disruptions in activity.”

We are confident this lack of downstream demand from the company that has the best visibility into the US shale sector is why oil is up another 2% even as virtually all oil producers are now ramping up production to even higher levels in a furious attempt to beggar their mostly OPEC neighbors.

 END

Crude rises as rig counts tumbles again:

(courtesy zero hedge)

Crude Pops After Rig Count Tumbles To New Lows

Crude prices had been sliding ahead of today’s Baker Hughes rig count data but the slide stalled as the total rig count fell 9 to 431 – a new low (from over 2000 rigs at the cyclical peak). As the oil rig count continues to perfectly track lagged oil prices, we note that this week’s 8 rig decline to a fresh cycle low of 343 could be the low. This year has still only seen one week in which rig counts did not decline.

*U.S. OIL RIG COUNT DOWN 8 TO 343, BAKER HUGHES SAYS

Is this the low for the oil rig count, for now?

*U.S. TOTAL RIG COUNT 431 , BAKER HUGHES SAYS

New record lows.

Charts: Bloomberg

END
The IEA warns that both the Saudi and the Russians will pump as much oil as they can and will not pay any attention to “freezes”
(courtesy IEA/zeor hedge)

IEA Warns “Saudis, Russians To Pump As Much Oil As Possible”

While the IEA has been urgently pushing an agenda of the oil market “rebalancing” in coming months in order to validate rising oil prices, the reality is that there are two parts to the equation: demand and supply. We will have to say more on demand shortly, because as it turns out most of it may have come from none other than China where commodities are merely the latest speculative bubble while China has been furiously stockpiling oil in what is merely pulling future demand to the present, however on the far more important supply side, where the key variable has become shale production over the coming year, earlier today the head of the Oil Industry and Markets Division at the International Energy Agency, Neil Atkinson, told CNBC that he believed both producers will continue to “pump as much oil as possible.”

This is what he said:

“In the post-Doha world, when we’re still in what is essentially a free market for oil, the Russians will pump as much oil out as the market will absorb and the Saudis have said much the same thing.”

Which incidentally is also what we have been saying for weeks heading into Doha, a meeting which was doomed from the beginning and which saw record oil supply from not only Russia but also Iraq in the last few weeks. This record production is set to continue.

Neil Atkinson painted an even bleaker picture saying that “we’re back to where we were before Doha where people produce what they can, sell what they can for whatever price they can achieve and the market takes care of the surpluses in time.”

Atkinson added something else known to regular ZH readers, namely that “as far as the Russians are concerned, even in the run-up to Doha when they were going to be party to an agreement to freeze production, they were actually pumping up production anyway.”

The IEA staffer noted that Saudi Arabia had spare production capacity (of up to 2 million barrels a day) as well a couple of other Middle Eastern producers such as Kuwait and the UAE but that “apart from that there is no spare production capacity essentially anywhere in the world.”

Of course, the IEA could not leave it on a sour note and concluded that he believes that oil markets would come close to a balance in the second half of 2016 with U.S. shale oil production expected to fall further this year. However, he said there was a possibility that the U.S. could ramp up production easily again in future. “In our numbers, the U.S. by itself is going to shed something like 450,000 to 500,000 barrels a day in 2016 versus 2015,” Atkinson said, “it’s coming down before our very eyes.”

Maybe it is, but as we also wrote a month ago, as a result of not only newly reset hedges at prices which are now close to breakeven but also due to the reactivation of DUCs, or drilled but uncompleted wells, “U.S. Production Is Coming Back On Line.”

As Reuters admitted previously, “a dreaded scenario for U.S. oil bulls might just be becoming a reality” as some U.S. shale oil producers, including Oasis Petroleum and Pioneer Natural Resources Co, are activating drilled but uncompleted wells (DUCs) in a reversal in strategy that threatens to bring more crude to a saturated market and dampen any sustained rebound in prices.

Ultimately it will boil down to one simple thing: is the world’s oil storage, which is rapidly approaching operational capacity in the case of Cushing and other U.S. PADD regions, and also includes over a hundred million barrels of oil held in offshore tankers, provide enough of a buffer to offset the pick up in global demand, which has yet to materialize, or will the collapsing contango force the oil held offshore to be unloaded and flood the world with all those barrels which will force wholesale dumping and liquidation.

And finally, as we were concluding this post, the following news hit the tape:

  • Libya’s eastern govt’s first oil shipment of 650k bbl crude from Messla and Sarir oilfields to leave tomorrow for Malta on tanker Distya Ameya from Hariga, Libya, National Oil Corp. chief Nagi Elmagrabi says in stmt.

Finally, keep in mind that the current oil rally is – at least so far – a replica of what happened in the summer of 2015 when oil soared for several months only to tumble to fresh lows at the end of the year. The driving catalyst back then was China. And, as we will shortly show, China will be the negative catalyst once again.

The complete interview with Atkinson below:

 

 END

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

Euro/USA 1.1275 DOWN .0015 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 110.62 UP 1.170 (Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER

GBP/USA 1.4394 UP .0073 (STILL THREAT OF BREXIT)

USA/CAN 1.2710 DOWN .0011

Early THIS FRIDAY morning in Europe, the Euro FELL by 15 basis points, trading now WELL above the important 1.08 level RISING to 1.1310; 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 NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was UP 6.35 POINTS OR 0.22% LAST HR RESCUE/ Hang Sang DOWN 208,87. OR  1.20%   / AUSTRALIA IS LOWER BY 0.06% / ALL EUROPEAN BOURSES ARE DEEPLY  IN THE RED EXCEPT SPAIN as they start their morning/

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

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

2, the Nikkei average vs gold carry trade (blowing up and the yen carry trade HAS BLOWN up/and now NIRP)

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

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

The NIKKEI: this FRIDAY morning: closed UP 208.87. OR 1.20%

Trading from Europe and Asia:
1. Europe stocks MOSTLY THE RED  THEY START THEIR DAY

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

Gold very early morning trading: $1247.50

silver:$17.21

Early FRIDAY morning USA 10 year bond yield: 1.87% !!! UP 1 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.69 UP 1 in basis points from THURSDAY night.

USA dollar index early FRIDAY morning: 94.75 UP 15 cents from THURSDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers FRIDAY MORNING

 

END

 

And now your closing FRIDAY NUMBERS

 

 

 

Portuguese 10 year bond yield:  3.30% UP 10 in basis points from THURSDAY

JAPANESE BOND YIELD: –.110% UP 1/2 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.60% PAR IN basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.47  UP 1 IN basis points from THURSDAY

the Italian 10 yr bond yield is trading 13 points lower than Spain.

GERMAN 10 YR BOND YIELD: .231% (DOWN 1 IN BASIS POINTS ON THE DAY)

 

END

 

IMPORTANT CURRENCY CLOSES FOR FRIDAY

 

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

 

Euro/USA 1.12341 DOWN .0056 (Euro DOWN 56  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 111.59 UP 2.136 (Yen DOWN 214 basis points AND MARKETS STILL FALL)

Great Britain/USA 1.4414  UP .0093 Pound UP 93 basis points/

USA/Canad 1.2674 DOWN 0.0049 (Canadian dollar UP 49 basis points with OIL RISING (WTI AT $43.69)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 56 basis points to trade at 1.12341

The Yen fell to 111.59 for a loss of 214 basis points as NIRP is STILL a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.EVEN THE HUGE FALL IN THE YEN COULD NOT HELP NYSE & NASDAQ

The pound was UP 93 basis points, trading at 1.44414

The Canadian dollar ROSE by 49 basis points to 1.2674, WITH WTI OIL AT:  $43.69

The USA/Yuan closed at 6.5040

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 1 AND 1/2  basis points from THURSDAY at 1.884% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.70 UP 1 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 95.05 UP 39 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 DOWN 71.00 POINTS OR 1.11%
German Dax :CLOSED DOWN 62.24 OR 0.60%
Paris Cac  CLOSED DOWN 13.17  OR 0.29%
Spain IBEX CLOSED UP 35.60 OR 0.39`%
Italian MIB: CLOSED DOWN 45.92  OR 0.25%

The Dow was up 21.23 points or 0.12%

NASDAQ down 39.66 points or 0.80%
WTI Oil price; 43.73 at 3:30 pm;

Brent Oil: 44.08

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  66.61 (ROUBLE DOWN  14 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT FELL AND WTI ROSE

.

END

 

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

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

WTI CRUDE OIL PRICE 5 PM:  $43.75

BRENT: 45.14

USA 10 YR BOND YIELD: 1.89%

USA DOLLAR INDEX:95.12 UP  47 cents on the day

 

END

 

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

Trading Today in Graph form:

US Stocks Hold Doha-Dud Gains As US Macro Crashes Most In 14 Months

 

How we suspect a few USDJPY traders (who are the most net long JPY on record) feel this evening…

After JPY’s biggest daily plunge against the USD since October 2014’s cluster of Central Bank efforts…

 

This week was the worst for US Macro data since Feb 2015…

 

This has pushed US macro data down to 2-month lows… the last time this happened, things ended badly for stocks…

 

The “W”-shaped recovery analog remains…

 

An odd day today as the shitty MSFT, GOOG earnings were largely ignored by everything other than Nasdaq…

 

Notably stocks did not get their usual boost from USDJPY’s surge…

 

Which left Nasdaq the only loser on the week – while Trannies and Small Caps were squeeze today back into the lead…

 

This is what it took to keep Dow 18,000 today – a 0.4vol point plung ein VIX!!

 

FANGs had their worst week in 2 months… (down 3 weeks in a row)

 

Spot the outlier in this week’s FX market (as The USD Index rose 0.5% or so on the week, rallying from midweek)…

 

Treasury yields rose all week, with no inflection like FX markets (though Wednesday saw the biggest damage done)… 2s30s steepened 5bps on the week

 

 

Gold ended the week practically unchanged but Silver, Crude, and Copper all surged an oddly similar 5% or so on the week…

 

After Crude started the week down almost 7%…

 

Silver outperformed Gold for the 2nd week – smashing the Gold/Silver ration down 10% in 2 weeks to its lowest since June 2015…

 

Charts: Bloomberg

Average:

end

 

As expected USA manufacturing PMI flash prints at 50.8 missing expectations of 52.0.  This is the lowest print since 2009.  This is a reading of the entire USA:

(courtesy zero hedge/PMI)

US Manufacturing Plunges To 7 Year Lows As PMI “Dashes Hope That Q1 Weakness Was Temporary”

Following Japan’s record low PMI, Europe’s modest pick-up, and China’s bounce, this week’s Philly Fed crash was more indicative as US Manufacturing (flash) PMI printed 50.8 (from 51.5 in March and notably missing 52.0 expectations). This is the lowest print since September 2009 with New Orders sliding(weakest since Dec 2015), and Employment at its weakest since June 2013. As Markit notes, “US factories reported their worst month for just over six-and-a-half years in April, dashing hopes that first quarter weakness will prove temporary.“

Not pretty – but probably transitory, right?

Hmm, but everyone says the labor market is great?

Commenting on the flash PMI data, Chris Williamson, chief economist at Markit said:

“US factories reported their worst month for just over six-and-a-half years in April, dashing hopes that first quarter weakness will prove temporary.

“Survey measures of output and order book backlogs are down to their lowest since the height of the global financial crisis, prompting employers to cut back on their hiring.

“The survey data are broadly consistent with manufacturing output falling at an annualized rate of over 2% at the start of the second quarter, and factory employment dropping at a rate of 10,000 jobs per month.

“With prior months’ survey data pointing to annualized GDP growth of just 0.7% in the first quarter, the deteriorating performance of manufacturing suggests that growth could weaken closer towards stagnation in the second quarter.

“The survey responses reveal an increase in business uncertainty in relation to both the economic and political outlook during the month, which is weighing on spending and investment decisions and exacerbating already-weak demand both at home and abroad.”

But apart from that, everything is awesome – it must be, because stocks are within reach of all-time highs?

 

end

 

The Bond king speaketh:

 

Two points of interest:

a) He feels Trump will win and will be good for the economy

b) The Fed has given up on raising rates

(courtesy Gundlach/zero hedge)

 

Gundlach Predicts “Trump Will Win”, Says “The Federal Reserve Has Basically Given Up”

In an interview posted on Swiss Finanz und Wirthschaft, Jeff Gundlach unleashes his deep ir, and in traditional style, offloads on both the Fed and all central banks, sayng that “negative interest rates are the dumbest idea ever“, adding that the Fed has given up both trying to normalize interest rates as well as trying to actually stimulate the economy:

What you see is that the same pattern has been in place since 2012: Hope for growth in the new year that ends up being revised downwards, over and over and over again. But now we have reached the point at which no one bothers anymore about the comedy of predicting 3% real GDP growth. Even nominal GDP growth isn’t probably going to be at 3% this year. Actually, nominal GDP is at a level that has historically been a recessionary level. It isn’t this time because the inflation rate is close to zero. But no one bothers anymore and the Federal Reserve has basically given up.

He also says the he has “been waiting for about two years for the Fed to capitulate on their interest rate increase dreams. Now, I think they did.”

As noted above, Gundlach has seen many stupid ideas in his time but nothing as bad as NIRP. “I think the next big thing will be that at some point central bankers in Japan and in Europe will have to realize that they need to give up on negative interest rates. Negative interest rates are the dumbest idea ever. It’s horrible. Look at how badly it’s been working. The day that the Bank of Japan went negative the Yen started strengthening like crazy and the stock market is down. That’s exactly the opposite of what they wanted. The same thing happened with the ECB.”

He then takes on the US stock market, saying it “seems egregiously overvalued versus other stock markets…. fundamentally, it’s very hard to believe in US stocks.Earnings and profit margins are dropping and companies basically are borrowing money to pay dividends and to buy back shares.” He spares no love for junk bonds either: “it’s likely that you are going to see declines in the US stock market and since the correlations are so high this means that probably the junk bond market will go back down, too.”

What about oil: “I predicted oil would make it easily to $ 40 and it did so very comfortably.But now it’s having a very hard time getting to $45. It bounces up a dollar, down a dollar and I think if oil is going back down to $ 38 people are going to be very concerned.”

His diatribe against conventional wisdom continues, when he blast that “the riskiest things are now stocks and other investments perceived to be safe. One of the most popular categories in US investing are low volatility stock funds. But there is no such thing! If you think that a stock like Johnson & Johnson can’t go down, you’re wrong. And if people own funds that invest in stocks which they think are immune from decline and they start to decline, all hell breaks loose.”

What does Gundlach like? Gold and TSYs:

“Gold is doing fine. It’s preserving capital in the US, it’s been making money over the last couple of years for European investors. That’s why I own gold.Because in a negative return environment anything that holds its value or makes a little is good.”

On the topic of who wins the election, he says that “Trump is going to win. I think Clinton and Sanders are both very poor candidates. I know the polls are signaling the opposite. But the polls said the opposite four years ago, too.”

He also thinks Trump would be the best candidate for the US economy:

In the short term, Trump winning would be probably very positive for the economy. He says a lot of contradictory things and things that are not very specific. But he does say that he will build up the military and that he will build a wall at the border to Mexiko. If he wins he’s got at least to try those things. Also, he might initiate a big infrastructure program. What’s his campaign slogan? Make America great again. What that means is let’s go back to the past, let’s go back to the 1960s economy. So he might spend a lot of money on airports, roads and weapons. I think Trump would run up a huge deficit. Trump is very comfortable with debt. He’s a debt guy. His whole business has had a lot of debt over time and he has gone bankrupt with several enterprises. So I think you could have a debt-fuelled boom. But the overall debt level is already so high that you start to wonder what would happen after that.

Finally, here is Gundlach’s explanation on what it takes to be a good investor:

I made a name for myself primarily because in March of 2005 I was convinced that there would be a complete collapse of the credit market. When it was still hypothetical, people argued with me. They said that this would never happen. But I was right. So you have to find a center piece idea that will be important in driving the market. And you have to have an intuition about how other investors will react if you’re right and they wake up to that idea. Such opportunities do not happen very often. It is not always so obvious. So you have to pick your moments. In the financial markets, 80% of the time it’s a coin flip. But the other 20% of the time you have very high confidence and it’s not a coin flip. For instance, I don’t think the stock market is a coin flip. Especially in the United States stocks are very expensive, particularly low volatility stocks.

In short, Gundlach doing what he does best: holding nothing back.

* * *

His full interview with FuW below:

 

end

 

We have outlined to your on several occasions that the used car prices are coming down and that this is causing problems for the  new car market as it is much cheaper to buy a used car than a new one.  The Volkswagen car settlement case in NY will create havoc as countless numbers of used Volkswagen cars will flood the market once they are fixed

(courtesy zero hedge)

 

The Volkswagen Car “Buy Back” Just Unleashed Havoc On The U.S. Car Market

When it comes to the US manufacturing sector which as a result of the oil sector collapse recently entered a recession, for years it was the US auto industry which was presented as a shining example of how “things can go right” and how US manufacturing workers have benefited when year after year domestic auto production rose and recently hit a record high annualized production rate.

But while recently there has been a rather steep decline in new car sales  (as a result ofsoaring inventories and shrinking credit) the real canary in the coalmine when it comes to consumer end demand for cars emerged in recent months when used-car prices began to leak lower slowly at first, and then very fast. In fact, as we showed recently, used-car-prices are plunging at a pace comparable to 2008, as a result of what is a record glut of used cars sitting on dealer lots, unable to find a willing buyer.

 

It all culminated with a recent RBC research report in which it asked if this is “the card that brings the whole house down” because, it added, “the reason for concern is lower used vehicle prices have a potential spillover effect to many other industry factors. If we think about volume, price, mix, credit – all have been incredibly positive and supportive of the recovery. All are also no doubt related, but that’s what makes it a bit scary.”

* * *

Fast forward to today when Volkswagen took a massive $18.28 billion charge related to the emissions-cheating scandal, forcing it to slash its 2015 dividends and post a deep loss. The largest German company announced earlier today a net loss of €1.58 billion for 2015, compared with a net profit of €10.85 billion a year earlier. The company posted an operating loss of €4.1 billion for the year.

For the current year, Volkswagen said group revenue would fall as much as 5% partly because of the emissions issue, though overall deliveries should be around the level of 2015. It expects a “sharp decline” in passenger car revenue, the company said, which is to be expected for a company that has blown through years of goodwill with one silly emissions-rigging scandal.

But much more important than VOW’s financial results, was that as part of the company’s settlement in the U.S., it agreed to offer U.S. owners of nearly 500,000 vehicles a blend of car buybacks, repairs and compensation.

Specifically, Volkswagen has pledged to give drivers of about 480,000 2-liter diesel vehicles the option of selling the cars back to Volkswagen, or having them modified to meet emissions standards, the judge said. Those with a lease can cancel it and return the vehicle to Volkswagen. Consumers also will get “substantial compensation” on top of that, according to Judge Charles Breyer, overseeing the lawsuit against the German car-maker, who has pressured Volkswagen since February to produce a fix for the cars. He made it clear last month that if no solution was offered by this week, he would consider a request by the plaintiffs to set a summer trial the WSJ reported.

Needless to say, given the option of a hassle-free buyback leading to cash in hand, or waste weeks in some dealership, everyone will pick the former.

* * *

Which take us back to the original point: the near record glut of used cars.

Because the immediate result of Volkswagen’s settlement to placate buyers following its emissions-testing scandal, could send a shock wave across the US auto industry.

As Market Talk correctly notes, offering hundreds of thousands of buyers a chance to sell back their old VW or end their lease early (in lieu of fixing the car) will almost certainly flood the used-car market that is already on pace to hit record inventory levels in 2016.

Once the German auto maker fixes the emissions problems on those cars, it will put them back into circulation, and the the availability of repaired models will add even further pricing pressure on used-car prices “that are sagging amid a glut of gently-used vehicles being turned in after leases or as trade-ins for new car purchases.”

* * *

Volkswagen may be just the tip of the iceberg.

Following the recently disclosed scandal at Mitsubishi, the Japanese Transport Minister Keiichi Ishii said on Friday he wanted Mitsubishi Motors Corp to respond “with integrity” after revelations that it cheated on test to measure fuel economy, including by possibly buying back the cars in question, Kyodo news reported.

In other words, even more buybacks, even more fixes and even more used cars about to push the record used-car glut to never before seen levels. How long until car dealers, stick with hundreds of thousands of used cars, are forced to start dumping.

RBC may have been premature with its observation of the “card that brings the whole house down“, but what happens when there is suddenly a whole lot of cards?

Average:

Let us close off the week, with this wrap up courtesy of Greg Hunter of USAWatchdog

(courtesy greg Hunter/USAWatchdog)

 

Saudi Arabia US Friction, Economic Update, China Gold Fix and Fraud Ignored by MSM

by Greg Hunter

 

The President was in Saudi Arabia in what the White House claims was a trip to “clear the air.”I really don’t know how you clear the air with the friction between the U.S. and the Kingdom. There is ISIS, which the Saudis are funding along with the U.S, but that’s changing because it appears the U.S. is increasing its attacks on ISIS. There is the bi-partisan Senate bill that will release the missing 28 pages of the 9/11 Commission Report that supposedly implicates Saudi Arabia. It will also allow the families if the 9/11 attack to sue Saudi Arabia if it was involved. The Saudis said they would dump a trillion dollars in U.S. assets if that becomes law. President Obama says he will veto. The House and Senate may have enough votes in this election year to override that veto as big time people in both parties are pushing this. The President is also basically telling Arab allies in the Middle East that they should learn how to share the region with Iran. So, I really do not know how they can “clear the air” with zero resolutions.

The global economy continues to implode. That means it is going to be even more impossible to make debt payments. Intel plans to lay off 11% of its workforce (12,000) to save some money. Of course, Intel has been bringing in cheaper foreign workers since 2010. Still, what does that say about Intel’s forward book of business? It must not be looking good for the chip business and all of the businesses Intel supplies. Other metrics, such as the Baltic Dry Index, have fallen and cannot get up.

The Chinese have finally opened up the Shanghai Gold Exchange, which trades silver as well. Already you are seeing some big price moves to the upside for both metals, and then you are seeing paper shorts come in and drive the price back down. Thursday morning in the U.S, there were $2 billion worth of paper gold and silver contracts dropped on the market. Meanwhile, the revelation that Deutsche Bank admitting to rigging both the gold and silver markets has been largely ignored by the mainstream media. It appears the price rigging is going to come to an end sooner than later. I am told that renowned gold expert Jim Sinclair is preparing a lawsuit against the big banks that suppressed the gold. Other lawsuits have been filed or are on the way.

Join Greg Hunter as he analyzes these stories and more in the Weekly News Wrap-Up.

(There is much more in the video presentation.)

Bill Holter of JSMineset.com is scheduled for the “Early Sunday Release.”

end

Well that was quite a week

I hope that everyone has a grand weekend

and again, I would like to wish all our Jewish friends out there a very happy Passover holiday week.

 

I will see you Monday night

Harvey

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