MAY6/Comex gold and silver comex OI rise to multi year highs: gold:569,492/Silver at 202,893/ Gold and silver explode higher on weaker jobs report/Hillary to face FBI interview in two weeks: CBS

Good evening Ladies and Gentlemen:

Gold:  $1,292.90 up $21.50    (comex closing time)

Silver 17.51  UP 21 cents

In the access market 5:15 pm

Gold $1287.50

silver:  17.42

Let us have a look at the data for today


At the gold comex today we had a GOOD delivery day, registering 50 notices for 5,000 ounces for gold,and for silver we had 2200 notices for 1,100,000 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 1772 contracts up to 202,893 despite the fact that the price was silver was up by only 2 cents with respect to yesterday’s trading (and gold  down). In ounces, the OI is still represented by just over 1 BILLLION oz i.e. .1.014 BILLION TO BE EXACT or 145% 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 220 notices served upon for 1,100,000 oz.

In gold, the total comex gold OI ROSE BY ANOTHER 1122  CONTRACTS UP to 569,492 contracts DESPITE THE FACT THAT THE PRICE OF GOLD WAS DOWN $1.90 with YESTERDAY’S TRADING(at comex closing). i would again suggest that comex officials are facing “a Houston, I have a problem” situation


As far as the GLD, we had another increase of a whopping 8.65 tonnes  of gold into the GLD. The new inventory rests at 834.19 tonnes.  I have no problem in telling you that the addition was paper gold and not physical as London is having a tough time finding real metal. Surprisingly 1.142 million oz was removed from the SLV heading to other destinations, and no doubt that would be Shanghai which has been buying silver on a blistering pace.


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

1. Today, we had the open interest in silver rise by 1772 contracts up to 202,893 even though the price of silver was UP by only  2 cents with YESTERDAY’S trading. The gold open interest ROSE by ANOTHER 1172 contracts DESPITE THE FACT THAT  gold FELL by $1.90 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 May contract for gold investors are refusing the tempting fiat offer and want only physical.

(report Harvey).


2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;


2c) COT report



i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN BADLY BY 84.59 PTS OR 2.82%  /  Hang Sang closed DOWN 339.05 OR 1.66%. The Nikkei closed DOWN 40.66 POINTS OR .25 . Australia’s all ordinaires  CLOSED UP 0.25% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4968.  Oil FELL  to 44.10 dollars per barrel for WTI and 45.04 for Brent. Stocks in Europe DEEPLY IN THE RED . Offshore yuan trades  6.5127 yuan to the dollar vs 6.4968 for onshore yuan.



none today


Volumes still explode in the bubble of Chinese commodities, however open interest remains stagnant. The bubble has burst:

Last night!


( zero hedge)


i)We have another Gartman on our hands:  Merkel reverses course on policy as she now wants to protect the German borders from immigrants.  She must now has found religion!

( zero hedge)


ii)Our good friends over at Deutsche bank seems to be in trouble every day:Now the Italian prosecutor is probing them for possible market manipulation in bonds.Wait until they see the emails on the manipulation in the precious metals’

( Reuters)


Total rig counts continue to crash to record lows as prices in oil rise:
( zero hedge


i) gold trading this morning

(zero hedge)

ii)Steve St Angelo now believes that the historic  Dow jones/silver ratio points to 300 dollar silver:

( Steve St Angelo/SRSRocco report)




i)The official jobs report:  Even with the plug  and falsified data, the jobs report is still bad:

initial reaction

(official stories BLS/zerohedge)


ii)The official report which shows April jobs rose by only 160,000 well below the 200,000 expected
( zero hedge)

iii) And now for the real numbers:  First 562,000 workers drop out of the labour force. Thus participation rate continues on its downward slope at 62.8%. The grand total of people not in the labour force:  94 million souls

( zero hedge)

iv)This is not good:  prime aged workers from ages 25 through to 64 tumble by 280,000.  Workers over 55 surge to an all time highs  (probably greeters at WalMart)

( zero hedge)

v)We know from the household survey, 253,000 full time jobs were lost. However it also shows that most of the gains were at the lower paying sector

( zero hedge)
vi) As we promised you, Goldman Sachs states no rate hike in June: they say maybe September. (Harvey: not a chance)
zero hedge

vii)It sure looks like the email scandal is heating up, just in time for the election.  Only in America!( zero hedge)


viii)Then CBS confirms that the FBI will interview Hillary in two weeks;

( zero hedge/Charlie Kay/CBS)

ix)Large truck orders continue to plunge to the tune of 39% in April/the economy is going southbound in a hurry

x) David Stockman continues with his commentary/Part II where he suggests 6 major points what Trump should do if he becomes President as the USA tries to get out of its mess:
a must read…
Part II
(David Stockman/ContraCorner)

xi)Michael Snyder talks about the huge job cuts at USA companies:  up 35% in April

(courtesy Michael Snyder/EconomicCollapseBlog)


Americans unleash a massive debt fueled spending spree on their credit card
(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest ROSE TO ANOTHER EXTREMELY HIGH  OI level of 569,492 for a GAIN 1,122 contracts DESPITE THE FACT THAT THE PRICE OF GOLD WAS DOWN $1.90 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 HAS STOPPED.   The month of May saw its OI FALL by 360 contracts DOWN to 1423. We had 530 notices filed  YESTERDAY so we surprisingly gained another 170 contracts or an additional 17000 oz will stand for delivery. This is truly amazing as somebody is in desperate need of physical gold. The next big active gold contract is June and here the OI fell by 3,593 contracts down to 400,085.. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was excellent at 257,292. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was good at192,249 contracts. The comex is not in backwardation.

Today we had 50 notices filed for 500 oz in gold.


And now for the wild silver comex results. Silver OI ROSE by 1772 contracts from201,121 UP to 202,893 DESPITE THE FACT the price of silver was UP BY ONLY 2 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 255 contracts DOWN to 1311. We had 150 notices filed YESTERDAY so we lost 105 contracts or 505,000 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 26 contracts DOWN to 501  OI.The next big delivery month is July and here the OI ROSE by 1670 contracts up to 141,432. The volume on the comex today (just comex) came in at 53,369 which is EXCELLENT. The confirmed volume YESTERDAY (comex + globex) was AGAIN HUGE AT 62,698. Silver is not in backwardation. London is in backwardation for several months.
We had 220 notices filed for 1,100,000 oz.

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY
May 6.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  51,670.139 OZSCOTIA, HSBC


Deposits to the Dealer Inventory in oz 5,000 OZ ???BRINKS
Deposits to the Customer Inventory, in oz  NIL
No of oz served (contracts) today 50 contracts
(5,000 oz)
No of oz to be served (notices) 1373 CONTRACTS137,300 OZ
Total monthly oz gold served (contracts) so far this month 632 contracts (63,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  190,397.3 OZ

Today we had 1 dealer deposit

We had another of these doozy deposits from Brinks:

another deposit of 5,000.000 oz and the CFTC cannot answer why!!!


Today we had 1 dealer deposit

i) Into Brinks:  5,000 oz.

total dealer deposit: 5,000 oz


Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 0 customer deposits:


total customer deposit: 0 OZ

Today we had 3 customer withdrawals:

i) Out of Brinks:  1607.500 oz  50 kilobars

ii) Out of HSBC: 48615.889 oz

iii) Out of Scotia; 1446.75 oz  45 kilobars

Total customer withdrawals:  51,670.139 oz

I will deem this to be a settlement of 1.607 tonnes


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 50 contracts of which 9 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (632) x 100 oz  or 63200 oz , to which we  add the difference between the open interest for the front month of MAY (1423 CONTRACTS) minus the number of notices served upon today (50) x 100 oz   x 100 oz per contract equals 200,500 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 (632) x 100 oz  or ounces + {OI for the front month (1423) minus the number of  notices served upon today (50) x 100 oz which equals 200,500 oz standing in this non  active delivery month of MAY(6.236 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 18.308 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 6.236 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 and May 6: 1.607 tonnes  = 21.089 tonnes still standing against 18.308 tonnes available.  .
Total dealer inventor 583,614.083 tonnes or 18.308 tonnes
Total gold inventory (dealer and customer) =7,223,153.485 or 224.67 tonnes 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 224.67 tonnes for a loss of 79 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 6.2 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 6.2016

Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  30,358.500 oz



Deposits to the Dealer Inventory  nil
Deposits to the Customer Inventory nil
No of oz served today (contracts) 220  CONTRACTS

1,100,000 OZ

No of oz to be served (notices) 1091 contracts

5,455,000 oz

Total monthly oz silver served (contracts) 1740 contracts (8,700,000 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  1,534,696.9 oz

today we had 0 deposits into the dealer account


total dealer deposit:nil oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 0 customer deposit:


Total customer deposits: nil oz.

We had 1 customer withdrawals

i) out ouf CNT: 30,358.500 oz


total customer withdrawals:  30,358.500 oz



 we had 1 adjustment

Out of CNT:  44,845.49 oz was adjusted out of the customer and this landed into the dealer account of CNT

The total number of notices filed today for the MAY contract month is represented by 220 contracts for 1,10,000 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 (1740) x 5,000 oz  = 8,700,000 oz to which we add the difference between the open interest for the front month of MAY (1311) and the number of notices served upon today (220) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  1740 (notices served so far)x 5000 oz +(1311{ OI for front month of MAY ) -number of notices served upon today (220)x 5000 oz  equals 14,155,000 oz of silver standing for the MAY contract month.
Total dealer silver:  29.226 million
Total number of dealer and customer silver:   152.545 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. 
At 3:30 pm we receive the COT report which gives position levels of our major players.
This should be quite exciting to see.
Let us head over to the gold COT:  corrected COT
Somehow I did not notice that the COT report was late and I used last week instead of this week’s COT
The real report is a humdinger:
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
338,476 66,828 59,431 116,644 411,545 514,551 537,804
Change from Prior Reporting Period
50,303 -488 13,195 199 54,992 63,697 67,699
202 97 90 45 58 285 211
Small Speculators  
Long Short Open Interest  
51,223 27,970 565,774  
4,193 191 67,890  
non reportable positions Change from the previous reporting period
COT Gold Report – Positions as of Tuesday, May 03, 2016

Our large speculators:

Those large speculators that have been long in gold added a whopping 50,303 contracts to their long side.
Those large speculators that have been short in gold covered a tiny 448 contracts.
Our commercials;
Those commercials that have been long in gold added a  tiny 199 contracts to their long side
Those commercials that have been short in gold added a whopping 54,992 contracts to their short side.
Our small specs;
Those small specs that have been long in gold added 4193 contracts to their long side.
Those small specs that have been short in gold added 191 contracts to their short side.
we have a crime scene at the commercial side of things at the gold comex.
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
100,401 24,526 14,599 55,731 146,325
627 3,525 -6,227 -969 -1,677
113 64 39 35 41
Small Speculators Open Interest Total
Long Short 198,237 Long Short
27,506 12,787 170,731 185,450
-1,942 -4,132 -8,511 -6,569 -4,379
non reportable positions Positions as of: 168 128
Tuesday, May 03, 2016   © SilverSeek.c
Our large specs:
Those large specs that have been long in silver added 627 contracts to their long side
Those large specs that have been short in silver added 3525 contracts to their short side.
Our Commercials:
Those commercials that have been long in silver pitched 969 contracts from their long side
Those commercials that have been short in silver covered 1677 contracts from their short side.
Our small specs:
Those small specs that have been long in silver pitched 1942 contracts from their long side.
Those small specs that have been short in silver covered 4132 contracts from their short side.
Commercials go net long by 708 contracts and please note the difference between gold and silver.
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 6.:  inventory rests tonight at 834.19 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 6.2016: Inventory 336.119 million oz
1. Central Fund of Canada: traded at Negative 5.0 percent to NAV usa funds and Negative 5.0% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.4%
Percentage of fund in silver:37.2%
cash .+1.4%( May 6/2016).
2. Sprott silver fund (PSLV): Premium to  RISES to +.02%!!!! NAV (MAY 6.2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES 1.07% to NAV  ( MAY 6.2016)
Note: Sprott silver trust back  into POSITIVE territory at +0.02%% /Sprott physical gold trust is back into positive territory at +1.07%/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 +,02%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.


And now your overnight trading in gold,FRIDAY 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

Buy Gold, ‘Get Out Of The Stock Market’ Warns Druckenmiller

Buy gold and ‘get out of the stock market,’ legendary billionaire investor Stanley Druckenmiller, advised investors this week at an investment conference in New York.

Druckenmiller, who has one of the best long-term track records in money management, said the stock market bull market has “exhausted itself” and that gold“remains our largest currency allocation.”

buy gold bullion 2Stan Druckenmiller. Photographer: Scott Eells/Bloomberg

He told the Sohn Investment Conference attendees to sell their equity holdings:

“The conference wants a specific recommendation from me. I guess ‘Get out of the stock market’ isn’t clear enough …”

He has been very critical of Federal Reserve and central bank monetary policies in recent years while correctly anticipating at that time that it would lead to higher asset prices.

“I now feel the weight of the evidence has shifted the other way; higher valuations, three more years of unproductive corporate behavior, limits to further easing and excessive borrowing from the future suggest that the bull market is exhausting itself,”said Druckenmiller, who averaged annual returns of 30 percent from 1986 through 2010 at his Duquesne Capital Management. He’s up 8 percent this year, according to a person familiar with the matter.

As bankers experiment with “the absurd notion of negative interest rates,”Druckenmiller said, he is investing in gold.

“Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation,” he said.

On the Fed, Druckenmiller said the central bank has borrowed more “from future consumption than ever before.”

“By most objective measures, we are deep into the longest period ever of excessively easy monetary policies,” he said. “Despite finally ending QE, the Fed’s radical dovishness continues today. By most objective measures, we are deep into the longest period ever of excessively easy monetary policies. In other words, and quite ironically, this is the least ‘data dependent’ Fed we have had in history.”

Druckenmiller said “volatility in global equity markets over the past year, which often precedes a major trend change, suggests that their risk/reward is negative without substantially lower prices and/or structural reform. Don’t hold your breath for the latter.”

Read full article on Bloomberg here

Gold and Silver Prices and News
Gold Set for Weekly Drop Of 0.6% Before Payroll Report Offers Rates Clue (Bloomberg)
Gold set for weekly decline ahead of U.S. jobs data (Reuters)
Gold Futures Fall for Third Day as Dollar Gains Squelch Demand (Bloomberg)
Gold falls for fourth day as dollar extends its gains (Reuters)
Jobless Claims in U.S. Increase to Highest Level in Five Weeks (Bloomberg)

Gold Is Back In A Bull Market (Money Week)
Gold To Rise Further, Charts Show – $1,340 Short Term Target (CNBC)
Highly Simplistic and Unbalanced Anti Gold Article (Guardian)
Italian Banks: It’s the Hope That Kills You (Bloomberg)
Hong Kong to Gain as China Streamlines Cross-border Gold Trade (SCMP)
Read More Here

Gold Prices (LBMA)
06 May: USD 1,280.25, EUR 1,121.06 and GBP 883.04 per ounce
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

Silver Prices (LBMA)
06 May: USD 17.31, EUR 15.15 and GBP 11.93 per ounce
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


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Read Our Most Popular Guides in Recent Months

Mark O’Byrne
Executive Director



Gold trading today:

(courtesy zero hedge)

S&P 500 Tumbles Into Red For 2016, Gold Up Over 20%

Well that escalated quickly.. After 3 VIX-smash saves this week, the selling pressure won (for now) as a dead-cat-bounce after the dismal jobs data has sent S&P 500 back into the red for 2016 (joining Nasdaq and Small Caps) with Dow and Trannies getting close…

The bounce is dead…


After 3 VIX-smashing saves…


But Bonds & Bullion lead the way since The Fed’s rate hike…

Steve St Angelo now believes that the historic  Dow jones/silver ratio points to 300 dollar silver:
(courtesy Steve St Angelo/SRSRocco report)

The Historic Dow Jones-Silver Ratio Points To $300 Silver

by on May 5, 2016 32 Comments

That’s correct.  Going by the historic Dow Jones-Silver ratio, it points to $300 silver.  This may seem outlandish or a play on hype, but it isn’t.  While many precious metals analysts have forecasted high three- digit silver prices, I didn’t pay much attention to them.  However, after I looked over all the data, $300 silver is not a crazy figure at all.

Let me explain.  The U.S. economy suffered a fatal blow in the 1970’s as its domestic oil production peaked and inflation soared.  To protect against the ravages of inflation, investors moved into gold and silver in a big way.  Yes, it’s true that the Hunt’s bought a lot of silver during the 1970’s, but who was buying gold to push its price to $850 in 1980 versus $35 in 1970.  Furthermore, who was buying oil to push its price up to $36 in 1980 from $1.80 in 1970??

As U.S. oil production and the EROI- Energy Returned On Invested continued to decline in the following decades, the American economy transitioned away from a high-paying manufacturing economy to what I call a LEECH & SPEND SERVICE ECONOMY.  Thus, each new decade brought about a new bubble to keep the facade of a growing economy alive.

We had the Department of Defense Military spending Bubble in the 1980’s, the Tech Bubble of the 1990’s, the Housing Bubble of the 2000’s and now we have the Auto, Housing, College, HealthCare, Stock Market, Retirement and U.S. Treasury Bubble.  The present highly-leveraged bubble will end all bubbles.

Short Term Silver Market Analysts Can’t See The Forest For The Trees

I wrote about this in my recent article, Precious Metals Investor:  Must See Important Charts & Data,

Unfortunately, Mr. Weiner’s gold-silver basis charting analysis wont put food on the table when the complex supply chain system disintegrates due to the collapse of U.S. energy production. However, owning physical gold and silver at this time could help considerably.

Mr Keith Weiner and Dan Norcini both view the precious metals with blinders on.  I would imagine both of these trading analysts have no idea of the future negative impacts of the energy market or the ramifications of the Falling EROI – Energy Returned On Invested.  Thus, they continue to make short-term forecasts as if the world will continue to grow for the next century.

Unfortunately, most Americans have their wealth tied into financial products that have no future.  Furthermore, the Auto & Real Estate Market will crash to a level that will take the breath away from even the most bearish analysts.  Thus, there will be very few worthy physical assets to own at this time.  The two physical assets I value the most are gold and silver.

The Historic Dow Jones-Silver Ratio Points To $300 Silver

If we look at the the Dow Jones-Silver chart, we can see we are no where close to the 25/1 ratio of 1980:


You really can’t see the 25/1 Dow Jones-Silver ratio in 1980 as it is a small blip on the bottom left-hand portion of the chart.  In Feb 1980, the Dow Jones traded at 865 points while silver traded at $35.  Can you imagine that??? The Dow Jones Industrials trading at 865 points?

Then when silver reached a high of $49 in April 2011, the Dow Jones-Silver ratio fell to 250/1 from a high of 2,500/1 in June 2001.  Note:  I am using round numbers here showing the Dow Jones-Silver ratio.  So, from 1980 to 2001, the Dow Jones-Silver ratio increased 100 times from 25/1 to 2,500/1.  Then it fell 10 times to 250/1 in 2011.  Currently, the Dow Jones-Silver ratio is 1,015/1.

We all know the broader markets are being propped up by the Fed and U.S. Government Plunge Protection Team.  However, at some point the markets will finally resume their crash lower.  If we assume that Dow Jones falls to 7,000 points, a 25/1 Dow Jones-Silver ratio would suggest a $300 silver price (rounded figure).

Unfortunately, I don’t believe the Dow Jones Index will stop at 7,000.  It will likely fall much lower.

Now, why would the value of silver rise as the Dow Jones falls in value?  This has to do with the massive amount of debt in the system.  Here is a chart of total U.S. debt from my article linked above:

Total- U.S.-Debt

You will notice the debt remained flat in the early 1970’s, but started to move up in the latter part of the decade.  In the first quarter of 1980, total U.S. debt stood at $863 billion when the price of silver traded at $35.  Today, the current U.S. debt is $19.2 trillion while the price of silver is less than half at $17.30.  The total amount of U.S. Debt has increased 22 times while the value of silver is less than half.

Now, I labeled the chart as ENERGY DEBT because it takes the burning of energy to create “PROFITABLE” economic activity to pay back the debt.  Investors need to understand it takes “Profitable” economic activity to pay back debt.  We really haven’t had profitable economic activity for at least the past decade as U.S. debt would have been declining.  We must remember, profitable economic activity allows debt to be repaid.

So, the Fed and U.S. Government have continued the official policy of printing money and increasing debt to continue business as usual.  This has given the ILLUSION of growth and an increase in the Dow Jones Index.  However, if we take a look at the Dow Jones Index below, we can see something is seriously wrong:


The Dow Jones Index has been rising since the crash in 2009 on lower trading volume.  Furthermore, the reason the Dow Jones Index has increased from 865 points in Q1 1980 to 17,663 recently was due to the massive increase of U.S. Debt from $863 billion to $19.2 trillion during the same time period.  The Dow Jones Index increased 21 times while total U.S. Debt increased 22 times.


Now, let’s take a look at the silver price chart over the same time period:


Not only has the current silver price fallen in half from its high in 1980, its trading volume continues to trend higher.  What has happened here is this, the U.S. Government and Wall Street funneled American’s funds into financial instruments such as Stocks, Bonds and Retirement Accounts over the past 3-4 decades.  These supposed financial products are nothing more than debts masquerading as assets.

Let me present the next chart on the increase in U.S. Retirement Assets:


When the price of silver traded at $35 in 1980, total U.S. Retirement assets equaled $991 billion.  By the end of 2014, the total U.S. Retirement market increased 25 times to $24.5 trillion.  Thus, during the time period when total U.S. debt increased 22 times, the Dow Jones Index jumped 21 times and the U.S Retirement Market ballooned 25 times.

Unfortunately, the majority of Americans are holding onto financial assets that are backed by U.S. debt that is 22 times higher than it was in 1980.  There lies the RUB.

So, why will the price of silver jump as financial instruments implode?  Because investors will move into physical silver in a big way as is not backed by debt.  This is the same as saying, “silver doesn’t have any counter- party risk.”  The counter-party risk in most financial assets is the massive debt.  Here is a chart comparing a (1 oz) silver coin versus the U.S. Retirement Market:


The economic energy value of a physical one ounce silver coin is stored in it, whereas the value of the U.S. Retirement Market is based on a massive amount of ENERGY DEBT.  Unfortunately, we will not have the cheap and available energy supply in the future to pay back this ENERGY DEBT.

Thus, the collapse of financial assets will occur as the value of gold and silver rise to unimaginable levels.  Why?  Because gold and silver will be the only few liquid stores of economic energy in the entire market.

I conclusion, I don’t know what the Dow Jones-Silver ratio will fall to.  However, I can tell you it will likely fall lower than the 25/1 ratio set in 1980.


Your early FRIDAY 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 6.4968 (SMALL REVALUATION UPWARDS) / Shanghai bourse  CLOSED DOWN 84.59 OR 2.82%  / HANG SANG CLOSED DOWN 339.95 OR 1.66%

2 Nikkei closed DOWN 40.66 OR .25% /USA: YEN FALLS TO 106.96

3. Europe stocks opened ALL IN THE RED  /USA dollar index UP to 93.68/Euro DOWN to 1.1424

3b Japan 10 year bond yield: RISES   TO -.114%     !!!!(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::  44.10  and Brent: 45.04

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 0.140%   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  : 8.60%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1283.00/silver $17.48(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 7 in  roubles/dollar) 65.83-

3m oil into the 44 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 .9693 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1072 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  + .14%

/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 1.74% early this morning. Thirty year rate  at 2.62% /POLICY ERROR)

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

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


Futures Sink Ahead Of Payrolls, Capping Worst Week For Stocks Since February

Ahead of the most important macroeconomic event of the week, US nonfarm payrolls (Exp. +200,000, down from 215,000 and following a very poor ADP report two days ago), the markets have that sinking feeling again.

Futures seem unable to shake off what has been a steady grind lower in the past week, while the Nasdaq has been down for nine of the past ten sessions, after yet another session of jawboning by central bankers who this time flipped on the hawkish side, hinting that the market is not prepared for a June rate hike. Additionally, sentiment is showing little sign of improvement due to concerns over global-growth prospects as markets seek to close the worst week since the turmoil at the start of the year.

Perhaps its the suddenly ascendent dollars, which has rallied the most since November in the past week, which has not only pushed global markets lower but has resulted in the S&P futures sliding to session lows, down 0.3% as of this moment.

The MSCI World Index extended its biggest weekly decline since February as corporate earnings failed to reassure investors.

“We’ve turned a little bit cautious,” John Woods, chief investment officer for Asia-Pacific at Credit Suisse Private Banking, told Bloomberg TV. “One of the reasons why we’ve gone underweight equities recently is because valuations look stretched at the top of the range but also because the two interest-rate hikes we expect are not being fully priced in by the market.”

Emerging markets headed for the worst week in four months with Turkey, Poland and South Africa providing focal points for selling. U.S. crude oil sank, set for its first weekly drop in more than a month and industrial metals were poised for their biggest weekly loss since 2013 as the aforementined Chinese bubble appears to have finally popped. Bonds and the dollar have been the main beneficiaries, with a gauge of the U.S. currency headed for its best week this year, while German bunds advanced.

The top worry in the market is still slower growth perspective than feared, and central banks,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. “We are on thin ice already and we don’t need more disappointments as the Fed is eyeing the job market very closely.”

As expected, pleas for more central bank handouts were quick: “We expect BOJ to do a U-turn in the coming months by opting for more easing and this is likely to result in renewed yen depreciation,” said Salman Ahmed, the London-based chief global strategist at Lombard Odier Investment Managers, which oversees about $165 billion. “However, we are sometime away from this dynamic to take hold.”

Perhaps the biggest reason for the drift lower is that late yesterday, four regional Federal Reserve presidents said they were open to considering an interest-rate increase in June. After financial markets were roiled in the first six weeks of the year, the central bank had adopted a more dovish stance. Of course, all that will take for these same 4 presidents to change their tune is for stocks to drop lower enough and back to square one we go. Recall how fast the Fed flipflops “With These Two Headlines, Fed “Credibility” Just Hit A New All Time Low.”

As a result, concerns about the Fed and payrolls, have sunk Asian and European markets, with the Stoxx Europe 600 Index falling 0.6 percent as of 11:05 a.m. in London, extending its weekly drop to 3.1 percent. Miners and energy producers posted the worst performance among industry groups, tracking declines in oil prices and base metals. ArcelorMittal slid 4.9 percent, adding to the gloom as it posted a 33 percent drop in quarterly earnings. Tullow Oil Plc tumbled 6 percent and Royal Dutch Shell Plc lost 1.6 percent. Futures on the S&P 500 lost 0.3 percent, after the index ended Thursday little changed, as investors awaited the jobs report to shed light on growth in the world’s largest economy and the trajectory of borrowing costs. Traders are pricing in only a 10 percent chance of a Fed interest-rate increase in June, with February 2017 the first month with at least even odds of a raise.

Global Market Snapshot

  • S&P 500 futures down 0.3% at 2039
  • Stoxx 600 down 0.6% to 330
  • FTSE 100 down 0.4% to 6091
  • DAX down 0.3% to 9818
  • German 10Yr yield down less than 1bp to 0.16%
  • Italian 10Yr yield up 2bps to 1.51%
  • Spanish 10Yr yield up 2bps to 1.6%
  • S&P GSCI Index up 0.2% to 348.3
  • MSCI Asia Pacific down 0.5% to 127
  • Nikkei 225 down 0.3% to 16107
  • Hang Seng down 1.5% to 20142
  • Shanghai Composite down 2.8% to 2913
  • S&P/ASX 200 up 0.2% to 5292
  • US 10-yr yield down than 1bp to 1.74%
  • Dollar Index down 0.18% to 93.61
  • WTI Crude futures down 0.1% to $44.26
  • Brent Futures down 0.2% to $44.93
  • Gold spot up 0.3% to $1,281
  • Silver spot up 0.1% to $17.37

Top Global News

  • Goldman Said to Extend Fixed-Income Job Cuts to 10% of Staff: Firm is also said to dismiss staff in equities division
  • Evonik Said Near $3.5 Billion Acquisition of Air Products Units: Agreement excludes Air Products’ electronics division
  • Herbalife Soars After Saying It’s Close to FTC Resolution: Co. expects to pay about $200m in potential settlement
  • Credit Suisse Banker Case Said to Widen With Three New Suspects: Another three former employees as suspects in a case looking into unauthorized trades on the accounts of rich eastern Europeans
  • Dish Network Is Said to Be Target of Negative Kerrisdale Report: Report to say Dish’s airwave holdings are overvalued, according to people familiar with the situation
  • ArcelorMittal Sees Better Steel Market as Prices Rebound: Co. sees broad recovery in global steel market
  • Facebook Must Face Privacy Claims Over Photo-Tagging Feature: Social network accused of violating Illinois biometrics law
  • U.S. Trade Panel to Start Probe on 8 Smartphone Vendors’ Devices
  • Teva Said Finalizing Asset Sales to Clear Allergan Deal: Reuters
  • Ron Burkle, SBE Said to Near Deal to Buy Morgans Hotel: NYP
  • JCPenney Said to Take Cost-Cutting Measures: New York Post

Looking at regional markets, Asian stocks traded mostly lower following a subdued lead from Wall St. with participants tentative ahead of NFP. 8 out of 10 sectors fall with energy, finance underperforming and consumer stocks outperforming. The Nikkei 225 (-0.7%) caught up with losses on return from its 3-day absence with a firm JPY weighing on exporter names. ASX 200 (-0.2%) was pressured from the open by energy weakness but then recovered off worst levels following the RBA SOMP which suggested the RBA were still open to future rate cuts given the weaker inflation forecasts. Chinese markets (Shanghai Comp -1.9%) conformed to the negative tone amid lingering growth concerns and after the PBoC conducted a consecutive weekly net drain, with CNY 220b1n of funds exiting the interbank market. Finally, 10yr JGBs tracked T-notes higher as the cautious tone in the region underpinned demand for safe-haven assets.

Top Asia News

  • China Ponzi Warning to Asset Managers Cites Pooling of Cash: Asset Management Association reiterates ban on money pooling
  • CLSA Sees China Bad-Loan Epidemic With $1 Trillion of Losses: Soured credit may be at least 9x official number
  • Indian State Power Giant Revives Threat to Cut Delhi Supplies: NTPC may halt supplies from May 10 over non- payment of dues
  • RBA Sees Inflation Below Goal in 2016; Yields, Aussie Plunge: RBA cuts 2016 underlying inflation forecast to 1-2% from 2-3%
  • Uber’s China Rival Said Close to Raising $2b in New Funding: Didi Kuaidi is close to raising funds in round that will give it valuation of ~$25b
  • Macquarie’s Record Profit Run May Be Ending as Challenges Mount: Group FY net A$2.063b vs est. A$2.037b

European equities are trading modestly in the red ahead of the key risk event in the form of the latest payrolls report. 17 out of 19 Stoxx 600 sectors fall with basic resources, oil & gas underperforming and automobiles, real estate outperforming. 55% of Stoxx 600 members decline, 42% gain. Notable outperformers in Europe have been Italian banks after earnings from Banca Monte dei Paschi (BMPS IM), which saw Co. beat on expectations and announce bad loan provisions had fallen to their lowest level in 4 yrs, however failed to lift the FTSE MIB out of the red. While Bunds have seen somewhat of a subdued start to the morning with little in way of newsflow as all eyes remain firmly fixed on the US jobs data.

Top European News

  • Monte Paschi Profit Surpasses Estimates on Lower Provisions: Bad-loan provisions drop to lowest in four years
  • Telenor Said to Hire JPMorgan to Explore Sale of VimpelCom Stake: VimpelCom said to work with Morgan Stanley on valuation
  • InterContinental Shares Fall on Mideast Sales Hit, Early Easter: Oil markets hit Middle East travel

In FX, as is always the case on NFP day we will be looking out for any major moves in the USD, currently EUR/USD and GBP/USD are gaining ground on the USD. The Bloomberg Dollar Spot Index was little changed on Friday, on course for a weekly gain of 1.3 percent.  The Aussie dropped as much as 1.4 percent to a two-month low and was poised for its biggest weekly loss since January.Australia’s central bank said underlying inflation is expected to be 1 percent to 2 percent 2016, down from the 2 percent to 3 percent it forecast in February. The authority cut its benchmark interest rate to a record low on Tuesday.

The yen rose 0.3 percent to 106.91 per dollar, trimming its weekly loss to 0.4 percent. The currency jumped 5 percent last week, prompting policy makers to warn of possible intervention, as the Bank of Japan unexpectedly refrained from adding to record stimulus at a policy review. Prime Minister Shinzo Abe said Thursday he was ready to respond to excessive currency moves if needed.

In commodities, oil fell as rising U.S. stockpiles and OPEC production cushioned the impact of declines in North American output. West Texas Intermediate crude dropped 0.5 percent to $44.08 a barrel, extending its weekly loss to 4 percent. Brent fell 0.7 percent to $44.70.U.S. crude inventories rose to the highest since 1929 while production slid the most in eight months last week, government data showed Wednesday. Canada’s supplies are sufficient to cover production losses from fires in the country’s oil-sands region, Genscape said. OPEC output climbed in April amid gains from Iran and Iraq.

Industrial metals in London were heading for their biggest weekly drop since 2013 on a resurgent dollar and rising concerns about the strength of demand in China, where authorities have taken steps to cool a speculative frenzy. Copper is down 5.1 percent this week to $4,791.50, poised for the biggest decline since November. Steel reinforcement-bar futures dropped by a record 9.5 percent this week on the Shanghai Futures Exchange. Iron ore and coking coal plunged by a similar amount on the Dalian Commodity Exchange after Chinese authorities clamped down on speculators. The USD weakness has also benefitted spot gold, with the yellow metal higher by around USD 5/oz, although still some way off the USD 1300/oz level, which it saw earlier in the week.

The main event is reserved for this afternoon however with the release of the April employment report for the US. As highlighted earlier the main focus will be on the payrolls figure as well as average hourly earnings and the unemployment rate. Elsewhere, later on this evening we’ll also receive the March consumer credit data. There’s little in the way of Central Bank speak today, while on the earnings front we’ll receive quarterly reports from just 6 S&P 500 companies and 4 Stoxx 600 companies.

Bulletin Headline Summary From RanSquawk and Bloomberg

  • Light newsflow has seen equities in modest negative territory ahead of the main risk event of the day in the form of the US nonfarm payroll report
  • The USD has seen downside against major counterparts this morning, with the likes of GBP, EUR and JPY all seeing strength as a result
  • Highlights today include the aforementioned US NFP report, Canadian jobs figures and potential comments from ECB’s Visco
  • Treasuries little changed in overnight trading as global equities and oil drop, precious metals rally ahead of today’s nonfarm payroll report.
  • If Britain is a country of the brink of a revolutionary vote to defy its leaders and leave the European Union, there was little evidence of it in elections held Thursday
  • Next week the Bank of England governor will present economic projections to guide investors on an outlook that has rarely been more clouded in doubt. He also has to balance how far to stray into the fraught political battle concerning Brexit
  • A new accounting rule that will force banks to set aside provisions for bad loans long before they sour could cannibalize profits and eat into capital at U.S. lenders
  • Chinese banks’ bad loans are at least nine times bigger than official numbers indicate, an “epidemic” that points to potential losses of more than $1 trillion, according to an assessment by brokerage CLSA Ltd
  • China’s $237 billion social security fund posted a rare public advertisement for job openings in economic analysis, equity research and global fixed-income investment, fueling speculation that the state-run institution is preparing to boost holdings of riskier assets
  • The world’s largest debt market is sound and traders’ ability to transact remains robust, U.S. Treasury Department officials said in premiering a liquidity gauge Friday in a blog to be posted on the government’s website
  • BlackRock Inc.’s iShares iBoxx High Yield Corporate Bond ETF, the largest exchange-traded fund that buys junk bonds, has seen 27.8 million shares redeemed, or about $2.6 billion, in the last four days
  • Goldman Sachs Group Inc. is cutting more jobs in its securities units, extending reductions in fixed-income operations this year to roughly 10 percent of workers there, according to people with knowledge of the situation
  • Sovereign 10Y yields mixed, Greece rallies 17bp; European and Asian equity markets drop; U.S. equity- index futures lower. WTI crude oil falls, precious metals rally


DB’s Jim Reid concludes the overnight wrap

And so welcome to random number generator day, also more commonly known as US nonfarm payrolls. The current consensus forecast is for a 200k print this afternoon although it’s interesting to see that the range of forecasts are from as low as 160k to as high as 315k. Our US economists are sitting at the lower end of that range and are forecasting for a below-market 175k gain. This is based on their view that upon closer inspection of the sectors responsible for job growth last quarter, the details reveal that retail trade has accounted for a disproportionate share of these gains (in the fact the pace of which is the fastest since 1994). They expect the pace of hiring in this sector to moderate somewhat closer to its 12-month average this month. As well as this, temp hiring, which has historically been a leading indicator of payroll growth, has declined over the same period and so these trends together contribute to their below-consensus forecast.

As usual we’ll also receive the other important details of the April employment report including average hourly earnings (market expecting +0.3% mom and +2.4% yoy), labour force participation rate (expected to be 63.0%) and the unemployment rate (expected to nudge down one-tenth to 4.9%). All of this data is due out this afternoon at 1.30pm BST so all eyes on then.

Markets have been trading cautiously all week leading into payrolls and a big part of that is the renewed fear and uneasiness about global growth. As a result we’ve also seen the Fed futures markets continue to price a lower probability of a hike at the June meeting despite the chorus of vocal support from Fed officials signalling that the meeting is ‘live’ – although in reality that is just in-keeping with the FOMC script so it shouldn’t come as too much of a surprise. Currently the probability of a 25bp hike next month is a lowly 10% and the lowest it’s been in months. In fact pricing for just one hike by the December meeting has now fallen below 50% and there’s little evidence to suggest that the gap currently between the Fed and the market is narrowing.

So the S&P 500 goes into today’s print on the back of three consecutive daily declines (in which it has shed -1.5%) and five in the last six days (in which it’s down -2.1%). It had looked as though we might be in for a better day yesterday with the index up as much as half a percent early doors, before gains were wiped out with the move down for Oil off the highs. The index closed a smidgen lower (-0.02%) but it is credit which seems to have been at the forefront of the risk-off moves of late. Last night the CDX IG index closed another 1.5bps wider. It means the index has weakened for the last 6 sessions and in that time is 11bps wider. It was interesting to see yesterday that the biggest HY ETF in the US (the iShares HYG Index) has had redemptions of around $2.3bn over the last four days and that the short interest in the fund is now up over 80% since mid-April. It’s worth noting that over a 4-day period the redemptions now are greater than during the selloff earlier this year and provides further evidence that this close to 3-month rally is quickly losing momentum.

In terms of that Oil move yesterday, WTI peaked back above $46/bbl mid-way through the day yesterday (and about +5% on the day) as the market reacted to the impact of the Canada wildfires and subsequent production curtailment in the Canada Oil Sands region, as well as the news of political infighting out of Libya and the potential knock on effect to output levels there. That said, $46 marked the high point for the day as prices quickly reversed with WTI trading all the way back down towards $44/bbl, which is where it’s hovering just north of this morning. That move coincided with another strong day for the US Dollar. The Dollar index rallied to a +0.65% gain yesterday, marking three consecutive daily gains.
Glancing at our screens this morning, markets look like they’re sent to end the week on a bit of a whimper in Asia. The focus has been on Japan where bourses have reopened following the public holiday. After initially opening positive the Nikkei is now down -0.89% with the Yen also posting a modest gain this morning. Some of that may also reflect data released in Japan overnight. The Nikkei services PMI for April was recorded as declining 0.7pts and into contractionary territory at 49.3. Combined with the manufacturing data, that has resulted in the composite dropping a full point to 48.9 and to the lowest since April 2014.

Elsewhere this morning we’re also seeing further losses for the Hang Seng (-1.30%), Shanghai Comp (-1.85%) and the ASX (-0.31%). The Aussie Dollar (-1.00%) has been the big focus for FX markets after the RBA revised down their inflation forecasts for this year.

Over the last 24 hours we’ve also had a host of Fedspeak to contend with. Yesterday we heard from St Louis Fed President Bullard who said that ‘my attitude about June is that it’s a live meeting in which we will have plenty of new data compared to March’. Dallas Fed President Kaplan backed this view up yesterday too, while overnight we’ve heard from these two officials again, along with Williams and Lockhart as part of a panel discussion. Lockhart highlighted that he doesn’t support a shift from the Fed’s 2% inflation target, while Williams questioned if the inflation goal is the right strategy for the future. Williams also said that in the face of another ‘negative shock’ then the Fed has a list of things that it can do including QE4, while negative rates are ‘at the bottom of the list’. Bullard also agreed with negative rates as being ‘very unlikely’.

Away from the Fedspeak, the data took a bit of a pause for breath yesterday. Ahead of today’s payrolls we received the latest reading for initial jobless claims which revealed an uptick in the number of claims last week to 274k (vs. 260k expected), a rise of 17k. While that was the highest reading in five weeks, the four-week average still remains at a lowly 258k. Meanwhile, closer to home in the UK the services PMI for April (52.3 vs. 53.5 expected; 53.7 previously) backed up what was a soft set of PMI indicators for the country last month. Combined with the first sub-50 manufacturing print for the UK in over three years, the composite declined 1.7pts last month to 51.9 and the lowest going back to 2013. With the Brexit referendum looming, the data points to some growth concerns for the start of Q2 and it’ll be interesting to hear what the BoE makes of the data.

Just wrapping up the price action yesterday, with a number of European holidays yesterday volumes were a bit thinner in the region although the Stoxx 600 (+0.32%) did manage to eke out a small gain for the first time in a week. Meanwhile core sovereign bond markets were stronger once again. 10y Bund yields eventually closed 4bps lower at 0.161% while Treasury yields were lower again too. The benchmark 10y year was 3bps lower at 1.746% and is now close to 20bps down from the highs in yield last month.

Looking at today’s calendar, it’s a particularly quiet close to the week datawise in Europe with just the latest industrial production for Spain due out. The main event is reserved for this afternoon however with the release of the April employment report for the US. As highlighted earlier the main focus will be on the payrolls figure as well as average hourly earnings and the unemployment rate. Elsewhere, later on this evening we’ll also receive the March consumer credit data. There’s little in the way of Central Bank speak today, while on the earnings front we’ll receive quarterly reports from just 6 S&P 500 companies and 4 Stoxx 600 companies.

Before we wrap up, there’s more important data out over the weekend from China too. On Saturday we’ll get the April foreign reserves data while on Sunday the all-important trade numbers are due out. So worth keeping an eye on those ahead of the open in Asia again on Monday.



i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN BADLY BY 84.59 PTS OR 2.82%  /  Hang Sang closed DOWN 339.05 OR 1.66%. The Nikkei closed DOWN 40.66 POINTS OR .25 . Australia’s all ordinaires  CLOSED UP 0.25% AS RESOURCE STOCKS DOING WELL. Chinese yuan (ONSHORE) closed UP at 6.4968.  Oil FELL  to 44.10 dollars per barrel for WTI and 45.04 for Brent. Stocks in Europe DEEPLY IN THE RED . Offshore yuan trades  6.5127 yuan to the dollar vs 6.4968 for onshore yuan.





Volumes still explode in the bubble of Chinese commodities, however open interest remains stagnant. The bubble has burst:

Last night!

(courtesy zero hedge)

Churn, Baby, Churn – The China Commodity Bubble Exposed In 1 Simple Chart

The frenzied trading that smashed Chinese commodity markets through the roof in the last month has begun to unfurl rapidly as authorities crackdown on the speculative fever and force exchanges to curve excess ‘churn’. Of course, there are still some who cling to the belief that any of this was ‘real’ demand, real buying, and real economic growth (just don’t look at The Baltic Dry in the last few days) but, as Bloomberg reports, it was nothing but “churn baby churn” as trading volume exploded but open-interest remained flat.

“With more speculators being let in on this secret, more money poured in
the game,”
Fu said. “Prices went higher and higher with explosive
growth in trading volumes.”


As Bloomberg reports,

The slowdown marks a return toward normality after a frenzy that drew comparisons with the credit-driven stock market rally last year that preceded a $5 trillion rout. Investor appetite has waned after the exchanges raised transaction fees and margins amid orders from regulators to limit speculation.


“It’s pretty crazy to see such a quick move in trading volumes, compared with historical levels,” Zhang Yu, an analyst with Yongan Futures Co., said by phone from Hangzhou in Zhejiang Province. “Some investors are exiting after the exchanges’ measures.”

Crazy Indeed…


Open interest, or the amount of outstanding contracts at the end of the day, has remained relatively unchanged throughout, indicating that the trading was short-term speculation, with traders holding positions for a few hours and cashing out before the end of the day. At the peak of the trading boom, daily aggregate volume across the contracts was more than four times open interest. It was 1.4 times by May 4.




We have another Gartman on our hands:  Merkel reverses course on policy as she now wants to protect the German borders from immigrants.  She must now has found religion!

(courtesy zero hedge)

Merkel Reverses Course, Now Wants To Protect German Borders From Immigrants

With her country’s political landscape shifting significantly before her, Angela Merkel has now put her political hat on in order to survive politically in Germany.

As France 24 reports, Angela Merkel is urging European Leaders to protect the EU’s external borders or risk a “return to nationalism.” Merkel said the “freedom of movement” in Europe is at stake as it deals with the worst migration crisis since WWII.

The irony of course, is that it wasn’t very long ago that Merkel was vehemently defending her open borders policy, saying:

“I am in favor of showing a friendly face of Germany. This is my open-arms policy

The 180 degree turn on the issue is of course explained not by a change of heart, but by a change in sentiment within Germany.

As we reported earlier, Germany’s AfD party is gaining significant popularity, and is on track to become the second most popular party in the country. The problem Merkel has is that the AfD party has a platform that is anti-immigrant, and anti-muslim, and the growing popularity of the party implies that these beliefs are starting to be held by the voters as well.

It won’t be long now before the AfD surpasses SPD and becomes Merkel’s newest headache to deal with.As she now sits on the complete opposite side of where the German people seem to be going on the issue of immigration, a dramatic policy change and increased rhetoric such as what was reported above can now be expected from Merkel.

Our good friends over at Deutsche bank seems to be in trouble every day:
Now the Italian prosecutor is probing them for possible market manipulation in bonds.
Wait until they see the emails on the manipulation in the precious metals’
(courtesy Reuters) and special thanks to Robert H for sending this to us.

Italian prosecutor probes Deutsche Bank for possible market manipulation

By Vincenzo Damiani

BARI, Italy An Italian prosecutor is investigating Deutsche Bank (DBKGn.DE) for possible market manipulation regarding the sale of 7 billion euros ($8 billion) in Italian government bonds five years ago, an investigative source said on Friday.

Deutsche Bank said it was cooperating with Italian authorities and had given information to market regulator Consob about a related inquiry in 2011. It did not give any further details or comment.

The German bank sold the bonds in the first half of 2011 as Italy slid toward a debt crisis that eventually brought down the government of former Prime Minister Silvio Berlusconi.

A prosecutor in Trani, southern Italy, is investigating the fact Deutsche told clients in a research note in early 2011 that Italy’s public debt was no cause for concern, and then sold almost 90 percent of its own holding, the investigative source said.

Five former Deutsche Bank managers as well as the bank itself are under investigation in the case, the source added.

In recent years the same prosecutor also opened probes into ratings agencies Moody’s, Standard & Poor’s and Fitch, saying their reports on Italy and its banks during the crisis were mismanaged and provoked sharp losses on the Milan stock market.

The case against Moody’s was dropped before a trial began in Trani last year. The case against Fitch Italia and its country head was moved to Milan, where a judge threw it out on Friday.

However David Riley, Fitch’s former head of sovereign ratings, remains on trial in Trani, along with five S&P officials. The ratings agencies have denied wrongdoing.

In a written response to a question from a parliamentarian about the issue in August 2011, Italy’s economy ministry said Deutsche Bank had explained the sale by saying it needed to balance out its exposure to Italian debt after taking on more when it bought out Deutsche Postbank in 2010.

The U.S. ambassador to Italy, John Phillips, mentioned the ratings agency probe in a speech to students in Milan last month in which he said Italy’s justice system was deterring investors.

In the United States it was “highly unlikely that such a case would be brought outside the major financial centers, where prosecutors have both jurisdiction and expertise in securities fraud prosecutions,” Phillips said.

“Needless to say, it is startling that executives may be restricted from international travel based on arrest warrants issued in a small city with no direct connection to Standard and Poor’s,” he added.

Berlusconi and his ministers often cited Deutsche Bank’s sudden offloading of its billions of euros of Italian bonds as evidence of an international plot to bring down his government.

(Writing by Isla Binnie; Editing by Giselda Vagnon and Mark Potter)



Total rig counts continue to crash to record lows as prices in oil rise:
(courtesy zero hedge)

Oil Shrugs As US Total Rig Count Continues Crash To Record Lows

WTI crude prices are unimpresed at the rig count data today (after spiking off the dismal jobs data). Total rig count fell 5 to 415 – a new record low while oil rigs fell 4 to 328, tracking lagged oil prices to their nadir.

19th weekly decline of the 20 weeks in 2016… will it change as laged oil prices pick up?



With the total count continuing to crash to new record lows…



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




USA/CAN 1.2847 DOWN .0009

Early THIS  FRIDAY morning in Europe, the Euro ROSE by 24 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 DOWN SHARPLY BY 84.59 PTS OR 2.82% / Hang Sang CLOSED DOWN 339.95 OR  1.66%   / AUSTRALIA IS HIGHER BY 0.25% AS RESOURCE STOCKS DOING WELL  / ALL EUROPEAN BOURSES ARE ALL IN THE RED  as they start their morning/

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

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

2, the Nikkei average vs gold carry trade ( 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 FRIDAY morning: closed DOWN 40.66 OR .25% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 339.95 PTS OR 1.66% . ,Shanghai CLOSED  DOWN 339.95 OR 1.66%/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED IN THE RED/India’s Sensex IN THE RED

Gold very early morning trading: $1282.40.


Early FRIDAY morning USA 10 year bond yield: 1.74% !!! PAR in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.60 DOWN 2 in basis points from THURSDAY night.

USA dollar index early FRIDAY morning: 93.62 DOWN 8 cents from THURSDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers FRIDAY MORNING


And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.32% UP 5 in basis points from THURSDAY

JAPANESE BOND YIELD: -0.114% DOWN 1 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.59% PAR IN basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.49  DOWN 1 IN basis points from THURSDAY

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




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


Euro/USA 1.1389 DOWN .0011 (Euro =DOWN 11  basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 107.13 DOWN 0.218 (Yen UP 22 basis points As MARKETS TANK BADLY)

Great Britain/USA 1.4415  down .0073 Pound down 73 basis points/

USA/Canada 1.2940 UP 0.0087 (Canadian dollar DOWN 87 basis points with OIL rising a bit(WTI AT $44.71. HOWEVER CANADA IS GETTING KILLED BY THAT HUGE FIRE IN ALBERTA)


This afternoon, the Euro was DOWN by 11 basis points to trade at 1.1389

The Yen ROSE to 107.13 for a GAIN of 22 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was DOWN 73 basis points, trading at 1.4415

The Canadian dollar FELL by 87 basis points to 1.2940, WITH WTI OIL AT:  $44.71

The USA/Yuan closed at 6.4968

the 10 yr Japanese bond yield closed at -.114% PAR IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 4  basis points from THURSDAY at 1.784% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.62 UP 2 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 93.92 UP 15 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 FRIDAY

London:  CLOSED  UP 8.45 OR 0.14%
German Dax :CLOSED UP 18.09 OR 0.18%
Paris Cac  CLOSED DOWN 18.22  OR 0.42%
Spain IBEX CLOSED UP 12.70 OR 0.15%

The Dow was UP 79.85  points or 0.05%

NASDAQ down 19.06 points or 0.40%
WTI Oil price; 44.71 at 4:30 pm;

Brent Oil: 45.25





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:






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

Trading Today in Graph form

Stocks Slump Most In 3 Months As Commodities & Credit Crash



First things first – it’s payrolls day so we ramp no matter what….


Gold topped stocks post-payrolls and bonds were sold as crude rallied most…


It’s been a volatile week…

  • S&P 500 Down 2.3% – Worst 2-week drop in 3 months
  • Dow Transports Down 5.5% – Worst 2-week drop in 4 months
  • AAPL Down 16.6% – Worst 3-week drop since Nov 2008
  • Treasury Bonds – Best 7-Day rally in 3 months
  • European Bank Credit (Subs) Rose 44bps – Worst 2-week spike in 3 months
  • High Yield Bonds (HYG) Down 1.75% – Worst week in 3 months
  • USD Index Up 1.4% – Best week in 6 months
  • Copper Down 5% – Worst week in 4 months
  • China Rebar Down 9.6% – Worst week in 10 months
  • China Iron Ore Down 4% – Worst week in 4 months

And finally, the last 4 weeks have been the worst for US Macro data since March 2015…


But Stocks managed to rally – as we noted above – but ended the week in the red…


S&P bounced off unch for the year and its 50DMA…


VIX tailed immediately as payrolls hit and then as we went red for 2016, VIX was hammered once again to a 14 handle!!


Biotechs were battered thanks to AGN and ENDP…IBB down 8 of the last 10 days…


Meanwhile over at the “no brainer”… AAPL is unchanged since April 2012…


Chesapeake collapsed on collateral call headlines (is there anyone left in managemnt to die?)


Bonds ain’t buying it – Credit markets had a realy ugly week (and day) even as stocks dead cat bounced…


And here is why…


Treasury yields fell on the week (but rose today after the dismal jobs data – which makes perfect sense to sell bonds when economic data that has maintained the ‘everyting is awesome’ narrative is completely destroyed…)


The USD Index rose for the 4th day in a row – despite the apparently dovish crap jobs news…note that commodity currencies (CAD/AUD) were the worst hit…


Commodities rallied on the day despite USD strength with Gold best of all (managing tio get green briefly before being pushed red)… Copper bounced off its 100DMA today


Charts: Bloomberg



The official jobs report:  Even with the plug  and falsified data, the jobs report is still bad:

(official stories BLS/zerohedge)

Initial reaction

Traders Dump’n’Pump VIX, Buy Gold After Dismal Jobs Data – S&P Gives Up Gains Year-To-Date

The machines went wild when the dismal jobs data struck. The instant reaction was a complete crush of VIX (despite stocks tumbling, Gold surging, and bond yields plunging), but that rapidly turned aroundand now VIX is heading higher again… Gold is now up 22% Year-to-date as S&P futures indicate cash will open in the red for 2016.

VIX crushed out of teh gate but the weakness dragged it back higher as traders rush for safe haven gold and bonds…


broadly speakinmg it is “risk-off” for now but VIX is being manhandled to remain positive into the open…


And that indicates S&P 500 will open in the red for 2016…

The official report which shows April jobs rose by only 160,000 well below the 200,000 expected
(courtesy zero hedge)

Payrolls Miss Huge: April Jobs Rose Only 160K, Below 200K Expected; Unemployment Rate At 5%

And now for the real numbers:  First 562,000 workers drop out of the labour force. Thus participation rate continues on its downward slope at 62.8%. The grand total of people not in the labour force:  94 million souls
(courtesy zero hedge)

562,000 Workers Drop Out Of The Labor Force As Participation Rate Resumes Drop

In addition to the poor headline Establishment survey print which rose only 160,000 in April, coupled with a deplorable Household survey employment number which plunged by 316,000 for the month and below levels seen in February, an even more concerning development was the resumption in the deteriorating trend in the US labor force participation rate, which in recent months had been on a steady increase as far fewer workers were dropping out of the workforce (contrary to convention wisdom, this was not driven by new entrants into the labor force).

All that changed today, when the number of Americans not in the labor force soared by a whopping 562,000 in April, pushing the grand total of people not in the labor force back over 94 million and fast approaching the all time high of 94.6 million.

As a result, the participation rate, which recently had climbed to 63% or the highest since early 2014, has once again resumed its downward slope with the April print down to just 62.8% as the poor labor and demographic conditions once again emerge as a key driver within the US workforce.

This is not good:  prime aged workers from ages 25 through to 64 tumble by 280,000.  Workers over 55 surge to an all time highs  (probably greeters at WalMart)
(courtesy zero hedge)

Prime Aged Workers Tumble By 280K, Workers 55 And Over Surge To New All Time High


In addition to the troubling trend revealed by the yet again declining labor participation rate as a result of hundreds of thousands of Americans dropping out of the labor force (and lack of entrants), one other recurring concern we have had with the jobs report is that new job growth has disproportionately gone to elderly workers, those 55 and over at the expense of young (16-24) and prime aged (25-54) workers.

This trend reverted itself in April. As the chart below shows, in April the household survey showed that when broken down by age group, a grand total of 270K jobs were lost, but it was the composition that was the issue because once again it was the prime-aged workers that took the brunt of the job cuts, as a whopping 284K workers aged 25-54 lost their jobs in the past month.


This means that while total workers aged between 16 and 54 are still some 3.5 million below where they were in December of 2007, during the same period workers aged 55 and over have grown by a whopping 8.1 million to a new all time high of 34.4 million, and as of this moment the oldest worker group comprises a record 22.8% of the total number of workers (per the Establishment survey) of 151 million.

We know from the household survey, 253,000 full time jobs were lost. However it also shows that most of the gains were at the lower paying sector
(courtesy zero hedge)

Where The April Jobs Were

We already know that the quantity of the April jobs was disappointing, but what about the quality? Well, on one hand the BLS reported that based on the Household Survey, in April 253K full time jobs were lost so there’s that. But what did the Establishment Survey, which is the far more massaged one and thus the one that algos pay the most attention to, show?

As the chart at the bottom reveals, following the March job gains which were driven by low paying education/health and retail trade as well as the better paying construction worker jobs, in April retail trade saw a big drop (as we predicted would happen last month), construction work likewise exhausted its growth, while the old standbys of Education and Health and Leisure and Hospitality continued to increase, rising by 54K and 22K respectively. The biggest job growth category, however, was Professional and Business services (which typically includes part-time jobs although we break it out), which saw a 56K increase in April, the biggest move higher for this job group in years.

An interesting rebound was observed in manufacturing jobs, which after tumbling by almost 30K last month, saw a modest 4K increase in April.

On the other end, a surprising drop was seen in government workers, which declined by 11K, while the 8K drop in minin and logging workers was very much as expected as the shale drama continues.


As we promised you, Goldman Sachs states no rate hike in June: they say maybe September. (Harvey: not a chance)

Goldman Throws In The Towel On A June Rate Hike, Sees Next Fed Move In September

Goldman’s muppet crushing ways continue.

Recall that just three days before today’s deplorable jobs number, Goldman revised its payrolls forecasthigher, saying that “we expect a 240k gain in nonfarm payroll employment in April. We increased our forecast from an initial estimate of 225k published last Friday as a result of the improvement in the employment component of the ISM non-manufacturing survey released this week.”


Well, jobs is not all that Goldman was wrong about, and moments ago the bank that was convinced the Fed would hike rates at least three times in 2016 just threw in the towel, and no longer see a June rate hike, instead forecasting that the next rate hike will take place in September. As a reminder, the market no longer see any rate hikes in 2016, which is of course par for the course not only for the “one and done” Fed, but for Goldman which come rain or shine is certain to keep steamrolling muppets.

Full Goldman note:

Soft April Employment Report, Change in Fed Call


BOTTOM LINE: Nonfarm payroll employment increased by 160k in April, less than expected by consensus forecasts. Average hourly earnings gained 2.5% from a year earlier. The unemployment rate was unchanged at 5.0%. In light of weaker-than-expected payrolls and recent Fed communication, we no longer expect a rate increase at the June FOMC meeting. We now forecast the next rate hike will come in September.




1. Nonfarm payroll employment increased by 160k in April, less than expected by consensus forecasts. Employment growth for the prior two months was also revised down by a net 19k. The deceleration reflected a pullback in construction (+1k vs +41k previously), retail (-3k vs +39k) and government (-11k vs +24k). Payback from weather-related gains in payrolls in earlier months may have depressed employment growth last month, particularly in the construction sector. Other details in the establishment survey were slightly more encouraging.


2. Average hourly earnings rose 0.3% in April (vs. +0.3% consensus) and were up 2.5% on a year-on-year basis, an increase from 2.3% in March. The year-over-year increase was boosted in part by upward revisions to February months. Average weekly hours rose to 34.5 after two months at 34.4 and aggregate weekly payrolls—the product of employment, average hourly earnings, and average weekly hours—rose 0.8% on the month.


3. The household survey showed a 316k decline in employment in April, following a string of very strong gains in recent months. Despite the decline in employment, the unemployment rate remained at 5.0% (4.984% unrounded) due to a two-tenths decline in the labor force participation rate to 62.8%. The U6 underemployment rate fell 0.1pp to 9.7%, mostly due to a decline in involuntary part-time employment.


4. With payrolls, unemployment claims, consumer sentiment, vehicle sales, and a number of business surveys in hand, our preliminary read for the April Current Activity Indicator is +2.0%, up from +1.9% in March.


5. In light of weaker-than-expected payrolls and recent Fed communication, we no longer expect a rate increase at the June FOMC meeting. We now forecast the next rate hike will come in September.

Michael Snyder talks about the huge job cuts at USA companies:  up 35% in April
(courtesy Michael Snyder/EconomicCollapseBlog)

The Next Employment Crisis Is Here: Job Cuts At U.S. Companies Jump 35 Percent In AprilBy Michael Snyder, on May 5th, 2016

Should we be alarmed that the number of job cuts announced by large U.S. companies was 35 percent higher in April than it was in March? This is definitely a case where the trend is not our friend. According to Challenger, Gray & Christmas, U.S. firms announced 65,141 job cuts during April, which represented a massive 35 percent increase over the previous month. And so far this year overall, job cut announcements are running 24 percent higher than for the exact same period in 2015. Meanwhile, on Thursday we learned that initial claims for unemployment benefits shot up dramatically last week. In fact, the jump of 17,000 was the largest increase that we have seen in over a year. Of course the U.S. economy has been slowing down for quite a while now, and many have been wondering when we would begin to see that slowdown reflected in the employment numbers. Well, that day has now arrived.At this point, U.S. firms are laying off people at a rate that we have not seen since the last financial crisis. Here is what Zero Hedge had to say about these latest numbers…

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.

So what is causing this?

Why are firms laying off so many people all of a sudden?

My readers are very well aware of the pain that the energy industry is experiencing at the moment, but surprisingly it was not the energy industry that announced the most job cuts in April…

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.

Yes, the U.S. energy industry has lost well over 100,000 good paying jobs since the beginning of last year, but the downturn is so much broader than that. All over America corporate earnings are down, and when earnings fall it is inevitable that layoffs will follow.

As I have written about previously, earnings for companies listed on the S&P 500 have fallen a total of 18.5 percent from their peak in late 2014, and it was being projected that corporate earnings overall would be down 8.5 percent for the first quarter of 2016 compared to the same period a year ago.

And in the chart that I have posted below, you can see that corporate profits after tax have been falling precipitously since peaking in mid-2015… employment-crisis-is-here-job-cuts-at-u-s-companies-jump-35- percent-in-april/corporate-profits-2 employment-crisis-is-here-job-cuts-at-u-s-companies-jump-35- percent-in-april/corporate-profits-2

As this new economic downturn intensifies, the layoffs will accelerate.

In plain English, that means that a whole lot more people will be losing their jobs.

Unfortunately, a very large percentage of Americans didn’t learn anything from the last crisis and are living on the financial edge. In fact, the Federal Reserve says that 47 percent of all Americans cannot even pay an unexpected $400 emergency room bill without borrowing the money or selling something.

So just like back in 2008, we are going to see huge numbers of people unable to pay their bills when they lose their jobs. Foreclosures are going to skyrocket, and lots and lots of families are going to be put out into the street.

This is why I have been preaching the importance of having an emergency fund for years. It is absolutely imperative to have an emergency fund that can cover your bills for at least six months in the event that there is a job loss or some other sort of major disaster strikes.

If you have not done this already, you are probably already too late.

The employment-crisis-is-here-job-cuts-at-u-s-companies-jump-35- percent-in-april cold, hard reality of the matter is that it would take most families quite a while to save up a six month emergency fund if they are starting from zero.

So if you are in this position and you lose your job, you may have to move in with family or friends when your money runs out.

I don’t mean to be cold, but this is the situation that we are facing. The next employment crisis is already here, and it is going to get much, much worse. No matter who becomes “the next president”, job cuts are going to accelerate and good jobs are going to become exceedingly difficult to find.

I am certainly not advocating that anyone give up. If you still have a good job for the moment, tighten your belt and use this time to feverishly prepare the very best that you can.

Sadly, tens of millions of Americans believed that this bubble of false prosperity would keep on rolling, and so they wasted immense amounts of precious time and resources. Now the day of reckoning is here, and vast numbers of our fellow citizens are going to discover the horror of being unprepared.



It sure looks like the email scandal is heating up, just in time for the election.  Only in America!1

(courtesy zero hedge)

FBI Interviews Clinton’s Top Personal Aide As Email Investigation Heats Up

As we reported yesterday, just when Hillary thought the email scandal was behind her, and she could shift her focus to the newly minted GOP presidential nominee Donald Trump, an order by Judge Emmet Sullivan of the U.S. District Court decided to lay out ground rules for interviewing multiple State Department officials, and ordered at least six current and former State Department employees to answer questions, allin an effort to finish the depositions in the weeks before the party nominating conventions.

One key name in the order was longtime Clinton personal aide Huma Abedin, who as The Hill reports,was indeed interviewed today by the FBI, along with other top aides, some multiple times.

Former Clinton employee Bryan Pagliano, who helped set up the server, has provided documents and other materials as well as interviews to the FBI under an immunity agreement, and it is widely expected that the investigation will methodically work its way to the top of the chain of command very shortly, as one of the final and most anticipated steps in the investigation would be to interview Clinton herself.

What we’re keeping a close eye on is whether or not the FBI actually does interview notorious hacker Marcel Lehel Lazar, who as we reported yesterday, claims he gained access to Clinton’s “completely unsecured” server and observed “hundreds of folders.”  

If this interview occurs and Lazar’s claims are validated, it could very well be the final piece to the puzzle in the saga that Hillary so desperately wants to go away.

Then CBS confirms that the FBI will interview Hillary in two weeks;
(courtesy zero hedge/Charlie Kay/CBS)

Hillary Clinton To Face FBI Interview Within Weeks, CBS Reports

Source confirms to @CBSNews Hillary Clinton to be interviewed by the FBI within the coming weeks in the e-mail server investigation.

(Charlie Kay/CBS)

Large Truck Orders Continue To Plunge, Down 39% In April

Submitted by Mish Shedlock of Mish Talk

Class 8 Truck Orders Plunge 39%; Large Truck Sales vs. Recessions

Class 8, “heavy duty” truck orders are down 39% from a year ago.

Class 8

First, let’s take a look at the reports, then we will take a look at what this may mean for the economy.

Class 8 Truck Orders Plunge 39%

The Wall Street Journal reports Truck Orders Fall in April.

Last month, trucking fleets ordered just 13,500 Class 8 trucks, the big rigs used on long-haul routes, down 16% from March and 39% from a year earlier. It was the fewest net orders in any April since 2009, FTR said.


DAT Solutions, an Oregon-based transportation data firm, reported that loads available for dry vans, the most common type of tractor-trailers used for shipping consumer goods, fell 28% in April while capacity on the market was up 1.7% on a year-over-year basis.


Eaton Corp. , the sales leader in heavy-duty truck transmissions, predicted that organic sales from its vehicles unit will fall 10%-12%, after earlier predicting that sales would drop 7% to 9%. The company lowered its outlook for the business after concluding there are at least 20,000 heavy-duty trucks built last year that are still sitting on dealer lots.


Engine maker Cummins Inc. said on Tuesday it doesn’t expect any improvement in the truck market later in the year. It now expects heavy-duty truck production in North America to be at 210,000 vehicles this year, down 5% from its earlier view and down 28% from 2015’s actual volume. Cummins’ first-quarter sales of diesel engines to the heavy-duty truck market dropped 17% from a year earlier to $631 million.

Worst Yet to Come

CCJ reports Sagging truck orders ‘will probably get worse before it gets better’.

Last month was the worst April for Class 8 truck orders since 2009 according to preliminary data released by FTR Wednesday.


North American Class 8 truck net orders fell for the fourth consecutive month in April to 13,500 units, down 16 percent month-over-month and 39 percent year-over-year.


Don Ake, FTR’s vice president of commercial vehicles, says “surprisingly low” orders across the board were weak as the Class 8 market tries to find the bottom of this cycle.


Kenny Vieth, president and senior analyst for ACT Research, says the blame for low orders was widespread.


” … an ongoing overcapacity narrative, a resulting weak freight rate environment, softness in late-model used truck values, and excessive new vehicle stocks,” he adds.

Large Truck Sales vs. Recessions

Variant Perception reports Peak in Heavy Truck Sales Point to Cyclical Pain.

Heavy truck sales are oddly a good leading indicator for the economy. It is odd because a lot of industrial production is coincident with the business cycle. However, if you go back over forty years, you can see that recessions have always been preceded by a decline in heavy truck sales. This is particularly true if the increase in truck sales is very large. Today, truck sales are not far from where they were at previous cyclical peaks in 1999 and 2007.

Heavy Truck Sales

Heavy Truck Sales

Orders are down, sales will follow, sharply!

Topping off the the automotive sector please don’t miss About Those Record Auto Sales: Let’s Communicate!


Today Endo International pharmaceuticals plunged as it reported lousy numbers.
This will cause huge damage with hedge funds as this pharmaceutical company was a darling of many:
(courtesy zero hedge)

Another Hedge Fund Hotel Explodes: Endo Craters

The pain for specialty pharma companies continues.

Yesterday afternoon, Endo International PLC – an “Irish” company that was one of the last tax inversions completed before the Treasury cracked down on the practice – reported not only that its losses deepened in its latest quarter, pressured by an asset impairment charge, but also slashed guidance citing higher competition and lower generics pricing.

The company said it now expects total revenue for the year to be between $3.87 billion and $4.03 billion, down from a previous range of $4.32 billion to $4.52 billion. The company also warned that its EPS would plunged from a range of $5.85 to $6.20 to between $4.50 and $4.80, a cut in guidance of more than 20%.

The stock has since imploded, down nearly 40% overnight.


The pain, however, is especially acute for a lot of hedge funds, because as Goldman reminds us after the spectacular blow ups of Valeant and Allergan, and recently, the plunge in uber hedge fund hotel AAPL,Endo itself is one of the stocks that has the highest hedge fund concentration in the S&P.


Who are these hedge funds? Most of the usual suspects including Visium, Viking, Paulson, Brahman, MSD and of course countless bank prop desks as listed below.


So if we report next week that the “smart money outflows” have continued for a record 15th week, we will know who the weekly scapegoat is for the latest redemption deluge as panicking hedge funds are forced to liquidate other assets to cover for their massive P&L blow ups in ENDP this morning.


Americans unleash a massive debt fueled spending spree on their credit card
(courtesy zero hedge)

Americans Unleash Epic Debt-Fuelled Spending Spree As Credit Card Debt Jumps Most On Record

While one of the recurring complaints about the US consumer has been the willingness to dig into their savings which recent matched the highest level since 2012, something unexpected was revealed today when the March Consumer Credit data showed that not only did total consumer credit soar by $29.7 billion, or almost double the $16 billion expected, and the highest in series history…

but that this was driven by a record $11 billion surge in revolving (aka credit card) debt, as it appears in March US consumers unleashed a historic debt-fuelled spending spree, one which as the chart below demonstrates is either a misprint, a huge outlier, or something has dramatically changed in US consumer psychology.


We are confident the March surge will be promptly unwound (or corrected away), however a far more troubling trend remains: the even more distressing explosion in consumer debt owned by the US government – mostly student and auto loans – as shown in the chart below.


David Stockman continues with his commentary/Part II where he suggests 6 major points what Trump should do if he becomes President as the USA tries to get out of its mess:
a must read…
Part II
(David Stockman/ContraCorner)

Trumped! Why It Happened And What Comes Next, Part 2 – The Peace Deal

Submitted by David Stockman via Contra Corner blog,

When it comes to the economic future, a Trump presidency could bring either a shitstorm or salvation. Regrettably, the odds of the former are immensely the higher.

That’s because Trump is a welcome, but extremely unguided missile.

On the one hand, his great virtue is that he is a superb salesman and showman who has captured the GOP nomination and has a serious shot at the White House with absolutely no help whatsoever from the Washington/Wall Street establishment.

So unlike any other candidate in recent memory, he owns his own talking points; is not saddled with a stable of credentialed advisors schooled in three decades of policy error and failure; and has the hutzpah to trust his own instincts——many of which, especially on foreign policy, are exactly the rebuke that Imperial Washington and its legions of parasites and racketeers so richly deserve.

On the other hand, the Donald’s policy thinking, if you can call it that, is thoroughly inchoate. His policy pronouncements amount to little more than spontaneous eruptions of sentiment, prejudice, hearsay, bile, applause lines, wishful thinking and disconnected non sequiturs. That’s where thoughtlets like Muslim bans, mass deportations, a Trump Wall on the Rio Grande, paying off the national debt, 40% tariff barriers, obliteration of ISIS and numerous other stray verbal hand grenades come from.

Yet occasional wild pitches are not really the problem, and the cynics are surely correct in predicting that Trump will excise most of them from his patter even before the GOP convention. The real problem is that Trump has no detectable economic philosophy or policy framework, and it is in that arena that he could go careening off into a cacophony of misfires, mistakes and statist mayhem.

To wit, Trump has already said that he likes the Fed’s low interest rates, is considering a minimum wage hike, thinks social security and medicare should remain untouched, will rebuild the military, intends to drastically increase spending for veterans, wants to slash income taxes on corporations and individuals, thinks a big infrastructure program is warranted, plans to spend tens of billions on border security and the Wall and will drastically hammer $2.2 trillion of imports in order to bring jobs back home.

Not only is most of that unaffordable, counter-productive and wrong. More importantly, Trump’s mish mash of economic policy utterances thus far fails to address why the Washington/Wall Street/Bicoastal/Bubble Finance status quo is failing main street so badly and causing 90% of Americans to realize that they are not winning economically anymore.

The heart of what went wrong is the lethal combination of free money and free trade that has been practiced ever since Greenspan panicked after Black Monday in October 1987. That is what has gutted the fly-over economy while gifting casino prosperity to Wall Street, Washington and the bicoastal elites, as I documented in Part 1. (click here for Part 1)

But as I indicated yesterday, there is a sliver of hope if Donald Trump does not capitulate to mainstream policies and is willing to set aside his potpourri  of shibboleths and panaceas in favor of a disciplined and coherent game plan that builds on his bedrock political insight that American families are losing the economic battle. To repeat, there is a way forward for the self-proclaimed world class deal maker to move the whole mess out of the hopeless paralysis of governance that now afflicts the nation.

A President Trump would need to make Six Great Deals

Peace Deal with Putin for cooperation in the middle east, defeat of ISIS, withdrawal from NATO and a comprehensive worldwide disarmament agreement.


A Jobs Deal based on slashing taxes on business and workers and replacing them with taxes on consumption and imports.


A Federalist Deal to turn back much of Washington’s domestic programs and meddling to the states and localities in return for a 4-year freeze on every single pending regulation and statue.


Health Care Deal based on the repeal of Obamacare and tax preferences for employer insurance plans and their replacement with wide-open provider competition, consumer choice and individual health tax credits.


A Fiscal Deal to slash post-disarmament spending for defense, devolve education and other domestic programs to the states and cities and to clawback unearned social security/medicare entitlement benefits from the affluent elderly.


And a Sound Money Deal to end the Fed’s war on savers and retirees, repeal Humphrey-Hawkins and limit the central bank’s remit to providing last resort liquidity at a penalty spread over market interest rates based on good commercial collateral.

Under what would in effect be a restoration of the original vision of Carter Glass, who was a storied financial statesman and author of the 1913 enabling legislation, the Fed’s authority to conduct open market operations and unlimited money printing would be eliminated. And its liquidity backstop would be limited to “narrow banks” which just take deposits and make loans, and have nothing to do with Wall Street trading, underwriting, hedging, derivatives and other forms of financial gambling.

Needless to say, this all sounds like radicalism relative to the prevailing system of Casino Capitalism and the Big Government status quo. But all of that is in for a rude awakening, and soon.

That’s because the Bubble Finance status quo as we know it is on its last legs. With each driblet of “incoming data” it is evident that a new recession is just around the corner. With each limpid trading session on Wall Street it is also evident that most carbon units have vacated the casino and that the robo-machines are running out of chart points to chase. That means a big market dive is coming soon.

In fact, a recession, a market crash, an explosion of deficit projections and, for good measure, double digit increases in next year’s health insurance premiums and copays will be hitting the headlines before the final Hillary/Donald debate duals of the fall campaign. It is this impending perfect storm that offers Trump the chance to hang 30-years of failed policy on Hillary Clinton as the insider totem, and to bombastically demand in the patented Trumpster style a clean sweep of the Washington/Wall Street/Federal Reserve policy mess.

I know from personal experience and long observation that it has to start with a Peace Deal.That’s the secret to unlocking the entire Washington policy gridlock and the resulting drift toward national bankruptcy, which otherwise will prove unstoppable. Indeed, nothing can change until at least $200 billion is whacked out of the defense budget, and under the circumstances ahead that could easily be done.

That propitious opportunity for peace is the emerging worldwide Great Deflation. It is taking down the Red Ponzi in China already and is administering the coup de grace to Russia’s third rate, New York SMSA-sized oil, mineral and wheat based economy. At the same time, the next US administration will be grappling with recessionary trillion dollar annual deficits while the socialist enclaves of European NATO will face fiscal burial in a renewed eruption of public debts that already average nearly 100% of GDP.

The key to a global Peace Deal is renunciation of Washington’s encroachment on Russia’s backyard in Ukraine and the former Warsaw Pact nations; and a Russian/Washington/Shiite alliance to encircle the Islamic state and enable Muslim fighters from Syria, Iran, Iraq and Hezbollah to finish off the butchers of the mutant Sunni Caliphate.

The NATO renunciation part of the deal is already in Trump’s wheelhouse because he thinks he can make a deal with Putin anyway, and has had the common sense to see that NATO is obsolete. What he needs to further understand is that Russia is incapable of threatening Europe and has no designs to do so.

Moreover, it is Washington, not the Europeans, who insisted on the pointless expansion of NATO. And it was Washington which betrayed George HW Bush’s sensible promise to Gorbachev in 1989 that in return for his acquiescence to the reunification of Germany NATO would “not be expanded by a single inch”.

There is even a bonus presidential debate point for the Donald on the latter matter. The betrayal of the elder Bush’s pledge was initiated by none other than Bill Clinton in the midst of his political crisis during the blue dress affair. Do not doubt the Donald’s capacity to put that one straight to Hillary.

Likewise, Trump is already half way there on the ISIS threat. Unlike the neocon adventurists of Washington, he has welcomed Putin’s bombing campaign against the jihadist radicals in Syria and recognizes that the enemy is headquartered in Raqqa, not Damascus.

God willing, it is to be hoped that he somehow comes to understand that the Iranians have a justified grudge against Washington for its historic support of the Shah’s plunder and savage repression; for CIA aid to Saddam’s brutal chemical warfare against Iran during the 1980s war; and for Washington’s subsequent demonization of the regime and false claims that it is hell-bent on nuclear weapons—–a charge that even the nation’s top 16 intelligence agencies debunked more than a decade ago.

To wit, the way out of the bloody mess in Iraq, Syria, Yemen and Libya—-all of which are projects bearing Hillary’s support and even inspiration—–is a rapprochement with Iran’s able and moderate statesman, President Hassan Rouhani, who has just received another wave of political reinforcement in the recent elections.

Someone needs to tutor the Donald on the great General Eisenhower’s pledge to go to Korea and make peace immediately after the election in 1952, which is exactly what he did. Likewise, the presumptive GOP candidate should pledge to go to Tehran to “improve the deal”, and this time Trump even has the plane!

Yes, “improving” the deal might be positioned as somehow strengthening Obama’s “bad deal” on the nuclear accord, but that would be the diplomatic fig leaf for domestic political consumption. The far broader purpose would be to bury the hatchet on the general bilateral relationship between the US and Iran, and to secure Rouhani’s agreement to a leadership role in the above referenced Muslin-led ground campaign to extinguish ISIS and liberate the territories now controlled by the Islamic State.

An “I will go to Tehran” pledge by Trump could electrify the entire mideast policy morass and pave the way for early US extraction from its is counter-productive and wholly unaffordable military and political intrusion. The fact is, the Islamic State is on its last leg because of US and Russian bombings, $30s oil and its own barbaric brutality. These forces are rapidly drying up its financial resources, and without paychecks its “fighters” rapidly vanish.

Indeed, ISIS is now so financially desperate that its fighters are literally disappearing. That is, it is shooting its wounded and selling their organs on the black market.

Needless to say, no army of fighters has ever prevailed or even survived by harvesting its own flesh. And especially not when confronted by an opposing force of better trained, better equipped, air-power supported fighters motivated by an equal and opposite religious fanaticism.

Accordingly, a Trump-Putin-Rouhani alliance could very readily celebrate the liberation of Raqqa and Mosul by July 4th next year, along with an history-reversing partition agreement to cancel the destructive Sikes-Picot boundaries of 1916. The latter would be superseded by Shiite, Sunni and Kurdish states, respectively in their historic areas of Iraq and a shrunken state of Alawites, Christians and other non-Sunni minorities in Syria , with protectorates in the north and east for Kurds and Sunnis.

At that point, Trump could put on his own “mission accomplished” pageant by bringing home every last American military personnel now stationed in the middle east, either overtly or covertly and wearing boots on the ground or not. And he could do so from the deck of an aircraft carrier that had been withdrawn from the Persian Gulf as part of the comprehensive Peace Deal with Putin and Rouhani. The Persian Gulf would be an American Lake no more.

The Donald might even be positioned to collect his Nobel Peace Prize on the way home.

Before then, however, he would also be in a position to collect some giant domestic political plaudits that could be married with the defeat of ISIS and peace in the middle east and Europe. To wit, Trump should promise to sign legislation day one permitting families of the victims of 9/11 to suit the Saudis for their losses.

Nothing could better bring closure to the vastly exaggerated domestic terrorist threat than the simultaneous eradication of the Islamic State and mutli-hundred billion lawsuits against the alleged 9/11 puppeteers hitting the headlines day after day.

Also, nothing would do more to provide political cover and impetus for the balance of the Peace Deal.  That’s because the indigenous terrorist threat in Europe is not sponsored, supported or funded in any manner by the nations of the Shiite Crescent. Instead, it is an extension of the mutant jihadism of radical Sunni and Wahhabi clerics.

Needless to say, even the unspeakably corrupt and arrogant princes of the House of Saud would get the message when the 5th Fleet leaves the Persian Gulf and the Trump/Putin/Rouhani alliance takes out its proxies in Syria and the Islamic State itself. In short, the financial lifeblood of terrorism would dry up—-whether the Saudi royals remained in Riyadh or decamped to Switzerland.

The essence of the great Peace Deal required to save the American economy is an end to procurement and R&D spending by the Pentagon and a drastic demobilization of the 2.3 million troops in the regular armed forces and national guards. And that can happen under the auspices of a global military “build-down” agreement and freeze on all further weapons exports.

Bankrupt governments in a world where NATO has been decommissioned, the Jihadi terrorist threat quelled and the middle east stabilized will absolutely be interested in a defense “builddown” and global arms reduction agreement. And there is no one better qualified to lead a sweeping military cost “restructuring” deal among bankrupt nations than the well experienced Donald Trump.

Well that about does it for today.
I am writing this in my office and I have to leave now
I will update the DATA on physical inventory changes in gold/silver on Sunday as
well as GLD and SLV and central fund of Canada data plus Sprott Physical premiums or deficits to nAV
I will provide my next full commentary on Monday
Have a great weekend.

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