May 2b/Open interest rises by another 24,106 or 48,000 contracts in two days/Silver OI declines by 2507 contracts/Italian banks in trouble as “Atlas” could only raise 4.5 billion euros and 1 billion of that needed to purchase all of Popolare di Vicenza/A little over 10 tonnes of gold headed to Germany from FRBNY/Protesters storm Iraqui government on Saturday/Puerto Rico defaults/ Atlantic City almost defaults but pays interest on bond/they will default shortly/

Good evening Ladies and Gentlemen:

Gold:  $1,295.30 up $5.90    (comex closing time)

Silver 17.66  down 13 cents

In the access market 5:15 pm

Gold $1291.25

silver:  17.53


Let us have a look at the data for today


At the gold comex today we had a poor delivery day, registering 1 notice for 100 ounces for gold,and for silver we had 270 notices for 1,350,000 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 a rather large  2507 contracts down  to 201,170 despite the fact that the price was silver was way up to the tune of  26 cents with respect to Friday’s trading. In ounces, the OI is still represented by ust  over 1 BILLLION oz i.e. 1.005 BILLION TO BE EXACT or 143% of annual global silver production (exRussia &ex China) We are now within spitting distance of all time highs for OI with respect to silver

In silver we had 270 notices served upon for 1,350,000 oz.

In gold, the total comex gold OI ROSE by a gigantic 24,106 contracts, UP to 549,520 contracts AS  the price of gold was UP $23.60 with FRIDAY’S TRADING(at comex closing).

We had a gigantic deposit in tonnes of gold inventory at the GLD to the tune of 20.80 tonnes, thus the inventory rests tonight at 824.94 tonnes.  This is an absolute fraud as there is noway these guys can locate 20 tonnes of gold in 24 hrs.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  2507 contracts down to 201,170 despite the fact that the price of silver was UP by a huge 24 cents with FRIDAY’S trading. The gold open interest ROSE by A GIGANTIC 24,106 contracts AS  gold ROSE by $23.60 on Friday. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver. Also the bankers are resolute in supplying non backed gold paper but they do not want to supply more silver paper. It sure looks like the bankers are getting scared with respect to silver as it looks like they are capitulating as the start to cover their shortfall.

(report Harvey).  

2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;  Gold pierces 1300 dollars and silver 18.00 before the bankers try their raid

2c) FRBNY gold movement report



i)Late  SUNDAY night/ MONDAY morning: Shanghai closed FOR HOLIDAY  /  Hang Sang closed FOR HOLIDAY. The Nikkei closed DOWN 518.67 OR 3.11%  . Australia’s all ordinaires  CLOSED DOWN 0.18% BUT RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4705.  Oil FELL  to 45.59 dollars per barrel for WTI and 47.05 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4830 yuan to the dollar vs 6.4705 for onshore yuan.



Is Goldman signalling the all clear button to go long USA/Yen?

(courtesy zero hedge)


see report on lousy PMI


i) Atlante, or Atlas, the bailout fund for Italy’s 360 billion euro non performing loans, is off to a rocky start.  Instead of raising 6 billion euros, they raised only 4.25 billion euros.

The first troubled bank to be rescued is Popolare di Vicenza.  It sought from the public an offering of 1.5 billion euros in an attempt to shore up its troubled sector.  Instead of raising 1.5 billion, it raised only 150 million euros leaving the rest to be owned by non other Atlante/  Thus Atlante is the proud owner of 90% of this troubled bank and now they must try and swap out the bad debt and put it onto Atlante’s balance sheet.  Once the share offering is complete, then Atlante loses 1 billion euros and will be down to 3.25 billion euros trying to buy 360 billion euros of non performing loans.  What a complete nightmare!! The purchase of bad loans by Atlante will not be done at book value and should be done close to fair market value, meaning huge losses to the banks, something they are trying to avoid. This loss would erode their capital base big time. The fair market value of the non performing loans is around 6 to 10,75 cents on the dollar.  Thus they only have around 3.25 billion euros worth buying 20 to 30 billion on bad stuff.

( zero hedge)

ii) Our good friends over at Deutsche bank have now more troubles as the UK Regulator states these guys are money laundering, they are funding terrorists and they lack controls on sanctions.  In other words expect more fines out of these guys as they no doubt finance sovereigns with their fines.
( zero hedge)

iii)Here is the next shoe to fall:  Deutsche bank unveils that QE has run its course.  It is now time to initiate a wealth tax.

This is cause an avalanche into gold
(courtesy zero hedge)
iv)Now confirmed, massive inside trading as the ECB  finds widespread trading on leaked inside USA information;  ( Harvey: and I will bet that gold/silver is one of their classic manipulative tools)
( zero hedge)



i)Saudi Arabia and perhaps the entire middle east’s largest construction company is the latest casualty to hit the globe as the Saudi Bin Ladin  Group just fired 50,000 out of its 200,000 work force.  All of the firings will be foreign workers who have not been paid for 4 months.

( zero hedge)

ii)Brilliant move:  let’s get the Russians annoyed with the USA et al

NATO will deploy 4,000 troops to the Russian border as the European Command urges a return to “war planning”
( zero hedge)

iii)Protesters storm Iraqi Parliament (broke through the Green zone).  Iraq is now in a state of emergency and their entire system is collapsing

( zero hedge)


it is now getting really bad in Venezuela.  Over the weekend they ran out of beer as the largest manufacturer of beer cannot get the grains to make beer:



i) take a look at this Wyoming Petroleum company. It lists assets of 1.3 billion and liabilities of 3.9 billion

No hope here…



ii)Oil falls to 44 dollars after another huge Cushing OK build:

(courtesy zero hedge)

iii)With the two defaults this weekend, Ultra Petroleum and Midstate Petroleum. the junk bond default rate has just hit an all time high of 13%.  The previous high rate of default was 9.7% in 2009:

( zero hedge)


i)Gold SURGES! early in the session, with gold breaking 1300 dollars and silver 18.00 dollars for the first time in quite some time:

(zero hedge)

ii)Venezuelan’s are large consumers of beer.  What more can happen to this hapless nations;

( Schipani/London’s Financial Times)
iii)Brien Lundin, editor of the famous Blanchard, Gold Newdletter talks about gold manipulation and emphasizes what may happen in discoveries when Deutsche bank spills the beans on its other co conspirators:

( Brien Lundin/GATA)

iv)Bill Murphy is interviewed by Liberty’s Elijah Johnson:

Bill Murphy/Johnson/GATA)

v)Ronan Manly discusses the secrecy behind trading at the LBMA:

( Ronan Manly/Lars Schall)

vi)Egon Von Greyerz talks with Kingworld news on gold.  He highlights the lessening of the gold/silver ratio and negative interest rates signals a resumption of the bull market for gold/silver

( zero hedge)


vii)Chris Powell offers a terrific commentary:  what if central banks have not lost control of the gold market as they have decided it best to have gold higher to devalue all currencies and therefore huge mountains of debt:

( Chris Powell/GATA)

ix)Bill Holter’s interview in the latest SGT report:

( Sean and Bill Holter)


x)Lawrie Williams comments on the huge gains made by the major gold and silver miners:

( Lawrie on gold/Sharp’s Pixley)


9. your more important USA stories which will influence the price of gold/silver

 i)A terrific commentary from Lee Adler on why we are witnessing new homes sales collapse in the USA.  It is very simple: he tracks full times jobs vs new home sales and it is a very good correlation.  So when full time jobs falter so does new homes sales.  Makes perfect sense.

( Lee Adler/Wall Street Examiner)

ii)This is worth watching. The Central States Pension fund has a court date and if the court allows the plan to cut pension incomes in half to prevent it becoming insolvent in 2025 it will have consequences to UPS to the tune 3.8 billion.  The commentary explains why!

( zero hedge)

iii)Very sad!!  All of the Sports Authority stores will close for good.  Remember that they filed for bankruptcy protection in March and the theory was that they were going to emerge with a lower number of healthy stores.  That was not the case as the stores just could not compete with on line operations like Amazon:( zero hedge)


iv)Today is Day for Puerto Rico as it defaults on 422 million in bond redemption due today.

( zero hedge)

v)Markit’s final Manufacturing PMI prints at 50.8, the lowest since 2009:( zero hedge)


vi)Now Atlantic City is set to default:

( zero hedge)

vii) Greg Hunter interviews Alasdair Macleod

(Greg Hunter and Alasdair Macleod)


Let us head over to the comex:

The total gold comex open interest ROSE THROUGH THE ATMOSPHERE AGAIN,  to an OI level of 549,520 for a GAIN of 24,106 contracts AS the price of gold UP $23.60 with respect to FRIDAY’S TRADING. We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses . The month of May saw its OI fall by 29 contracts down to 1794. We had 25 notices filed on Friday so we lost 4 contracts or 400 oz will not stand for delivery.The next big active gold contract is June and here the OI rose by 5,215 contracts up to 405,312. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was good at 32,267. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was excellent at 301,469 contracts. The comex is not in backwardation.

Today we had 1 notices filed for 100 oz in gold.


And now for the wild silver comex results. Silver OI FELL by a HUGE 2,507 contracts from 203,677 DOWN to 201,170 DESPITE THE FACT THAT the price of silver was UP quite nicely by 24 cents with FRIDAY’S TRADING. For the first time in over 2 years, we have not witnessed a liquidation of open interest as we ENTERED first day notice .  The next active contract month is May and here the OI FELL by only 2,683 contracts DOWN to 2920. We had 783 notices filed on Friday so we lost 1900 contracts or 9,500,000 oz of silver will not stand for delivery in this active month of May. The next non active month of June saw its OI RISE by 223 contracts UP to 708  OI.  The volume on the comex today (just comex) came in at 59,129 which is extremely high. The confirmed volume ON FRIDAY (comex + globex) was AGAIN HUGE AT 76,282. Silver is not in backwardation. London is in backwardation for several months.
We had  270 notices filed for 1,350,000 oz.

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY
May 2.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  nil


Deposits to the Dealer Inventory in oz NIL
Deposits to the Customer Inventory, in oz  NIL
No of oz served (contracts) today 1 contract
(100 oz)
No of oz to be served (notices) 1793 contracts

179,300 oz

Total monthly oz gold served (contracts) so far this month 26 contracts (2600 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  100.01 OZ

Today we had 0 dealer deposits

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

total dealer deposits: 0

Today we had 0 customer deposits:

total customer deposit:  NIL oz

Today we had 0 customer withdrawals:

Total customer withdrawals:  nil

Today we had 1 adjustments:

i) Out of HSBC:  108,609.655 oz of gold was removed from the dealer and this landed into the customer account of HSBC and will be deemed a settlement  (3.378 tonnes)



Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 1 contract of which 0 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (26) x 100 oz  or 2600 oz , to which we  add the difference between the open interest for the front month of MAY (1794 CONTRACTS) minus the number of notices served upon today (1) x 100 oz   x 100 oz per contract equals 181,900 oz, the number of ounces standing in this non active month.  This number is huge for May. Let us see if this number remains constant throughout themonth
Thus the initial standings for gold for the MAY. contract month:
No of notices served so far (26) x 100 oz  or ounces + {OI for the front month (1794) minus the number of  notices served upon today (1) x 100 oz which equals 181,900 oz standing in this non  active delivery month of MAY(5.6578 tonnes).
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
We thus have 5.6578 tonnes of gold standing for MAY and 16.419 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 5.6578 TONNES FOR MAY + 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) + april 29  .205 tonnes  = 24.552 tonnes still standing against 16.419 tonnes available.  .
Total dealer inventor 527,893.853 or 16.419 tonnes
Total gold inventory (dealer and customer) =7,250,269.882 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

MAY INITIAL standings

 May 2.2016

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory 60,853.85 oz


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


No of oz served today (contracts) 270 contracts

1,350,000  oz

No of oz to be served (notices) 4820 contracts


Total monthly oz silver served (contracts) 1053 contracts (5,265,000 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  708,882.75 oz

today we had 0 deposits into the dealer account

total dealer deposit: nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 0 customer deposits:


Total customer deposits: nil oz.

We had 1 customer withdrawals

i) Out of Scotia


total customer withdrawals:  60,853.85  oz



 we had 0 adjustments

The total number of notices filed today for the MAY contract month is represented by 270 contracts for 3,915,000 oz. To calculate the number of silver ounces that will stand for delivery in May., we take the total number of notices filed for the month so far at (1053) x 5,000 oz  = 5,265,000 oz to which we add the difference between the open interest for the front month of MAY (2920) and the number of notices served upon today (270) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  1053 (notices served so far)x 5000 oz +(2920{ OI for front month of April ) -number of notices served upon today (270)x 5000 oz  equals 18,515,000 oz of silver standing for the MaY contract month.
Total dealer silver:  27.975 million
Total number of dealer and customer silver:   151.718 million oz
The open interest on silver is now close an all time high with the record of 206,748 being set in the last week of April. The registered silver (dealer silver) is now at multi year lows as silver is being drawn out and heading to China and other destinations. 
The total dealer amount of silver is now at a multi year low of 27.975 million oz.
And now the Gold inventory at the GLD
May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes
April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes
April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14
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.


May 2.2016:  inventory rests at 824.94 tonnes. The addition was nothing but paper vapour.



Now the SLV Inventory
May 2/a huge in silver inventory at the SLV/a deposit of 1.49 million oz/Inventory rests at 337.007 million oz
April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580
April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz
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 change in silver inventory/rests tonight at 336.151 million oz
May 2.2016: Inventory 337,007 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 29.2016).
2. Sprott silver fund (PSLV): Premium to  FALLS to -.56%!!!! NAV (MAY 2.2016) 
3. Sprott gold fund (PHYS): premium to NAV  falls.0.59% to NAV  ( MAY 2.2016)
Note: Sprott silver trust back  into NEGATIVE territory at -.560%% /Sprott physical gold trust is back into positive territory at +0.59%/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 -.56%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
Federal Reserve bank of NY:  amount of earmarked gold shipped out:
We just received the FRBNY figures for gold:
March FRBNY earmarked gold:  7995 million dollars worth of gold at $42.22 dollars per oz
April FRBNY earmarked gold:  7981 million dollars worth of gold at $42.22 dollars per oz
Total amount of gold shipped out:  14 million dollars @ 42.22 per oz
Thus $14 million divided by $42.22 =  331,596 oz of gold or 10.314 tonnes of gold shipped
Obviously this is headed for Germany.  This is the first shipment of gold since Nov 2015:

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

Trading in gold and silver overnight in Asia and Europe
Mark O’Byrne (goldcore) off today/



Gold Surges To Jan 2015 Highs, Tops $1300 As Euro Hits 9-Month High

A lack of intervention in the Yen and strength in EUR have combined to weigh on the US dollar. Bloomberg’s USD Index is back at one-year lows as, while overnight chaos sent stocks higher, it has driven investors into the safety of bonds (Treasury yields down 2-3bps) and precious metals. Gold topped $1300 and Silver $18 as EURUSD pushes above 1.1500…

USD Index getting clubbed..

On the back of EUR strength…Topping 1.15 for the first time since August

Gold tops $1300…

And Silver hovers at $18…

It seems the Treasury’s “currency manipulation” report is having some effect.

Venezuelan’s are large consumers of beer.  What more can happen to this hapless nations;
(courtesy Schipani/London’s Financial Times)

This is what happens when you don’t issue the world reserve currency

Submitted by cpowell on Fri, 2016-04-29 18:45. Section: 

Venezuelans Add Beer to List of Privations

By Andres Schipani
Financial Times, London
Friday, April 29, 2016

Venezuela’s largest privately owned company on Friday stopped producing beer, adding to a list of privations facing residents already frustrated by power cuts, water shortages, triple-digit inflation, and grinding recession.

“This could mean the end,” says Sergio Silva, shopkeeper at a neighbourhood store in Petare, one of Caracas’ biggest slums. “If Venezuelans do not have beer  … this country could blow.” …

… For the remainder of the report:


Brien Lundin, editor of the famous Blanchard, Gold Newdletter talks about gold manipulation and emphasizes what may happen in discoveries when Deutsche bank spills the beans on its other co conspirators:

(courtesy Brien Lundin/GATA)

Gold Newsletter’s Brien Lundin: Manipulations and machinations

Submitted by cpowell on Sat, 2016-04-30 15:43. Section: 

11:55a ET Saturday, April 30, 2016

Dear Friend of GATA and Gold:

For many years Gold Newsletter has been essential to your secretary/treasurer’s interest in the gold market generally and in gold, silver, and resource companies particularly. Indeed, your secretary/treasurer’s interest was sparked entirely in 1998 by a trial subscription to the newsletter when it was under the editorship of its founder, James U. Blanchard III —

— whose extraordinary efforts restored in 1974, through federal legislation, the legal right of Americans to own monetary gold.

Since Blanchard’s death in March 1999 Gold Newsletter has been edited by Brien Lundin, proprietor of the New Orleans Investment Conference, and both the newsletter and the conference have generously given voice to GATA and recognition to the issue of gold market manipulation without fear of the resulting controversy.

Lundin’s letter this week included a detailed commentary on the issue, which he kindly has approved our sharing with you, so it is appended. Your secretary/treasurer finds it hard to imagine doing without Gold Newsletter, so if you’re inclined to check it out, subscription information is posted at the newsletter’s Internet site here:

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

* * *

Manipulations and Machinations

By Brien Lundin
Gold Newsletter, Metairie, Louisiana
Thursday, April 28, 2016

There’s a lot to talk about this subject. In past issues, we’ve covered the massive bear attacks on gold, the greatest example being April 2013, when traders colluded in obvious illegal fashion to dump gold contracts nominally worth billions in only a few minutes.

In this first major attack, the bears were able to drive gold down a couple of hundred dollars in two trading sessions. Since then, we’ve noted more such attacks, more recently undertaken by high-frequency traders and as tracked by Eric Hunsader of Nanex.

We’ve also covered the longer-term manipulations caused by central banks leasing out their gold through the bullion banks, as first exposed in the late 1990s by Frank Veneroso in the pages of Gold Newsletter and our Gold Book Annual.

The efforts of the Gold Anti-Trust Action Committee (GATA), which were largely born out of the results of Veneroso’s research, have also been well chronicled in these pages.

From a philosophical viewpoint, I’ve differed from some of GATA’s beliefs in that I don’t think governments have either the ability or interest to manipulate the gold market on a daily if not minute-by-minute basis.

But I do firmly believe that the burden of proof is on those who claim that the gold market is not manipulated. What is so special about gold that it would be the only asset class wherein governments did not exert some level of control?

The Federal Reserve fine-tunes the price of money (interest rates) to boost the stock and bond markets, thereby generating a “wealth effect” for the public. Agricultural commodities? Ever hear of ethanol and price supports? And there’s an entire Department of Energy, for goodness sake, whose only job is to manipulate the price of various forms of energy to meet political goals.

So why would gold — the ultimate gauge of the government’s success or failure in managing the currency — be somehow excluded from official attentions?

The answer is that it isn’t. To some degree, the price of gold is manipulated today, and has been for decades.

And just as we saw with the London Gold Pool of the 1960s and the U.S. Treasury gold auctions of the 1970s, the current efforts will fail in spectacular fashion.

But getting back to the primary subject, today I am more concerned not with short-term or long-term manipulations in gold but with the intermediate-term attempts by the large commercials to move the gold market according to their whims,

Again, the most important factor not facing gold right now is the massive net short position in “paper gold” accumulated by the large commercials. We can argue over who is included in this category of traders, and we can dither about their motives. But it cannot be argued that this sector has not exhibited firm control over the direction of gold prices.

Now with that said, the cynics and conspiracy-minded among gold investors claim that the large commercials intentionally set up those who are traditionally on the opposite side of the seesaw: the large speculators. According to the theory, the large commercials build up short positions as the price rises, selling gold that the large speculators eagerly take up as they follow the trend higher. At some crucial point the commercials dump enough gold onto the market to send the price plummeting through the speculators’ sell-stops, exacerbating the downtrend.
Once the selling is inevitably exhausted, the commercials cash in their shorts, even adding long positions to profit from the next turn in the cycle.

It’s easy to assign malevolent motives to the exercise, since the commercials almost always end up being correct, and seem able to force the market to their bidding. But commercials, being in the trade and needing to hedge their transactions, are naturally shorting the market to lock in their costs and minimize their exposure. The question of manipulation turns on whether there are other actors within the commercial category who are taking advantage of the natural tendencies of the market.

I tend to believe that there are some hijinks involved, if for no other reason than the reliability and amplitude of the cycles. Somebody’s making a lot of money, on a regular basis … and this makes me think that none of it is accidental.

And in truth, it really doesn’t matter to what degree the paper gold market is manipulated or whatever the precipitating factors may be — because the results are obvious and irrefutable. As you can see from the accompanying chart via Nick Laird’s ShareLynx service, the peaks and troughs in the large commercial short position precisely correspond with the peaks and troughs in the gold price over the long term.

Importantly, the current level of net shorts for the commercials is historically extreme, and argues for a sharp and deep correction at any time.

Now as I’ve noted many times over the years, while the commercials are almost always correct, they aren’t always so. And when they are wrong, they are wrong in spectacular fashion. You see, on rare occasions the commercials are hoist by their own petard. In these instances gold refuses to halt its rise despite the ever-mounting short positioning of the commercials. Eventually, the commercials are forced to cover their shorts, buying gold in a desperate fashion that only throws gasoline onto the fire and accelerates the gains. They’re not able to catch up to the market, and their efforts to constrain the rise only serve to boost it higher.

This last occurred in the 2004-2006 time frame. Consider the results:

— 2004: From the spring low to the end of the year peak, gold gained 21 percent. The Gold Bugs Index of gold stocks soared 50%.

— 2005: From the spring low to the year-end peak, gold rose 29 percent. The Gold Bugs Index leaped 70 percent in response.

— 2006: Gold was topsy turvy this year, jumping 36 percent in price from March to May, then losing 10 percent from May to December. The metal ended up gaining 21 percent from the spring low to the year-end peak. The Gold Bugs Index gained 30 percent over that time frame.

I haven’t researched the statistics, but rest assured that a 30-50 percent gain in the staid Gold Bugs Index translated into a much greater gain in the junior gold stock indices. And for the biggest winners that we were able to pinpoint in Gold Newsletter, we’re talking about multi-bagger gains.

So that’s the scope of the potential we’re looking at … if the commercials are trounced and gold takes off from here.

Will the commercials finally break the market? Or will some other factor emerge to prompt even more buying by the speculators — enough to send the commercials running for the exits? If it’s the latter, there are some interesting candidates for the factor that lights the fuse for the next big run.

China is both the world’s largest consumer and producer of gold, so it’s only natural that they’ve felt like second-class citizens in a market where the price of the metal is set by Western “paper gold” traders. So it was no surprise when China announced months ago that they would launch a twice-daily gold fix based on the physically-settled Shanghai Gold Exchange, and denominated in yuan instead of dollars. That long-anticipated price fix was finally launched on April 19. And the gold price soared higher immediately.

Coincidence? Actually, yes, as nearly the entire commodity complex was higher that day thanks to a bout of dollar weakness.

But certainly the new yuan gold fix didn’t hurt gold’s case that day, and it will continue to help support the metal over the long term. That’s because the yuan price fix will be rooted in the supply/demand fundamentals at play in a market where investors and savers are buying gold hand over fist.

Thus it is likely that the Chinese price fix will have an upward bias compared with London and New York trading, and these Western markets will have to recognize this trend over time. The bottom line is that I expect the new yuan price fix to provide a mild but consistent upward pressure on gold from now on.

There’s another issue that could be provide much more dramatic impetus for the metal.

As you have probably heard, Deutsche Bank is attempting to settle a U.S.-based lawsuit that accused it and other defendant banks of manipulating the London gold and silver price fixes. Moreover, Deutsche Bank is offering to squeal on its co-conspirators, apparently in exchange for some leniency.

While the lawsuit was filed a bit over two years ago, I never gave it much credit. I figured everyone knew the London a.m. and p.m. price fixes were, eh, “fixed” to some extent. How could you lock up representatives of five banks in a room, twice daily over some 90 years, to set a somewhat arbitrary price upon which fortunes turned, and not expect them to figure out some way to profit from the exercise?

It never really bothered me because the fix couldn’t vary too much from the trading trend in place before and after the price setting, and any small differences that did exist would be quickly overwhelmed by the larger trends.

But here’s what I didn’t count on: Deutsche Bank snitching on its cronies. This development now has lawyers around the globe salivating.

Already a group of law firms in Canada is proposing a C$1 billion class-action suit that mirrors the U.S. litigation. And rest assured there’ll be more to come — there’s blood in the water and the sharks are gathering.

If the discovery process turns up more wide-ranging manipulation of the sort we and many other gold bugs have been talking about for years, then the potential damages are mind-blowing.

Consider that anyone who has ever invested in not only the metals but any gold or silver stock would have suffered injury. That’s the kind of potential payout that will have lawyers searching every nook and cranny. Even proof that the banks manipulated “just” the gold and silver price fixes could be sufficient to justify wider-scale damage claims, since the fixes are used in so many ways to determine the value of contracts and metals purchases.

This could get very interesting.




Bill Murphy is interviewed by Liberty’s Elijah Johnson:

(courtesy Bill Murphy/Johnson/GATA)

GATA Chairman Murphy discusses stark change in silver trading

Submitted by cpowell on Sat, 2016-04-30 16:31. Section: 

12:30p ET Saturday, April 30, 2016

Dear Friend of GATA and Gold:

GATA Chairman Bill Murphy, interviewed by Finance and Liberty’s Elijah Johnson, discusses the amazing change in trading in the silver market, which he believes foretells much higher prices. The interview also covers Deutsche Bank’s agreement to settle a class-action lawsuit accusing it of manipulating the gold and silver markets with other investment banks. The interview is 15 minutes long and can be heard at You Tube here:…

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


Ronan Manly discusses the secrecy behind trading at the LBMA:

(courtesy Ronan Manly/Lars Schall)

London gold market is too secretive, gold researcher Ronan Manly says

Submitted by cpowell on Sun, 2016-05-01 20:22. Section: 

4:20p ET Sunday, May 1, 2016

Dear Friend of GATA and Gold:

Writing for Matterhorn Asset Management’s Gold Switzerland Internet site, financial journalist Lars Schall today interviews gold researcher Ronan Manly about his analysis of the world’s major gold markets. Manly says London’s gold market is among the least transparent, “because the London Bullion Market Association and the banks they represent do not want anyone poking around and finding out what’s really going on.” Manly also comments in detail on the German and Russian gold markets.

The interview is posted in both audio and transcript formats at Bullion Star’s Internet site here:…

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




Egon Von Greyerz talks with Kingworld news on gold.  He highlights the lessening of the gold/silver ratio and negative interest rates signals a resumption of the bull market for gold/silver

(courtesy zero hedge)

Tightening gold-silver ratio indicates monetary metals will keep rising: von Greyerz

Submitted by cpowell on Sun, 2016-05-01 23:58. Section: 

7:58p ET Sunday, May 1, 2016

Dear Friend of GATA and Gold:

Gold fund manager Egon von Greyerz tells King World News today that the tightening gold-silver ratio signals resumption of the bull market in the monetary metals, that negative interest rates are only weakening the world economy, and that the increasing manipulation of markets by central banks will lead to a spectacular bust. The interview with von Greyerz is excerpted at KWN here:…

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




Chris Powell offers a terrific commentary:  what if central banks have not lost control of the gold market as they have decided it best to have gold higher to devalue all currencies and therefore huge mountains of debt:

(courtesy Chris Powell/GATA)

What if central banks have NOT lost control of gold?

Submitted by cpowell on Mon, 2016-05-02 04:33. Section: 

12:51a ET Monday, May 2, 2016

Dear Friend of GATA and Gold:

Has the positioning of the big commercial traders in the monetary metals futures markets lost its value as an indicator of future monetary metals prices?

It seems like gold and silver bugs and maybe a few ordinary investors have been waiting for weeks for the usual smashing of the metals by those traders, the big investment banks, hoping to buy the next dip, only to have to watch the metals and the mining shares move steadily higher.

Among the market analysts whose prediction of a smash has gotten stale and who seems to be doubting himself is Clive Maund, whose latest commentary notes that it’s a “paradoxical situation.” His commentary is posted at GoldSeek here —

— and at 24hGold here:–para…

Meanwhile in other commentary at GoldSeek, market analyst Dan Norcini, while not yet so alarmed about the commercial short position in gold, chides “gold cult members who seem to not understand that when they are cheering predictions of $5,000 or even $50,000 gold they are cheering the ruin of everything around them”:

Count your secretary/treasurer among those who have been expecting the commitment of traders signal to be validated again for the thousandth time. But insofar as it is not validated and the monetary metals continue to rise, your secretary/treasurer can envision two possible explanations and offers them here with the justification of a slow-news Sunday night and the expertise of a high school graduate.

That is, either central banks, the biggest participants in the gold market, have lost control of it, the physical gold part of the market is overthrowing the paper gold part of the market, and the market is in the midst of the fabled “commercial signal failure.”

Or else central banks have not lost control of the gold market, and the gold price continues to go exactly where they want it to go.

That would mean that the consensus policy of central banks in regard to gold has changed recently — that they now want gold rising again, most likely to assist in the devaluation of their currencies, particularly now the U.S. dollar, as well as devaluation of the world’s debt, and that the huge short positions of the banks in the futures markets are actually central bank positions that must continue to increase even to unprecedented levels to keep this devaluation “orderly,” to use a favorite term of central banking. (Really, who else but institutions that are authorized to create infinite money and that hold large gold reserves could accept the risk of such shorting?)

This would mean that central banks disagree with Norcini. It would mean that far from considering a sharply higher gold price to be the end of the world, central banks consider a sharply higher gold price — at least if it can be accomplished in an “orderly” way — the prerequisite of worldwide debt relief, their own reliquefication, and the maintenance of their power, gold remaining, as the assistant undersecretary of state for economic and business affairs, Thomas O. Enders, explained to Secretary of State Henry Kissinger in April 1974, the supreme “reserve-creating instrument” of governments, the ultimate money, the form of money that underwrites all other forms of money, the form of money whose valuation is control of the world:

Your secretary/treasurer is far from the first to have such suspicions. They were expressed in detail four years ago by the American economists and fund managers Paul Brodsky and Lee Quaintance —

— and have been expressed increasingly by others lately, including, perhaps most notably, by fund manager and author James G. Rickards.

Since the world belongs to central banks and the rest of us occupy it only at their sufferance, they don’t volunteer what they are doing with our planet. Their policies and actions can be discerned only through careful observation, investigation, and research, like tedious searching of government archives that have not been fully redacted, leading to the compiling of documentation summarized by GATA here —

— and here —

— and even this research does not give much help as to the timing of policy.

So Maund, Norcini, and even your secretary/treasurer may be forgiven for not knowing certain things or not giving them their proper weight. The problem with Maund, Norcini, and others like them is only that, clinging desperately to their narrow craft, “technical analysis,” refusing to entertain the possibility that what they are analyzing are not really markets at all but the tools of higher powers, they seem not to want to know.

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




Lawrie Williams comments on the huge gains made by the major gold and silver miners:

(courtesy Lawrie on gold/Sharp’s Pixley)



  • Enormous gains YTD in major gold and silver stocks

    May 2, 2016lawrieongold

    On a day when the gold price, at the time of writing, had temporarily breached the $1300 level, before coming back a little – a rise of 23% since close on December 31 2015 – and with silver up 29% over the same period, after a bit of a slow start, it is interesting to see the massive gains experienced by many of the top gold and silver stocks over the same period. All prices quoted are in US dollars on US exchanges for comparative purposes, again at the time of writing.

    We have also included, top royalty/streaming companies, Franco Nevada in the gold stocks table, and Silver Wheaton in the silver stocks table to show the relative performances of what might be considered safer ways of investing in these two precious metals sectors.

    Selected Gold Mining Majors – US$ Quotes

    Company U.S. Ticker Price 12/31/2015 Price 5/2/16 gain
    Barrick ABX 7.4 19.4 +162%
    Newmont NEM 18.0 35.0 +94%
    AngloGold AU 7.1 16.9 +138%
    Goldcorp GG 11.6 20.14 +74%
    Kinross KGC 1.8 5.7 +217%
    Gold Fields GFI 2.8 4.7 +46%
    Agnico Eagle AEM 26.3 47.8 +82%
    Sibanye SBGL 6.1 14.9 +144%
    Yamana AUY 1.9 5.2 +174%
    Freeport* FCX 6.8 14.1 +107%
    Randgold GOLD 61.9 100.2 +62%
    Harmony HMY 0.9 3.7 +311%
    Franco Nevada FNV 45.75 70.4 +54%
    Gold price 1061 1300 23%

    Source: Metals Focus, Company Data

    *FCX is primarily a base metals stock (copper) but is one of the world’s largest gold producers so gold has a significant impact on its stock price.

    Top Primary silver mining stocks quoted on US Exchanges

    Company U.S. Ticker Price 12/31/2015 Price


    Pan American Silver PAAS 6.50 15.67 141%
    Tahoe Resources TAHO 8.67 14.13 63%
    Coeur Mining CDE 2.48 8.10 227%
    Hecla Mining HL 1.89 4.31 128%
    Silver Standard SSRI 5.18 9.39 81%
    First Majestic AG 3.27 10.64 225%
    Silver Wheaton SLW 12.42 20.95 69%
    Silver price 13.82 17.84 29%
    Source: Metals Focus, Company data

    The tables are a great demonstration of the gains that can be made in a rising gold and silver price environment, after a long downturn. But of course the rises are also vulnerable to any significant gold and silver price downturn to an equal extent. In investment timing is everything and, given the huge rises seen in some Tier 1 stocks, the tables suggest that they had been hugely oversold when sentiment moved against gold and silver. The big question is can both stocks and metal prices hold through the Summer doldrums period beginning around now? in-major-gold-and-silver-stocks/



Bill Holter’s interview in the latest SGT report:

(courtesy Sean and Bill Holter)

All;  my latest interview with Sean at SGT  Report


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



1 Chinese yuan vs USA dollar/yuan DOWN to 6.4705 / Shanghai bourse  CLOSED  FOR HOLIDAY  / HANG SANG CLOSED FOR HOLIDAY

2 Nikkei closed DOWN 518.67 OR 3.11% /USA: YEN RISES TO 106.62

3. Europe stocks opened MIXED  /USA dollar index DOWN to 92.90/Euro UP to 1.1481

3b Japan 10 year bond yield: FALLS   TO -.110%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.04

3c Nikkei now WELLBELOW 17,000

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

3e WTI::  45.59  and Brent: 47.05

3f Gold UP  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to 0.266%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 10.09%/: 

3j Greek 10 year bond yield FALL to  : 8.58%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1298.50/silver $17.88 (7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 12 /100 in  roubles/dollar) 64.89

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 .9582 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1002 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .266%

/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 1.81% early this morning. Thirty year rate  at 2.66% /POLICY ERROR)

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

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

Slew Of Negative News, Defaults And Failed Mergers Push Futures In The Green

It has been a busy weekend for mostly negative newsflow.

It all started with China which on Saturday reported yet another disappointing PMI print of 50.1, which both missed expectations and declined from the previous month; then we got the latest Iraq oil output and exports number which rose yet again, pushing it further into near record territory despite a weekend of political chaos in Baghdad which saw protesters loyal to al Sadr penetrate the fortified Green Zone; at the same time Russian total output dipped just 0.5% from its post-USSR record, suggesting the global oil glut is only set to deteriorate.

In M&A news the long awaited termination of the Halliburton-Baker Hughes merger finally took place when the companies announced last night they would not extend the termination deadline; more important was Puerto Rico’s announcement that it would default on a $422 million bond payment for its Government Development Bank while Atlantic City is also expected to announce a default later today; the US shale sector just had its two latest casualties after Ultra Petroleum filed for bankruptcy citing $3.9 Billion Debt; at the same time Midstates Petroleum also filed Chapter 11.

In sum, a bevy of negative news in the past 48 hours which perhaps explains why futures are fractionally in the green as of this moment.

Central planning humor aside, US – and certainly Japanese – equities continue to be driven mostly by the Yen, which has failed to decline substantially after last week’s surge, and as a result the USDJPY remains within several dozen pips of its post October 2014 lows of 106.2.

The yen soared almost 5 percent on the final two trading days of last week as the Bank of Japan unexpectedly refrained from boosting stimulus amid fading prospects for a U.S. interest-rate increase this summer.  As a result, Japan led a selloff in Asian equities, with the Topix index sliding for a fifth day as trading resumed after a break on Friday. The yen held its steepest back-to-back gains since the global financial crisis and the Stoxx Europe 600 Index reached a two-week low.

To sum it up in a single phrase, there was a gap in the communication between the BOJ and the market,” Yoshinori Ogawa, a market strategist at Okasan Securities in Tokyo told Bloomberg. “There are concerns the yen may strengthen beyond 105 per dollar. As we are in the middle of long holidays, liquidity is thin, which makes it easier for speculators to whip markets around with their selling.”

This ongoing pressure on the dollar explains why gold has finally breached the $1,300 resistance level.

What is perhaps strange is that despite a weaker dollar, oil continues to fall for a second day due to the noted previously Iraqi exports which approached record high in April, adding barrels to worldwide supply glut.  Operations weren’t affected Sunday after protesters stormed parliament in Baghdad, threatening to paralyze govt of OPEC’s 2nd-largest producer; disruption broke up Sunday as protesters agreed to leave govt area. “The rally is running out of steam,” says Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. “Negative sentiment and negative fundamentals are becoming more obvious. Most of the problem surrounds oversupply in the market, and that’s not going away.”

A notable move in Italy has seen local banks all slammed lower following the previously reported news that Italy’s bank bailout fund would use up a third of its firepower already just to buy most of the shares in Banca Popolare di Vicenza’s EU1.5b capital increase through an initial public offering after institutional investors showed little interest, in effect bailing out the first bank under its remit just weeks after being activated.  (Harvey: see below commentary on Italian banks)

S&P 500 futures rose 0.1 percent after U.S. equities ended last week with their worst two-day drop since February, amid lackluster earnings and few signs of a pickup in economic growth.

Liquidity in the market will be particularly low today as markets are shut for holidays in China, Hong Kong and the U.K.

Latest Market Snapshot

  • S&P 500 futures up 0.1% to 2061
  • Stoxx 600 up less than 0.1% to 342
  • DAX up 0.9% to 10131
  • German 10Yr yield down 2bps to 0.25%
  • Italian 10Yr yield down 2bps to 1.47%
  • Spanish 10Yr yield down 2bps to 1.58%
  • S&P GSCI Index down 0.5% to 358.4
  • MSCI Asia Pacific down 1.2% to 130
  • Nikkei 225 down 3.1% to 16147
  • S&P/ASX 200 down 0.2% to 5243
  • US 10-yr yield down 2bps to 1.82%
  • Dollar Index down 0.23% to 92.87
  • WTI Crude futures down 0.9% to $45.49
  • Brent Futures down 1.3% to $46.77
  • Gold spot up 0.5% to $1,299
  • Silver spot down 0.2% to $17.81

Global Top News

  • Halliburton, Baker Hughes Abandon $28 Billion Merger Agreement: Halliburton to pay Baker Hughes $3.5b termination fee
  • Buffett Hits Hedge Funds While They’re Down, Faulting High Fees: At the annual meeting of his Berkshire Hathaway, he warned about the enduring risk of derivatives, defended stocks in his portfolio and signaled that some of the co.’s biggest subsidiaries are hitting speed bumps; Buffett Says Valeant Business Model Was ‘Enormously Flawed’
  • Apollo-Led Consortium Increases Offer for Apollo Education: Consortium led by Apollo Global Management has increased its offer to buy Apollo Education to $10/share, or $1.14b
  • Puerto Rico Will Default on Government Development Bank Debt: Will default on a $422m bond payment for its Government Development Bank; GDB and creditors reach tentative framework on 53% haircut
  • Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt: Principal assets are gas-producing properties in Wyoming
  • Midstates Petroleum Co. files for bankruptcy protection
  • Euro-Area Manufacturing Growing at ‘Anemic’ Pace, Markit Says: Growth was little changed last month as stronger readings in Germany, Italy and Spain were offset by contraction in France
  • Energy Future Offers New Reorganization Plan Amid Deal Dispute: Proposal to sell Oncor unit to Hunt Consolidated in jeopardy
  • JPMorgan Says Justice Department, SEC Probing Hires in Asia
  • ‘Jungle Book’ Holds Off ‘Keanu’ to Stay No. 1 at Box Office: Collected $42.4m in its 3rd weekend in North American theaters
  • Oil Bulls Bet the Waning U.S. Shale Boom Will Curb Global Glut: Hedge funds boost bullish wagers to highest in 11 months: CFTC
  • AIG Raises $1.25 Billion Selling PICC Stock Near Bottom of Range: Sold 740 million PICC shares at HK$13.08 apiece
  • Short Sellers Target Perrigo After CEO Exit as Goldman Says Sell: Short interest at highest since 2013 after forecast cut

Looking at regional markets, Asia stocks opened the week in negative territory with Nikkei 225 resuming its BoJ-triggered declines as JPY strength slams exporters.Nikkei 225 (-3.1%) was dragged lower by a firmer JPY as well as poor earnings & forecasts from several Japanese firms. In addition, auto names were also pressured with Takata shares plunging 10% following reports that US authorities are to call for an expansion of car recalls affected by faulty airbags. Elsewhere, ASX 200 (-0.2%) conformed to the downbeat tone after discouraging Chinese PMI data whilst uncertainty over the upcoming RBA policy meeting adds to the caution. Finally, 10yr JGBs saw a mild uptick in trade amid a risk-averse sentiment in the region, while the 20yr yields declined to a fresh record low of 0.24%.

Top Asian News

  • China Factory Stabilization Shows Little Need for Added Stimulus: Official factory gauge, the manufacturing purchasing managers index, stood at 50.1 in April
  • Macau Gaming Revenue Stabilizes, Falls Less Than Estimated: April gaming rev. decreased 9.5% versus 13.5% estimated decline
  • JPMorgan Hires Ex-BOJ Officials for Research Business in Tokyo: Former BOJ deputy director Hiroshi Ugai recruited as senior economist, Rie Nishihara as senior analyst for banking
  • Election Jitters Send Philippine Stock Investors to Sidelines: Rodrigo Duterte, who maintains lead a week before presidential vote, has given few details on economic policies
  • Mitsubishi Motors’ Fraud Hits Nissan as Minicar Sales Plunge 51%: Nissan Japan sales of mini, standard vehicle fall 22% in April, Mitsubishi minicar deliveries drop 45%
  • Beaches of Dead Fish Test New Vietnam Government’s Response: Thousands rally on Sunday calling for closing of Formosa plant in a nation where public protests, criticism are unusual
  • Westpac Warns of Rise in Consumer Defaults on Mining Slowdown: Defaults inching up in mining states of Queensland, WA
  • Ricoh Drops Most on Record After Forecasting Decline in Profits: Closes down 16%, most since Nov. 2008, after a record 17% drop during the day
  • Takata Falls on Report Recalls May Rise to 100 Million Autos: Co. says no decision on additional recall in U.S. in response to Nikkei newspaper report

The European morning has seen equities kick-off the week in a tight range amid the holiday thinned trade, with UK markets closed and many across Asia also away.European equities trade marginally higher, led higher by exporters amid the EUR strength and with gains capped by the losses in financials, stemming from Italian banks as the NPL saga continues. Additionally, the tone has been somewhat dampened following soft Chinese Official PMI figures over the weekend, subsequently hinting at modest weakening in regards to the momentum of China’s economy.

From a fixed income perspective, Bunds are trading higher with the yield curve seeing some bull flattening, while notable outperformance has been observed in the long end with 30yr yields lower by 4.4bps. As such, some have noted that the price of German paper has been underpinned by residual month-end demand.

Top European News

  • Air France-KLM Board Picks Janaillac as New CEO, Chairman: Selected veteran transportation manager Jean-Marc Janaillac as CEO and chairman, to start July 31
  • Italian Bank Shares Tumble After Investors Snub Pop. Vicenza IPO: Bank stocks dropped after private investors snubbed an IPO by Banca Popolare di Vicenza and Atlante, Italy’s bank- rescue fund, had to buy almost all the shares; Italy Exchange to Rule on Pop. Vicenza Listing After Stock Sale
  • Philips Said Disappointed With Lighting Bids, Leaning To IPO: Could seek valuation of about EU5.5b in potential listing
  • Ferrari CEO Switch Said Imminent With Board Choosing Marchionne: Ferrari set to appoint Chairman Sergio Marchionne to replace Amedeo Felisa as CEO as early as Monday, according to people familiar with the matter
  • Italy’s Intesa Sanpaolo Sells Payment Units in $1.2b Deal: To sell Setefi and Intesa Sanpaolo Card payment units to a group that includes Bain, Advent in deal valued at EU1.04b
  • Deutsche Bank Said to Be Faulted by FCA Over Lax Client Vetting: Firm says it’s fixing lapses regulator cited in March letter
  • Merkel’s $1.4b German E-Car Push Boosts Infineon, STMicro: Value of chips in e-cars, hybdrids double that in regular cars
  • Spanish Politics Enters Uncharted Waters as Fresh Election Looms: Deadline for patching together a majority from the most fragmented parliament in Spanish history falls at midnight on May 2, triggering a repeat election for late June

In FX, there is not too much to report from early Europe, with the overnight session seeing a USD/JPY test lower but holding off 106.00 for now. A bid tone seen in the EUR with the lead spot rate taking out 1.1470-75 resistance — 1.1500 now targeted but digital out-strikes here said to be providing some supply ahead of the figure. EU manufacturing PMI’s saw the final read up slightly to 51.7, but notable weakness seen in the French component. Nevertheless, last week’s healthy EU wide GDP number adds to encouragement to a move beyond 1.1500. Elsewhere, Cable is shaking off some favour to the Brexit camp, but the EUR/GBP is pushing to new recent highs on the above EUR sentiment. An offered USD tone clearly continues, pushing AUD higher despite RBA risk ahead — outside calls for a rate cut. USD/CAD still eyeing 1.2500 lower down, but trade tight ahead of the North American open.

In commodities, in thin European trade WTI has managed to hang on to gains seen last week and continues to reside above the USD 45.00/bbl handle while Brent remains in close proximity to USD 47.00/bbl. Elsewhere, gold has continued its rally and has risen above the psychological USD 1300/oz as risk-averse sentiment and USD weakness underpinned the safe-haven, Silver printed just below USD 18/oz at USD 17.93/oz, while copper saw flat trade amid a lack of market participants as various nations including the world’s largest consumer China were away.

On today’s calendar we’ll get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released.

Bulletin Headline Summary from Bloomberg and RanSquawk

  • European bourses trade modestly higher, led by exporters as EUR/USD approaches 1.1500 to the upside
  • Fixed income remains supported amid light volumes this morning, with the UK away for May Day Bank Holiday
  • Highlights today include US Manufacturing PMI and scheduled comments from Fed’s Lockhart, ECB’s Draghi and Lautenschlaeger
  • Treasuries rally in overnight trading as equity markets mixed in Europe, lower in Asia with many bourses closed due to holiday; economic data this week will be dominated by Friday’s nonfarm payrolls report.
  • U.S. Treasury says China, Japan, Germany, S. Korea, Taiwan meet two of three criteria for pursuing FX policies that could provide unfair competitive advantage, under Trade Facilitation and Trade Enforcement Act of 2015
  • In a world awash with debt, it’s hard to imagine that there may not be enough to go around. Yet, JPMorgan predicts record-low global yields ahead
  • Italian bank stocks dropped in Milan trading after private investors snubbed an initial public offering by Banca Popolare di Vicenza SpA and Atlante, the country’s bank- rescue fund, had to buy almost all the shares
    Markit Economics in London said its monthly Purchasing Managers Index points to “anemic” factory growth in the Euro-area as stronger
  • in Germany, Italy and Spain were offset by contraction in France
  • Gold advanced above $1,300 an ounce as investors flood back to precious metals as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to further interest-rate increases
  • Puerto Rico will default on a $422 million bond payment for its Government Development Bank, escalating what is turning into the biggest crisis ever in the $3.7 trillion market that U.S. state and local entities use to access financing
  • Brazil’s President Rousseff promised increased spending on her party’s most popular social program and took other measures aimed at her electoral base, less than two weeks before the Senate is expected to vote in favor of the impeachment process she calls a coup d’etat
  • After ratcheting up lending at the behest of President Dilma Rousseff, Brazil’s state-controlled banks may be in store for more pain as Brazil’s longest recession in a century sparks a surge in delinquencies
  • Halliburton Co. and Baker Hughes Inc. called off their $28 billion merger that faced stiff resistance from regulators in the U.S. and Europe over antitrust concerns
  • The hundreds of protesters who pulled down blast walls and forced their way into Baghdad’s Green Zone on Saturday laid bare growing political chaos that increasingly poses a threat to the country’s security and the economy
  • Sovereign 10Y bond yields mixed; European equity markets mixed, Asian markets lower; U.S. equity-index futures rise. WTI crude oil drops, metals higher

DB’s Jim Reid concludes the overnight wrap

Earnings will again be a big focus for markets this week with 124 S&P 500 companies set to report, headlined by the likes of Merck, Pfizer and Kraft Heinz. We’ll also get the latest reports from 17% of the Stoxx 600 including some of the big banks. With the market firmly back to scrutinizing the data too, the big focus there this week comes on Friday when we’ll get the April employment report in the US. We’ll have a full preview of that closer to the date but as well as the labour market numbers it’s worth also keeping an eye on today’s ISM manufacturing print which, following on from softer regional readings, is expected to show a modest 0.4pt decline to 51.4. Our US economists are actually forecasting for a drop below 50 (to 49.0) and the data will give an early insight into what extent, if at all, growth is rebounding in Q2. We’ll also get the April PMI’s this week, so there’s plenty to keep us busy.

Over the weekend the main focus has been on the China data released on Sunday. The data showed a slight drop in the official manufacturing PMI for April, declining a modest 0.1pts to 50.1 (vs. 50.3 expected) while the non-manufacturing PMI was also lower, falling 0.3pts to 53.5. New orders subcomponents for both were softer, although especially in the latter where the component dropped back below 50. We’ll have to wait for the reaction from markets in China as bourses are closed for a public holiday (along with Hong Kong) today. The focus is more on Japan however where markets have reopened following a public holiday of their own on Friday. With the Yen unchanged this morning but hovering around 18 month highs, the Nikkei has plunged -3.62%, while the Topix is -3.55%. Elsewhere the ASX (-0.63%) and Kospi (-0.73%) are weaker too while moves for Oil aren’t helping with WTI down close to -1%.

Meanwhile the other headline grabber from the weekend is the news out of Puerto Rico with the confirmation that Governor Padilla has declared a debt moratorium on a $422m repayment due today by the island’s Government Development Bank, and so triggering a default. The bigger news now might mean what this means for the nation’s other general obligation bonds, of which according to Bloomberg $800m are due to be repaid by July. A story worth following.

Moving on. Earnings season is ticking along and in the US we’ve now had the latest quarterly earnings from 310 S&P 500 companies. There’s a familiar trend to what we’ve seen in the past with 77% beating at the EPS line and 57% at the revenue line – which largely matches previous quarters although the beat in sales is a bit better than what we’ve seen historically. As we’ve highlighted previously however, this masks what has been a significantly weaker period for earnings relative to last year. Our equity colleagues in the US highlight the important point that analysts have chopped their EPS forecast by over 9% for this quarter since the turn of the year, making it less of a surprise to see so many companies coming ahead of estimates. In fact our colleagues note that Q1 EPS should wrap up at about 5% lower YoY unless we see big beats from the remaining reporters. We’re currently down close to 6% on a YoY basis although ex-energy that’s only -0.5% yoy.

In a quick recap of markets on Friday, it was a pretty soft close to the week for markets on both sides of the pond, with volatility across currencies and some fairly mixed data plaguing sentiment. A late bounce into the close helped limit the loss for the S&P 500 to just -0.51%, however European bourses moved the other way in the late stages of trading there, culminating with the Stoxx 600 closing with a -2.13% decline which was the biggest daily fall since February. There was a similar underperformance in credit markets with the iTraxx Main and Crossover indices ending 2.5bps and 11bps wider respectively, while in the US CDX IG ended the day just 1bp wider. Currency markets were dominated by weakness for the US Dollar. In fact the Dollar index closed the day down -0.72% meaning it weakened over 2% during the week with the index now back to trading at the lowest level this year. It’s the mirror image for the Euro with the single currency up +0.87% on Friday and a shade over 2% on the week.

In terms of the US data, the core PCE was confirmed as rising +0.1% mom in March as expected which has resulted in the YoY rate dipping a tenth to +1.6%. The employment cost index print was reported as increasing +0.6% qoq in Q1. Meanwhile, there was some mixed signals coming from the personal income and spending reports last month. Income rose +0.4% mom and a little more than expected (vs. +0.3% expected), while spending (+0.1% mom vs. +0.2% expected) was below consensus. The Chicago PMI for April declined a steeper than expected 3.2pts to 50.4 (vs. 52.6 expected) while there was similar weakness in the ISM Milwaukee (-6.7pts to 51.1). Finally later in the session we got confirmation of a downward revision to the final April University of Michigan consumer sentiment print, by 0.7pts to 89.0. More concerning perhaps was the 3pt downward revision to the expectations reading to 77.6 which is the lowest since September 2014.

There was plenty of data released in Europe on Friday too. The highlight was a better than expected Q1 GDP print (+0.6% qoq vs. +0.5% expected) for the Euro area. This had the effect of keeping the YoY rate unchanged at +1.6% and while the headline reads positive, our Macro colleagues in Europe noted that some caution is warranted, however. They highlight in particular that there are transitory factors at play and numerous forces – including global uncertainty, rising oil and political risk – to prevent underlying growth from accelerating. Meanwhile, there was some disappointment in the CPI headline estimate for the Euro area after printing at -0.2% yoy (vs. -0.1% expected), a decline of two-tenths. The core print was recorded as declining three-tenths to +0.7% yoy (vs. +0.9% expected). Elsewhere, German retail sales were reported as declining unexpectedly in March (-1.1% mom vs. +0.4% expected) and so shrinking annual growth to +0.7% yoy.

Staying in Europe, there was some focus also on Portugal on Friday after the nation retained its IG credit rating status from DBRS. The news is significant as the agency is the only one to rate Portugal investment grade and so according to the FT, this allows the country to continue to benefit from QE bond buying by the ECB.

We’ll also get the final revision for the US this afternoon while the main focus will be the April data for ISM manufacturing and prices paid prints. March construction spending data will also be released. Away from the data we’ll start to hear from a number of Fedspeakers again. Lockhart (today and Wednesday), Mester (Tuesday), Kashkari (Wednesday) and Bullard (Thurday) are all scheduled while Bullard, Kaplan, Lockhart and Williams are all due to take part in a panel interview on Friday. Meanwhile the ECB’s Draghi is scheduled to speak this afternoon, while Weidmann is also due to speak later in the week.

It’s another big week for earnings with 124 S&P 500 companies set to report, accounting for 16% of the index market cap. The highlights look set to be AIG (today), Pfizer (Tueday), Kraft Heinz (Wednesday) and Merck (Thursday). In Europe we’ll get reports from 17% of the Stoxx 600 including Shell, HSBC, BNP, UBS and BMW.



i)Late  SUNDAY night/ MONDAY morning: Shanghai closed FOR HOLIDAY  /  Hang Sang closed FOR HOLIDAY. The Nikkei closed DOWN 518.67 OR 3.11%  . Australia’s all ordinaires  CLOSED DOWN 0.18% BUT RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4705.  Oil FELL  to 45.59 dollars per barrel for WTI and 47.05 for Brent. Stocks in Europe MIXED . Offshore yuan trades  6.4830 yuan to the dollar vs 6.4705 for onshore yuan.



Is Goldman signalling the all clear button to go long USA/Yen?

(courtesy zero hedge)

Goldman Throws In The Bearish Yen Towel: “There Is Little Doubt That The USDJPY Will Keep Falling”

Days before last week’s BOJ “stunner” in which the Japanese central bank ended up doing precisely nothing and smashing market expectations of further “bazooka” easing, we presented Goldman’s expectations why the Yen is set to “collapse” in the next 12 months, with Goldman’s FX strategist explaining why he believes the USDJPY will surge to 130 in the coming year. For those who missed it, the forecast was based on the assumption of much more aggressive easing including even more balance sheet expansion, something which clearly did not pan out (as we also warned) and the only “crushing” that took place was to the P&L of any Goldman clients who listened to the bank.

Then moments ago Robin Brooks came out with his much anticipated mea culpa in which he admits he misjudged the BOJ which has reverted to a “patient” narrative, saying “this is a fateful miscalculation in our view” but admitting that while “we hold to our structural view that $/JPY ultimately will go a lot higher… in the short term, it will fall.”

Seen in isolation, last week’s decision by the Bank of Japan (BoJ) to stay on hold is understandable. After all, the January move into negative rates produced a massive flattening in the JGB yield curve, exceeding anything seen in Apr. 2013 or Oct. 2014. We therefore have some sympathy for Governor Kuroda who said in the press conference that “we decided to watch the effect of QQE with negative rates this time.” But this meeting did not happen in isolation. The market interpreted the January shift to negative rates as validating fears that JGB scarcity limits QQE. $/JPY crashed from 120 – its equilibrium level following the QQE augmentation in 2014 – to below 110 in the run-up to last week, pushing inflation break-evens in Japan sharply lower. Our view going into last week was that the BoJ needed to grab the bull by the horns and dispel the notion that it is running “out of bullets.” We thought it could do this by shifting the emphasis back to balance sheet expansion by, for example, taking concrete steps to lift housing loans off banks’ balance sheets, something Governor Kuroda floated in a recent speech. Instead, the BoJ seemed intent on teaching the markets to be “patient,” downgrading the inflation forecast yet again while taking no action.This is a fateful miscalculation in our view. Unconventional easing is above all an expectations game, where it is necessary to shock markets again and again, until they have no reason to question a central bank’s commitment to its inflation target. Preaching “patience” is the opposite, telling markets they expect too much. There is little doubt in our minds that $/JPY will keep falling in the near term, until Governor Kuroda is forced to respond with overwhelming force. We therefore hold to our structural view that $/JPY ultimately will go a lot higher. But in the short term, it will fall.

Goldman then adds what Kuroda should be doing:

There remains the question what the BoJ can and should do. As we argued in the run-up to last week’s meeting, the BoJ needs to shift the emphasis of easing back to balance sheet expansion and QQE. While we do not believe that fears over JGB scarcity are well founded – there is plenty of scope for the BoJ to lift JGBs from non-banks (Exhibit 5) where the allocation to JGBs is high compared to government bond allocations elsewhere (Exhibit 6) – we think the BoJ needs to signal that it is not afraid to expand QQE beyond JGBs if needed by, for example, taking concrete steps to lift housing loans off banks’ balance sheets. We think such a step would cause $/JPY to rapidly move back above 120, as market fears over limits to QQE abate. Unfortunately, Governor Kuroda last week only floated additional rate cuts as the possible next easing step, something the market at this point disdains and, rightly, sees as incremental easing.

Until Governor Kuroda is willing to grab the bulls by the horns and confront market fears over the BoJ’s balance sheet, the path of least resistance for $/JPY is down. Our biggest anxiety is over intervention. In our opinion, this would throw out the rule book from recent years – that monetary policy is domestically focused – and the market could respond by pushing $/JPY down to an even greater degree. Of course, a lot rides on the price action in comings days. An emergency BoJ meeting may become necessary if Yen appreciation gets out of control.

It will be hardly encouraging for Goldman clients to hear that only an emergency central bank meeting will be the catalyst that delivers the long awaited move higher in the USDJPY, even as Goldman actively fails to note that according to the recent G-20 statements and last Friday’s Treasury warning an aggressive devaluation by the BOJ will henceforth be actively frowned upon.

But more importantly, Goldman’s admission that “the path of least resistance for $/JPY is down” may be just the “all clear” signal the market has been waiting for to go long the USDJPY, and judging by this morning’s reaction which has seen the currency pair spike higher, it is doing just that.





Atlante, or Atlas, the bailout fund for Italy’s 360 billion euro non performing loans, is off to a rocky start.  Instead of raising 6 billion euros, they raised only 4.25 billion euros.

The first troubled bank to be rescued is Popolare di Vicenza.  It sought from the public an offering of 1.5 billion euros in an attempt to shore up its troubled sector.  Instead of raising 1.5 billion, it raised only 150 million euros leaving the rest to be owned by non other Atlante/  Thus Atlante is the proud owner of 90% of this troubled bank and now they must try and swap out the bad debt and put it onto Atlante’s balance sheet.  Once the share offering is complete, then Atlante loses 1 billion euros and will be down to 3.25 billion euros trying to buy 360 billion euros of non performing loans.  What a complete nightmare!! The purchase of bad loans by Atlante will not be done at book value and should be done close to fair market value, meaning huge losses to the banks, something they are trying to avoid. This loss would erode their capital base big time. The fair market value of the non performing loans is around 6 to 10,75 cents on the dollar.  Thus they only have around 3.25 billion euros worth buying 20 to 30 billion on bad stuff.

(courtesy zero hedge)

Italy’s Bank Bailout Fund Already One Third Empty After First Bank Rescue

When one month ago, Italy was scrambling to unveil a “last resort” bad bank bailout fund (which eventually received the name Atlante, or Atlas, for the Titan god who was condemned to hold up the sky for eternity, only in this case he is holding up Italy’s €360 billion in bad loans), many wondered why the rush? While the explicit purpose of the fund was to allow Italy to bailout insolvent banks without the involvement of the state which is expressly prohibited by the Eurozone, the scramble appeared erratic almost frentic, and was one of the reasons why Italian bank stocks tumbled in early February.

The question: “Does someone know something?”

It turns out the answer was yes, because as we learn today, “Atlas” is about to become the proud new owner of around 90% of Italy’s Popolare di Vicenza after investors only bought a fraction of the mid-tier bank’s €1.5 billion IPOReuters reports.

Popolare di Vicenza, which was due to announce the outcome of the public share offer later on Friday, said earlier in the day that ATLAS had raised €4.25 billion, at the lower end of a 4-6 billion euro range it had initially targeted, from 67 mostly domestic financial institutions.

And if the low take-up for the Popolare di Vicenza share sale is confirmed, Atlas is about to see nearly a third of its fire-power invested in a single bank.

Alessandro Penati, chairman of the Quaestio investment firm which manages the fund, said Atlante would aim to sell any stake it may get in Vicenza after 18 months. Good luck with finding buyers unless the ECB is openly monetizing bank stocks by then, which at the rate Mario Draghi is going (and especially if he listens to advice from JPM) is a distinct possilbity.

“Atlante has the financial resources to fully support Popolare Vicenza’s capital increase,” said Penati. The fund will probably buy most of the shares as institutional investors showed little interest.

According to Reuters, it was not immediately clear whether Popolare di Vicenza, which must raise the cash to comply with capital requirements set by the European Central Bank (ECB), would have enough free float to list on the market next week as planned. The minimum free float required to list is 25 percent of the share capital, but the Milan bourse can make exceptions.

Meanwhile, Atlas’ Penati said his fund was set up as a backstop investor to avoid banks like Popolare di Vicenza being wound down and triggering a crisis for the whole industry. What he didn’t say is that “backstop investor” also means owning over 90% of the bank.

The fund targets an annual return of around 6 percent and will spend 70 percent of its cash to invest in cash calls at ailing banks, he said. He added that the rest would be used to buy junior tranches of bad debt from banks at a higher price than that offered by funds specialised in distressed securities, but not at book value – meaning banks would have to book further writedowns.

Traders said that contributed to pushing bank share prices down on Friday, with UniCredit dropping 5 percent.

One big problem for Italian banks is that they are saddled with €360 billion of NPLs but are reluctant to sell them at a discount because that would erode their capital.

Another big problem is that the very same Atlante, announced earlier today that it has only manged to raise €4.25 billion from 67 Italian and international intuitions, a tiny fraction of what will ultimately be required.  While analysts say Atlante should have enough money to buy between 20 billion and 35 billion euros of gross non-performing loans, for now it has about one fifth to one ninth of that amount. And as of this moment it has €1.5 billion less.

Our good friends over at Deutsche bank have now more troubles as the UK Regulator states these guys are money laundering, they are funding terrorists and they lack controls on sanctions.  In other words expect more fines out of these guys as they no doubt finance sovereigns with their fines.
(courtesy zero hedge)

Deutsche Bank Has Systemic Money Laundering, Terrorist Financing And Sanctions Problems: UK Regulator

Just two days after Deutsche Bank fired the head of its “integrity committee”, Georg Thoma who had been originally tasked with clearing up the bank’s past scandals, because according to DB’s vice chairman Alfred Herling, Thoma had been “overzealous” and “goes too far when he demands ever wider investigations and more and more lawyers come marching up”, today the UK financial watchdog agency FCA announced that Germany’s biggest bank has “serious” and “systemic” failings in its controls against money laundering, terrorist financing and sanctions, the Financial Times reported.

The Financial Conduct Authority (FCA), has now ordered a separate independent review, the FT reported the letter as saying. The FCA declined to comment.

In other words instad of firing it “Chief Ethics Officer” (sic), Deutsche should have ideally hired a few more because as a result of this latest probe it is most likely looking at billions more in settlement charges over the next 6 – 12 months.

“Our overall conclusion was that Deutsche Bank UK had serious AML (anti-money laundering), terrorist financing and sanctions failings which were systemic in nature,” the FCA letter, dated March 2, reportedly said.

“Effective senior management engagement and leadership on financial crime had been lacking for a considerable period of time.” And where there is effective senior management, the board makes sure to get rid of said management, because if it actually followed the law how could this megabank ever make money in Europe’s monetary twilight zone.

Meanwhile, Deutsche Bank said it is cooperating with regulators to fundamentally reform its anti-financial crime program.

“We understand the importance of this issue and are committed to and engaged in fixing it”, a company spokesman said in an emailed statement on Sunday.

This is only the latest brush-up between DB and the FCA: in late 2014, the UK regulator put Deutsche Bank’s London office under enhanced supervision owing to concern about the bank’s governance and controls. Enhanced supervision procedures are normally kept private and can follow fines. Following its review, Reuters reports, the FCA ordered a so-called skilled persons report – also called a Section 166 report – to assess remedial work Deutsche must now carry out.

Deutsche Bank’s new chief executive, John Cryan, who took over in July, has embarked on a deep restructuring of the bank, which includes an overhaul of governance procedures.

Cryan announced in November a review of its know-your-client mechanisms and its vetting procedures when taking on new clients. It has also suspended taking on new customers from 109 countries which it has defined as high risk, compared with 30 countries it had earlier classified as too risky.

The report on the FCA letter comes not only days after the abovementioned acrimonious public squabble among members of Deutsche Bank’s supervisory board and the ejection of the man heading the supervisory board’s Integrity Committee, but also just weeks after Deutsche became the first bank to settle and admit to charges that it had manipulated the gold market, and had also agreed to expose other gold manipulation cartel members.

Here is the next shoe to fall:  Deutsche bank unveils that QE has run its course.  It is now time to initiate a wealth tax.
This is cause an avalanche into gold
(courtesy zero hedge)

Deutsche Bank Unveils The Next Step: “QE Has Run Its Course, It’s Time To Tax Wealth”

Helicopter money may be on the horizon, but if Deutsche Bank has its way, there is at least one intermediate step.

According to DB’s Dominic Konstam, now that the benefits QE “have run their course”, it is time for the next, and far more drastic step: “the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.”

Here is the big picture unveiling of what is coming next from Deutsche Bank’s Dominic Konstam, who is also buying the Treasury long end hand over fist:

  • The G3 central banks all stood pat, continuing the move away from the beggar-thy-neighbor paradigm. However, the adverse market reaction to the BoJ’s inaction suggests that the benefits of QE (or QQE) in its present form might have run their course.
  • It is becoming increasingly clear to us that the level of yields at which credit expansion in Europe and Japan will pick up in earnest is probably negative, and substantially so. Therefore, the ECB and BoJ should move more strongly toward penalizing savings via negative retail deposit rates or perhaps wealth taxes. With this stick would also come a carrot – for example, negative mortgage rates.
  • Until then, bank NIM compression will continue to drive elevated demand for dollar-denominated assets, which manifests itself in suppressed UST term premia and wide cross-currency bases.
  • What this means for the US is that policy rates and longer bond yields are unlikely to go up until global growth accelerates materially. Until such time, it is critical for the Fed to continue to relent, allowing real yields to keep falling while breakevens rise and nominal yields remain roughly static.
  • If the Fed were to turn hawkish, there is perhaps even less scope for long-end yields to rise as breakevens would likely collapse on policy error fears.

Some of the troubling detail:

QE as implemented in major economies since the crisis has operated through two shocks: a demand shock whereby real yields are forced lower through lower nominal yields and static – or even falling – breakevens, and a shock to inflation expectations, whereby real yields ultimately continue to fall but due to rising BEI and static to lower nominal yields. In the case of the Anglo-Saxon economies, the demand shock quickly gave way to the shock (higher) to inflation expectations and actually allowed nominal yields to rise, if fleetingly.

The second shock, to inflation expectations, has thus far remained stubbornly elusive in Europe and more so in Japan, and ephemeral in the Anglo-Saxon economies. That said, this dynamic appears to have re-emerged in the US post Fed relent and has been an important driver of the recovery in risk assets and, more generally, the easing of financial conditions.

This week’s BoJ announcement disappointed, and as a result the yen appreciated sharply. This outcome does not bode well for the future efficacy of QE, at least while that is the primary policy tool in use. Breakevens have been drifting lower and real yields have been drifting higher since last summer. In other words, financial conditions in Japan are tightening, suggesting the need for more stimulus. However, the BoJ already holds a significant proportion of the assets that would be available for purchase, and the gains from additional QE activity – higher breakevens, lower real yields, and a weaker yen – are likely on the margin to be fleeting. It appears that the markets doubt the BoJ’s willingness or ability to carry on with larger and broader asset purchases, or worse yet they do not believe that such asset purchases will have their desired stimulative effect

Further QE should be viewed as an experiment in real time, where the point of inquiry is the level of real or nominal yields at which credit will begin to expand more strongly with loan-to-deposit ratios increasing. What seems increasingly clear to us is that this level is likely at negative yields, and probably substantially so. If this is true, it would suggest to us that the equilibrium level of rates in the economy is probably negative. This in turn would strongly suggest a significant re-think to short-rate policy. In this case, central banks should move more strongly toward penalizing savings, rather than just the institutions that “house” those savings – the banks. This would mean allowing significantly negative retail deposit rates or perhaps even wealth taxes. With this stick would also come a carrot – one example being that while deposit rates penalize savings (the whole point), banks might also pay borrowers to buy houses via negative mortgage rates.

In short, the real central bank panic is about to be unleashed; who will suffer? Why everyone else. And should wealth taxes really be imminent, we foresee a lot of “boating incidents” in the immediate future.

Now confirmed, massive inside trading as the ECB  finds widespread trading on leaked inside USA information;  ( Harvey: and I will bet that gold/silver is one of their classic manipulative tools)
(courtesy zero hedge)

Another “Conspiracy Theory” Confirmed: ECB Finds Widespread Trading On Leaked Inside Information

“information of many macroeconomic announcements is known by some market participants in advance

– European Central Bank

Remember when it was merely another conspiracy theory that “some” traders “trade” (with zero risk) with the benefit of leaked material non-public information? As of moments ago it is merely the latest conspiracy fact, confirmed by none other than the ECB, which earlier today published a research paper which finds substantial “informed” trading before the official release in seven of 21 market-moving U.S. macroeconomic announcements.

The paper has studied trading patterns from Jan. 2008 to March 2014 and finds that “prices begin to move in the ‘correct’ direction about 30 minutes before the release time. The pre-announcement price drift accounts on average for about half of the total price adjustment.”

Translation: chronic insider trading, which until recently was an allegation that the serious outlets would relentless mock as another conspiracy by tinfoil hat fringe websites.

The paper also finds “strong evidence of pre-announcement drift” in ahead of releases such as theConference Board’s consumer confidence index; NAR existing home and pending home sales; preliminary GDP; Federal Reserve’s industrial production (yes, even Fed data has been leaked repeatedly); ISM manufacturing and non- manufacturing indexes, and countless other examples.

While the ECB does not blame the entire “drift” on leaks of insider information, saying instead that “the evidence suggests that the pre-announcement drift likely comes from a combination of information leakage and superior forecasting” it is clear what the real culprit is for outperformance ahead of major data release, and – spoiler alert – it isn’t “superior forecasting.”

The paper also says that according to back-of-the-envelope calculations, since 2008 pre-release trading in S&P E-mini futures market profits amount to about $20 million per year.  Curiously, the ECB did not find evidence of “pre-announcement drift” in non-farm employment data. We doubt that especially since just this website has repeatedly caught BLS data being leaked in advance, an example of which we reported several years ago in “Bureau Of Labor Statistics Caught Red Handed Leaking Confidential Employment Data.”

From the paper’s non-technical summary:

Macroeconomic indicators play an important role in business cycle forecasting and are closely watched by financial markets. Some of these indicators appear to influence financial market prices even ahead of their so cial release time. This paper examines the prevalence of pre-announcement price drift in U.S. stock and bond markets and looks for possible explanations.

We study the impact of announcements on second-by-second E-mini S&P 500 stock index and 10-year Treasury note futures from January 2008 to March 2014. The study is based on 21 market-moving announcements among a sample of 30 U.S. macroeconomic announcements. Eleven out of these 21 announcements exhibit some pre-announcement price drift in the \correct” direction, i.e., in the direction of the price change consistent with the announcement surprise. For seven of these announcements the drift is substantial. Prices start to move about 30 minutes before the o cial release time, and this pre-announcement price move accounts on average for about a half of the total price adjustment.

These facts are uncovered by an outlier-robust procedure (MM weighted least squares), but are similarly striking in cumulative average return graphs and order  ow imbalances.

The paper shows that these results are robust to controlling for, among others, outliers, data snooping, nearby announcements and the choice of the event window length.

Extending the sample period back to 2003 with minute-by-minute data reveals both a higher announcement impact and a stronger pre-announcement drift since 2008, especially in the S&P E-mini futures market. Based on a back-of-the-envelope calculation, we estimate that since 2008 in the S&P E-mini futures market alone the prots associated with trading prior to the so cial announcement release time have amounted to about 20 million USD per year.

The late start of pre-release price drift, which becomes signicant only about 30 minutes before the so cial release time, reveals an interesting property of prevalent trading strategies. Assuming that informed traders possess their informational advantage already more than 30 minutes ahead of the release, the question arises why they wait with trading on their knowledge until shortly before the release time. A possible explanation is that trading close to the release time minimizes the exposure to other risks that are unrelated to macroeconomic announcements.

The diffi culty of identifying the causes of pre-announcement drift stems from the relatively small number of announcements that actually move financial markets. Nevertheless, we find that an implementation of strict release procedures makes pre-release drift less likely. This applies in particular to data released under the Principal Federal Economic Indicator (PFEI) guidelines, which impose strict security procedures. There is no evidence that modifying the calculation of market expectations, e.g., a focus on the most recent survey responses, helps in predicting the commonly used announcement surprise.

Public information, such as internet activity data, predicts the surprise in a few cases where the public information closely corresponds to the forecasting target. Analogously, improvements in data processing render privately collecting large amounts of comparable information feasible, which can be used for generating proprietary forecasts ahead of time. This early information -leaked or self-calculated- does not need to be precise in order to a have a large price impact. Under Bayesian learning, even if the information available before the o cial release is noisy, it can have a large price impact because of its timing. For a Bayesian learner, early availability makes up for less precision and a potentially smaller surprise. Thus, the incentives for privately collecting information and for leakage are high.

The main policy implications of this paper are twofold. First, the total impact of macroeconomic news is larger than measured in most event studies, which ignore the pre-release price drift. Therefore, the total impact of macroeconomic news on financial markets is larger, and financial markets are linked more tightly to the real economy than usually found. Second, information of many macroeconomic announcements is known by some market participants in advance. To ensure fairness in financial markets, strict release procedures need to be implemented for all market-moving announcements including announcements originating in the private sector.

Translation: the entire market is rigged.

For those who have been accused for years of being insane in claiming precisely what the ECB just “confirmed”, you can read the full paper here.



Saudi Arabia and perhaps the entire middle east’s largest construction company is the latest casualty to hit the globe as the Saudi Bin Ladin  Group just fired 50,000 out of its 200,000 work force.  All of the firings will be foreign workers who have not been paid for 4 months.

(courtesy zero hedge)

Oil’s Latest Casualty: Saudi Binladin Group Fires 50,000 Workers, A Quarter Of Its Workforce

In the latest clear sign that low oil prices are taking their indirect toll not only the US shale sector, leading to billions in capex cuts and hundreds of thousands of lost oil and gas jobs, on Friday Saudi newspaper al-Watan reported that the multinational construction conglomerate Saudi Binladin Gropu (which was founded in 1931 by Sheikh Mohammed bin Laden Sayyid, father of Osama bin Laden who was removed as a shareholder in the business in 1993 and disowned by the family) has laid off 50,000 staff as pressure on the industry rises amid government spending cuts to survive an era of cheap oil.

This means that Binladin, one of Saudi Arabia’s biggest firms and among the Middle East’s largest builders, whose total workforce is around 200,000 just fired a quarter of its total staff.

Reuters adds, citing al-Watan’s unnamed sources, that the group has terminated the contracts of 50,000 workers – apparently all foreigners – and given them permanent exit visa to leave the kingdom. However, the workers have refused to leave the country without getting paid as some had not received wages for more than four months. Furthermore, they were protesting in front of the Binladin’s offices in the country almost daily, the paper added.

What is most disturbing is that one of the biggest companies in Saudi Arabia if the not the Middle East, has had a series of pay disputes with workers this year as it appears unable to fund payroll. In March, scores of workers gathered outside one of the company’s office in Saudi Arabia to demand unpaid wages.

Migrant workers, who work for Saudi Binladin Group, gather as they 
ask for a final settlement over salary issue

While Binladin prospered during Saudi Arabia’s high oil price-driven economic boom in the past decade, employing around 200,000 workers as it built many of the kingdom’s flagship infrastructure projects including airports, roads and skyscrapers, like many other Saudi construction firms, it has been hit hard in the past year as low oil prices have prompted the government to slash spending in an effort to curb a budget deficit that totaled nearly $100 billion last year.

As Reuters adds, labor market reforms, designed to push more Saudi citizens into private sector jobs, have since 2011 made it more difficult and expensive for construction firms to hire foreign workers, pressuring the industry.

The Binladin Group made tragic headlines last September (ironically, the 11th) when a crane toppled into Mecca’s Grand Mosque during a dust storm, killing 107 people. Following the incident, the Saudi royal court said Binladin had been suspended from taking new contracts. An initial government probe found Binladin had not properly secured the crane. Binladin did not issue a public statement in response to the suspension.

Worse, it is no longer just Binladin’s income statement that is impacted but the stress is now spreading to its balance sheet: the company has been discussing how to manage its debts with banks and a few have agreed to refinance some debt through steps such as extending maturities, with some providing short-term financing for the company’s working capital including staff wages, Reuters said. It is unclear if the conglomerate will still be able to avoid a comprehensive restructuring should oil remains in the $40-barrel range.

Oh boy!! this is not good!! Protesters storm Iraqi Parliament (broke through the Green zone).  Iraq is now in a state of emergency and their entire system is collapsing
(courtesy zero hedge)

US-Created System In Iraq Is Collapsing: Protesters Storm Parliament, State of Emergency Declared – Live Webcast

Less than two years ago, the US set up another puppet government in the mid-east this time in the state of Iraq when following substantial US pressure, on August 14, 2014 then prime minister al-Maliki agreed to stepp down and be replaced with Haider al-Abadi. Today, the regime is in chaos and the system set up in Iraq by the US is collapsing when protesters loyal to popular Shiite cleric Muqtada al-Sadr breached the heavily fortified Green Zone, home to government buildings and foreign embassiesm and stormed the Iraqi parliament, forcing MPs to flee and resulting in a state of emergency being declared for all of Baghdad.

As can be seen in the photo (and live webcast below), hundreds of demonstrators occupied the country’s parliament. Video from inside the building showed jubilant crowds waving Iraqi flags and shouting “peaceful, peaceful.” Supporters of Sadr, whose fighters once controlled swaths of Baghdad and helped defend the capital from ISIS, have been demonstrating for weeks at the gates of the Green Zone, responding to their leader’s call to pressure the government to reform.

Cited by NBC, Brig. Gen. Saad Mann, a spokesman for the Iraqi military, said that Iraq security authorities have declared a state of emergency in Baghdad. “All gates that lead to Baghdad are closed. No one is allowed to enter into Baghdad, only those who want to leave Baghdad can do so.” “There is no evacuation for the American staff inside the American embassy,” he said. A U.S. official who spoke on condition of anonymity said the American Embassy in Baghdad was not being evacuated, contrary to local reports. We expect that should the pro-US government fall, this will promptly change.

Security forces responsible for guarding the entrance to the area were not able to stop the demonstrators without opening fire so they let them in, the security source told NBC News. As a result, the protest is mostly peaceful for now.

A live webcast from the scene of the Iraqi parliament can be seen after the jump.

Brilliant move:  let’s get the Russians annoyed with the USA et al
NATO will deploy 4,000 troops to the Russian border as the European Command urges a return to “war planning”
(courtesy zero hedge)

NATO Deploys 4000 Troops To Russian Border As EUCOM Chief Urges “Return To War-Planning”

With anti-establishmentarians on the rise in the US & Europe, it appears the neocons and their NATO proxy aren’t wasting any time and are stepping up not just the words, but their deeds, against a so-called “resurgent Russia.” NATO’s European Command (EUCOM) “needs to change,” blasts General Philip Breedlove, urging the military to get back to the business of war planning, a skill lost during the post-Cold War era saying his objective is to send a signal of deterrence to Russia. That signal was heard loud and clear as NATO is deploying an additional four battalions of 4,000 troops to the Russian border in Poland and the three Baltic States, according to a report citing US Deputy Secretary of Defense Robert Work.

“We have to be ready for a situation where we don’t have Russia as a partner,”warns EUCOM  Gen. Philip Breedlove, adding that the military here needs to get back to the business of war planning, a skill lost during the post-Cold War era and one needed again in the face of a resurgent Russia. As reports,

On Tuesday, Breedlove will walk a final time across the parade ground at EUCOM headquarters, handing off leadership of more than 60,000 troops to Gen. Curtis M. Scaparrotti.

Unlike when Breedlove assumed command in 2013, Scaparrotti arrives at a time of upheaval as the continent contends with Cold War-like tensions with Russia, a refugee crisis tearing at Europe’s social fabric, and increased fears about terrorism because of war along NATO’s southern flank.

Scaparrotti will lead a EUCOM headquarters that over the years has shrunk in size — it is the second-smallest of all combatant commands — even as the Pentagon attempts to boost its presence along NATO’s eastern edge.

Breedlove said more work needs to be done to lift EUCOM out of its post-Cold War mindset, which resulted in “building partner capacity,” military parlance for training missions. EUCOM is a “mere fraction” of what it was a generation ago, a downsizing that occurred when the U.S. was trying to make a partner out of Russia.

“I am very sure about how EUCOM needs to change,” Breedlove said during a recent exit interview with Stars and Stripes. “This headquarters shrank and changed from a war-fighting headquarters to a building-partnership-capacity, engagement kind of headquarters.”

“This headquarters needs to be a warfighting headquarters,” he said.

Reorienting EUCOM into a warfighting headquarters likely would demand more resources, more troops and new contingency plans to conduct combat operations within Europe.

In the past three years, EUCOM has responded to new security concerns by boosting its presence in eastern Europe, mainly through rotational troops and pre-positioned tanks and other armor.

A $3.4 billion Pentagon proposal, prompted by what the West sees as a more aggressive and unpredictable Russia, seeks to build upon recent efforts in the year ahead.

Dealing with Russia’s formidable capabilities around the Baltics, where NATO is outmanned and outgunned, is one obstacle allies will need to prepare for better, according to Breedlove.

Some critics, particularly in Berlin, have said Breedlove’s rhetoric sometimes has been too hawkish. The general rejects such criticism, saying his objective is to send a signal of deterrence to Russia; and as RT reports, NATO’s deployment of an additional 4,000 troops to the Russian border signals their intent loud and clear…

Work confirmed the number of troops to be sent to the border with Russia, The Wall Street Journal reports. He said the reason for the deployment is Russia’s multiple snap military exercises near the Baltics States.

“The Russians have been doing a lot of snap exercises right up against the borders, with a lot of troops,” Work said as cited by the Wall Street Journal. “From our perspective, we could argue this is extraordinarily provocative behavior.”

Moscow has been unhappy with the NATO military buildup at Russia’s borders for some time now; and with this latest move, The Russians, as expected, are displeased…

“NATO military infrastructure is inching closer and closer to Russia’s borders. But when Russia takes action to ensure its security, we are told that Russia is engaging in dangerous maneuvers near NATO borders. In fact, NATO borders are getting closer to Russia, not the opposite,” Russian Foreign Minister Sergey Lavrov told Sweden’s Dagens Nyheter daily.

Poland and the Baltic States of Lithuania, Latvia and Estonia have regularly pressed NATO headquarters to beef up the alliance’s presence on their territory.

According to the 1997 NATO-Russia Founding Act, the permanent presence of large NATO formations at the Russian border is prohibited. Yet some voices in Brussels are saying that since the NATO troops stationed next to Russia are going to rotate, this kind of military buildup cannot be regarded as a permanent presence.

Russia’s Defense Ministry says it’s ready for a tit-for-tat response to any NATO military activity near Russia’s borders. As Russia’s envoy to NATO Aleksandr Grushko put it, there are no “passive observes” in the Russian armed forces and Moscow would definitely compensate militarily for an “absolutely unjustified military presence.”

This is a huge mistake:  Visa free travel for 80 million Turks into Europe.  Possible migrants entering as well?
(courtesy zero hedge)

“Nightmare” Mistake: Visa Free Travel For 80 Million Turks Coming Up

Submitted by Mike “Mish” Shedlock of MishTalk

“Nightmare” Mistake: Visa Free Travel For 80 Million Turks Coming Up

Of all the inane, self-serving, deals German Chancellor Angela Merkel made with Turkey, visa-free travel for 80 million Islamic Turks tops the list.

“This is all a nightmare,” said one diplomat charged with making the deal work.

Nightmares aside, Brussels Prepares Legal Groundwork on Visa-Free Travel for Turks.

Brussels will this week propose visa-free travel to Europe for 80m Turks but says Ankara still needs to meet several politically explosive reform conditions within weeks, including overhauling its terrorism laws and party funding rules.

The enhanced travel rights were Turkey’s main windfall from a landmark EU deal in March, in which Ankara helped dramatically cut migrant flows to Europe by agreeing to take back all migrants arriving on the Greek islands.

On Wednesday the European Commission will legally recommend Turks should be granted short-term visa-free travel to the Schengen area. But it will point out that up to nine of the 72 eligibility conditions required of Turkey remain incomplete, according to people familiar with the proposal.

The stage is now set for a stand-off before the June visa deadline, with far-reaching consequences for the migration crisis, domestic politics across Europe and Turkey’s long-term relations with the bloc. Decisions on visa rights for Ukraine, Georgia and Kosovo are set to be taken at the same time.

“This is all a nightmare,” said one diplomat involved in talks. Another European diplomat described the Turkey-EU deal as carrying “the seeds of its own destruction”.

It is a gamble some senior EU officials fear “is a big mistake” and will backfire. “This will be the perfect get-out for the Dutch, French and Germans, who are facing major domestic problems and  suffering from buyer’s remorse since the Turkey deal,” the official said. “And the European Parliament will just not accept a political fudge, the Turks won’t be able to ram it through.”

Appropriate Terms (in Order of Occurrence)

  • Windfall to Turkey
  • Short-Term
  • Stage Set for Standoff
  • Nightmare
  • Seeds of its Own Destruction
  • Big Mistake
  • Backfire
  • Political Fudge

Political fudge, seeds of its own destruction, and nightmare are my three favorite descriptions.

A strong argument can be made for “short-term” given the massive long-term problems should this deal actually go through.



it is now getting really bad in Venezuela.  Over the weekend they ran out of beer as the largest manufacturer of beer cannot get the grains to make beer:

(courtesy Stratfor)

It’s a tough time to live in Venezuela.

The country’s long decline — on economic, social and political levels –reached a new inflection point this week, when the government cut public sector employees’ work week to a mere two days in efforts to cut down electricity use. Although rolling blackouts have been a part of life in Venezuela for some time, the situation has grown particularly challenging as a drought has begun to impact hydropower output from the Guri Dam.

And to top it all off, the country is literally running out of beer.

Empresas Polar, Venezuela’s largest private company, has now shuttered its breweries, saying it is unable to pay for imported grains under the government’s strict exchange controls, which govern access to dollars. So beer is now being added to a long list of items — including a variety of foodstuffs — that are in short supply for Venezuela.

All of these headlines have potential implications for embattled President Nicolas Maduro and his fractured government. Stratfor’s Latin America analyst team has studied the various factions arrayed against and with Maduro, their goals — and how the worsening social and economic crisis could affect the political landscape. You can read more about it with this piece, “Looking for a Way Out of Venezuela’s Crisis,” which is free on our website.




Just take a look at this Wyoming Petroleum company. It lists assets of 1.3 billion and liabilities of 3.9 billion

No hope here…


Ultra Petroleum Files for Bankruptcy, Citing $3.9 Billion Debt

Tiffany Kary and Steven Church
May 1, 2016 — 3:37 PM EDT
  • Principal assets are gas-producing properties in Wyoming
  • Company had until end of April to reach deal with lenders

Ultra Petroleum Corp. filed for bankruptcy protection, the latest oil and gas explorer to fall victim to the prolonged slump in energy prices.

Ultra listed $1.3 billion in assets and $3.9 billion in debt in court papers filed in Houston on Friday. The Houston-based company has 159 employees and its main assets are gas-producing properties in Wyoming, as well as some assets in Pennsylvania and crude oil properties in Utah, according to court papers.

“The low commodity prices, and especially the low natural gas prices that prevailed throughout 2015 and have continued through the first four months of 2016 have had a devastating impact,” Chief Financial Officer Garland Shaw said in a filing explaining events that led to the bankruptcy.

Among its first requests to the court will be for permission to continue a surety bonding program that had $12.6 million outstanding as of the bankruptcy date, and that secures its obligations on environmental, road damage, and plugging of wells, according to court records.

Between March and early April, Ultra missed a series of principal and interest payments owed to lenders and bondholders. And on April 14, the company was sued by pipeline operator Sempra Rockies Marketing LLC for failing to pay transport fees.

Worst Slump

The oil market is suffering its worst slump in decades, brought on by a glut of production. Crude inventories are at their highest levels since 1930 in the U.S., according to data from the Energy Information Administration.

Much of the problem can be traced to a record-breaking surge in U.S. oil production that wouldn’t have been possible without a tremendous amount of debt. Many independent drillers, the small producers that drove the shale boom, outspent cash flow even when oil was $100 a barrel, and made up the difference with bank loans and high-yield bonds.

Officials from 18 oil exporters meeting in Doha failed on April 17 to come up with an agreement to freeze production. At the end of March, JPMorgan Chase & Co. strategists said that oil and gas companies are likely to experience a 20 percent default rate over the next two years.

The trouble has made banks unwilling to keep financing struggling producers. Since the start of the year, lenders have yanked $6.4 billion in credit from 36 oil and gas companies, the sharpest reductions since oil prices began toppling two years ago, according to data compiled by Bloomberg.

The case is Ultra Petroleum Corp., 16-32202; U.S. Bankruptcy Court, Southern District of Texas (Houston)




China is importing huge amounts of oil and stockpiling it as strategic reserves.  This is what is dictating the price and helping with the glut of oil:

(courtesy Upadhyay/Oil

Why China Is Really Dictating The Oil Supply Glut

Submitted by Rakesh Upadhyay via,

Ship tracking data from Bloomberg shows that 83 supertankers carrying around 166 million barrels of oil are headed to China, which has stockpiled an impressive 787,000 barrels a day in the first quarter of 2016 – the highest stockpiling rate since 2014.

While the world was speculating about oil prices plunging to $20 and $10 per barrel, China was busy stockpiling its reserves.

The chart below shows an increase in imports as crude prices collapsed. Since the beginning of this year, China has imported a record quantity of oil.

(Click to enlarge)

Back in January 2015, Reuters had reported that China planned to increase its strategic petroleum reserves (SPR) from 30 days to 90 days. In January 2016, it was revealed that China was buildingunderground storage to complement its above-ground storage tanks.

The Chinese urgency points to two things. China believes that crude oil prices will not remain at the current levels for long, and that a disruption is possible due to geopolitical reasons, which can propel oil prices higher.

As a net importer of crude, it is protecting itself against a black swan event and using the current low prices to fill its tanks. The filled up tanks will ensure a steady supply of crude for at least three months in case of a disruption.

Does the record buying spree by the Chinese indicate a bottom in crude oil prices?

That is difficult to conclude, but it does put a floor beneath the current lows, because in all likelihood, China will resume its record buying and top up its SPR if prices tank.

The total Chinese imports in March via the very large crude carriers was 7.7 million barrels a day. Other than the supertankers, China also imports oil through pipelines and small tankers.

The Chinese demand doesn’t show a huge uptick corresponding to the rise in imports.JP Morganestimates that in March, the total demand for oil in China was 10.3 million b/d, down 2.5 percent over the previous year and down 2.3 percent month on month, whereas the chart shows that imports are higher compared to the same period last year.

Crude oil prices have been on an upswing this month. The import data coming out of China for April will give a clue as to whether the Chinese demand remains intact at higher crude prices or the imports drop when prices rise.

If the demand drops following a rise in prices, we can assume that China doesn’t believe that the price rally will be sustained. At lower levels, Chinese buying might become a factor in deciding the bottom, as their increased imports will reduce the glut.

Similar to Saudi Arabia, which is a swing producer, China is acting like a swing consumer.However, as China doesn’t report its storage data, it is difficult to estimate how long this trend will continue.

Though other factors were involved in encouraging the bulls to buy at lower levels, the increased demand from China also helped in lapping up the excess production. If their imports drop, the world will return to the supply glut and oil prices will retrace back to the lower $30s per barrel.

Oil falls to 44 dollars after another huge Cushing OK build:
(courtesy zero hedge)

WTI Crude Tumbles To $44 Handle After Big Cushing Build

Following last week’s shocking 1.75mm barrel build at Cushing, Genscape just reported an estimated 821k build which has stunned market participants apparently, sending WTI tumbling back to a $44 handle. Will this be the summer of 2015 oil re-run?

With the two defaults this weekend, Ultra Petroleum and Midstate Petroleum. the junk bond default rate has just hit an all time high of 13%.  The previous high rate of default was 9.7% in 2009:
(courtesy zero hedge)

The Energy Junk Bond Default Rate Just Hit An All Time High

When we last looked at the soaring default rate among junk bonds issuers just two weeks ago, we noted that the $14 billion in defaults had already pushed the April total to the highest since 2014, while the first quarter was the fifth highest quarterly default total on record.

But it was the stark deterioration within the energy space that we said would promptly push high yield bond defaults within the troubled sector to hit all time highs in very short notice.

That prediction was validated less than a month later because following this weekend’s bankruptcies of Ultra Petroleum and Midstate Petroleum which added $3.1 billion to the mushrooming high-yield energy bond default volume tally, in addition to the $1.5 billion of credit facility defaults, the energy high-yield default has soared to a record 13% rate, surpassing the 9.7% mark set in 1999, according to Fitch Ratings.

To be sure, neither of these defaults were a surprise: prior to this weekend, Fitch had a 2016 energy sector default forecast of 20% and included both of these filings in the annual forecast. Furthermore, based on the current bond trading prices of approximately $0.15 for Ultra’s $850 million 6.125% bonds due 2024 and $450 million 5.75% bonds due 2018, the market alsoexpects well below-average bond recoveries, something else we have previously highlighted will be a distinct feature of this default cycle.


As Fitch goes on to note, Ultra Petroleum cited persistently low natural gas pricing that left it with an unsustainable capital structure as reason for filing. The company plans to use the bankruptcy process to renegotiate unprofitable contracts as well as reduce its $3.7 billion of total bank and bond debt obligations. The $999 million reserve-based credit facility (RBL) at subsidiary borrower Ultra Resources was essentially fully drawn at the time of filing, following a $216 million draw in February 2016.

Ultra’s bankruptcy was expected as it followed the expiration of grace periods for interest payments on notes, nonpayment of certain pipeline transportation fees, bank covenant violations and de-listing of the common shares.

Midstates Petroleum’s filing affects approximately $1.8 billion of total debt and is based on a pre-arranged plan support agreement with its lenders under the reserve-based revolving credit facility that represents approximately 80% of first lien facility borrowings, along with certain other creditors holding approximately 74% of second lien debt and 77% in principal amount of the third lien debt. The proposed plan incorporates some secured debt paydowns and equity conversion of debt that is junior to the first lien debt. Low commodity prices triggered a liquidity crunch at the company.

Low market trading prices on the bonds portend poor recoveries for unsecured creditors. Midstates’s unsecured $294 million, 10.75% senior unsecured bonds, due 2020, and $348 million, 9.25% senior unsecured bonds, due 2021, were bid at $1.875 and $1.75, respectively. The $625 million, 10% second lien notes, due 2020, were bid at $44.625 and the $524 million, 12% third lien notes, due 2020, were bid at eight cents on the dollar.

In more bad news for bank lenders, Midstates, like Ultra borrowed up to the remaining maximum RBL borrowing base in the months leading up to bankruptcy. Midstates drew $249 million under its $750 million RBL in February 2016 to build cash in advance of the bankruptcy filing and the April 2016 re-determination. Full draws of RBLs ahead of restructuring and re-determinations have occurred among some of the most distressed E&P companies as they plan to enter restructuring with this cash liquidity. Linn Energy and W&T Offshore are two other E&P companies that recently fully utilized RBLs.

But this biggest problem for banks is that as more energy companies default should oil prices fail to materially recover, leading to tumbling recoveries across the capital structure and far greater impairments than modeled, the question will once again become one of just who has the greatest committed exposure to the energy sector, especially if as we hinted earlier today, the oil price pattern from last summer reasserts itself and WTI proceeds to slide once more as shale producers resume pumping now that they have been properly hedged following the recent rebound in oil.


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




USA/CAN 1.2534 DOWN .0017

Early THIS MONDAY morning in Europe, the Euro ROSE by 36 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 NIRP, and NOW THE USA’S NON tightening by FAILING TO RAISE THEIR INTEREST RATE / Last night the Shanghai composite was CLOSED MAY 1 HOLIDAY / Hang Sang CLOSED   / AUSTRALIA IS LOWER BY 0.18% / ALL EUROPEAN BOURSES ARE MIXED  as they start their morning/

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

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

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

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

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

The NIKKEI: this MONDAY morning: closed DOWN 518.67 OR 3.11% 

Trading from Europe and Asia:


Gold very early morning trading: $1298.75


Early MONDAY morning USA 10 year bond yield: 1.81% !!! PAR in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.66 PAR in basis points from FRIDAY night.

USA dollar index early MONDAY morning: 92.90 DOWN 17 cents from FRIDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers MONDAY MORNING



And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.10% DOWN 6 in basis points from FRIDAY

JAPANESE BOND YIELD: -0.125% DOWN 5 in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD:1.58% DOWN 1 IN basis points from FRIDAY

ITALIAN 10 YR BOND YIELD: 1.47  DOWN 2 IN basis points from FRIDAY

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






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


Euro/USA 1.1517 UP .0073 (Euro =UP 73  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 106.48 UP 0.254 (Yen DOWN 25 basis points As MARKETS TANK BADLY/GOLD/SILVER SKYROCKET)

Great Britain/USA 1.4663  UP .0062 Pound UP 62 basis points/

USA/Canad 1.2546 DOWN 0.0005 (Canadian dollar UP 5 basis points with OIL RISING(WTI AT $46.08)


This afternoon, the Euro was UP by 73 basis points to trade at 1.1517

The Yen FELL to 106.48 for a LOSS of 25 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 62 basis points, trading at 1.4663

The Canadian dollar ROSE by 5 basis points to 1.2546, WITH WTI OIL AT:  $44.88

The USA/Yuan closed at 6.4738

the 10 yr Japanese bond yield closed at -.125% DOWN 5 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 5  basis points from FRIDAY at 1.86% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.72 UP 6 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 92.66 DOWN 42 CENTS ON THE DAY/4 PM

Your closing bourses for Europe and the Dow along with the USA dollar index closing and interest rates for MONDAY

German Dax :CLOSED UP 84.30 OR 0.84%
Paris Cac  CLOSED UP 13.79  OR 0.31%
Spain IBEX CLOSED DOWN 3.60 OR 0.04%

The Dow was down 57.12 points or 0.32%

NASDAQ down 29.83 points or 0.62%
WTI Oil price; 44.93 at 4:30 pm;

Brent Oil: 45.87





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: 45.88


USA DOLLAR INDEX:92.57 down 51 cents on the day




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

Trading Today in Graph form:

Dis-May-Day – Bonds Down, Dollar Down, Oil Down, Gold Down, Economy Down… Stocks Up

China data weakens, Puerto Rico defaults, Japan falls, crude drops, another E&P company defaults, failed M&A deal, US macro data dumps… and stocks surge…


US equities went up today… because why not…just a little too uniformly post-EU Close…


Thanks to a brief USDJPY momentum igntion as Construction Spending, and ISM and PMI all missed expectations…


And what appears like institutional-buying (every VWAP dip bid from fund inflows)


Another day, another short-squeeze…


VIX accelerated lower as the last 30 minutes began and panic-buying was unleashed…on the heel sof AAPL headlines…


AAPL was down for the 8th day in a row…


Until this headline hit (HINT: remember the lying email he supposedly sent Cramer about China when AAPL was last crashing to these lows?) BUT it didnt last and AAPL closed down 0.15%


Treasury yields lifted modestly today…seemingly from one big selling effort into the open (as usual)


Seems bonds had it right after all…


The USD Index is down for the sixth straight day – longest streak since April 2015… note USDJPY tried to bounce but failed…


Crude was monkey-hammrered after hopeful algos ran it higher in the early going. Silver slumped as did copper and gold kept its head despite the weaker USD…


Silver suffered it worst day since the first day of April. Gold fell for the first day in the last 6, having tagged $1300 early in the day…


But Gold remains the big winner post last week’s Fed/BOJ debacle…


Charts: Bloomberg



A terrific commentary from Lee Adler on why we are witnessing new homes sales collapse in the USA.  It is very simple: he tracks full times jobs vs new home sales and it is a very good correlation.  So when full time jobs falter so does new homes sales.  Makes perfect sense.

(courtesy Lee Adler/Wall Street Examiner)

The Real Story Behind The True Magnitude Of The New Home Sales Collapse

Submitted by Wall Street Examiner’s Lee Adler via Contra Corner blog,

Comparing the growth in the number of full time jobs versus the growth in new home sales starkly illustrates both the horrible quality of the new jobs, and how badly ZIRP has served the US economy.

Growth in new home sales has always been dependent on growth in full time jobs.For 38 years until the housing bubble peaked in 2006, home sales and full time jobs always trended together, subject to normal cyclical swings. With the exception of 1981-83 when Paul Volcker pushed rates into the stratosphere, new home sales always fluctuated between 550 and 1,100 sales per million full time workers in the month of March.

New Home Sales and Full Time Jobs - Click to enlarge

That correlation broke in the housing crash of 2008-09 when sales fell to a low

But in the housing crash in 2007-09 sales fell to a low of 276 per million full time workers.Since then the number of full time jobs has recovered to greater than the peak reached in 2007. In spite of that, new home sales per million workers remain at depression levels.

With 30 year mortgage rates now at 3.6% sales are lower today than they were when mortgage rates were above 17% in 1982. Sales have never reached 400 sales per million workers in spite of the recovery in the number of jobs, in spite of ZIRP, in spite of mortgage rates often under 4%.

ZIRP has actually made the problem worse. It has caused raging housing inflation which has caused median monthly mortgage payments for new homes to rise by 20% since 2009. ZIRP has enabled corporate CEOs to game the stock market to massively increase their own pay while encouraging them to cut worker salaries and shift higher paying jobs overseas. That leaves the US economy to create only low skill, low pay jobs that do not pay enough for workers to be able to purchase new homes.

The perverse incentives of ZIRP are why the housing industry languishes at depression levels.



This is worth watching. The Central States Pension fund has a court date and if the court allows the plan to cut pension incomes in half to prevent it becoming insolvent in 2025 it will have consequences to UPS to the tune 3.8 billion.  The commentary explains why!
(courtesy zero hedge)

UPS Braces For $3.8 Billion Charge As Treasury’s Pension Benefit Decision Looms

As we covered previously, in an effort to remain solvent the Central States Pension Fund has submitted an application to the Treasury for approval to cut member benefits While some plan participants could see pension incomes cut in half, the fund projects that it will become insolvent by 2025 if nothing is done.

Treasury is set to decide on the matter by May 7th, and as it turns out, the decision impacts more than just current plan participants…

During its Q1 earnings call, UPS told investors that if Treasury approves the CSPF plan to cut benefits, the company would have to take a charge of approximately $3.2 to $3.8 billion.

As part of a collective bargaining agreement with the International Brotherhood of Teamsters when UPS withdrew from the fund in 2007,  the company agreed to provide supplemental benefits to any remaining members in the event that certain benefits were lawfully reduced.

While any income statement impact will be adjusted out by analysts, it will be a significant drain on UPS’ cash flow (UPS generated $5 billion in free cash flow in fiscal 2015) as it funds the benefit gap over time.

UPS is just the latest example of what lies ahead and forces the government’s hand to provideyet another bailout (and encourage yet more moral hazard over-promising).

As we concluded previously, “This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It’s going to open the floodgates for other cuts.” said Karen Friedman, executive president of the Pension Rights Center.

We can’t help but wonder that as more pension funds become insolvent, and more and more participants are forced to take reductions in benefits, whether helicopter money won’t soon become a reality for the United Stateseven before it becomes one in Japan. Especially if it is spun by some opportunistic politicans as the “only hope” for America’s workers to preserve some of their retirement savings.



Very sad!!  All of the Sports Authority stores will close for good.  Remember that they filed for bankruptcy protection in March and the theory was that they were going to emerge with a lower number of healthy stores.  That was not the case as the stores just could not compete with on line operations like Amazon:

(courtesy zero hedge)

Why Sports Authority is throwing in the towel and closing all of its stores

This Sports Authority in Torrance is among the more than 460 company stores that will soon be liquidated. The Englewood, Co.-based sporting goods chain filed for bankruptcy protection in March to rework $1.1 billion of debt. But the company has ultimately decided to sell off everything and cease operations.  (Chuck Bennett/Staff Photographer)This Sports Authority in Torrance is among the more than 460 company stores that will soon be liquidated. The Englewood, Co.-based sporting goods chain filed for bankruptcy protection in March to rework $1.1 billion of debt. But the company has ultimately decided to sell off everything and cease operations. (Chuck Bennett/Staff Photographer)

By Kevin Smith, San Gabriel Valley Tribune



When struggling retailer Sports Authority filed for Chapter 11 bankruptcy last month in the face of more than $1 billion in debt, the company indicated that it had two options going forward.

One of those was to shed underperforming stores and emerge from bankruptcy as an intact, but pared-down company. The other was to sell everything and cease operating.

On Tuesday, the company appeared to choose the latter.

In a hearing in U.S. Bankruptcy Court in Wilmington, Delaware, an attorney for the Englewood, Colorado-based sporting goods chain indicated that the only option for the company was to close all of its stores.

“It has become apparent that the debtors will not reorganize under a plan but instead will pursue a sale,” said the attorney, Robert Klyman.

The abrupt abandonment of a reorganization plan follows Sports Authority’s announcement in March that it would close 140 of its 464 stores in the U.S. and Puerto Rico to help pay off $1.1 billion in debt.

Phil Lempert, a Santa Monica-based analyst of consumer behavior and marketing trends, figures consumers haven’t seen the last of major retailers shuttering. Just last week, Sport Chalet announced the closure of all 47 of its stores in California, Nevada and Arizona. That chain is based in La Cañada Flintridge.

“With the minimum wage going up to $15 an hour and more people turning to online shopping, more stores are going to close,” Lempert said. “It’s fine to say that everyone should have a living wage. But the money has to come from somewhere.”

Lempert said a growing number of retail outlets have fallen victim to “showrooming,” where customers will walk into a store, try on the shirt or jacket they like and then order it online at a significant discount.

“These stores have to look at not at how they will compete with other brick-and-mortar stores, but how they will compete with Amazon,” he said. “It’s become a holistic environment where people can buy things on their mobile phones and then have the products delivered by the time they get home.”

Matt Carlson, president and CEO of the National Sporting Goods Association, said Internet sales have fueled increased competition for brick-and-mortar retailers. And online retailers have a big advantage. Their overhead costs are far less and their customers often don’t have to pay sales tax on their purchases.

Figures from the National Sporting Goods Association reveal that in 2009, 10 percent of all sporting goods purchases were made online. The following year that jumped to 12 percent and in 2014 it hit 15 percent.

One equity analyst who could not provide his name as it would violate his company’s policy, said Sports Authority’s store closures will be a “huge” hit for the industry.

“There are a lot of suppliers that will left hanging,” he said. “When you have 464 doors closing, there’s no where else to go to make up for that loss of sales volume.”

Industry experts say Pittburgh-based Dick’s Sporting Goods, which operates 645 locations, including 42 in California, will likely snag some of that business.

But REIBig 5 Sporting Goods and Bass Pro Shops will also be angling for Sports Authority’s customers.

Oscar Barrios, a sales associate with the Finish Line athletic wear store in the Ontario Mills mall, figures his store will pick up some business when the Sports Authority there closes.

“I think more people will be coming in to buy shoes from us,” he said. “It will probably increase our foot traffic.”

U.S. Bankruptcy Judge Mary Walrath, concerned that money from liquidation sales of Sports Authority’s assets was going to pay off certain creditors and not others, threatened to push the case into Chapter 7, under which a trustee would oversee the liquidation.

She postponed that decision until a May 3 hearing to give creditors more time to decide whom they want to direct the liquidation: company management or an outside trustee, according to Reorg Research, a firm that tracks bankruptcy cases.

Victor Camerena, who owns a Submarina sandwich shop adjacent to a Sports Authority store in Oceanside, was surprised to hear that all of the locations will be closing.

“Some of their employees come in here about four times a week and they were under the impression that the company wasn’t going to close that store,” he said. “But the way the economy is, and with the minimum wage increases, profit margins are getting tighter and tighter. It’s getting difficult for companies to stay in business.”

Staff writer Aldo Svaldi contributed to this report.




Today is Day for Puerto Rico as it defaults on 422 million in bond redemption due today.

(courtesy zero hedge)

Puerto Rico Says Will Default Tomorrow, Begs Congress For Help “Or Else Crisis Will Get Worse”

Update: PR Governor Padilla has spoken…


And of course, demands a bailout…


And then threatens…


As we detailed earlier, It’s D-Day in Puerto Rico.As Bloomberg reports, investors are finding little comfort in the Puerto Rico Government Development Bank’s efforts to strike a last-ditch agreement with creditors to soften the blow of a default this weekend. The bonds that mature today (May 1st) have crashed to just 20c (disastrously below the 36-cent recovery rate the commonwealth proposed in March).
It appears investors are not buying what Puerto Rico is selling and prefer to dump the bonds than hold out in hope of a ‘deal’…

A default on the $422 million due today is “virtually certain,” S&P Global Ratings said April 11.

No matter which route Puerto Rico takes, credit-rating companies see a default as inevitable. Moody’s Investors Service analysts said last week that any non-payment, even if it’s agreed to by creditors, constitutes a default in their eyes. S&P Global Ratings said a distressed-debt exchange or temporarily withholding interest is synonymous to default.

But as Bloomberg reports, Puerto Rico said its Government Development Bank, which is operating in a state of emergency to preserve its dwindling cash, reached an agreement with some credit unions to delay $33 million of bond payments as the commonwealth rushes toward a potential historic default.

The pact only affects a portion of the $422 million that the bank owes on May 1. The GDB will exchange the $33 million in bonds for new debt that will mature May 1, 2017, Governor Alejandro Garcia Padilla’s administration said in a statement Friday. The terms of the agreement are available to other credit unions, called cooperativas, and investors, according to the statement.

“Apart from this private exchange, GDB continues to negotiate a potential transaction related to an exchange of all of GDB’s bond indebtedness, which would require the participation of all creditors of GDB (including the cooperativas),” the administration said in the statement. “The private exchange does not affect, or take the place of, those ongoing negotiations.”

The bank is still negotiating a possible debt exchange on all of its bonds, which would require the participation of all its creditors, according a the statement. The GDB, which structured the island’s debt sales, has $5.1 billion of debt. The governor’s office said Garcia Padilla will speak to the commonwealth in a televised address Sunday at 5 p.m. New York time.



Is Atlantic City set to default?:

Actually they came up with the 1.8 billion in payment and that gives them a little breathing room until the next payment is due!

(courtesy zero hedge)

First Puerto Rico, Now Atlantic City? Mayor Holds Press Conference Ahead Of Looming Default – Live Feed

Update: it is only Puerto Rico who will be on the default docket today because in the last possible minute, Atlantic City’s mayor Don Guardian announced that his city had made the required $1.8 million in interest payments due May 1, averting what would have been New Jersey’s first municipal default since the Great Depression as state lawmakers bicker over how to assist the troubled gaming hub.

As he noted during his press conference, Mayor Don Guardian had said last week that he hadn’t decided whether to meet the city’s obligations on tax-exempt bonds sold in 2012. Some of the securities are insured by Assured Guaranty Ltd., which would have been obligated to pay holders interest on the bonds. Because May 1 fell on a Sunday, the city has until Monday to come through.

The city made the payments Monday morning, Guardian said in a City Hall news conference.

The decision averted a worsening of the city’s long-building fiscal crisis. The community has already lengthened pay periods for its workers to avert a shutdown of services as it tries to stave off insolvency. Governor Chris Christie’s rejection of measures that would have diverted gambling funds to the city created a $33.5 million hole in its budget. Christie and state lawmakers have yet to agree on a plan to rescue the 39,000-resident seaside town.

For now the chip can has been kicked, and markets seem to love it – the S&P just hit intraday highs on this news.

Just a day after Puerto Rico’s governor pulled the default rip-cordthe clock is ticking for Atlantic City Mayor Don Guardian.

The city must decide today whether to pay a $1.8 million debt obligation, or be the first New Jersey municipality to default since the Great Depression.

According to the Press of Atlantic City, the city is expected to run out of money in a matter of weeks, and the short-term picture looks grim. Not only is a $1.8 million bond payment due today, but a $7 million payroll payment is set for Friday as well.

With the city sitting on $500 million in debt, and with budget deficits topping $100 million, default and perhaps bankruptcy looks imminent without a major bailout from the state.

New Jersey Governor Chris Christie had reportedly reached an agreement to take over Atlantic City’s finances back in January in order to try and stem the fallout on New Jersey’s tourism, and also the credit rating concerns that other municipalities would have to deal with in New Jersey, but the deal has fallen apart.

“I can’t trust him. Steve and I thought we had a deal with an honorable guy. Now he wants me to call him? And say what exactly? You want a new deal? I try only to deal with honorable people.” Christie was quoted as saying regarding the deal falling through.

If the city defaults and subsequently enters into bankruptcy, the plea for helicopter money may be too much for the Fed to ignore, as other cities will surely follow suit.

A press conference is set for 11am EST today which you can watch live here
Live streaming video by Ustream


Markit’s final Manufacturing PMI prints at 50.8, the lowest since 2009:

( zero hedge)



“No End In Sight To Current Downturn” – US Manufacturing Plunges To Sept 2009 Lows

Following April’s flash PMI print plunge to cycle lows – blamed on the presidential election uncertainty – Markit’s Final Manufacturing PMI printed 50.8 (as expected) its lowest since September 2009. New orders weakened further as the rate of job creation tumbles to thre-year lows. ISM Manufacturing fell back from its oddly decoupled bounce to July 2015 highs to a coincidental 50.8 (missing expectations of 51.4). As Markit concludes, apparently peddling fiction, “the April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity…raising question marks over whether GDP growth will improve on the near-stalling seen in the first three months of the year.”

Manufacturing PMI Headline output and employment data are ugly…

And following ISM’s recent bounce, notably opposing Markit’s survey, ISM reported Manufacturing fell back perfectly in line with Markit’s PMI…

Breakdown shows 4 componenst in contraction…

Notably, despite the drop, all respondents ‘cherry picked’ by ISM were positive.

Howver, commenting on the final PMI data, Chris Williamson, chief economist at Markit said:

“The April PMI data suggest there’s no end in sight to the current downturn in manufacturing activity. The survey indicates that factory output is dropping at an annualized rate of approximately 3%, and factory headcounts are being culled at a rate of around 10,000 per month.

“Destocking is also very much in evidence as companies often reported weaker than expected demand and exports are slumping at the fastest rate for one and a half years.

“Rather than reviving after a disappointingly weak first quarter, the data flow therefore appears to be worsening in the second quarter, raising question marks over whether GDP growth will improve on the near-stalling seen in the first three months of the year.”

Charts: Bloomberg

Let us close with this interview of of Alasdair Macleod with Greg hunter
(courtesy Greg Hunter/USAWatchdog)

Very Big Correction for All Markets Coming- Alasdair MacleodBy Greg Hunter On May 1, 2016 In Market Analysis content/uploads/2016/04/1c.jpg content/uploads/2016/04/1c.jpgBy Greg Hunter’s


(Early Sunday Release)


Financial expert Alasdair Macleod says the most important economic news concerns the U.S. dollar. Macleod explains, “I think the most important point is actually the dollar has turned. The panic move into the dollar by miners and producers of raw material . . . was driving the dollar up. That has now ceased. China has now started buying those raw materials, base metals, oil and so on and so forth. So, the result is the commodity crisis is over. That, actually, is the biggest driver of the dollar, which is pushing it down.”

On the U.S. economy having a huge recession, Macleod contends, “Actually, the underlying business conditions are not good. What we have seen for considerable time is U.S. corporations have increased their borrowing, to invest in production—no, to buy back shares to artificially inflate their earnings. There comes a point that if you don’t have the underlying cash flow, you can’t do that anymore. I think there is a concern in the markets we are getting near to that point.”

Macleod predicts when the market turns, it will crash big-time. Macleod contends, “Whenever markets get mispriced, the correction is always very sudden, unexpected and hurts a lot of people. Now, we don’t have it in just one market, we have it in all markets. So, I would expect on that basis alone, that when the thing starts sliding, it’s going to be very, very big and actually could be systemically big.”

Macleod, who is also an expert in precious metals, says, “The fundamental reason gold (prices) is getting better is the dollar is getting weaker. The strength of the dollar in 2015 was all about falling commodity prices. . . . Commodity producers all owe dollars. The result was when their incomes dropped, they had to cover the dollars that weren’t going to get rolled over. The bank was not going to roll over dollars for Brazil or Glencore. That period is over, and the reason it is over is China now has its 13th five year plan, which is aimed at developing the rest of Asia. . . . It wants to give it an industrial revolution. You have a turn that has actually occurred in commodities, and if commodity prices are rising, then by definition, the purchasing power of the dollar is falling. The price of commodities over a long period of time tends to drop. The price of commodities measured in dollars tends to rise over a long period of time and quite spectacularly. . . . You can see this relationship between the dollar and gold priced in commodities is the thing to watch. . . . The natural drift for the dollar is down. There is a reason for foreigners to sell the U.S. dollar, and this is the key thing. . . . I see gold going better . . . because the dollar is going down.”

Join Greg Hunter as he goes One-on-One with Alasdair Macleod of

(There is much more in the video interview.)

Video Link markets-coming-alasdair-macleod/


Well that is all for today

I will see you tomorrow night


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