April 25.2016/Open interest in silver climbs above 200,000 at 201,787 within 200 contracts of its all time high and yet silver price is very low in comparison/Chicago Pensions system is in disarray/Deutsche bank echoes David Stockman in that Q one earnings are horrifying!/

Good evening Ladies and Gentlemen:

Gold:  $1,238.90 down $10.20    (comex closing time)

Silver 17.00  up 10 cents

In the access market 5:15 pm

Gold $1238.00

silver:  17.00

 

 

 Tomorrow is options expiry on the comex.  However we have to wait until Friday afternoon as the London’s LBMA options expire along with the bankers OTC options.
So expect the prices of our precious metals to remain subdued to the rest of the week.  The open interest in silver continues to rise despite Friday’s weakness in price.  Somebody is accumulating massive amounts of silver and the longs are waiting patiently ready to pounce.

Let us have a look at the data for today

.

At the gold comex today, we had a good delivery day, registering 973 notices for 97,300 ounces for gold,and for silver we had 2 notices for 10,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 224.62 tonnes for a loss of 78 tonnes over that period.

 

In silver, the open interest rose by a SURPRISING 2,556  contracts up  to 201,787 despite the fact that the price was silver was down  by 19 cents with respect to FRIDAY’s trading. In ounces, the OI is still represented by 1 BILLLION oz (1.009 BILLION TO BE EXACT or 143% of annual global silver production (exRussia &ex China)We are now at multi year highs in OI with respect to silver

In silver we had 2 notices served upon for 20,000 oz.

In gold, the total comex gold OI FELL 9,490 contracts, DOWN to 501,844 contracts AS  the price of gold was DOWN $20.30 with FRIDAY’S TRADING(at comex closing).

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 HUGE 2556 contracts up to 201,787 despite the fact that the price of silver was DOWN 19 cents with FRIDAY’S trading. The gold open interest FELL by A LARGE 9,490 contracts AS  gold fell by $19.30 ON FRIDAY.   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  SUNDAY night/ MONDAY morning: Shanghai closed DOWN BY 12.28 POINTS OR 0.41%  /  Hang Sang closed DOWN 162.60 OR 0.76%. The Nikkei closed DOWN 133.19 POINTS OR 0.76% . Australia’s all ordinaires  CLOSED DOWN 0.69%. Chinese yuan (ONSHORE) closed DOWN at 6.4927.  Oil FELL  to 43.72 dollars per barrel for WTI and 44.78 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.5071 yuan to the dollar vs 6.4927 for onshore yuan.

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

ii)Through purchases of their ETF’s, the Bank of Japan is now a top 10 owner of an unbelievable 90% of Japanese stocks:

(courtesy zero hedge)

iii)The following is something that Goldman Sachs is not very happy about, the huge rise in the yen and it continued today. We have witnessed the hedge funds do net long on dollar claims  (short the yen) as they loaded the boat on one side.  Now hedge funds are going net short the dollar.  Is Goldman Sachs going to wrong again?
(courtesy zero hedge)

b) REPORT ON CHINA

Not only is China hoarding gold but they are also hoarding crude at the fastest pace on record!

( zero hedge)

4.EUROPEAN AFFAIRS

i)Austrian right wing party sweeps the first round of Presidential elections:

( zero hedge)

ii)From the sublime to the ridiculous:  Unilever issue a bond at 0% coupon: i.e. it costs them nothing:

( zero hedge)

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

i)The White house is set to release some of the secret 28 pages.  Now we await the Saudi response and it may liquidate its bond holdings:

( zero hedge)

ii)Something is terribly wrong here!  The Saudi interbank rate climbs above 2%.  Either the Saudis are having trouble locating dollars or Saudi banks are afraid to loan to one another:

(courtesy zero hedge)

iii) SWEDEN AND THEIR HUGE MIGRANT PROBLEM

Sweden revolts as Stockholm City council moves Muslim migrants right next to a school:

( zero hedge)

6.GLOBAL ISSUES:  

TORONTO CANADA

 

i)The huge real estate company URBANCORP has just filed for bankruptcy protection.

This will surely hurt Canada’s booming real estate sector. It looks like the Chinese money have stopped coming.

( zero hedge)

ii)The following is a big story.  As we have pointed out there are now 7.8 trillion dollars worth of bonds in negative story.   We are also pointing out that many on the planet are scrapping the surface trying to get anything with a positive yield and that means bonds that are out 100 years.  If interest rates were just to move up 1/2%, the loss will be 1.3 trillion USA or if rates climb 1% then losses would be 2.6 trillion.  This is an accident waiting to happen

( zero hedge)

OIL ISSUES

i)Oil slides after a report shows a huge 1.5 million barrel inventory build at Cushing which is largely expected

( zero hedge)

 

ii)This is not going over well with the rest of the producers:  Saudi Arabia is set to boost production in competition with other producers to satisfy Chinese demand (stockpiling)

( zero hedge)

PHYSICAL MARKETS:

i) Bill Holter’s commentary tonight is entitled:

“”The chances of a COMEX default … (public article)”

ii)Strange:  Supposedly the CFTC did not know of the Deutsche market rigging settlement until GATA asked them what they were going to do about it, one week later.  I notified the CFTC on the Thursday morning release by Reuters

( zero hedge)

iii)A very important commentary from Andrew Maguire.  Basically he is stating correctly that the Chinese SGE  is taking liquidity away from the LBMA  and comex paper game. We have witnessed that the gold price is higher as it enters the Chinese fix.  It is now logical that a Chinese holder of gold can sell say 1 tonne of his hoard of 100 tonnes of gold and then buy a contract in London and NY at lower prices and then wait and take delivery to retrieve his lost 1 tonne.  This arbitrage will break the backs of the west:

a must listen to audio..
( Kingworldnews/Andrew Maguire)

iv)The Hong Kong gold exchange is now working with the large Chinese bank, ICBC to launch gold services such as storage, and physical settlement in the free trade zone of Qianhai.( GATA/South China Morning Post)

 

b)Zero hedge comments on the above story:

(courtesy zero hedge)

USA STORIES WHICH WILL INFLUENCE THE PRICE OF GOLD/SILVER

i)Take a look at the Chicago Pension system: There are 7500 retired teachers in theChicago area that earn over 100,000 dollars.

( zero hedge)

ii)Desperation time for the Republicans as Cruz and Kasich form a last minute alliance trying to stop him:

( zero hedge)

iii)The Dallas Fed mfg index disappoints again for the 16th straight month:

( zerohedge)
iv)Deutsche bank admits that the true story of Q 1 earnings are very disappointing and they echo what David Stockman states.  And strangely they also admit that D.B’s first quarter est is at risk:
( zero hedge)

v)Perhaps of all the home stats, new homes if the most vital:  today, new homes sales suffer their 3rd month drop and the worst streak since July 2011:

( zero hedge)

 vi)Gold Eagles from the USA mint triple from last yr due to the continued financial market deterioration( Steve St Angelo/SRSRocco Report)

 

Let us head over to the comex:

The total gold comex open interest FELL CONSIDERABLY, as expected to an OI level of 501,844 for a LOSS of 9,490 contracts AS the price of gold DOWN  $20.30 with respect to FRIDAY’S TRADING. We are now entering the active delivery month of April. For the past two years, we have strangely witnessed two interesting developments with respect to the gold open interest:  1) total gold comex collapse in OI as we enter an active delivery month or for that matter an inactive month, and 2) a continual drop in the amount of gold standing in an active month. We certainly witnessed both parts today . In the front month of April we lost 209 contracts from 1703 contracts down to 1494.  We had 61 notices filed yesterday so we LOST 49 CONTRACTS or an additional 4900 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI fall by 100 contracts down to 2285. The next big active gold contract is June and here the OI fell by 10,075 contracts down to 373,396. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 29,072. The confirmed volume ON FRIDAY (which includes the volume during regular business hours + access market sales the previous day was very good at 220,868 contracts. The comex is not in backwardation.

Today we had 973 notices filed for 97,300 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by a considerable 2556 contracts from 199,231 UP 201,787 DESPITE THE FACT THAT the price of silver was DOWN 19 cents with FRIDAY’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 FriDAY 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 only 8,096 contracts DOWN to 48,767. This level is exceedingly high AS WE ONLY HAVE  4 days before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 101,960, which is HUMONGOUS  AND NOT MANY ROLLOVERS. The confirmed volume on Friday (comex + globex) was AGAIN OUT OF THIS WORLD AT 130,872. 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 2 notices filed for 10,000 oz.
 

April contract month:

INITIAL standings for APRIL

Initial Standings for April
April 25.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  16,075.000 oz  (Scotia)

500 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 973 contracts
(97,300 oz)
No of oz to be served (notices) 411 contracts 41100 oz/
Total monthly oz gold served (contracts) so far this month 3643 contracts (364,300 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 127,373.7 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 0 customer deposit:

i

total customer deposit:  NIL oz

Today we had 1 customer withdrawals:

i) Out of SCOTIA;  16075.000  500 kilobars

 

total customer withdrawal:16,075.000 oz   500 kilobars

Today we had 1 adjustment:

Out of hsbc:

91,148.085 oz was adjusted out of the CUSTOMER and into the DEALER

 

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 973 contracts of which 328 notices was stopped (received) by JPMorgan dealer and 285 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 (3643) x 100 oz  or 364,300 oz , to which we  add the difference between the open interest for the front month of April (1384 CONTRACTS) minus the number of notices served upon today (973) 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 (364,300) x 100 oz  or ounces + {OI for the front month (1384) minus the number of  notices served upon today (973) x 100 oz which equals 405,400 oz standing in this non  active delivery month of April (12.609 tonnes).
We lost 49 contracts or 4900 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 12.609 tonnes of gold standing for April and 20.000 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 12.609 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 tonnes)  = 19.6221 tonnes still standing against 20.000 tonnes available.  .
 
Total dealer inventor 643,011.737 oz or 20.000 tonnes
Total gold inventory (dealer and customer) =7,205,549.709 or 223.62 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.62 tonnes for a loss of 78 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 25.2016

Silver
Ounces
Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 924,866.004 oz

JPM, Delaware

BRINKS, Scotia

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 702,729.000

BRINKS,SCOTIA

No of oz served today (contracts) 2 contracts

10,000  oz

No of oz to be served (notices) 4 contracts)(20,000 oz)
Total monthly oz silver served (contracts) 191 contracts (955,000 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 8,719,136.7 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 2 customer depositS:

i) Into BRINKS: 219,806.200 oz

II) INTO SCOTIA:  482,922.800 OZ

Total customer deposits: 702,729.000 oz.

We had 4 customer withdrawals

 

ii) Out of Delaware: 21,879.944 oz

iii) Out of BRINKS: 2,969.220 oz

iv) Out of JPMorgan; 300,003.800 oz

v)Out of Scotia:  600,013.04 oz

:

total customer withdrawals:  924,866.004  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 (191) x 5,000 oz  = 955,000 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 (2) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the April. contract month:  191 (notices served so far)x 5000 oz +(XX{ OI for front month of April ) -number of notices served upon today (2)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:   150.913 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
And now the Gold inventory at the GLD
April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes
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 25.2016:  inventory rests at 805.03 tonnes

end

 

Now the SLV Inventory
April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz.
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 25.2016: 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 rises to -79%!!!! NAV (April25.2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls.+62% to NAV  ( April25.2016)
Note: Sprott silver trust back  into negative territory at -79%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.62%/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 -.79%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
 
 
 end

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

Trading in gold and silver overnight in Asia and Europe
 

Gold Bullion In London Vaults Beneath Bank of England Worth $248 Billion – BBC

The gold bullion or “hidden gold mine” of various nation’s gold reserves stored in the vaults beneath the Bank of England have been covered by the BBC:

Under London’s streets lies a hidden gold mine.

It stretches across more than 300,000 square feet under the City, the finance quarter in the heart of Britain’s capital. There, beneath the pavement and commuters of Threadneedle Street, lies a maze of eight Bank of England gold vaults – each stacked with gold bars worth a total sum of around £141 billion ($200 billion).

gold_bullion_BOE
Stacks of gold bars are arranged on shelves in the Bank of England’s vaults (Credit: David Levenson/Alamy)

The bars sit on rows of blue numbered shelves. Every bar weighs precisely 400 troy ounces (about 12kg), making each currently worth some £350,000 ($500,000), comfortably more than the average price of a house in the UK. Each bar looks subtly different depending on where it was refined. Some bars have sloping edges to make them easier to pick up; others look more like a loaf of bread.

There is no smell here: metal has none. There is no noise, either, on account of the vaults’ thick concrete walls.

What there is, however, is one of the world’s most important traded assets. Deals are still done in gold in almost every country in the world. Its price is a crucial barometer for consumer confidence. Prices rise when markets are uncertain, and before US elections – like now.

Read full article here


Recent Market Updates

Silver Prices Up 6% This Week and 25% YTD; Gold Up 1% 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 News and Commentary
Gold marginally higher ahead of central banks this week (Bloomberg)
Metals hold up in high ground but may need to consolidate (Bullion Desk)
Gold hidden in secret vaults beneath the Bank of England worth $248bn (Independent)
One fifth of the world’s gold is buried in London (The Sun)
Building’s rent can be based on gold prices (Dispatch)

Silver’s New Bull Market (Zeal LLC)
Why Silver May Rally to $25: CPM Group -Video – (Fortune)
Britain should pay more attention to Eurozone crisis (Telegraph)
Gold has everything in its favor – Rally has legs (Marketwatch)
Resurgence Of Gold & Looming “Run On Cash” – Bass (Zerohedge)
Read More Here

Gold Prices (LBMA)
25 April: USD 1,230.85, EUR 1,094.08 and GBP 853.79 per ounce
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

Silver Prices (LBMA)
25 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce
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

 

Protecting_Your_Savings_in_the_Coming_Bail_In_Era_-_Copy-3.jpg Essential_Guide_to_Storing_Gold_in_Singapore.jpg 7_Key_Storage_Must_Haves.png

Read Our Most Popular Guides in Recent Months

Mark O’Byrne
Executive Director
 end
Strange:  Supposedly the CFTC did not know of the Deutsche market rigging settlement until GATA asked them.  I notified the CFTC on the Thursday morning release by Reuters
(courtesy zero hedge)

CFTC didn’t know of Deutsche’s market-rigging settlement until asked by GATA

Section:

12:23p ET Saturday, April 23, 2016

Dear Friend of GATA and Gold:

While it may be hard to believe, it seems that the U.S. Commodity Futures Trading Commission was unaware of Deutsche Bank’s agreement to settle a class-action lawsuit accusing it of manipulating the gold and silver markets until GATA repeatedly sought to bring the matter to the commission’s attention over the last week.

The news of the settlement agreement broke with Reuters and Bloomberg News reports on Wednesday and Thursday, April 13 and 14:

http://www.gata.org/node/16375

http://www.gata.org/node/16380

The reports said that Deutsche Bank had agreed in principle not only to pay financial damages to the plaintiffs but also to provide evidence against the other defendants in the suit.

 

Since the CFTC has jurisdiction over the U.S. commodity futures markets and since the commission purported to have undertaken a five-year investigation of the silver market, closing it in September 2013 upon concluding that there was no cause for action –http://www.cftc.gov/PressRoom/PressReleases/pr6709-13

— it was natural to seek comment from the commission about the Deutsche Bank news.

So on Saturday, April 16, your secretary/treasurer e-mailed the commission’s news media office as follows, providing the Internet link to the Bloomberg News report:

“Does the commission have any reaction to Deutsche Bank’s admission to manipulating the gold and silver markets, as reported by Bloomberg News this week? Is the commission responding to Deutsche Bank’s admission in any way? As you may recall, some years ago the commission reported that it had investigated the silver market and had found nothing improper. Is the commission reconsidering that conclusion?”

Receiving no response, on Tuesday, April 19, your secretary/treasurer sent by facsimile machine a letter to the office of the chairman of the CFTC, Tim Massad, reading: “As I am unable to get any acknowledgement from your commission’s press office, could you answer my questions here? Does the commission have any reaction to Deutsche Bank’s admission to manipulating the gold and silver markets, as reported by various news organizations last week? Is the commission responding to Deutsche Bank’s admission in any way? As you may recall, some years ago the commission reported that it had investigated the silver market and had found nothing improper. Is the commission reconsidering that conclusion? Thanks for your help.”

Having received no acknowledgment of that letter as well, yesterday – Friday, April 22 – your secretary/treasurer telephoned the CFTC’s press office and within a half hour of leaving a message received a cordial call back from an assistant to the director. He said he was unaware of the Deutsche Bank story and could find no reference to it in the commission’s compendium of news reports of interest to the commission’s work.

Your secretary/treasurer conceded that the story is being largely suppressed by Western financial news organizations and sent him the links to the Reuters and Bloomberg stories as well as a link to the original complaint in the class-action lawsuit. He said he would consult his superiors and hoped to reply to me next week.

Of course all this gives the impression that the CFTC not only doesn’t know what’s going on in its jurisdiction but also that it doesn’t want to know. It is additional evidence that certain commodity market rigging is outside the commission’s concern because the U.S. government and other governments are the actual perpetrators, surreptitious market rigging by the government being specifically authorized by the Gold Exchange Act of 1934 as amended in the 1970s –

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

— and because of the admission in recent official filings by CME Group, operator of the major U.S. futures exchanges, that it provides volume trading discounts to governments and central banks for surreptitiously trading all futures contracts on its exchanges:

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

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

All this also seems to confirm that the prerequisites of this market rigging are the cowardice of the monetary metals mining industry, which refuses to protest it, and the cowardice of mainstream financial news organizations, which refuse to report it.

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

 

 

 

END

 

Bill Holter’s interview with X22 report!
my latest interview with X-22 Report
end
Bill Holter’s commentary tonight is entitled:
“The chances of a COMEX default … (public article)”

IS GUARANTEED in my opinion!

I would not normally write something like this but it seems I had to.  Last week, Bob Moriarty of 321 Gold wrote a story with the exact same title http://www.321gold.com/editorials/moriarty/moriarty041916.html and came to the conclusion “…is zero”.  He began his article by saying “So anyone telling you Comex is about to default either doesn’t have a clue as to how commodity markets work or they are deliberately lying to you.”

  He then goes on to say “But the chance of a ‘Gold Derivatives Time Bomb,’ is also zero. There is no such thing. And there is no such thing as a ‘Commercial Signal Failure’ or a 400 ounce gold bar made of tungsten.”  Is he serious?  When well over 100 pieces of paper “call” on the one underlying real ounce …there is no chance of failure?  Is he trying to say the commercials can NEVER ever be wrong and forced to cover because they cannot deliver “promised” but non existent gold?  Is he trying to say 400 ounce tungsten bars have not already turned up?  I do want to point out, this is the same man who said a derivatives blowup can never happen.  I think those at Bear Stearns and Lehman Brothers would beg to differ with him!  We already know for a fact, we were only hours away from a total financial meltdown in 2008 were it not for the Fed magically creating $16 trillion.  It is clear to me, since the amount of global derivatives far exceed the underlying assets they represent, true “settlement” or “performance” is a foregone impossibility as the “pie” only gets bigger.  The only question now is “how big is TOO big”?
  Let’s look at the numbers and use a little common sense to see “who doesn’t have a clue or is deliberately lying to you”! Currently in the COMEX gold and silver vaults we see there are roughly 17 tons of gold and 32 million ounces of silver “registered” (available for delivery).  This amounts to about $680 million worth of gold and $540 million of silver.  A whopping total of $1.2 billion or less than 1/2 day’s interest on the U.S.  federal debt.  In today’s world of “trillions and quadrillions”, this amounts to pocket change!
I put these registered inventories forth so we can have something to use as a base for comparison.  Looking at silver, there are now 1 billion ounces represented by 200,000 COMEX contracts of various months.  For May alone (which goes first notice day in five days) there are 280 million ounces represented by these paper contracts.  By comparison, the world (excluding Chinese and Russian production) produces 700 million per year.  So, we have a market with a claimed 32 million ounces that “prices” (for now) a market which produces 700 million ounces per year.  This 32 million ounce inventory is the “guarantee” being used or promised to “deliver” on contracts (280 million ounces worth for May and 1 billion ounces in total) whose owners can decide they want delivery.  If you look at other “commodity” markets, there are none as egregious as silver.  Currently open interest represents 140+% of global production.   In other words, the paper market is far larger than the real physical market.  Not so in other commodities where the paper markets are typically 10-15% the size of global production.
Going one step further with this 32 million ounce inventory, we saw a 10 minute span on Thursday morning where 37.5 million ounces of silver were dumped all at once.  The effect of course was nearly a $1 drop in price.  This was done as silver looked to be breaking out pricewise to the upside, the massive dump was used to contain price.  We saw this again on Friday when over 100 million ounces were dumped in just one hour.  In perspective, Thursday’s dump equated to 19 days of total global production…sold in 10 minutes. TakingThursday and Friday’s “70 minutes” together saw the equivalent of
2 1/2 months of global silver production sold.  Again, who actually has this amount of silver and who in their right mind would ever sell it in this fashion to get the absolute worst price possible?  …unless they WANTED the worst price possible?  Taking a brief look at how inept the registered gold inventory is, Shanghai has been importing 30-40 tons per WEEK for several years now.  How many “days” worth of Shanghai imports will COMEX’ 17 tons cover?
The above speaks to the woefully small registered inventories claimed by COMEX.  From a mathematical standpoint, both silver and gold stocks could be wiped out in just one trade.  Bob Moriarty says this does not matter and no default can ever happen because COMEX can settle in paper.  I agree with his statement “COMEX can settle in paper” because it appears they have been doing this for years rather than delivering real metal to all of those standing.  I do no have smoking gun proof of this but just ask yourself the question, WHO would fully fund their account in order to take delivery, wait until the very last days of the delivery period and then just “go away”?  This happens time and time again, I believe it can only be explained by “cash premiums” being offered and paid.  If you have another plausible explanation, I would love to hear it but by “plausible” I mean to say it must include real logic a true economic man would follow.
Now, is “cash settlement” because there is no gold or silver available to deliver … considered a default?  According to Bob Moriarty the answer is “no”.  I would simply ask you this, if COMEX can only settle in cash, then what is it exactly that you are trading?  Of what value is a contract which cannot perform and deliver the product you are “supposedly” trading?  It is for this reason I have said for many years we will end up seeing a two tiered market where there is one price for the paper derivatives of gold and silver …and another (higher) price for the real thing.  In fact, we are already seeing the early stages of this with backwardation particularly in London.
To finish, until recently we were told that ALL markets were rigged EXCEPT for gold and silver.  We were just nutjob conspiracy theorists to think gold and silver markets were rigged.  But now we find out we weren’t nuts after Deutsche Bank admitted guilt and paid a fine for rigging the London fixes.  The fine by the way was not small potatoes, it was $5 BILLION …(or roughly five times the dollar value of what COMEX claims to be able to deliver)!
I assure you Deutsche Bank did not hand over $5 billion out of the goodness of their hearts, nor did they take lightly “pleading guilty” as they will now be sued by the mining industry to the moon and back.  Even more curious was their decision to turn state’s evidence?  I certainly do not have the particulars but I can observe and connect the dots.  The metals markets are acting very differently and the commercials (if COT numbers are to be believed) are extremely short while registered inventories are extremely low.  Financial stresses in Western credit markets are again showing quite similar to 2008. Central banks have already fired interest rate/money supply bazookas …while sovereign treasuries far and wide have destroyed their balance sheets.
Would it be crazy to believe fear capital will flood into the ONLY MONIES ON THE PLANET that have neither counterparty risk nor are anyone else’s liability?  Actually, from a mathematical standpoint, all of this global debt can ONLY be paid back if currencies are debased …which guarantees a flood into gold and silver.  Would it be considered a “default” if the U.S. had to print so many dollars that it took 1 million of them to purchase a cup of coffee?  In the situation where COMEX inventories get cleaned out, isn’t this the same thing as a bank in the old days “running out of gold”?  That was considered default then but Moriarty wants you to believe it is “business as usual” today?  Sorry, I don’t think so!
  This has been a “public” article , should you desire to read all of our work, please follow this link to our subscription page

http://www.jsmineset.com/member

Standing watch,

Bill Holter
Holter-Sinclair collaboration

end
Bill discusses the above with Greg Hunter

COMEX Default Is Coming Soon-Bill HolterBy Greg Hunter On April 23, 2016 In Market Analysis

By Greg Hunter’s USAWatchdog.com (Special Release)

According to financial writer Bill Holter, we are getting to the end of the gold and silver price suppression game. Holter contends, “Because the inventories are so small, silver and gold registered categories (at COMEX) total about $1.2 billion. That’s nothing in today’s world. That’s less than one day’s interest the U.S. pays on its debt. I don’t see this going for a long time because inventories are so small. . . . This whole suppression game on gold and silver was brought about to protect the reserve currency, the dollar, because gold is a direct competitor with the dollar. If the silver market blows up, and I shouldn’t say if, it’s when the silver market blows up, that’s going to blow the gold market up, and that is basically going to expose the fact the West is a fraud, that the gold and silver markets were a fractional reserve Ponzi scheme. That’s going to blow confidence, and you are going to see derivatives blow up all over the world, and markets will be closed in a couple of days.”

Holter, who is also an expert on gold, goes on to warn, “The world runs on credit, and you going to Walmart or a grocery store each week, the stuff doesn’t appear on shelves, it gets there by several layers of credit. . . . Silver is a teeny tiny domino compared to the whole system, but it will lead to all the dominos coming down. China and Russia know this. It could be two days, two weeks or two months. It could blow before the market opens on Monday morning. You tell me when someone steps up to buy twice as much silver than COMEX can deliver, and that’s it. It is done. This is a seminal moment for the entire Western financial system. . . . It could be any day. The default is coming.”

If criminal bankers would not have conspired to suppress gold for the last several years, what would the price be today? Holter says, “You couldn’t have $5,000 or $10,000 gold and 0% interest rates. I think there would have been a panic into metals (gold and silver) by now because the price suppression has been used to hit people’s emotions. It’s been used to hurt their psyche. I think if they had not dumped all this paper to suppress the price, the pot would have already boiled, and there would have been a run on the banks and a run into the metals.”

So, if the banks would not have criminally suppressed the price of gold, we would already have a gold price that would be thousands of dollars higher than today. Holter says, “Yes, absolutely. Gold is real money that cannot default. That is what this is all about. When the whole system defaults, what’s going to be left standing–gold and silver, real money. They are no one else’s liability.”

Join Greg Hunter as he goes One-on-One with Bill Holter of JSMineset.com.

(There is much, much more in the video interview.)

Video Link

http://usawatchdog.com/comex-default-is-coming-soon-bill- holter/

-END-

A very important commentary from Andrew Maguire.  Basically he is stating correctly that the Chinese SGE  is taking liquidity away from the LBMA  and comex paper game. We have witnessed that the gold price is higher as it enters the Chinese fix.  It is now logical that a Chinese holder of gold can sell say 1 tonne of his hoard of 100 tonnes of gold and then buy a contract in London and NY at lower prices and then wait and take delivery to retrieve his lost 1 tonne.  This arbitrage will break the backs of the west:
a must listen to audio..
(courtesy Kingworldnews/Andrew Maguire)

Massive’ pressure for gold price reset, Maguire tells KWN

Section:

1:56p ET Friday, April 22, 2016

Dear Friend of GATA and Gold:

London metals trader Andrew Maguire says the physical gold market, spurred by China, is steadily taking control of the market from the Western derivatives mongers and “the pressures for a price reset are massive.” An excerpt from the interview is posted at KWN here:

http://kingworldnews.com/whistleblower-andrew-maguire-and-deutsche-banks…

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

 

END

 

The Hong Kong gold exchange is now working with the large Chinese bank, ICBC to launch gold services such as storage, and physical settlement in the free trade zone of Qianhai.

 

(courtesy South China Morning Post.GATA)

Hong Kong’s gold exchange to work with ICBC in launch of Shenzhen services

Section:

By Enoch Yiu
South China Morning Post, Hong Kong
Sunday, April 24, 2016

The Hong Kong gold exchange has teamed up with Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.

Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said the exchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold. The service is considered useful for companies using gold to fashion decorative items, as the yellow metal can be stored before being fashioned into jewellery and other gold products at factories in Shenzhen.

The local gold bourse plans to build a HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor, and related offices areas in Qianhai, however the project will take two years before completion, according to Cheung.

“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services,” Cheung said.

“ICBC’s Macau branch also handles gold import and export services. Teaming up with ICBC would connect Hong Kong, Macau, Qianhai and Shenzhen as a gold trading hub,” he added.

The Chinese Gold and Silver Exchange Society partnered with the Shanghai international gold board last year to provide gold trading and custodial services. Twenty-one Hong Kong financial companies are authorised to trade gold in Shanghai.

The proposed Qianhai services is viewed as beneficial to Hongkongers, as it will enable trade in Shanghai and physical settlement in Qianhai. The service is believed to be particularly useful to jewellery manufacturers with operations in Shenzhen. It will also be possible for large dealers to ship their bullion from Shanghai to Qianhai,

“The development of the gold industry will speed up the physical delivery process of gold trading in Hong Kong, Shanghai and Qianhai. Of China’s 3,000 gold-jewellery manufacturers, 70 per cent have factories in Shenzhen, The bonded warehouse in Qianhai, which is next to Shenzhen, would make it much easier for them to access gold when needed,” he said.

Currently, jewellery manufacturers must transport gold from Hong Kong and Shanghai to their factories in Shenzhen, in what can be a lengthy process.

Meanwhile, Hong Kong Exchanges and Clearing is planning to relaunch gold futures trading, according to Chief Executive Charles Li Xiaojia, although a launch date has not been announced.

This comes only a year after the HKEx scrapped its gold contract last year owing to low trading volume.

Cheung said he was not worried about competition from HKEx.

“The Chinese Gold and Silver Exchange has knowledge and experience in trading and settlement of physical gold for 105 years. We have an electronic trading platform and we have the system to deliver physical gold for end users. If you look at the historical record, it shows we can compete with rivals,” he said.

* * *

end

 

Zero hedge comments on the above story:

(courtesy zero hedge)

 

 

 

Hong Kong Is Building The Biggest Gold Vault And Trading Hub In The World

Less than a week after the official launch of the Chinese Yuan-denominated gold fix on the Shanghai Gold Exchange, a historic move which represents an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market” and which will gradually transform the market of paper gold trading, in the process shifting the global trading hub from west to east, overnight Hong Kong’s Chinese Gold and Silver Exchange (CGSE) Society revealed plans to do something comparable for physical gold when it announced plans for what may end up being the biggest gold vault in the world.

As reported initially by SCMP, the Hong Kong gold exchange has teamed up with the world’s biggest bank by both assets and market cap, China’s Industrial and Commercial Bank of China (ICBC) to launch gold trading services in the Qianhai free trade zone in September, providing custodial and physical settlement service targeted at commercial users and precious metals traders, according to the exchange head.

Haywood Cheung Tak-hay, the honorary permanent president of the 105-year-old Chinese Gold and Silver Exchange Society, said theexchange has teamed up with ICBC to use its gold vault in Qianhai as a temporary bonded warehouse for Hong Kong traders and manufacturers to store their gold.

A 2011 file photo of honorary permanent president Haywood Cheung Tak-hay
of the Chinese Gold & Silver Exchange Society (centre) while conducting duties
as then president. Photo: Edward Wong

The plan is to replace this temporary facility with a massive, HK$1 billion permanent gold vault facility, including a bonded warehouse, trading floor and related offices areas in Qianhai: that would make it among the largest if not the biggest gold vault and trading hub in the world. The project will take two years before completion, according to Cheung.

“ICBC is the largest of 15 gold importers authorised in mainland China. It is the largest bank in the mainland and has an international branch network which could provide bank clearing and settlement services.” It also appears to have an acute interest in the yellow metal.

Cited by SCMP, Cheung said that “ICBC’s Macau branch also handles gold import and export services. Teaming up with ICBC would connect Hong Kong, Macau, Qianhai and Shenzhen as a gold trading hub,” he added.

The new “hub” would capture not only the paper but physical trading as well – as gold storage across – in the wealthiest Pacific Rim countries where the world’s biggest demand for gold is currently to be found.

The Chinese Gold and Silver Exchange Society partnered with the Shanghai international gold board last year to provide gold trading and custodial services. Twenty-one Hong Kong financial companies are authorised to trade gold in Shanghai.

The official reason behind the proposed Qianhai facility is to benefit Hongkongers, as it will enable trade in Shanghai and physical settlement in Qianhai. The service is believed to be particularly useful to jewellery manufacturers with operations in Shenzhen. It will also be possible for large dealers to ship their bullion from Shanghai to Qianhai.

“The development of the gold industry will speed up the physical delivery process of gold trading in Hong Kong, Shanghai and Qianhai. Of China’s 3,000 gold-jewellery manufacturers, 70 per cent have factories in Shenzhen, The bonded warehouse in Qianhai, which is next to Shenzhen, would make it much easier for them to access gold when needed,” he said.

Currently, jewellery manufacturers must transport gold from Hong Kong and Shanghai to their factories in Shenzhen, in what can be a lengthy process.

The new facility will also allow China’s uber wealthy, should they decide they no longer feel “comfortable” storing their millions of gold in Shanghai, to gradually shift it to Hong Kong.

At the same, SCMP reports that the Hong Kong Exchanges and Clearing, which scrapped its gold contract last year owing to low trading volume, is planning to relaunch gold futures trading, according to Chief Executive Charles Li Xiaojia, although a launch date has not been announced.

Cheung said he was not worried about competition from HKEx.

It remans to be seen how successful the new hub will be or whether it will even be completed as scheduled, however one thing is increasingly clear: as the rest of the (developed) world is increasingly exiting the gold trading, bonding, custody and vaulting business, the interest in China, already the world’s largest importer of gold, has never been higher. One still wonders how long before China’s serial bubble obsession, which moved from housing, to stocks, to bonds, to commodities and back to housing all in under two years, resets its attention on gold – the same gold which with the help of soaring Chinese demand in mid-2011 saw the price of the yellow metal soar to all time highs just shy of $2000.

Gold Eagles from the USA mint triple from last yr due to the continued financial market deterioration

(courtesy Steve St Angelo/SRSRocco Report)

Continued Financial Market Deterioration Impacts Gold Eagle Sales In A Big Way

By: SRSrocco Report

The financial system is sitting on the edge of a cliff and an increasing number of investors are beginning to realize it.  I hear more and more evidence from contacts in the financial and precious metal industry that the U.S. banking industry and Dollar are in serious trouble.

While some of individuals believe that the Fed and U.S. Government will continue rigging the markets for the next decade or more, I believe we will witness a financial dislocation or black swan event within the next year.

As I have stated in several interviews, I sold my business and left the big city and moved to the country back in the beginning of 2007.   I knew the mortgage industry and economy were going to collapse.  What I didn’t know was the degree to which the Fed and Central banks could prop up the market.

It has been eight years now and the silver bullets have run out.  While the Fed and Central Banks will continue to rig the markets as best they can, the amount of debt overhanging the market has become unsustainable.  As Central banks push interest rates negative, it just motivates more investors to get into gold and silver.

Last week there were several emergency Fed meetings followed by China’s launching of its new gold yuan benchmark this Tuesday.   Also, according to Global Research News:

China has reportedly decided ”there can be no conversion of gold-backed Yuan to or from US dollars.”  What China fears is that many countries around the world will want to trade their reserve US dollars  for the new Yuan, leaving China with mountains of worthless US dollars.  China already has several trillion in US dollar reserves and does not want or need more.

If the news reports that China will not allow a conversion of its new gold-backed Yuan to or from U.S. Dollars, this is indeed serious trouble for the United States Empire.  Which is the very reason I believe there were emergency Fed meetings last week.  Even though there hasn’t been any major impact via the mainstream media, the ramifications are likely to become public in due time.

Gold Eagle Sales Surge 3 Times Higher In April

The telltale sign that something isn’t right in the financial industry is a surge in Gold Eagle sales.  Last year, total Gold Eagle sales for April equaled 29,500 oz.  However, in just the first three weeks of April this year, Gold Eagle sales have reached 87,500.  This is three times last years figures and we still have another week remaining in the month:

Gold-Eagle-Sales-April-2015-vs-2016

We can see in the chart above, the weekly sales in the second (33,000 oz) and third week (34,000 oz) of April surpassed the total for the month last year.  Furthermore, April’s sales so far of 87,500 oz are nearly two-and-a-half times the 38,000 oz sold last month.

Now, if we compare total Gold Eagle sales for 2016 versus the same period last year, we have the following result:

Gold-Eagle-Sales-JAN-APR-2015-vs-2016

The U.S. Mint’s Gold Eagle (JAN-APR) sales are 90% higher at 333,000 oz compared to the same period last year of 175,500 oz.  If demand for Gold Eagles continues to remain strong for the remainder of the year, we could see total sales exceed 1 million oz.   This figure hasn’t been seen since 2011 when total Gold Eagle sales reached 1 million oz.

Here are the following annual Gold Eagle Sales totals (troy oz):

2007 = 198,500

2008 = 865,500

2009 = 1,435,000

2010 = 1,220,500

2011 = 1,000,000

2012 = 753,000

2013 = 856,500

2014 =524,500

2015 = 801,500

2016 Ytd = 333,000

With the Chinese recent launch of their new gold-backed Yuan, the days of U.S. Dollar hegemony are numbered.  When the world starts dumping U.S. Treasuries and Dollars, investors better make sure they have already own physical gold and silver.

-END-

 

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

 
 

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.4927 / Shanghai bourse  CLOSED DOWN 12.28  OR 0.41% / HANG SANG CLOSED DOWN 162.60 OR 0.76% 

2 Nikkei closed DOWN 133.19 or 0.76%%/USA: YEN RISES TO 111.09

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 94.88/Euro UP to 1.1254

3b Japan 10 year bond yield: RISES   TO -.065%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 111.09

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  43.32  and Brent: 44.78

3f Gold UP  /Yen UP

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

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

3h Oil DOWN for WTI andDOWN 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 0.219%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 10.11%/: 

3j Greek 10 year bond yield FALL to  : 8.60%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1233.90/silver $16.88 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 47 /100 in  roubles/dollar) 66.06

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 .9745 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0968 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 FALLS to  + .219%

/German 8 year rate negative%!!!

3s The Greece ELA NOW a 71.4 billion euros,

The bank withdrawals were causing massive hardship to the Greek bank. the Greek referendum voted overwhelming “NO”.  Next step for Greece will be the recapitalization of the banks and that will be difficult.

4. USA 10 year treasury bond at 1.88% early this morning. Thirty year rate  at 2.70% /POLICY ERROR)

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

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

Futures Rebound Off Lows Following Chinese Intervention; Oil Dips Ahead Of Fed, BOJ

Ahead of two key central banks events this week, the Fed announcement on Wednesday – in which Yellen is expected to do nothing and most likely will continue the dovish relent first seen a month ago – and then the BOJ on Thursday (which also mark the anniversary of the second longest and most artificial bull market in history) where Kuroda is increasingly expected to shock with something even more ridiculous, global shares have fallen modestly around the world as oil declined on signs a global surplus of crude is likely to persist. The yen strengthened with gold, reflecting investor caution before central bank meetings this week in the U.S. and Japan.

Futures are currently unchanged, but the E-mini was down as much as 12 points less than two hours earlier after the European open when this time it was up to the PBOC to intervene in global markets by pushing the Yuan higher (selling USDCNY via intermediary banks) sending global stocks sharply higher off session lows and leaving the S&P futures virtually unchanged. As Bloomberg reported, there has been increasing USD/CNY selling in afternoon session as Dollar Index edged lower. This is the PBOC entering the building and levitating stocks.

U.S. crude futures erased Friday’s gains on Saudi Arabia’s plan to complete an expansion of the Shaybah oilfield by the end of May (allowing the world’s largest exporter to maintain total capacity at 12m b/d) coupled with concern a global glut will be prolonged as Mideast producers boost supplies. Additionally, Iran has increased output by 1m b/d since sanctions lifted in January, according to Iran’s Oil Minister Bijan Namdar Zanganeh. Then the other upside catalyst, Kuwait’s now forgotten oil strike, has been fully offset as Kuwait oil output returns to 3m b/d after strike ends. 

Then consider that as we reported over the weekend, what until late January was record oil shorts has flipped to record oil longs, suggesting positioning is now stretched and a downside move may be imminent.

Combined, these indicate why there is little reason for significant oil upside from here: “We’re still in oversupply,” Wayne Gordon, executive director for commodities at UBS AG Wealth Management, told Bloomberg TV. “We don’t think that the production cuts that we’re seeing in the U.S. and non-OPEC countries are large enough yet to structurally support the oil price higher. For the next couple of months we’re going to the downside again.”

But while oil prices will be important, and especially whether the support level can defend the price, the market’s attention will be focused entirely of the Federal Reserve on Wednesday and Bank of Japan on Thursday. While the Fed is forecast to refrain from raising borrowing costs, investors will be on the lookout for shifts in guidance. Most economists predict monetary stimulus will be stepped up by the BOJ. Earnings are due from companies including Apple Inc. as well as China’s largest banks this week.

As the chart below shows, the rebound from the February lows has been all about central banks. What can they do to sustain the bounce in the future?

 

Energy companies and miners led declines in the Stoxx Europe 600 Index, which headed for its biggest loss in a week, as industrial metals also sank. The yen was the best-performing major currency, after tumbling on Friday by the most since 2014. Italian bonds fell with Spain’s, extending a decline from last week. The Stoxx Europe 600 Index dropped 0.6 percent. Anglo American Plc and Rio Tinto Group lost at least 3.5 percent, leading miners to the biggest decline of the 19 industry groups on the equity benchmark. BP Plc dragged oil companies lower as crude slid.

Automakers extended their drop into a second day, with Volkswagen AG and Daimler AG falling more than 1.5 percent. Royal Philips NV slid 4.7 percent after saying it is considering an initial public offering of its lighting business, as it reported better-than-estimated quarterly profit.

Standard & Poor’s 500 Index futures retreated 0.1 percent, indicating U.S. equities will decline after a lackluster end to last week on investor concern about earnings. Nasdaq 100 contracts lost 0.4 percent after technology shares tumbled the most in two weeks on Friday amid disappointing results from Microsoft Corp. and Google parent Alphabet Inc.

On the relatively quiet US calendar today, we will get new home sales data later and the Dallas Fed.

Global Market Snapshot

  • S&P 500 futures down 0.1% to 2084
  • Stoxx 600 down 0.6% to 346
  • FTSE 100 down 0.3% to 6294
  • DAX down 0.5% to 10277
  • German 10Yr yield down 1bp to 0.22%
  • Italian 10Yr yield up 2bps to 1.49%
  • Spanish 10Yr yield up 1bp to 1.61%
  • S&P GSCI Index down 1% to 344.4
  • MSCI Asia Pacific down 0.4% to 133
  • Nikkei 225 down 0.8% to 17439
  • Hang Seng down 0.8% to 21304
  • Shanghai Composite down 0.4% to 2947
  • US 10-yr yield down less than 1bp to 1.88%
  • Dollar Index down 0.2% to 94.92
  • WTI Crude futures down 1.3% to $43.30
  • Brent Futures down 1.1% to $44.654
  • Gold spot down less than 0.1% to $1,232
  • Silver spot down 0.5% to $16.89

Global Headline News

  • Ball to Sell Beverage-Can Assets to Ardagh for $3.42 Billion: Will sell 17 can factories in the U.S., Europe and Brazil, plus other facilities, assets to be sold had rev. of $3b last yr
  • Second U.S. Bid to Force Apple to Unlock Phone Ends in a Whimper: The U.S. government said it no longer needs Apple’s assistance to get into an iPhone used by a New York drug dealer
  • Apple’s IPhone Maker Showcases Labor Changes to Silence Critics
  • Yahoo Said to Narrow Field of Bidders as Soon as Next Week: Received more than 10 first-round offers for core unit, initial bids valued Yahoo’s core business at about $4b-$8b
  • Halliburton Reports $2.1 Billion Charge on Job Cuts, Assets: Company delays earnings as it seeks to wrap Baker Hughes deal
  • Carmakers Brace for Tough Scrutiny After Emission Scandals: Carmakers have to be clearer about the way they certify their fuel economy and emission ratings: Daimler CEO Dieter Zetsche
  • Williams Northeast Natural Gas Line Denied New York Permit: Proposed $925m Constitution natural gas pipeline was denied a key environmental permit from New York state regulators
  • Proposed Bank Pay Rules in U.S. May Boost Salaries, Deter Hiring: Changes would have biggest effect on early career top earners
  • Oil Bulls Plunge Into Market as U.S. Gasoline Demand Hits Record: Hedge funds boost bullish wagers to highest since May: CFTC
  • GE Seeks to Raise as Much as $922 Million in Czech Bank Unit IPO: Offering 260.6m of existing shares, or 51% of GE Money Bank at indicative price of 68 koruna ($2.83) to 85 koruna each
  • Obama Said to Be Sending 250 More Military Personnel to Syria: Move comes a week after U.S. announced more forces for Iraq
  • Disney’s ‘Jungle Book’ Holds Box-Office Lead Over ‘Huntsman’: “The Jungle Book” collected $60.8m in its second weekend at theaters in the U.S. and Canada: ComScore
  • Ford CEO Assumes Apple Working on Car, May Become Rival: BBC: Co. working on assumption that major rivals in future may not be General Motors or Chrysler but Google and Apple, BBC reports
  • N.Y. Times Said to Cut Hundreds of Jobs This Year: NYP
  • Google CEO Said to Plan Corporate Incubator: The Information
  • UMG, Sony Music, Warner Music Fight YouTube on Filtering: FT
  • Disney-Alibaba’s Web-Streaming Service Halted in China: SCMP

Looking at regional markets, Asian stocks began in a lacklustre fashion amid a cautious tone ahead of key policy meetings this week from FOMC, BoJ and RBNZ, while market closures due to ANZAC day also contributed to the lack of buying. Nikkei 225 (-0.8%) snapped its 4-day win streak as JPY recovered from some of Friday’s slump, while Sony shares plunged around 5% in a continuation of the weakness seen after delaying its earnings forecast. Shanghai Comp (-0.4%) is also negative despite the PBoC continuing to inject ample funds into the market as rising debt concerns clouded sentiment with total debt said to have risen to 237% of GDP in Q1. 10yr JGBs are lower as participants booked profits and the BoJ refrained from its bond-buying operations.

Elsewhere, Japanese PM Abe ordered the compilation of a supplementary budget for rebuilding areas seriously affected by the recent earthquakes. In China, PBoC Vice-Governor Chen said that financial institutions are facing expanding credit risks.

Top Asian News

  • The Tokyo Whale Is Quietly Buying Up Huge Stakes in Japan Inc.: BOJ is an estimated top 10 owner in about 90% of Nikkei 225
  • Shanghai CBRC Halts Banks’ Business With 6 Property Agencies: Central bank said unauthorized mortgage loans increased risks
  • Earliest China Economic Data Suggest Recovery Gathering Pace: Private gauges from 4 providers all picked up from March
  • BOC Aviation Said to Gauge Demand for Up to $1.5 Billion IPO: Co. plans to start taking investor orders in mid-May
  • Costliest Crudes Get a Lift as Cars Crowd Beijing And Mumbai: Light oils seen rising versus heavy grades on gasoline demand

In Europe, markets have kicked off the week in a shaky fashion so far, with European stocks trading firmly in the red (Euro Stoxxx -0.7%), slipping lower since the open. Sentiment has been dampened by lower than expected Ifo readings, while the likes of EDF (-7.9%) and Philips (-4.7%) underperform on stock specific news. Material names are also among the worst performers amid downside in the commodity complex, with energy also softer today as WTI Jun’16 futures slip back below USD 43.50/bbl.

In tandem with the downside in equities, Bunds trade higher this morning, with June’16 futures above 162.50. In terms of European supply, this week is set to see a sizeable drop to around EUR 7bIn from the EUR 22.5bIn that hit the market last week, while from a redemption perspective, today is set to see EUR 30bIn of principals due to be paid by France.

Top European News

  • Philips Lighting IPO Looking More Likely as Profit Rises: Leaning toward holding an IPO of its historic lighting business after 1Q profit beat estimates and an attempt at a private sale has so far been unsuccessful
  • German Business Confidence Unexpectedly Weakened in April: Ifo’s business climate index fell to 106.6 in April from 106.7 the previous month; median estimate was for increase to 107.1
  • Deutsche Bank Co-CEO, Ex-Officials Cleared in Munich Fraud Case: Co-CEO Juergen Fitschen and four former bank officials were acquitted of charges that they lied to judges during a more than 14-year-old dispute with a German media mogul
  • EDF Falls After Announcing Share Sale, Deeper Cuts, Divestments: To sell about EU4b billion of new shares and deepen cost cuts
  • Cinven Said to Be Leading Bidder for TUI Hotelbeds Booking Unit: Tour operator may announce deal as early as this week
  • Nordic Banks Warn Brexit Adds to Extreme Negative Rate Scenarios: Both Nordea and Handelsbanken, say a U.K. exit from the EU would push Denmark even further away from positive rates

In FX, there is not too much to get excited about this Monday, with the multiple event risks ahead causing some 2 way trade between the broader risk tone and USD sentiment. The FOMC on Wednesday is the man event, and although many expect the Fed to stay on hold for now, their rhetoric will be keenly monitored. USD/JPY is the focal point though, as the BoJ meeting has been built up on recent talk of negative rates being extended through the lending program, but a fair chunk of this has now been priced in , and with stocks coming off better levels, we have seen the lead spot rate giving up almost 1 JPY off the overnight highs at 111.90. The commodity currencies are also a little heavy this morning, but AUD is proving a little more resilient. CAD is underperforming with a slippage in Oil prices, though little momentum on the market at the moment. Cable still unable to put in a stronger test on 1.4500, but looks well supported on dips. German IFO the only major data release this morning, but despite coming in a touch softer vs expectations, had little impact on the EUR.

In commodities, oil has managed to trade above the USD 43.00/bbl level after hitting this support level overnight. It then met some pretty strong resistance at USD 43.50/bbl and is on its way back down to test USD 43.00/bbl once more. Gold initially trickled higher in EU trade as risk off sentiment grips the markets up as much as USD 7.00 at one stage before then ebbing in to negative territory. Elsewhere, copper and iron-ore prices were down amid cautiousness ahead of upcoming key risk events and after Chinese commodity exchanges raised transaction fees late last week to curb speculation.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities start the week off on the backfoot in a week set to be dominated by risk ahead of FOMC, BoJ and RBNZ meetings
  • German IFO the only major data release this morning, but despite coming in a touch softer vs expectations, had little impact on the EUR.
  • Highlights Include US New Home Sales and potential comments from ECB’s Constancio and Coeure
  • Treasuries rise during overnight trading amid equity weakness and lower crude oil; Treasury to sell $26b 2Y notes, WI 0.830%; last sold at 0.877% in March, compares with 0.752% in February.
  • German business confidence unexpectedly deteriorated in the latest sign that Europe’s largest economy is losing some of its momentum
  • Mario Draghi signaled last week that policy is going on hold; a pause that may hand Yellen an opportunity to raise interest rates in coming months, by reducing the risk of a sharp rally in the dollar if the policies of the two central banks conspicuously diverged
  • Norway increased its withdrawals from the nation’s wealth fund again in March, running ahead of estimates made by the central bank just two months ago
  • With the challenges to Japan mounting, an increasing number of officials at the central bank consider it’s time for the government to do more to spur economic expansion, according to people familiar with discussions at the BOJ
  • While the BOJ’s name is nowhere to be found in regulatory filings on major stock investors, the bank’s exchange-traded fund purchases have made it a top 10 shareholder in about 90 percent of the Nikkei 225 Stock Average, according to estimates compiled by Bloomberg from public data
  • Japan’s biggest life insurers will be looking for returns in corporate bonds and infrastructure lending in the year ahead, as central bank stimulus clouds the outlook for local sovereign debt
  • Chinese banks’ surging lending to non-bank financial institutions such as fund managers may pose a “black swan” risk for the nation’s financial system, according to Royal Bank of Scotland Group Plc
  • Sovereign 10Y bond yields mostly lower; European, Asian equity markets lower; U.S. equity-index futures fall. WTI crude oil, metals mostly higher

 

DB’s Jim Reid concludes the overnight wrap

With regards to the post-FOMC statement there is some debate as to whether the Fed will add back the “balance of risks” sentence which would re-open the door for a June rate hike. We don’t think they will do either but over the past week the probability of a June hike has increased from 14% to 23% (Bloomberg). One would expect the statement to be more confident given improved international conditions and a softer dollar of late but a Yellen led Fed will likely want to see more evidence of a US recovery before increasing the hawkish rhetoric again. The data is still ambiguous and it’s fair to say the global markets recovery is as much to do with the reduction of systemic risk (e.g. healthier $, EM, Oil and China news/moves) perhaps due to the early year Fed relent as it is to do with a strong pick up in growth. So the Fed continue to be trapped in our opinion.

Outside of this, Thursday’s first read of Q1 US GDP will be a key if backward looking release but one that will likely confirm why Yellen remains on the cautious side. DB expect 0.5% (Consensus 0.6%, Atlanta Fed at 0.3%). Durable goods (Tuesday) and the trade balance (Wednesday) might lead to a last minute fine tuning of Q1 estimates.

The BoJ meeting on Thursday could have been a bigger deal a couple of weeks ago when global markets were seeing renewed weakness. However since April 8th the Nikkei is up 13% and this means further action now is finely balanced. We’re also pretty much back to levels seen just before they cut rates into negative territory back at the end of January. Given the initial negative reaction to this base rate cut, the BoJ may wait to see more evidence as to the impact of this momentous move before calibrating policy further. They have a little breathing space for now but it feels to us that they will have to go even more unorthodox before too long in terms of policy. The consensus (as polled on Bloomberg 15-21 April) is fairly split on whether they’ll act this Thursday with a narrow majority (23 out of 41 economists) expecting further easing although 90% expect action by July. 19 expect an increase in ETF buying, with 8 expecting additional bond buying and the same number expecting a further cut in rates. Obviously some of these expect a combination of the above but 18 expect no new policy moves. There has also been some talk (after this polling) of the BoJ helping financials lend by offering negative borrowing costs on selected loans – a bit like that seen from the ECB in March. So all eyes on Thursday to see if they’re yet ready to try to ease the pressure on banks that their January cut created.

Asian markets are reasonably quiet overnight but are starting the weak on the softer side risk wise. The Yen has bounced back +0.6% after a -2.1% fall on Friday after the story discussed above re BoJ helping financials. The Nikkei is down -0.6% as we type (first time for 5 days) with the Shanghai Comp -0.8%. It’s a holiday in Australia and NZ.

Recapping markets on Friday, the S&P 500 closed flat after a late day rally (+0.9% on the week). The NASDAQ had its worst week since early February after weak results from Alphabet and Microsoft and poor guidance from the likes of Netflix. European equity markets closed down on Friday (STOXX -0.32%), with automobile stocks dragging the index lower after Daimler (-5.12%), Peugeot (-1.74%) and Volkswagen (-1.73%) were further scrutinised as part of the probe into the vehicle emissions scandal. Despite posting losses on both Thursday and Friday, equities were still positive on the week with gains of +1.65%. Over in credit markets, iTraxx Main was slightly wider on the Friday (+0.9bps) while Crossover widened by nearly +3bps. Over the course of the week the indices tightened by -5bps and -24bps respectively, with the bulk of the tightening attributable to the post-ECB rally. At the other end of the risk spectrum, 10Y Bund yields were slightly lower on Friday at 0.231% (-0.8bps) but ended the week over 10bps higher.

Friday was a big day in terms of PMIs. We saw the flash April PMI numbers out of the Euro area, with prints somewhat disappointing with Eurozone manufacturing (51.5 vs. 51.9 expected), services (53.2 vs. 53.3 expected) and composite numbers (53.0 vs. 53.3 expected) all posting marginally below consensus. The general levels were however broadly unchanged on the month, with manufacturing PMIs softening slightly (51.5 vs. 51.6 previous) while services PMIs were marginally higher (53.2 vs. 53.1 previous). The details also painted a more positive picture with composite new orders and employment improving in April, while the composite input prices rose by 1.6 points over 50. German manufacturing PMIs surprised on the upside (51.9 vs. 51.0 expected) but composite PMIs disappointed (53.8 vs. 54.2 expected). Meanwhile France saw its composite PMI beat estimates (50.5 vs. 50.2 expected) while its manufacturing PMI clocked in below expectations (48.3 vs. 49.9 expected).

We also saw the release of the flash April manufacturing PMIs in the US which painted a much more negative picture. The numbers missed expectations (50.8 vs. 52.0 expected; 51.5 previous) and eased to their lowest levels since September 2009. Softer rates of output combined with a slowdown in new business growth and declining order book backlogs proved to be the main drags on the index. So a bit of a worry given the bounce back in activity seen as Q1 progressed.

Kicking off the proceedings this morning we will see the April IFO survey readings out of Germany, shortly followed by the latest CBI orders data in the UK. This afternoon in the US the only releases of note will be March new home sales and the Dallas Fed manufacturing survey.

Away from the data, the only Fedspeak of note comes on Friday when Kaplan is due to speak. The BoE’s Cunliffe is due to speak on the same day. Away from this the other big focus this week will of course be earnings. 188 S&P 500 companies are set to report, or 33% of the market cap, with the big highlights being AT&T (Tuesday), eBay (Tuesday), Apple (Tuesday), Facebook (Wednesday), Boeing (Wednesday), Amazon (Thursday), Ford (Thursday), Exxon Mobil (Friday) and Chevron (Friday). In Europe we’ll get 102 Stoxx 600 company reports.

end

ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed DOWN BY 12.28 POINTS OR 0.41%  /  Hang Sang closed DOWN 162.60 OR 0.76%. The Nikkei closed DOWN 133.19 POINTS OR 0.76% . Australia’s all ordinaires  CLOSED DOWN 0.69%. Chinese yuan (ONSHORE) closed DOWN at 6.4927.  Oil FELL  to 43.72 dollars per barrel for WTI and 44.78 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.5071 yuan to the dollar vs 6.4927 for onshore yuan.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

Through purchases of their ETF’s, the Bank of Japan is now a top 10 owner of an unbelievable 90% of Japanese stocks:

(courtesy zero hedge)

In Shocking Finding, The Bank Of Japan Is Now A Top 10 Holder In 90% Of Japanese Stocks

The latest shocking example of just how intertwined central banks have become in not only Treasury and corporate bond markets and their respective “valuations”, but also in stocks, comes courtesy of the Bank of Japan which days ahead of an announcement which may see it double its ETF purchases from the current JPY3.3 trillion to JPY7 trillion or more (if Goldman is correct) has just been revealed to be a top 10 holder in about 90% of all Japanese stocks!

As Bloomberg puts it, “they may not realize it yet, but Japan Inc.’s executives are increasingly working for a shareholder unlike any other: the nation’s money-printing central bank.”

While the Bank of Japan’s name is nowhere to be found in regulatory filings on major stock investors, the monetary authority’s exchange-traded fund purchases have made it a top 10 shareholder in about 90 percent of the Nikkei 225 Stock Average, according to estimates compiled by Bloomberg from public data. It’s now a major owner of more Japanese blue-chips than both BlackRock Inc., the world’s largest money manager, and Vanguard Group, which oversees more than $3 trillion.

 

Under the BOJ’s current stimulus plan, the central bank buys about 3 trillion yen ($27.2 billion) of ETFs every year. While policy makers don’t disclose how those holdings translate into stakes of individual companies, estimates can be gleaned from publicly available central bank records, regulatory filings by companies and ETF managers, and statistics from the Investment Trusts Association of Japan. The BOJ declined to comment on Bloomberg’s findings.

The stunning chart showing just how deeply involved in the “fair value” of the Nikkei is shown below: it needs no explanation.

 

As Bloomberg adds, the estimates “reveal a presence in Japan’s top firms that’s rivaled by few others, with the BOJ ranking as a top 10 holder in more than 200 of the Nikkei gauge’s 225 companies. The central bank effectively controls about 9 percent of Fast Retailing Co., the operator of Uniqlo stores, and nearly 5 percent of soy sauce maker Kikkoman Corp. It has an estimated shareholder rank of No. 3 in both Yamaha Corp., one of the world’s largest makers of musical instruments, and Daiwa House Industry Co., Japan’s biggest homebuilder.”

The news follows the well-known recent disclosure that the BOJ is already an owner of more than half of all Japanese ETFs.

 

What many had forgotten is that by directly buying and holdings ETFs, the BOJ also becomes a holder of the underlying stocks. It was just unclear to what extent.

Now we know.

But that’s just the start. If the BOJ accelerates its ETF purchases this week to an annual rate of 7 trillion yen, as Goldman predicted last week, the central bank could become the No. 1 shareholder in about 40 of the Nikkei 225’s companies by the end of 2017,according to Bloomberg calculations that assume other major stakeholders keep their positions unchanged. It could hold the top ranking in about 90 firms using HSBC Holdings Plc’s estimate of 13 trillion yen.

This is simply unprecedented, and confirms that some time over the next several years, the Bank of Japan will not only own a majority of the Japanese bond market, but will be the outright owner of virtually all Japanese stocks!

Furthermore, recall what we have been saying ever since 2010, namely that central banks are nothing more than glorified risk-free hedge funds (because they can always print more funds if they need them)? Well, back then it was another conspiracy theory. Now it is an accepted fact: “When you see the numbers, you see it’s quite a decent holding,” said Nader Naeimi, the Sydney-based head of dynamic markets at AMP Capital Investors Ltd., which oversees about $120 billion. “Central banks are becoming big hedge funds.

But the most farcical is the defense by the BOJ’s head whose only mission has now been exposed as one of propping up the Japanese stock market: while the BOJ’s ETF buying has come under fire from opposition lawmakers, Governor Haruhiko Kuroda has repeatedly defended the program, saying as recently as last week the purchases aren’t big relative to the size of Japan’s stock market.

With this new data he may want to reconsider: at an estimated 8.6 trillion yen as of March, the BOJ’s holdings amount to about 1.6 percent of the total capitalization of all companies listed in Japan. That compares with about 5 percent held by the nation’s Government Pension Investment Fund. The central bank’s use of large-cap ETFs means its positions are concentrated, with less impact on the thousands of Japanese companies outside benchmark indexes.

That said, the BOJ is not alone. The U.S. government spent $245 billion to prop up banks during the global financial crisis in 2008, earning a profit of about $30 billion on their investments as the industry recovered. At the height of the Asian Financial Crisis in August 1998, Hong Kong bought HK$118 billion ($15.2 billion) of local shares to defend its currency peg, helping to fuel a rally that allowed it to dispose of the entire stake within five years.

The only difference is that in the US, the Fed is leery of disclosing just how it manipulates equities (via Citadel, at key downward inflection points). In Japan, it has been well-known for nearly a decade that the BOJ buys equities via ETFs and REITs outright.

This is not only troubling but dangerous: the longer the BOJ’s buying persists, the bigger the risk that market prices will detach from fundamentals. Assuming Goldman Sachs’s prediction for more stimulus proves correct, the BOJ could end up owning a quarter of Mitsumi Electric Co., a supplier to Apple Inc., and 21 percent of Fast Retailing by the end of 2017, estimates compiled by Bloomberg show

Then there is the question of corporate governance, something hedge fund activists such as Dan Loeb have been railing against for years:

With such large stakes sitting in index-tracking ETFs that lack a mandate to scrutinize company performance, the BOJ’s intervention could also hamper attempts to improve Japan’s corporate governance, according to Nicholas Benes, representative director of the Board Director Training Institute of Japan.

The central bank said in December that it plans to buy additional ETFs that weigh holdings based on metrics that include research spending and employee wage growth, but the BOJ hasn’t started those purchases yet because the funds don’t exist.

As Bloomberg adds, while bulls have cheered the BOJ’s efforts to lift share prices, the central bank is bound to reverse its intervention at some point, a potential source of instability that Sumitomo Mitsui Trust Bank Ltd. says is increasingly on the minds of long-term investors. “Of course, you can argue that we’re in abnormal times so we have abnormal measures,” said Ayako Sera, a Tokyo-based market strategist at Sumitomo Mitsui. “The biggest question in the future will be: What happens when the BOJ exits?

What exit? As Goldman said in its latest note yesterday predicting that Japan may unveil helicopter money as soon as this week, it said the BOJ simply has no exit any more, and will continue buying risk assets at an ever faster pace until it all comes crashing down.

The implications of a creeping central bank owner are widespread: “to critics already wary of the central bank’s outsized impact on the Japanese bond market, the BOJ’s growing influence in stocks risks distorting valuations and undermining efforts to improve corporate governance. Proponents, meanwhile, say the purchases provide a much-needed boost to investor confidence.”

Which at its core, is all central banking is about: preserving confidence, and intervening to make sure stocks don’t crash. This until several years ago was “conspiracy theory.” It is now conspiracy fact.”

For those who want shares to go up at any cost, it’s absolutely fantastic that the BOJ is buying so much,” said Shingo Ide, chief equity strategist at NLI Research Institute in Tokyo. “But this is clearly distorting the sanity of the stock market.

At some point, this charade has to end. There will be no more monetizable assets and unless the government intends to simply issue one liability (a bond) and buy it with another liability that they also print (fiat money) for the sheer sake of keeping the ponzi scheme alive (i.e. issuing debt for the sole purpose of perpetuating QE), “failed state” status is right around the corner.

We close with two quotes and one searing image.

Paul Krugman: “Why does the tide finally seem to be turning? Partly, I think, it’s just a matter of time; after six years it’s becoming hard not to notice that the anti-Keynesians have been wrong about everything. And the refusal of almost everyone on the anti-Keynesian side to admit any kind of error has gradually made them look ridiculous.”

 

Haruhiko Kuroda: “I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’ Yes, what we need is a positive attitude and conviction.”

end
The following is something that Goldman Sachs is not very happy about, the huge rise in the yen and it continued today. We have witnessed the hedge funds do net long on dollar claims  (short the yen) as they loaded the boat on one side.  Now hedge funds are going net short the dollar.  Is Goldman Sachs going to wrong again?
(courtesy zero hedge)

Yen Surges Most In 3 Weeks After Goldman’s Short Reco

Just 24 hours after Goldman Sachs suggests a looming collapse in the Yen (USDJPY to 130), the Japanese currency is rallying by the most in 3 weeks against the USDollar. Having been hammered on Friday, Yen has rallied back over 100 pips this morning (pushing USDJPY back to a 110 handle) as a potential short-USDollar squeeze begins (with hedge funds net short the greenback for the first time since July 2014).

Ironic really since we specifically noted that:

Of course, the most likely outcome here is that Goldman’s FX team will simply be dead wrong as has been the consistent case for months, and while Japan may indeed unveil helicopter money as soon as this week (after all Kuroda is known best for succumbing to peer pressure when it comes to monetary policy) the result may be not only a further plunge in JGB yields, but a surge in the Yen.

What better way to instigate a squeee then wait for the biggest short USD position in years and put out this recommnedation?

end

b) CHINA ISSUES

 

Not only is China hoarding gold but they are also hoarding crude at the fastest pace on record!

(courtesy zero hedge)

“China Is Hoarding Crude At The Fastest Pace On Record”

In the aftermath of China’s gargantuan, record new loan injection in Q1, which saw a whopping $1 trillionin new bank and shadow loans created in the first three months of the year, many were wondering where much of this newly created cash was ending up.

We now know where most of it went: soaring imports of crude oil.

We know this because as the chart below shows, Chinese crude imports via Qingdao port in Shandong province surged to record 9.86 million metric tons last month based on data from General Administration of Customs.

As Energy Aspects pointed out in a report last week, “Imports through Qingdao surged to another record as teapot utilization picked up, leading to rising congestion at the Shandong ports.”

And sure enough, this kind of record surge in imports should promptly lead to another tanker “parking lot” by China’s most important port. This is precisely what happened when according to reports, some 21 crude oil tankers with ~33.6 million bbls of capacity signaled from around Qingdao last Monday, according to data compiled by Bloomberg. 12 of those vessels, with about 18 million bbls, were also there 10 days earlier, data show.

As Bloomberg adds, port management had met to discuss measures to ease congestion, citing an official at Qingdao port’s general office, however for now it appears to not be doing a great job. Incidentally, putting Qingdao oil traffic in context, last year the port handled 69.9 million metric tons overseas oil shipments, or ~21% of nation’s total crude imports, more than any other Chinese port.

So what caused this surge in demand? The answer is China’s “teapot” refineries.

According to Oilchem.net, the operating rate at small refineries in eastern Shandong province rose to 51.84% of capacity as of the week ended Apr. 22. The utilization rates climbed as various teapot refiners completed maintenance and restarted production.

How much of a boost in oil demand did teapot refineries represent? Well, the current operating run rates is averaging 50.42% this tear compared to just 37.72% a year ago, Bloomberg calculated.

Notably, this may be just the beginning of China’s. As Bloomberg adds today, China, the world’s second-biggest crude consumer, may be poised for another increase in imports after the number of supertankers bound for the Asian country’s ports rose to a 16-month high amid signs it’s stockpiling.

There were 83 headed to China, the most since December 2014, according to a ship-tracking snapshot compiled by Bloomberg on Friday. Assuming standard cargo sizes, they would be able to deliver about 166 million barrels.

Others also noticed China’s ravenous demand. As JPM reported in a note last week, China crude imports rose in February and March after dip in January. The total crude imports (a number which certainly should be taken with a salt mine) was 7.7 million bpd in March, up 21.6% compared to last year. Furthermore, 2016 YTD imports are running 12.3% above the same period in 2015.

Where is China getting the most of its oil? Cue JPM:

Atlantic Basin, Russian imports strong in March at the expense of Middle East. In total, Atlantic basin–sourced crude was 28% of total imports, up from 25% the month prior, while Middle East–sourced crude was 44% of imports, down from 51% the previous month.Russian imports were the second highest on record at 4.6 million tons (up from 4.1 million tons in February), well above Saudi Arabia (4.0 million tons). Russia imports were 14% of total Chinese imports. The strength in Atlantic Basin exports primarily came from Venezuela, Colombia, and Brazil, which were all at or near record high.

It appears that at least China is delighted to take advantage of the ongoing OPEC production chaos and massively oversupplied oil market.

Furthermore, as ClipperData reported moments ago, Chinese waterborne crude oil imports are on pace for another record high this month.

However, while China is importing at a near record pace, is there also an offsetting increase demand? There was early in the year as shown in the chart below, but as of March the answer appears to be no. According to JPM, apparent oil demand was down slightly. Because while crude oil processed by Chinese refineries remained high in March, roughly unchanged month-over-month, after accounting for net product exports, apparent oil demand was 10.3 mbpd in March, down 2.3% from February and down 2.5% year-over-year.

So supply is soaring, demand is declining, which means just one thing: “China is hoarding crude at the fastest pace in at least a decade”, according to Bloomberg, filling up excess inventory capacity at a record pace.

The punchline:

The nation added 787,000 barrels a day to stockpiles in the first quarter, the most for the period since at least 2004 when Bloomberg started calculations based on customs data. Its imports climbed in March from countries including Iran, Venezuela and Brazil.

For now – with the record credit impulse still reverberating across its economy – China’s demand is relentless, and is keeping virtually all producers busy: “we’ve seen crude buying in recent months coming from a very broad range of sources, more coming from Latin America and more from Europe,” said Richard Mallinson, an analyst at Energy Aspects Ltd. in London. Shipments are being boosted by so-called teapot refineries and may also be advancing in preparation for the end of refinery maintenance programs in China, he said.

However, the party may be ending.

China’s pace of imports may drop substantially in coming weeks as the teapot operating rate starts to drop next week, as many refineries are scheduled to start repairs, just like in the US.

Meanwhile, the oil production glut persists, and if suddenly China can no longer take advantage of all those tankers overflowing with oil for the next few months as teapot maintenance takes place, the world will suddenly realize that the spike in Chinese excess demand, driven by the biggest credit impulse in history, may be over, at which point attention will once shift to an oil market that remains in a state of pernicious imbalance as a result of weak global demand, record OPEC production, and a critical storage situation as there is ever less onshore and offshore space in which to store all the excess oil.

Judging by today’s oddly rational drop in the price of crude, attention may already be shifting…

end

EUROPEAN AFFAIRS

Austrian right wing party sweeps the first round of Presidential elections:

(courtesy zero hedge)

 

Latest Shock From Europe’s Refugee Crisis: Austria Right-Wing Party Sweeps First Round Of Presidential Election

The fallout of popular anger emanating from Europe’s refugee crisis, which may have moderated in recent weeks following Europe’s desperate attempts to bribe Turkey to keep as many refugees in its borders as possible (unleashing the era of unprecedented Turkish leverage over European sovereigns, including Germany and the Netherlands) continued today with a dramatic result from the first round of Austria’s presidential election, where initial results showed that the candidate of the Freedom Party, Austria’s right-wing, anti-immigrant party has swept his competition, gathering over 35% of the vote and leaving the other five candidates far behind.

Austrian far right Freedom Party (FPOe) presidential candidate Norbert
Hofer during the final election rally in Vienna, Austria, April 22, 2016

Among the losers were the hopefuls nominated by the government coalition, reflecting significant voter dissatisfaction with the country’s political status quo.

The early triumph by Norbert Hofer of the Freedom Party is his party’s best-ever showing since its creation after World War II. Its previous best result was more than 27% in elections that decided Austria’s membership in the European Union.

According to AP, with just over 50% of polling stations reporting into the central electoral office, Hofer was far ahead of Alexander Van der Bellen and Irmgard Griss, both running as independents and within one percentage point of each other at close to 20%.

But the worst news today was for Rudolf Hundstorfer of the center-left Social Democrats and Andreas Khol of the centrist People’s Party, which form the present government coalition and have ruled either alone or together for much of the post-World-War II era. Both were polling at 11% in yet another confirmation of the anti-establishment revulsion sweeping not across just Europe, but virtually the entire world. Only political outsider Richard Lugner did more poorly, at under 3%.

Members of the right-wing Austrian Freedom Party (FPOe) celebrate
at the his party headquarters during Austrian presidential elections
in Vienna, Austria, 24 April 2016. (EPA Photo)

However, it may be too soon to declare a victory for the right-win party. The preliminary results show Van der Bellen and Griss in a close race to challenge Hofer in the May 22 runoff with both just under 12 percent support. That second round race will likely be closer, with most of those opposed to the Freedom Party expected to give one of the independents their support.

Hofer’s triumph reflects recent polls showing Freedom Party popularity. Driven by concerns over Europe’s migrant crisis, support for his party has surged to 32% compared with just over 20% for each of the governing parties.

However, Austrian voters were unhappy with the Social Democrats and the People’s Party even before the migrant crisis last year forced their coalition government to swing from open borders to tough asylum restrictions. Their bickering over key issues,  most recently tax, pension and education reform, has fed perceptions of political stagnation.

One person who will be watching the outcome of the May 22 runoff will be French 2017 presidential election frontrunner, National Front’s Marine Le Pen, who in recent polls has a double digit lead over her nearest competitor, and who stands to gain the most from the rising tide of immigrant and refugee anger that has swept across Europe in recent months. Considering her campaign promise to pull out of the Euro if elected, her ascendancy if unchecked, could have a far more calamitous outcome for the future of the common currency than this summer’s Brexit vote.

END
From the sublime to the ridiculous:  Unilever issue a bond at 0% coupon: i.e. it costs them nothing:
(courtesy zero hedge)

The ECB’s Visible Hand: Unilever Issues Debt With 0% Coupon, 0.06% Yield

On Friday we wrote our latest take on how the ECB’s CSPP, or corporate bond buying program, in which we explained how this ECB’s latest market manipulating adventure is about to crush the fundamentals of the European (and soon, courtesy of the ECB’s “SPV” loophole, global) bond market. We showed how the ECB, in its latest attempt to become an even more market-moving hedge fund, is set to buy billions in corporate bonds and not just European but also international, as long as they have a European-domiciled (read Ireland or Netherland) SPV holdco.

The big picture details were as follows:

  • May buy in primary and secondary markets
  • Issue share limit of 70% per ISIN
  • Inclusion of bonds issued by insurance companies
  • Can buy bonds of companies incorporated in the euro area whose ultimate parent is not based in the euro area
  • Remaining maturity of 6 months and maximum of 30Y

BofA’s disturbing assessment of the ECB program for broader markets was surprisingly gloomy:

Firstly, the credit market could (worryingly) become much less sensitive to fundamentals such as commodity prices. For instance, if commodity prices fall, debt spreads of Glencore could still tighten if the ECB remains an active buyer of their bonds.

Secondly, there is clear motivation for non Euro-Area companies to issue Euro debt via a Euro-Area incorporated SPV. Our understanding is that the process (and time needed) to set up such a vehicle is not too cumbersome.

If this is the way that the credit market in Euros develops, then the ECB could potentially be “corporate QE’ing the world”. All credit markets stand to benefit in such a scenario as the trickle-down effect looks significant to us.

Yet, investors will need to keep an even closer eye on the likelihood that credit spreads disconnect from fundamentals. For instance, if the ECB buys UK credits then this will exacerbate the lack of Brexit premium in the £ credit market.

And while we speculated how long until we get a US shale company “incorporating” an SPV in Europe to take advantage of the ECB’s backstop generosity, we didn’t have long to wait until we found the first aberration of how Mario Draghi is making a mockery of price discovery.

As Dow Jones writes, moments ago Unilever NV was set to raise money in bond markets Monday that will cost the consumer-goods giant almost nothing, in the latest sign of how the European Central Bank’s stimulus measures are slashing funding costs across the continent.

In one tranche of a €1.5 billion deal, the Anglo-Dutch company was set to sell €300 million of debt maturing in 2020 with a coupon of 0%, potentially offering investors a yield of just 0.06%,according to deal guidance released Monday by underwriting banks.

The Unilever bonds will be one of the lowest-yielding euro debt sales on record, and one of the first since the ECB released details on Thursday of its plans to start buying corporate bonds in June.

As predicted in early March, borrowing costs for major European corporations have dropped sharply since the ECB said in March it planned to start buying nonbank euro-denominated corporate debt later this year. This is understandable: after all with a central bank backstopping bond risk, there is no risk in buying these bonds. In fact, we expect the Unilever tranche to promptly break to the upside after the break for trading, pushing its yield negative, a historic first for a corporate bond.

Dow Jones writes that banks handling the Unilever deal have received orders of around EUR4 billion from investors for the debt sale, which also included eight-year and 12-year bonds, according to the deal notice. The eight-year bonds are expected to offer a yield of around 0.66%, while the 12-year bonds are expected to offer a yield of around 1.18%, according to a person familiar with the deal. Both these bonds will have positive coupons.

The bonds will price later Monday. Citigroup Inc., Deutsche Bank AG, HSBC PLC and Banco Santander SA are underwriting the deal.

And thanks to the ECB, we fully expect all of these Unilever tranches to promptly sport a negative yield after they break for trading in what is now a euphoric corporate bond market which like Europe’s Treasury market, will no longer be driven by fundamentals and entirely by central bank frontrunning.

end

 

RUSSIAN AND MIDDLE EASTERN AFFAIRS

The White house is set to release some of the secret 28 pages.  Now we await the Saudi response and it may liquidate its bond holdings:

(courtesy zero hedge)

White House Set To Release Secret Pages From Sept 11 Report

Over the past several weeks, the White House has been very vocal about its opposition to both the Bipartisan Bill that would allow families of Sept 11 victims to sue Saudi Arabia for its involvement in the WTC attack, as well as stonewalling when it comes to releasing the confidential “28 pages” that have been withheld from the Congressional inquiry report into 9/11 and which allegedly provide damning evidence about the the perpetrators of the worst terrorist attack on US soil.

As reported last weekend, none other than Saudi Arabia made its displeasure with any potential revelations quite public when it threatened it would sell up to $750 in US assets held by the kingdom should the White House allow more public scrutiny into Saudi involvement in Sept 11.

Perhaps in response to the spike in public interest following the resurgence to prominence of “Document 17”, Obama appears ready to make concessions. Recall that as we reported last week, according to a 47-page US memo known as document 17, written in 2003 and quietly declassified last year, the FBI learnt that the flight certificate of one of the Sept 11 pilots was in an envelope from the Saudi embassy in Washington.

Saudi Arabian embassy in Washington, AP Photo

And now, as AP reports this morning, the Obama administration will likely soon release at least part of a 28-page secret chapter from a congressional inquiry into 9/11 that may shed light on possible Saudi connections to the attackers.

The documents, kept in a secure room in the basement of the Capitol, contain information from the joint congressional inquiry into “specific sources of foreign support for some of the Sept. 11 hijackers while they were in the United States.”

Bob Graham, who was co-chairman of that bipartisan panel, and others say the documents point suspicion at the Saudis. The former Democratic senator from Florida says an administration official told him that intelligence officials will decide in the next several weeks whether to release at least parts of the documents. The disclosure would come at a time of strained U.S. relations with Saudi Arabia, a long-time American ally.

Tim Roemer, who was a member of both the joint congressional inquiry as well as the 9/11 Commission and has read the secret chapter three times, described the 28 pages as a “preliminary police report.”

“There were clues. There were allegations. There were witness reports. There was evidence about the hijackers, about people they met with — all kinds of different things that the 9/11 Commission was then tasked with reviewing and investigating,” the former Democratic congressman from Indiana said Friday.

Fifteen of the 19 hijackers were citizens of Saudi Arabia.

Naturally the Saudis are less than thrilled: its government says it has been “wrongfully and morbidly accused of complicity” in the attacks, is fighting extremists and working to clamp down on their funding channels. Still, the Saudis have long said that they would welcome declassification of the 28 pages because it would “allow us to respond to any allegations in a clear and credible manner.”

They may get their wish soon.

The pages were withheld from the 838-page report on the orders of President George W. Bush, who said the release could divulge intelligence sources and methods. Still, protecting U.S.-Saudi diplomatic relations also was believed to have been a factor.

According to AP, Ben Rhodes, President Barack Obama’s deputy national security adviser, said Obama asked National Intelligence director James Clapper to review the papers for possible declassification.

“When that’s done we’d expect that there will be some degree of declassification that provides more information,” Rhodes told reporters in Riyadh last week where Obama met with King Salman and other Saudi leaders. The White House says the 28 pages did not come up during discussions.

Translation: they are actively being scrubbed.

Roemer said many questions remain about the roles of Fahad al Thumairy, an official at the Saudi consulate in Los Angeles who allegedly helped two of the hijackers find housing and transportation after they arrived in Southern California. Al Thumairy was later denied entry into the United States in May 2003 after the State Department alleged that he might be involved in terrorist activity. Roemer also wants to know more about Omar al Bayoumi, who was strongly suspected of being a Saudi spy and was alleged to have been helpful to the hijackers.

“We did not discover … Saudi government involvement at the highest level of the 9/11 attacks,” Roemer said. But he added: “We certainly did not exonerate the Saudis. … Saudi was a fertile ground for fundraising for al-Qaida. Some of these issues continue to be problems today. That’s why we need to continue to get to the bottom of this.”

AP here detours into coverage of the “smoking gun” Document 17 which we profiled on Wednesday.

The online 28pages.org, an Internet site pushing to get the documents released, points to another document declassified in July 2015 that outlined ways in which the commission could examine possible Saudi links. The 47-page document lists several pages of individuals of interest and suggests questions that could be pursued. One name is suspected al-Qaida operative Ghassan al Sharbi.

 

Al Sharbi, who was taking flight lessons in the Phoenix area before 9/11, was captured in 2002 in the same place in Pakistan as Abu Zubaydah, a top al-Qaida trainer who was apprehended and waterboarded dozens of times by U.S. interrogators.

 

The document said that after al Sharbi was captured, the FBI discovered some documents buried nearby. One was al Sharbi’s pilot certificate inside an envelope from the Saudi Embassy in Washington, although it’s unclear whether the license had been mailed by the embassy or if the envelope was simply being reused.

A CIA’s inspector general report in June 2015 said there had been no reliable reporting confirming Saudi government “involvement with and financial support for terrorist prior to 9/11.” But it also that people in the CIA’s Near East Division and Counterterrorism Center “speculated that dissident sympathizers within the government may have aided al-Qaida.” The rest of chapter, titled “Issues related to Saudi Arabia,” is blacked out.

A bill directing the president to release the 28-page chapter was introduced in the Senate, and nearly three dozen Republicans and Democrats in the House are backing a similar resolution. Reps. Walter Jones, R-N.C., Stephen Lynch, D-Mass., and Thomas Massie, R-Ky., wrote Obama last week saying they don’t think releasing the chapter will harm national security and could provide closure for the victims’ families.

California Rep. Adam Schiff, the top Democrat on the House Intelligence Committee, has read the pages and said this past week that while he wants to see them declassified to end speculation about what they say, releasing them will not quell the debate over the issue. “As is often the case, the reality is less damaging than the uncertainty,” he said.

Especially if the “reality” has had over a decade of being scrubbed.

So is this latest news from the White House a conciliatory attempt to become more “transparent”, or is it just a diversion seeking to satisfy public interest with yet another false lead.

One thing is certain: if Saudi Arabia was ready to launch “financial war” against the U.S. merely over the threat of being implicated in Sept 11, if the Saudi princes have no response to this latest overture from Obama, it is nothing but noise. On the other hand, if the market finds US Treasurys suddenly being aggressively “offered” next week, there may be some truth to what is about to be released.

end

 

Something is terribly wrong here!  The Saudi interbank rate climbs above 2%.  Either the Saudis are having trouble locating dollars or Saudi banks are afraid to loan to one another:

(courtesy zero hedge)

What Oil Recovery? Saudi Borrowing Costs Spike To 7 Year Highs

Despite oil’s rebound off cyclical lows and the world’s exuberance that the energy space may be saved (on the basis of headline-reading algos pumping momentum into commodity futures products that only leveraged Chinese speculators could find value in), something ugly is occurring in Saudi Arabian money-markets.There appears to be a growing funding squeeze in The Kingdom as 3-month interbank rates spike above 2% for the first time since Jan 2009 prompting King Salman to approve a ‘post-oil economic plan’.

Whether this spike is responsible or not, The Kingdom is clearly seeking ways to reduce its reliance on crude.

As Bloomberg reports, King Salman approved a blueprint for diversifying the country’s economy away from oil on Monday, a package of developmental, economic, social and other programs.

Saudi Arabia’s plan for the post-hydrocarbon era will have to overcome habits developed over decades of relying on crude sales to fuel economic growth, create jobs and build infrastructure.

Almost eight decades after oil was first found in the country, officials on Monday are to unveil Deputy Crown Prince Mohammed bin Salman’s “Saudi Vision 2030,” a blueprint seeking to reduce the reliance on revenue from crude exports. King Salman approved the package of developmental, economic, social and other programs. Prince Mohammed, known as MbS among diplomats and Saudi watchers, disclosed details of the plan in interviews with Bloomberg in Riyadh.

“Shifting from an oil-based economy to something different is very difficult,” said Gregory Gause, a professor at Texas A&M University. “The Saudis have been talking about it for decades, but have made little progress. So MbS has his work cut out for him.”

Prince Mohammed is leading the biggest economic shakeup since the founding of Saudi Arabia in 1932, with measures that represent a radical shift for a country built on petrodollars. His drive may face resentment from a population accustomed to government largess and power circles stunned by the rapid rise of the 30 year-old prince, political analysts say.

Part of the program envisages selling less than 5 percent of Saudi Aramco and the creation of the world’s largest sovereign wealth fund.

The drop in crude prices has prompted Gulf Arab monarchies to dip into reserves they had accumulated since 2000. Saudi Arabia’s net foreign assets fell by $115 billion last year to plug a budget deficit that reached about 15 percent of economic output. The government also turned to the domestic bond market and is planning its first international dollar bond sale.

After decades of talk of diversification, more than 70 percent of Saudi government revenue came from oil in 2015 and the state still employs two-thirds of Saudi workers. Foreigners account for nearly 80 percent of the private-sector payroll.

“The issue really is how to get the Saudi private sector to hire locals, how to make the numbers on that right, since so much of the Saudi private sector has had business models based on lower-wage foreign labor,” said Gause.

In response to the country’s weakened fiscal position, Prince Mohammed’s plan is to raise non-oil revenue by $100 billion by 2020. The government announced cuts in utility and gasoline subsidies in December. Including future reductions, authorities expect the restructuring to generate $30 billion a year by 2020.

“There is a realization among many Saudis that the economic challenges that the kingdom is facing are daunting,” said Fahad Nazer, who worked at the Saudi embassy in Washington and is now a political analyst at JTG Inc. “Given the fact that some 70 percent of Saudis are under age 30, Prince Mohammed’s penchant for making quick decisions and holding officials accountable for their performance – or lack thereof – does have wide support among Saudis.”

Past rulers of Saudi Arabia have largely avoided seeking additional revenue from their citizens. As water prices surged after the reduction in subsidies, Saudis turned to social media to express their anger at the government. King Salman fired the water minister on Saturday.

Saudi leaders also have unique social challenges that other nations implementing economic changes didn’t have to manage. While steps have been taken to get women into the workforce, the kingdom still prohibits them from driving. The country’s feared religious police, despite having their powers to arrest curbed this month, still enforce gender segregation and prayer times.

“The foremost challenge Mohammed bin Salman faces over time is the inevitable need to restructure the Al Sauds’ relationship with the Wahhabis,” said James Dorsey, a senior fellow in international studies at Nanyang Technological University in Singapore. “This restructuring is inevitable both to be able to truly reform the economy and because the increasing toll identification with the puritan sect is taking on Saudi Arabia’s international reputation.”

His efforts to shake up the economy come against the backdrop of mounting domestic security threats and regional turmoil, with the Sunni-ruled kingdom bogged down in a war in Yemen against Shiite rebels it says are backed by Iran. He has also consolidated more power than anyone in his position since the founding of the kingdom.

“Within Saudi Arabia, the main challenges MbS will face will involve not the substance of oil policy but rather resistance within the royal family to so much power being concentrated in the hands of one prince of his generation,” he said.

So perhaps the spiking money-market rates are more indicative of the potential for social unrest?

end

 

SWEDEN AND THEIR HUGE MIGRANT PROBLEM

 

Sweden revolts as Stockholm City council moves Muslim migrants right next to a school:

(courtesy zero hedge)

 

Swedes Revolt Over Refugees Near Schools: Demand “F##king Answers” From Stockholm City Council

Having documented the growing tensions in Sweden between an immigration-happy government and a nation beset by refugee-crime sprees, it appears ‘the people’ have had enough. Stockholm residents are upset over the city council’s plans to re-locate hundreds of Muslim migrants right next to a school and during a recent meeting, brawls broke out as Swedes exclaimed, “we demand f##king answers, now!” These are not ultra-right-wing nationalists exhorting their racist feelings, these are average Swedes and the revolution is building…

“You just can’t sit there, when we come here looking for answers, and SAY you can’t ANSWER that. That is not OK. There has to be some f**king order in a democracy! But you are NOT answering OUR questions, will want f**king answers! We will stop shouting when you answer out questions!”

As Shoebat notes, unfortunately, these ‘compassionate’ leftists, who have no respect for their own society or even themselves, are not only pushing the European people into a civil war, but possibly a world war.

This town council meeting is just one of the small ‘on the ground’ fires which shows that people are ANGRY they are being ignored and shoved aside along with their families and culture in the name of this ‘new Europe.’ This will end ultimately in nothing short of disaster.

end

GLOBAL ISSUES:  

 

TORONTO CANADA

The huge real estate company URBANCORP has just filed for bankruptcy protection.

This will surely hurt Canada’s booming real estate sector. It looks like the Chinese money have stopped coming.

(courtesy zero hedge)

 

The Canary In Canada’s Real Estate Mine Just Died: Toronto’s Urbancorp Files For Bankruptcy

 

less than two weeks ago we documented that Toronto based Urbancorp, one of Canada’s largest residential developers, was having significant issues. Its attorney’s had taken the highly unusual step of terminating their contract, it hadn’t released 2015 financials due to the audit committee having “open issues and questions”, and most intriguing, a board member quit just two weeks after being appointed specifically to provide expertise in accounting.

For those unfamiliar with the company, Urbancorp was launched in 1993 by Alan Saskin, a former Cadillac Fairview executive, and has built dozens of condos and other housing developments in the Greater Toronto Area. This is how it describes itself on its website:

Urbancorp is proud to have created some of the most visionary home and condominium communities in the GTA.

 

As the premiere developer of the King West neighbourhood, Urbancorp transformed the old industrial lands of King Street West into the vibrant residential community of King West Village, including Bridge, Fuzion and ,the latest, Kingsclub Condominium. In the West Queen West neighbourhood, Urbancorp built Westside Gallery Lofts, Curve and, most recently, Edge and Epic on Triangle Park.

 

Urbancorp has built thriving new communities in other up-and-coming Toronto neighbourhoods. The Neighbourhoods of Queen Street East is comprised of three stunning new home communities along the Queen Street East corridor. With locations in Riverdale, Leslieville and The Beach, The Neighbourhoods of Queen Street East bring a fresh, modern vibe to the urban renaissance currently underway in Toronto’s east end.

And while the Greater Toronto Area may not be exactly Vancouver (where the real estate situation is getting more outlanding by the day), the local housing market has been consistently portrayed as sufficiently resilient and an indication of Canada’s economic stability.

But perhaps it isn’t, because late last night we learned that Urbancorp has filed for bankruptcy.

The filing which is seeking court approval to sell assets “to maximize real estate values for the benefit of creditors and other stakeholders,” came just four months after the company issued roughly $48 million in debt traded on the Tel Aviv Stock Exchange, and eight months afterreportedly taking out at $225 million loan. To the best of our knowledge, the company failed to pay interest on its new debt even once (also known as a NCAA or No Coupon At All). As The Globe and Mail reports, several contractors have registered construction liens against a project in Toronto’s Leslieville neighborhood, and there are many lawsuits pending against the corporation as a result of contractors and brokers not being paid.

“We determined, after much consideration and consultation, that a court-supervised process is the best way to deal with current cash flow issues. This will allow us to reduce debt in an efficient manner while continuing to focus on our core business.” CEO Alan Saskin said in astatement.

Ironically, in filings with the Tel Aviv securities commission late last year, Urbancorp presented itself as a top ten developer with a “AAA credit rating.” Come to think of it, that’s Canada’s credit rating too…

Urbancorp has more than 1,000 homes under construction in the Toronto area, and the restructuring is meant to ensure the successful completion of those homes.

However, new projects may be a different story. As Bloomberg points out, government regulator Tarion Warranty Corporation has proposed to revoke Urbancorp’s registration. If the registration is ultimately revoked, it would mean that the company wouldn’t be able to build properties. An appeal has been filed.

From Tarion

Tarion has issued a Notice of Proposal (NOP) to revoke the registration of 17 Urbancorp related companies.  As the Registrar, Tarion has a duty to protect new home buyers by requiring builders to adhere to certain requirements in order to obtain registration, and ensure they continue to abide by ongoing obligations under the Act in order to maintain their licence.  The decision to issue this NOP was made due to the builder’s failure to meet Tarion’s ongoing registration requirements.

 

As with all builders who are issued an NOP by Tarion, Urbancorp companies have the right to appeal this proposal to the Licence Appeal Tribunal (LAT), which they have done.  This appeal is currently in process.  During this time, Urbancorp remains registered under Tarion until the LAT appeal process is concluded.

 

Despite the NOP, Urbancorp remains obligated to fulfill its commitments to its customers.  This includes addressing warranty claims, seeking registration for any current condominium projects and completing any existing sales.

 

It is important for home buyers and homeowners to know that they remain protected under the warranty, and Tarion will step in to fulfill the warranty obligations if Urbancorp fails to do so.  This includes deposit protection, delay compensation and construction warranties that can last up to seven years on a new home.

The bankruptcy filing of Urbancorp is the second major bankruptcy we have reported in the luxury residential space. Recall two weeks ago Manhattan’s Bauhouse Group filed for bankruptcy after defaulting on $147 million in debt.

The sudden and very rapid deterioration in the high-end real estate segment has received little attention so far. With everyone focusing on energy companies and their cash flow issues, few are paying attention to the fact that luxury real estate is collapsing, and not just in the US but as of last night, in Canada – at least in those cities where Chinese money laundering isn’t encouraged by the authorities – as well.

With the Urbancorp bankruptcy filing, and the first official canary death in Canada’s real estate “coal mine”, we anticipate that the near future for Canada’s real estate sector will be a far more volatile one. Excluding Vancouver of course: that particular Chinese money laundering hub will continue humming until the locals finally decide they have had enough of having their city sold to criminal Chinese oligarchs.

 

END

 

The following is a big story.  As we have pointed out there are now 7.8 trillion dollars worth of bonds in negative story.   We are also pointing out that many on the planet are scrapping the surface trying to get anything with a positive yield and that means bonds that are out 100 years.  If interest rates were just to move up 1/2%, the loss will be 1.3 trillion USA or if rates climb 1% then losses would be 2.6 trillion.  This is an accident waiting to happen

(courtesy zero hedge)

 

“The Damage Could Be Massive” – How Central Banks Trapped The World In Bonds

Yields on $7.8 trillion of government bonds have been driven below zero by worries over global growth, forcing investors looking for income to flood into debt with maturities of as long as 100 years. Worse still, as Bloomberg reports, central banks’ policy is exacerbating matters, as the unprecedented debt purchases to spur their economies have soaked up supply and left would-be buyers with few options. This has driven the ‘duration’ – or risk sensitivity – of the bond market to a record high, meaning, as one CIO exclaimed, even with a small increase in rates “the positions are so huge that the damage can be massive… People are complacent.”

Decelerating economic growth worldwide, combined with more aggressive stimulus measures by the Bank of Japan and the European Central Bank, pushed average yields on $48 trillion of debt securities in the BofA Merrill Lynch Global Broad Market Index to a record-low 1.29 percent this month, compared with 1.38 percent currently.

Such low yields are unnerving some of the most famous names in the bond market.

Gross, who runs the $1.3 billion Janus Global Unconstrained Bond Fund, said in a recent tweet that a tiny move in Japanese 30-year government bonds could wipe “out an entire year’s income.”

It won’t take much of a backup to inflict outsize losses.

The effective duration of the global bond market, which is measured in years and determines how much prices are likely to change when interest rates move, surged to an all-time high of 6.84 years in April.

That translates into a 6.84 percent decline in price for every percentage-point increase in yields.

 

Simply put, a half-percentage point increase would result in a loss of about $1.6 trillion in the global bond market, according to calculations based on data compiled by Bank of America Corp.

This year alone, the danger of owning debt has surged by the most since 2010, raising concerns from heavyweights such as Bill Gross. It’s also left some of the world’s biggest bond funds, including BlackRock Inc. and Allianz Global Investors, at odds over the benefits of buying longer-dated bonds.

 

“It takes a fairly small move out in rates on the long-end to wipe out your annual return,” said Thomas Wacker, the head of credit of the Chief Investment Office at UBS Wealth Management, which oversees $2 trillion in assets. Longer-maturity debt is “not something we are particularly keen on,” he said.

Investors continuing to buy bonds even when they pay next to nothing suggests deep concern over the state of the global economy. This month, the International Monetary Fund warned the threat of worldwide stagnation was rising because economic expansion has been so tepid for so long. It also chopped its 2016 growth forecast to 3.2 percent from 3.4 percent in January.

“The price of these bonds increase at an accelerating rate,” said Brian Tomlinson, Frankfurt-based global fixed-income manager at Allianz, which oversees about $500 billion, referring to the market’s longest-term issues.“Economic growth continues to disappoint globally.”

So between the deflationary spiral that historic zombie-reviving central bank policy has enabled and the outlook for more zombifying central bank ‘stimulation’ ahead, the central planners have cornered the world into ever risky “sovereign” bonds and while that risk hits record highs, The Fed is trying to topple the applecart (at least with its jawboning) whioch – as we have shown above – would leave an even larger hole in both bank and public pension fund balance sheets.

“People are complacent,” Fabrizio Fiorini, chief investment officer at Aletti Gestielle SGR SpA, which oversees more than $17 billion, said from Milan. “Time is against the long end of the bond market. Even if an increase in bond yields may not be so strong, the positions are so huge that the damage can be massive.”

Average:

OIL ISSUES

Oil slides after a report shows a huge 1.5 million barrel inventory build at Cushing which is largely expected

(courtesy zero hedge)

Oil Slides After Report Of Big Cushing Build

WTI Crude tumbled back off algo-stop-run highs this morning after Genscape reported a 1.5 million barrel inventory build at Cushing (considerably more than the 1.2mm build expected).

That would be the biggest inventory build since mid-December and follows 4 of the last 5 weeks with draws…

And price is falling..

end
This is not going over well with the rest of the producers:  Saudi Arabia is set to boost production in competition with other producers to satisfy Chinese demand (stockpiling)
(courtesy zero hedge)

The Reason Why Oil Dropped: Saudis Set To Boost Production In Scramble For Chinese Demand

After meandering steadily higher for the past week, and completely ignoring the negative newsflow out of the Doha meeting, today oil took an unexpected leg lower to 4-day lows, leaving many stumped: what caused this drop?

The answer, according to Citi, is the realization Saudi Arabia is actually making good on its threat to boost production (recall that just one day ahead of Doha, Saudi deputy crown prince bin Salman said he could add a million barrels immediately) something we noted a month ago in “Why Saudi Arabia Has No Intention To End The Oil Glut.”

As Citi’s Ed Morse notes, the biggest bear risk to the oil market right now is that Iran’s ramp-up accelerates (which might in fact be happening with recent data indicating that April crude exports are running at ~1.9-m b/d) and then that Saudi Arabia does the same.

This would come as a surprise to many because one argument against the notion that the Saudis would turn on the taps is that “this would require ripping up their marketing playbook which relies on long term contracts with select buyers.”

As Citi adds, today’s news that Saudi Arabia is selling a cargo on the spot market to Asia may mark the turning of a dramatic new chapter in the Saudi playbook.

Recall that as we noted in our earlier post on the record demand by Chinese teapot refiners, in the recent surge of imports to Chinese teapot refineries the biggest beneficiaries were the Russians, while Saudi Arabia was the biggest loser. As JPM documented when highlighting the sources of Chinese oil imports:

“Russian imports strong in March at the expense of Middle East. In total, Atlantic basin–sourced crude was 28% of total imports, up from 25% the month prior, while Middle East–sourced crude was 44% of imports, down from 51% the previous month. Russian imports were the second highest on record at 4.6 million tons (up from 4.1 million tons in February), well above Saudi Arabia (4.0 million tons). Russia imports were 14% of total Chinese imports. The strength in Atlantic Basin exports primarily came from Venezuela, Colombia, and Brazil, which were all at or near record high.”

Which brings us to today Reuters report that “Saudi Aramco has sold a crude oil cargo to an independent Chinese refinery, its first spot sale to such a buyer in a sign that the world’s biggest exporter is trying to expand beyond its state-owned customers in China, a source with knowledge of the deal said.

The 730,000-barrel cargo will be lifted in June from Aramco’s storage in Japan’s Okinawa prefecture and shipped to China’s eastern province of Shandong, the source said.

Which brings us back to Ed Morse who says that “if anyone had a doubt about Saudi Aramco’s ability to use its logistical system and spot sales to increase market share, its recent 730-k bbl sale of a cargo to a Chinese teapot refiner in Shandong should lay any doubts to rest.”

Not only that, but according to Morse, the Saudis have a clear advantage if they are indeed trying to boost supplies to China to regain market share lost to Russia:

The sale comes from Aramco’s leased crude inventory at Japan’s Okinawa Island,a clear advantage Aramco has in marketing incremental sales not just into Asia but to Europe and the US as well given Saudi inventories deployed worldwide. What is unusual is that the sale is spot rather than the initiation of a new term contract. The Kingdom has had its sales arms tied behind their backs in competition for market share. For decades the world’s largest exporter has been handicapped by its conservative commitment to term sales based on long term contracts with limited open credit and strict payment terms.That might be great for maintaining the bulk of the ~7-m b/d of Saudi sales but it is a handicap in a world in which lumpy buyers prefer spot sales and where competitors offer a larger amount of open credit extending beyond 30 days to 90 days or even more, in the case of Iran.

And the unpleasant punchline for oil bulls: another 500,000 b/d in production may be about to hit the market.

It looks increasingly likely that the Kingdom is targeting another 0.5-m b/d of sales, bringing its production up to a steadier 11-m b/d or higher as the summer high burn season for crude in power generation reaches its peak and just at the same time that Iran looks like it will be adding 1-m b/d to sales above its pre-January levels.

According to Citi, “11-m b/d of production might be the new normal for the kingdom. This battle to secure market share appears to be the main driver of Saudi oil policy right now as witnessed by the breakdown in the Doha talks and apparent agreement to freeze production at January levels by a large number of oil producers, excluding Iran and the US, earlier this month. This ongoing effort by the Kingdom to secure market share at a price level too low to sustain output in the US, other non-OPEC producers and even marginal cost OPEC countries is the only significant bearish factor on the immediate oil horizon, in our view.”

This is not the first time the Saudis have done this: the kingdom’s oil marketing arm seems to have employed the same spot sales tactic in increasing market share in Europe at the expense of Russia and perhaps Iraq in late 2015. Spot sales are about the only way the Kingdom can gain new market share in a world in which chunky buyers are interested in securing incremental purchases via spot rather than term arrangements. Saudi Aramco has long shunned spot sales but it remains to be seen whether in the new oil environment, in an effort to gain greater control over market share and market pricing, the Kingdom will move more aggressively to allow resale of its crude and truly re-establish Saudi light crude oil as the global benchmark. With the Saudi Deputy Crown Prince just establishing a new road for transforming the kingdom for a post oil reformed economy, and with his talk of boosting output well above today’s level to even 20-m b/d, it’s time to think about what the new world oil order will look like and what the role of the world’s largest exporter will look like.

* * *

In other words, the rush to capture marginal Chinese market share is now on, and the question is how Russia will respond. The most likely answer: by undercutting Saudi pricing in its ongoing attempts to boost its own rising Chinese market presence.

But the worst news could be not so much the marked boost in production but that Chinese demand, as we documented just a few hours ago, may be about to hit a wall as Chinese teapots are closed for an extened period of time to undergo regular maintenance…

… leaving a world betting on soaring Chinese demand suddenly scrambling what to do with all the excess seaborne oil.

end

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

Euro/USA 1.1254 UP .0037 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 111.09 DOWN 0.670 (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 1.4450 UP .0060 (STILL THREAT OF BREXIT)

USA/CAN 1.2684 UP .0017

Early THIS MONDAY morning in Europe, the Euro ROSE by 37 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 NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was DOWN 12.28 POINTS OR 0.41% / Hang Sang DOWN 162.60. OR  0.76%   / AUSTRALIA IS LOWER BY 0.69% / ALL EUROPEAN BOURSES ARE DEEPLY  IN THE RED  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 MONDAY morning: closed DOWN 133.19. OR 0.76%

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

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

Gold very early morning trading: $1233.35

silver:$16.85

Early MONDAY morning USA 10 year bond yield: 1.88% !!! PAR in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.70 PAR in basis points from FRIDAY night.

USA dollar index early MONDAY morning: 94.88 DOWN 16 cents from FRIDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers MONDAY MORNING

 

END

 

 

 

And now your closing MONDAY NUMBERS

 

 

Portuguese 10 year bond yield:  3.30% PAR in basis points from FRIDAY

JAPANESE BOND YIELD: .60% UP 5 in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD:1.64% UP 4 IN basis points from FRIDAY

ITALIAN 10 YR BOND YIELD: 1.53  UP 6 IN basis points from FRIDAY

the Italian 10 yr bond yield is trading 11 points lower than Spain.

GERMAN 10 YR BOND YIELD: .264% (UP 3 IN BASIS POINTS ON THE DAY)

 

END

IMPORTANT CURRENCY CLOSES FOR MONDAY

 

 

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

 

Euro/USA 1.1267 UP .0050 (Euro =UP 50  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 111.24 DOWN 0.522 (Yen UP 52 basis points As MARKETS FALL)

Great Britain/USA 1.4482  UP .0091 Pound UP 91 basis points/

USA/Canad 1.2688 UP 0.0021 (Canadian dollar DOWN 21 basis points with OIL FALLING (WTI AT $42.70)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 50 basis points to trade at 1.1267

The Yen ROSE to 111.24 for a GAIN of 52 basis points as NIRP is STILL a big failure for the Japanese central bank/also all our yen carry traders are being fried!!.

 

The pound was UP 91 basis points, trading at 1.4482

The Canadian dollar FELL by 21 basis points to 1.2688, WITH WTI OIL AT:  $42.70

The USA/Yuan closed at 6.4900

the 10 yr Japanese bond yield closed at -.60% UP 5 BASIS  points in yield/

Your closing 10 yr USA bond yield: UP  2  basis points from FRIDAY at 1.90% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.72 UP 2 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.81 DOWN 23 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 MONDAY

London:  CLOSED DOWN 49.52 POINTS OR 0.78%
German Dax :CLOSED DOWN 79.14 OR 0.760%
Paris Cac  CLOSED DOWN 23.54  OR 0.52%
Spain IBEX CLOSED DOWN 92.80 OR 1.01`%
Italian MIB: CLOSED DOWN 283.81  OR 1.52%

The Dow was down 26.51 points or 0.15%

NASDAQ down 10.44 points or 0.21%
WTI Oil price; 42.76 at 3:30 pm;

Brent Oil: 44.49

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  66.68 (ROUBLE UP 18 ROUBLES PER DOLLAR FROM FRIDAY) AS THE PRICE OF BRENT FELL AND WTI FELL

.

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:  $42.99

BRENT: 44.71

USA 10 YR BOND YIELD: 1.91%

USA DOLLAR INDEX:94.78 down 26 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:

Bullion Pops & Trannies Drop As S&P Signals “Golden Cross”

And your post-Doha gains are… gone…

 

Chinese intervention at the end of their day turned an overnight losing session into a BTFD winner, but it did not take long for selling to begin again in futures, erasing all the post-Doha gains…BUT that was not allowed to stand…

 

Despite a 50 Dow point vertical spike at 1pmET (2Y auction), US (cash) equities drifted lower all day with each bounce met with fresh selling pressure near VWAP… UNTIL The late-day panic buying instigated by a VIX slam left Nasdaq perfectly 0.0000% for the day!

Dow Transports worst day since March 8th.

With The S&P 500 signaling a “Golden Cross”…

 

What day would be copmplete without a panic slam of VIX into the close- in this case a desperate attempt to push Dow back to 18k…

 

The US open once again sparked selling in bonds but Treasury yields only rose 1-2bps on the day (though notably were sold on the day even as stocks were sold)…

 

The USD Index slipped lower on the day on the heels of EUR and JPY strength…

 

Friday’s huge surge in USDJPY gave way to some profit-taking as Yen strengthened the most in April against the dollar…

 

And as a reminder – Levered Specs are the shortest USD in 22 months…

 

Modest USD weakness helped Gold but Crude plummeted on Saudi headlines (and fears over Cushing builds)

 

Crude slipped back toward pre-Doha levels…

 

Time for oil to catch down to Oil VIX…

 

This was gold’s best day against silver in 3 weeks…

 

Charts: Bloomberg

:
end

 

Take a look at the Chicago Pension system: There are 7500 retired teachers in theChicago area that earn over 100,000 dollars.

 

(courtesy zero hedge)

The Chicago Pension Scandal: $100,000+ Teacher Pensions Costing Taxpayers $1 Billion

As we’ve known for quite some time now, Illinois is completely insolvent, and in large part due to enormous pension liabilities which as of December were underfunded to the tune of $111 billion. Not only is the state insolvent, its millionaires can’t get out fast enough to avoid the massive tax hikes that will be coming in what is sure to be a failed effort to plug budget holes, as well as the soaring criminality in cities such as Chicago which recently just passed the historic milestone of 1,000 gunshot victims in the fastest time in decades.

Citing unfunded pension plans, Moody’s downgraded Illinois to Baa1, and gave it a negative outlook back in October. The issue with the pension funds (aside for the massive shortfall in funding) is that per the Illinois Supreme Court, benefits cannot be altered. In a ruling last year, the state’s Supreme Court overturned a 2013 law that tried to ease the burden of what was then a $105 billion funding gap.

Crisis is not an excuse to abandon the rule of law. It is a summons to defend it.” the supreme court said in its ruling.

In other words, regardless of the fact that the pension funds are insolvent, the state cannot cut benefits to any of its participants. This is in stark contrast to the multi employer private pension funds, which as we pointed out, are able to cut benefits in order to keep the funds solvent.

At this point, it’s clear that without the ability to cut pension benefits, most plans will end up insolvent, at which point nobody will be receiving benefits. Until that point comes, however, there are a few who are living quite well off of the system.

As Forbes’ Adam Andrzejewski reports, there are currently 7,499 teacher retirees that earn at least six figure pensions, and he estimates that in just six years, the number will be three times what it is today because, as we noted previously, the Illinois Supreme Court recently confirmed that pension benefits are constitutionally guaranteed and “the public employee gravy train is running faster than ever.”

Now, there would be nothing wrong with these retirees collecting the “annuity” benefits after paying to the retirement plan for years as most other honest, hard-working employee do. There is just one problem: this was a human system, and like every human system (especially in Illinois) it was impeccably gamed from the beginning. Especially when Chicago is involved as it is here.

Take the example of two union lobbyists who substitute taught for one-day in the public schools and then started collecting over $1 million of lifetime public ‘teacher’ pension payout – despite a state law expressly designed to stop them.

And now take all the other 7,499 educators. The retirees in question paid so little into their own retirement (breaking even on their cost basis within the first 20 months of retirement) that taxpayers now face a $900 million bill just to keep the pension payments flowing!

Not unexpectedly, a well known culprit behind this systemic abuse emerges: the city of Chicago. As the following map showing where the 7,499 six-figure educator pensions located, most of the ‘heat’ is in the six-county area around Chicago.

 The shifting of responsibility for funding retirement from the individual to the taxpayer at these levels is completely unsustainable.  

This week, our organization at OpenTheBooks.com debuted our interactive info mapping platform giving context to the 7,499 retired Illinois educators who pulled-down a pension of $100,000 or more. These retirees cost Illinois taxpayers $900 million (2015). Individually, these pension millionaires contributed so little to the system that they ‘broke-even’ on their ‘cost-basis’ within the first 20-months of retirement.

It takes the equivalent of all income taxes paid by 330,177 individual Illinois taxpayers to fund the nearly $1 billion for the 7,499 ‘highly compensated’ six-figure retirees. By any estimation, this is unsustainable. Illinois only has 6.2 million people with jobs.

 

The article goes on to point out that by 2017, Illinois tax payers will be on the hook for more than 10,000 educator pensions that pay more than $100,000 a year, and by 2022 that number rises to over 20,000 people pulling in six figures after retirement. Readers can probably calculate on their own the nominal dollar taxpayer support that will be needed then.

Adam also draws attention to another critical issue further burying taxpayers, which is double-dipping.

[M]any administrators taking six-figure pensions really aren’t even ‘retired.’ Twenty-one highly compensated school administrators are now members of the municipal system, not the teacher’s system. It’s double-dipping: receiving a ‘teacher’ retirement pension, while also rehired by a school under the ‘municipal’ plan.

This form of doubling-dipping is not prohibited under Illinois law. It should be. For example, Mohsin Dada made $503,200 by double dipping the Teacher’s Retirement System (TRS) and the Illinois Municipal system (IMRF). Dada’s teacher pension is $254,700 and his current salary from North Shore School District 112 is $248,510 – up from $202,903 just three years ago (2012).

It gets wose: the public pension largess is not only for government educators, but also private education associations and union bosses. For example, Reginald Weaver was President of the National Education Association (NEA) in Washington, D.C. – the de facto national teacher’s union. Weaver’s Illinois teacher’s pension is now $22,759 per month, or $273,108 annually.

And lest we forget about the fact that outside of the tens of thousands of retirees who are making six figures, there are another 100,000 pensions for rank and file teachers who make less than that. Include these members, and an estimated $1 out of every $3 collected by the Illinois income tax now goes toward retirement annuities. That’s the equivalent of all income taxes paid by 2 million Illinois taxpayers every year.

The systemic abuse of the system goes to the very core: locally, school districts are spiking salaries – granting raises near the end of a career to raise guaranteed pensions – which drives costs even higher. The fraud appears to be focused on the city of Chicago. Some examples:

  • Northern Illinois school districts are driving the majority of $100,000 pensions. In fact, 6,706 pensions for over $800 million in annual payouts were conferred by districts in the Chicago metropolitan suburban area. Only 793 six-figure pensions totaling $95 million in annual payouts were conferred by school districts in the rest of the state. Yet, income-taxpayers across the whole state guarantee the retirement annuities for everyone.
  • The Top 100 All-Time pensions: #1 $302,991 (Lawrence Wyllie at Lincoln-Way CHSD) to #100 $200,812  (Michael Radakovic at Aurora East USD 131). Read the Top 500 All-Time IL teacher pension list.
  • The Top 5 school districts conferring six-figure pensions are Palatine TWP HSD 211, Palatine (449); Township HSD 214, Arlington Heights (419); Consolidated HSD 230, Orland Park (196); Northfield TWP HSD 225, Glenview (188); Maine TWP HSD 207, Park Ridge (180).

Given what we know about the situation, there is no path forward that will save these pension funds from going insolvent. This brings us to an interesting twist… Under Illinois state law, the pension system is required to reach 90% funding by 2045. We’re curious if by that point, the state supreme court will view crisis as being a valid excuse to “abandon the rule of law.”

For those who are curious about more details, the following interactive map courtesy of OpenTheBooks.com lays out all the 7,499 “retired” Illionois reveals all those who hope to abuse the system until the very last drop. Click on the map for the interactive version.

end
end
The Dallas Fed mfg index disappoints again for the 16th straight month:
(courtesy zerohedge)

“This Is Not A Good Time To Be In Business”: Dallas Fed Disappoints, Contracts For 16th Straight Month

Following the death of Philly Fed’s dead-cat-bounce, Dallas Fed did the same with a disappointing thud back to -13.9 (missing expectations of a rise to -10.0). This is the 16th consecutive month in contraction (below 0) and respondents are increasingly depressed, “it is a bad time for manufacturing, agriculture and mining – the only sectors that actually create wealth.” What kind of fiction are these real average joes peddling? Have they not seen the jobs data?

A recession by any other name should smell so bad…

While new orders rose, number of employees and employee workweek contracted as future expectations tumbled to a 0.4 print with CapEx and wages expected to drop.

Here is the fiction the Dallas Fed respondents are peddling:

“Most of our clients are reporting slower sales heading into second quarter and expect further slowing into fourth quarter. As a result, they are stocking less and asking for faster shipments. Asian markets—especially China and Russia—are frequently discussed, but domestic production of biological products seems to have peaked in 2015 and is slowing.”

“Customers are really dragging their feet on payments. Terms are 15 to 30 days beyond agreed terms per the purchase order.”

“The summer season is the slow season, and we are already planning to go to a 32-hour work week.”

“It is a bad time for manufacturing, agriculture and mining—the only sectors that actually create wealth.”

“There is persistent downward pressure on the oilfield services industry due to continued weak oil and gas commodity prices and depressed activity levels both onshore and offshore. Already weak, and weakening, global economic outlooks foreshadow an even longer down cycle for the energy industry. It is expected that even though crude oil commodity prices may be achieving high points for 2016, exploration and development and the associated oilfield service activities that accompany them will continue to be depressed through 2017 as supply will continue to outstrip demand.”

“I’m not normally a pessimist, but deep sea drilling looks to be pretty darn ugly moving forward.

“Politics. Gas. Oil. ISIS. This is not a good time to be in business.”

And to sum it all up perfectly:

“Over-taxation, complicated export/import regulations and increasingly burdensome labor regulations are slowing down growth, hiring and expansion.”

end
Deutsche bank admits that the true story of Q! earnings are very disappointing and they echo what David Stockman states.  And strangely they also admit that D.B’s first quarter est is at risk:
(courtesy zero hedge)

The True Story Of Q1 Earnings: Deutsche Admits “Results So Far Are Disappointing; Our 1Q Est. Is At Risk”

One of the recurring themes as we cross Q1 earnings season, is that virtually every sellside strategist has been repeating ad nauseam how as a result of the shaprly lowered earnings expectations…

… companies will have no problems beating consensus estimates. And then we got something like last week’s week’s barrage of tech company misses.

For many pundits this apparently did not register and just today BofA said that “1Q EPS expectations have likely bottomed as companies have begun to beat across the board.” This is how it explained this observation:

With the conclusion of Week 2, 133 companies representing 40% of S&P 500 earnings have reported. Results last week were dominated by Financials-where surprise stats improved as most smaller banks and consumer finance companies beat expectations-and Industrials-where the majority of companies across sub-sectors surprised to the upside, led by Road & Rail.Bottom-up EPS ticked up to $26.48 from $26.36 the prior week, 0.4% higher than analysts’ expectations at the start of earnings season. Expectations often bottom in Week 2, and our forecast of $27.50 implies a 4% beat.

While analysts continued to cut estimates last week in Energy and Utilities (which have yet to report), estimates climbed for most other sectors amid better-than-expected results. Health Care has seen the most top- and bottom-line beats so far, consistent with trends over the past few years. Meanwhile, a high proportion of top- and bottom-line beats in Industrials is a shift from recent trends, echoing the improvement in the ISM and other industrial indicators. Overall for the S&P 500, 67% of companies have beaten on EPS, 57% have beaten on sales, and 44% have beaten on both-an improvement from the prior week, and much better than we saw this time last quarter, when just one-fourth of companies beat on both EPS and sales.

However, confirming once again that what is one analyst’s meat, is another analyst’s non-GAAP poison, this “improvment” was not enough for one of Wall Street’s most cheerful analysts, DB’s David Bianco, who in his Q1 earnings tracker admitted something troubling – the truth: “Results so far are disappointing and our 1Q est. is at risk.” In fact, as DB admits, a sharp bounce in the fishhook chart shown above is now dependent on “big beats at Energy.” Good luck with those. Here is why Bianco is displeased with the Q1 results so far:

132 companies or 41% of S&P 500 EPS have reported 1Q EPS. The weighted avg EPS beat is 2.2% (4.1% ex. Fin) with a -0.2% miss on sales (in line ex. Fin). Bottom-up 1Q S&P EPS is now $26.49, -7.2% y/y, and -1.6% ex Energy. Btm-up sales growth is -1.2% y/y for the S&P and 1.9% ex Energy. It will take an avg beat of ~5% from the remaining non Financial & Energy companies and higher from Energy firms to reach our $27.50- 28.00 or down 2-3% y/y 1Q est.

After analysts cut their 1Q EPS estimates by a whopping 9.4% from Jan 1 to Mar 31,they continue to make last minute trims to their 1Q EPS estimates, especially at Energy, for companies yet to report this season. These trims keep 1Q btm-up S&P EPS lower than suggested by the beats so far. Thus, the typical “fish hook” upturn in btm-up quarterly EPS has yet to occur and is now dependent on big beats at Energy. Howeverex. Financials & Energy the beats are normal. At current oil prices and FX rates 2016, S&P EPS should be $118-120 with a quarterly EPS profile of roughly: $27.50, $29.50, $30.50, $31.50.

1Q results are better than feared, but they do not point to any significant upside to our standing 2016 or 2017 S&P EPS outlook. If anything we think it less likely for S&P EPS growth, ex. Energy, to exceed 5% through 2017. However, we also increasingly think that our standing 5.5% real S&P CoE estimate might be too high. If Treasury yields stay low as the profit recession ends and also despite Fed hikes later this year, we see more S&P PE upside.

DB’s summary earnings table:

If excluding energy, perhaps once should also exlude FANG. Doing so shows just how reliant the market is on merely four companies because while the S&P is expected for post a 7% EPS drop in total and “only” 2% ex energy, the plunge is -8% if one excludes the FANG stocks.

So if one excludes both energy and FANG names, S&P earnings are set to tumble about 5%.

In summary this is what the worst quarter since the crisis looks like when charted.

And here is the full frontal of EPS in nominal terms including and excluding energy.

Finally, keep in mind that all these earnings are non-GAAP. If one looks at as reported, GAAP earnings, the result has been a disaster, not only in recent years, but also for Q1, where the gap, pardon the pun, between GAAP and non-GAAP earnings is set to be record wide.

end
Perhaps of all the home stats, new homes if the most vital:  today, new homes sales suffer their 3rd month drop and the worst streak since July 2011:
(courtesy zero hedge)

New Homes Sales Suffer 3rd Monthly Drop – Worst Streak Since July 2011

The cracks are starting to show in the housing ‘recovery’. With Starts and Permits already rolling over, New Home Sales printed a disappointing 511k (vs 520k expectations), dropping 1.5% MoM. This is the 3rd monthly decline in a row – the longest such streak since July 2011. While positive for affordability, the decline MoM and YoY in median home prices (-$9,400 and -$5,400 respectively) will do nothing for The Fed’s wealth-creation mandate. The West saw New Home Sales plunge 23.6% MoM while The Midwest surged 18.5%.

Worst streak of MoM home sales weakness since July 2011…

As YoY remains flat…

Is price starting to catch down to sales?

“Housing is certainly not booming,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York, said before the report. “Some people may be shut out of the market because lending standards are still tight. There may still be some reluctance to buy versus rent.”

 end
Desperation time for the Republicans as Cruz and Kasich form a last minute alliance trying to stop him:
(courtesy zero hedge)

Trump Slams “Horrible Act Of Desperation” As Cruz And Kasich Form Last Minute Alliance To Stop Him

In the bottom of the 9th, with two out and the bases loaded, Ted Cruz and John Kasich are attempting one final maneuver to stop Donald Trump from getting the GOP nomination.

As the WSJ reports, top officials from both the John Kasich and Ted Cruz campaigns have announced that the candidates have formed an alliance, and will work together during the remaining primaries in order to make sure Donald Trump doesn’t have enough delegates to win the nomination outright before the convention in July.

Top officials from the Ted Cruz and John Kasich campaigns announced the alliance in a pair of statements late Sunday night. The deal will keep Mr. Kasich, the Ohio governor, on the sidelines for Indiana’s May 3 primary, while Mr. Cruz, the Texas senator, won’t compete in contests in Oregon on May 17 and New Mexico on June 7.

Our campaign will focus its time and resources in Indiana and in turn clear the path for Gov. Kasich to compete in Oregon and New Mexico, and we would hope that allies of both campaigns would follow our lead,” Cruz campaign manager Jeff Roe said.

Mr. Kasich’s top strategist, John Weaver, made an explicit call for super PACs devoted to stopping Mr. Trump to follow the two campaigns’ lead.

We will focus our time and resources in New Mexico and Oregon,” Mr. Weaver said. “We would expect independent third-party groups to do the same and honor the commitments made by the Cruz and Kasich campaigns.”

Knowing that neither one can win the election by winning the actual popular vote, the men have decided to turn to utter desperation and play the system (which is a technically a valid strategy, as it is how the GOP set it up). The goal is to position themselves for an opportunity to win in a brokered convention, whereby delegates start to become “unbound” after the initial vote, and can vote for any candidate they’d like in the next round.

As we pointed out earlier, Pennsylvania is critical and will test Trump’s ground game as he tries to win over enough unbound delegates that will vote for him at the convention. If successful, he’ll try to replicate those efforts in the remaining states in order to turn the tables on the new Cruz/Kasich strategy.

He added that “when two candidates who have no path to victory get together to stop a candidate who is expanding the party by millions of voters, (all of whom will drop out if I am not in the race) it is yet another example of everything that is wrong in Washington and our political system,” he said. “This horrible act of desperation, from two campaigns who have totally failed, makes me even more determined, for the good of the Republican Party and our country, to prevail!

* * *

Statement from Ted Cruz

HOUSTON, Texas – Cruz for President Campaign Manager Jeff Roe today released the following statement:

“Having Donald Trump at the top of the ticket in November would be a sure disaster for Republicans. Not only would Trump get blown out by Clinton or Sanders, but having him as our nominee would set the party back a generation. To ensure that we nominate a Republican who can unify the Republican Party and win in November, our campaign will focus its time and resources in Indiana and in turn clear the path for Gov. Kasich to compete in Oregon and New Mexico, and we would hope that allies of both campaigns would follow our lead. In other states holding their elections for the remainder of the primary season, our campaign will continue to compete vigorously to win.”

Statement from John Kasich

Tonight, Kasich for America chief strategist John Weaver issued the following statement:

Donald Trump doesn’t have the support of a majority of Republicans – not even close [ZH: Trump has a total majority by >2 million] , but he currently does have almost half the delegates because he’s benefited from the existing primary system. Our goal is to have an open convention in Cleveland, where we are confident a candidate capable of uniting the Party and winning in November will emerge as the nominee. We believe that will be John Kasich, who is the only candidate who can defeat Secretary Clinton and preserve our GOP majority in the Congress.

Due to the fact that the Indiana primary is winner-take-all statewide and by congressional district, keeping Trump from winning a plurality in Indiana is critical to keeping him under 1237 bound delegates before Cleveland. We are very comfortable with our delegate position in Indiana already, and given the current dynamics of the primary there, we will shift our campaign’s resources West and give the Cruz campaign a clear path in Indiana.

In turn, we will focus our time and resources in New Mexico and Oregon, both areas that are structurally similar to the Northeast politically, where Gov. Kasich is performing well. We would expect independent third-party groups to do the same and honor the commitments made by the Cruz and Kasich campaigns.

We expect to compete with both the Trump and Cruz campaigns in the remaining primary states.”

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