May 5/Huge rise in gold OI despite a $17.40 fall in price yesterday ???/GLD inventory rises 3.90 tonnes with that huge drop in gold price??/Surprisingly in an non active month, we still have 5.7 tonnes of gold standing and no cash settlements/China again devalues her currency sending a strong message to the USA not to raise rates/Turmoil in Turkey as Erdogan set to fire his Prime Minister/the Turkish lira sinks/

Good evening Ladies and Gentlemen:

Gold:  $1,271.40 down $1.90    (comex closing time)

Silver 17.30  UP 2 cents

In the access market 5:15 pm

Gold $1277.50

silver:  17.33

Let us have a look at the data for today


At the gold comex today we had a GOOD delivery day, registering 530 notices for 53,000 ounces for gold,and for silver we had 150 notices for 750,000 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 226.122 tonnes for a loss of 77 tonnes over that period


In silver, the open interest rose by 2844 contracts up to 201,121 despite the fact that the price was silver was down by  19 cents with respect to yesterday’s trading. In ounces, the OI is still represented by just over 1 BILLLION oz i.e. .1.005 BILLION TO BE EXACT or 144% 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 150 notices served upon for 750,000 oz.

In gold, the total comex gold OI ROSE BY ANOTHER 2,596  CONTRACTS UP to 568,370 contracts DESPITE THE FACT THAT THE PRICE OF GOLD WAS DOWN $17.40 with YESTERDAY’S TRADING(at comex closing). i would suggest that comex officials are facing “a Houston, I have a problem” situation

We had a HUGE addition  in tonnes of gold inventory at the GLD TO THE TUNE OF 3.90 tonnes; thus the inventory rests tonight at 829.44 tonnes.AND GOLD IS DOWN IN PRICE???  .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 CHANGES  in silver .  Thus the inventory rests at 337.261 million oz.


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

1. Today, we had the open interest in silver rise by 2,844 contracts up to 201,121 even though the price of silver was DOWN  19 cents with YESTERDAY’S trading. The gold open interest ROSE by ANOTHER 2,596 contracts DESPITE THE FACT THAT  gold FELL by $17.40 YESTERDAY. Somebody big is standing FOR SILVER and surrounding the comex with paper longs ready to ponce once called upon to take out physical silver.I also believe that for the first time we are witnessing players wishing to stand for real physical in gold. The bankers are resolute in supplying non backed gold paper but they do not want to supply more silver paper.

(report Harvey).


2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;



i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed UP 6.57 PTS OR 0.22%  /  Hang Sang closed DOWN 76.01 OR 0.37%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 0.15% Chinese yuan (ONSHORE) closed DOWN at 6.5060.  Oil ROSE  to 45.06 dollars per barrel for WTI and 45.54 for Brent. Stocks in Europe BARELY IN THE GREEN . Offshore yuan trades  6.5193 yuan to the dollar vs 6.5060 for onshore yuan.CHINA FIRES ANOTHER SHOT ACROSS THE BOW BY LOWERING ITS YUAN (SEE BELOW)



none today


none today


i)My goodness! what morons! EU planning to fine sovereigns 290,000 per person for refusing their fair share of refugees.  As you can imagine, the response is anything but timid

( zero hedge)

ii)Another futile election coming up in Spain in June

( Mish Shedlock)


Turmoil is Turkey as the Prime Minister resigns.  Erdogan wants to concentrate his power and change Turkey into a Presidential affair:

( zero hedge)


i)Another good indicator as to the collapsing global trade as the world has already reached peak debt:  Air treight volumes across the largest global market are down 15% in the first quarter

(  IATA)

ii)The brief spike in the Baltic Dry Index just ended as the index plunges to below 400:  the loss in index points is the largest since November:
( zero hedge/Baltic Dry Index)


i)The devastation with the Canadian wildfire in Fort McMurray Alberta, has created over 500,000 barrels of oil offline and billions in losses:

( zero hedge)


ii)The world’s largest shipping company MAERSK, is already preparing for the next oil crash and they ought to know:

(courtesy zero hedge)


i)A terrific commentary from “Turd Ferguson” as to the mechanics of the fraudulent increase in paper OI by the banks and how this can eventually blow up

a must read to all of you beginners, trying to understand the crime:

( zero hedge)


ii)China makes trading a gold easier with Hong Kong with rules changes to simplify the trading:

( South China Morning Post, Hong Kong/GATA)


iii)A must read if you had severe losses in gold ownership over the past 15 yrs:

( Jim Sinclair)


i)I would love our BLS to explain this one;  job cuts in 2016 are the highest since 2009 and yet initial jobless claims tumble!!

( zero hedge)

ii)Donald Trump tell Americans exactly how bad it is in the USA with respect to jobs and the economy

( David Stockman/Part I/ContraCorner)

iii)This may be quite interesting: a notorious hacker claims that he got inside Hillary Clinton’s unsecured server.  If so this could make the election fascinating especially if she is charged

( zero hedge)

iv)Rail traffic plunges in the USA.  Another indicator of how bad the recession/depression really is in the USA

( Wolf Richter/WolfStreet)

v)Met Life is redeeming most of its funds from various hedge funds and thus a huge blow to the markets:

( zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE TO ANOTHER EXTREMELY HIGH  OI level of 568,370 for a GAIN 2,596 contracts DESPITE THE FACT THAT THE PRICE OF GOLD WAS DOWN $17.40 with respect to YESTERDAY’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.iT SURE SEEMS THAT THE LATER AS STOPPED.   The month of May saw its OI rise by 12 contracts up to 1783. We had 0 notices filed  YESTERDAY so we surprisingly gained another 12 contracts or an additional 1200 oz will stand for delivery.It is also surprising that the bankers cannot offer any fiat to our May longs:  they desire only physical. The next big active gold contract is June and here the OI fell by 1209 contracts down to 403,678.. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 333,928. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was good at 239,408 contracts. The comex is not in backwardation.

Today we had 530 notices filed for 53,000 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by 2844 contracts from 198,237 UP to 201,121 DESPITE THE FACT the price of silver was DOWN BY  19 cents with YESTERDAY’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 300 contracts DOWN to 1566. We had 143 notices filed YESTERDAY so we lost 157 contracts or 785,000 oz of silver will not stand for delivery in this active month of May. The next non active month of June saw its OI FALL by 23 contracts DOWN to 527  OI.The next big delivery month is July and here the OI ROSE by 2465 contracts up to 139,762. The volume on the comex today (just comex) came in at 139,762 which is JUST OUT OF THIS WORLD. The confirmed volume YESTERDAY (comex + globex) was AGAIN HUGE AT 56,116. Silver is not in backwardation. London is in backwardation for several months.
We had  150 notices filed for 750,000 oz.

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY
May 5.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  122,152.016 OZ



Deposits to the Dealer Inventory in oz 5,000 OZ ???


Deposits to the Customer Inventory, in oz  704.220 OZ


No of oz served (contracts) today 530 contracts
(53,000 oz)
No of oz to be served (notices) 1771 CONTRACTS

177,100 OZ

Total monthly oz gold served (contracts) so far this month 582 contracts (58,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  138,727.20 OZ

Today we had 1 dealer deposit

i) Into Brinks:  exactly 5,000.000 oz and this is not kilobars

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 1 customer deposits:

ii) Into Scotia:  704.220. oz

total customer deposit: 704.220 OZ

Today we had 3 customer withdrawalS:

i) Out of Scotia; 1607.500 oz  50 kilobars

II) Out of manfra: 160.75 5 kilobas oz

iii) Out of HSBC: 120,383.766 oz

Total customer withdrawals:  122,153.06 oz 3.799 tonnes)

and we will give them the benefit of the doubt that that was a settlement

Today we had 0 adjustment:



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 530 contracst of which 122 notices was stopped (received) by JPMorgan dealer and 11 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 (582) x 100 oz  or 58,200 oz , to which we  add the difference between the open interest for the front month of MAY (1783 CONTRACTS) minus the number of notices served upon today (530) x 100 oz   x 100 oz per contract equals 182,300 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 (582) x 100 oz  or ounces + {OI for the front month (1783) minus the number of  notices served upon today (530) x 100 oz which equals 183,500 oz standing in this non  active delivery month of MAY(5.7076 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 5.7076 tonnes of gold standing for MAY and 18.152 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 5.7076 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 + May 5:  3.799  = 22.168 tonnes still standing against 18.152 tonnes available.  .
Total dealer inventor 583,614.083 tonnes or 18.152 tonnes
Total gold inventory (dealer and customer) =7,269,823.624 or 226.122 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 226.122 tonnes for a loss of 77 tonnes over that period. 
JPMorgan has only 20.97 tonnes of gold total (both dealer and customer)
May is not a very good delivery month and yet 5.7 tonnes of gold is standing.  What is different from other months is that the bankers cannot offer any fiat to those standing. They want the real stuff.
And now for silver

MAY INITIAL standings

 May 5.2016

Withdrawals from Dealers Inventory nil
Withdrawals from Customer Inventory  81,088.08 oz


Deposits to the Dealer Inventory 598,828.590 oz CNT
Deposits to the Customer Inventory 2013.01 oz


No of oz served today (contracts) 150  CONTRACTS

750,000 OZ

No of oz to be served (notices) 1416 contracts

7,080,000 oz

Total monthly oz silver served (contracts) 1520 contracts (7,600,000 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  1,504,338.3 oz

today we had 1 deposits into the dealer account

i) into the dealer CNT;  598,828.590 oz

total dealer deposit: 598,828.590 oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposit:

i) Into CNT: 2013.01 oz

Total customer deposits: 2013.01 oz.

We had 2 customer withdrawals

i)Out of brinks; 80,090.18 oz

ii) Out of Delaware:  997.900 oz


total customer withdrawals:  81,088.08 oz



 we had 0 adjustment


The total number of notices filed today for the MAY contract month is represented by 150 contracts for 750,000 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 (1520) x 5,000 oz  = 7,600,000 oz to which we add the difference between the open interest for the front month of MAY (1566) and the number of notices served upon today (150) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  1520 (notices served so far)x 5000 oz +(1566{ OI for front month of MAY ) -number of notices served upon today (150)x 5000 oz  equals 14,680,000 oz of silver standing for the MAY contract month.
Total dealer silver:  29.181 million
Total number of dealer and customer silver:   152.576 million oz
The open interest on silver is still 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. 
And now the Gold inventory at the GLD
May 4/ we had a small deposit of .6 tonnes of gold into the GLD/inventory rests at 825.54 tonnes
May 3/no change in gold inventory at the GLD/Inventory  rests at 824.94 tonnes
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

May 5.:  inventory rests tonight at 829.44 tonnes


Now the SLV Inventory
MAY 5.2016: NO CHANGE IN INVENTORY/rests tonight at 337.261 million oz
May 4/we had a good size withdrawal of 1.553 million oz from the SLV/Inventory rests at 337.261 million oz
May 3: we had another huge deposit of 1.807 million oz/inventory rests at 338.814 million oz
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
May 5.2016: Inventory 337.261 million oz
1. Central Fund of Canada: traded at Negative 6.2 percent to NAV usa funds and Negative 6.1% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.1%
Percentage of fund in silver:37.5%
cash .+1.4%( May 52016).
2. Sprott silver fund (PSLV): Premium to  RISES to -.45%!!!! NAV (MAY 5.2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES.0.64% to NAV  ( MAY 5.2016)
Note: Sprott silver trust back  into NEGATIVE territory at -.450%% /Sprott physical gold trust is back into positive territory at +0.64%/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 -.45%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.


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

Trading in gold and silver overnight in Asia and Europe
Mark O’Byrne (goldcore)/Steve St Angelo

Sharia Gold Standard – $2 Trillion In Assets “Could Send Price Soaring”

The coming ‘sharia gold standard’ or shariah compliant gold could lead to a very significant source of  new demand for physical gold coins and bars in the Islamic world. It is believed that this will contribute to much higher prices and gold “soaring” as some of the $2 trillion of assets held in Islamic financial institutions are allocated to the very small physical global gold market.

Fifty gram gold bars sit across a one kilo gold bar at bullion dealers Goldcore, in London, U.K., on Thursday, March 11, 2010. Gold priced in euros reached a record on March 5 as investors, concerned that a Greek debt default may devalue the currency, purchased the metal as an alternative asset. Photographer: Chris Ratcliffe/Bloomberg

“The Islamic finance entry into gold market could definitely shake the gold market as Islamic financial institutions around the world, which hold around $2 trillion in assets and are expected to double that asset base up to 2020, would certainly unleash large funds to participate in the Shariah-compliant gold trade” according to the Gulf Times:

“On the outlook for new investment opportunities, the rapidly growing Islamic finance industry has set sight on the gold market as initiatives are underway to establish a new standard to make the metal tradable under Shariah finance rules, eliminating disputes among scholars whether gold is to be treated as a currency or as a commodity.

So far, Islamic investors have been reluctant to invest in gold because to do so, they would need the metal in physical form as an underlying asset, which is rarely the case in conventional gold trade. Because of that, broadly traded gold futures do not qualify as a Shariah-compliant investment. Other conventional gold-based financial offerings in the form of derivatives are also widely viewed as unacceptable for Islamic scholars.

London-headquartered World Gold Council (WGC), together with Kuala Lumpur-based Amanie Advisors, an independent advisory firm on Shariah investments and the Accounting and Auditing Organisation for Islamic Financial Institutions in Bahrain, now have been developing a “Shariah Standard on Gold” which aims at “providing guidance from the Shariah perspective on the usage of gold in financial and investment transactions for Islamic financial institutions and participants,” as WGC head Natalie Dempster puts it.

There are still different opinions among scholars about the classification of gold either as a commodity or a currency, referring to its previous use asgold coins.

“We found that there is overwhelming demand for gold to play a greater role in Islamic finance,” Dempster says, adding that “our discussions with industry participants signal that it will act as a major catalyst for the development of a broad range of Shariah-compliant gold products such as gold accumulation plans and physically-backed gold funds.”

If the standard goes through, it could definitely shake the gold market as Islamic financial institutions around the world, which hold around $2tn in assets and are expected to double that asset base up to 2020, would certainly unleash large funds to participate in the Shariah-compliant gold trade and represent a tremendously bullish force for the metal’s price with demand coming from investment funds, wealth managers, retail banks, liquidity managers, treasurers and takaful institutions.

Furthermore, gold, as an important tool to manage financial risk and volatility, could also help Islamic finance institutions to offset credit risk and diversify their exposure to commonly used, but limited Shariah-compliant assets such as real estate, Islamic bonds or certain stocks.”

Full article by can be read on Gulf Times here

Gold and Silver Prices and News
Gold Investors Bet on Resilient Rally as Open Interest Surges (Bloomberg)
Gold Snaps Three-Day Decline as Investors Weigh Fed Rate Outlook (Bloomberg)
Gold firms after three days of losses as equities drop (Reuters)
Gold settles lower as dollar shrugs off weak data (Marketwatch)

Due to central banks, gold remains “good bet for 2016” (Money Week)
How Gold and Silver Can Protect Your Money from the Coming “Bank Account Tax” (Casey Research)
Currency War Battle That Europe and Japan Can’t Afford To Lose (Dollar Collapse)
SILVER: Prospects for the Birth of a New Bull Run (Elliot Wave)
Read More Here

Gold Prices (LBMA)
05 May: USD 1,275.75, EUR 1,114.95 and GBP 879.23 per ounce
04 May: USD 1,280.30, EUR 1,114.18 and GBP 883.59 per ounce
03 May: USD 1,296.50, EUR 1,118.15 and GBP 881.32 per ounce
29 April: USD 1,274.50, EUR 1,119.45 and GBP 873.80 per ounce
28 April: USD 1,256.60, EUR 1,106.45 and GBP 861.43 per ounce

Silver Prices (LBMA)
05 May: USD 17.38, EUR 15.21 and GBP 12.01 per ounce
04 May: USD 17.18, EUR 14.96 and GBP 11.86 per ounce
03 May: USD 17.49, EUR 15.10 and GBP 11.92 per ounce
29 April: USD 17.85, EUR 15.67 and GBP 12.22 per ounce
28 April: USD 17.35, EUR 15.29 and GBP 11.92 per ounce

Mark O’Byrne
Executive Director




A terrific commentary from “Turd Ferguson” as to the mechanics of the fraudulent increase in paper OI by the banks and how this can eventually blow up

a must read to all of you beginners, trying to understand the crime:

(courtesy zero hedge)

TF Metals Report: Bullion banks creating infinite paper gold on Comex

Submitted by cpowell on Wed, 2016-05-04 20:32. Section: 

4:29p ET Wednesday, May 4, 2016

Dear Friend of GATA and Gold:

Bullion banks, the TF Metals Report’s Turd Ferguson writes today, are allowed to create infinite amounts of “paper gold” for sale on the New York Commodities Exchange and indeed are doing so to hold the price down. Of course these short positions are almost certainly either central bank positions or underwritten in some way by central banks. But of course as gold market expert Bron Suchecki wrote a few years ago, while the sellers may not have the gold they’re selling, the speculators who are buying the paper probably probably don’t have the money to take delivery — or at least they haven’t done so yet. Ferguson’s commentary is headlined “Comex Gold Open Interest” and it’s posted at the TF Metals Report’s Internet site here:

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




China makes trading a gold easier with Hong Kong with rules changes to simplify the trading:

(courtesy South China Morning Post, Hong Kong/GATA)

Hong Kong to gain as China streamlines cross-border gold trade

Submitted by cpowell on Thu, 2016-05-05 01:36. Section: 

By Enoch Yiu
South China Morning Post, Hong Kong
Wednesday, May 4, 2016

Gold trading between Hong Kong and China is expected to rise with the People’s Bank of China announcing today a rule change from June 1 to simplify cross-border shipment procedures that would help speed up gold imports into the country.

Companies that frequently import and export gold and gold products will be allowed to apply for a single permit that can be used for up to 12 shipments, the central bank said in a statement on its website.

China currently has only 15 authorised gold importers, including major banks such ICBC, which need to register every single shipment.

Gold traders said the rule change would benefit not just mainland Chinese gold importers but also Hong Kong gold traders that deal with mainland importers. …

… For the remainder of the report:…




A must read if you had severe losses in gold ownership over the past 15 yrs:

(courtesy Jim Sinclair)

Jim Sinclair: Have you been damaged by the manipulation of gold and silver ?

Submitted by cpowell on Thu, 2016-05-05 01:46. Section: 

By Jim Sinclair
Tuesday, May 3, 2016

I have been exploring and analyzing the present and proposed litigation of gold and silver precious metals. I have reached some conclusions and want to share my views and offer you an important opportunity to join with me to address this problem in a never-before-used litigation approach.

Are you a precious metals share investor? A precious metals producer? A company whose business was injured as a result of the manipulation and suppression of the price of gold or silver? If so, please e-mail me as soon as possible and provide contact information for me to confer with you. If your entity meets the above criteria, I will speak with you as soon as possible.

I have investigated class-action suits and other conventional causes of action. I have not been satisfied by my findings. We need not only a cause of action; we need a prevailing case. We need a winning plan of action, not just another lawsuit on top of the heap of other emerging lawsuits. …

… For the remainder of the commentary:


Those of you who have losses, I urge you to sign:

(courtesy Jim Sinclair/Bill Holter)

Have You Been Damaged By the Manipulation Of Gold And Silver ?

Posted May 3rd, 2016 at 10:38 PM (CST) by & filed under General Editorial.

Dear CIGAs,

I have been exploring and analyzing the present and proposed litigation of Gold and Silver Precious Metals (PMs). I have reached some conclusions and want to share my views and offer you an important opportunity to join with me to address this problem in a never before used litigation approach.

Are you a PM share investor? … A PM producer? … A company whose business was injured as a result of the manipulation and suppression of the price of Gold or Silver? If so, please email me as soon as possible, and provide contact information for me to confer with you. If your entity meets the above criteria, I will speak with you personally as soon as possible.

I have investigated Class Action Suits, and other conventional causes of action. I have not been satisfied by my findings. We not only need a cause of action, we need a prevailing case. We need a winning plan of action, not just another law suit on top of the heap of other emerging law suits.

After analyzing, investigating and brain storming with various legal counsel, a Class Action Suit doesn’t seem to be the best strategy or tactic for recovering from the market rigging of PMs. It seems apparent that Class Action Suits have too many drawbacks. After careful research, I believe Class Action Suits for redress of PM manipulation will fail due to many of the drawbacks.

Some of the drawbacks are:

  1. Even if successful, the classes may be so large that very little is ultimately returned to the plaintiffs in a settlement.
  2. Class Actions are long, protracted litigation and assets of the defendants may evaporate long before settlement. Class action suits can take a decade to resolve.
  3. Many Class Actions are framed inaccurately regarding who is eligible to be a member of the Class.
  4. The definition of eligibility for Class standing may be too broad and encompass too many plaintiffs.
  5. Many Class actions initially fail in Summary Judgment.
  6. Class Action complaints may be ill-presented and not truly representative of all members of the Class since often some, but not all issues apply to the entire class. This is too cumbersome.
  7. The costs of a Class Action are prohibitively high.
  8. Not all Class Action witnesses represent all members of the Class, or all issues.  Often, witnesses are too academic rather than factual (evidentiary) or probative of actual damages.

The above are just some of the drawbacks to Class Action Suits. We do not choose a Class Action Suit for the above reasons. We plan to win so a winning structure to litigation is fundamentally important to a positive and successful outcome.

I believe after careful consideration, we have found the structure and method of winning in litigation against market manipulators. If you are an executive, decision-making officer of a PM producer, or in the process of becoming a PM producer, or an otherwise already operating entity in the production of PMs, and have damages due to the rigged manipulation of the PMs markets, please email me. I welcome your email and will reach out to you. Your entity can be operating anywhere in the world. I am not proposing a Class Action Suit, but we need each other for our mutual benefit in this litigation. I am happy to reach out to parties who have been financially injured and may be interested in participating with us in this dynamic, never before applied litigation strategy.

No money is being asked of you. We are not soliciting funds to finance litigation, and we will not solicit litigation financing from you during the litigation process. This is a contingent fee litigation, which means legal counsel and expenses for litigation are paid, and only paid when we win.

A few moments of time can determine our mutual needs, desires and benefits. Due to the manipulation which suppressed PM prices, we producers and those becoming producers have been significantly damaged. We need to overcome the apathy this suppression of the PM price has created in the producer’s industry. We need to overcome the inertia these suppressed PM prices have created and move forward to recover our damages. We need to act as expeditiously as possible.

Once interested parties are on board, we will arrange a conference call with legal counsel. Our legal counsel will present the revolutionary framework for our successful litigation against those who have manipulated the price of PMs and financially harmed us due to their actions.

For our JSMineset readers, I request that you urge the production entities you are involved with to discuss this important opportunity with me. Together we can make the difference. Speak with the decision makers of the companies you are invested with and urge them to contact me if I have not already reached out to them. In these matters, bigger is better. Your influence can help and support this cause, and will make the difference. Urge the companies you are invested with to send an email to me and provide a phone number for contact. Do you want all of your losses and damages back? I do! Wake up your company and ask them to have their decision-making representative email me so we can arrange a conference. Because neither you nor your company will recover your damages and losses by just hoping, we must act. Time is short for this window of opportunity.  You have the power. Talk with your companies and take action by asking them to email me.

This opportunity will not last long. The window of opportunity will close quickly. Billions of dollars are a potential recovery in this never before applied legal framework. Your PM companies need to join us. Please urge your PM company to email me at We are in this together, and we are in it to win it.

Best Regards,
Jim Sinclair



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



1 Chinese yuan vs USA dollar/yuan DOWN to 6.5060 (SMALL devaluation) / Shanghai bourse  CLOSED UP 6.57 OR 0.22%  / HANG SANG CLOSED DOWN 76.01 OR 0.37%

2 Nikkei closed FOR HOLIDAY /USA: YEN FALLS TO 107.26

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index UP to 93.65/Euro DOWN to 1.1417

3b Japan 10 year bond yield: FALLS   TO -.124%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 107.26

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  45.06  and Brent: 45.54

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 FALS to 0.211%   German bunds in negative yields from 8 years out

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

3j Greek 10 year bond yield FALL to  : 8.57%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1280.00/silver $17.43(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 88 in  roubles/dollar) 65.80-

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

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


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9643 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1014 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .211%

/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 1.79% early this morning. Thirty year rate  at 2.65% /POLICY ERROR)

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

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

Futures Rebound As Crude Regains $45 On Canada Fears; Turkey Hammered

While markets remain relatively subdued ahead of tomorrow’s nonfarm payrolls report, after several days of losses in US stocks, which have taken “sell in May” to heart and pushed the S&P500 to three week lows, overnight markets ignored the latest weak data out of China where the Caixin Services PMI was the latest indicator to disappoint (dropping from 52.2 to 51.8), and instead focused on crude, which rebounded from yesterday’s post inventory-build lows and briefly printed above $45/bbl over uncertainty related to the impact of Canada wildfires on production and how long will last. The bounce in WTI has meant Brent briefly traded at parity with West Texas for the first time in 6 weeks.

It “would appear to be related to outages in production related to the wildfires in Canada – uncertainty of the extent of the outages and how long they will persist,” says BNP Paribas energy strategist Gareth Lewis-Davies.

“Move today has to be seen in the context of the last 5 days and we have only recovered half the losses we have seen in that period.”

Emboldened by the rise in oil, European stocks rose for the first time in a week as commodity, energy producers lead the rebound from the biggest four-day drop since February, while S&P500 futures rose 0.3%, and was back over 2,050.

As we noted yesterday, Turkish equities and bonds continued to fall amid a political showdown between the president and prime minister.  Turkey’s 10-year bond yields climbed to a one-month high, while the Borsa Istanbul 100 Index dropped 1.6 percent, declining for a fifth day. The clash between Davutoglu and Erdogan threatens to usher in an era of political uncertainty, raising questions ranging from the president’s bid to coalesce power through a constitutional amendment or early elections to the future path of economic policy. The lira gained 1.4 percent after the steepest selloff in eight years yesterday.

Despite the attempt at a rally, sentiment was mixed: “There’s still a very cautious feeling to markets,” said William Hobbs, who helps oversee about $150 billion as head of investment strategy at the wealth-management unit of Barclays Plc in London. “The world is growing and is likely to grow a bit quicker as we go through the year and inflation returning and that’s simply not priced in at these levels.”

“The market has been in a consolidation phase as its previous rally, which was based on a rebound in commodity prices and signs of economic stabilization, is starting to taper off,” Audrey Goh, a strategist at Standard Chartered, told Bloomberg. “We are also going into the summer months, when the market tends to be weaker.”

Among companies moving in early U.S. trading, Tesla Motors Inc. climbed 3.6 percent after the electric-car maker reaffirmed its deliveries forecast and pulled ahead its plans to produce 500,000 autos annually. Fitbit Inc. tumbled 13 percent after the maker of wearable fitness trackers gave a profit forecast that fell short of the lowest analysts’ estimates.

Market Wrap

  • S&P 500 futures up 0.3% to 2052
  • Stoxx 600 up 0.3% to 333
  • FTSE 100 up 0.2% to 6127
  • DAX up 0.3% to 9862
  • German 10Yr yield up 1bp to 0.22%
  • Italian 10Yr yield up 1bp to 1.52%
  • Spanish 10Yr yield up less than 1bp to 1.61%
  • S&P GSCI Index up 1.3% to 352.2
    MSCI Asia Pacific down 0.2% to 128
  • Nikkei 225 closed
  • Hang Seng down 0.2% to 20485
  • Shanghai Composite up 0.2% to 2998
  • S&P/ASX 200 up 0.2% to 5279
  • US 10-yr yield up 2bps to 1.8%
  • Dollar Index up 0.17% to 93.34
  • WTI Crude futures up 2.9% to $45.07
  • Brent Futures up 2.4% to $45.70
  • Gold spot down less than 0.1% to $1,279
  • Silver spot up 0.3% to $17.42

Top Global News

  • Tribune Board Rejects Gannett’s $815 Million Takeover Bid: Company unveils standalone plan to bolster LA Times globally
  • Goldman, HSBC Said Among Banks on Saudi Exchange IPO Shortlist: JPMorgan, Morgan Stanley also said to be considered for IPO that could raise more than $500m for 30% stake
  • Tesla’s Musk Sleeping Near Factory Floor to Spur Manufacturing Progress: Co. now sees reaching 500,000- vehicle production in 2018, two years earlier than before
  • Turkey PM Said to Give Up as Erdogan Pressure Insurmountable: Prime Minister Ahmet Davutoglu is expected to step down this month after losing power struggle with President Erdogan
  • Synacor More Than Doubles After Winning AT&T Web-Hosting: Contract with carrier will be worth $100m annually
  • Camping World Said to Aim to Raise $350m in IPO: New York Times

Looking at regional markets, Asia stocks traded mostly lower amid holiday-thinned trade and following the losses seen on Wall St. where US stocks declined to 3-week lows, while the region also digests further softer data from China. However, outperformance in energy and financials have capped losses in ASX 200 (-0.2%) after WTI crude futures reclaimed USD 44/bbl while banks were underpinned following NAB’s earnings. China saw mild pressure with the Shanghai Comp (-0.2%) negative after Chinese Caixin Services & Composite PMI figures were weaker than prior, although further liquidity injections by the PBoC helped stem losses. As a reminder, Japanese and South Korean markets are closed for public holiday.

Asia Top News

  • China Fertilizer Maker to Default on Bonds Amid Debt Woes: Inner Mongolia Nailun investors opted for early note repayment
  • Yuan’s Losing Streak Signals PBOC Break With Stronger Dollar: Chinese currency may have to drop more quickly vs USD: analyst
  • Fears of China Unrest See Investment Firms Evicted to Preempt It: >1,000 such cos. have failed, with more to come
  • Philip Lowe to Replace Stevens as RBA Governor From Sept. 18: Lowe inherits post with diminished interest rate ammunition
  • National Australia Earnings Rise as Bad-Debt Charges Decline: 1H cash profit A$3.31b vs est. A$3.356b
  • Packer Cuts Macau Stake, Stoking Crown Buyout Speculation: Australia’s Crown to reduce Melco stake to 27% from 34%

Today has seen a quiet start to the morning amid numerous market closures in Europe due to Ascension Day allied with participants remaining cautious prior to the US jobs report tomorrow. As such, volumes have been somewhat on light side, with equities trading modestly higher while notable outperformance has been observed in the FTSE MIB in the wake of source reports that the Italian Treasury is considering investing in the Italians bank rescue fund. Alongside this, similarly to trade overnight, Europe has been bolstered by gains in energy names with WTI crude breaking above USD 45.00/bbl.

European Top News

  • Brexit Uncertainty Drags U.K. Economy to Near Stagnation: Services PMI drops to 52.3 from 53.7, below estimates and weakest since February 2013
  • Centrica Falls Most in More Than a Year on Equity Sale Plan: Company plans to sell 350 million shares to fund acquisitions
  • Repsol Beats Estimates on Surprise Profit From E&P Business: Results reflect lower exploration costs, efficiency savings
  • BT Profit Beats Expectations, Helped by EE Wireless Purchase: Company targets investing GBP6b in network upgrades
  • Barclays Sells 12.2% Stake in African Unit for $879 Million: Stake bought by money managers; Barclays now owns 50.1%

In FX, Australia’s dollar strengthened 0.5 percent versus the USD. The nation’s retail sales increased 0.4 percent in March from the previous month, while the trade deficit was smaller than economists forecast. Reserve Bank of Australia Deputy Governor Philip Lowe will replace Glenn Stevens as head of the monetary authority in September.

The greenback strengthened 0.2 percent to 107.21 yen, building on a 0.6 percent advance over the last two days. The Bloomberg Dollar Spot Index held near a one-week high after the probability that the Fed will raise interest rates this year climbed back above 50 percent. U.S. employers added at least 200,000 workers for a third month in April, according to a Bloomberg survey of economists before data on Friday.  Russia’s ruble climbed 1 percent and the Mexican peso gained 0.7 percent as oil advanced. South Africa’s rand rose 0.6 percent, rebounding from a four-week low.

In commodities, Heading towards the North American crossover, WTI and Brent crude futures continue to extend on its overnight gains with WTI making a break above USD 45.00/bbl. One factor for consideration in regards to the recent upside in oil prices over the past couple of days, is reports of a Canadian wildfire in the Fort McMurray region in which some of Canada’s large oil producers are situated, including Canada Oil Sands. As such, around lmin bpd of Canadian Oil Sands production capacity could be affected.

Additionally, Libyan supply disruptions have also added to the strength in oil prices as officials warned that output may decline to around 120k bpd. To put this in some context, Libya currently produces 310k bpd and have a total capacity of 780k bpd. Elsewhere, gold prices have been pressured by the continued recovery in the greenback allied with the modest upside in European equities, subsequently sapping demand from the safe-haven. Elsewhere, copper and iron ore prices were subdued amid holiday thinned trade overnight.

Following yesterday’s data deluge, the sole two events on the US calendar are Jobless Claims and Challenger job cuts, while the Fed’s Bullard & Kaplan speak. Earnings wise we’ve got 30 S&P 500 companies set to report including Merck, while in Europe we’ve got 15 Stoxx 600 companies due to release their latest quarterlies

* * *

Bulletin Headline Summary from RanSquawk and Bloomberg

  • Today has seen a quiet start for European equities which have spent much of the session in modest positive territory.
  • Crude prices remain elevated amid reports of supply disruptions in Libya, alongside wildfires in Canada potentially harming oil production within the region.
  • Today’s highlights include US Jobless Claims, Challenger Job Cuts, EIA Natural Gas, ECB’s Visco, Fed’s Bullard & Kaplan.
  • Treasuries lower in overnight trading as global equity markets mixed, oil rallies and precious metals drop; economic data today includes jobless claims which are close to four decade lows.
  • The European Central Bank will discontinue production of the 500-euro ($575) banknote in a move that risks tensions with euro-area citizens worried the institution is encroaching on their freedoms
  • U.K.’s Purchasing Managers Index dropped to 52.3 from 53.7 in April, its lowest level in more than three years; Britain goes to the polls in a series of local and legislative elections that will deliver a new mayor for London, continued nationalist government in Scotland and the voters’ first verdict on Jeremy Corbyn’s leadership of the Labour Party
  • China’s authorities, seeking to forestall potential social unrest due to growing failures of investment firms and online lenders, are ordering many to break leases and close their storefronts on busy streets
  • Speculators who traded 1.7 trillion yuan ($261 billion) futures in a single day last month have retreated as fast as they advanced. Trading volumes across the nation’s three biggest exchanges are more than half of what they were at their peak on April 22 and back to levels similar to a year ago
  • Turkish Prime Minister Ahmet Davutoglu is expected to step down after losing a market-roiling power struggle with President Recep Tayyip Erdogan, clouding the country’s economic prospects and imperiling its relations with the European Union
  • Philip Lowe is set to replace Glenn Stevens as governor of Australia’s central bank, inheriting an economy grappling with the onset of disinflation that forced policy makers to cut interest rates to a record low this week
  • Sovereign 10Y yields mixed, Greece rallies 19bp; European and Asian equity markets mixed (Japan closed); U.S. equity- index futures rise. WTI crude oil rallies, precious metals lower


DB’s Jim Reid concludes the overnight wrap

Before we look closer at the rest of the data and price action yesterday, there’s been some data out of China this morning first for us to digest. The private Caixin services PMI for April has softened a touch to 51.8, after printing at 52.2 in March. That largely matches up with the 0.3pt decline in the official reading over the weekend and means that the composite was down half a point this month to 50.8.

Bourses in China have been volatile this morning and have largely swung between gains and losses, but as we type the Shanghai Comp is little changed. Elsewhere the Hang Seng (-0.40%) is in the red for the fourth consecutive session, while the Kospi (-0.49%) is also weaker along with the ASX (-0.25%). Markets in Japan remain shut until tomorrow, while the Yen is unchanged. Just staying with China, overnight our China Chief Economist Zhiwei Zhang published a note highlighting the hidden risks in the financial sector. Zhiwei highlights that China’s recent credit boom has made the financial sector more fragile and monetary policy less effective. He takes a look at what is a widening gap between rapid bank credit growth and moderate M2 growth and that of the credit expansion going to non-bank financial institutions, much of this is in the form of investment rather than loans which are less transparent and potentially more risky. Zhiwei has revised up his probability of the scenario of growth dropping below 6% for 4 consecutive quarters over the period of 2017-19 from 20% to 25%. A link to the note is attached here.

Back to yesterday. It all felt a bit déjà vu in markets with the price action virtually matching that of Tuesday. In Europe we saw the Stoxx 600 close – 1.12% to finish at the lowest level in nearly a month, while markets in the US also edged lower but slightly less so. The S&P 500 ended -0.59% meaning it’s been down in four of the last five sessions. It felt like it was the same culprits yesterday weighing on sentiment too with energy and financials stocks largely leading the bulk of bourses lower. Indeed the Stoxx 600 Banks index was down -1.48% yesterday and has tumbled 9% now in the space of just four sessions. The S&P 500 Energy index was down -1.30% yesterday and is down 4% over the same period.

Credit markets are also having a tougher month in May so far. In the US CDX IG was another 2bps wider yesterday and has now weakened for five consecutive sessions. The iTraxx Main index is also 5bps wider from where we closed April. Meanwhile there was the usual volatility in currency markets in and around the batch of data releases. Ultimately it concluded with a second consecutive stronger day for the US Dollar though with the Dollar index up +0.25% (it’s now up +1.5% from Tuesday’s 18-month low). The Yen traded in another big range but ended up a touch weaker. Finally the closing level for WTI (+0.30% at $43.78/bbl) masked what was actually an intraday range of nearly 4% (it has rebounded 2% this morning though), while it was another rough day for the majority of base metals too (Copper -1.08%, Zinc -0.53%, Iron Ore -5.24%).

Touching on that US data in a bit more detail, in terms of the components of the ISM services reading, employment, new orders and prices paid all rose last month, although there was a slight decline for business activity and new export orders (albeit from recent highs). The spread between the two ISM series is now back to 4.9pts (after being 2.7pts and 3.9pts in March and February respectively) and the most since January. Meanwhile, the March trade deficit narrowed a touch at $40.4bn (vs. $41.2bn expected) and narrowing nearly $7bn from February. The final services PMI was revised up 0.7pts to 52.8 and so resulting in a composite print of 52.4 which is a gain of 0.7pts from March and the second consecutive monthly increase. Elsewhere, factory orders rose a bit more than expected in March (+1.1% mom vs. +0.6% expected), Q1 nonfarm productivity weakened slightly less than expected (-1.0% qoq vs. -1.3% expected) and unit labour costs rose +4.1% qoq. That fall in productivity is the second consecutive negative quarterly reading and leaves YoY growth in productivity at a fairly subdued +0.6%.

The end result of all that data was for the Atlanta Fed to revise down their Q2 GDP forecast by a tenth to 1.7%. That’s still above the forecast of our US economists however who expect only a mild rebound from the weak first quarter and currently have growth pegged at 1.0%.

Elsewhere, during the European session yesterday the main focus was on the release of the remaining PMI’s. For the Euro area we saw the final April services reading revised down a very modest 0.1pts to 53.1, with the composite print of 53.0 effectively unchanged versus the prior two months. Across countries we saw marginal downward revisions to Germany and France while Italy was the positive surprise as its services reading printed ahead of expectations (52.1 vs. 51.9 expected; 51.2 March) much like its manufacturing data earlier in the week. Wrapping up the data, Euro area retail sales declined sharply in March and by more than expected (-0.5% mom vs. -0.1% expected).

Before we look at today’s calendar and just staying in Europe briefly, political fragility has been a big theme of late and we can add Turkey to that list with the news that the power struggle between Turkey’s PM Davutoglu and President Erdogan looks set to end with Davutoglu giving up his premiership. The FT highlighted that despite Erdogan occupying a largely ceremonial post, he has continued to demonstrate enough power to largely influence most aspects of government. According to Bloomberg, Davutoglu’s AK Party is to hold a leadership contest within two weeks with the current Premier not expected to be a candidate. The Turkish Lira weakened nearly 4% yesterday while equity markets in Turkey were generally off at least 2%.

Looking at the day ahead, after the packed calendar that we had yesterday, today looks fairly sparse by comparison. This morning in Europe the only release of note is the April services and composite PMI’s for the UK which is worth keeping an eye on in light of the soft manufacturing print earlier in the week, while in the US the sole release is the latest weekly initial jobless claims data. Away from the data we’re due to hear from the Fed’s Bullard this afternoon (scheduled for 4.50pm BST), while it might also be worth keeping an eye on Japan PM Abe’s press conference today too (due at 2.00pm BST). Earnings wise we’ve got 30 S&P 500 companies set to report including Merck, while in Europe we’ve got 15 Stoxx 600 companies due to release their latest quarterlies.




i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed UP 6.57 PTS OR 0.22%  /  Hang Sang closed DOWN 76.01 OR 0.37%. The Nikkei closed FOR HOLIDAY  . Australia’s all ordinaires  CLOSED UP 0.15% Chinese yuan (ONSHORE) closed DOWN at 6.5060.  Oil ROSE  to 45.06 dollars per barrel for WTI and 45.54 for Brent. Stocks in Europe BARELY IN THE GREEN . Offshore yuan trades  6.5193 yuan to the dollar vs 6.5060 for onshore yuan.CHINA FIRES ANOTHER SHOT ACROSS THE BOW BY LOWERING ITS YUAN (SEE BELOW)










My goodness! what morons! EU planning to fine sovereigns 290,000 per person for refusing their fair share of refugees.  As you can imagine, the response is anything but timid

(courtesy zero hedge)

EU Plans $290K Per Person Fine For Countries Refusing “Fair Share” Of Refugees; Angry Response Ensues

As Norway offers cash for refugees to leave, announcing that they won’t be accepting any more refugees from the EU, and Switzerland prepares its military to close down borders, the EU has seemingly had enough of every country acting as if it has any type of sovereignty left. The European Commission has announced that it is going to pull rank on everyone, and in Obama-like fashion, will be fining countries for not taking their fair share of refugees.

Here is a detailed summary of all that happened today in the ongoing European refugee crisiscourtesy of Mish Shedlock.

* * *

EU Plans $290,000 Per Person Fine on Countries Refusing “Fair Share” of Refugees; Case For Brexit Crystallized

The European Commission plans fines of $290,000 per person on countries refusing to take in their fair share of refugees.

This plan is aimed straight at Poland, Slovokia, Hungary, the Czech Republic, and Austria.

The UK, Ireland, and Denmark all have opt-out policies, but the UK cannot expect that to last forever unless the vote goes for Brexit.

Punitive Fines

Today the EC fired a warning shot across the bow of countries who believe they have a right to control their foreign policies.

The announcement comes in the form of Punitive Penalties for Refusing Asylum Seekers.

The European Commission has proposed reforms to EU asylum rules that would see stiff financial penalties imposed on countries refusing to take their share of asylum seekers.


The bloc’s executive body is planning a sanction of €250,000 (£200,000; $290,000) per person.


The UK and Ireland can opt out of asylum policies, and the British government has already indicated it will not take part. Denmark is also exempt.


Countries refusing to accept their quota would effectively be fined – with the money going to frontline states such as Italy and Greece that have carried the burden.


The proposals for sanctions alarmed Central European countries that have refused to implement the refugee quota deal:

  1. Poland’s foreign minister wondered if it was “a serious proposal”
  2. Slovakia’s interior minister complained the proposed “fair share” system failed to respect reality
  3. Hungary called it “blackmail” and “unacceptable”
  4. The Czech Republic said it was an unpleasant surprise as it returned to a concept of mandatory quotas which had been rejected

The four countries were outvoted when the quota plan was agreed.


Hungary’s government on Tuesday announced plans for a referendum on the EU’s resettlement plans.

Add Austria to the List

Following Austria’s vote last month in national elections it’s safe to add Austria to the list.

For details, please see Anti-Immigration Party Wins First Round of Austria Elections: “We are Not the World’s Social Department”.

Hungary Referendum on Quota Wins Supreme Court Backing

The Hungarian government’s plans to hold a referendum on whether it will accept the EU’s quota system on accepting migrants has been approved by the country’s top court, Hungary Today reported.


Hungarian Prime Minister Viktor Orban’s government has been strongly critical of EU pushes to resettle refugees and migrants across the continent, going as far as putting up fences on Hungary’s borders with neighbors Serbia and Croatia.


Orban has remained critical of these plans and on Tuesday evening Hungary’s Supreme Court refused to block the decision to hold a national referendum on the issue.


The vote is planned in September or early October, asking Hungarians “Do you want the EU, even without the approval of Hungarian parliament, to be able to prescribe the mandatory resettlement of non-Hungarian citizens in Hungary?”


After receiving approval from Hungary’s top court, the motion for a referendum will now be put to a parliamentary vote, where Orban’s Fidesz party holds a commanding majority. In the likely scenario that it is approved, an exact date will be set.


Opposition parties in Hungary have opposed the idea, with far-right eurosceptic party Jobbik calling for Hungary to refuse the quotas plan outright, without a referendum, news site reported. Meanwhile, the liberal Democratic Coalition warned that the referendum was actually taking Hungary towards leaving the EU.

Case for Not Joining EU Crystal Clear

The case for a UK Brexit is now crystal clear.

The UK’s “opt-out” of such items will not last forever. This is just the beginning of nannycrat nonsense.

London can also expect financial transaction taxes and all sorts of inane wealth redistribution schemes.

In Hungary, the liberal Democratic Coalition warned that the referendum was actually taking Hungary towards leaving the EU.

Hungary’s Referendum Question

Hungary’s Referendum Question: “Do you want the EU, even without the approval of Hungarian parliament, to be able to prescribe the mandatory resettlement of non-Hungarian citizens in Hungary?

Question Every Nation Needs to Ask

Let’s for a moment presume the US, Mexico, Canada, Honduras, Guatemala were in an “Amero Agreement” with each country having equal say.

Here’s the revised question “Do you want the Mexico, Honduras, and Guatemala, even without the approval of US Congress, to be able to prescribe the mandatory resettlement of non-US citizens in the US?

That is exactly what’s happening in Europe.

The US would never cede foreign policy to Mexico and Honduras, so why should the UK, Hungary, or Poland cede policy to a group of other nations?

Brexit Odds

ZeroHedge reports Pro-Brexit Leader Jokes “Keep Sending Obama Over” After Surge In Polls

Brexit Odds

“Brexit leaders are thrilled President Barack Obama came out against them, because they are seeing a bounce in the polls.”


RT offers this perspective: ‘Blackmail’: Eastern European govts lash out at EC’s quota penalty proposal.

Related Posts

Key quote: “The Americans would never contemplate anything like the EU for themselves or for their neighbors, in their own hemisphere,” said London Mayor Boris Johnson.

Another futile election coming up in Spain in June
(courtesy Mish Shedlock)

Another Deadlocked Election Coming Up In Spain

Submitted by Mike “Mish” Shedlock

Another Deadlocked Election Coming Up In Spain?

After six months of failed coalition attempts, Spain’s King Felipe dissolved parliament and announced new elections. I reported on this last week, but the official document dissolving parliament was signed today. New elections are on June 26. Will the results be any different?

There are 350 seats in Spain’s parliament. Courtesy of the BBC, the 2015 election went like this (blue highlights mine).

Party Leaders

  • PPOE – Former Prime Minister Mariano Rajoy
  • PSOE – Pedro Sanchez
  • Podemos – Pablo Iglesias
  • Ciudadanos – Albert Rivera

Coalition Problems

  • PSOE and PPOE could have formed a coalition, but the result would not have been stable. The party leaders do not get along and the left and right generally don’t mix.
  • The three leftists parties could have formed a coalition, but Podemos is eurosckeptic and in favor of letting Catalonia have a vote on independence. The other two leftist parties are staunch nationalists as well as staunch euro supporters.
  • Ciudadanos ruled out forming a coalition with Podemos for philosophical reasons noted above.
  • Ciudadanos was formed as an anti-corruption party and wants nothing to do with Mariano Rajoy and his totally corrupt PPOE Popular Party either.

Clash of Ideas

The Financial Times explains the blame game as follows.

  • Mariano Rajoy, the acting prime minister and leader of the conservative Popular party, has repeatedly blamed the Socialists for refusing to form a grand coalition under his leadership. “What happened over the past four months must not repeat itself. Vetoes are bad for democracy,” the prime minister said on Monday.
  • Pedro Sánchez, the Socialist leader, has in turn attacked the anti-austerity Podemos movement for turning down his proposal for a Socialist-led government with the centrist Ciudadanos party.
  • Podemos, meanwhile, has lashed out at the Socialists for declining its invitation to form a leftist government.

“A poll by Metroscopia, published in the El País daily over the weekend, gave the PP 29 per cent of the vote, far ahead of its closest rival, the Socialists, with 20.3 per cent.”

Podemos IU Alliance

Let’s complicate the matter further. Podemos just announced an alliance with Izquierda Unida(IU) United Left.

IU received 3.68% of the vote in 2015.

Via translation from El Pais, please consider Podemos Seeks to Unite All Forces Left of PSOE.

Podemos “We Can” has launched new operations in three communities (Catalonia, Galicia and Valencia) to gather support for the upcoming elections. Now, Podemos seeks to expand these agreements not only IU but a whole series of forces to the left of the PSOE with good territorial projection.

In short, Podemos is going after that block of “other” voters in the above chart. If current results hold, Podemos will oust PSOE from the number two spot.

Political Setup

  1. No party is going to achieve a majority.
  2. PSOE and Podemos unlikely to reach 50%
  3. Ciudadanos will not enter a three-way agreement with PSOE and Podemos
  4. If PSOE and PPOE can muster up 50% combined, there will be intense pressure by the king to form an unstable “grand coalition”
  5. If PSOE and PPOE cannot muster up 50%, another failed election is in store.

Budget Analysis

Spain’s budget is way out of control. No matter who gains control, huge budget cuts are coming up. Won’t that be fun?

I expect an unstable “grand coalition” forms. If so, I doubt it lasts a year. PPOE will not like the budget cuts but will have to keep voting for them for the coalition to “work”.

Podemos is waiting in the wings for the upcoming collapse.




Turmoil is Turkey as the Prime Minister resigns.  Erdogan wants to concentrate his power and change Turkey into a Presidential affair:

(courtesy zero hedge)

Turkey PM To Quit, Handing Even More Power To Erdogan: What This Means For Turkey

Yesterday when we reported on the dramatic plunge in the Turkish Lira, which crumbled the most since 2008 on a report that a denied AKP party convention was going to take place, we predicted that this means a resignation of PM Davutoglu, who having been caught in a bitter power struggled with president Erdogan would likely resign, we said “if the convention is confirmed, it means that Turkey is about to be swallowed in yet another bitter political crisis, which will likely result in Erdogan concentrating even more power, unless of course he is stopped which in turn would meat more rioting, more civilian casulties, and even less media freedom to describe one nation’s collapse into a despotic, authoritarian state.”

An uneasy meeting between president and PM on Wednesday signalled the latest events

Moments ago Davutoglu’s resignation was confirmed, and as BBC reports, “Turkey’s Prime Minister Ahmet Davutoglu says he will stand down at an extraordinary congress of his ruling AK Party later this month.”

The result has been a dramatic surge in Turkish Lira volatility, which as shown in the chart below just jumped the most in the past decade.

The BBC adds that speculation about his resignation has been rife since Mr Davutoglu met President Recep Tayyip Erdogan on Wednesday. He is long thought to have disapproved of Mr Erdogan’s plans to move Turkey to a presidential system of government. He announced his resignation after holding talks with party leaders. The congress would be held on 22 May, he said.

Earlier on Thursday, presidential aide Cemil Ertem said there would be no snap elections following the appointment of a new leader. He also told Turkish TV that the country and its economy would stabilise further “when a prime minister more closely aligned with President Erdogan takes office”. In other words, just as expected, this was merely Erdogan’s latest move to concentrate even more power in his hands.

For those who have not been following this latest Turkish scandal, here are the basics.

Why is this happening now?

After he was elected president in 2014, Mr Erdogan hand-picked Mr Davutoglu to succeed him as head of the AK Party (Justice and Development Party). But the prime minister’s unease with Mr Erdogan’s plans to move to a presidential system, among other policies, has been evident in recent months.

In a sign of his weakening influence, Mr Davutoglu was stripped last week of the authority to appoint provincial AK Party officials.

What will this mean for Turkey?

The development comes at a time of increasing instability for Turkey, which is tackling an escalating conflict with the rebels of the Kurdistan Workers’ Party (PKK), attacks by the so-called Islamic State, and an influx of migrants and refugees.

Turkey is also in the midst of implementing a key deal with the European Union, brokered by Mr Davutoglu, to limit the number of refugees flowing across its border in return for accelerated EU accession talks and financial aid.

The future of that agreement, which Mr Davutoglu was seen as having agreed with little input from the president, could be plunged into doubt by his departure.

Who will be his successor?

Among those tipped as successors to Mr Davutoglu are Transport Minister Binali Yildirim, who is close to Mr Erdogan, and Energy Minister Berat Albayrak, who is the president’s son-in-law.

They will be formally elected at the party congress.

What has been the fall-out?

The political uncertainty has rattled the financial markets. The Turkish lira suffered its heaviest daily loss on Wednesday, down almost 4% against the US dollar. It rallied slightly on Thursday but was still well off its previous trading levels.

What does it mean for Erdogan?

Recep Tayyip Erdogan is arguably the most formidable politician since modern Turkey’s founding father Ataturk. After 11 years as prime minister, he was elected president in 2014 – but under a parliamentary system, in which his role should be largely ceremonial.

The fiercely ambitious Mr Erdogan is intent on changing that to a presidential system, which he says would make Turkey function more effectively, but which would also significantly increase his powers.

As president, he chose a prime minister who he thought would be pliant: the ex-foreign minister and bookish former academic, Ahmet Davutoglu.

But it seems he miscalculated. Seeing wavering public support for a presidential system, realising that he would be significantly sidelined should it materialise and disagreeing with Mr Erdogan on a growing list of policies, the prime minister has quietly dissented.

There has been little public show of disobedience, no clear spat. That’s not Mr Davutoglu’s style. Nor is it likely, given the widespread fear of Mr Erdogan within the ruling AKP.



Another good indicator as to the collapsing global trade as the world has already reached peak debt:  Air treight volumes across the largest global market are down 15% in the first quarter


(courtesy  IATA)

Air Freight Volumes Across Largest Global Market Tumble 15% In First Quarter

For years, our biggest lament and recurring confirmation that
unorthodox monetary policies are simply not working, has been tracking
global trade – the lifeblood of any properly functioning global economy – which has not only failed to reach its pre-crisis growth rates, but especially over the past 2 years, has seen slowing dramatically. The latest evidence of this slowdown came earlier today when the International Air Transport Association (IATA) reported that demand
for global air freight, measured in freight tonne kilometres, fell another 2% in March on subdued growth in world trade.

Specifically, the IATA said that air freight volumes declined in annual terms for the second consecutive month in March 2016and rounded out the weakest opening quarter of the year since 2012.

While the IATA is somewhat hopeful that growth should pick up in the coming months as the US seaport disruption drops out of the annual comparison, it notes that the “broad signs of softness mean that 2016 is shaping up to be another weak year for air freight.” Even muted optimism was hard to find in the statement of  IATA Director General Tony Tyler who said that “expectations
of purchasing managers gives little optimism for an early uptick. The
combination of fierce competition, capacity increases and stagnant
demand makes this a very difficult environment in which to generate

The reason for ongoing deterioration in trade – lack of demand: industry-wide capacity has continued to grow strongly as demand has fallen, keeping intense pressure on yields. Available
capacity rose 6.9% in the month, meaning that load factors – how
full planes are – fell by 4.0 percentage points to 43.5%.

Some highlights:

  • Global air freight volumes fell by 2.0% year-on-year in March 2016, and by a similar amount across the first quarter of the year combined. (Note that the latter period includes a boost from the leap year: adjusting for the extra day in February,  freight volumes in Q1 this year were closer to 3% lower than in Q1 2015.)
  • The annual decline in volumes in Q1 was driven overwhelmingly by North American and Asia Pacific carriers, both of whom enjoyed strong boosts to transpacific air freight at the time of the US west coast seaport disruption in early 2015. (See Chart 1.)  Modest year-on-year increases in FTKs flown by European and Middle Eastern carriers provided a partial offset for total FTKs. (Again, see Chart 1.)

But the punchline, and the main driver for the global trade slowdown, is mostly one. Yes, everyone knows it is the result of major economic problems in China which have depressed Asian trade with North America, but we doubt anyone knew just how bad it was. According to IATA, the latest available data by route show that air freight
volumes across the Pacific – the largest market in terms of air freight
tonne kilometres (FTKs) – were almost 15% lower during the start of
this year compared to the same period in 2015
 (Chart 2.)

Some other observations: the underlying backdrop for air freight remains weak – not least because wider global trade growth remains subdued. World trade volumes have grown by just 0.8% in annual terms so far this year. Admittedly, annual trade growth may pick up sharply over the coming months, as the annual comparison is flattered by the downward trend in volumes seen during the first half of 2015. But the key point is that the current upward trend in global trade volumes is very modest (around 1.5% in annualized terms since the middle of last year). Tellingly, world trade volumes in February were only 0.4% higher than at the end of 2014. Moreover, the export orders component of the global  Purchasing Managers’ Index – a closely watched business survey which has a long-standing relationship with growth in air freight volumes – remained in contractionary territory for the second consecutive month in March.

IATA’s conclusion:

All told, 2016 is shaping up to be another year of disappointing growth for air freight. Even if FTKs grow in line with their five-year average rate of around 1.5% over the rest of this year, given the poor start, overall volumes would still only expand by 0.6% in 2016 as a whole.

Unfortunately, that priced to perfetion 0.6% trade growth in 2016 – which is a borderline contraction if even one exogenous shock kicks in- will not support the much needed 3.0% global growth, and means that

Source: IATA

The brief spike in the Baltic Dry Index just ended as the index plunges to below 400:  the loss in index points is the largest since November:
(courtesy zero hedge/Baltic Dry Index)

Surprise! Baltic Dry Index Plunges Most Since November As Commodity Bubble Bursts

Who could have seen this coming? Remember a week ago when TV entertainers crowed about the surge in The Baltic Dry Freight Index was a “clear signal” that ‘China is back’ baby and that escape velocity growth was just around the corner as global growth was destined to pick up…

Well, just as we warned very explicitlythe ramp in the index merely reflected the frenzied speculation in industrial metals by the Chinese and as authorities have cracked down on that idiocy, so the Baltic Dry has plunged by the most since November… as real demand punches back.

This was never going to end well.



The devastation with the Canadian wildfire in Fort McMurray Alberta, has created over 500,000 barrels of oil offline and billions in losses:

(courtesy zero hedge)

The Fallout From The “Devastating” Canadian Wildfire: Over 500,000 Barrels Offline, $1 Billion In Losses

It took the market over a day to appreciate the fallout from the devastating Canadian wildfire which has led to a state of emergency in Alberta, the evacuation of over 80,000 people in the oilsands gateway city of Fort McMurray, and the destruction of over 1,600 structures. According to insurance industry reports, losses from the fire are approaching $1 billion, and will likely set records for the country.

The average cost of a single-family home in the community was recently around CAD$627,000 ($487,000), Aon said, citing data from the local real estate industry, and cited by CNBC. That would suggest losses of CAD$1 billion ($779 million), with more to come as the fire continues to blaze out of control. Such damages would already make the fire the third-costliest insured loss event in Canadian history, the firm said.

And now that Canada has had a chance to evaluate the damage from the historic fire, the question on everyone’s lips is what will be the near-term impact on oil production as a result of the fire. While initially producers located in the area denied they would be forced to reduce production, this has changed over the past 24 hours.

“As more information comes in, it appears that the impact on production of the wildfires in Alberta will be significant,” said analysts at JBC Energy in Austria. Analysts noted that Shell shut its Albian Sands mine and Suncor SU, -2.20%  shut its base plant, while producers Syncrude Canada and Connacher Oil & also reduced output in the region.

“Taken together this amounts to some 0.5 million b/d of capacity that is currently offline. Infrastructure is being affected too, with the 560,000 b/d Corridor pipeline shut down and movement along the 140,000 b/d Polaris pipeline significantly curtailed. On top of that, trains are not operating near Fort McMurray, according to the Canadian National Railway,” said the analysts.

But the most comprehensive answer so far comes from Morgan Stanley’s Benny Wong who estimates that the total number of offline capacity will be anywhere between 400 and 500 mbbl/d, with the shut-in expected to last about 10 days, potentially reducing total market output by as much as 5 million barrels.

More details:

Production curtailed as a precaution. Producers have been reducing staff and operations to focus on providing safety, shelter and resource for workers, their families and other Fort McMurray residents who have evacuated the city. While the situation is fast evolving and information is still developing, we attempt to provide an update on the situation. Assuming partially curtailed projects with no specifics are impacted by 25-50% of our forecasts, we estimate there is currently at least 400-550 mbbl/d of oil sands production potentially offline, of which 90% is synthetic light crude ( Exhibit 1).

Differentials have reacted. Canadian crude prices strengthened relative to WTI as news of supply curtailment started coming to light. The Western Canada Select (WCS) heavy oil discount narrowed US$0.60/bbl to US$12.85/bbl. Synthetic pricing also strengthened by $1.25/bbl to be at a US$1.00/bbl premium to WTI ( Exhibit 3).

SU stock pricing in ~10 days of shut-in. SU was the first one to announce the reduction of operations and demobilizing of non-critical staff. The company is also expected to be impacted most in terms of production. SU shut down base plant operations (~304 mbbl/d of bitumen in 1Q16) and reduced rates at in situ operations due to the reduce availability of diluent (Firebag and McKay River which produced 200 mbbl/d and 37 mbbl/d of bitumen in 1Q16, respectively). It is not entirely clear at this point the exact amount being curtailed as SU had a planned ~45 day turnaround at its U2 upgrader with guided impact of ~130 mbbl/d in the quarter (net of ~100 mbbl/d to be sold as bitumen blend). Given the share price underperformance of 2.2% (Exhibit 5) and SU’s ’16 multiple to find implied lost value and cash flow, we estimate the stock is pricing in ~10 days of lost volumes.

HSE reducing Sunrise output. Upon being advised of the partial shutdown of the Polaris pipeline (Exhibit 6), which delivers diluent to several operations in the region, HSE reduced production to ~10 mbbl/d gross (the project was averaged ~20 mbbl/d gross in March). We expect minimal cash flow impact given the project is still in ramp up and not fully covering fixed cost. (One could argue HSE may be saving some money with the reduced output of negative margins). HSE has 50% interest in the project.

AOSP shut down. Shell shut down its Albian Sands mining operations (Muskeg River and Jackpine) which can produce up to 255 mbbl/d. RDS has a 60% stake and is partnered with CVX (20%) and MRO (20%).

Syncrude reducing production. The project was already in the middle of a 44 day turnaround that was expected to curtail volumes by ~30% after averaging a strong 320 mbbl/d in 1Q16. No specifics have been provided yet on volumes. SU owns 48.7%, IMO owns 25%, MUR owns 5% (agreed to be sold to SU with the deal set to close at end of 2Q16).

ATH trucking diluent. As a precautionary measure, ATH is trucking diluent to its Hangingstone project given the curtailed condensate delivery in the region. No impact to the Hangingstone project is reported so far, which averaged ~7.3 mbbl/d in February and ramping up towards its 12 mbbl/d capacity.

Connacher curtails Great Divide volumes. The company announced that production has been reduced to ~4 mbbl/d. The site produced 4.6 mbbl/d in February and 8 mbbl/d in January.

No impact at Kearl yet. IMO stated there was no impact to operations midday 5/4/16 and that staffing levels were reduced to essential staff only. However, we look for an update on whether there is any impact from the partial shutdown of the Polaris pipeline. The project averaged 138 mbbl/d in 1Q16.

The world’s largest shipping company MAERSK, is already preparing for the next oil crash and they ought to know:
(courtesy zero hedge)

The World’s Largest Shipping Company Is Already Preparing For The Next Oil Crash

It was almost a year ago, when having tumbled in early 2015, oil proceeded to rebound strongly into the summer, where it traded at about $60 for three months, before US production resumed resulting in the next big leg lower which culminated with this’s February drop to 13 year lows. At that point a comparable rebound to last year materialized, and just like last year,  the pundits have emerged claiming that there will be no further downside. Incidentally, we covered this comparison previously in “For Oil 2016 Is Setting Up To Be A Rerun Of Last Year.”


However, unlike last year, not everyone is (wrongly) convinced that this time the rebound in oil will be sustainable. One very prominent company that is already preparing for the next oil crash is the world’s largest shipping company, Danish conglomerate A.P. Moeller-Maersk A/S (also known as Maersk).

Maersk is perhaps best known for its pragmatic, even downright bearish outlook on the global economy. Recall that three months ago, the company admitted in its annual report that “demand for transportation of goods was significantly lower than expected, especially in the emerging markets as well as the Group’s key Europe trades, where the impact was further accelerated by de-stocking of the high inventory levels.”

The company’s CEO, Nils Andersen, told the FT in February that it is worse than in 2008.The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.”

It is the risk that the current 60% rebound in oil prices from 2016 lows is just another temporary bounce, that has forced Maersk to start preparing for the next oil crash. The company’s CEO is confident that since the world keeps producing more petroleum than it can consume, it is “adapting its cost base to prepare for the risk of lower crude prices”according to Bloomberg.

As a result, Maersk’s oil unit is already exploring bigger cost cuts than previously planned. “The price will obviously be driven by the balance between supply and demand and there will be oversupply for many months still,” he said by phone from Copenhagen. “It definitely can’t be ruled out that the oil price will fall again.

To be sure, Andersen is ultimately bullish on higher oil price… he is just not bullish on the path that oil prices will take to his higher price target: “I have previously said the oil price was too low, but it’s very plausible that the balance between supply and demand will continue to be unfavorable,” Andersen said.

Recent cost-cuts by Maersk have drastically reduced its breakeven oil price: in its latest full year forecast, the company predicted it can now break even with oil at $40 to $45. It previously said oil needed to trade at about $45 to $55 in order to avoid a loss. “We’re happy we’ve reached the goal we set,” Andersen said. “We will definitely work on cutting costs even further.”

As it continues to cut costs, we expect that Maersk will soon be profitable with oil in the $30, if not lower. Which is precisely the contingency Maersk is actively preparing for.


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




USA/CAN 1.2847 DOWN .0016

Early THIS THURSDAY morning in Europe, the Euro FELL by 72 basis points, trading now WELL above the important 1.08 level RISING to 1.1417; 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  CLOSED UP 6.57 PTS OR 0.22% (LAST 2 HR RESCUE)/ Hang Sang CLOSED DOWN 76.01 OR  0.37%   / AUSTRALIA IS HIGHER BY 0.15%  / ALL EUROPEAN BOURSES ARE ALL IN THE GREEN  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 THURSDAY morning: closed FOR HOLIDAY 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 76.01 PTS OR 0.37% . ,Shanghai CLOSED  UP 6.57 OR 0.22%/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED FOR HOLIDAY/India’s Sensex IN THE GREEN

Gold very early morning trading: $1277.40.


Early THURSDAY morning USA 10 year bond yield: 1.789% !!! PAR in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield RISES to 2.65 PAR in basis points from WEDNESDAY night.

USA dollar index early THURSDAY morning: 93.68 UP 41 cents from TUESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING


And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.16% UP 7 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -0.124% DOWN 1/10 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.61% UP 5 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.50  UP 4 IN basis points from WEDNESDAY

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




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


Euro/USA 1.1403 DOWN .0088 (Euro =DOWN 88  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 107.26 UP 0.324 (Yen DOWN 33 basis points As MARKETS TANK BADLY

Great Britain/USA 1.4481  down .0024 Pound down 24 basis points/

USA/Canada 1.2862 UP 0.0046 (Canadian dollar DOWN 46 basis points with OIL rising a bit(WTI AT $44.51)


This afternoon, the Euro was DOWN by 88 basis points to trade at 1.1403

The Yen FELL to 107.26 for a LOSS of 33 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was DOWN 24 basis points, trading at 1.4481

The Canadian dollar FELL by 46 basis points to 1.2862, WITH WTI OIL AT:  $44.51

The USA/Yuan closed at 6.5032

the 10 yr Japanese bond yield closed at -.124% PAR IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 4  basis points from WEDNESDAY at 1.74% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.60 DOWN 4 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 93.74 UP 47 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 THURSDAY

London:  CLOSED  UP 5.23 OR 0.09%
German Dax :CLOSED UP 23.61 OR 0.24%
Paris Cac  CLOSED DOWN 4.77  OR 0.11%
Spain IBEX CLOSED UP 35.10.60 OR 0.41%

The Dow was UP 9.45  points or 0.05%

NASDAQ down 8.55 points or 0.18%
WTI Oil price; 44.51 at 4:30 pm;

Brent Oil: 45.20





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: 44.89


USA DOLLAR INDEX:93.27 up 21 cents on the day


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

Trading Today in Graph form

Sinko Day Stocko – Crude Pump’n’Dump Leads Trannie Slump

Come on, we had to…


Yet again, VIX was slammed to keep the S&P 500 off the red line for 2016 losses…


And while Trannies tumbled, Nasdaq, Dow, and S&P was desperately held at unch for as long as possible…


Once again futures show the exuberant efforts overnight to keep the dead cat alive…


But on the week, it’s all red…


Tesla was a bloodbath… afte running stops immediately after the earnings announcement…


HYG (high yield bond ETF) tumbled for the 4th day closing below its 200-day moving average…


After the biggest outflows on record…


Treaury yields fell notably today…


Another day of US Dollar strength…


Commodities all drifted lower by the close on the heels of USD strength but most notably the chaotic pump and dump in crude…


Crude ripped on Canada headlines (and Libya) but reality set in as the Monday stops were run…


Copper continues to get clubbed as China’s bubble bursts…


And finally…


Charts: Bloomberg




I would love our BLS to explain this one;  job cuts in 2016 are the highest since 2009 and yet initial jobless claims tumble!!

(courtesy zero hedge)

A “Recovery” Paradox: Job Cuts In 2016 Are Highest Since 2009 As Initial Jobless Claims Tumble

The paradoxical divergence between the government’s data on initial jobless claims, which in just over half an hour is expected to print at or close to another multi-decade low, and the actual number of layoff announcements by employers as tracked by Challenger Gray, and which continues to soar is puzzling to say the least.

While one can debate the veracity of the BLS’ seasonally adjusted data, one thing is certain: when a company announces it will layoff thousands, it will. So for all those who suggest that all is well with the US jobs picture based on initial claims reports, here is the latest report from Challenger according to which the pace of downsizing increased in April jumped by 35% to 65,141 during the month of April, from the 48,207 layoff announcements in March.

Looking further back, in the first four months of 2016, employers have announced a total of 250,061 planned job cuts, up 24% from the 201,796 job cuts tracked during the same period a year ago. This represents the highest January-April total since 2009, when the opening four months of the year saw 695,100 job cuts in the aftermath of the biggest financial crisis in modern history.

Contrary to popular belief it is not just energy: “We continue to see large scale layoffs in the energy sector, where low oil prices are driving down profits. However, we are also seeing heavy downsizing activity in other areas, such as computers and retail, where changing consumer trends are creating a lot of volatility,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

That said, the energy woes continue and the sector announced another 19,759 job cuts in April, bringing the year-to-date total to 72,660. That is up 26 percent from the 57,556 energy-sector job cuts announced in the first four months of 2015. As energy bankruptcies are only set to accelerate from here, we anticipate many more delayed layoffs from this moment onward.

Computer firms announced 16,923 job cuts during the month; the highest total among all industries. That total includes 12,000 from chipmaker Intel, which is shifting away from the traditional desktop and laptop market and toward the mobile market. To date, computer firms have announced 33,925 job cuts, up 262 percent from a year ago, when job cuts in the sector totaled just 9,368 through the first four months of the year.

Some obligatory spin: “For all intents and purposes, the economy remains strong. The nation’s payrolls have experienced 66 consecutive months of net job gains, a trend that is likely to continue with the new report out Friday. The unemployment rate is at five percent, with a growing number of metropolitan areas at three percent or lower. Yet, job cuts are trending upward,” noted Challenger.

“However, it is not unusual to see heavy job cuts a strong economy. In December 1998, near the height of the boom, we recorded more than 103,000 planned workforce reductions. The fact is, companies are constantly retooling, and sometimes the best time to do that is when the economy is strong,” said Challenger.

A prime example of this dichotomy is IBM, where unconfirmed reports estimate as many as 14,000 layoffs in the first quarter (which is not included in any Challenger reports, due to the speculative nature of the figure). While the company has said little about the job cuts, it issued a statement touting 70,000 new hires in 2015 along with 25,000 open positions worldwide.

The closest IBM came to confirming workforce reductions was to say that it is “aggressively transforming its business to lead in a new era of cognitive and cloud computing. This includes remixing skills to meet client requirements” in its official statement.

“We are at a stage in the recovery, where it is not unusual to see hiring and firing occur simultaneously across the economy and often within a single company. Like IBM and Intel, companies are shifting strategies that require them to cut in some places while adding in others,” said Challenger.

Finally, the most adversely impacted state remains Texas, which with 71,186 layoff intentions, accounts for nearly a third of all statewide layoffs.


Donald Trump tell Americans exactly how bad it is in the USA with respect to jobs and the economy

(courtesy David Stockman/Part I/ContraCorner)

Trumped! Why It Happened And What Comes Next, Part 1

by  • May 4, 2016

First there were seventeen. At length, there was one.

Donald Trump’s wildly improbable capture of the GOP nomination, therefore, is the most significant upheaval in American politics since Ronald Reagan. And the proximate cause is essentially the same. Like back then, an era of drastic bipartisan mis-governance has finally generated an electoral impulse to sweep out the stables.

Accordingly, the Donald’s patented phrase that “we aren’t winning anymore” is striking a deep nerve on main street. But that is not on account of giant trade deficits or a faltering foreign policy and failed military adventures per se.

Indeed, it has very little to do with any patriotic impulse with respect to America’s collective polity, and everything to do with voter perceptions that they personally are not winning economically anymore, either.

What is winning is Washington, Wall Street and the bicoastal elites. The latter prosper off finance, the LA branch of entertainment (movies and TV), the SF/technology branch of entertainment (social media) and the great rackets of the Imperial City—including the military/industrial/surveillance complex, the health and education cartels, the plaintiffs bar, the tax loophole farmers and the endless lesser K-Street racketeers.

Consequently, most of America’s vast flyover zone has been left behind. Thus, the bottom 90% of families have no more real net worth than they had 30 years ago. By contrast, the real net worth of the top 9% stands at 150% its 1985 level, and the very top 1% is at 300% of its level three decades ago.

Moreover, the wealth round trip of the bottom 90% depicted in the chart below was hardly real in the first place. Main Street net worth temporarily soared owing to Greenspan’s 15-year housing bubble which culminated in the great financial crisis. What is left is mainly the debt.

The same pattern is evident in real household incomes and average real earnings of full time workers. In this case, the metric displayed in the chart encompasses men over 16 to control for changes in the work force mix, but the result is unmistakable. To wit, real median household incomes in 2014 were no higher than the level first reached in 1989, and real weekly full-time wages were actually 4% lower.

In a similar vein, Indiana was supposed to be Senator Cruz’ last stand, but according to the pundits he ended up getting blown away by the “Carrier” vote. United Technology’s plan to move its air conditioner factory to Mexico became Donald Trumps whipping boy, but the metaphor had deep resonance.

Since the year 2000, the US has lost 20% of its highest paying full-time jobs in the goods producing economy—–that is, energy and mining, construction and manufacturing.

Goods Producing Economy Jobs- Click to enlarge

Even when you allow for the supposed shift to white collar jobs in finance, technology, entertainment and other domestic services, the story is pretty much the same. There are still nearly 2 million fewer full-time, full pay “breadwinner jobs” in the US today than when Bill Clinton was packing his bags to leave the White House in January 2001.

These jobs currently pay an equivalent annual wage of $50,000 on average, which isn’t affluence by any means. But the point is, these jobs are the best of what we have and the total has been going nowhere for the last decade and one-half, even as the adult population (over 16 years) has risen from 212 million to 250 million.

Breadwinner Economy Jobs- Click to enlarge

Stated differently, the Trump voters don’t watch CNBC. Or if they do, they are savvy enough to dismiss it’s specious celebration of America’s phony bicoastal prosperity, and especially the monotonously stupid and profoundly misleading ritual of Jobs Friday. The voters know from experience that those millions of “new jobs” are mainly part-time gigs that come and go between the financial crashes that arise every seven years or so out of Wall Street and Washington.

Indeed, these bread and circuses jobs may all be part of the “print” according to Keynesian windbags like Mark Zandi, but the flyover zone voters know the real truth. They pay cash wages of less than $20,000 per year on a full-time equivalent basis, offer virtually no benefits and are scheduled by the day and hour.

Bread and Circuses Economy Jobs - Click to enlarge

In fact, nearly 40% of all the net payroll jobs created since the year 2000 are in what we have called the Part Time Economy. Trump voters have gotten stuck in them, fear they will end up there or have friends and family who have no other opportunities.

Needless to day, they know they are not winning.

Part Time Economy Jobs - Click to enlarge

Meanwhile, the bicoastal elites tend to their increasingly fanciful projects and provocations. That is to say, Imperial Washington’s completely trumped up campaign against Russia and Putin is cut from the same cloth as Silicon Valley’s pretension that there are ( or were until February) 147 “unicorn” start-ups that are each worth a billion dollars or more—notwithstanding that few of them have meaningful revenues, cognizable business models or any prospect of earning a profit.

Everywhere the governing institutions are whistling past the graveyard, yet have become so insular and removed from accountability that they are clueless about their own impending doom. The Federal Reserve, for example, has now fueled the mother of all financial bubbles after seven years of non-stop money printing and radical interest rate repression, but nevertheless believes that the nirvana of full employment prosperity is just around the corner.

Likewise, US military intervention has failed in every Muslim land it has bombed, droned or occupied. Yet the White House is still sending more bootless boots to these decimated lands, thereby insuring even more blowback and gifting jihadist recruiters with endless fodder for outrage and revenge.

So too, a seven year “recovery” cycle has been squandered on the fiscal front. While Obama was taking bows for cutting the deficit in half and Republicans were joining in to gut the discretionary spending sequester, the fiscal time bomb of entitlements continued to tick unattended.

The fact is, nominal GDP is now growing at only 3% per year, and in a world of relentless deflation owing to the end of the great central bank credit bubble, there is no prospect that it will accelerate. Accordingly, by 2026 GDP will be $24 trillion under the best of circumstances, while the national debt will rise by $9 trillion per CBO’s Keynesian reckoning or upwards of $15 trillion if you believe the Fed has not abolished the business cycle.

That’s right. The virtually guaranteed national debt of $30-$35 trillion will reach an Italian style 140% of GDP just as the baby boom retirement wave hits full stride.

So when Trump says that Uncle Sucker is broke, the public believes him. It happens to be true.

Finally, the greatest bicoastal scam is the rampant Bubble Finance prosperity of Wall Street and Silicon Valley.

(To be continued)


This may be quite interesting: a notorious hacker claims that he got inside Hillary Clinton’s unsecured server.  If so this could make the election fascinating especially if she is charged

(courtesy zero hedge)

Notorious Hacker Makes ‘Bombshell’ Claim: “I Got Inside Hillary’s Completely Unsecured Server”

In a dramatic development that could lead to renewed focus on Hillary Clinton’s email server scandal, NBC reports that the Romanian hacker who first exposed Hillary Clinton’s private email address is making a “bombshell” new claim: that he also gained access to the former Secretary of State’s “completely unsecured” server.

“It was like an open orchid on the Internet,” Marcel Lehel Lazar, who is better known by his handle Guccifer which he used when he first unveiled the formerly unknown domain name of Hillary personal server one year ago, told NBC News in an exclusive interview from a prison in Bucharest. “There were hundreds of folders.”

Cynthia McFadden, right, with the Romanian hacker Guccifer in Romania

As previously reported, Lazar was extradited last month from Romania to the United States to face charges he hacked political elites, including Gen. Colin Powell, a member of the Bush family, and former Clinton advisor Sidney Blumenthal.

NBC further reports that according to a source with knowledge of the probe into Clinton’s email setup told NBC News that with Guccifer in U.S. custody, investigators fully intend to question him about her server.

To this point Lazar, 44, has not provided documentation to back up his claims, nor has he released anything on-line supporting his allegations, as he had frequently done with past hacks. The FBI’s review of the Clinton server logs showed no sign of hacking, according to a source familiar with the case.

Brian Fallon, national press secretary for Clinton’s presidential campaign, said Guccifer’s claims were baseless. “There is absolutely no basis to believe the claims made by this criminal from his prison cell,” said Fallon. “In addition to the fact that he offers no proof to support his claims, his descriptions of Secretary Clinton’s server are inaccurate. It is unfathomable that he would have gained access to her emails and not leaked them the way he did to his other victims.

“We have received no indication from any government agency to support these claims, nor are they reflected in the range of charges that Guccifer already faces and that prompted his extradition in the first place,” Fallon added. “And it has been reported that security logs from Secretary Clinton’s email server do not show any evidence of foreign hacking.”

That strawman, of course, now puts Hillary in harms way as it redoubles attention on a scandal that many had decided was likely going to blow over. All that Trump will have to do now is find confirmation that Lazar is telling the truth and suddenly Clinton’s email transgressions will get a renewed lease on life at the worst possible moment, just as a federal judge opened the door to interviewing Hillary Clinton as part of a review into her use of a private email server while secretary of State.

All this is happening just as as Hillary thought she had managed to put her email scandals behind her.

According to The Hill, Judge Emmet Sullivan of the U.S. District Court for the District of Columbia laid out the ground rules for interviewing multiple State Department officials about the emails, with an eye toward finishing the depositions in the weeks before the party nominating conventions.

Clinton herself may be forced to answer questions under oath, Sullivan said, though she is not yet being forced to take that step.

“Based on information learned during discovery, the deposition of Mrs. Clinton may be necessary,” Sullivan said in an order on Wednesday. [READ THE ORDER BELOW] Discovery is the formal name for the evidence-gathering process, which includes depositions.

“If plaintiff believes Mrs. Clinton’s testimony is required, it will request permission from the Court at the appropriate time.

In his order, Sullivan pointed to revelations from the emails appearing to show officials trying to evade demands of FOIA.

In one email, for instance, Mull told Abedin that Clinton’s emails “would be subject to FOIA requests” if she used a department-issued BlackBerry, even though her identity would remain secret. Abedin responded that the idea “doesn’t make a whole lot of sense.”

In February, Sullivan ruled that the evidence-gathering process could proceed, and the two sides have been haggling since then.

Sullivan had previously suggested that Clinton could be forced to respond to questions, but his order on Wednesday offered the clearest indication that it remains a real possibility.

The order comes in the course of a lawsuit from conservative watchdog group Judicial Watch, and leaves open the possibility that Clinton will be forced to answer detailed questions on the eve of her formal selection as the Democratic presidential nominee about her creation of the server.

While it is unclear yet if Hillary will be deposed, Sullivan ordered at least six current and former State Department employees to answer questions from Judicial Watch, which has filed multiple lawsuits over the Clinton email case. Among these are longtime Clinton aide Huma Abedin, former chief of staff Cheryl Mills, under secretary for management Patrick Kennedy, former executive secretary Stephen Mull and Bryan Pagliano, the IT official believed to be responsible for setting up and maintaining the server. The judge also ordered the State Department to prepare a formal answer
about Clinton’s emails. Donald Reid, a senior security official, may
also be asked to answer questions, if Judicial Watch so decides.

More importantly, that process is scheduled to be wrapped up within eight weeks, putting the deadline in the final week of June, and well ahead of the presidential election.

* * *

Judicial Watch brought suit against the State Department under the Freedom of Information Act (FOIA) in an effort to bring Abedin’s emails to light. The lawsuit has since evolved into a battleground over Clinton’s use of the private server.

Judicial Watch President Tom Fitton called Wednesday’s order “a significant victory for transparency and accountability,” and promised that it would shine a light on Clinton’s email practices.

“Judicial Watch will use this discovery to get all of the facts behind Hillary Clinton’s and the Obama State Department’s thwarting of FOIA so that the public can be sure that all of the emails from her illicit email system are reviewed and released to the public as the law requires,” he said in a statement.

* * *

Any deposition would surely roil the presidential race and force her campaign to confront the issue, which has dogged her for a year. Once again, this is precisely what Trump will pounce on and will be sure to make it the centerpiece of all his upcoming debates with cLINTON


Rail traffic plunges in the USA.  Another indicator of how bad the recession/depression really is in the USA

(courtesy Wolf Richter/WolfStreet)

Haunting Pictures Of A Transportation Recession As Freight Rail Traffic Plunges

Submitted by Wolf Richter of Wolf Street

Freight Rail Traffic Plunges: Haunting Pictures of Transportation Recession

292 Union Pacific engines idled in Arizona Desert

Total US rail traffic in April plunged 11.8% from a year ago, the Association of American Railroads reported today. Carloads of bulk commodities such as coal, oil, grains, and chemicals plummeted 16.1% to 944,339 units.

The coal industry is in a horrible condition and cannot compete with US natural gas at current prices. Coal-fired power plants are being retired. Demand for steam coal is plunging. Major US coal miners – even the largest one – are now bankrupt. So in April, carloads of coal plummeted 40% from the already beaten-down levels a year ago. The AAR report:

Rail coal traffic continues to suffer due to low natural gas prices and high coal stockpiles at power plants. Coal accounted for just 26% of non-intermodal rail traffic for US railroads in April 2016, down from 36% in April 2015 and 45% as recently as late 2011.

Only five of the 20 commodity categories saw gains. Of the decliners, coal was the biggest. But petroleum products also plunged 25%, and grain mill products dropped 7%. Even without coal, carloads were down 3% year-over-year.

But it’s not just coal. In April, loads of containers and trailers fell 7.5% year-over-year to 1,028,460 intermodal units. They transport goods for retailers and wholesalers. They haul parts, components, and assemblies for manufacturers. They haul imported goods from ports and borders to different destinations across the country, and they haul goods to be exported to the ports and borders. They’re a measure of the real economy.

For the first 17 weeks of the year, total rail freight fell 7.8% from the same period a year ago, with carload traffic down 14.3% and intermodal down 0.8%.

But there’s hope, because there’s always hope. AAR Senior VP of Policy and Economics John Gray:

“We expect non-coal carloads to strengthen when the economy gets stronger, and we think intermodal weakness in April is probably at least partly a function of high business inventories that need to be drawn down before new orders, and thus new shipments, are made.”

Ah yes, inventories. We’ve long bemoaned their ballooning to crisis levels.

It didn’t get any better at the end of April: for the week ending April 30, carloads plunged 14.1% and intermodal traffic dropped 8.6% from the same week a year ago.

The impact on railroads is now very visible – and not just in the numbers on their income statements.

Here’s how Union Pacific is dealing with this issue, via Google Earth, on May 3: 292 engines idled on a siding west of Benson, Arizona, along I-10, for a stretch of nearly 4 miles. Note how the line of locomotives curves and fades into the left edge of the photo – an once majestic and haunting sight, all these powerful machines idled on a track in the Arizona desert (click images to enlarge):

These engines are expensive pieces of equipment. When they just sit there, not pulling trains, they become “overcapacity,” and they get very expensive. Then there are engineers and other personnel who suddenly become unproductive. What you see parked here is a drag on earnings. I added the red line for clarity:

The person who sent me these pictures lives and works in that neck of the woods. He said:

“I remember back in 2008-2009, hundreds if not thousands of rail cars stacked along I-10 in AZ-NM on side rails. I have not traveled east bound in a couple of years. I suspect rail cars may be piling up. They need to be parked somewhere. We may head over to Carlsbad Caverns in eastern NM soon, and I will keep an eye out…”

This scenario is playing out across the country, railroad by railroad, perhaps thousands of engines and hundreds of thousands of rail cars – an enormous capital investment – parked mostly out of sight somewhere, “overcapacity” that is now waiting for better days, and the end of the US transportation recession.

Met Life is redeeming most of its funds from various hedge funds and thus a huge blow to the markets:
(courtesy zero hedge)

In Latest Blow To Hedge Funds, Largest US Life Insurer Is Redeeming Most Of Its Investments

It has been a terrible year for hedge funds, not only in terms of performance but more importantly when it comes to keeping LPs and investors happy and invested, and it is only getting worse.

Recall that in recent weeks some very prominent alternative money managers have been slammed with major substantial requests such as Brevan Howard which was served with an cash call for $1.4 billion, and Tudor which has seen $1 billion in redemptions, while New York City’s pension for civil employees voted this month to pull $1.5 billion from hedge funds.

Then, just three days ago, AIG joined the anti-hedge fund fray when it announced it would redeem $4 billion from its hedge fund investments, while Chris Ailman, who runs investments at the $187 billion California State Teachers’ Retirement System, or CALSTRS, said that the hedge fund industry’s two-and-twenty fee model is “broken” and “off the table” for large institutional investors.

Moments ago we the latest confirmation that the hedge fund business model is indeed suffering through an existential battle when MetLife Inc., the largest U.S. life insurer, said was seeking to exit most of its hedge-fund portfolio after a slump in the investments. According to Bloomberg, the insurer is seeking to redeem $1.2 billion of the $1.8 billion in holdings, a process that may take a couple of years to complete, Chief Investment OfficerSteven Goulart said Thursday in a conference call discussing first-quarter results at the New York-based company. The portfolio, which posted negative returns in the quarter, was cut by about $600 million in 2015, he said.

“It’s had up-and-down years and really it’s just too inconsistent, we think, in actual performance,” Goulart said. “What we’ll be left with is a small portfolio of really our most consistently performing managers in hedge funds.”

Oh, so past performance is indicative of future performance after all?

As Bloomberg adds, MetLife, which has an investment portfolio of more than $520 billion, has been looking in recent years for alternatives to bonds because interest rates are so low. While results from private equity have been satisfactory, hedge funds have been more volatile, Goulart said.

Chief Executive Officer Steve Kandarian added that he is seeking to increase the portion of earnings that can be returned to shareholders. That focus on free cash flow factored into the decision to cut the hedge-fund investments, Goulart said.

In other news, MetLife reported profit Wednesday that missed analysts’ estimates. Investment income fell 17% to $4.56 billion, hurt by both hedge funds and low bond yields. Kandarian said Thursday that the insurer will continue to hold some investments beyond bonds.

“Some earnings variability is an acceptable risk, as these asset classes have provided strong returns to MetLife shareholders over time,” Kandarian said. Variable investment income, which includes hedge funds and private equity, “was better than planned in 7 of the past 10 years.”

In other words, the surprising redemption is as much as an attempt to scapegoat hedge funds as it is a statement on the alternative asset management industry. But whatever the reason, the reality is that now that the process is in motion, we expect billions more in redemptions as the great “wash out” predicted by Dan Loeb takes place. It also means more forced sales and liquidations, which in the current illiquid market will only result in even more volatility and even more underperformance by those other hedge funds who have matched positions to those being unwound.

Finally, for those seeking the ultimate culprit why the hedge fund industry has been on such a poor roll in recent years, look no further than the Fed, which continues to intervene any and every time there is even a modest correction in the process crushing the short books and leading to unprecedented short squeezes such as the ones experienced in February and March of this year.

Well that about does it for tonight
I will bring you a commentary tomorrow but it will be published quite late and maybe on Saturday morning.


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