April 26/Comex silver hits its all time open interest high at 206,000 contracts despite a low price/China continues to have USA dollar outflows: IIF expects this yr almost 600 billion USA dollarrs will leave Chinese shores/Chinese steel and Iron ore prices falter badly in China/Richmond mfg fed index falls badly as does USA consumer confidence/Apple and Twitter disappoint badly and thus the markets will open badly tomorrow/

Good evening Ladies and Gentlemen:

Gold:  $1,243.20 up $3.00    (comex closing time)

Silver 17.11  up 11 cents

In the access market 5:15 pm

Gold $1243.90

silver:  17.17


 Today we got a little surprise in that gold rebounded from its lows to close at $1243.20 at comex closing time and silver was up 11 cents at $17.11  The comex options expiry had little effect on both metals.  In silver, we now have an all time high in silver OI at 206,037 which represents 1.03 billion oz.  Generally when you get a record high OI, you also have high prices for your commodity. In silver in blows my mind that we have a record OI and a low price of silver.  It shows you the damage that the bankers inflicted upon us.
Please remember that even though comex options have expired we still have London’s LBMA and OTC to contend with.  They expire on Friday morning.

Let us have a look at the data for today


At the gold comex today, we had a good delivery day, registering 202 notices for 20200 ounces for gold,and for silver we had 0 notices for nil oz for the non active April delivery month.

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

In silver, the open interest rose by a SURPRISING 4,250  contracts up  to 206,037 despite the fact that the price was silver was up only by 10 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.03 BILLION TO BE EXACT or 147% 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 0 notices served upon for nil oz.

In gold, the total comex gold OI FELL 6,408 contracts, DOWN to 495,436 contracts AS  the price of gold was DOWN $10.20 with MONDAY’S TRADING(at comex closing).

We had another withdrawal  in gold inventory of 2.38 tonnes at the GLD, thus the inventory rests tonight at 802.65 tonnes.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 4,250 contracts up to 206,037 despite the fact that the price of silver was UP by only 10 cents with MONDAY’S trading. The gold open interest FELL by A LARGE 6,408 contracts AS  gold fell by $10.20 YESTERDAY.   Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.

(report Harvey)

2 a) Gold trading overnight, Goldcore

(Mark OByrne)


i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 18.03 POINTS OR 0.61%  /  Hang Sang closed UP 102.83 OR 0.48%. The Nikkei closed DOWN 86.02 POINTS OR 0.49% . Australia’s all ordinaires  CLOSED DOWN 0.30%. Chinese yuan (ONSHORE) closed DOWN at 6.4928.  Oil FELL  to 43.05 dollars per barrel for WTI and 45.01 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5048 yuan to the dollar vs 6.4928 for onshore yuan.




i)The big story of the day.  The very influential and private IIF (Institute of International Finance) has just concluded that China had another outpouring of USA capital of just under 200 billion for the quarter and they expect around $568 to the lost for the year.

Most pundits had thought that China had stabilized its economy and outflow but they were mistaken

a must read…

( zero hedge)

ii)We have been warning about the following:  steel prices have risen domestically due to huge speculation.  The price of iron ore has has also risen.  Well it seems that this bubble has just burst as both steel and iron ore prices have come back to earth in these past two days:

( zero hedge)



i)A major UK Pension fund slashes benefits as they become 86% funded with a liability of 8 billion pounds. They have now initiated increased fees from both employee and employer which will weaken profitability

( zero hedge)


ii)as you will recall we had an election in Spain of which nobody won.  In order to form a government a coalition of the various parties had to be formed.  In the past 4 months it seems that they could not agree to any coalition and a new election must be called.The problem, of course, is that the election will produce the same results.

( zero hedge)



Alberta, Canada

Many are saying the decline in business activity inside Alberta amounts to a depression;

( zerohedge)


Commodity king, Freeport McMoRan  does not see any daylight with respect to its oil and gas sector as it just fired 25% of its staff:

( zero hedge)



i)Dave Kranzler believes that the China/Russia move to crate a link between Beijing and Moscow is very positive along with the physical fix

( Dave Kranzler/IRD)


ii)  Craig Hemke


An excellent commentary tonight from Craig Hemke.  In his calculations of total silver produced, he includes China and Russia.  I exclude them as both countries never let a oz of gold or silver leave their respective countries

( Craig Hemke/GATA)


i)Core durable goods tumble for the 14th consecutive month: generally means a deep recession

( zero hedge)

ii)Home prices are showing the slowest growth and for 5 months in a row have missed expectations.  February saw prices rise by 5.38%.
( zero hedge/Case Shiller)
iii)Markit sees its preliminary PMI for April services rising a bit to 52.  However its manufacturing PMI continues to falter.  They suggest that Q2 is humming along at only a .8% GDP
( zero hedge)

iv)Devastation continues to run rampant in the USA.  One out of 5 American families has nobody having a job.  We are also witnessing a complete devastation in the retail sector as the consumer is basically has no funds for incremental purchases.  The retail chain of Aeropostale (800 stores) will file for bankruptcy and will not continue

( zero hedge)
v)Eight hundred department stores or 1/5 of the USA capacity is now uneconomic
( zero hedge)
vi)We now have the 3rd Fed mfg index fall, after the Philly and Dallas Fed.  This time it was the Richmond Mfg Fed index faltering.  You will recall that last month it gave a surprise spike to 7 yr highs.  It did not last long:
( zero hedge)

vii)Consumer confidence dropped in April and is hovering at 2 yr lows. Income growth potential is falling.  Not a very good sign:

( zero hedge)

ix)Seems that the Atlanta Fed keeps getting tapped on the shoulder to revise its GDP higher Today is really farcical:

( Atlanta Fed/zero hedge)

x)This seems to be the trend:  even though their report is not that bad, hedge fund Brevan Howard met with a massive 1.4 billion USA redemption:

( zero hedge)
xi After the market closed we had two biggy on the downside:
First Twitter
Second: Apple

Let us head over to the comex:

The total gold comex open interest FELL CONSIDERABLY, as expected to an OI level of 495,436 for a LOSS of 6,408 contracts AS the price of gold DOWN  $10.20 with respect to MONDAY’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 1079 contracts from 1384 contracts down to 305.  We had 973 notices filed yesterday so we LOST 106 CONTRACTS or an additional 10,600 gold ounces will NOT stand for delivery. The next non active contract month of May saw its OI fall by 24 contracts down to 2261. The next big active gold contract is June and here the OI fell by 6,481 contracts down to 366,905. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was poor at 143,383. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was poor at 128,809 contracts. The comex is not in backwardation.

Today we had 202 notices filed for 20,200 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by a considerable 4250 contracts from 201,787 UP 206,037 DESPITE THE FACT THAT the price of silver was UP by only 10 cents with MONDAY’S TRADING.  We are now in the next contract month of April and here the OI fell by 2 contracts reducing to 6. We had 2 notices filed YESTERDAY so we NEITHER  gained NOR LOST ANY SILVER OUNCES THAT will stand for delivery in this non active month of April.   The next active contract month is May and here the OI FELL by only 7,156 contracts DOWN to 41,611. This level is exceedingly high AS WE ONLY HAVE 3 days before first day notice on Friday, April 29. The volume on the comex today (just comex) came in at 129,349, which is HUMONGOUS  AND NORMAL ROLLOVERS. The confirmed volume yesterday (comex + globex) was AGAIN OUT OF THIS WORLD AT 101,880. Silver is not in backwardation. London is in backwardation for several months.
We had 0 notices filed for 10,000 oz.

April contract month:

INITIAL standings for APRIL

Initial Standings for April
April 26.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  1,607.500 oz  (Scotia)

50 kilobars

Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  32,073.910 OZ



No of oz served (contracts) today 973 contracts
(97,300 oz)
No of oz to be served (notices) 103 contracts 10,300 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 128,981.2 oz


Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 1 customer deposit:

i) Into Scotia: 32,073.910 oz

total customer deposit:  32,073.910 oz

Today we had 1 customer withdrawals:

i) Out of SCOTIA;  1607.500  50 kilobars

total customer withdrawal:1,607.50 oz   50 kilobars

Today we had 0 adjustments:



Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 202 contracts of which 91 notices was stopped (received) by JPMorgan dealer and 30 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 (3847) x 100 oz  or 384,700 oz , to which we  add the difference between the open interest for the front month of April (305 CONTRACTS) minus the number of notices served upon today (202) 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 (3847) x 100 oz  or ounces + {OI for the front month (305) minus the number of  notices served upon today (202) x 100 oz which equals 395,000 oz standing in this non  active delivery month of April (12.286 tonnes).
We lost 106 contracts or 10,600 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 12.286 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)  = 19.218 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) =7,219,937.119 or 224.57 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.57 tonnes for a loss of 78 tonnes over that period. 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
And now for silver


 april 26.2016

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 1,027,743.500 oz

JPM, Delaware

BRINKS, Scotia

Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 596,467.200


No of oz served today (contracts) 0 contracts

nil  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 9,746,880.2 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into BRINKS: 596,467.200 oz


Total customer deposits: 596,467.200 oz.

We had 4 customer withdrawals

ii) Out of Delaware: 1986.000 oz  ?????

iii) Out of BRINKS: 275,463.310 oz

iv) Out of JPMorgan; 150,255.600 oz

v)Out of Scotia:  600,038.65 oz


total customer withdrawals:  1,027,743.500  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 (4) and the number of notices served upon today (0) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the April. contract month:  191 (notices served so far)x 5000 oz +(4{ OI for front month of April ) -number of notices served upon today (0)x 5000 oz  equals 975,000 oz of silver standing for the March contract month.
we neither gained nor lost any silver ounces standing in this non active delivery month of April.
Total dealer silver:  31.957 million
Total number of dealer and customer silver:   150.482 million oz
The open interest on silver is now at an all time high having surpassed yesterday’s OI which came within 200 OI of the record; silver is slowly disappearing from the comex vaults.
The total dealer amount of silver remains at multi year low of 31.957 million oz.
And now the Gold inventory at the GLD
aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.03 tonnes
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.


April 26.2016:  inventory rests at 802.65 tonnes



Now the SLV Inventory
aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz.
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 26.2016: Inventory 334.724 million oz
1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.0%
Percentage of fund in silver:37.6%
cash .+1.4%( April 26.2016).
2. Sprott silver fund (PSLV): Premium to rises FALLLS to -96%!!!! NAV (April26.2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls.+67% to NAV  ( April26.2016)
Note: Sprott silver trust back  into negative territory at -96%% due to purchase of 75 million dollars worth of silver/Sprott physical gold trust is back into positive territory at +.67%/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 -.96%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.

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

Trading in gold and silver overnight in Asia and Europe

Swift Warns of Cyber Fraud – $81 Million Stolen From Central Bank

Swift, the vital global financial network that western financial services companies, institutions and banks use for all payments and transfer billions of dollars every day, warned its customers yesterday evening that it was aware of cyber fraud and a number of recent “cyber incidents” where attackers had sent fraudulent messages over its system and $81 million was apparently stolen from a central bank.

SWIFT_LogoSWIFT (Wikipedia)

As reported by Reuters, the disclosure came as law enforcement agencies investigate the February cyber theft of $81 million from the Bangladesh central bank account at the New York Federal Reserve Bank. Swift has acknowledged that the scheme involved altering Swift software on Bangladesh Bank’s computers to hide evidence of fraudulent transfers.

Yesterday’s statement from Swift marked the first acknowledgement that the cyber attack on  the New York Federal Reserve Bank was not an isolated incident but one of several recent criminal schemes that aimed to take advantage of the global messaging platform used by some 11,000 financial institutions.

“Swift is aware of a number of recent cyber incidents in which malicious insiders or external attackers have managed to submit Swift messages from financial institutions’ back-offices, PCs or workstations connected to their local interface to the Swift network,” the group warned customers.

The warning, which Swift issued in a confidential alert sent over its network, did not name any victims or disclose the value of any losses from the previously undisclosed attacks.

Swift, or the Society for Worldwide Interbank Financial Telecommunication, is a co-operative owned by 3,000 financial institutions. Also, Swift released a security update to the software that banks use to access its network to thwart malware that security researchers with British defense contractor BAE Systems said was probably used by hackers in the Bangladesh Bank heist.

Cyber security experts said more attacks could surface as SWIFT’s banking clients look to see if their SWIFT access has been compromised.

Shane Shook, a banking security consultant who investigates large financial crime, said hackers were turning to SWIFT and other private financial messaging platforms because such attacks can generate more revenue than going after consumers or small businesses.

“These hacks specifically target financial institutions because smaller efforts result in much larger thefts,” he said. “It’s much more efficient than stealing from consumers.”

Full Reuters article is here

We have for some time warned of the risks posed by cyber fraud and war to banks, savings and indeed investments. The apparent theft of $81 million from a central bank from an account at the New York Federal Reserve shows this.

Cyber theft is a real risk for all digital or virtual wealth today – whether that be digital bank accounts and deposits or electronic stock and other exchanges.

Fintech solutions involving the vitally important blockchain cometh and not before time. However, many of these solutions are also vulnerable in the short term as the nascent industry grows and the best solutions survive and thrive and less safe ones are slowly found out by the market and disappear.

The risks posed to bank deposits, markets and indeed all online investments and savings by hacking, cyberterrorism and cyberwar remains not understood.


Given these real risks, tangible gold becomes not important but a vital means of preserving wealth. Physical gold coins and bars, due to their tangible nature, are not vulnerable to crises that may afflict electronic digital currency and other digital wealth.

Those who hold physical gold and silver coins and bars outside the banking system as an insurance policy would certainly weather the storm better than those who do not.

The hope is that these risks will not materialise. Hope is not a strategy. We believe it is prudent to be aware of and take appropriate measures to protect your wealth.

Our modern western financial system with its massive dependency on single interface websites, servers and the internet faces serious risks that few analysts have yet to appreciate and evaluate. These also pose risks to digital gold providers who do not allow clients to interact and trade on the phone and are solely reliant on online trading platforms.

Jim Rickards, the leading expert on currency wars and risks posed by cyber fraud to people’s, company’s and indeed nation’s wealth commented to GoldCore about the cyber theft:

“Bangladesh is one of the poorest countries in the world. $100 million of their money disappeared. The money was on deposit with the Federal Reserve Bank of New York, the safest bank in the world. The culprits hacked SWIFT, one of the most secure message traffic systems in the world. If the Fed and SWIFT aren’t safe, nothing is safe. If Bangladesh had held physical gold, they would still have their money. The case for owning gold in an age of cyber-financial threats is compelling.”

Recent Market Updates

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

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 ends higher ahead of central bank meetings (Marketwatch)
Gold climbs as dollar lends support ahead of Fed meeting (Reuters)
Gold Rises, Copper Falls as U.S. Home Sales Sag a Third Month (Bloomberg)
Sales of New U.S. Homes Fall for a Third Month on Slump in West (Bloomberg)
China debt load reaches record high as risk to economy mounts (FT via CNBC)

Macro picture sees precious metal shine (FT Adviser)
Gold, already on its way up, may head even higher: Technician (CNBC)
World Witnessed Socialism’s Death … Central Banking Is Next (Gold Seek)
Depression, Debasement, & 100 Years Of Monetary Mismanagement (Zero Hedge)
When will the Fed stop propping up the US stockmarket? (Money Week)
Read More Here

Gold Prices (LBMA)
26 April: USD 1,234.50, EUR 1,093.46 and GBP 847.28 per ounce
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

Silver Prices (LBMA)
26 April: USD 16.86, EUR 14.98 and GBP 11.67 per ounce (Not updated yet)
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

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

investors better make sure they have already own physical gold and silver.



Dave Kranzler believes that the China/Russia move to crate a link between Beijing and Moscow is very positive along with the physical fix

(courtesy Dave Kranzler/IRD)


China And Russian Look To Take Over Global Gold Trading

BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets,” First Deputy Governor of the Russian Central Bank Sergey Shvetsov told TASS  – RT.com, April 19

The article in RT.com from which the above quote is sourced surprisingly did not receive a lot of attention from the alternative media.  Perhaps it was overshadowed by the highly anticipated move by China to commence fixing the price of gold on the Shanghai Gold Exchange in yuan.  I suggested that we would not see an immediate impact on the price of gold, which we have not, but that the move was part of a larger plan by China to “de-dollarize” the world.

Also largely ignored by the alternative media was the fact that Russia added another 500,000 ounces of gold to its Central Bank reserves (Harvey: 15.55 tonnes)– data provided by Smaulgld.com. To put this into some context, currently the Comex, which is sporting over 50 million ounces of paper gold open interest, is reporting 643k ounces of gold designated as available for delivery (“registered”).   In 2015, Russia added a record amount of gold tonnage to its Central Bank stash.

I would argue, as would many, that China and Russia are strategically and methodically weaning the world off paper gold and fiat currencies and are looking to officially remove the dollar from its reserve status and to re-introduce gold into the global monetary system – without triggering WW3.   Of course, this would explain the Obama Government’s recent military belligerence toward both countries…

Dennis Gartman, among many others, has expressed anxiety over the net short position in gold futures by the “commercial trader segment” bullion banks per the Commitment of Traders report.  The fear is that the banks are getting ready to attack the price of gold with another hedge fund “long liquidation” operation.  This, of course, is a trading pattern in the precious metals that we have become accustomed to enduring since the bull market began in 2000/2001.   Obvious manipulation that for some reason seems to be undetectable by the Government regulators (CFTC) who are paid by the Taxpayers to enforce laws.

I looked at some statistics from the COT data that goes back  to 2005 (compiled assiduously by one of the partners in the investment fund I co-manage).   While the net short position in gold futures held by the bullion banks, 240,121 per the latest COT report,  is quite a bit higher than the average net short over the period (-161,781), it’s not even close to the highest net short of -308,231 in December 2009 or -302,740 in September 2010.  In 2009, gold sold off for a bit after that -308k reading  but in 2010 gold continued higher toward $1900 after the -302k reading.

The point here is that the relative net short position held by the criminal bullion banks is not necessarily the best predictive metric with which to forecast the next move in the price of gold. Furthermore, it’s quite possible that the physical gold market activities being conducted by China and Russia will act as a counter-force to the manipulation efforts exerted by the western Central/bullion banks.

I have argued for years that traditional chart and t/a analysis applied to the precious metals is thoroughly useless because of the high degree of intervention by the Central and bullion banks.

With that reservation about using charts, I wanted to present a couple charts of gold and one of the dollar because, in my view, gold is potentially set up for a monster move higher and the dollar appears to be potentially headed off the proverbial cliff (click on images to enlarge):






The graph in the middle is a 10-yr weekly of gold. You can see that over this time period, the price of gold is still exceedingly “oversold” per the TRIX indicator.  The other graphs  is a 1-yr daily which shows that gold has been “oscillating” laterally in a consolidation formation.  It’s brushing up against its 50 dma (yellow line).  Of course, at this point, the price of gold could “break” either way, higher or lower.   Perhaps even a quick trip down to its 200 dma (red line).  Having said that, the longer term graph of gold, combined with the massive demand for physical gold from Russia and China, suggests that every manipulated price hit should be aggressively bought.  You can see the dollar (lower left graph) is positioned treacherously, as it has traded well below its 50 dma and could be headed lower.  Certainly the ongoing economic and political deterioration of the United States is not giving anyone a reason to buy dollars.

There’s been a lot of “chatter” about whether or not the mining shares, which have had a tremendous run since mid-January, are “overbought.”  The general consensus is that the mining shares are due for a pullback and I know a lot of my subscribers are hesitant to buy right now.  My view is that, in the context of the brutal beating inflicted on the miners since March 2011 by overt manipulative forces – from both official entities and predatory hedge funds – it’s impossible to determine a true measure of “overbought” because the mining shares have been oversold for nearly five years.

I’m in an email group with a very impressive roster of precious metals investment and analytic professionals. One of them who is rather well-known made this comment today, which I thought summed up the situation perfectly:    Now everybody is desperately waiting on the sideline to build up a first positon in gold, silver and miners, but nobody wants to buy into the rally, but rather buy into a correction… that’s why I am convinced, that every bigger dip will be bought and gold might head to 1,400-1,500 by year end! 

The next bi-monthly issue of my Mining Stock Journal will be released Thursday. I have a sub-50 cent junior exploration stock to present with a market cap that is likely 1/10 the intrinsic value of the Company given the amount of proved gold and silver it has already discovered.  This company is self-funding for now as well.  You can access the next issue plus I’m offering the four previous back-issues (for now) by clicking here:  Mining Stock Journal.



An excellent commentary tonight from Craig Hemke.  In his calculations of total silver produced, he includes China and Russia.  I exclude them as both countries never let a oz of gold or silver leave their respective countries

(courtesy Craig Hemke/GATA)

TF Metals Report: Spinning the yarn


11:12a ET Tuesday, April 26, 2016

Dear Friend of GATA and Gold:

The TF Metals Report’s Turd Ferguson today notes what seems like astounding strength in the silver futures market, where open interest has risen dramatically. He speculates that high-frequency traders may be turning bullish and buying dips. His analysis is headlined “Spinning the Yarn” and it’s posted at the TF Metals Report here:


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


Your early TUESDAY 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 6.4929 / Shanghai bourse  CLOSED UP 18.03  OR 0.61% (LAST HR RESCUE) / HANG SANG CLOSED UP 102.83 OR 0.48% 

2 Nikkei closed DOWN 86.02 or 0.49%%/USA: YEN RISES TO 110.91

3. Europe stocks opened ALL MIXED  /USA dollar index DOWN to 94.58/Euro UP to 1.1281

3b Japan 10 year bond yield: FALLS   TO -.115%     !!!!(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::  43.05  and Brent: 45.01

3f Gold DOWN  /Yen UP

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

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

3h Oil 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 0.257%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.12%/: 

3j Greek 10 year bond yield FALL to  : 8.55%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1233.75/silver $16.99 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 25 /100 in  roubles/dollar) 66.31

3m oil into the 43 dollar handle for WTI and 45 handle for Brent/

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9750 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1000 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .257%

/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 1.91% early this morning. Thirty year rate  at 2.73% /POLICY ERROR)

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

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

As Fed Meeting Begins Futures Are Flat In Sleepy Session; Apple Earnings On Deck

With the Fed decision just one day away, followed the very next day by the increasingly more irrational BOJ, stocks had no desire to make significant moves and overnight’s boring session was the result, as European stocks and U.S. index futures rose modestly but mostly hugged the flatline while Asian declined 0.2% for a third day as raw-material shares declined and Tokyo equities slumped before central bank meetings in the U.S. and Japan this week. China’s stocks rose the most in almost two weeks, up 0.6% but failed to rise above 3000 on the Shanghai Composite, in thin trading.

The reason why no breakout is possible in any direction is because confusion reigns about the most basic issue: earnings. Take these two quotes for example:

“While policies are supportive of equities, valuations look expensive,” Hans Goetti, the Dubai- based chief strategist for the Middle East and Asia for Banque Internationale à Luxembourg told Bloomberg. “First-half earnings don’t really look great. Unless you have very good earnings coming through in the second half, I think valuations could be on the high side.”

And then this: “Earnings are doing pretty well,” Michael Woischneck, a fund manager who oversees the equivalent of $190 million at Lampe Asset Management in Dusseldorf, Germany told Bloomberg. “But that’s something that could change with just one word from a Fed governor. Although no changes are expected, wording at this week’s meeting is key.”

Peraps one was looking at GAAP while the other one was focused on non-GAAP?

In any case, European stocks climbed for the first time in four days as BP Plc and Standard Chartered Plc rose after the companies reported earnings. The Stoxx Europe 600 Index rose 0.5 percent as of 10:37 a.m. London time. BP rallied 4.2 percent and Standard Chartered jumped 10 percent in London. The pound strengthened against all of its major counterparts on speculation that the U.K. is less likely to leave the European Union.  Banks led gains in Europe and Asian equities pared their decline. The yen and Treasuries advanced before central bank meetings this week. Malaysia’s ringgit dropped to a one-week low after a state-owned investment fund withheld an interest payment on its bond. Copper fell for a second day and crude oil traded below $43 a barrel. Day ahead natural gas in the U.K. rose to the highest since mid January as colder-than-usual weather boosted demand.

BP, the first oil major to report quarterly earnings, posted a surprise profit as a stronger-than-expected refining and trading performance helped mitigate the lowest crude prices in more than a decade. In the U.S., Apple Inc. releases results Tuesday that may shed more light on the state of the technology sector. The Federal Reserve concludes its meeting Wednesday, with investors pricing in no chance of an interest-rate increase. The Bank of Japan’s outcome is a day later and most analysts predict Governor Haruhiko Kuroda will unveil a stimulus boost.

Futures on the Standard & Poor’s 500 Index added 0.3 percent. Apple, the world’s most valuable company, forecast in January that quarterly revenue would drop for the first time in more than a decade as iPhone sales slowed. The company’s projection of $50 billion to $53 billion for the three months through March compares with an average estimate of $52 billion in a Bloomberg survey of analysts.

The MSCI Emerging Markets Index rebounded 0.1 percent, after losing 0.4 percent, as stocks in China, India and South Korea advanced. The Hang Seng China Enterprises Index of mainland shares in Hong Kong rose 0.3 percent after sliding 1.4 percent. The Shanghai Composite Index added 0.6 percent, rebounding from the lowest since March.

Global Market Snapshot

  • S&P 500 futures up 0.2% to 2087
  • Stoxx 600 up 0.2% to 347
  • FTSE 100 up 0.3% to 6279
  • DAX up less than 0.1% to 10295
  • German 10Yr yield up 1bp to 0.28%
  • Italian 10Yr yield up 1bp to 1.54%
  • Spanish 10Yr yield up 1bp to 1.65%
  • S&P GSCI Index up 0.2% to 346
  • MSCI Asia Pacific down 0.2% to 133
  • Nikkei 225 down 0.5% to 17353
  • Hang Seng up 0.5% to 21407
  • Shanghai Composite up 0.6% to 2965
  • S&P/ASX 200 down 0.3% to 5221
  • US 10-yr yield down 1bp to 1.9%
  • Dollar Index down 0.3% to 94.56
  • WTI Crude futures up 0.7% to $42.94
  • Brent Futures up 0.7% to $44.80
  • Gold spot down 0.3% to $1,235
  • Silver spot up less than 0.1% to $17.01

Global Top News

  • DuPont Boosts Outlook as First-Quarter Sales Top Estimates: Boosts yr oper. EPS forecast to $3.05-$3.20, had seen $2.95- $3.10; 1Q oper. EPS $1.26 vs est. $1.04; says on track for $730m cost reductions
  • BP Reports Surprise Profit on Strength in Refining, Trading: Profit adjusted for one-time items and inventory changes was $532m vs analyst ests. for loss of $244.9m; co. says it can balance books w/ oil at ~$50-$55/bbl
  • Sarepta Fails to Win FDA Panel Backing for Muscle Disease Drug: Panel votes 7-3 that drug wasn’t shown to be effective
  • U.S. to Require Large Banks to Have Year Worth of Liquidity: WSJ; Details of rule crafted by Federal Reserve, FDIC, Office of the Comptroller of the Currency to be released Tuesday at FDIC board meeting
  • Toyota Cedes Global Sales Lead to VW as Shutdowns Trump Scandal: Toyota sales fell 2.3% in 1Q to 2.46m in Jan.- March, Volkswagen deliveries rose 0.8 percent to 2.5m
  • Fed to Keep Options Open for June Rate Hike: Decision-Day Guide: Officials to debate whether to reinstate risk assessment
  • Toshiba Books $6.2 Billion Loss After Westinghouse Writedown: Yr prelim Oper. loss 690b yen; had forecast 430b yen loss; nuclear business results in 260b yen impairment
  • Oil’s Recovery Inches Higher as Fracklog Awaits Price Trigger: Drilled, uncompleted wells could return 500,000 b/d to market
  • New Valeant CEO Papa Trades Challenge at Perrigo for Fresh One
  • Verisk to Sell Health-Care Services Ops to Veritas for $820m: Sale prices includes $720m cash, $100m L-T promissory note with interest paid in kind, other contingent consideration
  • Perella Weinberg Said In Merger Talks With Tudor Pickering: Considering a tie-up with Tudor Pickering in a push into the energy sector
  • Alere Said to Get Default Notice From Creditors on Filing Delay: Received notice of default from group of bondholders after company delayed filing 2015 financial statement
  • McDonald’s Said to Market Euro Bonds After ECB Expands Stimulus: Offering the securities in 3 parts, with notes maturing in January 2021, November 2023 and May 2028, according to person familiar with matter
  • Earnings Blowups Send Tech Traders to Options Market for Hedges: Ratio of Nasdaq VIX to S&P 500 gauge near highest since August
  • Landry’s, Jefferies CEOs Plan IPO for New SPAC: Reuters: Landry’s CEO Tilman Fertitta, Jefferies/Leucadia CEO Richard Handler to start special purpose acquisition co. through their cos. called Landcadia, plans to raise as much as $300m in IPO

Looking at regional markets, Asian stocks traded lower following the subdued lead from Wall St. as participants remained cautious ahead of the week’s key policy decisions. ASX 200 (-0.3%) opened from its long weekend to trade in minor-positive territory, underpinned by a rebound in the commodities-complex in which WTI briefly reclaimed USD 43/bbl, but failed to hold onto gains as commodities pulled back and the downbeat tone persevered. Nikkei 225 (-0.5%) extended on losses with participants tentative as they contemplate on whether the BoJ will ease further this week, while Chinese markets (Shanghai Comp +0.6%) initially outperformed following another substantial liquidity injection and expectations outflows are to improve this year, before sentiment later soured on commodity weakness with Dalian iron ore prices falling over 4%. 10yr JGBs traded mildly higher as the risk-averse tone in Japan supported safe-haven assets, while the BoJ were also in the market to acquire around JPY 1trl in government debt.

Top Asian News

  • Mitsubishi Motors’ Improper Mileage Tests Date Back to 1991: Formed a panel of three former prosecutors to investigate improper testing that goes back as far back as 1991, including the falsification of fuel efficiency data
  • 1MDB Defaults on Bond After Missing $50 Million Payment: 1MDB in disagreement with IPIC over debt obligations
  • Hyundai Posts 9th Successive Profit Drop as China Sales Fell: Deliveries in South Korea rose 3.7%, while in China fell 9.6%; 1Q oper. profit 1.34t won; est. 1.42t won; 1Q net income, excluding minority interests, 1.69t won; est. 1.5t won
  • Obscure Chinese Hedge Fund Is Making Big Enemies in Stock Market: Activist investor in the making takes on Internet firms
  • UBS Says Hong Kong Traders Should Be Worried Amid China Defaults: End of implicit state support to drive up funding cos
  • Alipay Owner Raises Record $4.5 Billion to Fund Global Expansion: China’s sovereign wealth fund joins as new investor
  • Mallya Faces Expulsion From India Parliament by Ethics Panel: Businessman said to be overseas as creditors seek debt dues
  • India’s Energy Minister Wants to Cut Coal Imports to Nothing: Goyal says India increasing domestic output to cut imports

Sentiment today has kicked off in a more upbeat fashion in Europe, with equity indices higher across the board (Euro Stoxx: +0.4%). In terms of the notable outperformers, the likes of BP (+3.8%) and Standard Chartered (+10.0%) have both seen strength in the wake of their earnings updates, while Italian banks are once again among the best performers in Europe. In tandem with the uptick in sentiment, WTI futures remain near their highest levels of the day, although still slightly lower than the USD 43.00/bbl level.

In fixed income, Bunds have ebbed lower throughout the morning to break below 162.00 to the downside and approach the April 25th low at 161.90 in what appears to be more of a technically driven move and also in tandem with the move higher in stocks. Separately, orders for the UK 2065 Gilt syndication exceed GBP 19bIn with price guidance unchanged according to bookrunners with price guideline at 0.25-0.5bps above 3.5% 2068 Gilt. Looking ahead, highlights still to come include US durable goods orders, flash services PMI, comments from ECB’s Constancio and Fed’s Mester and Lockhart.

Top European News

  • Standard Chartered Jumps on Surprise Drop in Loan Impairments: 1Q pretax adj. profit fell 64% to $539m, capital ratio climbs, costs fall 12% y/y, losses on bad loans fell 1% to $471m
  • Diamond’s Atlas Mara Interested in Barclays Africa Takeover: Said it’s held talks with investors on a potential bid for or the U.K. lender’s operations in Africa to boost its presence across the continent
  • Bayer Profit Beats Estimates as Newest Drugs Buoy Demand: 1Q Ebitda before special items EU3.4b, est. EU3.1b, top-selling drugs Xarelto and Eylea continued to soar
  • Orange Quarterly Sales Rise 0.6% as Growth Resumes in Spain: 1Q rev. EU10b vs est. EU10b; keeps guidance, targets 2016 restated Ebitda higher than in 2015 on comparable basis
  • BAT Revenue Beats Estimates on Gains Across Western Europe: Reported a surge in cigarette sales in western Europe that helped 1Q revenue beat analysts’ estimates
  • EON Sees Profit of Up to 1 Billion Euros After Uniper Split: Utility plans to pay dividend of 40%-60% of underlying income
  • Merkel Said to Weigh $1.4 Billion in Electric-Car Incentives: Will meet with German automotive CEOs on Tuesday evening to discuss a plan to spend as much as EU5,000 per vehicle,
  • Pound Shows How Brexit Concerns Are Starting to Look Overdone: Implied pound volatility falls most since 2015 U.K. election

In FX, nothing other than GBP buying behind the USD moves this morning, as ($) index has turned lower aggressively and is now testing support in the 94.50 area. Brexit repositioning said to be largely behind the sharp turn in the tide of UK sentiment, but we sense specs are now pushing for further stops with pre 1.4600 offers set to be tested. Nevertheless, mid Feb highs now achieved. EUR/GBP losses have slowed though as EUR/USD has turned higher in tandem, touching on 1.1300. AUD and CAD gain on follow on moves, but .7750 and 1.2630 levels contain respectively for now.

Ahead of the FOMC, some restraint is likely to kick in soon, but levels are getting stretched despite the focus on whether Yellen and Co will hint/signal at a potential move in June.

The ringgit slid 0.5 percent. 1Malaysia Development Bhd. said it didn’t pay $50 million of interest on a $1.75 billion bond amid a dispute with Abu Dhabi’s sovereign wealth fund on who should be making the payment. The latter is the co-guarantor of the defaulted securities and said this month 1MDB owed it more than $1 billion. 1MDB’s dollar bonds slumped, sending $3 billion of March 2023 securities down 1.76 cents to 88.37 cents on the dollar to yield 6.53 percent .

The yen strengthened 0.3 percent to 110.87 per dollar, having touched a three-week low of 111.91 on Monday. Nikkei newspaper reported that Japan’s $1.3 trillion Government Pension Investment Fund will start hedging to protect its foreign assets against an appreciating yen, a move Bank of America Merrill Lynch strategist Shusuke Yamada said could boost the local currency.

In commoditues, WTI has been trickling lower after reaching highs of USD 45.45/bbl last Thursday. Prices have continuously made lower highs and lower lows (1hr chart) and currently resides at USD 42.94/bbl. Gold has been largely range bound between USD 1240.77/oz to USD 1232.35/oz. Silver was also bearish overnight and on a technical note used the 23.6 fib on the 4 hour chart as resistance for a move up which was at the USD 17.00 level. In industrials we also saw copper and Dalian iron ore futures pressured with the latter retreating further away from 20-month highs amid a widespread cautious tone.


Bulletin Headline Summary from RanSquawk and Bloomberg

  • Sentiment today has kicked off in a more upbeat fashion in Europe, with equity indices higher across the board (Euro Stoxx: +0.4%)
  • Nothing other than GBP buying behind the USD moves this morning, as ($) index has turned lower aggressively and is now testing support in the 94.50 area
  • Looking ahead, highlights include US Durable Goods Orders, Flash Services PMI, API Crude Oil Inventories and Fed’s Mester
  • Treasuries little changed during overnight trading amid European equity strength after better-than-expected earnings from BP and Standard Chartered; Treasury auctions continue with sale of $34b 5Y notes, WI 1.385%; last sold at 1.335% in March, 1.169% in February.
  • Federal Chair Janet Yellen and her colleagues will have a chance this week to signal whether they want to raise rates as soon as June. The message is likely to be it’s still an option, but far from a certainty
  • Bond traders aren’t fully pricing in another rate increase until February, while driving a gauge of expected volatility in Treasuries to the lowest since 2014 this month. That’s the sort of hubris that can get them burned, according to Jerome Schneider, a money manager at Pimco
  • The ECB’s announcement in March to include corporate bonds in its QE program has sent borrowing costs toward record lows for issuers in the region. That has investors looking beyond senior debt to find bonds that may have been overlooked
  • A measure of risks to sterling following the June 23 vote on Britain’s membership in the European Union has tumbled by the most since the country narrowly avoided an inconclusive general election result last year
  • If Britain leaves the European Union, it’s going to need negotiators, and lots of them. Parliament’s Foreign Affairs Committee thinks it knows where it can find them: London’s financial sector
  • Fitful financial markets and signs of a southwest Florida real estate slowdown so unnerved Canadians Fab and Christa Michetti that they sold one of their two vacation homes there last month. The U.S. presidential election’s isolationist talk provided one more push
  • Sovereign 10Y bond yields mostly higher; European, Asian equity markets mostly higher; U.S. equity-index futures rise. WTI crude oil higher while metals drop


DB’s Jim Reid concludes the overnight wrap

Markets were snoozing a little yesterday ahead of things hotting up in what is a very busy rest of the week. There was some cautiousness around though with the Fed and the BoJ continuing to create lots of debate, especially the latter. The meeting is seemingly on a knife-edge in terms of whether they’ll act now or not and as we highlighted yesterday the consensus split is fairly even as to whether they pull the trigger this time. Our FX colleagues touched upon the topic of the BoJ approving NIP loans yesterday in their daily FX piece. While they ultimately expect no change in policy, they believe that it’s unlikely in their view that NIP loans would provide a major jolt that leads to an increase of banks’ corporate loans.

This morning in Asia, bourses are generally following the lead from the US last night and drifting lower. Leading the way are markets in Japan where the Nikkei is currently -1.08% and the Topix is -1.31%. The Hang Seng (-0.81%), Kospi (-0.09%) and ASX (-0.34%) are also in the red, with China flattish as we go to print. The risk-off tone is being reflected by the strengthening in the Yen this morning too, currently up +0.28%. Despite the near 3% weakening for the currency last week, which is going part of the way to lending support to the BoJ on hold camp, the Yen is still a not too insignificant 6.7% stronger from the day before the January negative rate move, rallying from nearly 119 to the current level of just below 111.

As we noted earlier there wasn’t much to write home up about with regards to newsflow and price action in markets yesterday, compounded also by a lack of earnings releases for investors to get stuck into. Some slightly softer macro data and an easing across the energy complex (WTI ended down nearly 2.5% and back below $43/bbl) contributed to a softish day for markets on the whole with the S&P 500 (-0.18%), Dow (-0.15%), Stoxx 600 (-0.51%) and DAX (-0.76%) all ending the session in the red. Its worth noting though that volumes were generally 10-20% lower than the average depending on the index. Credit markets were probably the bigger underperformer yesterday. In Europe, after rallying to the tune of 5bps or so last week, the iTraxx Main gave back about half of that move in yesterday’s session, while across the pond CDX IG ended just over 1.5bps wider following a 7bp rally last week.

Speaking of credit markets, some of the more interesting news yesterday was in the new issue market where Unilever became the latest corporate to price a post ECB-CSPP announcement zero-coupon bond in Euros (4y bonds). The bonds were priced at a discount so as to yield a miniscule 12bps. This comes after Sanofi priced 3y bonds last month also with a zero coupon and it feels like it won’t be the last.

That news came despite it being a broadly weaker day across rates markets. 10y Bund yields edged another 3bps higher yesterday and at 0.263% is now some 19bps off the early April lows. It was a similar story in the US Treasury market where the benchmark 10y ended up 2.5bps higher in yield at 1.914% – the first time it’s closed above 1.9% since March 25th.

Just on that economic data, in the US we learned that new home sales declined unexpectedly last month (-1.5% mom vs. +1.6% expected) to an annualised rate of 511k. In fairness this actually masked what was actually 26k of upward revisions to the prior two months so the headline probably looked softer than the overall details revealed. Meanwhile, the other data released in the US was another regional manufacturing survey, this time from the Dallas Fed. Data for this month was weaker than expected however at -13.9 (vs. -10.0 expected), a slight weakening from the -13.6 in the prior month. Closer to home, the only data of note came out of Germany where the IFO business climate survey was little changed from March at 106.6 (and below hopes for a rise to 107.1). The current assessment component declined 0.6pts to 113.2 which was offset by a modest 0.4pts gain in the expectations component to 100.4

Turning to the micro and a quick update of where we’re standing on the earnings front (ahead of a busy rest of the week calendar). As it stands with 138 S&P 500 companies having reported, 104 have beat EPS consensus (75%) at a weighted average beat of 2.6%. Meanwhile 82 companies have beaten revenue estimates (59%) at a more modest 0.2% average beat. The bottom-up EPS for the index is now over 8% lower on a YoY basis, while DB’s David Bianco made mention in his piece on Friday that analysts have cut their Q1 EPS estimates by a whopping 9.4% since January 1st – with this number likely to increase as we run further through reporting season. This was most evidenced by the Banks last week and looking ahead to Apple’s Q2 results today, the current EPS consensus estimate is $1.98 which has been marked down nearly 17% since the start of the year. So while earnings are tracking at their usual beat/miss ratio, this is being propped up by materially lower consensus earnings expectations while earnings are also down high single digits (in percentage terms) relative to last year.

Taking a look at the day ahead now, this morning in Europe it’s a fairly sparse calendar with only BBA loans data out of the UK of any interest. That all changes this afternoon however where we’ve got a packed afternoon for data in the US. The early release will be the first reads for durable and capital goods orders in March. The market is expecting a +1.9% mom headline durable orders print, and +0.9% mom core capex print, while our US economists are a little less optimistic at +1.0% mom and +0.7% mom respectively. Also due out today will be more housing market data in the form of the S&P/Case-Shiller house price index, along with the Conference’s Board’s leading index (expected to decline 0.4pts to 95.8), the flash services and composite PMI, and finally further regional manufacturing data in the form of the Richmond Fed manufacturing activity index. Away from the data there will be more Central Bank speak from the ECB with Constancio scheduled to speak, while BoE Deputy Governor Cunliffe is also due to speak today.

Earnings season kicks up another gear meanwhile with 50 S&P 500 companies set to report. The highlights look set to be Proctor & Gamble (before-market), AT&T (after-market), eBay (after-market) and of course Apple (after-market). Meanwhile, the highlight of the European calendar today will likely be results out of BP.



i)Late  MONDAY night/ TUESDAY morning: Shanghai closed UP BY 18.03 POINTS OR 0.61%  /  Hang Sang closed UP 102.83 OR 0.48%. The Nikkei closed DOWN 86.02 POINTS OR 0.49% . Australia’s all ordinaires  CLOSED DOWN 0.30%. Chinese yuan (ONSHORE) closed DOWN at 6.4928.  Oil FELL  to 43.05 dollars per barrel for WTI and 45.01 for Brent. Stocks in Europe ALL MIXED . Offshore yuan trades  6.5048 yuan to the dollar vs 6.4928 for onshore yuan.



none today


IIF Ruins The Party, Predicts Another $420 Billion In Chinese Capital Outflows This Year

In early 2016, the biggest global macroeconomic risk factor was the accelerating capital outflows out of China over fears of currency devaluation (or simply because the local population knows better than anyone just how dire to domestic situation is and is rushing to park its assets offshore) and with good reason: after the PBOC burned through $1 trillion in reserves to offset capital flight starting in the summer of 2014, even the IMF chimed in with a concerned report suggesting China may have at most another half a trillion “buffer” left before it runs into illiquid assets which would prove virtually impossible to liquidate easily in the open market.

It got so bad that in January and early February, US equity futures would surge or slump based on a Yuan fixing that was a few basis point lower or higher than expected.

But then, almost as if on cue, following three consecutive months of nearly $100 billion in outflows, in February the capital flight slowed sharply and then proceeded to reverse (not if one includes FX adjustments but these days who actually does math) in March, leading to the first Chinese reserve increase since October. (assuming of course one believes Chinese data; one reason why one should not is everything that is currently going on in Vancouver real estate which proves the capital outflow has never been stronger).

So perhaps as a result of the rapid reversal in reserve liquidation or the stabilization in the offshore Yuan rate (where the PBOC has been particularly active in punishing shorts), fears about Chinese capital flights have been relegated to the back pages. Which is paradoxical, because not only have none of China’s underlying problems been addressed, the only way China managed to sweep its all too glaring problems under the rug was with the aid of $1 trillion in new Q1 loans.

Of course, it was concerns about soaring bad debt (as well as a hard landing economy and plunging exports, but those are all derivatives of China’s 350% in debt/GDP) that got China where it was in the summer and winter of 2015 in the first place, when it first started devaluing its currency. So to suggest that by adding even more debt on top of what was a debt problem somehow fixed it, well, debt problem is something only a full Krugman could suggest.

Which is why we were not surprised to read that according to the latest Institute of International Finance forecast, and in validation of Kyle Bass’ strong conviction that China is about to suffer a major 15%+ devaluation, China’s capital outflow headaches may be only just starting. According to the IIF’s latest report released today, global investors are expected to pull $538 billion out of China’s slowing economy in 2016, which means another $420 billion after the $118 billion that has already been withdrawn in Q1.

That number would be down a fifth from the $674 billion pulled out last year, the industry association said, but could be a stark acceleration from $118 in reserves sold in the first three months of the year as fears re-emerge of a “disorderly” drop in the yuan, or the renminbi, as the currency is also known.

“A sharp drop in the renminbi would likely spark a renewed sell-off of global risk assets and trigger a flight of portfolio capital from emerging markets,” the IIF said in a new report.

“Moreover, a sharp depreciation of the renminbi could lead to a round of competitive devaluation in other emerging markets, particularly in those with close trade linkages to China.”

As noted above, for now, however, outflows are slowing. Roughly $35 billion was pulled out in March, bringing the total since the start of the year to around $175 billion, well below the pace seen in the second half 2016.

The IIF cited progress Chinese authorities had made in easing worries about the yuan’s direction. Once again, we fail to see what those are aside from one more trillion in loans and another unprecedented round of fiscal stimulus.

Ironically, the IIF forecast that:

  • We project net capital outflows to slow to $538 billion in 2016 from $674 billion last year, supported by a gradual recovery in non-resident capital inflows. However, there remain risks that outflows could accelerate again if concerns about RMB depreciation intensify again

Which is certainly not improvement but actually a sharp deterioration to the latest runrate inflow, considering it took the Shanghai Accord and countless central bank interventions to stabilize the Yuan, and the halt the Chinese outflows. The IIF’s forecast is implicitly suggesting that what has been achieved is nothing but a pyrrhic victory and over the next three quarters,China is about to see another $420 billion in outflows, a dramatic deterioration to the status quo, one which would return the market into a full blown sell-off mode as that encountered at the end of 2015 and first two months of 2016 when panic over China’s soaring outflows was all the rage.

So did the IIF just tacitly open the next Pandora’s box in China’s capital flight tale? In its own conclusion, the IIF hopes for the best:

In our baseline projections, capital outflows and pressure on the RMB persist through 2016, but diminish in intensity as policymakers persuade investors that they will be successful in stabilizing the RMB’s value.

With brute central bank intervention to punish anyone found shorting the CNH. Anyway, continuing:

Greater confidence that the economy is on track to meet the growth target of 6.5-7 percent would also help. Most of the improvement is projected to
be in a turnaround in non-resident capital flows, while resident outflows and errors and omissions are forecast to moderate more gradually

That confidence won’t come to anyone who does an even cursory look behind the scenes because as we have reported over the past week, none of the Chinese numbers – be they imports, annualized GDP or province level GDP – actually make any sense.

The IIF conludes as follows:

Nonetheless, China remains vulnerable to a renewed intensification of capital outflows, particularly if doubts about the stability of the RMB were to come to the fore again. In particular, stress could rise through a combination of a stronger USD—particularly if the market comes to believe that the Fed will tighten more quickly than currently priced in—and further disappointment about China’s growth momentum.

So yes, any Fed rate hikes and we are right back out of the eye of the hurrican, but even more amusing would be if we end up in the same spot if after reading this report the market realizes that after managing to restore inflows, China is now expected to see another $400 billion in outflows for the rest of 2016 as per the IIF’s “benign” forecast, and proceeds to panic all over again.


We have been warning about the following:  steel prices have risen domestically due to huge speculation.  The price of iron ore has has also risen.  Well it seems that this bubble has just burst as both steel and iron ore prices have come back to earth in these past two days:
(courtesy zero hedge)

China Commodity Bubble Bursts As Exchanges Curb Goldman’s “Biggest Concern”

During the last week we have highlighted the frightening similarity between the speculative spike in China commodity trading (which has sent industrial metals prices soaring in yet another ‘error’ signal for real supply and demand) and the pump-n-dump in Chinese stocks. Specifically, as Goldman warns the factor that “concerns us the most is the increased speculation in the Chinese iron ore futures market,” and now, as Bloomberg reports, it appears that bubble is bursting as Steel and Iron Ore prices tumble most in 21 months after Chinese exchanges raise margins in an attempt to curb speculation.

This is what the commodity insanity looked like!!

Bloomberg notes that:

Goldman Sachs has expressed its concern about the surge in speculative trading in iron ore futures in China, saying that daily volumes are now so large that they sometimes exceed annual imports.

The increase in futures trading in the world’s largest importer was among factors that have lifted prices, according to a report from analysts Matthew Ross and Jie Ma received on Tuesday. Iron ore volumes traded on the Dalian Commodity Exchange are up more than 400 percent from a year ago, they said.

“While increased fixed-asset investment in China, a bring-forward of steel production (ahead of a government curtailment) and mining disruptions help to explain the strong rally in the iron ore price, the one driver that concerns us the most is the increased speculation in the Chinese iron ore futures market,” they wrote.

As we said ast week, eventually, the excesses will need to be curbed and maybe that starts a new phase of risk-off within China: As one local trader put it:

“The market is moving so quickly, yesterday felt just like the stock market in June last year before the crash… I think how it goes up, that’s how it will come down.”

“There have been two days in the past month where futures volumes have been greater than the total amount of iron ore that China actually imported for the whole of 2015 (950 million tons),” the Goldman analysts wrote.

And so, as Bloomberg adds,

To slow trading activity, the Dalian exchange has announced it would be increasing margin requirements and transaction costs on iron ore futures, they said.

nd that has sent commodity prices tumbling…

The most-active Iron ore futures contract dropped as much as 4.4 percent on Tuesday after the exchange doubled trading fees.

The benchmark spot price for ore with 62 percent content delivered to Qingdao fell 5 percent to $62.78 a dry ton on Tuesday, up 44 percent this year, according to Metal Bulletin Ltd.

Other raw materials in China were also in retreat on Tuesday. Coking coal futures, which trade in Dalian, reversed early gains to lose as much as 5 percent to 777.5 yuan ($120) a ton.

As Goldman concluded:”the commodity rally is not sustainable” and along with it the Baltic Dry’s misplaced confidence signals.



A major UK Pension fund slashes benefits as they become 86% funded with a liability of 8 billion pounds. They have now initiated increased fees from both employee and employer which will weaken profitability


(courtesy zero hedge)

Major UK Pension Fund Slashes Benefits As Funding Crisis Spreads

As we continue to cover the pension crisis that is unfolding in the United States (recently hereand here), it is important to remember that these problems are not unique to just the U.S.

One of the largest educator pension funds in the U.K., the Universities Superannuation Scheme (USS) is implementing significant changes to the plan benefits as it becomes increasingly under-funded, just like its peers in the United States. The changes are drastic, and are meant to keep the fund solvent in order to at least pay some benefits rather than none over time. The plan represents 330,000 members across 400 institutions, according to its website.

The changes were foreshadowed in 2014, when in discussing the funding issues, the USS said“this means it is likely that, given the increased cost of providing future pensions and the need to deal with an increased deficit, higher contributions and/or other responses will be required.”

Upon the completion of the 2014 actuarial valuation, the first of those “other responses” was for the fund update its deficit recovery plan to include employer’s contributing 2.1% of salaries toward the deficit over a period of 17 years.

Following completion of the 2014 actuarial valuation, and further consultation with Universities UK (as the representative body for the scheme’s sponsoring employers), the trustee has updated its recovery plan for addressing the scheme’s deficit. The updated recovery plan requires employers to contribute 2.1% of salaries towards the deficit over a period of 17 years. The trustee has extended the period of the recovery plan following an extensive piece of work, undertaken independently, on the financial strength of the scheme’s sponsoring employers (which is generally referred to as the employers’ covenant). The conclusions from that work confirmed the trustee has reasonable visibility of the ongoing strength of the covenant over a period of 20 years.

Then, as the funding gap widened, further measures were taken.

According to the 2015 annual report (month ended March 31, 2015) the fund had £49.1 billion in assets, and £57.3 billion in valued liabilities, adding up to a deficit position in the amount of £8.2 billion. Said another way, only 86% funded, down from 89% the prior year.


Based on the 2015 results, additional steps were taken in the effort to lower the plan’s deficit.

The USS introduced changes that significantly change the structure of the plan, and begins to shift the focus from definied benefit to defined contribution. Beginning April 1, 2016, the following changes have been made (per the annual report):

  • The use of final salary to calculate retirement benefits comes to an end, and will be replaced by a career revalued benefit (CRB) basis (i.e. an average salary calculation, adjusted for a capped CPI amount will be used to calculate defined benefit payments instead of using the most recent – and presumably highest – salary at retirement).
  • Employer contribution rates will increase to 18%, up from 16%
  • Employee contribution rates will increase to 8%, up from 6.5% for current CRB members, and up from 7.5% for final salary members)

Additionally, beginning October 1, 2016, contributions after the first £55,000 of one’s salary will be paid into a new defined contribution plan (of which the employer will contribute 12% of the excess salary over the threshold). This point is critical, as it starts to move the plan from defined benefit to defined contribution, which takes pressure off employers to fund guaranteed payout amounts, and puts members at the mercy of the performance of the money managers handling their investments.

In summary, one of the UK’s largest pension funds couldn’t sustain the current trajectory of cash flows, so they decided to cut defined benefits and put the burden on money managers to live up to member expectations in retirement. This is a plan that we already know will end poorly once the markets reset and wealth is once again transferred from the savers to the asset owners, as is the recurring cycle under the central banking regime. Of course, there is always helicopter money tied to bailouts of such pension funds, which is forever a possibility with the PhD’s behind the central banking curtain.

h/t Henry Lahr


as you will recall we had an election in Spain of which nobody won.  In order to form a government a coalition of the various parties had to be formed.  In the past 4 months it seems that they could not agree to any coalition and a new election must be called.
The problem, of course, is that the election will produce the same results.
(courtesy zero hedge)

Spain “Doomed” To New Elections After King Felipe Unable To Bring Parties Together

Back In December, Spain held what turned out to be inconclusive elections as voters clearly rejected the status quo with the country’s lowest turnout in three decades. While incumbent Rajoy gained the most seats he was unable to get a majority and now four months later, King Felipe appears to have thrown in the towel on trying to bring the sides together in a working coalition. A new election for Spain is now inevitable in the summer after the king said no candidate counts with enough support to form a government – after a third round of talks between party leaders, the king won’t nominate a candidate, the Royal Palace said in a statement.

To be sure, voters were clearly sick of the status quo. The country’s three decade old political duopoly was broken when PP and PSOE garnered their lowest combined share of the vote since the eighties.


And now as AP reports,

A new election in June for Spain seemed all but inevitable Tuesday after the leader of the country’s Socialist party said he was open to a last-minute deal for a coalition government proposed by a small leftist group but predicted he wouldn’t get enough support to pull it off.


Pedro Sanchez said Spain is “doomed to a call for new elections” after meeting with King Felipe VI, who has spent the last two days with political leaders to determine whether he should pick one to try to form a government or set a fresh national election for June 26 in a bid to break four months of political paralysis.


The poll would happen six months after the last election on Dec. 20 that saw the downfall of the country’s traditional two-party system as voters enraged by high unemployment, corruption and austerity cuts strongly supported two new upstart parties.


Felipe was expected to decide Tuesday night whether or not Spain will hold another election after meeting with acting Prime Minister Mariano Rajoy, who told the king on Tuesday for the second time since January that he doesn’t have enough support among other parties to cobble together a government led by his conservative Popular Party.


Sanchez’ declaration came after the small Compromis party floated a list of 30 proposals Tuesday to form a new government to rule in the 350-seat lower house of Parliament, and the Socialists said they could accept most of them.


The challenge in Spain for forming a government has come down to mathematical calculations on which party could win enough support in an election that saw the Popular Party come in first with 123 seats, the Socialists second with 90, the far-left Podemos party with 60, the business friendly Ciudadanos with 40 and a handful of smaller parties with the remaining 37 seats.


Sanchez had already struck a deal with Ciudadanos but in two votes last month was unable to convince Podemos and Compromis, which together have sway over 69 seats, to join them.


Podemos leader Pablo Iglesias said his group backed the last minute Compromis plan but that the Socialists’ refusal to enter into a coalition of leftist forces excluding Ciudadanos meant the deal had little chance of success.


Ciudadanos leader Albert Rivera rejected the proposal outright and also predicted the country was headed for another election.


Polls suggest a repeat election — which would be a first for Spain since democracy was restored in 1978 — is unlikely to break the stalemate and could mean a political impasse stretching into the summer, possibly ending with another impasse and yet another election.


Spain has never had a coalition government at the national level. The Socialists rejected Rajoy’s proposal for a grand coalition as has happened in many other European countries.

Additionally, The King asked parties on Monday to keep the costs of a new political campaign down, a sign he had little hope a viable pact could be found, and some leaders have already acknowledged they lack the support of rivals to secure a parliamentary majority.

In December’s election, which produced the most fragmented result in decades, the center-right People’s Party (PP) of caretaker Prime Minister Mariano Rajoy won 123 seats in the 350-seat lower house of parliament, while the Socialists took 90, Podemos 69 and Ciudadanos 40.


Although opinion polls suggest a new election would do little to resolve the deadlock, leaders have entered pre-campaign mode, blaming each other for the impasse which may start taking its toll on the economy more noticeably if Spain remains without a government for many more months.

So more political turmoil ahead in the periphery, turmoil which has the potential to rattle markets. But perhaps the most important thing to note about everything said above is this: a leftist-led government is now considerably more certain. It’s only a matter of what form it will take. That means the religious adherence to Berlin-style fiscal rectitude is going to come to a rather unceremonious end sooner or later. That, in turn, means the relative calm shown in the following chart may well give way to carnage by the end of the year…



Alberta, Canada


Many are saying the decline in business activity inside Alberta amounts to a depression;

(courtesy zerohedge)


“We Haven’t Seen This Is In Our Lifetimes” – CEO Says “Alberta Is In A Depression”

Regular readers know that we’ve covered Alberta’s decline at length (refresher here), so there is no need to give much of a backstory other than to say that the situation seems to get worse for the Canadian province as each day passes even as oil has rebounded in the past two months.

Toronto’s “Condo King” Brad Lamb tried to put things into context when he said the situation is “worse than 2008.” However, on Friday we received an even more gloomy (albeit realistic) description of the economic situation in Canada’s energy hub, Alberta. In a very blunt interview with BNN, Murray Mullen the CEO of trucking company Mullen Group, said that the situation has moved well past recession, and should be described as a depression.

“Well, if you’re involved in the oil patch directly, drilling activity or anything like that I think we’ve gone beyond recession and it’s more a depression. The facts are that this latest round of commodity price collapse that happened the first part of this year I think really put the nail in the coffin for the industry.”


“The damage has already been done basically for this year. Even though it seems like the oil price and even natural gas is starting to recover, there was no room for error because commodity prices had fallen so low in 2015, and then when it happened in 2016, and it’s not just crude oil, it’s natural gas also. We’re just kind of trapped in a difficult market dynamic that we haven’t seen in probably most of our lifetimes.


“There’s no investment activity going on below $40, it just goes to zero.”

The fact that Mr. Mullen categorized the situation as a depression isn’t surprising to us: after all that’s how we characterized the economic reality in Alberta for the first time last December in “This Is Canada’s Depression

And while we wait for yet another local shoe to drop (and after soaring crime, surging suicides, and overwhelmed food banks, one wonders just what could be next), we continue to be on the lookout for the number of future bankruptcies that emerge from this space (as he alluded to numerous times throughout his interview). Recall that as as we first reported, Canada’s bankshave virtually zero reserves for a worst case scenario.

Because when the already shaking Calgary domino finally falls, that’s when the Bank of Canada will have no choice but to make good on its threat from last year and unleash negativeinterest rates.


* * *

And just as we hinted, constantly from bad to worse. Moments ago, Bloomberg reported that Moody’s has downgraded Alberta’s credit rating. 

  • Moody’s says province will need to increase direct borrowing in order to finance operating deficits for first time in over 20 years
  • Moody’s expects Alberta’s net direct and indirect debt to increase to nearly 17% of GDP in 2018-19 from 7% in 2015-16
  • Outlook negative


Commodity king, Freeport McMoRan  does not see any daylight with respect to its oil and gas sector as it just fired 25% of its staff:

(courtesy zero hedge)

No Energy Recovery In Sight: Freeport Fires 25% Of Its Oil And Gas Workers

One of the more important companies reporting today was commodity king Freeport McMoRan which in 2016 has seen its stock plunge then surge on hopes the Chinese bubble reflation will push commodities higher. So far it has worked, but far more important was what FCX’ own assessment of the future was: was it preparing for a strong rebound, or instead, was it slashing costs and firing employees in another confirmation that the recent rally has been, as Bank of America’s “smart money” clients admit for 13 consecutive weeks, nothing but fumes. It was the latter, because in addition to reporting poor earnings numbers that were largely in line with expectations, the company also announced that it would fire 25% of its oil and gas employees, hardly a ringing endorsement for the future prospects of the energy space.

From the report:

During first-quarter 2016, FCX conducted a formal process involving multiple third-party oil and gas industry and financial participants to evaluate alternatives for the oil and gas business. Further weakening in oil and gas prices and negative credit and financing market conditions during first-quarter 2016 had a significant unfavorable impact on the process. While the process did not identify a buyer for the entire oil and gas business, a number of parties have interest in select assets, and FCX continues to engage in discussions with parties interested in potential asset or joint venture transactions.

In the interim, FCX is taking immediate steps to reduce oil and gas costs further. In April 2016,FCX announced a new management structure and is instituting an approximate 25 percent oil and gas workforce reduction. The newly structured oil and gas management team is actively engaged in managing costs and developing plans to preserve and enhance asset values. FCX expects to record a charge of approximately $40 million in second-quarter 2016 associated with workforce reductions and other restructuring costs.

We fully expect these newly designated “waiters and bartenders” to be touted by the US Labor Secretary as yet another confirmation of Obama’s great economic recovery.

Then crude extends its gains as API reports a huge 1.1 million inventory draw:
However Cushing continues at add inventory:
(courtesy zero hedge/API)

Crude Extends Gains After Surprise Inventory Draw

With expectations for a 1.75m barrel build, API shocked by reporting a 1.1m inventory draw sending WTI crude above $44.50 – running stops from last week’s highs. Gasoline (-400k) and Distillates (-1.02m) also saw draws. Cushing, however, after recent declines from pipeline closures, saw a 1.9m barrel build.



Spiking crude above last week’s highs…




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




USA/CAN 1.2646 DOWN .0031

Early THIS TUESDAY morning in Europe, the Euro ROSE by 15 basis points, trading now WELL above the important 1.08 level RISING to 1.1281; Europe is still reacting to deflation, announcements of massive stimulation (QE), a proxy middle east war, and the ramifications of a default at the Austrian Hypo bank, an imminent default of Greece, Glencore, Nysmark and the Ukraine, along with rising peripheral bond yield further stimulation as the EU is moving more into NIRPand NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was UP 18.03 POINTS OR 0.61% / Hang Sang UP 102.83. OR  0.48%   / AUSTRALIA IS LOWER BY 0.30% / ALL EUROPEAN BOURSES ARE MIXED  as they start their morning/

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

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

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

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

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

The NIKKEI: this TUESDAY morning: closed DOWN 86.02. OR 0.49%

Trading from Europe and Asia:


Gold very early morning trading: $1232.20


Early TUESDAY morning USA 10 year bond yield: 1.91% !!! PAR in basis points from MONDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.73 UP 1 in basis points from MONDAY night.

USA dollar index early TUESDAY morning: 94.58 DOWN 21 cents from MONDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers TUESDAY MORNING



And now your closing TUESDAY NUMBERS

Portuguese 10 year bond yield:  3.22% DOWN 7 in basis points from MONDAY

JAPANESE BOND YIELD: .100% DOWN 4 in   basis points from MONDAY

SPANISH 10 YR BOND YIELD:1.64% PAR IN basis points from MONDAY

ITALIAN 10 YR BOND YIELD: 1.55  UP 1 IN basis points from MONDAY

the Italian 10 yr bond yield is trading 9 points lower than Spain.







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


Euro/USA 1.1287 UP .0021 (Euro =UP 21  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 111.43 UP 0.296 (Yen DOWN 30 basis points As MARKETS FALL)

Great Britain/USA 1.4575  UP .0091 Pound UP 91 basis points/

USA/Canad 1.2618 DOWN 0.0056 (Canadian dollar UP 56 basis points with OIL FALLING (WTI AT $42.70)


This afternoon, the Euro was UP by 21 basis points to trade at 1.1267

The Yen FELL to 111.43 for a LOSS of 30 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 1.4575

The Canadian dollar ROSE by 56 basis points to 1.2618, WITH WTI OIL AT:  $43.96

The USA/Yuan closed at 6.4905

the 10 yr Japanese bond yield closed at -.100% DOWN 4 BASIS  points in yield/

Your closing 10 yr USA bond yield: UP  3  basis points from MONDAY at 1.93% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.75 UP 3 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.61 DOWN 19 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 TUESDAY

London:  CLOSED UP 23.60 POINTS OR 0.38%
German Dax :CLOSED DOWN 34.76 OR 0.34%
Paris Cac  CLOSED DOWN 12.94  OR 0.28%
Spain IBEX CLOSED UP 143.00 OR 1.56`%
Italian MIB: CLOSED UP 267.18 OR 1.45%

The Dow was up 13.08 points or 0.07%

NASDAQ down 7.48 points or 0.15%
WTI Oil price; 43.98 at 3:30 pm;

Brent Oil: 45.76





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

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


BRENT: 46.31


USA DOLLAR INDEX:94.51 down 28 cents on the day



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

Trading Today in Graph form:

FANGs Slump Despite Crude Pump As China Commodity Carnage Continues

Nothing to see here, move along…China commodity carnage, US data dismal, and a Fed meeting that has to err on the side of hawkishness…


The commodity carnage in China continued overnight…


But for the 4th day in a row, authorities intervened to support Chinese stocks…


And that provided some hope oveernight into the US open…


On the day – very mixed – Nasdaq underperformed but Trannies & Small Caps squeezed higher…Dow/S&P Unch…


Once again, VIX was smashed into the close in an effort to maintain Dow 18,000…BUT FAILED


Another day, another short squeeze…lifts Trannies & Small Caps


AAPL was chaotic today into earnings…


FANGs had their worst 3-day run in almost 3 months, back to 6-week lows…


Treasury yields rose for the 2nd day heading into The Fed meeting, with a wider range today…


The USD Index drifted lower once again… (though notably JPY weakened also)…


Copper drifted lower – dragged by the industrial metal collapse in Chinas but crude and PMs all rallied on the weaker dollar…


Crude algos panic-big oil prices above $44, running yesterday’s high stops ahead of tonight’s API report…


Charts: Bloomberg

Bonus Chart: Macro madness…


Core durable goods tumble for the 14th consecutive month: generally means a deep recession


(courtesy zero hedge)


Core Durable Goods Tumble For 14th Month, Longest Non-Recessionary Stretch In 60 Years

Following February’s dismal drops across the board in Durable Goods, expectations were high for a March rebound. However, the mean-reverters were greatly disappointed as Orders rose just 0.8% MoM (missing expectations of a 1.9% surge) off a revised lower print, pushing the YoY change back into the red. Core Durables Goods Orders fell YoY for the 14th consecutive month – a streak never seen in 60 years outside of a broad US recession. Capital Goods Orders (0.0% vs +0.6% exp) and Shipments (+0.3% vs +0.9% exp) both missed and were both revised lower. Not a pretty picture…

The headline Durable Goods Orders printed back in the red YoY…

But a 14th consecutive monthly drop in YoY Core Durable Goods Orders has never happened outside of a recession…

It really is different this time.

Most notably, New Orders for defense aircraft and parts surged 65.7% to $6.1 billion – So not even war can keep the US economy afloat any more!!

Finally, the all important core capex series, or nondefense capital goods ex aircraft was unchanged for the month, and printed a 2.4% decline from a year ago. This too represents 14 consecutive months of core capex declines, something else that has never happened outside of a recession.

Charts: Bloomberg

Home prices are showing the slowest growth and for 5 months in a row have missed expectations.  February saw prices rise by 5.38%.
(courtesy zero hedge/Case Shiller)

Case-Shiller Home Price Growth Slowest Since September

For the 5th month in a row (and 10th of last 11), S&P Case-Shiller Home Price growth YoY missed expectations. February saw prices rise 5.38% (below 5.5% exp) which is the weakest annual growth since September 2015. Seattle and San Francisco rose the most MoM as Cleveland and New York saw the biggest drops MoM.

Weakest home prices appreciation since September 2015 and the misses continue…

The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, recorded a 5.3% annual gain in February, unchanged from the previous month. The 10-City Composite increased 4.6% in the year to February, compared to 5.0% previously. The 20-City Composite’s year-over-year gain was 5.4%, down from 5.7% the prior month.

”Home prices continue to rise twice as fast as inflation, but the pace is easing off in the most recent numbers,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices.

“The year-over-year figures for the 10-City and 20-City Composites both slowed and 13 of the 20 cities saw slower year-over-year numbers compared to last month. The slower growth rate is evident in the monthly seasonally adjusted numbers: six cities experienced smaller monthly gains in February compared to January, when no city saw growth. Among the six were Seattle, Portland OR, and San Diego, all of which were very strong last time.

Mortgage defaults are an important measure of the health of the housing market.Memories of the financial crisis are dominated by rising defaults as much as by falling home prices. Today as well, the mortgage default rate continues to mirror the path of home prices. Currently, the default rate on first mortgages is about three-quarters of one percent, a touch lower than in 2004. Moreover, the figure has drifted down in the last two years. While financing is not an issue for home buyers, rising prices are a concern in many parts of the country. The visible supply of homes on the market is low at 4.8 months in the last report. Homeowners looking to sell their house and trade up to a larger house or a more desirable location are concerned with finding that new house. Additionally, the pace of new single family home construction and sales has not completely recovered from the recession.”

Combined with weakness in new home sales, starts, and permits, things are starting to creak in the “real estate recovery” narrative.

Markit sees its preliminary PMI for April services rising a bit to 52.  However its manufacturing PMI continues to falter.  They suggest that Q2 is humming along at only a .8% GDP
(courtesy zero hedge)

Services PMI Suggests “0.8% GDP At Start Of Q2” As “Job Creation Slows”

With Manufacturing PMI at multi-year lows and trending lower, why would anyone be surprised that, amid plunging profits in retailers and weakness in restaurant performance indices, Markit’s preliminary Services PMI for April would bounce for the 2nd month in a row to  52.1. However, as Markit notes, despite th emodest pickup, growth is clearly far more fragile than this time last year.”

Dead cat bounce?

As Markit details,

“The upturn in the rate of growth of business activity and increased inflows of new orders suggest the economy should see GDP rise at an increased rate in the second quarter, butgrowth is clearly far more fragile than this time last year.

Viewed alongside the recent poor performance of the manufacturing sector, which reported its worst month since October 2009, the survey suggests the economy grew at an annualized rate of just 0.8% at the start of the second quarter, only marginally above the pace signalled for the first quarter.

 Survey responses indicate that persistent weak demand from domestic and overseas customers, the struggling energy sector, the strong dollar and election worries are all eating into business optimism.

“The current pace of growth is also only being supported by price reductions, as an increasing number of firms offer discounts to win sales.

Job creation has also slowed as a result of costcutting pressures and uncertainty over the outlook, but remains solid. The surveys point to another 150,000 non-farm payroll increase in April, as robust service sector hiring continues to offset factory job losses.”

Additionally, growth momentum remained much weaker than that seen on average since the survey began in late-2009.

Survey respondents suggested that subdued client demand and less favourable underlying economic conditions had weighed on business activity at their units in April. Reflecting this, latest data signalled only a marginal rebound in new business growth from the survey-record low recorded in March.

A relatively weak upturn in new work contributed to slower job creation across the service economy in April. Payroll numbers have expanded continuously for just over six years, but the latest increase was the softest since October 2015 and weaker than the post-crisis trend. At the same time, service providers indicated another modest drop in backlogs of work in April, suggesting a lack of pressure on operating capacity.


We now have the 3rd Fed mfg index fall, after the Philly and Dallas Fed.  This time it was the Richmond Mfg Fed index faltering.  You will recall that last month it gave a surprise spike to 7 yr highs.  It did not last long:
(courtesy zero hedge)

Richmond Fed Plunges By Most Since August After March’s WTF Spike

Following the weakness in Philly and Dallas Fed regional – fading off Feb/Mar dead cat bounces –Richmond Fed’s epic 9-standard-deviation biggest spike ever to 7 year highs in March appears to have been a one of as it fell back from 22 (3rd highest ever) to 14 (still above expectations) – the biggest drop since August. Of course how one can take this seriously is anyone’s guess as shipments , new orders, wages, and workweek all crashed from March’s embarrassing spike as did inventory levels for finished and raw materials (not good for Q2 GDP). Worse still outlook for six months ahead saw wages, workweek and new orders collapse further.

As a reminder, here is March…

And so April tumbles most since August…

Charts: Bloomberg

Consumer confidence dropped in April and is hovering at 2 yr lows. Income growth potential is falling.  Not a very good sign:
(courtesy zero hedge)

Consumer Confidence Stagnant Since The End Of QE3 As Wage Growth Hopes Fade

We’re gonna need more money-printing. Consumer Confidence dropped in April to 94.2, missing expectations of 95.8 and hovering at its lowest in 2 years. In fact, the current level is relatively unchanged since the end of QE3, despite all the recent surges in stocks as the post-2009 94% correlation between the S&P 500 and confidence is breaking down rapidly and ruining The Fed’s animal spirits’ party. Most crucially, income growth expectations are tumbling as The Conference Board suggests American consumers “do not foresee any pickup in momentum.”

h/t @GreekFire

“Consumer confidence continued on its sideways path, posting a slight decline in April, following a modest gain in March,” said Lynn Franco, Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved, suggesting no slowing in economic growth. However, their expectations regarding the short-term have moderated, suggesting they do not foresee any pickup in momentum.”

Consumers’ appraisal of current conditions improved somewhat in April. Those saying business conditions are “good” decreased from 24.9 percent to 23.2 percent.However, those saying business conditions are “bad” also declined, from 19.2 percent to 18.1 percent. Consumers’ appraisal of the labor market was also mixed. Those claiming jobs are “plentiful” decreased from 25.4 percent to 24.1 percent, however those claiming jobs are “hard to get” also declined from 25.2 percent to 22.7 percent.

Consumers were less optimistic about the short-term outlook in April than last month. The percentage of consumers expecting business conditions to improve over the next six months decreased from 14.7 percent to 13.4 percent, while those expecting business conditions to worsen rose to 11.0 percent from 9.5 percent.

Consumers’ outlook for the labor market was also less favorable. Those anticipating more jobs in the months ahead decreased slightly from 13.0 percent to 12.2 percent, while those anticipating fewer jobs edged up from 16.3 percent to 17.2 percent. The proportion of consumers expecting their incomes to increase declined from 16.9 percent to 15.9 percent; however, the proportion expecting a reduction in income also declined, from 12.3 percent to 11.2 percent.

Seems that the Atlanta Fed keeps getting tapped on the shoulder to revise its GDP higher
Today is really farcical:
(courtesy Atlanta Fed/zero hedge)

Atlanta Fed Boosts GDP Forecast Following Today’s Durable Goods Miss And Downward Revision

If there was some confusion why the Atlanta Fed recently revised its GDP Nowcast higher following the recent retail sales miss, that confusion will be even more acute today when moments ago the Atlanta Fed plugged today’s weaker than expected durable goods print (and downward revision to past month’s data), and ended up with… a GDP forecast that was higher than previously, or an increase from 0.3% to 0.4%.

From the Atlanta Fed’s Nowcast:

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2016 is 0.4 percent on April 26, up from 0.3 percent on April 19. After last Wednesday’s existing-home sales release from the National Association of Realtors, the forecast for first-quarter real residential investment growth increased from 8.5 percent to 10.8 percent. After this morning’s advance report on durable manufacturing from the U.S. Census Bureau, the forecast for real equipment investment growth declined slightly while the forecast for real inventory investment increased slightly.

Devastation continues to run rampant in the USA.  One out of 5 American families has nobody having a job.  We are also witnessing a complete devastation in the retail sector as the consumer is basically has no funds for incremental purchases.  The retail chain of Aeropostale (800 stores) will file for bankruptcy and will not continue
(courtesy zero hedge)

In 1 Out Of Every 5 American Families, Nobody Has A Job

Submitted by Michael Snyder via The Economic Collapse blog,

If nobody is working in one out of every five U.S. families, then how in the world can the unemployment rate be close to 5 percent as the Obama administration keeps insisting? The truth, of course, is that the U.S. economy is in far worse condition than we are being told. Last week, I discussed the fact that the Federal Reserve has found that 47 percent of all Americans would not be able to come up with $400 for an unexpected visit to the emergency room without borrowing it or selling something. But Barack Obama and his minions never bring up that number. Nor do they ever bring up the fact that 20 percent of all families in America are completely unemployed. The following comes directly from the Bureau of Labor Statistics

In 2015, the share of families with an employed member was 80.3 percent, up by 0.2 percentage point from 2014. The likelihood of having an employed family member rose in 2015 for Black families (from 76.4 percent to 77.7 percent) and for Hispanic families (from 85.9 percent to 86.4 percent). The likelihood for White and Asian families showed little or no change (80.1 percent and 88.6 percent, respectively).

For purposes of this study, families “are classified either as married-couple families or as families maintained by women or men without spouses present” and they include households without children as well as children under the age of 18.

Digging into the numbers, we find that there were a total of 81,410,000 families in America during the 2015 calendar year.

Of that total, 16,060,000 families did not have a single member employed.

So that means that in 19.7 percent of all families in the United States, nobody has a job.

And of course there are lots more families that are “partially employed”. In other words, maybe the wife has a job but the husband does not.

So based on these numbers, it would appear to me that the true rate of unemployment in this country is vastly higher than 5 percent, and John Williams of shadowstats.com agrees with me. According to his calculations, the broadest measure of unemployment in the U.S. would actually be sitting at 22.9 percent if honest numbers were being used.

But let’s not just focus on where we are.

Let’s take a look at where we are going.

According to Challenger, Gray & Christmas, job cut announcements by big companies in the United States were up 32 percent during the first quarter of 2016 compared to the first quarter of 2015, and it appears that the job losses are going to continue to mount as we roll into the second quarter. For instance, late last week Intel announced that it is going to be laying off 12,000 workers

As it navigates its path into the future, Intel, the 47-year-old corporation best known for making microprocessor chips that power personal computers, has announced significant changes to its business.

On Tuesday, Intel’s CEO Brian Krzanich said in a letter to employees that the company over the next year will cut its 107,300-person global workforce by 12,000 people, or 11 percent.

Those are good middle class jobs, and they are exactly the kind of jobs that we cannot afford to be losing.

Meanwhile, the “retail apocalypse” appears to be accelerating once again.

Bloomberg is reporting that teen clothing chain Aeropostale is preparing to file for bankruptcy.  Aeropostale currently operates more than 800 stores across the nation, and it is unclear if any of them will be able to stay open as this process plays out. But of course it isn’t just Aeropostale that has gone bankrupt lately. Here are a few more examples of major retailersthat have recently filed for bankruptcy

April 16, 2016: Vestis Retail Group, the operator of sporting goods retailersEastern Mountain Sports (camping, hiking, skiing, adventure sports), Bob’s Stores (family clothing and shoes), and Sport Chalet (general sporting goods), filed for Chapter 11 bankruptcy. It will close all 56 stores and stop online sales.

In the filing, it blamed the going-out-of-business sales at “certain Sports Authority locations,” plus the weather, which had been too warm, and trouble with switching to a new software platform. It’s owned by private equity firm Versa Capital Management LLC.

April 7, 2016: Pacific Sunwear of California, clothing retailer with nearly 600 stores and derailed ambitions of skate-and-surf cool, filed for Chapter 11 bankruptcy. PE firm Golden Gate Capital, a lender to the company, agreed to convert over 65% of its loan into equity of the reorganized company and add another $20 million in financing. Wells Fargo agreed to provide $100 million of debtor-in-possession financing.

March 2, 2016: Sports Authority filed for Chapter 11 bankruptcy. It said it would close 140 of its 450 stores, including all stores in Texas.

Just because the stock market has been doing well in recent weeks does not mean that the crisis has passed.

In fact, many experts believe that the crisis of 2016 is just getting started.  Albert Edwards of Societe Generale is one of them

But what I do know is when in the last few weeks I have heard that Janet Yellen sees no bubble in the US, when Ben Bernanke hones and restates his helicopter money speech, and when Mario Draghi says that the ECB’s policy of printing money and negative interest rates was working, I feel utterly depressed (I could also quote similar nonsense from Japan, the UK and China). I have not one scintilla of doubt that these central bankers will destroy the enfeebled world economy with their clumsy interventions and that political chaos will be the ugly result.

The only people who will benefit are not investors, but anarchists who will embrace with delight the resulting chaos these policies will bring!

All over the world, the underlying economic fundamentals continue to deteriorate.Here in the U.S., retail sales have been extremely disappointing, total business sales have been steadily falling, corporate revenues and corporate profits continue to plunge, and corporate debt defaults have soared to their highest level since the last financial crisis.

All of these numbers are screaming that a major economic downturn is here, and with each passing week things look even more ominous for the second half of 2016.

This seems to be the trend:  even though their report is not that bad, hedge fund Brevan Howard met with a massive 1.4 billion USA redemption:
(courtesy zero hedge)

Iconic Hedge Fund Brevan Howard Slammed With $1.4 Billion In Redemption Requests

It has already been a very bad several years for hedge funds with 2016 starting off especially brutally, as Goldman’s own Hedge Fund VIP basket demonstrates…

… when moments ago we learned that it is about to get even worse for one of the most iconic names in the macro hedge fund space, Brevan Howard, which according to Bloomberg has been served with $1.4 billion in cash redemption requests.

Brevan Howard co-founder Alan Howard

As Bloomberg writes, investors in Brevan Howard Asset Management have asked to pull about $1.4 billion from the firm’s main hedge fund after successive annual declines followed by losses during the first quarter, according to two people with knowledge of the matter.

The Brevan Howard Master Fund, which bets on macroeconomic trends to invest across asset classes, will have to meet the redemption requests by the end of June, said the people who asked not to be identified because the information is private. The fund managed $17.6 billion at the end of March, down from about $27 billion two years ago, according to a company website.

While the firm’s billionaire co-founder Alan Howard has previously said that there will be “exceptional opportunities” to make money this year, those have so far failed to materialize. What is odd is that Brevan’s losses are once again not even that material: the Master Fund closed the first quarter down 0.97 percent after losing 2 percent in March. It dropped almost 2 percent in 2015 and 0.8 percent in 2014, people familiar with the matter said earlier this month.

This, however, appears sufficient for many LPs to send in their redemption papers.

Investors disappointed by hedge funds’ performance during recent market turmoil pulled the most money last quarter since the tail-end of the financial crisis, according to Hedge Fund Research Inc. Money managers betting on macro economic trends suffered $7.3 billion in outflows.

The recent trend of pulling funds away from hedge funds is not new: recently New York City’s pension for civil employees, whose money managers included Brevan Howard, voted this month to pull $1.5 billion from hedge funds. Clients of Tudor Investment Corp. have asked to withdraw more than $1 billion from the firm founded by billionaire Paul Tudor Jones after three years of lackluster returns, while Och-Ziff Capital Management Group LLC saw its assets fall by about $1 billion in March to $42 billion on April 1, according to a company filing.

As central banks continue to take over capital markets and make fundamental-based investing impossible, we expect even more hedge fund casualties who collect 2 and 20 in a worldin which activist central bankers have become the Chief Risk Officers of broader markets, and better yet, they do it for “free.”

Eight hundred department stores or 1/5 of the USA capacity is now uneconomic
(courtesy zero hedge)

Malinvestment In US Malls—-800 Department Stores Or One Fifth Of Capacity Now Uneconomic

By Suzanne Kapner at The Wall Street Journal

Department stores need to close hundreds of locations if they want to regain the productivity they had a decade ago, according to new research from Green Street Advisors.

The real-estate research firm estimates that the closures could include roughly 800 department stores, or about a fifth of all anchor space in U.S. malls.

Sears Holdings Corp. alone would need to close 300, or 43%, of its Sears stores to regain the sales per square foot it had in 2006, adjusted for inflation, according to Green Street.

“Department stores used to be a great catchall for different brands, but today many of the brands have stores of their own, and shoppers can also find them online,” said DJ Busch, a senior Green Street analyst.

Sears and other retailers including Macy’s Inc. and J.C. Penney Co. have closed hundreds of stores in recent years as business has shifted to discounters or online merchants likeAmazon.com Inc. But the closures haven’t been enough to offset a drop in sales, Green Street said.

Sales at the nation’s department stores averaged $165 a square foot last year, a 24% drop since 2006, according to company disclosures and Green Street estimates. Over the same period, the stores reduced their physical footprint by 7% in aggregate.

Some chains have moved faster to cull their fleets than others. On Thursday, Sears said it would close 78 stores, including 68 Kmarts, this summer, part of a plan announced in February to “accelerate the closing of unprofitable stores.” But Penney has only closed seven stores this year out of a base of more than 1,000.

Green Street estimates that Penney would need to close a total of 320 locations, or 31% of its stores to return to its 2006 productivity levels, while Nordstrom Inc. would need to shutter 30 stores, or a quarter of its footprint. By comparison, Macy’s, which closed 40 stores last year, would only need to eliminate a further 70 locations, or 9% of its base, Green Street estimates.

While declining to comment on the specifics of Green Street’s report, the chains have indicated that mass store closings aren’t the right strategy.

“There’s a misperception out there that when we close a store, that business transfers online,” Ed Record, Penney’s chief financial officer, told analysts in November. “When we close a store, particularly in a small market, we see our dot-com business go down.

A spokesman for Nordstrom said that all of its stores are profitable, and closing stores “is not our normal practice.”

In addition to closing unproductive locations, Macy’s has been trying to get more shoppers in the door by adding Bluemercury beauty shops and Backstage discount stores to its department stores.

It may be unrealistic to expect that department stores could ever return to historical levels of sales or profits given the changing dynamics of retailing. Many retailers say they make less money selling goods online than they do in their physical stores. And with the Internet making it easier for consumers to comparison shop, discounts have become the norm.

Department stores occupy about two-thirds of mall anchor space, and even though they are being replaced by restaurants, grocery stores, and big box retailers such as Dick’s Sporting Goods Inc. and Target Corp., there aren’t always enough new tenants to go around, said Green Street’s Mr. Busch.

The store glut has important implications for the country’s weaker malls, which rely on their anchors to drive foot traffic. “If department stores were to move forward and aggressively streamline their physical presence it could result in several hundred malls no longer being relevant retail destinations,” he said.

Source: Department Stores N


After the market closed we had two biggys on the downside:

First Twitter:



(courtesy zero hedge)


Twitter Crashes After Slashing Revenue Forecast

Despite all eyes on the slightly better than expected MAUs (310m vs 308m exp.), Twitter is being clubbed like a baby seal after-hours as it has slashed Q2 revenue:

  • *TWITTER SEES 2Q REV. $590M TO $610M, EST. $677.1M

Most crucially, Twitter explains, “Revenue came in at the low end of our guidance range because brand marketers did not increase spend as quickly as expected in the first quarter.” Which also does not exactly bode well for the overall ad spend market.

Some other key points from the CEO:

We see a clear opportunity to increase our share of brand budgets over time. We have a strong product roadmap designed to tap into incremental brand-oriented online video budgets, and will deliver additional features for advertisers later this year — including more detailed demographic targeting and verification, and reach and frequency planning and purchasing.

This is what Twitter would like the market to focus on: the sequential growth in users:

The market sadly is not seeing it, and instead is looking at the following: the company’s poor guidance which sees Revenue next quarter to be about 10% below consensus estimate of $677.

OUTLOOK For Q2, we expect:

  • Revenue to be in the range of $590 to $610 million;
  • Adjusted EBITDA to be in the range of $145 to $155 million;
  • Stock-based compensation expense to be in the range of $165 to $175 million;
  • GAAP share count to be in the range of 700 to 705 million shares;
  • Non-GAAP share count to be in the range of 710 to 720 million shares.

For FY 2016, we expect:

  • Capital expenditures to be $300 to $425 million;
  • Adjusted EBITDA margin in the range of 25-27%.

Note that our outlook for Q2 and full year of 2016 reflects foreign exchange rates as of April 15, 2016.

Meanwhile, Twitter continues its favorite pastime of converting massive GAAP losses into non-GAAP profits by adding back $151 million in stock-based compensation

Some other key highlights:

Advertising Metrics


Total ad engagements grew 208% year-over-year, an acceleration in growth compared to Q4 2015,
driven once again by the adoption of auto-play video, increases in ad load versus the prior year period,
and improvements in click through rate in select ad formats. The average cost per ad engagement fell
56% year-over-year, again primarily due to the move to auto-play video. Cost per ad engagement for
direct response and app install ad formats was up nicely year-over-year, as we have made noticeable
improvements in targeting, measurement, and creative capabilities for those formats.


Costs & Adjusted EBITDA


Non-GAAP total expenses in Q1 grew 26% year-over-year to $490 million. The increase was driven by higher traffic acquisition costs from non-O&O advertising revenue, infrastructure costs, sales and marketing, and employee-related and overhead expenses. Traffic acquisition costs were 57% of non-advertising revenue in the quarter, vs. 64% in Q1 2015 and 61% in Q4 2015. Stock based compensation expense was $151 million in the quarter, $9 million below the low end of our  forecasted range of $160 to $170 million. This also marks the fourth consecutive quarter of absolute decline in stock based compensation expense. Adjusted EBITDA was $180 million in Q1, $20 million ahead of the high end of our guidance range of $150 to $160 million. Adjusted EBITDA margin on GAAP revenue was 30%, approximately 600 basis points better than that of Q1 2015 and 300 basis points better on a
sequential basis. Total employees were approximately 3,800 at the end of the period, reflecting slower
than expected hiring.


Balance Sheet


We ended the quarter with $3.6 billion in cash, cash equivalents and marketable securities. Free cash
flow in the period was $99 million.
Total MAU was 310 million for the quarter, which compares favorably to the 305 million reported for Q4
2015. Growth was driven by both seasonality and marketing initiatives.

Investors are not happy:

And now Apple misses:

Apple Tumbles After Missing Sales And Earnings, Guides Below Lowest Estimate

First it was Twitter, now it is consumer tech titan AAPL’s turn to tumble.

For those pressed for time, here is the breakdown:

  • APPLE Q2 REVENUE $51.56BN, EST 251.97BN
  • APPLE Q2 EPS $1.90, EST $2.00
  • APPLE SEES 3Q REV. $41B-$43B, EST. $47.4B
  • APPLE SOLD 4.03M MACS IN 2Q, EST. 4.6M
  • APPLE 2Q IPHONE ASP $641.83, EST. $651

And now the details:

Moments ago AAPL reported Q2 EPS of $1.90, missing expectations of $2.00 on revenue of $50.56BN which also significantly missed expectations of $52 Billion. Perhaps the biggest drive for this was both the sequential and annual plunge in Chinese sales, which dropped to $12.5 billion from $16.8 billion a year ago.


And while Apple beat expectations on iPhone sales, selling 51.2 million units in the quarter, above the 50.7 million expected, it did so on both a lower than expected margin of 39.4%, and lower iPhone ASPs, which dropped to $641.8 below the $651 estimate.


The company’s guidance for Q3 revenues was abysmal, and sees only $41-$43BN in sales, well below not only the median estimate of $47.35bn but below the lowest sellside estimate of $43.95bn.

But the scariest chart is probably the one showing the sharp slow down in sales across virtually all geographies.

Tim Cook’s commentary:

“Our team executed extremely well in the face of strong macroeconomic headwinds,” said Tim Cook, Apple’s CEO. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”

But more troubling was the CFO commentary according to whom what was slowing iPhone sales was the slowness to upgrade.

Is the AAPL magic gone?

As of this moment investors says yes, as AAPL tumbles 6% after hours, and that despite AAPL announcing that the Board has increased its share repurchase authorization to $175 billion from the $140 billion level announced last year.


Well that about does is for tonight

I will see you tomorrow night



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