APRIL 28/Agnico eagle produces strong results in a tough environment (banker manipulation)/ The big news of the day: Japan cannot and willnot do anymore QE/sends Japanese yen skyrocketing and bourses crumbling throughout the globe/Yen carry traders are fried to death/China seems its commodity bubble burst/EU cancels meeting with Greece as there is no headway, Greece may fail in July/Carl Icahn dumps all of his Apple stock/

Good evening Ladies and Gentlemen:

Gold:  $1,265.50 up $15.90    (comex closing time)

Silver 17.55  up 26 cents

In the access market 5:15 pm

Gold $1266.60

silver:  17.56


From last night’s access market through to the opening of Japan, the bankers were doing everything possible to knock gold off its perch.  Then suddenly, Kuroda of the Central Bank of Japan shocked all of the traders by doing absolutely nothing.  Everyone was expecting some sort of new QE.  That sent the Japan skyrocketing by over 340 basis points, the Nikkei plummeted by over 1000 points and then bourses around the world were hit pretty hard.  The big winner was gold and silver as they immediately rebounded and that put a huge dent in the plans of the bankers with respect to the London’s options which expire tomorrow morning.  If they fail tomorrow that would be the first time in many years that the bankers have failed during the entirety of options expiry week.


Please remember that even though comex options have expired we still have London’s LBMA and OTC to contend with.  They expire on tomorrow morning.

Let us have a look at the data for today


At the gold comex today, we had a good delivery day, registering 30 notices for 3000 ounces for gold,and for silver we had 2 notices for 10,000 oz for the non active April delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period.


In silver, the open interest fell  by  3,278  contracts down  to 203,470 despite the fact that the price was silver was up  by 18 cents with respect to yesterday’s trading. In ounces, the OI is still represented by 1 over BILLLION oz (1.01 BILLION TO BE EXACT or 145% of annual global silver production (exRussia &ex China) We are now at all time highs for  OI with respect to silver

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

In gold, the total comex gold OI ROSE by 4142 contracts, UP to 502,029 contracts AS  the price of gold was UP $7.00 with WEDNESDAY’S TRADING(at comex closing).

We had a huge addition of 1.49 tonnes of  gold inventory at the GLD, thus the inventory rests tonight at 804.14 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 335.580 million oz.


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

1. Today, we had the open interest in silver fall by 4,278 contracts down to 203,470 despite the fact that the price of silver was UP by only 18 cents with WEDNESDAY’S trading. The gold open interest ROSE by A LARGE 4,145 contracts AS  gold ROSE by $7.00 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  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 7.47 POINTS OR 0.25%  /  Hang Sang closed UP 26.43 OR 0.12%. The Nikkei closed DOWN 623.33 POINTS OR 3.61% . Australia’s all ordinaires  CLOSED UP 0.73%. Chinese yuan (ONSHORE) closed EVEN at 6.4760.  Oil FELL  to 45.17 dollars per barrel for WTI and 47.14 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4831 yuan to the dollar vs 6.4760 for onshore yuan.



ii) The big news:  The central bank of Japan did absolutely nothing.  That disappointed the markets and the Nikkei initially dropped 1000 points and finishing down 624 points.  The USA/Yen crashed 3 huge handles to 108.07.  Markets around the globe tumbled:

(courtesy zero hedge)


iii) As we pointed out to you yesterday, Chinese commodity trading volume has crashed

The bubble has burst!!

( zero hedge)

iv)Smart man!!  The following Chinese wealth manager decided to disappear before the authorities disappeared him.  He is off with 154 million dollars:
( zero hedge)

v)China injected 1 trillion usa into its economy and did get industrial profits rising by 11% year over year.  However China is still stuck with huge excess capacity.  Another problems is payments due to suppliers is running at 83 days and that is not good. Remember also that this month commodity prices burst which should burst everything inside China

( zero hedge)


Oh boy!! this is trouble.  The EU rejects the Greek emergency summit. As you will recall, Greece has big repayments in July and it does not seem that they will be made

(courtesy Mish Shedlock/)


Ports around the globe very quite as goods are just not moving

( C. Paris/Wall Street Journal/David Stockman/ContraCorner)


Crude rips higher up to $46.00 crushing the oil shorts
( zero hedge)


i) this is huge!!  We now have the largest Russian bank, VTB that will supply up to 100 tonnes of gold per year to China.  Since Russia generally keeps all of its gold and purchases gold on the foreign markets for its own account, they will now supply China.

(courtesy GATA/Reuters)

iiA very important commentary tonight from Bill Holter

a must read…

My response to Bob Moriarty (public article)

iii)Dave Kranzler of IRD on gold, the market story of the year:

( Dave Kranzler/IRD)


i)The actual first quarter GDP grew at only .5% instead of the .7% expectations:

( zero hedge)


David Stockman lays out the political mess inside the USA

a must read…
( David Stockman/ContraCorner)

iii)David Stockman has the detailing on a continuous basis the S and P earning last year.  The official earnings for the year:  slightly over 86 dollars with a P/E at 24 x.  Now we are entering first quarter  2016 and the S and P earnings are coming in at a growth rate of -8%.

And the earnings are mirroring the likes in Europe and Japan:
( JPMorgan/zero hedge)

iv)Carl Icahn dumps his entire stake in Apple:

( zero hedge)

v)Strange!! our Quant specialist, Marko Kolanovic is suddenly worried about the end game and believe it or not discusses how gold will be useful in this environment:

( zero hedge)

vi) What took them so long!  The SEC will now begin to crack down on non GAAP accounting earnings:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE CONSIDERABLY, as expected to an OI level of 502,029 for a GAIN of 4,145 contracts AS the price of gold UP  $7.00 with respect to WEDNESDAY’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.The front April contract month is now off the board and we will have to wait to see how many contracts are served upon.  The next non active contract month of May saw its OI fall by 111 contracts down to 2023. The next big active gold contract is June and here the OI rose by 3089 contracts up to 70,666. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 230,036. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was fair at 181,884 contracts. The comex is not in backwardation.

Today we had 30 notices filed for 3,000 oz in gold.


And now for the wild silver comex results. Silver OI FELL by a considerable 3,278 contracts from 206,748 down to 203,470 DESPITE THE FACT THAT the price of silver was UP by only 18 cents with WEDNESDAY’S TRADING.  We are noff off the April contract month.  The next active contract month is May and here the OI FELL by only 15,540 contracts DOWN to 11,490. This level is exceedingly high AS WE ONLY HAVE 1 day before first day notice tomorrow, Friday, April 29. The volume on the comex today (just comex) came in at 97,587 which is extremely high. The confirmed volume yesterday (comex + globex) was AGAIN OUT OF THIS WORLD AT 141,158. Silver is not in backwardation. London is in backwardation for several months.
We had  2 notices filed for 10,000 oz.

April contract month:

INITIAL standings for APRIL

Initial Standings for April
April 28.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  26,373.07 oz  (Scotia,BRINKS)

500 kilobars +

Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  48,079.648 OZ


No of oz served (contracts) today 30 contracts
(3000 oz)
No of oz to be served (notices) off the board
Total monthly oz gold served (contracts) so far this month 3984 contracts (398,400 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month 155,354.2 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: 10,297.975 oz

total customer deposit:  10,297.975 oz

Today we had 2 customer withdrawals:

i) Out of SCOTIA;  1,607.500  50 kilobars

ii) Out of Manfra:  64.30  2 kilobars

total customer withdrawal:1,607.500 oz   52 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 107 contracts of which 42 notices was stopped (received) by JPMorgan dealer and 24 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 (3984) x 100 oz  or 398,400 oz , to which we  add the difference between the open interest for the front month of April (30 CONTRACTS) minus the number of notices served upon today (30) 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 (3984) x 100 oz  or ounces + {OI for the front month (30) minus the number of  notices served upon today (30) x 100 oz which equals 398,400 oz standing in this non  active delivery month of April (12.3917 tonnes).
we gained 2,400 oz of additional gold standing.
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 12.3917 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 12.3917 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)  = 19.107 tonnes still standing against 20.000 tonnes available.  .
Total dealer inventor 643,108.03 oz or 20.000 tonnes
Total gold inventory (dealer and customer) =7,250,269.872 or 225.51 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 225.51 tonnes for a loss of 77 tonnes over that period. 
JPMorgan has only 21.15 tonnes of gold total (both dealer and customer)
And now for silver


 april 28.2016

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 375,800.85 oz


Deposits to the Dealer Inventory nil
Deposits to the Customer Inventory 600,381.000


No of oz served today (contracts) 2 contracts

10,000  oz

No of oz to be served (notices) off the board
Total monthly oz silver served (contracts) 193 contracts (965,000 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 10,122,681.0 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into CNT: 600,381.000??? oz

Total customer deposits: 600,381.000 oz.

We had 1 customer withdrawals


i) Out of CNT; 375,800.85 oz



total customer withdrawals:  375,800.85  oz



 we had 0 adjustments

The total number of notices filed today for the April contract month is represented by 2 contracts for 10,000 oz. To calculate the number of silver ounces that will stand for delivery in April., we take the total number of notices filed for the month so far at (193) x 5,000 oz  = 965,000 oz to which we add the difference between the open interest for the front month of April (2) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the April. contract month:  193 (notices served so far)x 5000 oz +(2{ OI for front month of April ) -number of notices served upon today (2)x 5000 oz  equals 965,000 oz of silver standing for the March contract month.
we neither lost nor gained any silver ounces standing.
Total dealer silver:  31.957 million
Total number of dealer and customer silver:   151.683 million oz
The open interest on silver is now close an all time high with the record of 206,748 being set yesterday. 
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 28/a huge addition of 1.49 tonnes of gold at the GLD/Inventory rests at 804.14 tonnes
April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes
aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 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 28.2016:  inventory rests at 804.14 tonnes



Now the SLV Inventory
April 28/no change in silver inventory/rests tonight at 335.580 million ox
April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580
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 28.2016: Inventory 335.580 million oz
1. Central Fund of Canada: traded at Negative 5.5 percent to NAV usa funds and Negative 5.4% to NAV for Cdn funds!!!!
Percentage of fund in gold 60.7%
Percentage of fund in silver:37.9%
cash .+1.4%( April 28.2016).
2. Sprott silver fund (PSLV): Premium to  RISES to +58%!!!! NAV (April28.2016) 
3. Sprott gold fund (PHYS): premium to NAV  rises.1.06% to NAV  ( April28.2016)
Note: Sprott silver trust back  into positive territory at +.58%% /Sprott physical gold trust is back into positive territory at +1.06%/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 +.58%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.

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


Trading in gold and silver overnight in Asia and Europe

Property Bubble In Ireland Developing Again

A property bubble is developing in Ireland again. The Dublin housing market has seen residential property prices surge by 50% on average and as much as 100% in more affluent areas since the Dublin property market began to bounce in 2012.

Property_bubble“Crisis: The dysfunctional property market has already re-emerged just
a few years after the biggest housing bust in the country’s history”

Respected Irish economist and economic commentator Colm McCarthy warned last week that “there is another house price bubble under way in the Dublin area.”

While all the focus is on the housing crisis and the rising threat of homelessness for many including families, and rightly so, less attention is being paid to the surge in prices in Dublin. Prices have risen  by so much that modest 3 bed and 4 bed houses in middle class suburbs in Dublin are now unaffordable to typical middle class families.

Many families need financial support from grandparents in order to be able to buy. This means that the majority of buyers are buy to let investors looking to profit from rising yields as rents spiral higher. Many of these buyers are cash buyers.

Writing in the Independent, McCarthy warned of increased speculation and “extraordinary prices”:

“Notwithstanding the efforts by the Central Bank to keep mortgage credit under control, some extraordinary prices have been quoted recently for the small parcels of land that become available.”

McCarthy cites spiralling Dublin land prices and makes the point that high prices being paid for land in Dublin means that the subsequent houses built on this land come on the market and much higher prices.

He focuses on the lack of supply, potential solutions and the risk that the government response may make matters worse including the risk of a wage price spiral as trade unions use spiralling house prices to secure higher wages leading to inflation and potentially stagflation as the global economy slows down.

The OECD voices concerns about an emerging property bubble in November. From the Examiner:

The OECD yesterday predicted the Irish economy will continue to grow strongly, but the Paris-based think- tank warned that the country faces “significant risks”, including another property bubble, as the crisis years are put behind.

“Pent-up demand after a long crisis may result in stronger private spending than projected,” the OECD said.

“Strong property prices may boost construction activity further in the short run, but also risk sparking another spiral of higher property prices and credit.”

Despite the eurozone getting a grip on its debt crisis by improving its bank safety net, “Ireland’s still high debt leaves it particularly vulnerable to any re-emergence of the banking and sovereign debt crisis”, it said.

UTV Ireland’s documentary series Insight investigated the state of the Irish property market, the housing crisis and whether there was a bubble developing, in a special report aired two weeks ago.

‘Insight: Is the Property Bubble Back?’ examined how the surging house prices in Dublin is forcing people to purchase properties in commuter towns such as Wicklow and Naas – where developments are currently being constructed to facilitate a rising demand, reminiscent of boom-time levels. As are average rents in Dublin which are now higher than at the peak of the boom.

UTV Ireland interviewed independent TD Mick Wallace who warned that there was new property bubble forming in Dublin.

Another Independent TD Richard Boyd Barrett voiced similar concerns to RTE as reported in the Irish Times:

The Government is “recreating the conditions for a housing bubble which has the potential to crash the Irish economy again in the near future”, according to People Before Profit TD Richard Boyd Barrett.

As was the case in 2007, there are valid reasons to be concerned about an emerging Dublin property bubble, especially given the extremely uncertain global financial and economic outlook.

Many of the risks seen in 2007 and in recent years remain and are now coming to the fore in 2016:

• Global economy remains vulnerable to recessions and new debt crises. There are fragile recoveries in the UK and U.S. while the Eurozone and Japan remain in recession
• Financial and banking system remains vulnerable as seen in the very sharp falls in German, European and U.S. bank shares in recent days
• Geopolitical risk in the Middle East (Syria, Saudi, Iran etc.), increasing tensions amongst Russia, China and western powers and the increasing spectre of terrorism and war
• The Eurozone crisis is far from resolved and there is the risk of debt crises in China, the U.S., the Eurozone, Ireland and other nations

We believe that gold and silver have had healthy periods of correction and consolidation.  Both are more than 20% higher so far in 2016. We believe they should continue rising again in 2016 and in the coming years due to the considerable macroeconomic, systemic, geopolitical and monetary risks of today.

We are confident that gold will continue to protect those who own it as part of an overall diversification strategy and as crucial financial insurance in a portfolio. Dr Constantin Gurdgiev, Dr Brian Lucey, Eddie Hobbs, Jim Power and Jill Kerby are all advocating diversification into gold today.

Recent Market Updates
Cyber Fraud At SWIFT – $81 Million Stolen From Central Bank

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

Gold News and Commentary
“We believe the recovery in the U.S. is more fragile than is acknowledged” (GoldCore in Marketwatch)
Silver Supply Trouble Shows Why Rally Momentum Is Building (Bloomberg)
China’s gold imports from Hong Kong rise to 3-month high – (Reuters via Biz Recorder)
China’s Gold Imports Jump on Investment Demand as Price Falters (Bloomberg)
Silver may touch as high as $20 an ounce in near term – Deutsche Bank (Metal.com)

Gold Has “Chart of Decade” – Going to $10,000/oz – Rickards (Boomberg)
Depression, Debasement, & 100 Years Of Monetary Mismanagement (Zero Hedge)
Pimco Economist Has A Stunning Proposal To Save The Economy: The Fed Should Buy Gold (Zero Hedge)
Why a Collapse Is “Practically Unavoidable” (Casey Research)
Do Old Indicators Matter Or Is Physical About To Overrun Paper? (Dollar Collapse)
Read More Here

Gold Prices (LBMA)
27 April: USD 1,244.75, EUR 1,100.79 and GBP 853.58 per ounce
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

Silver Prices (LBMA)
27 April: USD 17.34, EUR 15.34 and GBP 11.87 per ounce
26 April: USD 16.95, EUR 15.02 and GBP 11.64 per ounce
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

Mark O’Byrne
Executive Director





Agnico eagle produces extremely strong results

(courtesy Agnico Eagle Home page)


Agnico Eagle Reports First Quarter 2016 Operating and Financial Results – Continued Strong Operational Performance – Amaruq, El Barqueno and Barsele Drill Programs Yield Positive Results

April 28, 2016

Stock Symbol: AEM (NYSE and TSX)

(All amounts expressed in U.S. dollars unless otherwise noted)

TORONTO, April 28, 2016 /PRNewswire/ – Agnico Eagle Mines Limited (NYSE:AEM, TSX:AEM) (“Agnico Eagle” or the “Company”) today reported quarterly net income of $27.8 million, or $0.13 per share, for the first quarter of 2016.  This result includes unrealized gains on financial instruments of $9.6 million ($0.04 per share), non-cash foreign currency translation gains on deferred tax liabilities of $8.0 million ($0.04 per share), non-cash foreign currency translation losses of $6.8 million ($0.03 per share), non-cash stock option expense of $5.9 million ($0.03 per share), non-recurring losses of $1.9 million ($0.01 per share) and various mark-to-market and other adjustment losses of $0.9 million (nil per share).  Excluding these items would result in adjusted net income of $25.7 million or $0.12 per share for the first quarter of 2016.  In the first quarter of 2015, the Company reported net income of $28.7 million or $0.13 per share.

First quarter 2016 cash provided by operating activities was $145.7 million ($167.5 million before changes in non-cash components of working capital).  This compares to cash provided by operating activities of $143.5 million in the first quarter of 2015 ($176.8 million before changes in non-cash components of working capital).  The decrease in cash provided by operating activities before changes in working capital during the current period was largely due to higher exploration and corporate development expenditures (up 70%, period over period) which were partially offset by higher sales volumes.

“The year is off to a good start with a more constructive gold price environment and continued strong operating performance from all of our mines.  As a result of the strong operating results, we now expect to meet the top end of our production guidance for 2016,” said Sean Boyd, Agnico Eagle’s Chief Executive Officer.  “At current margins, Agnico Eagle is generating sufficient cash flow to support its expanded exploration and development activities and potentially pay down additional debt,” added Mr. Boyd.

First Quarter 2016 highlights include:

  • Quarterly gold production – Payable gold production1 in the first quarter of 2016 was 411,336 ounces of gold at total cash costs2 per ounce on a by-product basis of $573 and all-in sustaining costs per ounce3 (“AISC”) on a by-product basis of $797
  • Strong operational performance at Mexican operations – In the first quarter of 2016, payable gold production was 87,899 ounces at the Company’s Mexican mines.  Silver production was a new quarterly record of 752,000 ounces.  Total cash costs per ounce of gold on a by-product basis averaged $364
  • 2016 production now expected to reach high end of the guidance range – Production for 2016 is now expected to meet the high end of the guidance range of approximately 1.525 to 1.565 million ounces of gold with total cash costs per ounce on a by-product basis of between $590 to $630 and AISC of approximately $850 to $890 per ounce
  • Continued strong operating performance enhances financial flexibility – In the first quarter of 2016, $55 million was repaid under the Company’s credit facility and net debt was reduced by approximately $89 million to $923 million at March 31, 2016.  For the sixth consecutive quarter, the Company has reduced net debt
  • Amaruq Project, Nunavut – Further drilling refines the geometry of the Whale Tail Ore Shoot and IVR deposit – Drilling resumed in January and results show that the Whale Tail Ore shoot is larger in the central area than previously interpreted and confirms that the IVR deposit extends to the East and to a depth of 230 metres
  • Drilling at Barsele, in Sweden, extends the mineralization at depth and suggests the potential for a Goldex type deposit – Highlights include: 2.01 grams per tonne (“g/t”) gold (capped) over an estimated true width of 84.0 metres at a depth of approximately 310 metres in the Skirasen zone
  • A quarterly dividend of $0.08 per share was declared 



this is huge!!  We now have the largest Russian bank, VTB that will supply up to 100 tonnes of gold per year to China.  Since Russia generally keeps all of its gold and purchases gold on the foreign markets for its own account, they will now supply China.

(courtesy GATA/Reuters)

Russia’s VTB aims to supply up to 100 tonnes of gold to China per year

Submitted by cpowell on Wed, 2016-04-27 15:20. Section: 

By Oksana Kobzeva and Polina Devitt
Tuesday, April 26, 2016

MOSCOW — VTB Bank, Russia’s second-largest lender, aims to supply between 80 and 100 tonnes (2.57-3.22 million troy ounces) of gold to China per year, the bank said on Tuesday after it started the shipments.

VTB said earlier Tuesday it had dispatched its first batch of gold to China, becoming the first Russian bank to start direct supplies of physical gold to the world’s largest buyer and consumer of the precious metal. …

… For the remainder of the report:




Very strange: The CFTC continues to have no comment on the gold/silver rigging of Deutsche bank:

(courtesy Chris Powell/GATA)


CFTC has no comment on Deutsche Bank’s admission of gold, silver
market rigging

Submitted by cpowell on 11:01AM ET Thursday, April 28, 2016.
Section: Daily Dispatches
2p ET Thursday, April 28, 2016

Dear Friend of GATA and Gold:

The U.S. Commodity Futures Trading Commission will not answer
questions arising from Deutsche Bank’s reported agreement to pay
damages for and implicate other banks in the manipulation of the
gold and silver markets, a commission spokesman said today.

Last week your secretary/treasurer put to the commission three
questions about the development with Deutsche Bank:

— Does the commission have any reaction to Deutsche Bank’s
admission to manipulating the gold and silver markets?

— Is the commission responding to Deutsche Bank’s admission in
any way?

— In September 2013 the commission reported that it had been
investigating the silver market for five years and had found
nothing improper. In light of the development with Deutsche Bank,
is the commission reconsidering that conclusion?


Today’s “no comment” from the commission spokesman also covered
an additional question put to the commission today. Today’s
question noted that after your secretary/treasurer reported to
you, in a dispatch on April 23, his inquiries to the commission –


— a GATA supporter asserted to your secretary/treasurer that
soon after the announcement of Deutsche Bank’s plan to settle the
market-rigging lawsuit, he reached a market surveillance official
for the commission and this official said the commission was very
much aware of the development with Deutsche Bank. Such an
admission by a CFTC market surveillance official would contradict
the impression the CFTC spokesman gave to your
secretary/treasurer a week ago, conveyed in the April 23 dispatch
— that the commission had not been aware of the development with
Deutsche Bank until GATA inquired.

So today’s rejected question was: Prior to GATA’s inquiry to the
CFTC, was a market surveillance official for the commission
contacted about the Deutsche Bank development and did he confirm
that the commission was aware of it?

Since the CFTC’s annual budget is around $250 million, these
refusals to comment about or even acknowledge awareness of
reports of commodity market rigging could seem a bit overpriced.

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



Dave Kranzler of IRD on gold, the market story of the year:

(courtesy Dave Kranzler/IRD)


The Precious Metals Are The Market Story Of The Year So Far

“Short gold on market overreaction”Jeffrey Currie on CNBC on Feb 16, 2016;   CNBC host:“Is there any commodity that you can recommend to help our viewers make money?” Jeffrey Currie: “Short gold”CNBC on April 5, 2016;

Goldman Sachs’ Jeffrey Currie has become the “Jim Cramer” of the gold market (click on graph to enlarge).  When heUntitled issues a table-pounding call, do the opposite.  When gold was approaching its bottom around the $1050 level, Currie’s price target was $800.   Much the same way Wall Street banks like Goldman, with AAPL at $96 and down 27% since July have been forced to lower their price target from $200 to $150, Currie was forced to raise his price target for gold to $1080.  And he’s still pounding table with a “short gold” advisory.   I guess when he receives a taxpayer-subsidized seven-figure bonus every year, he doesn’t mind looking like a total idiot with regard to the market.

To be sure, there’s several developments that warrant designation as the market story of the year so far.  The shocking performance of the stock market would likely get the nod except for the now-obvious fact that the Federal Reserves continuous intervention is the force behind the stock market’s buoyancy.  In relation to the true underlying fundamentals, perhaps the only two markets in history that have been more irrational are the Dutch tulip bulb mania of the 1630’s and the Weimar Republic stock market from 1914 – 1923.

Without a doubt in my mind, the move up in the precious metals sector since January 20th is the market story of the year so far.  What makes this even more remarkable is the relentlessness of the move despite the obvious repetitious attempts by the Federal Reserve/bullion banks to push the price of gold/silver lower with fraudulent Comex paper derivatives, as evidenced by the rapidly escalating amount of paper gold/silver contracts printed and sold into the “market.”  The open interest of paper in relation to the amount of underlying deliverable physical gold/silver on the Comex has been multiplying recently at a geometric rate.

This rise in the price of gold/silver has ensued despite a plethora of skepticism from even the traditionally bullish precious metals-investing analysts.  Most market prognosticators – and I’m more less guilty of this myself – have been forecasting a sharp pullback/correction in response to market technicals which heretofore have signaled the imminence of a massive bullion bank price attack.

Further contributing to the surprising price-behavior of gold is the absence of Indian imports which push the market higher with elephantine seasonal demand at this time of year.  India’s import machine has been effectively shut down from a jeweler’s strike since March 1.  This source of physical demand has begun to stir, which could make the present build-up in the paper short interest in gold and silver particularly interesting to watch.

There’s a flood of capital on the sidelines that stands ready to move into the sector but that is waiting for a big price pullback before initiating or adding to position.  The “smart” institutional money has been unloading historically overvalued stocks and is loathe to buy near-zero yielding Treasuries.   Perhaps this dynamic in and of itself will pre-empt any meaningful price corrections for the time-being.  While it may feel like the metals and mining stocks have made an unsustainably large move since mid-January, these two graphs below provide some perspective on the “scale” of the current move (click to enlarge):



As you can see, the two graphs of gold and the HUI index, while making a large percentage move since mid-January, have barely moved the needle in relation to their mid-bull market tops in 2011.

For as brutal and relentless as the manipulated price correction has been for the last five years, we can expect the next move higher to be a least as equally forceful in its power and durability.  Make no mistake, the underlying fundamentals which triggered the de facto financial system collapse in 2008 and drove the precious metals sector its peak in 2011 have become even stronger since the advent of QE – the money printing which further fertilized and enabled these systemically catastrophic inducing trigger-points.

The junior mining stocks are set up to provide life-style changing wealth creation.  But finding the ones that are bona fide companies is a challenge.  The Mining Stock Journal presents bi-monthly commentary and insight to the precious metals market plus a well-researched junior mining stock idea with each issue.   You can access the current report plus the back-issues (distributed via email) here:  Mining Stock Journal.   The issue that will be published today presents a relatively undiscovered and incredibly undervalued compa


A very important commentary tonight from Bill Holter

a must read…

My response to Bob Moriarty (public article)

In response to my article yesterday The Chances Of A COMEX Default… (Public Article) , Bob Moriarty decided to respond and attack me personally in this article http://www.321gold.com/editorials/moriarty/moriarty042716.html .  He claims me to be a “GURU” (an insult according to him), a fool, a bad writer with poor grammatical skills (I agree), with poor logic …and a liar.  To start, calling someone a “liar” is a very big leap because it means there is an “intent to deceive” as opposed to just being wrong or even stupid.  Moriarty says I “feed people’s fantasies” to entice them to subscribe to our newsletter which is now one month old.  I wonder had I written the article over a month ago when all of my work was public what he would have claimed my motives to be?  Many have read my work since 2007 at http://www.lemetropolecafe.com/ and dozens of other sites, does anyone see a shift in my logic since those days in order “fool subscribers”?
  As for my grammatical skills, I agree, they suck!  People do not read my work to make sure whether proper tense or punctuation is correct, they read it for the logic.  I try to take complicated subjects and break them down so the average person can understand what is happening.  The logic in this case is there are several hundred ounces of gold/silver represented by paper contracts but backed by only one ounce.  Put simply, COMEX is a fraud.  A call on this contractual metal cannot be met because the metal simply does not exist.  I believe when the “call” for delivery comes, COMEX will be forced to declare force majeure and settle with cash.  As I asked in the article, is this a default or is it not?  In the real world it will make no difference at all whether it is “legally” a default or not, “practically” IT IS!  In the real world the prices of gold and silver will have exploded and the “cash” so generously provided by COMEX to “settle” will not purchase the ounces you thought it would.  In essence, while gold and silver supplies go into hiding, you will be left holding a pile of devaluing and worthless dollars that will not “buy” what you were promised.
  If you want to be “technical”, here are several passages from COMEX rules:
Section 702 of the rules states in part:
“In the event a clearing member fails to perform its delivery obligations to the Clearing House, such failure may be deemed a default pursuant to Rule 802.”
Section 714 of the rules states in part:
“A failure by a clearing member carrying a short futures position to tender a Delivery Notice on or before the time specified by the Clearing House on the last day on which such notice is permitted shall be deemed a violation of this Rule, except that the President of the Clearing House may, for good cause, extend the time to present such notice. Unexcused failure to make delivery shall be deemed an act detrimental to the interest or welfare of the Exchange. In addition to any penalties imposed as provided in Chapter 4, the Clearing House Risk Committee shall determine and assess the damages incurred by the buyer.”
Section 802 of the rules states in part:
“1. Default by Clearing Member
If a clearing member of CME, CBOT, NYMEX , COMEX, or an OTC Clearing Member, (i) fails promptly to discharge any obligation to the Clearing House or (ii) becomes subject to any bankruptcy, reorganization, arrangement, insolvency, moratorium, or liquidation proceedings, or other similar proceedings under U.S. federal or state bankruptcy laws or other applicable law, the Clearing House may declare such clearing member to be in default. For purposes of this Rule 802, each default by a clearing member will be considered a separate default event, provided that if a clearing member has been declared in default, subsequent failures to pay by such defaulting clearing member shall not be considered separate default events unless and until the original default has been fully resolved and such clearing member has been restored to good standing.”
  The obvious question is this, if COMEX uses the word “default” in their own legal language then how is it impossible to ever occur?  Would they really address an impossibility?  While these rules pertain to individual members, what happens collectively were the longs to demand delivery of non existent metal?  What will it be called when collectively the members cannot perform and deliver?  “Default(s)” as in “plural” or just one grand default?
Further, Mr. Moriarty wrote “If Mr. Holter and Ted Butler want instead to make an argument that since the short position is so large you will never be able to take delivery because there won’t be any silver, they can say that. Butler did in 2001 and managed to pick the absolute bottom of silver in real terms in 5000 years. Not only was there a lot of silver, it was at a low. There was no shortage then, there is no shortage now.”  I would ask this, if far more “paper” silver has been sold than actually exists, isn’t this a “shortage” of real metal in and of itself?  Buyers have “paid” for silver that doesn’t even exist.  This aids in suppressing price because the paper was used as a “relief valve” to divert real demand into fake supply.  Is this not a scam?  This by the way is “manipulation” pure and simple, something Moriarty denies.  Deutsche Bank has graciously now moved what was “conspiracy theory” into the category of FACT!
  After discussions with the CFTC, Harvey Organ has told me “the CFTC insists cash settlement is a no no, gold or ‘equivalent’ must be delivered for settlement”.  As a side note, I find it quite odd COMEX which trades in 100 ounce gold bars continually reports “.000” (triple zero) movements which is a statistical impossibility.  They have also been reporting many movements and adjustments that are divisible by 32.15 indicating these are kilo bars.  It is also odd because the 100 ounce bars are only 99.5 fine while kilo bars are 99.99 fine, how is this accounted for if kilo bars are used to settle?  Something fishy here?
Mention of “naked shorting” definitely needs mentioning because there certainly IS such a thing.  One needs look no further than COMEX itself.  What exactly are the contracts sold over and above available metal?  Or look at shorts in various stocks, there have been times where more stock was sold short than authorized and issued.  What would you call this?  “Naked shorts” are the reason for the old saying “he who sells what isn’t his’n, buys it back or goes to prison”.
  As for fake bars of gold, they have already intermittently shown up at this point.  https://www.sprottmoney.com/blog/fake-gold-is-back-hk270-million-discovered-in-hong-kong-nathan-mcdonald-sprott-money-news.html
Rob Kirby is cited in this article saying 6,000  400 ounce bars were discovered in China  http://www.silverbearcafe.com/private/03.10/phonygold.html  The New York Post reported on fake gold in New York  http://nypost.com/2012/09/23/fake-gold-hits-nyc/  followed by more fake gold found in New York https://www.youtube.com/watch?v=trMTQBKbZlk .  As I see it, when the call for delivery comes, either fake bars, no bars or cash will be the only options available.

 When it comes to derivatives, Mr. Moriarty wrote “I only know of three people who seem to understand derivatives. That would be Adam Hamilton, me, and a guy named Jim Sinclair”.  He followed later with “Maybe Mr. Holter could get someone to introduce him to Jim Sinclair. Sinclair knows who does and doesn’t understand derivatives. He also knows about commodities and how they cannot default. I don’t think he would dream of charging people $119 a year just to feed people’s fantasies.”  Isn’t this interesting?  I am not sure I understand, at the beginning of his piece he acknowledges Jim Sinclair as my partner but now someone “should introduce us”?  And …there are only three people in the world that he knows of who understand derivatives …and one of them is my partner Jim Sinclair?  I’m pretty sure the feeling is not mutual on Jim’s part, he wrote me prior to my first article written

  “Bill,  I dismissed Moriarty for poor knowledge many years back.  His insistence derivatives net out to zero was evidence of real world ignorance.  Denial of notional value as total true value is warped logic.  Notional value will bcome full value at that very moment in time they are called on to perform.  As long as derivatives have no need to perform they remain unimportant.  As you have written, what is a contract worth that cannot perform?  COMEX comes immediately to mind.  Ry, Jim” 
  I must confess, I wrote poorly and incorrectly when writing “I do want to point out, this is the same man who said a derivatives blowup can never happen.  I should have included “because of ‘notional’ value”.  For this I apologize publicly.  Failing to include “because of notional value” is the main point to where we disagree.  This is where he and Jim Sinclair vehemently disagree.  We believe notional value when markets become stressed will become real and TOTAL VALUE.  Jim and I believe too much “notional value” is exactly what will cause a de facto default on the COMEX with gold and silver.  You see, the notional value of all the futures contracts, the puts and calls, and OTC derivatives simply dwarf COMEX inventories.  The derivatives on gold and silver dwarf ALL THE METALS EVER MINED IN ALL OF HISTORY FOR THAT MATTER!  THIS is where we disagree.  Notional values will ultimately be the root cause of cross party defaults in EVERYTHING …INCLUDING COMEX GOLD AND SILVER!
   I am not sure I get it, while talking about markets AND DERIVATIVES blowing up, Moriarty believes none of this can or will happen because of notional value?  These derivatives that will blow up are all paper contracts based on stocks, bonds and currencies but not commodities nor silver or gold because those members and exchanges cannot default?  I would suggest this, if an exchange settled with bananas instead of copper, that would be a default.  Just as if COMEX settled gold or silver with dollars?  Are not fiat dollars and physical precious metals the exact opposites of each other?  Who wants dollars if they were expecting gold?  Technically, under a situation of force majeure, settling in dollars may not be a legal default (though COMEX itself says it is in their own rules)… it is however a real world and de facto default settling in the exact opposite currency to what you were “betting” on as a speculator.  Man up and call a spade a spade Bob!
  To finish, I would like to address the most egregious personal attack Mr. Moriarty levelled against me.  He called me a liar.  As he obviously did not know Jim Sinclair and I are partners, he may not have known I was a stockbroker for 23  years and a branch manager for 12 of those.  In a highly litigious business world, I worked 23 years without ever an arbitration, lawsuit or any type of settlement.  Of more pride, none of my brokers were ever involved in any type of arbitration, lawsuit or settlement.  After the Dot Com bust, of the 711 branch offices at AG Edwards, less than one dozen offices were not litigated against.  Mine was one of those!  A “liar” cannot go 23 years while supervising others and doing business on a handshake and verbal order without being sued multiple times in multiple venues.  I tell it as I see it, if you disagree then that is your option.  Call me what you want, liar is cannot be one of them.
Mr. Moriarty may not like my spelling or grammar (my schoolteachers did not either!), he may not like or agree with my logic though I believe it is sound.  He may believe whatever he would like to, it does not make him correct nor logical.  I tried to take the high road with this and simply argue the logic, or lack of.  I would hope Mr. Moriarty would extend the same courtesy in the future.  Lastly, so sorry for the spelling and grammatical errors but in reality I don’t give a damn!
As an addendum, Jim Sinclair felt it necessary to chime in after reading the above:
“Mr. Moriarty and I had a serious disagreement extremely early in the recognition of the severe problems that derivatives and their financial interdependence threatened the financial community based on lack of full grasp of the impact of bankruptcy a complexity of contract law thereupon many years back.  His insistence that derivatives net out to zero was correct in a theoretical and prefect world in which all parties to all derivatives performed as to what and when the contract called for. He even had a professor write an article to sustain his view. What they both missed was the critical financial factor and entirety of the problem OTC derivatives have landed us with in the trillions.  His denial of notional value transmuting to total true value in default is under contract law simply untrue.  Notional value will become full value at that moment in time they are called on to perform. If either party can’t come up with the huge funds then called for or physical gold, then bankruptcy of one party leads to the initial default.  The danger lies should this default be of size to become systemic in nature.  If either party to the Comex contract buyer or seller fails to perform according the varied contract stipulation the agreement under contract law, default occurs and the agreements in nominal value becoming real cash value which is an enormous financial swing. It is in the present discussion to recognize that default occurs at the point of non performance of the contract. All that Force Majeure does in the Comex contract is to outline a possible form of a solution to which there is no guarantee of

  Under the logical outline by Bill of events you can anticipate the Comex contract will default by not being able to perform in the contract manner called for. As far as the called for    

remedy by the halt that Force Majeure it is also theoretical in a perfect world. This is exactly what Bear Sterns and Lehman Brothers faced for the same reason which broke them both. Bill’s argument is totally correct in the real world of finance”
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome  bholter@hotmail.com

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



1 Chinese yuan vs USA dollar/yuan UP to 6.4760 / Shanghai bourse  CLOSED DOWN 7.47  OR 0.25%  / HANG SANG CLOSED UP 26.43 OR 0.12% 

2 Nikkei closed DOWN 624.44 or 3.61%%/USA: YEN FALLS TO 108.07

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 93.88/Euro UP to 1.1345

3b Japan 10 year bond yield: FALLS   TO -.082%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.07

3c Nikkei now JUST BELOW 18,000

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

3e WTI::  45.14  and Brent: 47.14

3f Gold UP  /Yen UP

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to 0.244%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 10.95%/: 

3j Greek 10 year bond yield RISE to  : 8.91%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1255.25/silver $17.32 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 30 /100 in  roubles/dollar) 64.83

3m oil into the 45 dollar handle for WTI and 47 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 .9668 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.0971 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .245%

/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 1.83% early this morning. Thirty year rate  at 2.68% /POLICY ERROR)

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

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

Global Stocks Plunge After Bank Of Japan “Shock”

It is very fitting that on today’s April 28th anniversary of the bull market, the day that officially makes this the second-longest “bull market” in history, the market got a stark reminder of just how it got there: through constant and relentless central bank intervention, which has been “beneficial” to stocks for the most part, however last night was anything but.

Less than one week after the BOJ floated a trial balloon using Bloomberg, that it would reduce the rate it charged some banks which set off the biggest USDJPY rally since October 2014, we are back where we started following last night’s “completely unexpected” (for everyone else: we wrote “What If The BOJ Disappoints Tonight: How To Trade It” hours before said “shock”) shocking announcement out of the BOJ which did absolutely… nothing.

It’s a total shock,” Nader Naeimi, Sydney- based head of dynamic markets at AMP Capital Investors told Bloomberg. “From currencies to equities to everything — you can see the reaction in the markets. I can’t believe this. It’s very disappointing.”

As we reported last night, the yen surged the most in 8 months, or since August’s market meltdown and Japanese equities plunged after the Bank of Japan refrained from adding to its monetary stimulus. Bonds jumped around the world and gold rallied as the Federal Reserve signaled no hurry to raise interest rates. The staggering move as seemingly everyone was caught wrong-footed is shown in the chart below.

As we warned readers in advance of the BOJ announcement, it all started with Goldman which one week before the BOJ announcement changed its “base case” for BOJ easing from June to April, expecting a doubling in ETF purchases, and immediately all the other sellside lemmings followed, assuing everyone would be flatfooted when the BOJ “disappointed.” As Bloomberg puts it, “the BOJ’s decision was a surprise because a majority of economists surveyed by Bloomberg had predicted some action to counter a strengthening yen that had cast a shadow over the outlook for wage gains and investment spending. That the market’s reaction was so violent shows the weight financial markets are attaching to shifts in monetary policy.”

The move confounded economists, a slight majority of whom had expected extra easing, and investors, who’d pushed the Topix index higher and the yen toward a one-month low in the hours before the decision.

The resulting screams of anger as the BOJ refuse to coddle spoiled “traders”, pardon central bank frontrunners, was absolutely hilarious: “I’m very disappointed. I wanted the BOJ to do something and the BOJ should have done something,” said Masaru Hamasaki, head of the investment information department at Amundi Japan Ltd. “Kuroda has created mostly positive surprises so far, but this time it’s negative. The BOJ hasn’t been on the same wavelength as markets this year.”

There was more: “Todays market reaction is all about the BOJ,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “‘Investor expectations that had been built ahead of the meeting have now been scaled back. Earnings in a nutshell look OK, but as earnings estimates further down the road are still too high, there will be a negative trend in earnings revisions.”

But wait, it gets even better: “Quite a few people have been wrong-footed by this,” said Andrew Clarke, Hong Kong-based director of trading at Mirabaud Asia Ltd. “Guessing what governments do next at this moment in time is not a good way to play these markets. Hoping that there will be more stimulus will lead to disappointment, because hope isn’t a very good strategy.”

Yes, hope is not a very good strategy, especially when you are betting it all on what an irrational central planner may or may not do.

Of course, Kuroda’s inaction doesn’t just matter to investors. Japan’s economy is struggling to break out of a funk, with consumer prices dropping in March by the most since 2013 and company profits getting hurt by the stronger yen. In refraining from adding to stimulus, officials are betting that their success in bringing down borrowing costs since unveiling a negative-rate policy in January will generate an acceleration in lending. Perhaps this is just Kuroda’s way of saying Abenomics (and the BOJ’s policies) have failed and it’s time to pack it up?

And while Japan’s troubling future just got even more nebulous, stocks around the world tumbled, with European and Asian stocks, and U.S. index futures all falling after the BOJ “shock.” The drop is so big that not even last night’s blowout earnings by Facebook appear to be able to make much of a dent.

The MSCI All-Country World Index dropped 0.2 percent. The Stoxx Europe 600 Index lost 1.3 percent, heading for its biggest decline since April 5 as almost all of its industry groups declined.  Among the notable movers, we say Banco Bilbao Vizcaya Argentaria SA plunge 7.9 percent and Lloyds Banking Group Plc falling 2.4 percent after they reported earnings declines. Deutsche Bank AG was the exception, rising 3.8 percent, as it posted a surprise profit. Electrolux AB jumped 9.5 percent after Europe’s biggest maker of home appliances announced earnings that beat analysts’ estimates and raised its forecast for U.S. growth.

Futures on the Standard & Poor’s 500 Index slid 0.8 percent after the gauge rose for a second day, closing near its highest level of the year. In the premarket, Facebook Inc. climbed 8.4 percent after reporting sales and profit that topped projections. Medivation Inc. added 2.3 percent after Sanofi offered to buy it. The U.S. will release details of its first-quarter economic growth on Thursday.

Market Wrap

  • S&P 500 futures down 0.8% to 2074
  • Stoxx 600 down 1.2% to 344
  • FTSE 100 down 1.1% to 6248
  • DAX down 1.3% to 10165
  • German 10Yr yield down 6bps to 0.23%
  • Italian 10Yr yield down 5bps to 1.47%
  • Spanish 10Yr yield down 3bps to 1.6%
  • S&P GSCI Index up 0.2% to 356.7
  • MSCI Asia Pacific down 0.3% to 131
  • Nikkei 225 down 3.6% to 16666
  • Hang Seng up 0.1% to 21388
  • Shanghai Composite down 0.3% to 2946
  • S&P/ASX 200 up 0.7% to 5225
  • US 10-yr yield down 3bps to 1.82%
  • Dollar Index down 0.67% to 93.75
  • WTI Crude futures down less than 0.1% to $45.32
  • Brent Futures up less than 0.1% to $47.22
  • Gold spot up 1% to $1,258
  • Silver spot up 0.8% to $17.38

Top Global News

  • Facebook’s Zuckerberg Wants Right to Be Bold After Revenue Beat: Proposed new share class to give CEO more freedom for big bets; 1Q adj. EPS 77c vs est. 63c; 1Q rev. $5.38b vs est. $5.27b; Zuckerberg Borrows Google Tactic in Splitting Stock for Control
  • Sanofi Pursues Medivation for $9.3 Billion After Being Spurned: Offers $52.50 per share in cash, a premium of >50% to the 2-month volume-weighted avg. price prior to takeover rumors
  • BOJ Holds Off More Stimulus to Gauge Impact of Negative Rate: Keeps three key tools unchanged; majority forecast some action
  • Deutsche Bank Profit Beats Estimates as Legal Costs Drop: 1Q net attributable EU214m vs EU544m y/y; est. loss EU484.3m; debt trading revenue falls less than analysts had expected; Cryan, Fitschen call financial markets outlook “uncertain”
  • Texas Instruments Forecast Shows Rising Auto-Industry Demand: Sees 2Q rev. $3.07b-$3.33b, est. $3.17b; sees 2Q EPS 67c-77c, GAAP est. 71c; 1Q GAAP EPS 65c, est. 62c
  • First Cash Said to Be in Advanced Merger Talks With Cash America: Discussing an all-stock merger of equals and an agreement could be announced as soon as this week
  • Valeant’s ‘Mistakes’ Raised Profit, Destroyed Value, Ackman Says: Drugmaker’s price strategy reassessed at Washington hearing
  • PayPal Goes Mobile to Lure Customers, Fend Off Competitors: 1Q net rev. $2.54b vs est. $2.50b, adj. pro forma EPS 37c, est. 35c
  • Hanesbrands Offers $835 Million for Aussie Underwear Firm: Agreed to buy Australia’s Pacific Brands Ltd. for A$1.15 per share in cash, 22% more than the target’s closing price on Wed., gaining iconic underwear labels including Bonds and Jockey
  • Marriott 1Q Adj. EPS, Rev. Beat; Starwood Deal ‘On Track’: 1Q adj. EPS 87c, est. 84c, 1Q rev. $3.77b, est. $3.71b
  • VW’s Biggest Brand Stumbles to Loss on Emissions Crisis: VW brand posted a loss of EU127m in the final three months of 2015, compared with a profit of EU780m a yr earlier
  • House Panel Approves $610.5B Defense Policy Bill For FY 2017: House Armed Services Committee approves the $610.5b defense authorization bill by a vote of 60-2
  • Qlik Tech Said to Draw Bids From Thoma Bravo, Bain, Permira: First-round offers said submitted by Tuesday deadline
  • Puerto Rico Risks Historic Default as Congress Chooses Inaction: Island may impose moratorium if GDB payment isn’t delayed
  • Suncor Takes Majority Syncrude Stake After Murphy Oil Deal: Additionanal Syncrude stake will provide 17,500 barrels
  • Monsanto Says New Technology to Help GMOs Fight Pest Resistance: Technique may allow GMO plants to beat weed, insect resistance
  • DreamWorks Said to Explore Sale Advised by Centerview: Reuters

Looking at regional markets, Asian stocks trade mixed following a mild positive lead from Wall St. where an unsurprising FOMC and strength in oil provided early support, while Nikkei 225 slumped after the BoJ disappointed markets and kept monetary policy on hold. This saw a firm break below 17000 in the Nikkei 225 (-3.6%) with the index wiping out Industrial Production inspired gains. ASX 200 (+0.6%) benefited from the uptick in energy after WTI broke above USD 45/bbl to post another YTD high, while the Shanghai Comp (-0.3%) weakened amid ongoing poor earnings with state-owned CNPC the latest addition after its profits dropped over 50%. 10yr JGBs are relatively flat despite the slump in Japanese stocks as the BoJ’s inaction kept fixed-income demand subdued.

Top Asian News

  • China’s $1 Trillion Bond Leverage Unwinds as Pimco Senses Panic: Investors get squeezed as bond prices fall, repo rates rise
  • Daiwa Securities Quarterly Profit Falls 45% on Trading Slump: Brokerage commissions and underwriting fees also drop
  • Docomo Forecasts Jump in Profit as Phone Subsidy Ban Cuts Costs: To buy back up to 193b yen of shares from May 2 to Dec. 31
  • Sony Reports Quarterly Loss, Holds Forecast to Assess Earthquake: 4Q net loss 88.3b yen vs 106.8b yen loss y/y
  • ICBC Joins Bank of China in Breaching Bad-Loan Coverage Rule: Industrial & Commercial Bank of China breached a regulatory requirement for bad-loan coverage as it reported a 0.6% gain in 1Q profit
  • Samsung Gets S7 Boost, Still Leaves Question of What’s Next: Latest smartphone model fuels gains in net income, sales; shares decline as analysts see few new hits on horizon; co. to uy back 2.03 trillion won worth of common and preferred shares
  • Cnooc 1st Quarter Revenue Drops 31% After Crude Hits 12-Year Low: 1Q oil, gas revenue falls 30.7% y/y to 24.6b yuan
  • India’s Tata Starts Tech Transformation With Yoga Wearables: Tata hopes to place technology at the heart of group strategy
  • China Said to Mull Starting Trading of Credit-Default Swaps: NAFMII sought views on CDS and credit-linked notes, people say

European equities are broadly lower this morning as hopes of further stimulus had been shattered by the BoJ, after the central bank kept rates unchanged while also refraining from increasing the size of its asset purchase program. Alongside this, another bout of earnings have guided price action in Europe with IBEX the notable underperformer following a poor figures from BBVA. While the DAX saw a technical break below yesterday’s low amid VW’s annual conference, while weak regional German CPI’s point towards a poor national reading, subsequently adding to the dampened tone. Bunds have been bolstered by the negative tone across the region, with yields across the curve falling after the BoJ’s lack of action, coupled with signals from the FOMC that they are in no rush to tighten monetary policy. As such, CME FFR futures are now pricing in as much as 17% of a hike in June.

Top European News

  • Lloyds Falls After Posting Decline in First-Quarter Revenue: Rev. fell 1% to GBP4.4b, lender cut operating costs 2% to offset revenue drop
  • Anglo to Sell Niobium, Phosphate Business for $1.5 Billion: China Molybdenum agreed to buy the division and the transaction is expected to be completed in the second half of this year
  • Euro-Area Economic Confidence Rebounded in April From 1-Year Low: Indicator rises to 103.9 in April from 103.0 in March, economists had forecast a gain to 103.4
  • German Unemployment Extends Drop in Sign Economy Still Robust: Number of jobless fell for seventh straight month in April, unemployment rate remains at record low level of 6.2%
  • Airbus Profit Falls on Delivery Delays as A400M Issues Brew: Earnings slump 23% after setbacks to A320Neo, A350 programs, said fresh problems with the troubled A400M transport plane could hurt future earnings.
  • BBVA, CaixaBank Drop as First-Quarter Profit Miss Estimates: BBVA said net income fell 54% to EU709m, earnings were hit by lower trading revenue and currency fluctuations
  • Telecom Italia Said to Target $1.1 Billion Cost Cuts by 2018: New CEO Cattaneo wants to double company’s prior savings goal
  • WPP Sales Rise as U.S. Clients Spend More on Advertising: Forecast further increase this year, helped by the Summer Olympics in Rio and the U.S. presidential election
  • Hermes Sales Buoyed by Bags After Boosting Leather Output: Sales of leather goods, saddles surges 15%, beating estimates
  • TUI Agrees to $1.3 Billion Hotelbeds Sale to PE, Pension Funds: Price about 1.2 times 2015 rev. for online booking unit

In FX, In the wake of the FOMC statement last night, we see the market continue to pressure the USD, and focus is firmly on USD/JPY this morning after the heavy overnight losses based on the BoJ’s on-hold call. Heavy spec positioning on hints of a move saw the lead spot rate hit by 3 JPY, but early London has only managed a modest dip under 108.00 since. EUR/USD has been pressed higher as a result, with EUR/JPY showing the familiar resilience at the lows, but only after suffering a near 4 JPY drop. Similar losses seen in the rest of the major cross rates, but AUD, CAD and NZD all still higher against the USD, as is GBP which is back testing recent highs through 1.4600. German regional inflation all generally softer, but widely expected, with the unemployment rate unchanged at 6.2%. EU sentiment indices on the soft side also, but industrial above expectations — all to minimal effect on the EUR. Oil still pushing higher as Jun WTI eyeing $45.50+. CAD well bid but pre 1.2500 orders contain for now. US Q1 GDP the main event this afternoon, with USD sales fading in the last hour or so as a result.

In commodities, WTI and Brent have benefited from the decline in the USD index as the Fed look to be in no rush to hike rates, WTI currently trading near the USD 45.00/bbl level with the next major resistance at the psychological level of USD 46.00/bbl level. Gold has also been rising off the back of safe haven flows into the asset following the central banks decisions and comments. Silver has also been rallying reaching the USD 17.35/oz level eyeing the recent highs of USD 17.67/oz. In base metals copper prices were subdued amid the dampened tone in China and on the hourly chart price is currently at the 38.2 fib support level and could look to move higher after rejecting it for a second time.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Global equities slump amid the surprising lack of action by the BoJ, alongside a slew of rather soft earnings updates from large European names.
  • JPY benefits from the BoJ’s action, coupled with the broad risk off tone in the region.
  • Looking ahead, highlights include US Advance GDP, Unemployment Claims, German national Inflation figures alongside ECB’s Linde and Costa.
  • Treasuries rise during overnight trading with European and Asia sovereign bonds after the BOJ held off on more stimulus to take more time to assess the impact of negative rates, and the Fed showed no sign of June rate increase.
  • Haruhiko Kuroda hasn’t lost his power to jolt markets: but now he’s moving them by doing nothing as the yen soared the most in eight months and stocks sank in Tokyo
  • New Zealand’s central bank said it may need to cut interest rates further after holding them steady Thursday, as slowing global economic growth and a strong currency prolong a period of low inflation
  • Sweden’s krona is moving in the wrong direction with the threat of a major appreciation putting economic growth forecasts at risk, according to Riksbank Deputy Governor Per Jansson
  • Currency trading via CME Group Inc., ICAP Plc and Thomson Reuters Corp. fell to $538 billion per day last month, from more than $669 billion in September 2014, according to data compiled by Bloomberg, which shows the extent of the slump in a market that this month saw some banks report less client activity
  • PetroChina Co. posted its first-ever quarterly loss as falling prices for global crude and domestic gas wiped out earnings; China’s biggest oil and gas producer reported a 13.8 billion yuan ($2.1 billion) loss in the three months ended March 31 from a 6.15 billion yuan profit a year ago; Cnooc Ltd., China’s biggest offshore oil and gas explorer, reported a 31 percent decline in revenue and an increase in output amid a crash in crude prices
  • China is considering starting trading of credit-default swaps as the number of corporate nonpayments surges, according to people familiar with the matter
  • Brexit campaigners sought to seize back the initiative in the referendum battle as eight high-profile economists declared Britain would do better outside the European Union.
  • Daiwa Securities Group Inc. said it has almost completed a round of job cuts overseas as a trading slump contributed to a 45 percent decline in fourth-quarter profit
  • Sovereign 10Y bond yields lower; European, Asian markets lower; U.S. equity-index futures fall. WTI crude oil lower, metals higher

DB’s Jim Reid concludes the overnight wrap

It’s straight to Japan for us this morning where all eyes have been on the BoJ. Expectations had been growing in recent weeks that we might see some sort of further easing, a view also shared by a narrow majority of economists, however the big news is that BoJ has stayed put on all measures. That means annual asset purchases are unchanged at ¥80tn, the policy rate is to stay at -0.1% and the rate of ETF purchases is also unchanged. At the same time the BoJ has also pushed backed on its 2% inflation target, the fourth time in a year they have done so.

Pressure had only mounted leading into the meeting this morning after the BoJ reported lower than expected inflation data. Headline CPI was reported as dipping into negative territory at -0.1% yoy last month (vs. 0.0% expected), a fall of four-tenths. That’s the first deflation reading since 2013. Core inflation also slipped into negative territory at -0.3% yoy (vs. -0.2% expected), a drop of three tenths. The core core print (ex food and energy) was one-tenth lower at +0.7% yoy.

The most immediate impact to the BoJ decision was a huge rally in the Yen. Having hovered around 111.5 prior to the release, the currency surged over two big figures and broke through 109.0 (touching 108.77). It’s currently hovering around 109.3 which is a 2% rally on the day. Meanwhile Japanese equity markets have sharply reversed course. The Nikkei was up +1.41% prior to the decision, but sharply reversed to the tune of nearly 4.5% to trade at -2.96% as we go to print. It’s a similar story for the Topix which is currently -2.62%. Bourses elsewhere in Asia have given up earlier gains. The Shanghai Comp (-0.68%) and Kospi (-0.67%) are in the red post the news, while the Hang Seng (+0.50%) is up but has given up bigger gains from earlier in the session. 10y JGB yields are down 3bps.

The big focus now will be on Governor Kuroda who is scheduled to speak to the press shortly after this hits your emails at 7.30am BST. Given the massive adverse reaction from markets, this has arguably suddenly become the main event of the week where there will be huge attention placed on his every word.
Needless to say yesterday was all about the other big central bank meeting of this week with the conclusion of the FOMC meeting. All-in-all the tone of the statement didn’t offer a whole lot of new information, with the Fed still very much in a wait and see mode. Those banging the tightening drum for June will probably be a little disappointed and while that door is still being left open, the lack of any real reaction in futures markets – with the probability hovering around 21% this morning – indicates that investors were little swayed by the outcome yesterday.

The main focus of the statement was on the reference to global risks. After previously saying that global economic and financial developments pose risks to their outlook, they replaced that with the line that the Fed ‘continues to monitor inflation indicators and global economic and financial developments’.

With regards to economic developments, Fed officials appeared more downbeat saying specifically that growth of economic activity ‘appears to have slowed’ which has coincided with a moderation in household spending. On the flip side the committee also made mention to households’ real income rising at a ‘solid rate’ and consumer sentiment also remaining high. Business fixed investment and net exports were acknowledged as being soft, while the usual positive rhetoric around the labour market was referenced with ‘a range of recent indicators, including strong job gains, points to additional strengthening of the labour market’. On the inflation front market-based measures of inflation compensation were reported as remaining low, while survey measures are little changed. For the third time in a row, the balance of risks statement was omitted.

So it feels like its back to the data-watch train to determine the path ahead for the Fed. On that note, today’s advance Q1 GDP figures released this afternoon will be of huge interest. The current consensus forecast is for +0.6% qoq, which is also the latest forecast of the Atlanta Fed. That consensus forecast has actually been trimmed from as high as +2.5% back in January. Our US economists are a little lower than the market at +0.5%. We’ll know the exact outcome at 1.30pm BST.

In terms of what happened in markets yesterday, prior to the FOMC the bulk of risk assets in the US had been trading in the red, led by weakness in the tech sector from the weak Apple led results hangover. As the session dragged on however and post-FOMC, markets bounced back into the close albeit finishing with still fairly modest gains. The S&P 500 ended up with a +0.16% gain despite Apple closing some 6% lower, while the Dow (+0.28%) closed up slightly more. The Nasdaq (-0.51%) did however fail to recover from the early leg lower. Some better than expected results out of Facebook late last night however (shares traded up as much as 7% in extended trading) did see US equity index futures and particularly the tech-heavy Nasdaq trade higher this morning, but those moves have been wiped out post the BoJ decision.

Supporting the rebound also was another impressive performance for the Oil complex. WTI closed above $45/bbl after rallying close to 3% to mark a fresh 2016 high. That was actually after what was a fairly volatile session which saw Oil drop some 3% off its early highs in the afternoon following a surprise jump in US crude stockpiles levels, before then climbing back into the close late in the session post FOMC. The US Dollar continued its theme of declining each day this week with the Dollar index ending -0.20%, while some of the bigger moves were reserved for the Treasury market. Having risen for seven consecutive sessions, 2y yields ended 4.4bps lower yesterday at 0.819%, while 10y yields finished close to 8bps lower at 1.852%, albeit still back to where they were mid-way through last week.

Yesterday’s main economic data of note was the March advance goods trade balance reading for the US. The data showed an unexpected shrinking of the deficit to $57bn from $63bn reflecting a sharp slowdown in imports, after expectations had been for little change. Meanwhile the latest housing market data was reserved for the March pending home sales numbers which were reported as rising +1.4% mom last month (vs. +0.5% expected).

Meanwhile closer to home yesterday there was a similar bounce off the early lows for risk assets in Europe yesterday with the Stoxx 600 and DAX ending with a +0.29% and +0.39% gain respectively. The main focus data wise was on the ECB’s money and credit aggregates numbers for March. The data was fairly unspectacular with M3 money supply growth up one-tenth to +5.0% yoy as expected, while the credit impulse shrank. Meanwhile we also got wind of a number of regional consumer confidence surveys, with Germany reporting a rise in confidence, while France was little changed and Italy reported a decrease. Finally the advance Q1 GDP reading for the UK printed as expected at +0.4% qoq.

Looking at the day ahead, the early focus this morning is on the UK where the April house price data is due. Shortly after that we’ll get the latest unemployment reading out of Germany, while later this afternoon the April CPI print in Germany will be closely watched. We’ll also get confidence indicators for the Euro area today. Over in the US this afternoon the big focus is on the aforementioned Q1 GDP report, while the core PCE reading will be released alongside (expected at +1.9% qoq). Initial jobless claims data and the Kansas City Fed’s manufacturing survey rounds off the data. It’s another busy day for earnings too with 63 S&P 500 companies set to report including Amazon, UPS and Ford Motor. In Europe the corporate reporting calendar is highlighted by the banks today.



i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN BY 7.47 POINTS OR 0.25%  /  Hang Sang closed UP 26.43 OR 0.12%. The Nikkei closed DOWN 623.33 POINTS OR 3.61% . Australia’s all ordinaires  CLOSED UP 0.73%. Chinese yuan (ONSHORE) closed EVEN at 6.4760.  Oil FELL  to 45.17 dollars per barrel for WTI and 47.14 for Brent. Stocks in Europe ALL IN THE RED . Offshore yuan trades  6.4831 yuan to the dollar vs 6.4760 for onshore yuan.



The big news:  The central bank of Japan did absolutely nothing.  That disappointed the markets and the Nikkei initially dropped 1000 points and finishing down 624 points.  The USA/Yen crashed 3 huge handles to 108.07.  Markets around the globe tumbled:

(courtesy zero hedge)

Japanese Bloodbath After BoJ Disappoints – Nikkei Drops 1000 Points, USDJPY Crashes

If there was a sign that nothing else matters but central bank largess, this was it.The moment The Bank of Japan statement hit and proclaims “unchanged” a vacuum hit USDJPY and Japanese stocks. Reflecting that Japan’s economy has “continued a moderate recovery trend” which is utter crap given the quintuple-dip recession, Kuroda and his cronies said they will “add easing if necessary” and apparently that is not now. Not so much as a higher ETF purchase or moar NIRP.. and the aftermath is carnage – NKY -1000 points and USDJPY crashed to a 108 handle!!


Incidentally, this is what consensus looked like ahead of today’s BOJ decision:

Of 41 respondents, 19 predict an increase in purchases of
exchange-traded funds, eight expect a boost in bond buying, and eight
project the BOJ will cut its negative rate.

And the result…

Some context…

The BoJ website crashed also.

The fallout is going global… Dow Futures tumbled 150 points to LoD…

And Yuan surged…

Just as we noted earlierthe biggest argument for a BOJ disappointment was that with the G7 meeting in Japan in on month on 26–27 May 2016, it’s unlikely that
Japanese policymakers will want to draw attention yet again to the idea
that they are in the business of manipulating the JPY lower. After all
the most recent G20 meeting once again confirmed that absent “disorderly moves” in the Yen, the US would frown on any attempt to dramatically manipulate its currency lower.

Unless, of course, Abe wants to send Lew and Obama a message, that if China can enjoy a weaker dollar (courtesy of its USD peg), then so should the Bank of Japan.



As we pointed out to you yesterday, Chinese commodity trading volume has crashed

The bubble has burst!!

(courtesy zero hedge)

Chinese Commodity Trading Volume Crashes: “Most Don’t Even Know What They Are Trading”

The speculative Chinese commodity bubble has begun to reach the mainstream as Citi’s warning to “hold on to your hats” today at the surge in trading volumes across Rebar, Iron Ore, Coke, and Copper literally exploded with the former now the most actively trade commodity in the world. The frenzy has become so insane that the head of the largest metals exchange in the world exclaimed at a conference in Singapore today that “I don’t think most people who trade it know what it is.” We suspect he is 100% correct and judging by the following chart, we know exactly how it will end.

As Bloomberg reports, the head of the world’s largest metals exchange said while volumes in China’s commodity futures markets have become phenomenal, it’s possible some traders don’t even know what it is they are buying or selling.

“Why should steel rebar be one of the world’s most actively-traded futures contracts?” Garry Jones, chief executive officer of the London Metal Exchange, said at a conference in Singapore on Wednesday. “I don’t think most people who trade it know what it is.”

Trading of commodity futures in China from steel reinforcement bars — a benchmark product used in construction — to iron ore, coking coal and cotton has ballooned this month on an unprecedented surge in retail investor interest. The jump in volumes has stunned global markets, according to Morgan Stanley, while eliciting concern from Goldman Sachs Group Inc.

Exchanges in Asia’s top economy including in Shanghai have announced a series of measures this month to cool the frenzy, and said more steps may follow.

“If you look at the client base of most Chinese exchanges, it’s heavily retail-focused,” Jones said on a panel discussion addressing commodities and risk management in China. The exchanges there “have very high retail participation. They have a very high velocity of trading,” he said.

Now where have we seen this pattern of massive speculative volume rushing in from retail investors chasing a trend?

The speculative activities will be vulnerable to a sharp reversal, once the upward price momentum wanes, according to BMI Research, a unit of Fitch Group, drawing parallels with a rally, followed by a slump, in Chinese equities last year.

And that did not end well for price action before in 2015…

or 2009…

And just as expected above…once the volume reaches a crescendo it crashes and The Party’s Over

As reports from China suggest both major margin increases at the main exchanges and crackdowns on real production: Tangshan city is banning all coke, steel & cement productions for 24 hours starting this noon.

And then this: the spewing of false signals on the Chinese economy is over:
(courtesy zero hedge)

Volume Collapses As China Commodity Exchanges Ordered To “Curb Speculation”

We have been warning about China’s speculative commodity trading bubble – spewing false signals around the world about the strength of the real economy – and now, as we suggested previously, Chinese authorities have decided to burst yet another bubble they created.Reuters reports that China’s Securities regulator has ordered three major commodity exchanges to “control intraday speculation in commodity markets,” ordering them to “curb trading for investors with no commodity industry background.” Volume has crashed… and just as it did in the equity markets, price will follow.

As Reuters reports, China’s securities regulator ordered the country’s major commodity futures exchanges this week to control speculative trading activity, sources told Reuters, after a surge in prices sparked fears of a boom-and-bust cycle.

In response, commodity futures exchanges in Dalian, Shanghai and Zhengzhou ordered major institutional investors that lack a commodities background to rein in their trading, three people with direct knowledge of the situation said. The sources didn’t define what was meant by a lack of background in commodities.

Analysts said speculators have been betting that government plans for more infrastructure spending and signs of a pick up in the economy would fuel more demand for commodities.

Others suggested commodities futures markets were the only place left for speculators to make quick profits given weakness in stocks, bonds and housing.

The result…Party’s Over!

As Reuters concludesthe measures this week appear to be having an impact. Steel and iron ore futures steadied on Thursday, while other commodities fell further.

The aim is to restrict the oversized space for profiting from short-term trades, reduce elevated holdings of related products and curb speculation,” the Dalian Commodity Exchange said on Wednesday, referring to the moves to increase trading costs.

The volatility in prices has already deterred some major industry players from using the futures market, causing some to take losses and others to reduce their positions. It also marks a setback for attempts to give China’s domestic markets more influence over global pricing, analysts say.

And that means prices are set to tumble…

A run up in steel prices has been blamed for encouraging some idled steel mills to restart production, adding to a production glut in the country and exports of the metal, which is upsetting other countries.


Smart man!!  The following Chinese wealth manager decided to disappear before the authorities disappeared him.  He is off with 154 million dollars:
(courtesy zero hedge)

China “Wealth Manager” Disappears With $154 Million

As China’s credit fueled craziness rages on, individual “investors” have been tripping over themselves trying to get in on a piece of the action, opening up enough brokerage accounts for every man, woman, and child in LA and pouring hard earned money into “investment” opportunities such as P2P funds.

This has of course lead people to game the system, recall Ezubao’s $7.6 billion P2P ponzi scheme that led to the arrest of 21 people earlier this year, and more recently the shuttering of Zhongjin Capital Management, which also led to 21 arrests on charges of suspicion of illegal fundraising.

It now appears that we’ve reached the point in the game where instead of waiting around to be arrested, those running shady ponzi schemes are now pulling the ripcord, clearing out as many bank accounts as possible, and just disappearing.

In the latest development in the crumbling shadow banking sector, police in the Chinese city of Hangzhou are searching for the chairman of the Wangzhou Group who allegedly disappeared with $154 million according to Reuters.

The Wangzhou Group is the parent of asset management firm Wangzhou Fortune,has more than 20,000 investors.

Investors had reported “problems with the company’s cash flow” since last Monday, Xinhua said.

To repay investors, Wangzhou Group plans to retrieve about 1 billion yuan in principal and interest payments on loans it has made and cover the additional 1.2 billion yuan shortfall by selling property, Xinhua quoted a company statement as saying.

We expect this won’t be the last time we hear of such a thing taking place, because after all as the credit bubble starts to burst, China authorities will try to root out more fraudulent firms in order to try and get ahead of the situation.

An effort that will inevitably be too little, too late.

China injected 1 trillion usa into its economy and did get industrial profits rising by 11% year over year.  However China is still stuck with huge excess capacity.  Another problems is payments due to suppliers is running at 83 days and that is not good. Remember also that this month commodity prices burst which should burst everything inside China
(courtesy zero hedge)

China Industrial Profits Soar Most In 18 Months But Overcapacity Looms

Profit growth of Chinese industrial companies rebounded dramatically in March. Of course this should not be totally surprising given the trillion-dollar credit injection in Q1 and artificially-elevated commodity prices juicing the zombified industrial base but it does leave The Fed today with a problem – they’re running out of excuses. So in being patriotic, we will help – first, as Goldman warns, this profit spike is unsustainable given the surge in overcapacity; and second, nobody is paying – payment delays have surged to the highest in 17 years as the ponzi accelerates.

So a trillion dollars goes in and profits spike 11.1% YoY..

But on Sunday we also learned that median days sales outstanding for mainland domiciled companies now sits at 83 days – the highest in nearly 17 years and double the average for EM as a whole.

As you can see from the above, it now takes 50% longer for Chinese firms to get paid than it did just five years ago. As you might imagine, the problem is particularly acute for industrial firms who are waiting 131 days to convert sales into cash. “A reading of more than 100 days is typically a red flag,” Amy Sunderland, a money manager at Grandeur Peak Global Advisors in Salt Lake City told Bloomberg.

Yes, Amy it certainly is. Especially considering the median for companies in the MSCI Emerging Markets Index is just 44 days.

But, as Goldman notes, while it is all sunshine and rainbows now, this profits jump is not sustainable…

March industrial profits improved both in month-over-month and year-over-year terms. This is consistent with the rebound in industrial production in March. Better underlying activity growth, pickup in producer prices and lower financial costs all contributed to the rebound in profits in March.

Moreover, according to data quoted by NBS in the explanatory note, higher investment returns and non-business income also helped with the rebound in headline industrial profit growth: investment return went up 20.4% yoy in March (-3% in Jan-Feb), and non-business income (this includes gains from most asset sales , but not investment property) jumped 68.3% yoy in March (39.5% yoy in Jan-Feb). Compared with March last year, 30.5% of increase in profits (3.4 pp of the 11.1%yoy headline profit growth ) came from investment return/non-business income. Profit growth improved in most sub-sectors: in year-over-year terms, profit growth improved or turned less negative in ferrous/non-ferrous metal smelting and pressing, general equipment manufacturing, automobile manufacturing, computer manufacturing among other sectors.

We continue to expect sequential growth to rebound in Q2, which should support profit growth in the near term; however, structural issues such as overcapacity will still weigh on industrial profits in the long run.

Especially if the commodity bubble bursts…



Oh boy!! this is trouble.  The EU rejects the Greek emergency summit. As you will recall, Greece has big repayments in July and it does not seem that they will be made

(courtesy Mish Shedlock/)

Greek Default Looms In July After EU Rejects Greek Emergency Summit

Submitted by Mike “Mish” Shedlock

More Greece “Uncertainty”: Default Looms in July, EU Rejects Greek Emergency Summit

Those who thought the situation in Greece was solved after prime minister Alexis Tsipras suddenly caved in to creditors’ demands need think again.

Greek tax revenues are running well under expectations. A default looms in July unless the creditors give more money to Greece so that Greece can pay back the creditors. As convoluted as that sounds, that’s precisely the way this madness works.

The creditors demand still more austerity but Tsipras said “no”. Instead, Tsipras seeks an emergency meeting, but European Commission president Donald Tusk said “no” to that proposal.

Supposedly this standoff represents “renewed uncertainty”.

Emergency Meeting Request Denied

The BBC reports EU Rejects Greek Request for Emergency Summit.

The head of the European Union has rejected Greece’s request for an emergency meeting aimed at ending an impasse over the country’s bailout.

Greece agreed to a third rescue package worth €86bn (£60bn; $94bn) last year and faces a looming debt payment. However, it has been unable to unlock the next loan instalment after clashing with its creditors over more reforms.

The International Monetary Fund and other European partners are demanding that Greece implement further austerity measures. They are looking to generate nearly €4bn in additional savings or contingency money in case Greece misses future budget targets.

But the left-wing government led by Alexis Tsipras has said it will not agree to any “additional actions” to what it had already signed up to last summer.

A special ministerial meeting was supposed to be held on Thursday, but Dutch Finance Minister Jeroen Dijsselbloem, who is in charge of the Greece negotiations, called it off.

Summit Request Denied

The Financial Times reports Donald Tusk Rejects Alexis Tsipras Summit Request.

Donald Tusk, the European Council president, has turned down a Greek request for an emergency summit on Athens’ bailout and told eurozone finance ministers to do more to narrow their differences.

Without a deal on new austerity measures, Greece faces a default on €3.5bn in debt payments that come due in July.

Greece is fast running out of cash to pay salaries and pensions in May because of lagging tax receipts. To cover the gap Mr Tsipras’s government has been strong-arming state entities, from the cash-strapped health service to the profitable water utility, to empty their bank accounts and place the funds with the central bank in a short-term loan arrangement.

Bailout negotiations have stalled over a request by the EU and the International Monetary Fund, Greece’s main lenders, that Athens legislate €3bn in “contingency” budget cuts that could be triggered if the programme veers off-course and fails to produce projected surpluses.

Euclid Tsakalotos, the Greek finance minister, has told negotiators getting additional cuts through the Greek parliament is politically impossible, and has asked instead for lenders to accept across-the-board budget cuts in case targets are missed. EU and IMF negotiators have rejected that proposal, however, insisting the additional reforms be targeted carefully to ensure they do not damage economic growth.

“Renewed Uncertainty”

“I am convinced that there is still work to be done by the ministers of finance who have to avoid a situation of renewed uncertainty for Greece,” Mr Tusk said after a phone call on Wednesday morning with Alexis Tsipras, Greece’s prime minister.

Talk of renewed uncertainty is ridiculous. It’s a certainty that what cannot be paid back, won’t be paid back.

The only thing “uncertain” is the same that that’s been uncertain since the beginning of the crisis: the timing of the credit event.



Ports around the globe very quite as goods are just not moving

(courtesy C. Paris/Wall Street Journal/David Stockman/ContraCorner)

What Global Growth Rebound? Ports Quiet, Containerships Losing Steam

By Costas Paris at the Wall Street Journal 

At a logistics park bordering Shanghai’s port last month, the only goods stored in a three-story warehouse were high-end jeans, T-shirts and jackets imported from the U.K. and Hong Kong, most of which had sat there for nearly two years.

Business at the 108,000-square-foot floor warehouse dwindled at the end of 2015 after several Chinese wine importers pulled out, said Yang Ying, the warehouse keeper, leaving lots of empty space. The final blow came after a merchant turned away a shipment in December at the dock.

“The client told the ship hands, just take the wine back to France,” Ms. Yang said. “Nobody wants it.”

Pain is increasing among the world’s biggest ports—from Shanghai to Hamburg—amid weaker growth in global trade and a calamitous end to a global commodities boom. Overall trade rose just 2.8% in 2015, according to the World Trade Organization, the fourth consecutive year below 3% growth and historically weak compared with global economic expansion.

The ancient business of ship-borne trade has been whipsawed, first by a boom that demanded more and bigger vessels, and more recently by an abrupt slowing. That turnabout has roiled the container-shipping industry, which transports more than 95% of the world’s goods, from clothes and shoes to car parts, electronic and handbags. It has set off a frenzy of consolidation and costs cutting across the world’s fleets.

Ashore, it is also slamming ports and port operators, the linchpin to global commerce. Nowhere is the carnage more painful than along the Europe-Asia trade route, measuring roughly 28,000 miles round trip. A cooling Chinese economy and a high-profile crackdown by Beijing on corruption has damped demand for everything from commodities like iron ore to designer scarves and shoes. Meanwhile, Europe’s still sputtering recovery from the global economic crisis is hitting the flow of goods in the other direction.

On Friday, the Hong Kong Marine Department reported throughput for its port in the first quarter was off 11% from the first three months of last year. Throughput for all of 2015 also dropped 11%.

“It is the first time you see people in shipping being really scared,” said Basil Karatzas, of New York-based Karatzas Marine Advisors and Co.

Chinese imports from the European Union fell nearly 14% in 2015. Chinese exports to Europe were down 3%. This year isn’t starting any better. In the first quarter, Chinese imports from the EU fell 7% from a year earlier, a decline matched by exports to Europe.

Jonathan Roach, a container-shipping analyst at London-based Braemar-ACM Shipbroking, said some 100 Asia-to-Europe sailings were canceled last year, or 10% of regularly scheduled voyages on the route.

“Drastic fleet management strategies have been implemented by liner operators to reduce their exposure on oversupplied Asia-Europe trades,” Mr. Roach said.

 Last November, Maersk Line, the world’s biggest container operator, said it would lay off 4,000 employees and pushed back new ship orders to weather collapsing freight rates. In Asia, South Korean shippers Hyundai Merchant Marine and Hanjin Shipping Co.are in talks with creditor Korea Development Bank to restructure debts.

There are many reasons for the global slowdown, including a yearslong commodities-price rout, generally slower growth in Asia and an anemic recovery in much of Europe. Economic and political crises have roiled big markets, including Russia, Ukraine and Brazil. And policy makers blame a dearth of big trade deals, like Nafta, which have spurred big global trade gains in the past.

Not everyone is suffering. U.S. ports from Los Angeles to New York are pursuing expansions in anticipation of higher volumes, thanks to a relatively robust American economy. But even in those ports, retailers are sitting on large amounts of unsold goods, and could cut back on ordering more from overseas if inventories don’t come down.

At the biggest ports in Asia and Europe, there are few signs of a near-term rebound. Last year, Shanghai International Port (Group) Co., China’s top port, handled more containers, but total cargo fell to 513 million tons, down 5% from 2014. Through March this year, volumes were down 4% from the year-earlier period.

Willy Lin, chairman of the Hong Kong Shippers’ Council, said car parts imported from Europe and assembled in China fell by at least 13% by volume in 2015. Shipments of luxury goods, including high-end clothes, shoes and apparel, from Europe were down around 15% last year.

“It is 30% fewer boxes coming in and around 10% [fewer] going out” of Chinese ports, Mr. Lin said.

The pain is just as bad in Europe. A recent study by the European Shippers’ Council, which represents around 25,000 exporters and importers, found a 12% decrease in Northern European port calls by all shipping lines between the second half of 2014 and the second half of last year. The study showed a doubling of skipped port calls between Europe and Asia over the same period.

At the Belgian port of Zeebrugge, a major European transshipment hub for container ships and dry-bulk vessels, cargo volumes have dropped to less than half over the past 15 months.

“You can see it at the docks, which at times are empty,” said Fernanda Van Opstal, a sales manager in Zeebrugge for port operator APM Terminals, owned by Danish shipping giant A.P. Moeller-Maersk A/S.

Ms. Van Opstal said exports to China, including timber, fertilizers, metal and plastic scrap, and heavy machinery, continue, but volumes over the past year are down by up to 30% in most categories. So-called “Triple E” vessels, the world’s largest container-carrying ships, are coming and going less frequently, and often less than full.

In Hamburg, Europe’s third-busiest port behind Rotterdam and Antwerp, container traffic with China fell last year to its lowest since 2009. Klaus-Dieter Peters, chief executive of Hamburger Hafen und Logistik AG, which runs three out of the four container terminals in Hamburg, blames China’s slowing economy and the crises in Russia and Ukraine.

Cranes at the Yangshan Port Container Terminal in Shanghai late last year.

Cranes at the Yangshan Port Container Terminal in Shanghai late last year. PHOTO: DING TING/XINHUA/ZUMA PRESS

“The challenging environment…was felt particularly in seaborne container handling,” he said. HHLA’s container throughput fell 13% in 2015.

At the Zhanghuabang Terminal in Shanghai, near the mouth of the Yangtze River, roads are lined with idle trucks, with chain-smoking drivers waiting for loads. Inside the terminal on a recent afternoon, 45-year-old driver Sun Shihong was helping other workers unload half-ton, U-shaped coil units made by Shanghai Electric Group for use at power plants

In 2010, Mr. Sun said the company was using more than 40 trucks, each of which made the run between the factory and the port three times a day.

“I earned 12,000 yuan (about $1,850) a month three years ago,” he said. “And now, 6,000 yuan to 7,000 yuan.”

Source: Once Bustling Trade Ports in Asia and Europe Lose Steam – the Wall Street Journal



Crude rips higher up to $46.00 crushing the oil shorts
(courtesy zero hedge)

WTI Crude Soars To $46 – Highest In 5 Months

The panic-buying continues in the crude complex. Oil prices are up for the 3rd day in a row, trading up to $46 for the first time since December 4th 2015. Despite continued growth in inventories and worse than expected economic growth, it appears speculative traders in black gold just can’t get enough… Of course, as we just detailed, this merely accelerates the self-defeating re-birth of shale production as cash-flow desperation trumps rationality.

June crude is back at its highest sicne Dec 4th 2015… and above its 200dma…


The last time June crude was here, the rest of the curve was over $4 higher… think about what that says about the real confidence in this bounce…


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




USA/CAN 1.2590 UP .0008

Early THIS THURSDAY morning in Europe, the Euro ROSE by 19 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 DOWN 7.47 POINTS OR 0.25% / Hang Sang UP 26.43. OR  0.12%   / AUSTRALIA IS HIGHER BY 0.73% / ALL EUROPEAN BOURSES ARE DEEPLY IN THE RED  as they start their morning/

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

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

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

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

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

The NIKKEI: this THURSDAY morning: closed DOWN 624.44. OR 3.41%

Trading from Europe and Asia:


Gold very early morning trading: $1255.00


Early THURSDAY morning USA 10 year bond yield: 1.83% !!! DOWN 3 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.68 DOWN 3 in basis points from WEDNESDAY night.

USA dollar index early THURSDAY morning: 93.88 DOWN 51 cents from WEDNESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING




And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.17% DOWN 2 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -..075% DOWN 3 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.60% DOWN 3 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.48  DOWN 4 IN basis points from WEDNESDAY

the Italian 10 yr bond yield is trading 12 points lower than Spain.





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


Euro/USA 1.1350 UP .0024 (Euro =UP 24  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 108.07 DOWN 3.449 (Yen UP 344.9 basis points As MARKETS FALL BADLY)

Great Britain/USA 1.4605  UP .0067 Pound UP 67 basis points/

USA/Canad 1.2527 DOWN 0.0054 (Canadian dollar PU 54 basis points with OIL RISING(WTI AT $45.75)


This afternoon, the Euro was UP by 24 basis points to trade at 1.1350

The Yen ROSE to 108.13 for a GAIN of 340 basis points as NIRP is STILL a big failure for the Japanese central bank/AND TODAY IF ANY REMAINING YEN CARRY TRADERS WERE TOTALLY WIPED OUT

The pound was UP 67 basis points, trading at 1.4605

The Canadian dollar ROSE by 54 basis points to 1.2527, WITH WTI OIL AT:  $45.81

The USA/Yuan closed at 6.4735

the 10 yr Japanese bond yield closed at -.075% DOWN 3 BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 3  basis points from WEDNESDAY at 1.83% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.67 DOWN 4 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 93.76 DOWN 63 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 WEDNESDAY

London:  CLOSED UP 2.49 POINTS OR 0.04%
German Dax :CLOSED UP 21.32 OR 0.21%
Paris Cac  CLOSED DOWN 2.04  OR 0.04%
Spain IBEX CLOSED DOWN 63.60 OR 0.68%
Italian MIB: CLOSED UP 226.09 OR 1.21%

The Dow was down 210.79 points or 1.17%

NASDAQ down 57.85 points or 1.19%
WTI Oil price; 45.75 at 3:30 pm;

Brent Oil: 47.80





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: 47.55


USA DOLLAR INDEX:93.72 down 67 cents on the day



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

Trading Today in Graph form:

Kamikaze-Kuroda & Carl Icahn Crush Facebook-Driven Stock-Feeding Frenzy

There is only one clip for this…


It started in Japan…when Kuroda let the world down… 1500 NKY points down!!


And then China stomped on its latest bubble…


But then US GDP printed its worst level in 2 years… and stocks took off!! soaring all the way to the edge of Kuorda’s Kamikaze moment before Carl Icahn upset everyone...


Stops run to Kuroda’s cliff and then icah npushed the market over the edge…


Of course, Nasdaq was outperforming thanks to Facebook out of the gate but once the selling started everything collapsed…


Dow futures swung around 1000 points in the last 24 hours…


“Most Shorted” stocks plunged…


AAPL tanked again after carl Icahn said he was out…


VIX was smashed early on in another desperate bid for 2100 in the S&P 50).. but failed… (VIX >15.5 at the close…)


Financials began to rollover…


Stocks decoupled higher from bonds once again before catching back down…


Treasury yields roller-coastered lower…(but notably 2Y and 30Y held as the belly slumped)…


Yen’s surge weighed on The USD Index – biggest drop in a month – down 4 days in a row…



USD weakness helped most commdoties (but industrials fell as China collapsed)


WTI Crude is now up 18% off the post-Doha lows – from $39 to $46…


Crude’s rip leads the way post-Fed, with stocks red…


But Gold (and Silver) are the best performers since Kuroda’s Kamikaze-move…


Charts: Bloomberg

Bonus Chart: Do you feel lucky?



The actual first quarter GDP grew at only .5% instead of the .7% expectations:

(courtesy zero hedge)

US Economy Grew At Just 0.5% In Q1, Missing Expectations, Lowest Growth Rate In Two Years

“Did the Fed have an advance glimpse at Q1 GDP?”

That was a question everyone was asking yesterday when the Fed came out with another not too hawkish statement. The answer may have been yes because moments ago the BEA reported that the US economy grew at just a 0.5% annualized rate in the first quarter, missing expectations of a 0.7% growth rate, growing at half the rate recorded in the 4th quarter, and the lowest quarterly growth rate since Q1 2014 (when the winter was blamed for a negative print). It was also the third consecutive quarter of GDP declines.

The breakdown of components was mixed: while personal consumption rose 1.9% q/q, it contributed only 1.27% to the bottom GDP line, the weakest spending contribution since Q1 of 2015. What was more troubling was the impact from all the other components:

  • Fixed Investment subtracted 0.27% from the annualized GDP print, the first negative CapEx print since Q1 2011
  • Inventories, as expected, subtracted another 0.33% from the annualized number, following last quarter’s -0.22% decline
  • Trade (net exports and imports) was another negative contribution, cutting the final number by another 0.33%
  • Government was perhaps the only bright side, adding 0.2% to the GDP print up from 0.2% in the prior quarter.


Needless to say, this is hardly the backdrop for the Fed to unleash even more tightening, and we expect the market to trade appropriately, because after all bad news is bad news.

Incidentally, this is how today’s latest economic disappointment will be spun by the career economists and sundry permacheerful pundits:

David Stockman has the detailing on a continuous basis the S and P earning last year.  The official earnings for the year:  slightly over 86 dollars with a P/E at 24 x.  Now we are entering first quarter  2016 and the S and P earnings are coming in at a growth rate of -8%.
And the earnings are mirroring the likes in Europe and Japan:
(courtesy JPMorgan/zero hedge)

JPM Summarizes Earnings Season So Far: “At -8%, The S&P500 Q1 EPS Growth Is The Worst Since ’09”

As we approach the mid point of earnings season (this is the busiest week of the Q1 earnings season with 39% of companies having already reported in the US, 33% in Europe and 17% in Japan), here is a quick summary of where we stand.

Here is a quick rundown courtesy of JPM:

In the US, 80% of S&P500 companies beat EPS estimates, surprising positively by 3%. The actual EPS is running at -8% yoy for the overall market and at -7% ex-Energy. The S&P500 blended Q1 EPS is tracking at $26.5, down from $29.1 at the start of the year. The proportion of US companies beating sales estimates, at 58%, is up from previous quarters but top-line growth remains soft, at -1% yoy.

In Europe, 57% of Stoxx600 companies beat EPS estimates, surprising positively by 4%. The actual Q1 EPS growth is coming out at -18% yoy, but it is flat ex-Energy and Financials. Only 43% of the companies beat sales expectations, down from previous quarters. Top-line growth is weak, too, at -7%. Ex-Energy and Financials, sales are running at -4% yoy.

In Eurozone, 59% of the companies that have reported beat estimates. Overall EPS growth is coming out at -6% yoy, and at +2% ex-Energy. So far, the Euro area is the only region delivering positive earnings growth ex-Energy. Revenue delivery is weaker with only 44% of companies beating sales estimate. Sales are down 5% yoy and 2% ex-Energy.

In Japan, the earnings season is at an earlier stage. So far, only 40% of companies beat EPS estimates, recording yoy growth of -11%. 40% of the companies beat revenue estimates with negative top-line growth of -2% yoy.

80% of US companies beating EPS estimates is above the historical average. However, we note that in the last 10 years, the proportion of EPS beats was always well above the 50% threshold, suggesting that companies typically do a good job at managing analysts’ expectations. The actual delivered EPS growth is a better indicator of the underlying earnings backdrop, in our view. At -8%, the S&P500 Q1 EPS growth is the worst since ’09.

Finally, this is what global earnings “growth” looks like.

Carl Icahn dumps his entire stake in Apple:
(courtesy zero hedge)

“No Brainer” – Carl Icahn Dumps Entire Stake Of AAPL

And just like that the “no brainer” party’s over. Remember when in January 2014 Carl Icahnlaid out his extensive thesis on why being long AAPL is the best investment out there?  Or when a little over a year later, hoping for even more stock buybacks (even as he was decrying short term activism) he boosted his price target on AAPL to $240?

All that is now over.

Speaking during a CNBC interview, Carl Icahn admitted the ultimate “no brainer” is no longer a holding of his:


And so, two years after his “buy buy buy” pitch, and with AAPL stock less than half of his so-called price target but with , the billionaire has pulled the plug, after pushing up the company’s debt from $35 billion to just shy of $80 billion.

The market is not happy.


But don’t cry for Icahn. With a cost basis of $68, he still made hundreds of millions.

What we would like to know is which hedge fund will sell next. As a reminder, there are many candidates…

David Stockman lays out the political mess inside the USA
a must read…
(courtesy David Stockman/ContraCorner)

Stockman: Anything Trumps Hillary

Submitted by David Stockman via Contra Corner blog,

It’s all over except the shouting. That is, the primary election season effectively ended last night and now the actual shouting match between Hillary and The Donald begins.

This will surely be the most entertaining election in US history, and probably the most pointless, too. After all, Hillary wants to use government to make Government Great Again. And Trump promises to use government to make America Great Again.

But government doesn’t make anything great, including itself. It is a necessary evil that always and everywhere is driven toward self-aggrandizement and mission creep by the politicians and special interest lobbies which control its operations.

What government actually does is thwart the capacity of the people to pursue their own vision of greatness by encumbering their economic lives with burdensome taxation, regulation, roadblocks to opportunity and monetary fraud while saddling their public lives with endless Nanny State impositions and encroachments upon their personal liberty.

And, most especially, what the central state does in its current incarnation as Imperial Washington is to sabotage national greatness, not foster it, and saddle the economically listing American nation with a debilitating $800 billion national security apparatus that is wholly unnecessary.

The latter has long since morphed into a Warfare State leviathan. It pursues senseless and destructive foreign interventions that erode, not enhance, the safety and security of American communities. It impairs constitional liberties at home under cover of exaggerated and often contrived threats of terrorism. And it breeds blowback and terrorism aboad wherever its drones, bombs, occupations and covert machinations intrude in matters that are none of our business.

But of course that is exactly what Hillary’s candidacy is all about. Namely, insinuating the American state even more deeply and destructively into matters which are none of its business, and doing so at home and abroad with equal similitude.

Hillary Clinton allegedly protested the Vietnam War before becoming a Republican summer intern in 1967, but to my knowledge that was the last war she didn’t embrace. She was an enthusiastic backer of Bill Clinton’s feckless military interventions in the Balkans during the 1990s and a signed-up hawk for George Bush’s catastrophic wars in Afghanistan and Iraq.

As Donald Trump rightly says, her time as Secretary of State was an unmitigated disaster.The “peace candidate” actually won the 2008 election, but Secretary Clinton along with lifetime CIA operative and unabashed war-monger, Robert Gates, saw to it that peace never got a chance.

From the pointless, bloody “surge” in Afghanistan to the destructive intervention in Libya to the arming and aiding of jihadist radicals in Syria, Hillary has proved herself to be a shrill harpy of military mayhem. Indeed, she brought a fillip to the neocon playbook that has made Imperial Washington even more trigger happy.

To wit, Clinton has been a tireless proponent of the insidious doctrine of R2P or “responsibility to protect”. No one in their right mind could have concluded that the aging, pacified, tent-bound Moammar Khadafy was a threat to the safety and security of the American people. Even the community organizer from South Chicago wanted to keep the American bombers parked on their runways.

But Hillary’s infamous emails leave no doubt that it was she who induced Obama to embrace the folly that quickly created yet another failed state, hotbed of jihadism and barbaric hellhole in the middle east. Indeed, her hands are doubly bloody.

When Hillary bragged that “We came, we saw, he died”, it turns out that not just Khadafy but thousands of innocents have died, and not just from the chaos unleashed in Libya itself. The former dictator’s arsenals and mercenaries have now been dispersed all over North Africa and the middle east, spreading desolation in their wake.

Indeed, the CIA annex in Benghazi was actually in the business of recycling Libyan weapons to the jihadists in Syria through the ratline to Turkey. Is there any possibility at all that this would have happened, and that Ambassador Stevens would have been murdered, had Hillary not put the shive to Khadafy’s backside?

And then there is the ultimate proof that Hillary is an unreconstructed warfare statist who would bury America deeper in foreign quagmires and fiscal chains. To wit, she has become so blinded by the parochial delusions of Imperial Washington that she actually likened Vladimir Putin to Adolf Hitler.

C’mon. The man’s a monumental crook and no model citizen of the world, but he is no threat to American security whatsoever.

He presides over a third rate economy no larger than the GDP of the New York SMSA that essentially consists of a complex of petroleum fields, grain farms and metal mines and a lethargic work force with a fondness for Vodka.

Until the constitutionally elected government of Ukraine was overthrown by a Washington funded mob of  economically deprived citizens, disgruntled nationalists and crypto-Nazi agitators in February 2014, Putin was basking in the glory of the Sochi Olympics and having petty quarrels with the crook who took-over the tiny state of Georgia after the Soviet Union disappeared. The world disdained his oafish character, but no one claimed that he was fixing to invade Europe.

At the same time, any one who knew the slightest thing about Ukraine’s history and its long co-existence in the shadow of Mother Russia understood that bringing it into NATO was a decidedly stupid idea, and that threatening Russia’s rented naval homeport in Sevastopol, Crimea was sheer folly.

Not Hillary. She was soon at the barricades justifying the folly of the NATO confrontation with Russia and the self-defeating economic sanctions against Putin.

Even though she was out of office and in a position to recognize that the very same “partition” solution that had led to the severance of Kosovo from Serbia during the 1990s could have solved the Donbas and Crimea issues, she was having none of it.

Instead, by her lights NATO, which should have been disbanded after 1991, needs to go to the brink with Putin over essentially a Ukrainian civil war. And that’s just for starters.

Hillary keeps advocating a “no-fly” zone in Syria, but the Islamic State butchers don’t even have an air force.  So her so-called “humanitarian” no fly zone is just another way to confront Putin.

Indeed, it’s designed to stop him from aiding the constitutionally sanctioned and secular government of Syria that has invited Russian help. Yet Hillary is so besotted by the beltway fatwa against Bashar al-Assad that she is oblivious to the fact that the Russian/Iranian/Syrian alliance has done more in a few months to weaken ISIS and its jihadist confederates than has Washington’s feckless bombing campaigns and futile attempts to arm “moderates” and organize a coalition of the region’s unwillings during the last two years.

Meanwhile, on the other side of the Potomac, Hillary wants to make Big Government even greater. Indeed, her victory speech last night was more or less an ode to free stuff.

Students who borrow hand-over-fist are going to be let off the hook, while social security beneficiaries who already receive far more than they paid in are going to get a raise.

So are workers who are desperately hanging on to entry level part-time jobs. Hillary is going to raise their wages to $15/hour, and presumably then supply them with unemployment benefits, food stamps and Medicaid when their jobs are off-shored or robotized.

And when it comes to the most destructive “free stuff” of all, Hillary will surely be all-in. That is, she will not lift a finger to stop the Fed’s 88 month running gift of free money to the Wall Street casino.

Yes, she apparently did “Feel The Bern” and has a deck full of empty talking points about how a Clinton Administration will be there for main street, not Wall Street.

No it won’t. Hillary Clinton has spent a lifetime milking and promoting the state.

She has no clue that it is the state itself in the form of the rogue central bankers now ensconced in the Eccles Building that is creating the wealth and income mal-distribution and rampant unfairness which she denounces; and which is strangling American capitalism and the opportunities to advance for the traditionally left behind and the recently fallen behind that she so stridently voices from the podium.

If Hillary really wanted to stop Wall Street’s unspeakable windfalls and bring a modicum of economic hope back to main street, of course, she would demand Janet Yellen’s resignation and promise to clean house among the enablers of casino capitalism at the Fed.

But as the Donald might say, “it’s not going to happen”.

So is there any chance at all that Trump will make America Great Again by erecting trade barriers, a Trump Wall on the Rio Grande and an end to America’s imperial beneficence and meddling abroad?

Stayed tuned. There may be more to The Donald than meets the eye.

And whatever it is, it certainly trumps Hillary’s deplorable purpose to make Imperial Washington an even greater menace both abroad and at home.

Strange!! our Quant specialist, Marko Kolanovic is suddenly worried about the end game and believe it or not discusses how gold will be useful in this environment:
(courtesy zero hedge)

Why Is JPM’s “Quant Guru” Suddenly Worried About The “Endgame”

When JPM quant Marko Kolanovic released his latest report today, we were expecting him to read his latest insight on the positioning of quant funds, on the relative imbalance of risk parity, or perhaps whether market gamma was suggesting that the market is poised for an inflection point, either lower or higher. Instead, we were surprised to read an extended analysis looking at how trapped the “out of options” central banks are, what the next steps are for the global economy, how the market is now as overvalued as it was before the 2000 crash, how rising rates “would make the current S&P 500 level look like a bubble”, and the exhaustion of all available policy options, which he dubbed the “endgame.” To wit:

If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying.This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

We were most surprised by Kolanovic’s strong case to buy gold, although considering it comes just one week after a Pimco economist dared to propose that central banks should monetize gold next in an attempt to massively boost inflation expectations (while send the price of gold to $5,000), perhaps we are not that surprised.

* * * .

We are confident readers will find it just as an engaging read.

From JPM’s Marko Kolanovic

Central banks, Inflation, and Debt Endgame

With the Fed and BoJ meetings behind us, markets are increasingly accepting that central banks are nearly out of options. Central banks can hardly raise interest rates, and there is a growing realization that negative interest rates simply make no sense (see analysis below). Unconventional approaches of buying corporate bonds (ECB) and stocks (Japan) so far have not produced significant results, and run the risk of tainting these assets for private investors. The next attempt to boost the economy or prevent a potential market crisis will likely need to be accomplished by fiscal measures. Fiscal measures may be employed even if there is no crisis (e.g., post US election), and over the next months investors will look closely at potential measures and their impact on equity markets, commodities (potential positive impact on certain sectors – e.g., from infrastructure spending), and the value of debt and currencies (likely negative impact).

Before we discuss the implications and risks that could result from such developments, we present an analysis that suggests that central banks face the risk of entrenched low inflation (rather than the risk of high inflation) and likely will not be able to raise rates meaningfully. Figure 1 shows the cumulative PCE (relative to the Fed’s 2% target) that shows significant and persistent undershooting over the past 8 years. Since 2000, the cumulative undershoot is 6% on the core PCE measure. Over the past 4 years, core PCE undershot by more than 1.5 % (and headline by 3.5%, the difference being largely due to the 2014 decline in energy). This undershooting is fairly significant: over the past 2 years headline PCE undershot by 3% (2 standard deviations) and Core by 1% (1 standard deviation). What should be more worrying is that PCE readings historically show strong persistence (serial correlations). This means that a low core PCE reading today implies that PCE is more likely to stay low in the future as well (e.g., core PCE reading today has 80% correlation with the reading of 12 months ago). Our quantitative model of core PCE indicates the most likely level is still below the Fed’s 2% target and continuing to undershoot over the next 3 years.

In that context, the Fed should welcome any overshooting of the target as that is the only way it can end up closer to the stated 2% target over any meaningful time period (e.g., 2, 5, or 10 years). For instance, overshooting the target over the next 2-3 years by ~0.5% each year (or over the next 1-2 years by ~1%) would put the inflation averages within the margin of the stated 2% target. The problem is that it simply may not happen, and inflation breakeven rates in the US, Europe and Japan point to the same direction.

Over the past 20 years, PCE overshoots (undershoots) tended to coincide with S&P 500 rallies (declines). However, over the past 8 years, PCE kept trending lower, while the market rallied strongly. While the Fed’s QE programs did not prevent inflation to persistently undershoot the 2% target, a potential byproduct was inflated S&P 500 valuations. Indeed, many clients ask us how much of the S&P 500 rally can be attributed to near zero rates and can be at risk should rates continue to rise? Assuming the S&P 500 returning to median P/E levels for comparable rate and inflation environments in the past, it would suggest a 5%-15% de-rating of the equity multiple should rates continue to rise at a moderate pace and assuming no increase of recession probability. If rates increase the probability of recession, it would likely result in a larger market pullback, as both earnings and multiples would suffer.

Should the problem of low inflation go away (e.g., if there is an oil price shock, or upside growth surprise) and there is need to raise rates more significantly, the Fed will face another problem. That is how to hike but not push the equity market significantly lower. The reason is that with current levels of leverage, rates behave like a ratchet (easy to turn lower, but hard to turn higher without breaking the gears). Over the years of ZIRP, asset prices and business models adjusted to low rates. For example, home buyers make decisions based on monthly mortgage payment levels, and S&P 500 companies (ex-financials) have the highest leverage since 2007 (when leverage was at record levels), with some of the debt used to buy back shares.

Indeed, the current S&P 500 P/EBITDA ratio is at the same level as shortly before the market crash of 2000. The distinction between current market valuations being reasonable vs. bubble-like is due to low interest rates (as well as lower effective tax rates).Significant increase of rates (e.g., to levels implied by 2018 Fed dots) would make the current S&P 500 level look like a bubble.

As we argued above, it is hard to see short-term rates moving meaningfully higher any time soon. We also think that rates cannot go much lower either as negative rates fundamentally don’t make sense (issues such as physical storage of cash can make negative yields viable only over short periods of time). So the attempt to boost growth or fight a potential crisis will likely need to be accomplished by fiscal measures.

However, fiscal measures also bring an increased level of government debt and increased market and credit risk of owning government bonds. These risks are in addition to current low yields and a less favorable correlation of bonds to risky assets. The unfavorable risk-reward of government bonds near the point of zero yields will likely prevent asset managers from increasing holdings of government bonds. If there are no private buyers, governments can still place their bonds with central banks. This trend is of course already in place – for instance, the Fed’s holdings of US Treasuries increased from ~18% in 2008 to ~34% today.

Increased government spending, financed by central banks could indeed create inflation, but will further elevate the problem of debt viability. If investors lose confidence that the debt can ever be repaid, they will reduce their holdings, increasing the cost to governments or inviting more central bank buying. This can eventually result in the devaluation of all currencies against real assets such as gold, high inflation or even outright defaults (as was the case in Greece). If such a trend develops in one of the large economies, it could have far-reaching consequences.

Once fiscal measures replace monetary measures, we think investors will increasingly focus on the dynamics of government debt and currency valuations, particularly in Japan and the US.

How can an investor hedge against the risk of these potential developments? One can reduce allocation to bonds and increase allocation to real assets and equity sectors related to real assets. Investors can also move away from bonds that are not backed by reserve assets such as currency reserves or gold. The ability of a government to pay back debt and at the same time as maintaining the value of the currency should be measured by hard assets for which transfer to bondholders is politically viable. For example, during the Greek crisis, the option of selling islands owned by the government was off limits. On the other hand, governments can easily part with assets with no national or cultural attachments such as FX reserves or gold, as was recently the case with Ukraine and Venezuela.

What took them so long!  The SEC will now begin to crack down on non GAAP accounting earnings:
(courtesy zero hedge)

SEC Begins Crack Down On Non-GAAP Accounting Gimmicks

Having railed for years against the accounting gimmickry known as non-GAAP, with both the WSJ, AP and even Warren Buffett joining the vocal outcry in recent years, things may finally be changing. According to Dow Jones, the SEC is finally stepping up its scrutiny of companies’ “homegrown earnings measures, signaling it plans to target firms that inflate their sales results and employ customized metrics that stray too far from accounting rules.

According go DJ, the move to intensify oversight “signals that regulators have grown weary of the widespread use of some adjusted measures, which often result in a rosier view of profits than what is reported under generally accepted accounting principles, or GAAP.

 And in the most actionably news yet, we read that the SEC is launching a campaign to crack down on made-to-order metrics that regulators think are particularly confusing or opportunistic.”

This is long overdue because as we showed in February, the spread between GAAP and non-GAAP earnings has grown to gargantuan levels in recent years and the current reporting season may in fact conclude with the widest nominal gap between GAAP and non-GAAP in history.


If the SEC actually plans on follow through with its threats – as opposed to its failed attempt to regulate HFT frontrunning – the gaap may very soon be closing and would reveal the true GAAP P/E of the S&P which according to our calculations is currently north of 24x.

Regulators plan to push back on companies that accelerate the recognition of revenue that hasn’t yet been earned, said Mark Kronforst, chief accountant of the SEC’s corporation finance division. Firms that sell their product on a subscription model, for instance, are required to book the revenue as they deliver the goods or services. But some firms are using non-GAAP measures that assume all sales are recorded as soon as customers are billed, which adds revenue to their books earlier than allowed under GAAP, Mr. Kronforst said.

“The point is, now the company has created a measure that no longer reflects its business model,” he said. “We’re going to take exception to that practice.”
The SEC’s rules allow companies to report profit figures that don’t comply with GAAP, provided they don’t obscure the official numbers and reconcile the non-GAAP numbers to the equivalent GAAP figure.

To be sure companies for whom non-GAAP means the difference between a miss and a beat (as we documented on numerous occasions recently) are pushing back and saying “investors value the adjusted measures because they exclude unusual or noncash costs, resulting in measures that better reflect future operating results. Technology firms such as Facebook Inc. and other Silicon Valley brand names are particularly devoted users of non-GAAP formulas, reporting numbers that strip out hundreds of millions of dollars of stock compensation.”

What companies really mean is that both companies and investors would prefer to lie and be lied to in order to perpetuate the illusion that all is well until this is no longer possible. The most egregious example of all is most likely Alcoa, which we showcased several weeks ago,and which has generated a $500 million loss in the LTM period which however courtesy of $1 billion in non-one time, recurring “one-time, non-recurring” addbacks has been transformed into a $500 million profit.


The SEC appears to have noticed, and according to Dow Jones it has recently seen companies report adjusted earnings that go further: A company, for instance, applies different accounting assumptions, such as changing the lifespan of equipment that must be expensed over time. Stretching out the useful life of machinery typically results in lower annual costs and boosts profits. Naturally, there are also far more egregious examples.

So what will the SEC do?

The agency plans to issue comment letters in the coming months that critique firms that booked revenue on an accelerated basis. Mr. Kronforst, who plans to speak Thursday at a Northwestern University legal conference about the issue, declined to name them.


Mr. Kronforst said regulators also plan to challenge companies that report their adjusted earnings on a per-share basis. The results are often higher than per-share GAAP earnings and look too much like measures of cash flow, which decades-old rules prevent from being presented on a per-share basis, Mr. Kronforst said. That is because investors could confuse cash flow with actual earnings, which truly represent the amounts that could be distributed to investors.


“We are going to look harder at the substance of what companies are presenting, rather than what the measures are called,” he said.

In other words, the SEC threatens to finally do its job and determine if companies are abusing every accounting loophole known in order to apply countless layers of lipstick on their piggy lips. The SEC often pushes back on non-GAAP figures that it fears could be misleading, typically by issuing public-comment letters on a company’s investor filings. SEC Chairman Mary Jo White said in March that regulators could write new rules to restrict the use of non-GAAP financial metrics.

Amusingly, the SEC has previously “objected” to companies’ non-GAAP metrics. That clearly led nowhere. In 2011, regulators raised questions with Groupon Inc. before the firm went public, criticizing its use of a non-GAAP profit measure that excluded its marketing costs. Groupon scaled back its use of the metric in response to the SEC’s concerns.

That said, we doubt the SEC will push too hard: if it does the companies that make up the S&P may just be force to admit that instead of generating 120 in EPS in 2015, their true earnings were just shy of 90. And that would lead to a massive selloff, something the SEC would never be allowed to unleash.

Well that about does it for tonight
I will report to you tomorrow night

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