may 12/GLD adds another whopping 3.27 tonnes to inventory despite gold whacking today/Silver OI near its all time record OI rising to 206,438 contracts/gold OI rises by 6113 contracts to 585,890 and this necessitates a raid today and another most likely tomorrow/BREXIT DEBATE NOW TIED/Brazil’s Roussef is now suspended/Venezuela is now in utter chaos and total anarchy/Kremlin has 20,000 of Hillary Clinton emails and they do not know what to do with them: Judge Napolitano/ Norstrom plummets with awful results and terrible revenue guidance forward/Glencore has 30% of June Brent oil

Good evening Ladies and Gentlemen:

Gold:  $1,270.40 down $4.10    (comex closing time)

Silver 17.09  down 21 cents

In the access market 5:15 pm

Gold $1263.50

silver:  17.00

 

As soon as our crooked bankers saw the likes of the open interest in gold and silver they knew that they had to whack despite the awful news on the jobless front today. We are now very close at an all time record high OI for silver and yet the price is 32.00 less per oz. Generally, the CFTC state that these things correct themselves.  We have now had 5 years of high silver OI with a low price and that destroys their mantra which is in bold as you enter the CFTC offices, namely that the futures market is a price discovery mechanism and that future price discovery of any commodity will lead to the correct price. Obviously our bought and paid for regulators have destroyed their motto with respect to the precious metals.

Expect another raid tomorrow!

 

Let us have a look at the data for today

.

At the gold comex today we had a GOOD delivery day, registering 27 notices for 2700 ounces for gold,and for silver we had 2 notices for 10,000 oz for the non active May delivery month.

Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 235.21 tonnes for a loss of 68 tonnes over that period

.

In silver, the open interest rose by 1047 contracts up to 206,438 as the price was silver was UP by 22 cents with respect to yesterday’s trading. In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.032 BILLION TO BE EXACT or 147% of annual global silver production (exRussia &ex China)

In silver we had 2 notices served upon for 10,000 oz.

In gold, the total comex gold OI ROSE BY 6,113  CONTRACTS UP to 585,890 contracts AS THE PRICE OF GOLD WAS UP $10.70 with YESTERDAY’S TRADING(at comex closing). Yesterday I stated:  “Again the liquidation of contracts was not to the liking of our crooked banks.” They did not like the OI in both gold and silver and thus the raid today.

 

As far as the GLD, we had another huge change in tonnes (despite the gold price being down badly today) a deposit of 3.27 tonnes into the GLD. The new inventory rests at 845.19 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. We had no changes in silver inventory at the SLV. Inventory rests at 335.073 million oz.

.

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

1. Today, we had the open interest in silver ROSE by 1,077 contracts UP to 206,438 as the price of silver was UP by 22 cents with YESTERDAY’S trading. The gold open interest rose by a considerable 6,113 contracts as  gold WAS UP $10.70  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. The amount standing for May remains at a very high 6.37 tonnes.

(report Harvey).

 

2 a) Gold trading overnight, Goldcore

(Mark OByrne/off today

2b)  Gold trading earlier this morning;

(Harvey)

3. ASIAN AFFAIRS

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN  BY 1.175 PTS OR 0.04%  /  Hang Sang closed DOWN 139.83 OR 0.70%. The Nikkei closed UP 67.33 POINTS OR 0.41% . Australia’s all ordinaires  CLOSED DOWN 0.24% Chinese yuan (ONSHORE) closed DOWN at 6.5180.  Oil ROSE to 46.58 dollars per barrel for WTI and 47.84 for Brent. Stocks in Europe DEEPLY IN THE GREEN . Offshore yuan trades  6.54520 yuan to the dollar vs 6.5180 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS

REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) REPORT ON JAPAN

none today

b) REPORT ON CHINA

NONE TODAY

4.EUROPEAN AFFAIRS

i)Members of the European Parliament are slamming the latest Greek bailout.  Even members of the troika disagree as to how to rescue Greece.  They believe that there must be some sort of debt relief due to the oncoming social Armageddon. But Germany says no. The reason of course is that a default on debt will blow up Deutsche bank.

( zero hedge)

ii)With one month to go before the vote in England on whether to leave the EU, the Bank of England engaged in fearmongering as they state that sterling will fall sharply.  The two sides are now tied:

( zero hedge)

EMERGING MARKETS

i)Rousseff is suspended and now the senate votes.  The problem of course is that all of the government heads are corrupt.  Brazil does not have anybody clean to lead:

( zero hedge)

 

ii)Chaos supreme in Venezuela now.

( zero hedge)

OIL ISSUES

i)Two more energy companies go bust:  Linn Energy and Penn Virginia
( zero hedge)
ii)The IEA believes the oil surplus will be lower than usual and thus causes crude to top 47 dollars:( zero hedge)

 

iii)Absolutely brilliant:  Crooked Glencore is manipulating the price of oil as they have over 30% of June Brent supply:

( Reuters/zero hedge)

PHYSICAL MARKETS

i)Just  a start.  Shortly we will see most of the upper echelon of bankers thrown in jail

( zero hedge)

USA STORIES WHICH MAY INFLUENCE THE PRICE OF GOLD AND SILVER

i)China is exporting deflation to the world:  Import prices tumble now for 21 straight months and the tumble was the worst recorded since 2009

( zero hedge)

ii)So much for a USA recovery:  initial jobless claims soar by 20,000 to 294,000.

( zero hedge)
iii)Apple tumbles after a report shows a huge 70 to 80% plunge in iphone chip shipments. And these shipments were suppose to be for the new iphone 7

( zero hedge)
iv)Michael Snyder illustrates 11 signs that the USA economy is deteriorating

Our ever popular Michael Snyder..
( Michael Snyder)
v)The following commentary is extremely important:

The Kremlin has 20,000 hacked emails belonging to Hillary Clinton and they are debating amongst themselves whether to release these or not. Also the FBI are interviewing 5 of Mrs Clinton’s closest aids and this is to determine if they should be charged in the transfer of state secrets via Clinton’s server.
a must read../
( Judge Andrew Napolitano/David Stockman/ContraCorner)
vi)The following is a major blow to Obamacare as cost sharing reductions to insurers are illegal and must be appropriated by Congress.  This will surely be headed to higher courts but in the meantime, it is a severe blow

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest rose to an OI level  of 585,890  for a gain of 6,113 contracts AS  THE PRICE OF GOLD WAS UP $10.70 with respect to YESTERDAY’S TRADING. We are within spitting distance of the comex all time high of 206,748. 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 100 contracts DOWN to 1217. We had 100 notices filed ON YESTERDAY so we neither gained nor lost any gold ounces that will stand for delivery. . The next big active gold contract is June and here the OI FELL by 21,911 contracts DOWN to 346,974 as those paper players that wished to stay in the game rolled to August. The estimated volume today (which is just comex sales during regular business hours of 8:20 until 1:30 pm est) was VERY GOOD at 209,252. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was EXCELLENT at 328,424 contracts. The comex is not in backwardation. We are LESS THAN 3 weeks away from first day notice for the huge June contract.

Today we had 27 notices filed for 2700 oz in gold.

 

And now for the wild silver comex results. Silver OI ROSE by 1077 contracts from 205,391 UP to 206,438 as  the price of silver was UP BY 22 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 22 contracts DOWN to 877. We had 25 notices filed YESTERDAY so we GAINED 3 contracts or AN ADDITIONAL  15,000 oz of silver will   stand for delivery in this active month of May. The next non active month of June saw its OI FALL by 22 contracts DOWN to 797  OI.The next big delivery month is July and here the OI ROSE by 912 contracts UP to 142,571. The volume on the comex today (just comex) came in at 47,138 which is EXCELLENT. The confirmed volume YESTERDAY (comex + globex) was AGAIN EXCELLENT AT 55,199. Silver is not in backwardation. London is in backwardation for several months.
THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.
 
We had 2 notices filed for 10,000 oz.
 

MAY contract month:

INITIAL standings for MAY

Initial Standings for MAY
May 12.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  160.75 OZ

MANFRA

5 KILOBARS

Deposits to the Dealer Inventory in oz 2,699.85 oz

Brinks

Deposits to the Customer Inventory, in oz  96,453.000 OZ

HSBC

???

 

No of oz served (contracts) today 27 contracts
(2,700 oz)
No of oz to be served (notices) 1190 CONTRACTS

119,000 OZ

Total monthly oz gold served (contracts) so far this month 859 contracts (85,900 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  211,861.2 OZ

Today we had 1 dealer deposit

i) Into Brinks:  2,699.85

total dealer deposit: 2,699.85 oz

 

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 1 customer deposits:

i) Into HSBC: a crazy 96,453.000 oz ???

THIS IS NOT A KILOBAR ENTRY/NOT DIVISIBLE BY 32.15 OZ.

total customer deposit: 96,453.000 OZ

Today we had 1 customer withdrawal:

i) OUT OF MANFRA:  160.75 OZ

Total customer withdrawals:  160.75 oz  5 KILOBARS

Today we had 1 adjustment:

OUT OF SCOTIA:

WE HAD 97.22 OZ ADJUSTED OUT OF THE DEALER AND INTO THE CUSTOMER OF SCOTIA. WE WILL DEEM THAT A SETTLEMENT: .0003 TONNES

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 100 contracts of which 17 notices was stopped (received) by JPMorgan dealer and 1 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 (859) x 100 oz  or 85,900 oz , to which we  add the difference between the open interest for the front month of MAY (1217 CONTRACTS) minus the number of notices served upon today (27) x 100 oz   x 100 oz per contract equals 204,900 oz, the number of ounces standing in this non active month.  This number is huge for May. iT NOW SEEMS THAT THE AMOUNT STANDING FOR GOLD IN MAY WILL HOLD AND WITH THAT IT WILL BRING MUCH EXCITEMENT TO JUNE 
 
Thus the initial standings for gold for the MAY. contract month:
No of notices served so far (859) x 100 oz  or ounces + {OI for the front month (1217) minus the number of  notices served upon today (27) x 100 oz which equals 204,900 oz standing in this non  active delivery month of MAY(6.3732 tonnes).
WE NEITHER GAINED NOR LOST ANY GOLD OUNCES STANDING IN THIS NON ACTIVE DELIVERY MONTH OF MAY.
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 6.3732 tonnes of gold standing for MAY and 18.700 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 6.3732 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 – MAY 12  .0003  = 20.8217 tonnes still standing against 18.700 tonnes available.  .
 
Total dealer inventor 601,216.748 tonnes or 18.700 tonnes
Total gold inventory (dealer and customer) =7,562,214.055 or 235.21 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 235.21 tonnes for a loss of 68 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 6.3732 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. We are extremely close to the all time highs in both gold and silver OI.
 end
And now for silver
 

MAY INITIAL standings

 May 12.2016

Silver
Ounces
Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  800,672.788 oz

CNT, SCOTIA

Deposits to the Dealer Inventory  NIL
Deposits to the Customer Inventory  597,057.400 oz

JPM

No of oz served today (contracts) 2  CONTRACTS

10,000 OZ

No of oz to be served (notices) 875 contracts

4,375,000 oz

Total monthly oz silver served (contracts) 1922 contracts (9,610,000 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  3,291,048.4 oz

today we had 0 deposit into the dealer account

total dealer deposit:NIL oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 1 customer deposits:

i) Into JPM: 597,057.400 oz

Total customer deposits: 597,057.400  oz.

We had 2 customer withdrawals

i) out ouf CNT: 689,557.278 oz

ii) Out of SCOTIA: 111,115.510 oz

:

total customer withdrawals:  800,672.788 oz

 
 

 

 we had 0 adjustment

The total number of notices filed today for the MAY contract month is represented by 2 contracts for 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 (1922) x 5,000 oz  = 9,610,000 oz to which we add the difference between the open interest for the front month of MAY (877) and the number of notices served upon today (2) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the MAY contract month:  1922 (notices served so far)x 5000 oz +(877{ OI for front month of MAY ) -number of notices served upon today (2)x 5000 oz  equals 13,985,000 oz of silver standing for the MAY contract month.
WE GAINED 3 CONTRACTS OR AN ADDITIONAL 15,000 OZ WILL STAND FOR DELIVERY.
 
Total dealer silver:  29.692 million
Total number of dealer and customer silver:   152.822 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.
end
And now the Gold inventory at the GLD
May 12/another huge deposit of 3.27 tonnes in gold inventory at the GLD/inventory rests at 845.19 tonnes
May 11/another huge deposit of 2.67 tonnes in gold inventory at the GLD/Inventory rests at 841.92 tonnes
May 10/Another huge deposit of 2.38 tonnes in gold inventory at the GLD/Inventory rests at 839.25 tonnes
May 9/Surprisingly we had another deposit of 2.68 tonnes of gold into the GLD with gold down!! Inventory 836.87 tonnes
May 6 SURPRISINGLY WE HAD ANOTHER HUGE DEPOSIT OF 8.65 TONNES OF GOLD INTO THE GLD/ INVENTORY RESTS AT 834.19 TONNES
May 5/SURPRISINGLY WE HAD A HUGE DEPOSIT OF 3.90 TONNES OF GOLD WITH THE PRICE OF GOLD DOWN???
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
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

May 12.:  inventory rests tonight at 845.19 tonnes

end

Now the SLV Inventory
May 12/no change in silver inventory/rests tonight at 335.073 million oz/
 May 11.2016/no change in silver inventory/rests tonight at 335.073 million oz/
May 10.2016/we had a huge withdrawal of 1.046 million oz in silver leaving the SLV,no doubt for Shanghai which lately has been gobbling up whatever inventory it could lay its hands on/Inventory rests at 335.073 million oz.
May 9. no change in silver inventory/rests at 336.119 million oz.
May 6/ SURPRISINGLY WE HAD A WITHDDRAWAL OF 1.142 MILLLION OZ FROM THE SLV
INVENTORY RESTS AT 336.119 MILLION OZ
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 12.2016: Inventory 335.073 million oz
end
 
1. Central Fund of Canada: traded at Negative 5.1 percent to NAV usa funds and Negative 5.2% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.3%
Percentage of fund in silver:37.3%
cash .+1.4%( May 12/2016).
2. Sprott silver fund (PSLV): Premium rises   to +.63%!!!! NAV (MAY 12.2016) 
3. Sprott gold fund (PHYS): premium to NAV  FALLS 1.57% to NAV  ( MAY 12.2016)
Note: Sprott silver trust back  into POSITIVE territory at +63% /Sprott physical gold trust is back into positive territory at +1.57%/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 +.63%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
 
 
 

END

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

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

Global Gold Investment Demand Surges Record 122% In Quarter 1, 2016

Global gold demand surged a record 21% and gold investment demand a record 122% in Q1, 2016 according to the World Gold Council who released their ‘Gold Demand Trends Q1 2016’ report today.
global gold demand
The report is a leading industry resource for data and opinion on global gold demand. The quarterly publication examines demand trends by sector as well as geography.

Key findings re global gold demand in Q1 are

– Gold was a top-performing asset in Q1 – up 17% in USD terms

– Overall demand for Q1 2016 increased by 21% to 1,290t, up from 1,070t in Q1 2015.

– Global investment demand was 618t, up 122% from 278t in the same period last year.

– UK gold investment demand surges 61% – low base to 3.2 tonnes

– EU gold demand very robust at 58.4t and Germany remains largest buyer in EU

– Central bank demand dipped slightly to 109t in Q1 2016, compared to 112t in the same period last year.

– Total consumer demand (primarily jewellery) was 736t down 13% compared to 849t in Q1 2015.

– Global jewellery demand fell 19% to 482t versus 597t in the first quarter of 2015

– Demand in the technology sector fell 3% to 81t in Q1 2016.

– Total supply was up 5% to 1,135t in Q1 2016, from 1,081t in the first quarter of 2015. Mine supply was up 8% to 774t.

Also of note from the report:

Gold demand reached 1,290 tonnes Q1 2016, a 21% increase year-on-year, making it the second largest quarter on record. This increase was driven by huge inflows into exchange traded funds (ETFs) – 364t – fuelled by concerns around the shifting global economic and financial landscape. Higher prices and industrial action in India pushed global demand for jewellery down (-19%), while total bar and coin demand was marginally higher (+1%). Central banks remained strong buyers, purchasing 109t in the quarter. Total supply increased 5% to 1,135t. Hedging by producers (40t) supported an increase of 56t in mine supply, although countered by a marginal decline in recycling.

Investment demand ignites price rally

During the first quarter, the US$ gold price appreciated by 17% on the strength of investor conviction. This was matched by local price gains in markets across the globe.

The enthusiasm with which investors renewed their appetite for gold ETFs in Q1 was palpable – the gold price surged by 17% in response to such large-scale inflows. This was the best performance in almost three decades and gold ranked as one of the best performing assets globally during the quarter. The effect was also felt in the price of gold measured in other currencies, with double digit gains in the euro (+11%), British pound (+20%), Chinese renminbi (+16%), Indian rupee (+17%) and Turkish lira (+13%) (Chart 2).

The investment response in the ETF market was echoed in surging physical demand for gold bars and coins in a handful of markets. US investors in particular were keen to add to their holdings, wanting the security of gold amid economic uncertainty. Demand jumped by 55% to 18.3t, albeit that this was being compared with a particularly weak Q1 2015. Bar and coin demand in the UK grew by a similar magnitude (+61%) although absolute volumes remained low (3.2t). And, powered by a strong German market, European demand remains resolute – at 58.4t it <Germany> remains one of the largest markets for gold investment.

Read the full report here

Gold and Silver Prices and News
Gold futures settle higher as high flying dollar stalls (Marketwatch)
Goldman raises gold price forecasts on weaker greenback (CNBC)
Gold moves off two-week low as dollar slips, shares retreat (Reuters)
Gold Climbs on Investment Demand as Goldman Increases Forecasts (Bloomberg)
20 percent slide in sterling if Britain leaves EU (Reuters)

Experts Weigh In on How to Detect Counterfeit Gold Coins (Investment University)
Gold “Good As Portfolio Insurance” – Says Gambles (CNBC)
Comex Gold Open Interest – Craig Hemke (24H Gold)
Macy’s Crushed By Amazon, Italian Banks Crushed By Euro (Dollar Collapse)
Eurozone Recovery Wilts As Sugar Rush Fades, Deflation Lurks (Telegraph)
Read More Here

Gold Prices (LBMA AM)
12 May: USD 1,268.30, EUR 1,111.30 and GBP 878.28 per ounce
11 May: USD 1,271.80, EUR 1,116.19 and GBP 882.45 per ounce
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

Silver Prices (LBMA)
12 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce (To be updated)
11 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce
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

Protecting_Your_Savings_in_the_Coming_Bail_In_Era_-_Copy-3.jpg Storing_Gold_in_Switzerland 7_Key_Storage_Must_Haves.png

Read Our Most Popular Guides in Recent Months

END-

 

 

 

Just  a start.  Shortly we will see most of the upper echelon of bankers thrown in jail

(courtesy zero hedge)

Deustche Bank Brokers Jailed After “Prolonged, Persistent Bad Behavior” In Biggest Insider Trading Bust Ever

Two former Deutsche Bank corporate brokers have been sentenced to one of the longest prison terms possible for the crime of insider trading in the UK. As US financial market participants walk free in the streets managing their own “home office” money, Martyn Dodgson and Andrew Hind will be rotting in a Wandsworth prison cell (among the worst reputed of England’s prisons) for up to four and half years for what the judge called “persistent, prolonged and deliberately dishonest behavior.”As Bloomberg reports, the group, including three other defendants, formed part of the FCA’s biggest insider-trading investigation dubbed Operation Tabernula.

The FCA accused Dodgson and Harrison of passing inside information on possible deals from their jobs between 2006 and 2010 to Hind who the agency claimed gave them to Parvizi and Anderson to trade on. All of the men denied the charge. But as Bloomberg reportsthe sentences are among the longest handed down in an FCA insider-dealing case

Martyn Dodgson, 44, was sentenced Thursday in London (to 4 1/2 years in jail)  alongside friend and accountant Andrew Hind, who was given a 3 1/2 year prison term for the same offense. The men were found guilty of insider dealing on Monday after a four-month trial.

“This was persistent, prolonged and deliberately dishonest behavior,” Judge Jeffrey Pegden said when handing down the sentence. Dodgson showed a “gross breach of trust.”

The sentences were another victory for the Financial Conduct Authority, which has won 30 convictions for insider trading since it started prosecuting the crime less than a decade ago.The success comes as U.S. prosecutors are struggling with a court ruling that limits their ability to tackle the offense.

Three other defendants in the case, former Panmure Gordon & Co. corporate broker Andrew “Grant” Harrison and day traders Benjamin Anderson and Iraj Parvizi, were acquitted. They also used nicknames including Fatty, Nobu and Fruit in an effort to disguise their identities.

The group formed part of the FCA’s biggest insider-trading investigation dubbed Operation Tabernula. The FCA already secured three other convictions in relation to the probe.

The sentences are among the longest handed down in an FCA insider-dealing case.Former Moore Capital Management LLC trader Julian Rifat, another target in Tabernula, received a 19-month prison sentence last year after pleading guilty.

Finally, we note that, Dodgson and Hind will probably start their sentences in HM Prison Wandsworth, a Victorian jail south of the Thames known for its poor conditions and violent residents.

The City regulator heralded the case as proof it can hold rule-breakers to account…

“This was an extraordinary and complex case of a type not prosecuted in this country before,” said enforcement boss Mark Steward. “The message is loud and clear, that the FCA will not tolerate sophisticated predatory criminals abusing our markets. This case demonstrates our capability and determination to root out this kind of abuse and ensure our market and the investing public are properly protected.

“Dodgson was an experienced and well-paid banker, well aware that what he was doing constituted a criminal offence and who conspired with Hind to abuse our market and to profit at the expense of the investing public.

“The FCA is committed to detecting this kind of abuse and make the perpetrators fully accountable in accordance with the law.”

end

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

 
 

:

1 Chinese yuan vs USA dollar/yuan DOWN to 6.5180 (BIG DEVALUATION SOUTHBOUND ) / Shanghai bourse  CLOSED DOWN 1.175 OR 0.04%  / HANG SANG CLOSED DOWN 139.83 OR 0.70%

2 Nikkei closed UP 67.33 OR 0.70% /USA: YEN RISES TO 109.17

3. Europe stocks opened ALL IN THE GREEN  /USA dollar index UP to 94.06/Euro UP to 1.1400

3b Japan 10 year bond yield: RISES   TO -.096%     !!!!(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::  46.58  and Brent: 47.84

3f Gold DOWN  /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 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 0.120%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate FALL to 7.84%/: 

3j Greek 10 year bond yield FALL to  : 7.57%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1268.90/silver $17.27(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 29 in  roubles/dollar) 64.75-

3m oil into the 46 dollar handle for WTI and 47 handle for Brent/

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

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 .9702 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1061 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  + .120%

/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 1.75% early this morning. Thirty year rate  at 2.607% /POLICY ERROR)

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

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

Futures Halt Selloff, Levitate Higher On Another USDJPY Spike; Oil Rises

If yesterday’s selloff had a specific catalyst, namely some of the worst consumer retail earnings seen in years, it merely undid the Tuesday rally which levitated global risk with no fundamental driver, aside for a 200 pip spike in the USDJPY.  Some central bankers may even say it was a “magical” levitation. (Recall: A Central Banker Officially Loses It: “We Are Magic People”).  Fast forward to the overnight session when following a muted Asian session, it was once again up to the “magical” USDJPY to send stocks well into the green without any actual catalyst whatsoever, but what merely appears to have been another “magical” intervention session by the BOJ.

In addition to rising European stocks and S&P500 futures which were 0.6% higher at last check, oil prices also rose after the International Energy Agency softened its forecast for a global supply surplus. Curiously, while the IEA said that it expects OPEC April crude output to rise 33k bpd to 32.76mln bpd, the highest since August 2008, and noted that Iran output rose to pre-sanctions levels in April while Iraq output rebounded on near-record southern exports, it offset this surge in output with hopes that non-OPEC supply would decline by 100k bpd citing outages. Which is ironic because with every $1 higher in WTI more shale companies restart production. It also expects a smaller global surplus on stronger global demand.

A good summary of recent oil price action comes from Angus Nicholson, analyst at IG, who said that “we have had a lot of reasons that have supported the price over the past week, the Canadian wildfires, Nigerian supply disruptions and then a surprisingly bigger inventory pullback. At the moment, oil has been trading very tightly within a range of around $43 to $47. We need a key breakout of that trading range to decisively say which direction the price is going.”

With oil trading 1% higher at $6.60, it seems we are about to break out of this band any moment.

Meanwhile, the abovementioned USDJPY levitation helped the Stoxx Europe 600 Index reverse a drop of as much as 1%, overcoming a drag from companies including LafargeHolcim Ltd. that posted lower earnings.  Because when all else fails there is always central-bank driven “magical” multiple expansion.

Market Snapshot

  • S&P 500 futures up 0.6% to 2069
  • Stoxx 600 up 0.2% to 335.4
  • Eurostoxx 50 +0.4%
  • FTSE 100 -0.1%
  • CAC 40 +0.4%
  • DAX +0.3%
  • IBEX +0.6%
  • FTSEMIB +0.4%
  • SMI -0.2%
  • Nikkei 225 up 0.4%
  • Hang Seng down 0.7%
  • Kospi down 0.1%
  • Shanghai Composite down 0%
  • ASX down 0.2%
  • Sensex up 0.7%
  • Euro down 0.12% to $1.1412
  • Dollar Index up 0.13% to 93.95
  • Japanese yen down 0.52% to 108.98
  • Brent Futures up 0.6% to $47.9/bbl
  • Gold spot down 0.6% to $1269.4/oz
  • German 10Yr yield up 1bps to 0.14%

Global Top Headlines

  • Donald Trump Is Considering Newt Gingrich for Vice Presidential Role: according to multiple people familiar
  • Brexit Dominates Agenda as Bank of England Unveils New Forecasts: economists predict officials will leave key rate at 0.5%
  • French Government Faces Confidence Vote After Labor-Law Revolt: rogue Socialist lawmakers blocked government labor bill
  • Norway Keeps Rate at Record Low as Oil Wealth Spending Jumps: Norges Bank says rise in oil price may mean higher growth
  • ECB Can Still Pull Rabbits Out of the Hat, Council Member Says: Lithuanian central bank governor speaks in Bloomberg interview
  • Boeing Mulls Price Cuts, to a Point, in Quest for 737 Share Gain: planemaker bid used jets against C Series in Delta contest
  • Lockheed Martin Stands to Get $3 Billion Order From Denmark:

Looking at regional markets, Asia stocks traded mixed after initially following the losses on Wall St. amid disappointing retailer earnings and the worst day for consumer discretionary stocks in 3 months . Asia bourses were dampened from the open, although ASX 200 (-0.2%) found some mild reprieve following gains in commodities after WTI crude futures rose to 6-month highs and iron-ore snapped a 6-day losing streak. JPY, earnings and auto names initially drove price-action in Nikkei 225 (+0.4%), with Toyota shares slumping on weaker results and outlook, although downside was limited by gains in Takata and Mitsubishi Motors before the index recovered in late trade. Chinese markets (Shanghai Comp. flat) shrugged off opening losses stemming from debt concerns stoked after Yingli Green Energy Holding expected to default on CNY 1.7bIn of debt maturing today. 10yr JGBs traded marginally lower despite the risk-averse tone in Japan, with demand dampened following a weaker 30yr JGB auction in which b/c decline from prior and lowest accepted price fell below expectations.

BoJ Summary of Opinions stated that Japan’s economy is likely to be on moderate expanding trend and that QQE with NIRP has already produced its effects which will steadily spread to economic activity and prices. The summary also noted a member said they would add stimulus if necessary, while a member also stated that price stability target should be seen as flexible.  BoJ Gov. Kuroda said they will not hesitate to ease if necessary and could utilise any of the three methods. Kuroda added that BoJ now sees 2% inflation goal to be achieved in his tenure and it is not appropriate to say the exit could start within his term.

Top Asian News

  • Nissan Buying 34% Stake Hands Lifeline to Scandal-Hit Mitsubishi: Nissan reliant on Mitsubishi Motors for Japan minicars
  • Sharp’s Losses, Liabilities Highlight Foxconn Revival Challenge: Net loss 256b yen for fiscal year ended March 2016
  • Singapore Charges Two Men With Insider Trading on Two Stocks: Charges relate to trades in Qualitas Medical, Leeden in 2011
  • Qihoo Buyer Group Said to Hit Impasse With Chinese FX Regulator: Chinese consortium told it can’t move money offshore in one go
  • KDDI Profit Forecasts Lag Analyst Estimates; To Buy Back Shares: To repurchase up to 1.53% of shares for as much as 100b yen during May 13 to Sept. 23
  • Takata Predicts Return to Profit Despite Costs; Shares Surge: Stock soared as much as 24%, most on record
  • Japan Posts Its 21st Straight Monthly Current-Account Surplus: March current-acct surplus 2.98t yen vs est. +2.97t yen

European equities have spent much of the morning trading in negative territory, albeit trading mixed heading into the North American open. Financials initially led the way lower, with some attributing the downside to fears of US and French governments issuing substantial fines in relation to the Panama Papers, as well as the earnings report from Credit Agricole (-4.0%), which saw declines in profits. On the upside, energy is one of the best performers today as WTI continues to extend on gains seen in the wake of DoE inventories seen yesterday as WTI Jun’16 futures trades above USD 46.50/bbl for the first time this month.
Fixed income markets saw initial upside at the open, benefiting from the aforementioned downside seen in equities, however Bunds failed to hold onto gains , moving into negative territory, with the German benchmark also impacted by the supply from Italy and Ireland and after-market US 30yr Bond Auction.

Top European News

  • Banks Pricing Dong Face $8 Billion Valuation Gap as IPO Planned: Dong announces intention to float, will sell at least 15%
  • Credit Agricole Quarterly Profit Falls on Decline in Trading: profit at the LCL network drops 32% to EU85m
  • LafargeHolcim Profit Falls on Lower Indian Prices, Brazil: adj. operating Ebitda declines 22%, missing estimates
  • Zurich Insurance Net Beats Estimates as Overhaul Continues: Net income fell 28% to $875m vs est. $745m
  • BMW to Introduce Electric, Self-Driving Flagship Car in 2021: New iNext model to feature new interior, digital connectivity
  • RWE First-Quarter Profit Beats Estimates on Trading Gains: shares rose the most this month
  • Hapag-Lloyd Said to Plan to Finalize UASC Merger by Mid- June: according to a person familiar with the matter
  • Daily Mail Names Boston Consulting’s Paul Zwillenberg as CEO: succeeds Martin Morgan, who retires from May 31
  • ITV Says Revenue Growth Continuing; Sees Good 1H Profit Growth: has confidence for for full year and into 2017
  • Generali Profit Drops After Year-Earlier Gain Isn’t Repeated: Net income declined to EU588m from EU682m a year earlier
  • Tata Steel’s U.K. Unit Said to Attract Hebei Iron & Steel: company may compete with Liberty House, Excalibur, JSW

In FX, it has all be about the USDJPY once again, which set the overnight risk tone following a 100 pip “magical” ramp on no news (and in fact following the soaring trade surplus, the Yen should have risen if anything). The latest drop in the Yen led to a strong push higher in European and US risk assets just as fears were growing that a December replay would materialize. In Europe, it has been an expectedly cautious morning of FX trade this morning, predominantly in GBP as the triumvirate of BoE rate announcement, minutes and QIR are all due at midday today. Early on, we saw some softening in the Cable rate, but another dip into the low 1.4400’s has been met with fresh demand, with dovish expectations now at risk of being overdone. Elsewhere, AUD/USD has retested .7300 this morning, as inflation forecasts came in a touch below expectations, but we would/should have anticipated this to a larger degree given the recent CPI shock . The figure level has held well, with the oversold status suggested a stronger correction. Oil pushing up to new highs with WTI now challenging the previous peak just shy of $46.75. CAD is back through 1.2850, and eyeing a test on pre-1.2800 levels . Large EUR/USD strikes in and around 1.1400 rolling off today to provide some near term support here.

In commodities, Brent and WTI have both risen following yesterday’s surge on the back of an unexpected drawdown in DoE crude oil inventories , with WTI breaking previous wave highs and currently at USD 46.58/bbl. Gold prices have seen some pressure this morning and has broken the USD 1270/oz support level to the downside. Elsewhere, metals in Shanghai are up roughly an average of 1.5% with Zinc rising the most by 2.6% and aluminium close behind at 2%. Iron ore also joined in up 2.2% to USD 55.40 and steel rebar was one of the only metals to fall, down 0.8%.Yesterday we saw base metals rise an average of 1.1% after recent sell offs and in terms of average volumes that was at 5,966 lots slightly higher than yesterday’s 5,556k.

In other oil the IEA says that OPEC Apr’16 crude output rose 33k bpd to 32.76mln bpd however what is pushing oil higher is that at the same time the IEA also cut 2016 non OPEC supply estimate by 100k bpd citing outages. Nigeria’s oil output is down 600k bpd to 1.4mln bpd due to attacks, with the Gov. oil revenue massively diminished according to Nigerian oil minister.

Taking a look at today’s calendar, today in the US we’ll get the April import price index reading and also the latest weekly initial jobless claims print. We’ll also hear from Fed officials Mester (4.00pm BST), Rosengren (4.45pm BST) and George (7.15pm BST) today.

Bulletin Headline Summary From RanSquawk and Bloomberg

  • Despite opening in negative territory, European equities trade higher as oil prices continue to support sentiment
  • An expectedly cautious morning of FX trade this morning, predominantly in GBP as the
    triumvirate of BoE rate announcement, minutes and QIR are all due at midday today
  • Looking ahead, highlights include BoE Bank Rate, QIR and minutes, US Import Price index, weekly jobs and BoE’s Carney
  • Treasuries lower in overnight trading amid rise in global equities, crude oil and before today’s Bank of England rate announcement at 7am ET; auctions conclude with $15b 30Y bonds, WI 2.60%, last sold at 2.596% in April, saw biggest stop through by a 30Y since Dec. 2014.
  • Brexit is dominating the U.K. agenda and the Bank of England is set to update its take on how the vote is affecting the economy on Thursday; rate setters led by Governor Mark Carney have already warned uncertainty may be weighing on growth
  • U.K. Chancellor of the Exchequer George Osborne said the Treasury and the Bank of England are making contingency plans to stabilize financial markets should Britain vote to leave the European Union next month
  • U.K. Prime Minister Cameron said the U.K. plans to make financial services companies liable for their employees’ complicity in money laundering and fraud, in an extension of proposed laws against tax evasion
  • Euro-area industrial production ended the first quarter with a second monthly drop, weakened by falling output in consumer goods and capital goods. Output declined 0.8% in March from February
  • Norway’s central bank left its benchmark rate at a record low 0.5% as the government spends more of its vast oil wealth to keep the economy from slipping into a recession
  • Fed officials were optimistic as they entered 2016, projecting four hikes at their meeting in December. But they downgraded that expectation in March to just two moves, now even that forecast is looking doubtful
  • A measure of expected price swings in Treasuries dropped to levels last seen in 2014, signaling a growing conviction among traders the Federal Reserve will maintain a gradual monetary policy path
  • Soured loans at Chinese commercial banks rose to the highest level in 11 years as defaults spread from small private firms to large state-owned enterprises in a weakening economy
  • Brazil’s Senate voted to suspend President Dilma Rousseff from office to face an impeachment trial, ushering in a new government to take command of Latin America’s largest economy
  • Wall Street bankers celebrated last year as mergers and acquisitions reached the highest level ever, topping even pre-crash 2007. This year M&A is hitting a more dubious record: Deals gone bust
  • Sovereign 10Y yields mixed; European and Asian equities mostly higher; U.S. equity- index futures rise. WTI crude oil rallies, precious metals fall

DB’s Jim Reid concludes the overnight wrap

A generally positive start for markets this week came to an abrupt halt yesterday and rather than oil driving markets, it was some soft earnings reports on both sides of the Atlantic as well as the news of blocked M&A deals which generally dampened sentiment. Indeed in the US the headlines were dominated by the 15% fall in the share price of Macy’s (which was the most in seven years) after the retailer reported weaker than expected revenue numbers for Q1 this year and cut its full year 2016 profit guidance with the stronger US Dollar and weaker performance from some its core categories weighing on earnings. Softer than expected results from Walt Disney which were reported after the close on Tuesday compounded the pain and helped to fuel some steep falls across a large number of retail names yesterday. The consumer discretionary sector (-1.98%) led losses for the S&P 500 (-0.96%) which snapped its run of three consecutive positive days. A reminder that we get US retail sales data tomorrow covering the month of April.

Meanwhile, in Europe the Stoxx 600 ended with a -0.45% loss, it too succumbing to its first loss this week. It was driven by weakness from quarterly reports out of JCDecaux, EON and ABN Amro, while the news that the EU has halted the proposed acquisition of Telefonica’s O2 unit by Hutchinson added to the bad news. EU Competition Commissioner Margrethe Vestager stated yesterday that the Commission had ‘strong concerns’ that UK consumers would be left with ‘less choice and higher prices’ should the takeover take place. Added to that was the news just prior to this out of the US that a District Judge had halted the proposed merger between Staples and Office Depot with similar concerns that a merger between the two could hurt their customers. This news was arguably more surprising with Staples tumbling -18% and Office Depot down a huge -41%. Telefonica was down just -1% during European trading.

So while some of yesterday’s weakness also spread to credit markets (particularly the US where CDX IG finished just shy of 2bps wider) the bigger story continues to remain the unrelenting supply story in the primary markets this week. The big numbers came from the Euro market yesterday where just shy of €19bn was said to have priced across 26 tranches (including corporate, financials and SSA’s). In fact that was the biggest number of tranches in a single day for more than two years while the daily volume was the third biggest this year. Some of the corporate deals which stood out were the €4bn 4-tranche deal from Johnson & Johnson, €1.8bn 2-tranche deal from Kraft Heinz and the hybrid issue from Total. It was an impressive session in the US too despite what was a weaker day for markets. Just shy of $11bn was said to have priced across ten issuers while the announcement that Dell is said to be considering upsizing its announced $16bn debt offering means it looks like there’s no sign of supply or demand abating just yet.

Moving on to Asia, markets are following the US lead last night with the bulk of bourses currently in the red. The Nikkei (-0.41%), Topix (-0.50%), Shanghai Comp (-0.58%), Kospi (-0.02%), Hang Seng (-0.36%) and ASX (-0.48%) are all currently lower as we go to print, with credit indices in the region also a touch weaker. Currency markets are a bit more mixed as is the case with commodities this morning. Meanwhile there’s also been more M&A chatter to mention with Mitsubishi and Nissan said to be in talks about a possible tie-up. Both companies have confirmed discussions but no decision has yet been reached.

Elsewhere, there’s nothing to report of as yet in Brazil with the Senate currently still debating the President Rousseff impeachment. The NY Times is reporting that the vote by the Senate could be as late as Thursday morning local time in Brazil so we may have some time before we get confirmation of the outcome.
Back to markets. Yesterday was another strong day for Oil with WTI climbing another +3.52% higher to close just above $46/bbl (at $46.23/bbl to be precise) and in turn surpassing the highest close this year set last month. Brent also had a strong day too and rallied to the tune of +4.57% to creep closer to $48/bbl. Yesterday’s surge in prices came about on the back of the latest US crude stockpiles data from the EIA which was reported as unexpectedly dropping by 3.4m barrels in the week ending May 6th. US crude production was also reported as falling while the fallout from the rebel violence in Nigeria continues with reports suggesting that at least a fifth of Nigerian oil production has so far been shut down. In fact it wasn’t just Oil prices which had a stronger day yesterday. Base metals also firmed with Aluminium (+0.64%), Copper (+0.60%), Zinc (+2.98%), Nickel (+2.01%) and Iron Ore (+0.56%) all quietly up, while Gold also bounced +0.90%.

Away from this there wasn’t too much on the macro front for markets to feast on yesterday. The only data in the US came in the form of the April Monthly Budget Statement where a $106.5bn surplus was recorded which largely matched expectations. During the European session it was all about the UK data where ahead of today’s BoE meeting, industrial production was reported as rising a little less than expected in March (+0.3% mom vs. +0.5% expected). The YoY rate now however has fallen to -0.2% from +0.1% with the Q1 print of -0.4% representing a second consecutive quarterly decline, and therefore implying that the UK industrial sector is back in recession. We’ll get the Q1 GDP print on the 26th of this month. Sterling actually closed unchanged yesterday after paring back that post-data weakness later in the session, while 10y Gilt yields were a basis point lower at 1.390%.

end

ASIAN AFFAIRS

i)Late  WEDNESDAY night/ THURSDAY morning: Shanghai closed DOWN  BY 1.175 PTS OR 0.04%  /  Hang Sang closed DOWN 139.83 OR 0.70%. The Nikkei closed UP 67.33 POINTS OR 0.41% . Australia’s all ordinaires  CLOSED DOWN 0.24% Chinese yuan (ONSHORE) closed DOWN at 6.5180.  Oil ROSE to 46.58 dollars per barrel for WTI and 47.84 for Brent. Stocks in Europe DEEPLY IN THE GREEN . Offshore yuan trades  6.54520 yuan to the dollar vs 6.5180 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

none today

b) CHINA ISSUES

none today

EUROPEAN ISSUES

Members of the European Parliament are slamming the latest Greek bailout.  Even members of the troika disagree as to how to rescue Greece.  They believe that there must be some sort of debt relief due to the oncoming social Armageddon. But Germany says no. The reason of course is that a default on debt will blow up Deutsche bank.

(courtesy zero hedge)

MEPs Slam Latest Greek Bailout As “Social Armageddon”

Lawmakers in the European Parliament have sharply condemned the latest Greek bailout deal – reached after weeks of negotiations – which they say will lead to “Social Armageddon” and “too high a price to pay.” As SputnikNews reports, heated exchanges over the state of play of the Greek macro-economic adjustment program were seen in the European Parliament this week, and divisions are also very evident within the Troika itself as obvious need for debt relief (IMF) is scuttled by Germany and the Eurogroup.

On Monday (May 9th), The Eurogroup, Monday (May 9), agreed the latest package of measures for Greece to implement as part of the latest bailout deal.

Controversially, it included cuts of 3% of GDP by 2018, including pension and personal income tax reform as well as VAT reform and public sector wage bill measures.

However, there was disagreement within the Troika of creditors — the European Commission, the European Central Bank, (ECB) and the International Monetary Fund (IMF) — over extra reforms demanded by the IMF that could amount to another US$4 billion in cuts by Greece, over and above what it has already promised.

In heated exchanges over the state of play of the Greek macro-economic adjustment program, the center-left parties – the Socialists & Democrats (S&D), European United Left (GUE) and the Greens/European Free Alliance – as well as European Conservatives & Reformists (ECR) warned Greece’s creditors and the IMF not to impose more reforms on the country and called for debt relief.

EPP leader Manfred WEBER (DE) criticised Prime Minister Tsipras. Referring to the 0.7% growth figure in 2014, he blamed the Tsipras government for slipping below zero growth in 2015 and “harming the country”. He took Ireland as an example of a programme country that recovered as a result of reforms.

S&D leader Gianni PITTELLA (IT) said that the problem is not Athens, but the IMF with its policy of preventive austerity. “If they continue to sabotage an agreement, we have to go it alone”, he said.

ECR’s Notis MARIAS labelled the Greek programme as “violent and leading to a social Armageddon”.

ALDE’s Sylvie GOULARD (FR) said too many issues are being pushed toward 2018 because of the UK’s EU referendum and elections in other countries and that it bears the risk of losing control over the adjustment programmes.

GUE’s Dimitrios PAPADIMOULIS criticised EPP leader Manfred Weber for his attack on Mr Tsipras: “He did not create the Greek debt. The Greek people voted for him and want to keep him as their Prime Minister.”

Green leader Philippe LAMBERTS (BE) said he did not share the optimism after yesterday’s euro group meeting on Greece: “The austerity of its creditors and the IMF is socially unacceptable. That’s too high a price to pay.”

Steven WOOLFE (EFDD, UK) blamed the Eurogroup and the IMF for high unemployment and suicide rates in Greece and encouraged the Greeks “to leave the EU like the UK will do on 23 June.”

Marcel DE GRAAFF (ENF, NL) said Greece is bankrupt and urged “to close the tap, to scrap the euro and return to the drachma”.
Divisions within the Troika were revealed, as SputnikNews reports, in a leaked letter from IMF chief Christine Lagarde, who said:

“We do not believe it will be possible to reach a 3.5% of GDP primary surplus [in 2018] by relying on hiking already high taxes levied on a narrow base, cutting excessively discretionary spending and counting on one-off measures as has been proposed in recent weeks.”

The IMF is calling for debt relief – the writing-off of part of Greece’s debt, or ‘haircut’ in order for Athens to be able to sustain its reforms.

However, in a statement, its Troika partners said: “The Eurogroup reconfirms that nominal haircuts are excluded.”

The latest measures agreed by parliament include reducing pension spending by about two percentage points to around 15 percent of GDP by 2019; setting social security contributions at 20 percent of employees’ net monthly income — with 13.3 percent coming from employers and 6.7 percent from employees; and lowering the income tax-free threshold, or personal allowance, to an average of around US$10,000 a year from around US$10,800 and making income bands narrower.
Prepare for another ‘hot’ summer in Athens as already evidenced this week…

There were mass strikes and demonstrations over the weekend (May 7/8) across the whole of Greece as many public service unions took actions in protest at the Greek Parliament bringing forward a vote on the new bailout package, finally agreeing the new measures on Sunday evening.

END
With one month to go before the vote in England on whether to leave the EU, the Bank of England engaged in fearmongering as they state that sterling will fall sharply.  The two sides are now tied:
(courtesy zero hedge)

Full-Blown Fearmongering: Bank Of England Warns Of Recession, “Sharp” Sterling Fall If UK Leaves Europe

While the Bank of England voted unanimously 9-0 to keep rates on hold at 0.5%, what the market was far more focused on the BOE’s latest gloomy scenarios about what would happen should the UK vote for Brexit on June 23. The BOE did not disappoint, and cautioned that that sterling could fall “sharply” and unemployment would probably rise, while in the press conference after the announcement BOE governor and former Goldmanite Mark Carney went all the way warning Brexit “could possibly lead to recession.”

That this takes place just days after UK’s David Cameron warned of a World War threat should the UK leave the EU is not surprising: after all the whole point is to scare the UK population into submission and into a vote to stay in the EU.

Among the warnings from the BOE’s fire and brimstone forecast was that the “Sterling is also likely to depreciate further, perhaps sharply. This combination of influences … could lead to a materially lower path for growth and notably higher path for inflation.”

Which is ironic: in a world in which every central bank is scrambling to crush its own currency, shouldn’t the BOE then welcome any event that will send the sterling “sharply” lower? Questions, questions…

Meanwhile, the torrent of doom and gloom “if Brexit happens” continues. As Reuters puts it, “British voters have faced a raft of reports from the government and international bodies in recent weeks warning of the dangers of leaving, and the International Monetary Fund is expected to weigh in again on Friday.” All of them have been uniformly bearish which likely means that the outcome from a Brexit would be quite favorable.

Earlier this week, Britain’s National Institute for Economic and Social Research (NIESR) — whose former director Martin Weale sits on the BoE’s rate-setting Monetary Policy Committee said sterling could slide 20 percent if Britain left the EU.

BoE Governor Mark Carney has previously called Brexit the biggest domestic risk to British financial stability, and on Thursday he said it could damage the global economy too.

Finance minister George Osborne, who has tried to focus voters on the economic costs of Brexit, said in a letter to Carney on Thursday that the BoE’s latest forecasts highlighted the potential “lose-lose” situation facing British households.

Many do not believe these “forecasts” – supporters of Brexit argue Britain would benefit from less European regulation, and could strike better overseas trade deals on its own. Regardless, the BOE did not relent and the central bank said that there were growing signs that the Brexit vote was weighing on the economy, but that it would fully recover from the damage if it voted to stay in the EU.

However, even without a Brexit the UK economy appears to be getting worse and as a result the it downgraded its forecasts for growth overall due to weaker productivity and higher household saving due to jitters about the general economic situation, rather than global weakness or a lasting effect from the EU referendum.

The BoE’s main forecasts worked on the assumption that the country would vote to stay in the EU, and the only concession made to the referendum was to assume that around half the slide in sterling over the past six months was temporary.

The BoE forecast Britain’s economy would grow 2.0 percent this year and 2.3 percent in 2017, down from forecasts of 2.2 percent and 2.4 percent in February.

The BOE also forecast that in two years’ time inflation is forecast to reach a fraction over its 2% target, essentially unchanged from the forecast in February. Since then, financial markets have pushed back their assumption on when interest rates will rise to early 2019 from late 2017 — in part because they price in a risk of Britain leaving the EU. Most economists still expect the central bank to raise interest rates early next year if Britain stays in. And then this surprise:

  • CARNEY SAYS BANK OF ENGLAND CAN LOWER INTEREST RATE IF NEEDED

And to think just a year ago prevailing consensus was expecting the BOE’s next rate move to be higher.

Finally, on the all important topic of what the people think about Brexit, here is the latest summary poll from Bloomberg, which shows the two camps effectively tied just over a month before the all important vote.

end

EMERGING MARKETS

Rousseff is suspended and now the senate votes.  The problem of course is that all of the government heads are corrupt.  They do not have anybody clean to lead:

(courtesy zero hedge)

Brazil President Rousseff Suspended, To Be Put On Trial After Losing Impeachment Vote

In a vote whose outcome was largely expected, moments ago the Brazilian Senate concluded a marathon 21 hour session with a 55 to 22 vote to suspend President Dilma Rousseff from office to face an impeachment trial, ushering in a new government to take command of Latin America’s largest economy. Rousseff will be tried on allegations she illegally doctored fiscal accounts to mask the size of the budget deficit.

When officially notified later on Thursday morning, Brazil’s first woman president will be suspended, ending 13 years of rule by the leftist Workers Party, and the “market friendly” Vice President Michel Temer will become acting president during her trial.

As Bloomberg adds, “from the moment she receives the notification, the process of impeachment for the crime of responsibility takes effect,” Senate President Renan Calheiros said after voting ended. She is expected to be notified within hours, and give a press conference at 10 a.m. local time.

Rousseff, a one-time guerrilla fighter, now must step down and stand trial in the Senate, in a process that could by law last as long as 180 days and result in her permanent removal from office. Rousseff will maintain some presidential privileges such as an official residence, a salary, a security detail, personal staff and transportation. Vice President Michel Temer, 75, will take over as interim president. Many expect the switch to be permanent.

“It’s difficult to see a situation where Rousseff would be able to come back,” said Harold Trinkunas, director of the Latin America Initiative at the Brookings Institution in Washington.

Temer’s aides said he will work fast to build support by putting in place an economic team that can revive confidence amid above-target inflation, double-digit unemployment and a near-record budget deficit. He will announce new cabinet members at 4 p.m. local time.

The vote has capped nearly six months of political uncertainty since then-lower house speaker Eduardo Cunha accepted the impeachment request. Rousseff’s chances of surviving declined rapidly in recent months as a corruption probe encroached on her inner circle and the worst recession in decades eroded many of the gains that Brazilians enjoyed during the 13 years of rule by her leftist Workers’ Party. What led a majority of Brazilians to back impeachment was the sense that Rousseff both mismanaged the economy and was lenient on corruption. At its zenith, her party combined social welfare and market savvy to earn the envy of the developing world.

Ironically, leading members of Rousseff successor Temer’s Brazilian Democratic Movement Party are under investigation for the same allegations that plagued many of Rousseff’s allies, meaning the public could turn against his administration as well. Sixty-two percent of respondents in an Ibope poll last month said new elections rather than impeachment would have been the best solution to the political crisis. Backers of the Workers’ Party, which has strong ties to unions and protest movements, have already pledged to stage demonstrations and work stoppages to push for Temer’s ouster.

“Temer is going to face enormous polarization and a very angry and incredibly mobilized opposition,” said Matthew Taylor, associate professor at American University’s School of International Service and former instructor at the University of Sao Paulo. “The Workers’ Party will make the current opposition look like a bunch of teddy bears.”

In other words it is very possible that Brazil may find itself in a political crisis as it swings from one extreme to another, unable to form a stable government.

Meanwhile, the markets have been delighted by the impeachment process, sending Brazil’s local stock market soaring in 2016, even as the local economy has slid into a depression. Investors, however, are split over whether Temer, a career politician and constitutional lawyer, can unify Brazil and revive growth. While they welcome his plan to downsize government and to make more room for the private sector, some also fear political turmoil could persist and even intensify as critics challenge his legitimacy and try to block his proposals.

For risk assets the question is whether this will be the long-overdue “sell the news” moment.

 

end

 

Chaos supreme in Venezuela now.

(courtesy zero hedge)

 

Raw Venezuela: Looter Burned Alive, While “Streets Filled With People Killing Animals For Food”

The situation in Venezuela is reaching all out chaos, as crippling socialist policies have resulted in a devastating power and food shortage, as well as looming political instability.This is Caracas today…

 

These are hungry Venezuelans protesting that their children are dying from lack of food and medicine and that they do not have enough water or electricity. As AgainstCronyCapitalism reports, this is a country with more oil than Saudi Arabia, and the government has stolen all th emoney and now they bottleneck peaceful protesters and threaten them with bombs (or haul them to prison and torture them).

On the other side, Vice President Aristobulo Isturiz, speaking on state television, said that aseparate march will be held to support the extension of President Nicolas Maduro’s economic emergency decree.

As SHTFPlan.com’s Mac Slavo details, the point was reached long ago where people wereforced to wait in long lines for basic rations that may not even be there, or turn to the black market.

Now, hunger and scarcity have apparently reached a tipping point that is driving people to poach stray animals and even pets for food.

According to the PanAm Post:

Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food.

 

Through Twitter, Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger. People are also reportedly gathering vegetables from the ground and trash to eat as well.

 

The crisis in Venezuela is worsening everyday due in part to shortages reaching 70 percent […] six Venezuelan military officials were arrested for stealing goats to ease their hunger, as there was no food at the Fort Manaure military base.

As pure desperation sets in, crime also becomes inevitable.

A man accused of mugging people in the streets of Caracas was surrounded by a mob of onlookers, beaten and set on fire, according to the Daily Mail, who published a pixeled-out but still graphic video of the man burning:

An alleged thief suffered the most brutal mob justice in Caracas, Venezuela, when he was beaten up and burned alive in the street.

Roberto Fuentes Bernal, 42, was reportedly caught trying to mug passersby in the Venezuelan capital, and before police arrived at the scene, the crowd took the law into their own hands.

[…]

Local media reports that Bernal was taken to a nearby hospital and is receiving treatment for burns covering 70 per cent of his body.

One witness said Bernal had been caught trying to rob a man as he left a nearby bank, while another version of the story has Bernal arguing with his wife in the street. 

Here’s the video (Warning: Graphic):

There are factions vying to oust Maduro, but signs that he may hang on and force his population to endure more of this socialist nightmare.

Let us hope that these events don’t come home to the streets of America, andprepare to avoid them in case they do.

end

OIL ISSUES

Two more energy companies go bust:  Linn Energy and Penn Virginia
(courtesy zero hedge)

Two More Energy Companies Go Bankrupt: Linn Energy, Penn Virginia File Chapter 11

According to data compiled by Haynes and Boone, in just the first four months of 2016 there had already been double the amount of bankrupt energy debt than in all of 2015, with the total secured and unsecured defaults rising to $34 billion, double the $17 billion total for all of 2015.

We can now add two more major names succumbing to the Saudi onslaught against marginal shale producers when overnightfirst Linn Energy announced a prepackaged Chapter 11 deal, followed by Penn Virginia defaulting just hours later.

In the first case, oil and gas producer Linn Energy LLC filed for chapter 11 bankruptcy after reaching a deal with lenders to restructure its $8.3 billion debt load and obtain $2.2 billion in fresh financing. In its bankruptcy filing press release, Linn announced that the holders of more than 66% of its credit facility have agreed to the “broad terms” of a debt restructuring but didn’t provide further details. The lenders also agreed to let Linn Energy spend the cash securing their debt, known as cash collateral, and to help fund a new $2.2 billion term loan.

LinnCo LLC, a publicly traded affiliate, filed for bankruptcy alongside Linn Energy Wednesday. LinnCo was created to help Linn Energy raise additional equity capital and is taxed as a corporation, rather than as a master limited partnership like Linn Energy.

For those wondering if the bankrtupcy would prevent the company from pumping more oil, bad news: Linn Energy said access to the cash will allow it to continue normal operations without lining up new bankruptcy financing. However, the company still requires permission from the U.S. Bankruptcy Court in Victoria, Texas, to begin spending.

Having obtained creditor consents in advance as part of the prepack, we assume that once the existing equity is wiped out, the company will reemerge with a far smaller debt load. However, a problem may emerge if its partnership status with LinnCo poses a problem for investors. As the WSJ writes,partnerships, as opposed to corporations, take advantage of a structure that allows companies to avoid paying corporate income taxes. Investors’ hunger for yield fueled a boom in these partnerships, which pay out their available cash to investors. Linn Energy led a revival of this status among companies pumping oil and gas and was once the largest energy producer operating as a partnership.

Such partnerships bankrolled the shale boom, buying up the older, more predictable fields that other drillers were trying to jettison to chase new prospects in flashier shale formations. But the partnerships had to keep buying new fields to keep their output—and cash distributions—growing. Many took on heavy debt loads to fund their acquisitions.

Even before the price of oil began to slide in 2014, some critics raised questions about whether these companies would be able to keep their promises of steady and growing payouts. An earlier wave of partnerships went bust in 1980s when commodity prices fell. But proponents of the structure argued that more sophisticated hedging markets would allow upstream MLPs to produce reliable streams of cash.

In an effort to stem the hit to investors, Linn Energy completed an exchange offer last month in which holders of Linn Energy units were given the chance to swap them for stock in LinnCo. Shares in both companies are likely to be wiped out now that they are in bankruptcy, but the swap could address the tax issue for investors.

Following the April exchange, Linn Energy launched a second, similar exchange offer that is set to expire May 23. In its bankruptcy announcement, Linn Energy said it is going to ask the bankruptcy court to allow unit holders to continue to swap Linn Energy units for LinnCo shares.

The strategy is largely untested and many are watching to see whether it proves successful for Linn Energy.

The Linn bankruptcy was not a surprise: the company warned in March that a bankruptcy filing may be “unavoidable,” and said last month that it reached a settlement with bondholders on a restructuring that could take place through a chapter 11 reorganization.

* * *

In the day’s second bankruptcy, energy producer Penn Virginia also filed for chapter 11 bankruptcy protection Thursday.  And just like Linn, the Pennsylvania-based explorer and producer deals said it had reached a prepackaged agreement with holders of 87%, or $1.03 billion, of its total funded-debt obligations to restructure under chapter 11 protection and eliminate long-term debt by more than $1 billion.

Penn Virginia said it expects to emerge from chapter 11 by the end of the summer.

Penn Virginia’s history dates back to 1882 with its founding as a coal concern in Virginia. It shifted to oil and gas in the 1980s, and more recently has pared its natural-gas holdings in favor of oil fields.

“Like many other exploration and production companies, Penn Virginia has been significantly affected by the recent and continued dramatic decline in oil and natural gas prices,” Interim Chief Executive Edward Cloues said. “We believe using the chapter 11 process is the most efficient way to achieve our financial objectives and deleverage the Company’s balance sheet.”

As a result, now that two more energy companies are about to see their interest expense slashed drastically going forward, the only real impact on the company will be that their all in production costs will decline substantially, allowing both to pump more oil at even lower prices, and thus adding to the global supply imbalance, something that will infuriate Saudi Arabia and add even more output to a market that remains chronically oversupplied.

END

 

The IEA believes the oil surplus will be lower than usual and thus causes crude to top 47 dollars:

(courtesy zero hedge)

WTI Crude Tops $47 To 6-Month Highs After IEA Forecast

Following IEA’s report this morning which proclaimed OPEC production at record highs but forecast a drop in the global oil glut in the first half of the year (due to demand from India, as the current marginal demand driver – China’s teapot refiners – have since slowed dramatically), WTI crude prices have jumped back above $47 for the first time since November 2015.

Strength in the first quarter was driven by China, Russia and by transport fuel use in India, which is “taking over from China as the main growth market for oil.”

As Bloomberg reports, the global oil surplus in the first half of this year will probably be smaller than previously estimated because of robust demand in India and other emerging nations, the International Energy Agency said.

Supply will exceed demand by an average of 1.3 million barrels a day in the first six months of 2016, down from the 1.5 million projected a month ago, following surprisingly strong consumption in the first quarter, the Paris-based adviser said in a report. Still, further gains in oil prices “are likely to be limited by brimming crude and products stocks,” it predicted.

“Changes to the data in this month’s report confirm the direction of travel of the oil markets towards balance,” said the agency, which advises 29 of the most industrialized nations on energy policy. “The global supply surplus of oil will shrink dramatically later this year.”

The diminished glut indicates that OPEC’s policy, driven by de facto leader Saudi Arabia, to let lower crude prices re-balance world markets is taking effect. Oil futures closed at a six-month high above $46 a barrel in New York on Wednesday as supplies were tightened by declining U.S. drilling, wildfires in Canada and disruptions in Nigeria.

Of course, the glut remains at ‘unprecedented’ levels and any rally will be self-defeating as we already heard from various US shale producers who will come back online heavy once prices hit $50..

end

Absolutely brilliant:  Crooked Glencore is manipulating the price of oil as they have over 30% of June Brent supply:
(courtesy Reuters/zero hedge)

Is Glencore Manipulating The Price Of Oil: Swiss Trader Holds Over 30% Of June Brent Supply

While oil bulls were delighted by yesterday’s DOE news of an inventory drawdown refuting the prior day’s API news of a major build, what was ignored was the build in Cushing storage (more on that shortly), which according to Genscape hit a utilization just shy of 80%, or more than 70 million barrels, a record high since Genscape began monitoring the hub in 2009. To be sure, the risk of running out of land storage has been one we have previously discussed onvarious occasions and hinted that one way this is being circumvented is with substantial amounts of oil being stored on tankers at sea, mostly by commodity trading companies who take advantage of the oil contango to generate month to month profits as producers choose to keep their product away from the market until prices rise.

As it turns out, not only is this the case, but according to Reuters, one particular energy trader – a name well-known to Zero Hedge readers – Glencore, has built up a massive inventory stake in the Brent market where it now holds an unprecedented 30% position in Brent, which it is holding for offshore storage in its tankers in hopes of pushing the price of Brent, and thus the entire energy complex higher, by limiting supply.

As Reuters details, citing trade sources, Glencore has built up one of the largest positions in part of the Brent crude market which acts as a benchmark for global oil prices since the start of the year.

For those unfamiliar, the Brent market is based on four North Sea crude oils – Brent, Forties, Oseberg and Ekofisk, or BFOE. And, according to Reuters Glencore is quietly cornering the Brent market, by holding more than a third of the 37 BFOE cargoes loading in June and is expected to acquire more.

The report details that Glencore has been acquiring June BFOE cargoes through the “chains” – a forward market in which cargoes soon to be assigned loading dates are traded, according to trade sources citing data from pricing agency Platts.

“It’s definitely a bold statement of market view by Glencore,” said a trading source with another company operating in the North Sea. “You’d have to be in their heads and in their books to know exactly what’s going on.”

To be sure, Glencore has been alleged to “warehouse” oil previously, most recently in January when Bloomberg reported that “Glencore is said to be storing oil on ships off the coast of Singapore and Malaysia as a market structure known as contango allows traders to benefit from holding on to supplies for sale later. The commodities trader has at least 4 very large crude carriers, each of which can hold about 2 million barrels, floating at sea off the nations’ coast in Southeast Asia.”

However taking advantage of contango for contango purposes is one thing. Attempting to corner the entire market is something entirely different, and has direct implications on the price of oil, something Glencore can further benefir from if it were to be concurrently long Brent.

According to Reuters, just under half of June’s supply of the four benchmark crude grades amounts to nearly 10 million barrels of oil – over 10 percent of daily world production. “Glencore have got big positions all over the place in BFOE,” said another North Sea trading source. “They are consistently keeping cargoes in the chains.”

he company has taken this position as supply underpinning the Brent contract is set to be smaller than in a typical month. In June, output of the BFOE crudes will fall to 740,000 barrels per day – the lowest in almost two years – mainly because of maintenance at Ekofisk oilfields.  This, say analysts, helped Brent futures for June delivery strengthen against the July contract and eventually trade at a premium – a structure known as backwardation and unusual when supply is generally ample.

It also means that Glencore was likely losing money on the actual month to month roll of its inventory, however it was more than offsetting losses if it was concurrently long Brent as removing 30% of the overall market supply has certainly pushed the price of Brent notably higher.

Reuters sources agreed with this assessment: “Glencore have obviously been very bullish,” the first trade source said. “Part of the explanation would be that they recognised there would be next to no Ekofisk around and the North Sea market would tighten up. So, why not?

Why not? Well, because to some this stockpiling reeks of manipulation of the price by keeping a major amount of monthly supply off the market. And snce Brent and WTI tend to trade largely in tandem, the answer to “why not” is because millions of consumers would end up paying far more at the pump than if Glencore was not choking supply just to boost its own earnings.

One way to see the impact of this may be to look at the strip which both in Brent and WTI has flattened substantially as can be seen on the chart below, as prompt month manipulation by the likes of Glencore pushes spot higher even as hedgers and long-term investors continue to sell the long end on expectations of declining future prices.

 

With the expiry of the June Brent futures contract at the end of April, the spread between the first-month Brent contract moved to a discount to the second month, known as contango and a more typical structure when supply is ample.

Trading houses such as Glencore, along with rivals Vitol, Trafigura, Gunvor and Mercuria, buy and sell physical commodities, from natural gas, to copper or crude oil, moving millions of tonnes of raw materials around the world each year. But because there are a small number of participants in the Brent market and it is far easier to manipulate the price, and it is therefore both not uncommon, and in fact frequent, for them to take large positions, which sometimes lead to unusual patterns in related physical and paper markets, according to other traders.

Glencore is not the first one who has done this: in January, Shell accumulated a large number of Forties cargoes and was expected to ship many of them to South Korea. This coincided with the last time the first-month Brent contract traded in backwardation to the second.

As for the market impact on both Brent (and indirectly WTI) it is elementary finance that when supply is throttled, the equilibrium price will rise substantially, as has been the case in recent weeks.

Finally, one question remains: who benefits? Well, one look at the net spec Brent long position shows that someone has been very bullish the Brent price. In fact, as of the past few weeks, net specs longs have never been higher.

And now that we know which trader has been cornering the Brent physical market, we can also make an educated guess which (same) trader has also made huge profits by betting on the recent surge in the price of Brent. Which, since the (same) trader controls the actual supply of Brent, is about as close to a “no-brainer” trade as we have ever seen.

end

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

Euro/USA   1.1400 DOWN .0023 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 109.17 UP 0.766 (Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER

GBP/USA 1.4489 UP .0055 (STILL THREAT OF BREXIT)

USA/CAN 1.2838 DOWN .0025

Early THIS  THURSDAY morning in Europe, the Euro FELL by 23 basis points, trading now WELL above the important 1.08 level FALLING to 1.1367; 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 BY 1.175 PTS OR 0.04% / Hang Sang CLOSED DOWN 139.83 OR  0.70%   / AUSTRALIA IS LOWER BY 0.24% / ALL EUROPEAN BOURSES ARE ALL IN THE GREEN  as they start their morning/

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

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

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

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

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

The NIKKEI: this THURSDAY morning: closed UP 67.33 OR 0.41% 

Trading from Europe and Asia:
1. Europe stocks IN THE GREEN AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 139.83 PTS OR 0.70% . ,Shanghai CLOSED  DOWN 1.175 OR 0.04%/ Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN

Gold very early morning trading: $1268.05

silver:$17.25

Early THURSDAY morning USA 10 year bond yield: 1.75% !!! UP 2 in basis points from WEDNESDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.607 UP 2 in basis points from WEDNESDAY night.

USA dollar index early THURSDAY morning: 94.06 UP 23 cents from WEDNESDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers THURSDAY MORNING

END

And now your closing THURSDAY NUMBERS

Portuguese 10 year bond yield:  3.23% DOWN 11 in basis points from WEDNESDAY

JAPANESE BOND YIELD: -0118% UP 1 in   basis points from WEDNESDAY

SPANISH 10 YR BOND YIELD:1.62% UP 2 IN basis points from WEDNESDAY

ITALIAN 10 YR BOND YIELD: 1.51  UP 4 IN basis points from WEDNESDAY

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

GERMAN 10 YR BOND YIELD: .156% UP 2 IN BASIS POINTS ON THE DAY

 

END

IMPORTANT CURRENCY CLOSES FOR THURSDAY

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

 

Euro/USA 1.1391 DOWN .0052 (Euro =DOWN 52 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 109.08 UP 0.675 (Yen down 68 basis points )

Great Britain/USA 1.4449 UP .0025 Pound UP 15 basis points/

USA/Canada 1.2835 DOWN 0.0028 (Canadian dollar UP 28 basis points with OIL RISING a bit(WTI AT $46.46.  CANADA IS GETTING KILLED BY THAT HUGE FIRE IN ALBERTA)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was DOWN by 52 basis points to trade at 1.1371

The Yen FELL to 109.08 for a LOSS of 68 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 15 basis points, trading at 1.4449

The Canadian dollar ROSE by 28 basis points to 1.2835, WITH WTI OIL AT:  $46.46

The USA/Yuan closed at 6.514

the 10 yr Japanese bond yield closed at -.118% DOWN 2 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 2 IN basis points from TUESDAY at 1.755% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.60 UP 2 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.13 UP 30 CENTS ON THE DAY/4 PM

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

London:  CLOSED  DOWN 58.30 OR 0.95%
German Dax :CLOSED DOWN 113.20 OR 1.13%
Paris Cac  CLOSED DOWN 23.40  OR 0.54%
Spain IBEX CLOSED DOWN 0.80 OR 0.01%
Italian MIB: CLOSED DOWN 46.72 OR 0.26% (BANKING CRISIS)

The Dow was UP 9.38  points or 0.05%

NASDAQ DOWN 23.35 points or 0.49%
WTI Oil price; 46.45 at 4:30 pm;

Brent Oil: 47.58

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.77 (ROUBLE UP 27/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT ROSE AND WTI ROSE

TODAY THE GERMAN YIELD ROSE TO .154  FOR THE 10 YR BOND

.

END

 

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:

WTI CRUDE OIL PRICE 5 PM:46.47

BRENT: 47.90

USA 10 YR BOND YIELD: 1.755%

USA DOLLAR INDEX: 94.16 UP 33 cents

END

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

Trading Today in Graph form

 

Crude Chaos Sparks Stock Schizophrenia, Trannies Trounced

Seriously…

 

Stocks were mixed today -Trannies and Nasdaq tumbled, the S&P ended marginally red and Dow barely held green.. Stocks were saved in the pre-NYMEX ramp from crude…

 

The path was insanely schizophrenic as algos have gone wild…(after soaring early, then crashing, then melting up)

 

The Dow has traveled 1500 points since the Payrolls print…and back red for the week

 

AAPL ugliness…

 

Yesterday’s buying frenzy in bonds (and string 10Y auction demand) morphed into panic-selling-ish (as a weak 30Y and overall selling) senindg short-end yields positive for the week…

 

The USD Index resumed its uptrend today – 7th of last 8 days – as JPY weakened once again, running stops at yesterday’s highs…

 

The USD ran the world again today…but once Europe closed, everything went up..

 

Commodities suffered on the day – all smacked as US equities opened – but of course oil BTFD’ers could noty help themselves…

 

Oil was just manic today also as no matter what the headline (Iraq discussing Freeze – BUY, Iraq increasing production – BUY), crude prices soared…

 

Charts: Bloomberg

END

 

China is exporting deflation to the world:  Import prices tumble now for 21 straight months and the tumble was the worst recorded since 2009

(courtesy zero hedge)

US Import Prices Tumble For 21 Months In A Row As China Exports Most Deflation Since 2009

For a near record 21 months in a row, US Import Prices dropped in April compared to last year (down a worse than expected 5.7% YoY, and rising only 0.3%, less than the 0.6% expected rebound from March) with China exporting deflation at the fastest pace since 2009.

Looking at the breakdown, while a major culprit for the collapse in imported deflation remains sliding energy prices, it wasn’t the only reason for the slowdown as imports ex-fuel and food fell a notable 2% Y/Y in April. Additionally, industrial supplies prices rose 1.5% after rising 2.7% in March; capital goods prices fell 0.1% after falling 0.1% in March; consumer goods prices fell 0.3% after falling 0.3% in March.

As for the biggest culprit, it remains a well-known one: China. Acording to the BLS, China’s import price index dropped again, sliding from 101.4 to 101.3, the lowest print since 2010…

… while the annual rate of change was a -1.9%, the biggest decline since 2009.

For all the bluster about Chinese inflation picking up, it appears it is mostly in pork and domestic commodity prices. The prices of everything else continues to drop.

END
So much for a USA recovery:  initial jobless claims soar by 20,000 to 294,000.
(courtesy zero hedge)

Initial Jobless Claims Soar Most In 11 Years To 15-Month Highs

The last great hope indicator of the bullish narrative appears to have broken as today’s initial jobless claims soars 20k to 294k – the highest since Feb 2015. Seemingly confirming the dismal payroll print, one can only wonder how long before this catches ‘down’ to the weakness in PMI/ISM survey employment data and the hard macro data. The last 3 weeks have seen initial claims soar by the most since 2005…

This is the first time claims have risen YoY since Nov 2012…

Catch ‘up’ time…

It begins!

END
Apple tumbles after a report shows a huge 70 to 80% plunge in iphone chip shipments. And these shipments were suppose to be for the new iphone 7
(courtesy zero hedge)

AAPL Tumbles After Report Of 70-80% Plunge In iPhone Chip Shipments

Apple share are tumbling (as are the entire complex of suppliers) following a report from Nikkei that Taiwan Seminconductor’s shipments of iPhone 6s, iPhone 7 chips for June-Dec. period will likely shrink 70%-80% vs year earlier. As one anayst noted, a decline of more than 20-30% is not in consensus estimates. As Bloomberg reports, of particular interest is that this cut to orders is about upcoming iPhone 7, not about the well-publicized iPhone 6 slowdown.

The timing would be right about now for early wafer starts for silicon for September launch of iPhone 7… and it seems market participants agree…

“No brainer” investors in AAPL have now seen no price change since April 2012…

However, as Bloomberg reports, for investors contemplating prospects for the smartphone market after a shaky earnings report from Apple, Asian suppliers just provided a few hints: It’s going to get worse before it gets better.

Three suppliers that seldom command much attention, working behind the scenes to make devices sold under the brands of better-known customers, put out back-to-back earnings reports Tuesday. They spell trouble ahead for smartphone makers and other companies that once thrived on mobile mania.

Pegatron Corp., which assembles iPhones, missed profit expectations and said April sales dived 16 percent. Minebea Co., which makes LED lights for mobiles, lagged its own forecasts for revenue and earnings. Japan Display Inc., which supplies screens to Apple and others, said profit has deteriorated so rapidly it will lose money for the fiscal year and suspend a promised dividend. Adding to the gloom, Lenovo Group Ltd. tumbled to a four-year low as analysts warned of rising competition.

Asian components makers are positioned early in the supply chain so they often signal what’s ahead for giants like Apple, Samsung Electronics Co. and Xiaomi Corp. The iPhone maker offered evidence of a deteriorating market with its first quarterly sales decline in 13 years.Now, some are bracing for a possible triple-whammy: sliding sales, an unfettered market-share competition and crumbling prices.

“The smartphone industry will continue to slow down this year,” said Richard Ko, a Taipei-based analyst at KGI Securities Co. “Competition will worsen and prices will likely continue to fall.”

And don’t forget, Apple is the 2nd most crowded long among global stocks, according to UBS…

end
The following commentary is extremely important:
The Kremlin has 20,000 hacked emails belonging to Hillary Clinton and they are debating amongst themselves whether to release these or not. Also the FBI are interviewing 5 of Mrs Clinton’s closest aids and this is to determine if they should be charged in the transfer of state secrets via Clinton’s server.
a must read../
(courtesy Judge Andrew Napolitano/David Stockman/ContraCorner)

‘Guccifer’ And The Kremlin’s 20,000 Hacked Emails———Dropping The Dime On Hillary, Soon

The bad legal news for Hillary Clinton continued to cascade upon her presidential hopes during the past week in what has amounted to a perfect storm of legal misery. Here is what happened.

Last week, Mrs. Clinton’s five closest advisors when she was Secretary of State, four of whom remain close to her and have significant positions in her presidential campaign, were interrogated by the FBI. These interrogations were voluntary, not under oath, and done in the presence of the same legal team which represented all five aides.

The atmosphere was confrontational, as the purpose of the interrogations is to enable federal prosecutors and investigators to determine whether these five are targets or witnesses. Stated differently, the feds need to decide if they should charge any of these folks as part of a plan to commit espionage, or if they will be witnesses on behalf of the government should there be such a prosecution; or witnesses for Mrs. Clinton.

In the same week, a federal judge ordered the same five persons to give videotaped testimony in a civil lawsuit against the State Department which once employed them in order to determine if there was a “conspiracy” — that’s the word used by the judge — in Mrs. Clinton’s office to evade federal transparency laws. Stated differently, the purpose of these interrogations is to seek evidence of an agreement to avoid the Freedom of Information Act requirements of storage and transparency of records, and whether such an agreement, if it existed, was also an agreement to commit espionage — the removal of state secrets from a secure place to a non-secure place.

Also earlier this week, the State Department revealed that it cannot find the emails of Bryan Pagliano for the four years that he was employed there. Who is Bryan Pagliano? He is the former information technology expert, employed by the State Department to problem shoot Mrs. Clinton’s entail issues.

Pagliano was also personally employed by Mrs. Clinton. She paid him $5,000 to migrate her regular State Department email account and her secret State Department email account from their secure State Department servers to her personal, secret, non-secure server in her home in Chappaqua, New York. That was undoubtedly a criminal act. Pagliano either received a promise of non-prosecution or an actual order of immunity from a federal judge. He is now the government’s chief witness against Mrs. Clinton.

It is almost inconceivable that all of his emails have been lost. Surely this will intrigue the FBI, which has reportedly been able to retrieve the emails Mrs. Clinton attempted to wipe from her server.

While all of this has been going on, intelligence community sources have reported about a below the radar screen, yet largely known debate in the Kremlin between the Russian Foreign Ministry and the Russian Intelligence Services. They are trying to come to a meeting of the minds to determine whether the Russian government should release some 20,000 of Mrs. Clinton’s emails that it obtained either by hacking her directly or by hacking into the email of her confidante, Sid Blumenthal.

As if all this wasn’t enough bad news for Mrs. Clinton in one week, the FBI learned last week from the convicted international hacker, who calls himself Guccifer, that he knows how the Russians came to possess Mrs. Clinton’s emails; and it is because she stored, received and sent them from her personal, secret, non-secure server.

Mrs. Clinton has not been confronted publicly and asked for an explanation of her thoughts about the confluence of these events, but she has been asked if the FBI has reached out to her. It may seem counter-intuitive, but in white collar criminal cases, the FBI gives the targets of its investigations an opportunity to come in and explain why the target should not be indicted.

This is treacherous ground for any target, even a smart lawyer like Mrs. Clinton. She does not know what the feds know about her. She faces a damned-if-she-does and damned-if-she-doesn’t choice here.

Any lie and any materially misleading statement — and she is prone to both — made to the FBI can form the basis for an independent criminal charge against her. This is the environment that trapped Martha Stewart. Hence, the standard practice among experienced counsel is to decline interviews by the folks investigating their clients.

But Mrs. Clinton is no ordinary client. She is running for president. She lies frequently. We know this because, when asked if the FBI has reached out to her for an interview, she told reporters that neither she nor her campaign had heard from the FBI; but she couldn’t wait to talk to the agents.

That is a mouthful, and the FBI knows it. First, the FBI does not come calling upon her campaign or even upon her. The Department of Justice prosecutors will call upon her lawyers — and that has already been done, and Mrs. Clinton knows it. So her statements about the FBI not calling her or the campaign were profoundly misleading, and the FBI knows that.

Mrs. Clinton’s folks are preparing for the worst. They have leaked nonsense from “U.S. officials” that the feds have found no intent to commit espionage on the part of Mrs. Clinton. Too bad these officials — political appointees, no doubt — skipped or failed Criminal Law 101. The government need not prove intent for either espionage or for lying to federal agents.

And it prosecutes both crimes very vigorously.

Reprinted with the author’s permission.

https://www.lewrockwell.com/2016/05/andrew-p-napolitano/perfect-storm-legal-misery/

 

Major Court Ruling Against Obamacare, “Insurers Will Scream”

Submitted by Mish Shedlock of MishTalk

 

Healthcare insurers are already taking it on the chin. Some insurers got out of the healthcare business entirely, others stopped coverage in multiple states due to mounting losses.

What happened is healthy individuals, especially millennials decided to opt out of Obamacare. Those who opted in after having been denied coverage previously were high-cost individuals.

Adding fat to the fire, a federal court ruled today that “cost sharing reductions”  to insurers are unconstitutional payments.

Please consider Judge Rules for House GOP in ObamaCare Suit.

In a major ruling, Judge Rosemary Collyer, an appointee of President George W. Bush, said the administration does not have the power to spend money on “cost sharing reduction” payments to insurers without an appropriation from Congress.

 

Collyer stayed her ruling so the administration can appeal the decision.

 

At issue are billions of dollars in “cost sharing reduction payments” under ObamaCare which are paid to insurance companies so they can reduce out of pocket costs such as deductibles for low income people on ObamaCare plans.

 

The House GOP argued that the administration was unconstitutionally spending money on these payments without an appropriation from Congress.

 

The administration argued it did not need an appropriation from Congress because the funds were already permanently appropriated by ObamaCare in the same section as the law’s better known tax credits that help people afford coverage.

 

However, Collyer ruled that the section only appropriated funds for tax credits, and said the cost sharing reductions require a separate congressional appropriation, which the administration does not currently have.

 

“Such an appropriation cannot be inferred,” Collyer wrote. “None of Secretaries’ extra-textual arguments — whether based on economics, ‘unintended’ results, or legislative history — is persuasive. The Court will enter judgment in favor of the House of Representatives and enjoin the use of unappropriated monies to fund reimbursements due to insurers under Section 1402.”

Judge Rosemary Mayers Collyer

Judge Rosemary Mayers Collyer (born November 19, 1945) is a United States District Judge for the United States District Court for the District of Columbia, and a member of the United States Foreign Intelligence Surveillance Court.

On August 1, 2002, Collyer was nominated by President George W. Bush to a seat on the United States District Court for the District of Columbia vacated by Thomas Penfield Jackson. Collyer was confirmed by the United States Senate on November 14, 2002, and received commission on November 15, 2002. She has announced that she will take senior status on May 18, 2016.

Senior status equates to semi-retirement. Last October, Collyer Refused to Let House ObamaCare Suit Move to Another Court.

 

Court Case

Collyer’s ruling seems to make sense. However, this case is surely headed to higher courts.

I do not pretend to know how those courts will rule.

 

Potential End of Obamacare

Many lawsuits were filed against Obamacare, some of them outright frivolous. This once could potentially stick.

Should the case go the the Supreme Court, it is conceivable a ruling might depend on who wins the presidential election this November.

Meanwhile there are going to be lots of skittish insurers with serious concerns. Already, many insurers are bleeding cash and dumping Obamacare.

This could mean the end of Obamacare, at least as we know it.

end

After hrs:  Nordstrom plummets after reporting terrible earnings and slashing guidance by a lot.  The consumer is not spending.  Also all bricks and mortar operations are having trouble.
(courtesy zero hedge)

Nordstrom Plummets After Reporting Terrible Earnings, Slashing Guidance

After many prominent blow ups in the retail and consumer space in the past week, moments ago Nordstrom was the latest casualty of the US consumer’s unwillingness to spend money when the company reported Q1 EPS of $0.26, missing consensus estimates of $0.46 by nearly half, and about a third of what the company earned last year despite relatively flat revenues of $3.25 billion which also missed expectations of $3.29 billion. Comparable sales dropped -1.7% on estimates of an unchanged print.

What was worse, however, and the reason why the stock is getting monkeyhammered after hours is that the company slashed its guidance, and instead of seeing a 0-2% increase in comp sales, JWN now expects -1 to +1% for 2016. Worst of all is that instead of seeing EPS of $3.10-$3.35, Nordstrom slashed earnings guidance, and now expects only $2.50-$2.70 in EPS for the full year.

None of this should come as a surprise: precisely one week ago we reported that the true state of the US consumer is deplorable when “All Six Retail Companies Reporting April Comp Sales Missed.” Now we are just seeking the flowthrough on the income statement.

The one good thing about JWN is that the company did not blame a stronger dollar (because it wasn’t in Q1), nor weather, but instead admitted the problem: lower sales. To wit:

“Our first quarter results were impacted by lower than expected sales. In response we have made further adjustments to our inventory and expense plans,” said Blake Nordstrom, co-president, Nordstrom, Inc. “As the pace of change in retail continues to accelerate, we remain committed to serving customers by taking steps that will continue to meet their expectations while driving profitable growth.”

The bottom line, of course, is that just like all the other retailers, Nordstrom is merely suffering from the same reason all the other retailers are getting crushed in Q1 –  a US consumer who simply refuses to spend. Since that same consumer accounts for two thirds of US GDP, the Federal Reserve has a major problem on its hands.

Some consumers who definitely won’t be spending much in the coming days are JWN longs: the stock has plunged as much as 15% after hours and is back to levels not seen since September 2011.

end
Michael Snyder illustrates 11 signs that the USA economy is deteriorating
Our ever popular Michael Snyder..
(courtesy Michael Snyder)

11 Signs That The U.S. Economy Is Rapidly Deteriorating Even As The Stock Market Soars

Submitted by Michael Snyder via The Economic Collapse blog,

We have seen this story before, and it never ends well.  From mid-March until early May 2008, a vigorous stock market rally convinced many investors that the market turmoil of late 2007 and early 2008 was over and that happy days were ahead for the U.S. economy.  But of course we all know what happened.  It turned out that the market downturns of late 2007 and early 2008 were just “foreshocks” of a much greater crash in late 2008.  The market surge in the spring of 2008 was just a mirage, and it masked rapidly declining economic fundamentals.  Well, the exact same thing is happening right now.  The Dow rose another 222 points on Tuesday, but meanwhile virtually every number that we are getting is just screaming that the overall U.S. economy is steadily falling apart.  So don’t be fooled by a rising stock market.  Just like in the spring of 2008, all of the signs are pointing to an avalanche of bad economic news in the months ahead.  The following are 11 signs that the U.S. economy is rapidly deteriorating…

#1 Total business sales have been declining for nearly two years, and they are now about 15 percent lower than they were in late 2014.

#2 The inventory to sales ratio is now back to near where it was during the depths of the last recession.  This means that there is lots and lots of unsold stuff just sitting around out there, and that is a sign of a very unhealthy economy.

#3 Corporate earnings have declined for four consecutive quarters.  This never happens outside of a recession.

#4 Profits for companies listed on the S&P 500 were down 7.1 percent during the first quarter of 2016 when compared to the same time period a year ago.

#5 In April, commercial bankruptcies were up 32 percent on a year over year basis, and Chapter 11 filings were up 67 percent on a year over year basis.  This is exactly the kind of spike that we witnessed during the initial stages of the last major financial crisis as well.

#6 U.S. rail traffic was 11 percent lower last month than it was during the same month in 2015.  Right now there are 292 Union Pacific engines sitting idle in the middle of the Arizona desert because there is literally nothing for them to do.

#7 The U.S. economy has lost an astounding 191,000 mining jobs since September 2014.  For areas of the country that are heavily dependent on mining, this has been absolutely devastating.

#8 According to Challenger, Gray & Christmas, U.S. firms announced 35 percentmore job cuts during April than they did in March.  This indicates that our employment problems are accelerating.

#9 So far this year, job cut announcements are running 24 percent above the exact same period in 2015.

#10 U.S. GDP grew at just a 0.5 percent annual rate during the first quarter of 2016.  This was the third time in a row that the GDP number has declined compared to the previous quarter, and let us not forget that the formula for calculating GDP was changed last year specifically to make the first quarter of each year look better.  Without that “adjustment”, it is quite possible that we would have had a negative number for the first quarter.

#11 Barack Obama is poised to become the first president in U.S. history to never have a single year during his time in office when the economy grew by more than 3 percent.

But you never hear Obama talk about that statistic, do you?

And the mainstream media loves to point the blame at just about anyone else.  In fact, the Washington Post just came out with an article that is claiming that the big problem with the economy is the fact that U.S. consumers are saving too much money…

The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.

So even though half the country is flat broke, I guess we are all supposed to do our patriotic duty by going out and running up huge balances on our credit cards.

What a joke.

Of course the U.S. economy is actually doing significantly better at the moment than almost everywhere else on the planet.  Many areas of South America have already plunged into an economic depression, major banks all over Europe are in the process of completely melting down, Japanese GDP has gone negative again despite all of their emergency measures, and Chinese stocks are down more than 40 percent since the peak of the market.

This is a global economic slowdown, and just like in 2008 it is only a matter of time before the financial markets catch up with reality.  I really like how Andrew Lapthorne put it recently

On the more bearish slant is Andrew Lapthorne, head of quantitative strategy at Societe Generale. To him this profit downturn is a sign that stocks are far too overvalued and the economy is weaker than you think.

“MSCI World EPS is now declining at the fastest pace since 2009, losing 4% in the last couple of months alone (this despite stronger oil prices),” wrote Lapthorne in a note. For the S&P 500 specifically, the year on year drop in profit drop was themost since third quarter of 2009.

“Global earnings are now 14% off the peak set in August 2014 and back to where they stood five years ago. Equity prices on the other hand are 25% higher. Gravity beckons!”

I couldn’t have said it better myself.

Look, this is not a game.

So far in 2016, three members of my own extended family have lost their jobs.  Businesses are going under at a pace that we haven’t seen since 2008, and this means that more mass layoffs are on the way.

We can certainly be happy that U.S. stocks are doing okay for the moment.  May it stay that way for as long as possible.  But anyone that believes that this state of affairs can last indefinitely is just being delusional.

Gravity beckons, and the crash that is to come is going to be a great sight to behold.

END
I am sick of all the fraud upon us
I will see you tomorrow
Harvey
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2 comments

  1. Agnes · · Reply

    Most of us are good people, Harvey. It’s just the bad ones we always hear about. Get out of the house and meet a few of us, in lines in stores, at bus stops, walking a dog nearby. News, as always, is the awful exception, and a skewed view of real life.

    Like

  2. Thank you very much, Harvey Organ, for your bountiful, accurate, and most wonderful information. I don’t buy (purchase) anything until I read your blog from start to (10 seconds later on fast forward) finish. (Note: same time it took the twin towers to collapse = impossible). I recognize you spend many hours pondering what to say? Yet, it takes me two hours to read your blog plus I need to look up a lot of abbreviations to completely understand what your commenting on. I am an individual but everything I do is geared to what you are saying. I infinitely understand the beliefs of ordinary citizens of the world. Most of the times, for greed, people will or will not distort the facts. However, your articles shoot an arrow of truth, into the heart of the information, which cannot be measured .. truth is infinite.. and “thank you for spending so many hours typing out your blogs”.. they are priceless and creator inspired. May the Gods bless you.. Harvey Organ.. Sincerely.

    Like

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