Mark O’Byrne (goldcore)/

Gold Bullion Is “Long Term Insurance Policy” – HSBC’s Steel

By Mark O’ByrneMay 11, 20160 Comments

Gold bullion is a “long term insurance policy” according to James Steel, chief commodities analyst at HSBC, who spoke with Tom Keene about what’s driving gold markets on “Bloomberg Surveillance” yesterday.

(Source: Bloomberg)

In Bloomberg’s “Single Best Chart,” Keene displays inflation adjusted ‘London gold prices’ going back to 1950.

Steel is cautious on gold in the short term but positive in medium and long term and thinks gold will “churn higher.”

When asked about whether he has a “message for gold bugs … people who have Krugerrands in their dressing room drawer”, Steel spoke of gold’s portfolio insurance benefits and “the diversification argument is the most powerful … it is an insurance policy”.

A better question would be what is his message to typical retail investors – or”paper bugs” if one wishes to be pejorative – who have no allocation to gold bullion whatsoever and whose investments and savings are at risk due to the looming next phase of the global financial crisis.

Watch interview here

Gold and Silver Prices and News
Gold Climbs on Investment Demand as Goldman Raises Forecast (Bloomberg)
Gold sticks near 2-week low on firm dollar, equities (Reuters)
Goldman Raises Gold Forecast While Retaining Bearish Outlook (Bloomberg)
Demand for gold on the rise amid uncertainty in global markets (HBL)
Britain’s biggest ever gold nugget ‘worth £50,000’ discovered in Wales (Telegraph)

Singer Says Gold Rally Just Beginning as Central Bankers Doubted (Bloomberg)
Keiser Interviews Rickards About Gold (Youtube)
New York Court Investigates Claims Silver and Gold Prices Rigged (AFR)
Comex Gold Open Interest (ZH)
SWOT Analysis: Will the Gold Rally Persist? (GoldSeek)
Read More Here

Gold Prices (LBMA AM)
11 May: USD 1,264.85, EUR 1,111.04 and GBP 875.90 per ounce (To be updated)
10 May: USD 1,264.85, EUR 1,111.04 and GBP 875.90 per ounce
09 May: USD 1,277.75, EUR 1,121.54 and GBP 884.68 per ounce
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

Silver Prices (LBMA)
11 May: USD 17.04, EUR 15.00 and GBP 11.82 per ounce (To be updated)
10 May: USD 17.04, EUR 15.00 and GBP 11.82 per ounce
09 May: USD 17.33, EUR 15.21 and GBP 11.99 per ounce
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

Read Our Most Popular Guides in Recent Months

Mark O’Byrne

Executive Director

Published in Market Update

end

 

Craig Hemke gives a terrific commentary on the importance of the latest banking participation report.  Because the banks have accounts in London with OTC and with LBMA, these positions are not accounted for.  However from the participation report you can see the control the banks have by selling naked huge amounts of  gold contracts to stifle gold’s advance. The mantra of the CFTC is that the futures exchange is a price discovery mechanism. This is now thrown out the window”

(courtesy Craig Hemke/Chris Powell/GATA)

 

TF Metals Report: Assessing the latest bank participation report

Submitted by cpowell on Tue, 2016-05-10 17:58. Section: Daily Dispatches

1:58a ET Tuesday, May 10, 2016

Dear Friend of GATA and Gold:

Conscientious as ever, the TF Metal’s Report’s Turd Ferguson today reviews the monthly Bank Participation Report of the U.S. Commodity Futures Trading Commission about positioning in the U.S. gold futures market, acknowledging that the report is likely full of deceptions if not outright lies but adding that it may have some value through historical comparison.

Your secretary/treasurer would add that in addition to the proven unreliability of the data as noted by Ferguson, the reporting banks may have offsetting and unreported positions in other markets and the positions reported to the CFTC may not even be the banks’ own but effectively central bank positions and thus backed by infinite money or credit, the central bsnks’ primary mechanism of destroying markets, a mechanism that cannot be examined by mainstream financial journalism or mainstream market commentary.

Indeed, for all anyone outside central banking knows today, central bank policy now may be to devalue currencies by pushing gold upward instead of downward as usual, and so an ever-enlarging short position in gold futures may be required by central banks to keep their revaluation of gold under control. In any case, no one who fails to take central bank trading into account knows anything worth knowing about the gold market. The gold market is first of all governments and central banks.

Ferguson’s analysis is headlined “Assessing the Latest Bank Participation Report” and it’s posted at the TF Metals Report here:

http://www.tfmetalsreport.com/blog/7618/assessing-latest-bank-participat…

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
CPowell@GATA.org

END

Legendary hedge fund manger Paul Singer now states that gold is just beginning its rally. Strangely JPMorgan is also predicting a new gold bull market

(courtesy Paul Singer/Elliott Management/JPMorgan  Marcelli)

Paul Singer: “Gold Rally Just Starting” As JPM Predicts A New Gold Bull Market

It was just last week when legendary hedge fund manager Stanley Druckenmiller delivered his latest anti-Fed sermon and once again extolled gold as the asset class to own in these experimental times in which the “bull market in stocks is exhausted”, saying “what was the one asset you did not want to own when I started Duquesne in 1981? Hint…it has traded for 5000 years and for the first time has a positive carry in many parts of the globe as bankers are now experimenting with the absurd notion of negative interest rates. Some regard it as a metal, we regard it as a currency and it remains our largest currency allocation.”

Today, it is the turn of that other prominent anti-Fed crusading hedge fund billionaire, Elliott Management’s Paul Singer, who in his latest letter said that gold’s best quarter in 30 years is probably just the beginning of a rebound as global investors weigh the ramifications of unprecedented monetary easing on inflation.

As cited by Bloomberg, Singer said that “it makes a great deal of sense to own gold. Other investors may be finally starting to agree,” Singer wrote in an April 28 letter to clients. “Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

He said that “if investors’ confidence in central bankers’ judgment continues to weaken, the effect on gold could be very powerful. We believe the March quarter’s price action could represent something closer to the beginning of such a move than to the end.”

What makes Singer’s outlook especially notable is that it thankfully disagrees with the view from Goldman Sachs which as we reported last night, was stopped out of its short gold position with a 4.5% loss, and while forecasting modestly higher prices in 3, 6 and 12 months (it now sees gold at $1,100 instead of $1,000) still expects weaker gold prices over the next 12 months. Which considering Goldman’s absolutely abysmal predictive track record is great news for gold bulls.

Bloomberg adds that in addition to expressing his gold view through options, Singer is backing a new venture focused on royalties, streaming, and other forms of investments in the mining industry that will be led by Shaun Usmar of Barrick Gold Corp.

And while Goldman cotninues to bash gold (which has once again jumped this morning right on schedule), some unexpected support to Singer’s view came from none other than JPMorgan’s Private Bank whose Solita Marcelli told CNBC that “we’re recommending our clients to position for a new and very long bull market for gold.” After seeing three back-to-back years of losses, the precious metal has rallied 20 percent in 2016. And that’s just the start of the next leg higher, according to Marcelli. “[We think] $1,400 is very much in the cards this year.”

As CNBC adds, the firm’s global head of fixed income, currencies and commodities reasoned that, with so many negative interest rate policies around the world, gold will continue to be bought as an alternative currency. And, with expectations that investors will seek to hedge against the resulting volatility, Marcelli believes that gold will remain attractive in a world where bonds and U.S. rates may cease to be the main risk-off asset.

“Central Banks may consider diversifying their reserves [as they anticipate] negative rates on existing holdings,” said Marcelli, when discussing the commodity as safe-haven trade. “Gold is a great portfolio hedge in an environment where the world government bonds are yielding at historically low levels.”

While Marcelli admits the move will come slowly, she remains convinced that the commodity will continue to grind higher — with that key $1,400 level being the first line in the sand.

“Gold is looking more and more attractive every single day,” concluded Marcelli. “As a nonyielding asset, it has a minimal storage cost, so when you compare it to negative-yielding assets, it actually has a positive carry.”

It is refreshing to see that in a world in which over $7 trillion in bonds have a negative yield, someone has done the math. It is less refreshing that gold is once again so prominently featured in the official narrative, because if cash has recently become a target in a global NIRP world, that means that gold, whose wealth preservation qualities are vastly greater, will surely undergo an Executive Order 6102 redux in the coming years as governments around the globe seek to eliminate access to hard assets.

END

A terrific commentary from Steve St Angelo on record silver eagles and maples from Canada and the USA. The data has now been released in Canada for maple sales.  Together with USA Eagles, both exceed mine production by over 33 million oz.  Thus both countries must import silver for other uses such as pharmaceuticals, photography etc.

a must read.

(courtesy Steve St Angelo/SRSRocco report)

Surging North American Silver Investment Pushes Domestic Supply Deficit To New Record

by SRSrocco on May 11, 2016

Let me explain.  We need to start off by showing the total Canadian Silver Maple Leaf sales for 2015.  The Royal Canadian Mint finally published their 2015 Annual Report in which they stated that sales of Silver Maples jumped 18% from 29.2 million (Moz) in 2014 to 34.3 Moz in 2015:

Sales of Canadian Silver Maples started off strong in Q1 2015, but declined in Q2 2015 by falling 400,000 oz compared to the same period in 2014 (7.2 Moz Q2 2014 vs 6.8 Moz Q2 2015).  However, things turned around significantly in the Q3 and Q4 2015 during the silver retail investment shortage (July-Oct).

Sales of Silver Maples were a record 18.6 Moz in the second half of 2015 versus 13.8 Moz in the second half of 2014.  If we add Canadian Silver Maple Leaf sales to U.S. Mint Silver Eagles for 2015, it jumped to a stunning 81.3 Moz compared to 73.2 Moz in 2014.

I discussed this in my THE SILVER CHART REPORT which was released in June 2015.  Here isCHART #37 of a total of 48 charts in the report:

As we can see, combined U.S. and Canadian domestic silver production was 96.6 Moz in 2001 while total Silver Maple & Eagle sales were only 9.2 Moz.  Thus, the total Silver Maple & Eagle sales only accounted for 9% of the two countries silver mine supply.  This trend started to change significantly in 2008 as Silver Maple & Eagle sales consumed nearly half of U.S. and Canadian silver mine supply.

However, this trend turned into a deficit 2011 as Silver Maple & Eagle sales were 9.4 Moz higher than domestic silver mine supply (63.1 Moz Official Coins vs 53.7 Moz supply).  Even though Silver Maple & Eagle sales declined in 2012, the net investment supply deficit resumed again in 2013 and 2014.  Matter-a-fact, Silver Maple & Eagle sales were nearly 20 Moz more than U.S. and Canadian domestic silver mine supply in 2014.

Surging North American Silver Investment Pushes Domestic Supply Deficit To New Record In 2015

Well, if you think 2014 was a banner year for the silver investment domestic supply deficit, take a look at my updated chart including the data for 2015:

Here we can see that total Silver Maples & Eagles of 81.3 Moz is 33.7 Moz more than domestic silver mine supply of 47.6 Moz from the U.S. and Canada.  Moreover, this only includes the manufacture of these two Official Silver Coins.  This does not include the estimated 40-50 Moz of private rounds and bars now including in the 2016 World Silver Survey.

What a difference since 2001… AYE?  Total Silver Maple & Eagle sales in 2001 were less than 10% of U.S. and Canadian Mine supply.  Thus, these two countries had plenty of silver to supply their investment needs that year.  However, the U.S. and Canada had to import 33.7 Moz in 2015 just to produce these two Official Silver coins.

While the U.S. and Canada can continue to import enough silver to meet its current needs, this may not be true in the future.

-END-

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

 

 

:

1 Chinese yuan vs USA dollar/yuan UP to 6.50160 (BIG REVALUATION UPWARDS ) / Shanghai bourse  CLOSED UP 4.446 OR 0.16%  / HANG SANG CLOSED DOWN 187.39 OR 0.93%

2 Nikkei closed UP 13.82 OR 0.16% /USA: YEN FALLS TO 108.70

3. Europe stocks opened ALL IN THE RED  /USA dollar index DOWN to 94.04/Euro UP to 1.1400

3b Japan 10 year bond yield: FALLS   TO -.103%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 109.08

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  44.74  and Brent: 45.88

3f Gold UP  /Yen UP

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

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

3h Oil UP for WTI andUP for Brent this morning

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to 0.121%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 7.90%/: 

3j Greek 10 year bond yield FALL to  : 7.70%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1276.50/silver $17.54(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 35 in  roubles/dollar) 65.92-

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.

JAPAN ON JAN 29.2016 INITIATES NIRP. THIS MORNING THEY SIGNAL THEY MAY END NIRP. TODAY THE USA/YEN TRADES TO 109.08 DESTROYING WHATEVER IS LEFT OF OUR YEN CARRY TRADERS

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9723 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1098 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.

3p BRITAIN STARTS ITS CAMPAIGN AS TO WHETHER EXIT THE EU.

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .121%

/German 8 year rate negative%!!!

3s The Greece ELA NOW at  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 1.76% early this morning. Thirty year rate  at 2.60% /POLICY ERROR)

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

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

US Futures, European Stocks Drop As USDJPY Tumbles

One day after the biggest jump in stocks in two months on what has still been an undetermined catalyst, overnight global equities did a U-turn with European stocks falling toward a one-month low and U.S. stock index futures declining, as crude oil dropped toward $44 a barrel. A driver the move lower was a sharp reversal in the USDJPY which dropped 100 pips from yesterday’s highs which took places just as Goldman predicted the USDJPY has finally bottomed, facilitated by a weaker dollar (also following a Goldman report yesterday forecasting the USD was about to surge).

S&P 500 futures fell 0.2% after Walt Disney Co. tumbled 5.5% in premarket New York trading after posting second-quarter results that missed analysts’ estimates. Macy’s Inc. is among companies releasing earnings Wednesday. In Europe, the Stoxx 600 lost 0.7%. A gauge of lenders fell the most on the index, with Raiffeisen Bank International AG tumbling 8.6 percent after saying it’s considering merging with its parent company to ease the pressure of regulatory requirements. ABN Amro lost 2.4 percent. Total SA and Eni SpA dragged energy producers down as oil prices retreated.

Commodities were once again at the forefront of the action, with industrial metals from aluminum to zinc climbing as Glencore Plc forecast demand to exceed supply. Soybeans, silver and gold also gained, while crude fell before U.S. inventories data. As the chart below shows, however, the main driver of market action remains the dollar, which impacts both commodities, and risk as the two continue to move broadly in line all year.

In an amusing twist, China’s Economic Information Daily publication wrote a front page article saying China should avoid short-term A-Share intervention, adding that state-backed funds such as the China Securities Finance Corp. should be long-term investors in the A-share market and avoid short-term intervention, adding that CSFC traded stocks frequently during 1Q, which artificially distorted the market: report.

Aside from central bank intervention in various markets, skepticism still remained: “earnings so far have been OK but not strong enough to deliver a real upside for stock prices,” said Ralf Zimmermann, a strategist at Bankhaus Lampe in Dusseldorf, Germany. “What is still really missing from this environment is a notable rally in the banking stocks, which is an important driver for any stock market rally. With oil moving down, it’s negative for oil producers.”

Elsewhere, the Lyxor ETF Brazil rose 1.3 percent before a Senate vote that would force Rousseff out of office and into an impeachment trial. The Philippine Stock Exchange Index surged 3.1 percent, extending Tuesday’s 2.6 percent rally, as Rodrigo Duterte, a tough-talking mayor of Davao city, won Monday’s presidential vote. The peso gained 0.4 percent on Wednesday.

Market Wrap

• S&P 500 futures down 0.2% to 2073
• Stoxx 600 down 0.7% to 333.8
• Eurostoxx 50 -1.1%
• FTSE 100 -0.3%
• CAC 40 -1.1%
• DAX -0.8%
• IBEX -1.2%
• FTSEMIB -2.1%
• SMI -0.4%
• MSCI Asia Pacific up 0% to 127.6
• Nikkei 225 up 0.1%
• Hang Seng down 0.9%
• Kospi down 0.1%
• Shanghai Composite up 0.2%
• ASX up 0.6%
• US 10Yr yield down 2bps to 1.75%
• Italian 10Yr yield down 3bps to 1.48%
• Spanish 10Yr yield down 3bps to 1.61%
• German 10Yr yield down 1bps to 0.11%
• Gold spot up 0.5% to $1272.2/oz
• Brent Futures down 0.6% to $45.3/bbl

Top Global Headlines

• IMF Might Not Join Greek Bailout at Current Review: Kathimerini: newspaper cites three unidentified European officials
• Norway Increases Oil Wealth Spending to Ward Off Recession: fiscal stimulus impulse rises to 1.1ppt From 0.7ppt
• The Fog of Brexit: Investor complacency over Brexit may not last, Macro View column says
• Glencore CEO Lists Mining’s Mistakes After $1 Trillion Spree: Glasenberg outlines a ‘recipe for better returns’ from mining
• Staples-Office Depot Merger Collapses After Block by Judge: shares of both companies plunge in after-market trading

Looking at regional markets, Asia stocks traded mixed with most of the major bourses taking the impetus from a firm Wall St. close. ASX 200 (+0.6%) traded higher after yesterday’s energy advances which saw WTI regain the USD 44/bbl level, while a recovery in basic materials also benefited large cap miners with BHP Billiton surging nearly 4%. Nikkei 225 (+0.1%) was positive, although the index pulled off its best levels as JPY strength pared some exporter gains, while participants also digested a slew of earnings. Chinese markets were mixed with the Shanghai Comp (+0.2%) higher after the PBoC upped its liquidity injection. 10yr JGBs saw subdued trade as a mildly positive risk-tone in Japan dampens demand for government paper, while the BoJ’s presence in the market for JPY 1.24tr1 in JGBs stemmed any significant downside.

Japan PM Abe adviser Hamada said that Japan retains right for FX intervention and Japan should intervene if JPY strengthens rapidly to 100.00 against USD. However, Hamada also further stated that he does not think JPY will appreciate much from between 105.00-110.00 levels.

Asian Top News

• China’s Africa Push Reaches Currencies in Deal Investors Decry: Naira-yuan swap may delay, not prevent devaluation, Citi says
• A Young Tokyo Stock Picker Rubs His Hands as Japan Gets Old: Kuzuhara’s fund gains as Topix tumbles, winning several awards
• Japan’s Biggest Traders See No Commodities Recovery in Sight:
• India Acts to Stop Investors Using Mauritius as Tax Shelter: Capital gains on investments from April 1, 2017 to be taxed
• Toyota Forecasts 35% Decline in Net Income on Stronger Yen: Plans to buy back up to 3.42% of its shares
• Hong Kong Exchange Net Declines on Lower Trading Volume: 1Q net HK$1.43b vs HK$1.58b y/y
• Takata Forecasts Profit Despite Looming Air-Bag Recall Costs: restructuring panel expected to make proposals by October

European equities have suffered this morning, with Euro Stoxx lower by around 1.0% and DAX slipping back below the psychological 10,000 level. Leading the way lower this morning has been financials, with the FTSE MIB underperforming after a number of Italian banks reported their earnings and with Banco Popolare among the worst performers in Europe. Similarly, high profile Credit Suisse and Deutsche Bank are also softer this morning as the latter retraces much of its post-earnings upside. On the other hand, the FTSE outperforms this morning, granted a reprieve by modest strength in the material sector. Despite the upside in equities, Bunds have traded flat throughout the session ahead of supply today from Germany and Portugal. As has been the case throughout the week, today has seen a large quantity of corporate issuance, including deals from the likes of J&J.

European Top News

• ABN Amro 1Q Profit Falls on Lower Fee Income: regulatory charges jump to EU98m from none in 2015
• EON Profit Beats Estimates With 30% Jump on Gazprom Accord: gas supply accord boosts earnings by about EU400m
• Bilfinger Quarterly Loss Widens as Two Directors Step Down: Thomas Blades named chairman of executive board from 3Q
• Raiffeisen Eyes Merger With Parent to Ease Regulatory Burden: six-month review started, decision for deal due this year
• TUI to Sell Adventure-Holidays Arm to Focus on Mass Tourism: to sell about 50 adventure travel brands
• Carlsberg Sales Rise Slightly as Profit Forecast Maintained: to move 300 back-office jobs to India to shed costs
• Premier Oil Says It Will Meet or Exceed 2016 Production Forecast: co. comments in statement
• Altice First-Quarter Earnings Stall as French Unit Struggles: Numericable-SFR facing stiff competition
• Statoil Could Pump More Oil at Giant Sverdrup Field, Lundin Says: output rate from phase 1 seen almost 27% above earlier target

In FX,the all important yen climbed 0.6 percent to 108.62 per dollar, after sliding more than 2 percent over the last two days. This happens the day after Goldman said that USDJPY has bottomed and the USD is – once again – set to soar. The currency has gained more than 10 percent this year, making it harder for the Bank of Japan to achieve its inflation goal, and Finance Minister Taro Aso reiterated Tuesday that the government can intervene to stabilize the exchange rate if necessary. The pound weakened for the first time in three days versus the euro as a report showed U.K. industrial production grew less in March than analysts forecast, adding to signs that Britain’s economy is suffering as it heads toward a referendum on its membership of the European Union. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, fell for a second day following on Goldman’s forecast that the USD is set to jump. The gauge had its strongest rally in almost a year in the five days through Monday.

In commodities, all eyes were on WTI crude which fell 0.9% to $44.28 a barrel, after climbing 2.8 percent in the last session. Concern over supply disruptions in Nigeria and Libya, holders of Africa’s largest oil reserves, was countered by speculation that U.S. data on Wednesday will show American stockpiles expanded from the highest level since 1929. Zinc and lead rose by more than 1.7 percent in London, while copper gained 1.2 percent. Commodities are “now close to pre-supercycle levels,” when growth in Asia fueled a surge in prices, Glencore said Tuesday. The London Metal Exchange’s LMEX Index of six industrial metals closed at a one-month low on Tuesday. Gold gained 0.5 percent, buoyed by the dollar’s retreat. Goldman Sachs Group Inc. this week raised its forecasts for bullion prices as it scaled back expectations of U.S. Federal Reserve rate hikes over the next year. Silver climbed as much as 1.3 percent.

On today’s US calendar, algos will be focused on the DOE energy inventory report at 10:30am while the only data of note is the April Monthly Budget Statement. There’s a similar lack of Fedspeak although we will hear from the ECB’s Weidmann and Nowotny today. Keep an eye on Brazil however where the Senate is scheduled to vote on the impeachment process: a simple majority of 41 senators would be enough for the Senate to accept the request, which would force President Rousseff to temporarily step down for as long as 180 days, a period in which Vice President Michel Temer would take over and have full autonomy to appoint a new cabinet and run the government. Results may not be out until sometime late tonight or early next morning, but it looks like one to watch.

Bulletin Headline Summary from RanSquawk and Bloomberg

• European equities trade lower as underperformance in financial names dampens sentiment in the region
• GBP lags FX markets in the wake of further disappointing UK data, this time with industrial and manufacturing production failing to meet expectations
• Looking ahead, highlights Include Industrial Production & Manufacturing Production from the UK, US MBA Mortgage Applications, DOE U.S. Crude Oil Inventories
• Long-end Treasuries higher overnight as European equities drop with crude oil and precious metals rally; auctions continue with $23b 10Y notes, WI 1.735%; last sold at 1.765% in April.
• The most aggressive traders are joining the growing ranks of those betting against the three-month rally in U.S. stocks. Since the end of February, investors have sent $1.3 billion into exchange-traded notes that pay two or three times the inverse of the market’s return
• Today may be the last day in office for President Dilma Rousseff, as Brazil’s Senate gears up for a vote that would force her out and into an impeachment trial she appears unlikely to survive. The Senate debate is scheduled to last 10 hours and end with a vote around 7 p.m. local time
• Norway’s government boosted the amount of oil money it will spend this year to a record, dipping deeper into its sovereign wealth fund to ward off a recession
• Spain is the latest euro-region sovereign to sell 50-year bonds, with an issue via banks that’s likely to price today. It follows half-century deals last month from France and Belgium as countries take advantage of historically low interest rates
• U.K. industrial production grew less than forecast in March as manufacturing barely rose and oil and gas output shrank. Output rose 0.3%, figures from the Office for National Statistics published today show
• Billionaire hedge fund manager Paul Singer said that gold’s best quarter in 30 years is probably just the beginning of a rebound as global investors weigh the ramifications of unprecedented monetary easing on inflation
• Sovereign 10Y yields mostly lower led by Greece (-12bp); European equities lower, Asian markets higher; U.S. equity- index futures drop. WTI crude oil falls, precious metals rally

DB’s Jim Reid concludes the overnight wrap

Yesterday broke a recent spell of apathetic to soft risk markets. A big rebound across the commodity complex and in particular for Oil helped to fuel what was a much better day for risk generally. A Q1 loss for Credit Suisse that wasn’t quite as bad as feared also helped financials turn in a decent day and the progress between Greece and its Creditors did little to dampen the tone either. The S&P 500 ended the session with a +1.25% gain which was the biggest single day gain since March 11th. Prior to this we’d seen the Stoxx 600 close +0.91% although it was peripheral bourses which put in the better performance in Europe. Spanish and Italian equities were up +1.32% and +1.41% respectively while Greek equities rallied to the tune of +3.15%. Indeed 10y Greek government bond yields also finished the day nearly 60bps lower.

Across commodities, as highlighted it was energy markets which stood out. WTI wiped out all of the previous day losses by rallying +2.81% (to close at $44.66/bbl) while Brent was up an even more impressive +4.33% to close back above $45/bbl. It’s all about the supply side of the equation for the market at the moment and yesterday’s bounce seemed to be predicated on possible production curtailments in Nigeria. Indeed, concern over increasing rebel violence in the Niger River delta has seen major producers commence evacuation procedures there. Production concerns in Libya were also a factor yesterday as well as the ongoing focus on the wildfires in Canada. Away from energy markets base metals were also generally firmer with the exception of Copper. Iron ore (+0.49%) snapped a two-day 9% loss while Zinc (+0.71%), Nickel (+1.22%) and Lead (+0.95%) also had better days.

Credit markets were not to be left behind with the more energy sensitive US market outperforming. CDX IG ended the session 3.5bps tighter, the second successive daily gain and the best single day move tighter since the end of March. CDX HY rallied 16bps while in Europe we saw Main and Crossover finish 3bps and 8bps tighter respectively. The bigger focus for credit right now though is the huge amounts of primary issuance that we’re seeing this week. €11bn worth of deals priced in the European market yesterday across 13 issuers taking the week to date volume past €17bn. Meanwhile in the US nearly $10bn of deals priced meaning that week to date volumes in the two days so far (currently $36bn) already exceeds the YTD weekly average with expectations still for steady issuance over the remainder of the week. While we’re on the subject of credit, a quick mention that this morning our latest Credit Bites note was released which takes a look at the latest monthly Moody’s default rate release. It should have hit your emails just before this.

Switching our focus now to the latest in markets this morning, bourses in Asia had initially gotten off to a decent start, largely following the US lead from last night, but have since given up the bulk of the gains now with the Yen strengthening and the rally in Oil coming to a halt. Indeed the Nikkei is currently +0.29% but was up as much +1.47% at one stage, with the Yen rallying around half a percent. The Hang Seng (-0.63%) and Kospi (-0.38%) are now in the red after also starting strongly, while the Shanghai Comp (+0.62%) is firmer but has traded in a 1% range. Oil markets are off around half a percent, while credit markets a marginally tighter generally.

Moving on. On Monday we recapped the current state of play with regards to earnings season in the US and today we’re taking a closer look at the same data for European earnings. As it stands we are now 79% of the way through the season and earnings beats are currently standing at 57% based on Bloomberg data. While that is less than what we’ve seen in the US, a similar theme has played out in that earnings are beating on low and downwardly revised guidance. The energy sector is a good example of that with 77% of companies beating earnings guidance despite YoY EPS for the sector being down over 60%. In fact our European equity strategy colleagues highlighted in their report from a couple of days ago that overall EPS for the Stoxx 600 is -21% yoy and excluding the impact of energy and financials is ‘just’ -4% YoY but is still lower nevertheless. Much like the US it’s the downward revision guidance which is helping to somewhat artificially inflate that beat miss ratio. Since the turn of the year our colleagues note that Stoxx 600 consensus EPS growth for 2016 has fallen to 0.3% from around 7% which is a significantly sharper decline than in previous years.

Turning to the macro, there was some contrasting economic data for us to touch on yesterday. Releases out of the US were generally a little better than expected. Wholesale inventories were reported as rising +0.1% mom in March as expected, while trade sales were up a greater than expected +0.7% mom (vs. +0.5% expected). The NFIB small business optimism reading was up 1pt last month relative to April to 93.6 (vs. 93.0 expected) and so rebounding off the recent low. Meanwhile JOLTS job openings printed at 5.76m in March, more than expected (5.45m expected) and up from 5.61m in February. Recent data since May 4th has now seen the Atlanta Fed revise up their Q2 GDP forecast to 2.2% from the prior 1.7% estimate.

In contrast, yesterday’s industrial production reports in Europe were generally disappointing. Indeed reports for Germany (-1.3% mom vs. -0.3% expected), France (-0.3% mom vs. +0.7% expected) and Italy (0.0% mom vs. +0.2% expected) all missed expectations and paint some downside risk to Thursday’s report for the wider Euro area. On the positive side, the March export numbers out of Germany (+1.9% mom vs. 0.0% expected) bettered expectations and helped Germany to further widen its trade surplus. We’ll get the Q1 GDP report for Germany this Friday where currently expectations are running at +0.6%.

Looking at the day ahead, the economic diary is relatively sparse today. This morning in Europe the only release of note comes from the UK where we’ll get the March industrial and manufacturing production reports (industrial production expected to come in at +0.5% mom). Later this evening meanwhile and over in the US the only data of note is the April Monthly Budget Statement. There’s a similar lack of Fedspeak although we will hear from the ECB’s Weidmann and Nowotny this evening. It’s worth keeping an eye on Brazil however where the Senate is scheduled to vote on the impeachment process. Our EM colleagues noted last night that a simple majority of 41 senators would be enough for the Senate to accept the request, which would force President Rousseff to temporarily step down for as long as 180 days, a period in which Vice President Michel Temer would take over and have full autonomy to appoint a new cabinet and run the government. Results may not be out until sometime late tonight or early next morning, but it looks like one to watch.

Einstein’s defintion of insanity was “doing the same thing over and over again and expecting a different outcome.” It appears, judging by the world’s central bankers’ utter failure to ignite anything but speculative bubbles in risk assets they are all insane and, while the phenomenon of negative rates is relatively new in Europe and Japan (in other words they can decalre it too soon to judge), it has been four years since Denmark went full NIRP-tard, and inflation has done nothing but collapse.

As Bloomberg reports,

The latest data from Statistics Denmark is bad news for ECB President Mario Draghi and other central bank governors seeking to fuel inflation through ultra-low interest rates.

Denmark’s consumer price index in April was unchanged from a year ago for the second month in a row and up a less-than-expected 0.1 percent from March.

After four years of negative interest rates, it looks like the (inverse) relationship between rates and prices may be broken for good.

Because, as Charles Hugh-Smith detailed previously, what NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals.

The last hurrah of central banks is the negative interest rate policy–NIRP. The basic idea of NIRP is to punish savers so severely that households and businesses will be compelled to go blow whatever money they have on something–what the money is squandered on is of no importance to central banks.

All that matters is that people and enterprises are forced to spend whatever cash they have rather than “hoard” it, i.e. preserve and conserve their capital.

That this is certifiably insane is self-evident. If an economy depends on bringing future spending into the present by destroying savings, that economy is doomed regardless of NIRP, for eventually the cash runs out and spending declines anyway.

But NIRP will fail completely and totally due to another dynamic— one I addressed last month in Another Reason Why the Middle Class and the Velocity of Money Are in Terminal Decline. As correspondent Mike Fasano noted, negative interest rates force us to save even more, not less:

“People like me who have saved all their lives realize that they their savings (no matter how much) will never throw off enough money to allow retirement, unless I live off principal. This is especially so since one can reasonably expect social security to phased out, indexed out or dropped altogether. Accordingly, I realize that when I get to the point when I can no longer work, I’ll be living off capital and not interest. This is an incentive to keep working and not to spend.”

If banks start charging savers interest on their cash, savers will have to save even more income to offset the additional costs imposed by central banks on their savings.

A third dynamic dooms the insane negative interest rate policy: what does it say about the stability and health of the status quo if central banks are saying the only way to save the status quo is to force everyone to empty their piggy banks and spend every last dime of cash?

What exactly are we saving by destroying savings and capital? Isn’t capital the foundation of capitalism? The answer is we are saving nothng but a rotten-to-the-core, parasitic, predatory banking system, coddled and enabled by corrupt central banks and states.

What NIRP says about central banks is that they have run out of options and are now in their own end zone, heaving the final desperate Hail Mary pass that has no hope of saving them from complete and total defeat.

NIRP also says the economy that needs NIRP is sick unto death and doomed to an implosion of impaired debt, over-leveraged risk-on bets and asset bubbles generated by stock buybacks and central bank purchases of risky assets.

The central bankers are delusional if they think NIRP will inspire confidence in investors, punters, households and enterprises. Rather, NIRP signals the failure of central bank policies and the end-game of credit expansion as the solution for all economic ills.

What NIRP communicates is: this sucker’s going down, so sell everything and hoard your cash and precious metals. If that’s what the central banks want households and enterprises to do, NIRP will be a rip-roaring success.

If the USA dollar strengthens then Europe Japan and Emerging Markets win but China loses ad does commodities.  If the USA dollars weakens, then Europe, Japan emerging markets loses, but China and commodities win. Because of this a war is now waging between central banks trying to put their country on the winning side.  It generally ends in a global failure.  And as Smith correctly states:

(courtesy zero hedge)

Brazilian Soccer Star Warns Olympic Visitors “Stay Home, Your Life Is At Risk Here”

OIL MARKETS

Macy’s stock was massacred today after the company slashed its outlook.  They scared the living daylights out of investors when they stated that the consumer is “uncertain”.  Inventories reach record levels against declining revenues of 7.4% IN THE QUARTER

Macy’s is a good Bellwether was to what is going on inside the uSA