May 13/Another huge 5.94 tonnes of paper gold into the GLD/Today we had two raids on gold and silver and both failed/Japan postpones their tax hike as they must be scared about something!/ USA business inventories to sales rise to record highs of 1.41 indicating severe recession or depression/

Good evening Ladies and Gentlemen:

Gold:  $1,271.90 UP $1.60    (comex closing time)

Silver 17.12  UP 3 cents

In the access market 5:15 pm

Gold $1273.20

silver:  17.09


Yesterday I reported the following to you:

“Expect another raid tomorrow!”

And sure enough they blasted gold and silver twice:

i. During the access market, gold and silver were bombed but during the Asian /European time zone where physical dealings are prevalent, both of precious metals rose to levels at comex closing time.

ii) Then when comex opened for trading they bombed again knocking gold down to 1261.00 USA and silver to $16.88;

Again, gold and silver clawed back up to finish in positive territory.

The bankers know they have a battle on their hands.

Let us have a look at the data for today


At the gold comex today we had a GOOD delivery day, registering 73 notices for 7300 ounces for gold,and for silver we had 119 notices for 595,000 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 fell by 482 contracts down to 205,956 as the price was silver was DOWN  by 21 cents with respect to yesterday’s trading. A very tiny contraction compared to the raid we had yesterday. In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.029 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 FELL BY 7,519  CONTRACTS DOWN to 578,371 contracts AS THE PRICE OF GOLD WAS DOWN $4.10 with YESTERDAY’S TRADING(at comex closing). Again, THE BOYS DID NOT LIKE the liquidation of contracts AS THEY WANTED A GREATER CONTRACTION. They did not like the OI in both gold and silver and thus the attempted raid today with much fanfare but their escapade failed. With gold at 1274.00 early in the morning, the metal was smashed down to 1264.00 but then recovered to close at 1271..


As far as the GLD, we had another huge  deposit of 5.94 tonnes into the GLD. The new inventory rests at 851.13 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 fell by 482 contracts DOWN to 205,956 as the price of silver was DOWN by 21 cents with YESTERDAY’S trading. The gold open interest fell by 7,519 contracts as  gold WAS DOWN $4.10  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.  Gold investors, in the May contract month are refusing the tempting fiat offer as they 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;


2c) COT report



i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN  BY 8.75 PTS OR 0.31%  /  Hang Sang closed DOWN 196.17 OR 0.99%. The Nikkei closed DOWN 234.13 POINTS OR 1.41% . Australia’s all ordinaires  CLOSED DOWN 0.54% Chinese yuan (ONSHORE) closed DOWN at 6.5210.  Oil FELL to 46.10 dollars per barrel for WTI and 47.70 for Brent. Stocks in Europe  IN THE RED . Offshore yuan trades  6.54570 yuan to the dollar vs 6.5210 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS.




i)With negative interest rates in Japan, who is buying all of the uSA treasuries? None other that Mrs Watanabe  (Japanese citizens). This is an accident waiting to happen!

( zerohedge)

ii)OH OH! is Japan expecting a Lehman type of shock  They just postponed their tax hike scheduled for April 2017:

( zero hedge)


i)The big unwind begins as the entire bubble just exploded in China: Steel crashed the most since 2009 as did other commodities.  This will certainly blow up their banking system:

Also the ‘easing’ game inside China is over!

( zero hedge)


ii)Wow!  1st quarter  GDP fell off a cliff falling- .4% Q/Q instead of growth of .1%

Real Estate prices are plummeting inside Hong Kong
( zero hedge)

iii)We knew this was going to happen!!  China’s credit growth went to absolute zero  and zero hedge explains why this is important..a must read.

( zero hedge)


none today


Russia hints at nuclear war after the USA deploys ballistic missile shield;

( zero hedge)


As stock markets are manipulated daily, the big question is who is buying and who is selling.  It seems that the smart money is selling and buying gold. Below is a good commentary as the Bank of America charts where investor funds are heading:

(courtesy zero hedge/Bank of America)



i) Iran offers huge discount on Asian crude, the highest discount since 2007.  Saudi Arabia is not pleased:

( I. Slav/Oil


ii)USA rig counts continue to crash land:

( zero hedge)

iii)We have been warning you that by June, Cushing OK will be at full capacity.

And lo and behold it is:
( zero hedge)


i)  John Embry discusses the massive short position by the banks in both gold and silver

a very important read.

(courtesy John Embry/Kingworldnews)



ii)Antal Fekete: there is a world war against gold! He is certainly right on that score

(Antal Fekete/GATA)


i)More junk released by the USA as they state that April retail sales soared??? With a complete collapse at Macy’s and Nordstrom?

( zerohedge)


ii)Here is one group that you do not want to offend:  the Teamsters.  These guys read the tea leaves and they know that there is a shortfall in the Central States Pension Fund.  They are demanding a taxpayer bailout….good luck to them!
( zero hedge)

iii)The following is a big story!!  The business inventories have now risen from last month’s 1.36 up to 1.41.  The superb indicator of a recession/depression

( zero hedge)

iv)U. of Michigan consumer confidence hits an 11th month high on just the hope subset:

(courtesy zero hedge)

Let us head over to the comex:

The total gold comex open interest fell to an OI level of 578,371 for a loss of 7519 contracts AS  THE PRICE OF GOLD WAS DOWN $4.10 with respect to YESTERDAY’S TRADING.  We are now entering the NON active delivery month of MAY. For the past two years, we have strangely witnessed two interesting developments and we have generally seen two phenomena happen respect to the gold open interest:  1) total gold comex collapses in OI as we enter any delivery month  and 2) a continual drop in the amount of gold standing in that month as that month progresses. IT SURE SEEMS THAT THE LATER HAS STOPPED.   The month of May saw its OI FALL 24 contracts DOWN to 1194. We had 27 notices filed  YESTERDAY so we  gained 3 gold contracts or an additional 300 gold ounces will stand for delivery. The next big active gold contract is June and here the OI FELL by 13,529 contracts DOWN to 333,445 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 205,104. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was EXCELLENT at 264,921 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 73 notices filed for 7300 oz in gold.


And now for the wild silver comex results. Silver OI fell by 482 contracts from 206,438 DOWN to 205,956 as  the price of silver was DOWN BY 21 cents with YESTERDAY’S TRADING.We are within spitting distance of the all time high OI in silver of 206,748 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 ROSE by 31 contracts UP to 908. We had 2 notices filed YESTERDAY so we GAINED 33 contracts or AN ADDITIONAL  165,000 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 66 contracts DOWN to 731  OI.The next big delivery month is July and here the OI FALL by 371 contracts DOWN to 140,948. The volume on the comex today (just comex) came in at 58,506 which is EXCELLENT. The confirmed volume YESTERDAY (comex + globex) was AGAIN EXCELLENT AT 58,435. Silver is not in backwardation. London is in backwardation for several months.
We had 119 notices filed for 595,000 oz.

MAY contract month:

INITIAL standings for MAY

May 13.
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  160.75 OZMANFRA


Deposits to the Dealer Inventory in oz 104.099.85 oz


Deposits to the Customer Inventory, in oz  nil


No of oz served (contracts) today 73 contracts
(7300 oz)
No of oz to be served (notices) 1121 CONTRACTS112,100 OZ
Total monthly oz gold served (contracts) so far this month 932 contracts (93,200 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  211,861.2 OZ

Today we had 1 dealer deposit

i) Into Delaware:  104.099 oz

total dealer deposit: 104.099 oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 0 customer deposits:



total customer deposit: nil OZ

Today we had 0 customer withdrawal:


Total customer withdrawals:  nil oz

Today we had 1 crazy adjustment:

OUT OF Hsbc:



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 73 contracts of which 12 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 (932) x 100 oz  or 93,200 oz , to which we  add the difference between the open interest for the front month of MAY (1194 CONTRACTS) minus the number of notices served upon today (73) x 100 oz   x 100 oz per contract equals 205,300 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 (932) x 100 oz  or ounces + {OI for the front month (1194) minus the number of  notices served upon today (73) x 100 oz which equals 205,300 oz standing in this non  active delivery month of MAY(6.3858 tonnes).
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
We thus have 6.3858 tonnes of gold standing for MAY and 21.697 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 6.3858 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  = 20.8337 tonnes still standing against 21.697 tonnes available.
Total dealer inventor 697,565.649 tonnes or 21.697 tonnes
Total gold inventory (dealer and customer) =7,562,109.956 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.
And now for silver

MAY INITIAL standings

 May 13.2016

Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  1,465,084.920 oz


Deposits to the Dealer Inventory  569,506.270  OZ


Deposits to the Customer Inventory  1,180,869.889 OZ



No of oz served today (contracts) 119  CONTRACTS595,000 OZ
No of oz to be served (notices) 875 contracts4,375,000 oz
Total monthly oz silver served (contracts) 2041 contracts (10,205,000 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  4,756,133.3 oz

today we had 1 deposit into the dealer account

i) Into CNT:  569,506.270 oz

total dealer deposit:569,506.270 oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 3 customer deposits:

i) Into JPM: 599,383.700 oz

ii) Into CNT:  30,381.619 oz

iii) Into HSBC: 551,104.570 oz

Total customer deposits: 1,180,869.889 oz.

We had 2 customer withdrawals

i) out ouf CNT: 588,484.93 oz

ii) Out of SCOTIA: 876,599.99 oz


total customer withdrawals:  1.465,084.92 oz



 we had 1 adjustment

i) Out of CNT:

20,968.62 oz is adjusted out of the customer account and this lands in to the dealer account.


The total number of notices filed today for the MAY contract month is represented by 119 contracts for 595,000 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 (2041) x 5,000 oz  = 10,205,000 oz to which we add the difference between the open interest for the front month of MAY (908) and the number of notices served upon today (119) x 5000 oz equals the number of ounces standing 
Thus the initial standings for silver for the MAY contract month:  2041 (notices served so far)x 5000 oz +(908{ OI for front month of MAY ) -number of notices served upon today (119)x 5000 oz  equals 14,150,000 oz of silver standing for the MAY contract month.
Total dealer silver:  30.282 million
Total number of dealer and customer silver:   153.107 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 close to multi year lows as silver is being drawn out and heading to China and other destinations. The shear movement of silver into and out of the vaults signify that something is going on in silver.
At 3:30 pm we receive the COT report which gives position levels of our major players.
Let us see the damage that our commercials inflicted upon the gold/silver markets
First the gold COT
Gold COT Report – Futures
Large Speculators Commercial Total
Long Short Spreading Long Short Long Short
337,251 72,353 67,605 123,211 408,207 528,067 548,165
Change from Prior Reporting Period
-1,225 5,525 8,174 6,567 -3,338 13,516 10,361
190 100 97 47 59 286 215
  Small Speculators      
  Long Short Open Interest    
  51,710 31,612 579,777    
  487 3,642 14,003    
  non reportable positions Change from the previous reporting period  
COT Gold Report – Positions as of Tuesday, May 10, 2016
 I am not so sure that I believe these figures:
Our large specs:
Those large specs that have been long in gold pitched 1225 contracts from their long side ???
Those large specs that have been short in gold added 5525 contracts to their short side???
Our commercials:
Those commercials that have been long in gold added 6567 contracts to their long side???
Those commercials that have been short in gold covered 3338 contracts from their short side???
Our small specs:
Those small specs that have been long in gold added 487 contracts to their long side
Those small specs that have been short in gold added 3642 contracts which is huge for them unto their short side??
Conclusion:  the figures look fake to me/the commercials go net long by 9905 contracts?  fairy tales!
And now for our silver COT:
Silver COT Report: Futures
Large Speculators Commercial
Long Short Spreading Long Short
107,844 27,573 16,664 53,870 145,602
7,443 3,047 2,065 -1,861 -723
111 69 40 34 41
Small Speculators Open Interest Total
Long Short 205,391 Long Short
27,013 15,552 178,378 189,839
-493 2,765 7,154 7,647 4,389
non reportable positions Positions as of: 168 130
  Tuesday, May 10, 2016   © SilverSe
Silver COT:
Our large specs:
Those large specs that have been long in silver added a large 9443 contracts to their long side
Those large specs that have been short in silver added 3047 contracts to their short side
Our commercials:
Those commercials that have been long in silver pitched 1861 contracts from their long side
Those commercials that have been short in silver covered 723 contracts from their short side.
Our small specs:
Those small specs that have been long in silver pitched 493 contracts from their long side
Those small specs that have been short in silver added 2765 contracts to their short side.
commercials go net short by 1138 contracts.??
looks to me like fairy tales as well
And now the Gold inventory at the GLD
May 13./another addition of 5.94 tonnes of gold into the GLD/Inventory rests at 851.13 tonnes
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 4/ we had a small deposit of .6 tonnes of gold into the GLD/inventory rests at 825.54 tonnes
May 3/no change in gold inventory at the GLD/Inventory  rests at 824.94 tonnes
May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes
April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes
April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14
April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes
aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes
April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes
April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes
April 21/no change in gold inventory/rests tonight at 805.03 tonnes
April 20/no change in gold inventory/rests tonight at 805.03 tonnes
April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes
April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46

May 13.:  inventory rests tonight at 851.13 tonnes



Now the SLV Inventory
May 13./no change in silver inventory at the SLV/inventory rests at 335.073 million oz
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 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 13.2016: Inventory 335.073 million oz
1. Central Fund of Canada: traded at Negative 3.2 percent to NAV usa funds and Negative 3.4% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.2%
Percentage of fund in silver:37.4%
cash .+1.4%( May 13/2016).
2. Sprott silver fund (PSLV): Premium FALLS   to +.00%!!!! NAV (MAY 13.2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES 1.68% to NAV  ( MAY 13.2016)
Note: Sprott silver trust back  into POSITIVE territory at +00% /Sprott physical gold trust is back into positive territory at +1.68%/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 +.00%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.



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

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

Ryanair CEO On BREXIT, Contagion, The EU and Gold

Michael O’Leary was forthright, opinionated and humorous as ever today at a Bloomberg News conference where he warned that Brexit could lead to contagion. The CEO of one of Europe’s largest airlines said that the airline would be unlikely to diversify into gold, as it is in his eyes a “risky asset.”

ryanair buy goldRyanair CEO, Michael O’Leary handed copy of ‘New Case For Gold’

In response to a question, put to him by Research Director of GoldCore, Mark O’Byrne:

“Given event risks and risk of contagion posed by BREXIT and the advent of negative interest rates and threat of bail-ins, will Ryanair follow the lead of the world’s largest insurer, Munich Re and diversify some of their cash reserves into gold?”

Ryanair CEO O’Leary said that he would leave that to greater minds than his – referring to his treasury executives. But he said that his own view was that Ryanair would not diversify their cash reserves into gold as he did not like sitting on cash or indeed diversifying into other “risky assets.” He said he preferred to use cash on balance sheet for productive purposes like “buying planes.”

After the event, Mark gifted Michael a copy of Jim Rickards latest best selling book,‘The New Case For Gold’ so that Michael would have a better understanding of gold’s renewed importance as a safe haven asset and a hedge against negative interest rates, currency debasement, deposit bail-ins and indeed cyber hacking and fraud.

ryanir goldMichael O’Leary of Ryanair

Michael graciously accepted the book but whether he reads or not is another story. As one wag quipped he will “probably throw the book at a cyclist when he is driving home today!”

O’Leary is a breath of fresh air in terms of not being politically correct, speaking his mind and calling it how he sees it. Some see that as divisive, others as honest.

Like him or dislike him, he is always interesting and has something interesting to say. He was the highlight of what would have been a fairly hum drum event even given the fact that the Irish Prime Minister, An Taoiseach, Enda Kenny gave the opening address. He warned of the severe consequences of BREXIT.

O’Leary has said Britain leaving the EU is “far too serious for politicians to make spurious arguments” and that if the UK left it would end up like Norway where it would have to implement EU legislation but would have no say in the issues. He disputed arguments by those who said Britain could remain in the free trade area without implementing EU rules and said Britain could “not afford to stay outside the single market.”

He said a vote for BREXIT could lead to contagion in the EU as other states seek to leave. He said it would create a lot of uncertainty in the short term for markets and the UK economy but that the UK economy might do well in the long term from BREXIT.

One of the most interesting questions posed to the attendees – some 100 of them – was whether the UK would vote for BREXIT. The vast majority said that they would not and only a handful of attendees – including Michael O’Leary and I – said that UK would vote for BREXIT.

Markets and bookies were wrong about the Nice and Lisbon referendums in Ireland and I believe they will be wrong re BREXIT as well. They are completely underestimating the degree of anger among voters and deep concern about the ‘democratic deficit’ at the heart of the EU both in the UK and now throughout the EU.

This is evidenced in the rise of Trump and Sanders and of popular parties of the left and right throughout the world. A few shorts weeks ago, Trump was given little chance to win the Republican nomination.

O’Leary articulated it very well when he said how he was very pro EU and pro the single market and all the benefits that it brings in terms of free markets, freedom to trade and the free movement of people and capital. However, he warned about the rise of the “EU Super State” and the lack of democracy in the EU with the bureaucrats in Brussels not listening to the wishes of the people.

This is what concerns people in all European countries he said.

Immigration is a distraction and is not the primary reason for many people being increasingly concerned about the EU project. For a small minority yes but not for the majority of voters in the UK or elsewhere.

Stephen Flood, CEO of GoldCore concurs:

“Europe is heading towards a federal republic without any meaningful dialogue as to what this would mean for state sovereignty. The project means that the people of Europe are been threatened with the removal of economic supports and trade agreements unless they acquiesce to this super state.

Many British people have become aware of this threat and the increasing changes in their governance and legal system. They rightly express discontent at this progression and demand a debate as to where Europe is going.

The European debt crisis has bot been resolved and the behaviour of the ECB towards debtor countries has broken with every capital market norm since the dawn of time. Political decisions were made by a non elected body to the detriment of smaller countries, i.e. Ireland and Greece. The ECB and Commission have broken the social pact for its own political, economic and monetary purposes and gains.”

O’Leary’s view on gold is the typical group think, herd view of gold as “risky asset” prevalent among most of the Irish and British population where there is little understanding of gold as a safe haven asset and as financial insurance. This is due to a lack of a culture or tradition of owning gold and a complete lack of coverage and analysis of the gold market. This is in marked contrast to the Germans, Austrians, Swiss and most Asian nations who understand gold as a store of value.

This is changing in Ireland and the UK but slowly as there is still a significant focus on stocks, bonds, deposits and especially property. In Ireland especially, we love our property and have weekly property supplements which are 20 page plus and are getting as big and frothy as the property supplements we had prior to the last property crash.

We sincerely hope for his financial well being and that of his company, that the Ryanair CEO reads the book and subsequently diversifies into gold – both personally and with Ryanair itself.  I believe that Jim Rickards would gladly meet with his team to discuss the importance of proper diversification of the Ryanair cash reserves.

We are happy to send copies of the book and our extensive research on gold as a safe haven to Michael and his Treasury team.

Gold and Silver Prices and News
Gold up today as European stocks decline – Gold -1% for week (WSJ)
Carney Warns Brexit Risks Causing Recession (BBG)
Post-Brexit UK May Feel Cold Chill From EU States, Kenny Says (BBG)
Gold demand is off to its fastest start ever in 2016 (CNBC)
Global gold demand up record 21% in Q1 (FT)

Gold Fund Buying Frenzy Spurs Demand to Second-Highest Ever (BBG)
Gold prices are heading higher – ETF Securities (CNBC Video)
Fundamentals improved – Precious metals bottomed (CNBC Video)
Can anything stop this global cycle of doom? (Telegraph)
Brexit isn’t to blame for slowing UK growth. It’s more serious than that (Guardian)
Read More Here

Gold Prices (LBMA AM)
13 May: USD 1,275.15, EUR 1,123.51 and GBP 885.16 per ounce
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

Silver Prices (LBMA)
13 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce  (Not updated by LBMA)
12 May: USD 17.51, EUR 15.36 and GBP 12.14 per ounce
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


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Mark O’Byrne
Executive Director

Metals holding up well against massive shorting, Embry tells KWN

Submitted by cpowell on Fri, 2016-05-13 01:23. Section: 

9:20p ET Thursday, May 12, 2016

Dear Friend of GATA and Gold:

Sprott Asset Management’s John Embry tells King World News that he can’t think of another market that could sustain the steady and overwhelming shorting done lately in the monetary metals by the bullion banks, but he adds that the metals are holding up well. The interview is excepted at KWN here:…

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




Antal Fekete: there is a world war against gold! He is certainly right on that score

(Antal Fekete/GATA)


There’s a world war against gold, economist Fekete says


12:36p ET Friday, May 13, 2016

Dear Friend of GATA and Gold:

Interviewed by Mexican financial journalist Guillermo Barba, the economist and gold standard advocate Antal Fekete explains how negative interest rates constitute the destruction of both financial and physical capital. Fekete also argues that central banks are waging a longstanding world war against gold. He adds that he has developed a mechanism of profiting from investing in gold by buying and selling calls and puts depending on central bank policy. The interview is headlined “There Is a Global War Against Gold” and it’s posted at Barba’s Internet site here:

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

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



1 Chinese yuan vs USA dollar/yuan DOWN to 6.5210 ( DEVALUATION ) / Shanghai bourse  CLOSED DOWN 8.75 OR 0.31%  / HANG SANG CLOSED DOWN 196.17 OR 0.99%

2 Nikkei closed DOWN 234.13 OR 1.41% /USA: YEN RISES TO 108.91

3. Europe stocks opened ALL IN THE RED  /USA dollar index UP to 94.32/Euro DOWN to 1.1350

3b Japan 10 year bond yield: FALLS   TO -.108%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.91

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  46.10  and Brent: 47.70

3f Gold UP  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund RISES to 0.142%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 9.02%/: 

3j Greek 10 year bond yield FALL to  : 7.41%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1275.35/silver $17.13(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble DOWN 29 in  roubles/dollar) 65.15-

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.


30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9712 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1025 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.


3r the 8 Year German bund now  in negative territory with the 10 year RISES to  + .141%

/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 1.724% early this morning. Thirty year rate  at 2.575% /POLICY ERROR)

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

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

Bloody Start To Friday The 13th For Global Markets

Global stocks have started Friday the 13th on the wrong foot, with not only Hong Kong GDP unexpectedly tumbling by 0.4%, the worst print in years while retail sales fell for a thirteenth straight month in March, the longest stretch since 1999 as the Chinese hard landing spreads to the wealthy enclave, but also following a predicted collapse in Chinese new loan creation, which will reverberate not only in China but around the globe in the coming weeks. The latest overnight drop in the Yuan hinted that should the recent USD strength continue, China will have no choice but to repeat its devaluation from last summer and winter. 

As a result of renewed Chinese concerns and, following devastating retail earnings, rising fears about a US recession as the US consumer has not been so weak in years, European shares have given up all their gains for the week on Friday and emerging-market equities headed for a fourth-straight weekly loss as flagging corporate earnings eroded investor confidence. Oil retreated from a six-month high and iron ore fell to a two-month low. Even Germany’s strongest GDP print in two years (0.7%, up from 0.3%, and 2.7% annualized) wasn’t sufficient to boost the euro, while bonds rose.

As shown in the chart below, global stocks have not only hit the latest double top, but are now set to catch down to declining global growth.

The big event today (and the week), and coming on the back of what’s been a relatively quiet week for data, will be the US retail sales numbers for April due out at 8:30amThe interest in the number will have increased following some of the terrible retailer earnings reports in recent days. Macy’s, Walt Disney and Kohls are a selection of these while last night after the close Nordstrom added to the pain for the sector after missing earnings and revenue expectations and lowering its profit guidance for the full year, sending the share price down some 17% in extended trading. Expectations are for a bounce back in the April data this afternoon, boosted by a rebound in vehicle sales and a slight increase in gas prices. The current consensus forecast for the headline is +0.8% mom. The retail control element (which is the core of the report) is worth keeping an eye on though. DB’s brand new permabear Joe LaVorgna expects this to rise by just +0.2% and if so, will mean the reading is up only +2.1% annualized through April which would be the weakest start to the year since the first four months of 2013.

As Bloomberg notes, markets failed to sustain gains made in the first half of the week amid signs of lackluster economic growth in Europe and Asia and a pull-back in industrial metals. U.S. retail data is due on Friday after cuts in forecasts by Macy’s Inc. and Nordstrom Inc. renewed concern that consumer demand is flagging in the world’s largest economy.

“People just don’t seem to believe in growth for the equity market and prefer staying on the sidelines,” said Chris Beauchamp, a London-based market analyst at IG Plc. “Investors are nervous ahead of retail sales, which has been an underlying theme this week.”

The Stoxx Europe 600 Index dropped 0.7 percent 10:31 a.m. in London, heading for a weekly decline of 0.2 percent. Shares have been falling since Wednesday as earnings reports failed to inspire investor confidence, undermining earlier gains. S&P 500 futures slid 0.3 percent, indicating U.S. equities will open lower after closing little changed in Thursday’s whipsaw session. The MSCI Emerging Markets Index fell 1.1 percent, erasing this week’s gain to leave it down 0.9 percent. The Shanghai Composite Index slid 2.6 percent in its fourth weekly drop and longest run of declines not seen since May 2014. The Hang Seng China Enterprises Index fell 1.3 percent and is down 10 percent from the April high, entering a correction.

WTI trades near $46, halting 3 days of gains that incl. 6-mo. high yday with pressure from stronger dollar.  Brent, as is traditionally the case, mirrors WTI retreat, unable to hold earlier move higher on Nigerian force majeure and Glencore manipulation.

Nordstrom slid as much as 16 percent in late trading after cutting its annual forecast, adding to evidence that the department-store industry is in a deep slump. Nvidia Corp. rose 5.7 percent in Europe after the biggest maker of graphics chips used in high-end gaming computers predicted sales that may top analysts’ estimates. Eutelsat Communications SA led media companies lower, plummeting 30 percent as brokers downgraded the satellite operator after it cut its results forecasts for this year and next. Total SA and Royal Dutch Shell Plc led energy producers lower.

Market Wrap

  • S&P 500 futures down 0.3% to 2053
  • Stoxx Europe 600 down 0.7% to 330.82
  • MSCI Asia Pacific down 1.3% to 125.95
  • US 10Yr yield down 3 bps to 1.72%
  • Dollar index up 0.2% to 94.29
  • WTI oil futures down 1.0% to $46.3/bbl
  • Gold spot up 1% to $1275.82/oz

Top Global News

  • Yen drops second week as BOJ’s Kuroda reiterates easing stance
  • Abe lurches to economic left to broaden appeal before poll
  • China Inc. misses best shot to repay $430 billion as yuan drops;
  • China credit expansion moderates amid warning on debt binge
  • Treasurers worry Draghi’s bazooka may chase away their investors
  • The losing hedge this negative-rate maestro says will never work
  • Banks, bond buyers applaud as EU softens trade transparency
  • HSBC said to hire 175 compliance staff for U.K. ring- fenced bank
  • Euro-area growth revised down slightly despite German strength
  • Brazilian real’s impeachment rally seen fizzling after ouster

Looking at regional stock market, Asia equity markets traded mostly lower following the subdued US lead, while disappointing earnings in the region also weighed on sentiment. ASX 200 (-0.5%) was led lower by basic materials following weakness in the commodities complex, while Nikkei 225 (-1.4%) shrugged off opening gains as JPY strength dampened exporter sentiment. Furthermore, a slew of earnings have also provided a catalyst for price action with telecoms underperforming in Japan after KDDI missed on expectations and pessimism regarding government telecom sector adjustments. Chinese markets were mixed with the Shanghai Comp (-0.3%) fluctuated between gains and losses as Industrials benefited from recent infrastructure funding announcements, while Hong Kong lagged with the Hang Seng China Enterprise Index in correction territory after declining 10% from April highs. 10yr JGBs traded mildly positive in tandem with the downbeat tone in Japan with the BoJ also in the market for JPY 850b1n of government debt. BoJ’s Governor Kuroda said BoJ easing framework is very strong, adding there is room for BoJ to ease more. Kuroda also commented time is needed for monetary policy to take effect, but added he is not saying BoJ will wait until effects can be confirmed.

European equities are softer this morning with losses relatively broad-based in a continuation of the sentiment seen yesterday on Wall Street and overnight in Asia.While underperformance has been seen in the FTSE MIB, weighed yet again by the weakness in financials. So far newsflow has remained particularly light this morning as participants await key US data releases in the form of retail sales and PPI. The risk averse tone in the region has filtered into flight to quality flow supporting Bunds which have made a break above 164.00. Alongside this, gains in German paper has been exacerbated by the softening of yields with notable bull flattening across the curve.

In FX, we have seen a fresh charge on the USD to push the weighted index into the mid 94.00s, led by EUR/USD which has been hit down from circa 1.1375 levels first thing in Europe to lows just under 1.1330 for now. The move was sparked by better than expected German GDP which printed +0.7% in Q1, sharply higher than the 0.3% in Q4, and above the 0.6% expected. The yen strengthened 0.3 percent to 108.71 per dollar, paring its weekly decline to 1.5 percent. The Bloomberg Dollar Spot Index added 0.2 percent, poised for a second weekly gain. Regional Federal Reserve chiefs for Boston and Kansas City argued at separate events Thursday that the U.S. central bank risks stoking an asset bubble by delaying raising interest rates for too long. The odds of a hike by year-end climbed to 53 percent from 48 percent on Wednesday, Fed Funds futures show. Oil has been relatively stable, but USD/CAD bulls maintaining pressure on near term resistance ahead of 1.2900. Stocks on the red however, so this bolsters the heavy tone in all risk currencies. SGD rallied sharply in EM on intervention talk. All eyes on US retail sales later on, with the market quick to slip into consolidation mode after the early London action.

In commodities, West Texas Intermediate crude was down 1.1 percent at $46.20 a barrel, after ending Thursday at a six-month high. Producers in Canada plan to resume operations at some oil-sands sites after wildfires took production offline, while Nigeria said militant attacks have cut output by as much as 600,000 barrels a day. China’s steel reinforcement-bar futures plunged by a record 13 percent this week, after price surges over the last two months prompted authorities to clamp down on speculation in the commodities market. Iron ore futures sank to the lowest level since March 4 in Singapore.

“The steel market took a hit as blast furnace operation rates, inventories, have all been climbing so the previous concerns over a shortage have abated,” Xu Tao, Wang Nan and Li Xiaodong, analysts at Zheshang Futures Co., said in a report Friday. Natural gas in the U.K. for next-month delivery is headed for its second straight weekly gain as its use in power output rises. Coal-fired electricity generation in Great Britain is at its lowest in at least six years amid closures of the emissions-heavy plants. Gold gained 0.8 percent, trimming this week’s loss to 1.2 percent.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • A cautious start to the morning with EU equities softer as participants look ahead to key US data releases.
  • USD-index rallies to the detriment of its major counterparts in what has been a rather quiet morning in terms of fundamental drivers.
  • Looking ahead, highlights include US retail sales and PPI, ECB’s Constancio, BoE’s Weale and Fed’s Williams.
  • Treasuries higher overnight as global equities and oil sell off, precious metals rally; U.S. stock index futures drop amid weak corporate earnings and subdued economic data.
  • Federal Reserve Chair Janet Yellen didn’t rule out using negative rates in a future crisis but emphasized that they would be adopted as a last resort
  • Jeffrey Gundlach said there’s a 50% chance the Federal Reserve will raise interest rates this year
  • Mizuho Financial Group Inc., Japan’s second-biggest lender by assets, forecast net income will decline 11 percent to a four-year low as the central bank’s negative-interest rate policy squeezes loan profitability
  • China’s broadest measure of new credit rose less than expected last month, suggesting that the central bank is starting to temper a flood of borrowing amid warnings from officials about potential side effects of the debt binge
  • Hong Kong’s economy unexpectedly contracted 0.4% q/q in the first three months of the year as falling retail sales and a weakening property market weigh on the city
  • The world’s biggest oil companies are borrowing record amounts of money to cope with a slump in crude prices. Exxon Mobil, Royal Dutch Shell, Chevron, Total, BP and Eni have together sold the equivalent of $37 billion of bonds this year
  • Even as Mario Draghi’s pledge to buy corporate bonds drives borrowing costs toward record lows, some treasurers are sounding the alarm that it may ultimately cause harm
  • The euro-area economy grew slightly less than initially estimated in 1Q, though momentum was still the fastest in a year. Led by a better-than-forecast performance by Germany, its largest economy, the euro region expanded 0.5% in the 1Q
  • Italy’s economy expanded in the first quarter, while still leaving growth well below the euro-area average as government debt hit a record-high €2.23 trillion ($2.53 trillion) in March
  • Sovereign 10Y yields little changed; European and Asian equities drop; U.S. equity- index futures lower. WTI crude oil drops, precious metals rally

DB’s Jim Reid concludes the overnight wrap

The big focus today and coming on the back of what’s been a relatively quiet week for data, will be the US retail sales numbers for April due out this afternoon. The interest in the number will have increased following some of the soft retailer quarterly reports we’ve seen in recent days. Macy’s, Walt Disney and Kohls are a selection of these while last night after the close Nordstrom added to the pain for the sector after missing earnings and revenue expectations and lowering its profit guidance for the full year, sending the share price down some 16% in extended trading. That said expectations are for a bounce back in the April data this afternoon, boosted by a rebound in vehicle sales and a slight increase in gas prices. The current consensus forecast for the headline is +0.8% mom although our US economists have a more cautious +0.3% forecast. The retail control element (which is the core of the report) is worth keeping an eye on though. Our colleagues expect this to rise by just +0.2% and if so, will mean the reading is up only +2.1% annualized through April which would be the weakest start to the year since the first four months of 2013.

All that to look forward to later, but first to the latest in Asia where markets are closing the week on a bit of a sour note, with the vast majority of bourses in the red. It’s Japan where the biggest moves lower have come, with the Nikkei currently -1.08%, not helped by a +0.2% strengthening for the Yen. The Hang Seng (-0.91%), Shanghai Comp (-0.08%), Kospi (-0.58%) and ASX (-0.54%) are also lower as we go to print. Credit markets are a touch wider while EM currencies have generally weakened. US equity index futures are also down close to half a percent this morning, despite little new newsflow overnight.

Turning back to markets yesterday, despite risk assets – certainly in the US – having a fairly directionless session, it was actually a fairly busy day at a macro level with various Fedspeakers, softer US data and Central Bank meetings for investors to digest. After ebbing and flowing the S&P 500 closed a smidgen in the red (-0.02%) at the closing bell although that was seen as something of a positive result after the mid-session wobble. The Nasdaq (-0.49%) was down more though with some of that reflecting another fall for Apple (-2.35%) after reports suggested that shipments of iPhone chips are expected to shrink. That move actually took Apple’s share price to the lowest since June 2014 and if we look back over the last month or so (since April 14th), Apple has actually declined on 16 of the 20 trading days.

Markets in Europe had been a bit weaker prior to this (Stoxx 600 -0.49%) after giving up gains into the close as energy stocks in particular went into retreat mode with violent swings in Oil. Indeed the Stoxx 600 Oil and Gas index trimmed a gain of as much as +2.3% in the last hour or so of trading as WTI, having touched $47/bbl briefly, declined nearly $1.5/bbl in a short space of time before than gaining again in the evening session, eventually closing at $46.70/bbl and +1.02% on the day. It seems that while investors continue to grapple with the supply disruptions in Canada and Nigeria, a report from the IEA yesterday suggesting the global oil stocks will see a ‘dramatic reduction’ in the second half of this year was attributed to the rally back off the lows.

To the macro and firstly yesterday’s data where the release that appeared to garner most attention was the initial jobless claims print in the US. Claims were reported as climbing 20k last week to 294k (vs. 270k expected) which is the highest level since February last year. Our US economists noted however that some caution is warranted though as it appears that the entire increase was attributable to the state of New York. Indeed claims in NY were up 23k last week and historical data shows that this jump could be driven by seasonal issues. There has been similar evidence of such in 2014 and 2011 and claims then reverted back to trend the following week. Despite claims being up on three consecutive weeks now, there’s still yet to be any sign of broad-based deterioration. Meanwhile, the other data in the US yesterday was the import price index which was recorded as increasing +0.3% mom (vs. +0.6% expected).

Closer to home in Europe we learned that industrial production for the Euro area was -0.8% mom in March (expectations had been for 0.0%) which has had the effect of the dragging the YoY rate down to +0.2% now (from +1.0%). French CPI meanwhile was confirmed at +0.1% mom for the month of March, with the YoY rate a lowly -0.2%.

The bigger focus however was on the Bank of England monetary policy meeting. As had been expected the Bank left rates on hold at 0.5% after a unanimous 9-0 vote (there had been some suggestion that we’d see as many as two dissenters to this). The inflation report showed that the Bank has revised down its forecasts for growth by one or two tenths in each of the next three years while the inflation forecast was little changed generally but slightly steeper in the near term. Much of the focus though was the mention of the EU UK referendum vote. The inflation report made mention to that a vote to leave ‘could lead to a materially lower path for growth and a notably higher path for inflation’. Governor Carney also warned of the possibility of ‘material effects on the exchange rate’ and even the possibly a ‘technical recession’. The Pound actually broke above $1.45 intraday yesterday but then quickly pared those gains shortly after to finish little changed on the day around $1.445. The other Central Bank meeting yesterday at the Norges Bank saw the Bank hold rates as expected too at 0.5% with the outlook not deviating all that much from expectations.

Over at the Fed meanwhile we heard from a couple of notable speakers in Rosengren and George, both of whom offered up a fairly hawkish tone. The former opined that ‘if the incoming economic data continue to be consistent with gradual improvement in labour markets and inflation getting closer to target, the Fed should be ready to normalize interest rates’. He followed this up by also saying that market pricing currently implies a too pessimistic view about the fundamental strength of the US economy. Fellow Fed official George offered a similar view in saying that rates are ‘too low for today’s economic conditions’. The probability of a rate hike next June continues to sit at a lowly 4%.

Before we look at today’s calendar, a quick note on the latest in Brazil where as widely expected and following an extended voting session, the Senate voted by 55 to 22 in favour of accepting the petition for the impeachment of President Rousseff. Rousseff has now been notified and Vice President Temer has replaced her. Our EM colleagues note that the impeachment process is not over yet and that Rousseff will be put on a trial in the Senate that could last up to 180 days. For Rousseff to be definitely impeached, at the end of the process two-thirds of the Senators (54 Senators) will have to vote in favour of impeachment. Since 55 voted in favour yesterday, the most likely scenario is that Rousseff will not return to office in their opinion.

Before we wrap up, a quick mention that over the weekend China is due to release the remainder of its April indicators. Industrial production, retail sales and fixed asset investment are all due out early tomorrow morning while the latest money supply, aggregate financing and new yuan loans data is also due at some stage. So expect all this to set the early tone come Monday morning again.



i)Late  THURSDAY night/ FRIDAY morning: Shanghai closed DOWN  BY 8.75 PTS OR 0.31%  /  Hang Sang closed DOWN 196.17 OR 0.99%. The Nikkei closed DOWN 234.13 POINTS OR 1.41% . Australia’s all ordinaires  CLOSED DOWN 0.54% Chinese yuan (ONSHORE) closed DOWN at 6.5210.  Oil FELL to 46.10 dollars per barrel for WTI and 47.70 for Brent. Stocks in Europe  IN THE RED . Offshore yuan trades  6.54570 yuan to the dollar vs 6.5210 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE WIDENS.



With negative interest rates in Japan, who is buying all of the uSA treasuries? None other that Mrs Watanabe  (Japanese citizens). This is an accident waiting to happen!

(courtesy zerohedge)


Fed Nemesis & Mysterious Treasury Bond Buyer Exposed

The monotonous drone from The Eccles Building continues to pontificate that bond bulls are fools but stock buyers are the smart ones for the miracle hockey-stick of Keynesian dreams is just around the corner and rate-hikes right along with it. Three decades of factual dismissal of this bullshit propaganda are of course proving that line of reasoning simply false and while Rosengren, Bullard, et al. bloviate that ‘investors’ should be selling bonds, it is shockingly ironic that their bond-buying nemesis is Mrs. Watanabe in the land of failed Keynesian policy piling into Treasuries at a record pace since The BoJ went NIRP.

As UBS Rate strategists detail, since the BoJ launched its negative interest rate policy, Japanese investors have been significant net buyers of foreign assets, mainly DM government bonds. Weekly flow data suggests that this trend has continued beyond the turn of the Japanese fiscal year, albeit at a slightly slower pace (since April, Japan net purchases of overseas bonds amount to ¥2tn vs. ¥4.3tn in Mar-16 and ¥3.1tn in Feb-16). Today’s data of overseas purchases by destination for March highlights which markets have benefitted so far.

DM: Record appetite for US Treasuries in March; dwarfed other markets

Treasuries normally make up most of Japanese investors’ foreign bond purchases. This was certainly true in March, with the ¥4.8tn of net purchases of USTs (largest since at least 2005) accounting for 87% of the overall net flow

And that Fed-frustrating bid for bonds is not about to stop…

Investment plans point to continued strong demand; should weigh on yields

Our take on Japanese life insurers’ and asset managers’ investment plans for FY16-17 is that avast majority plans to boost their foreign bond holdings further, often at the expense of JGBs.

While most still seem to favour FX-hedging overseas bonds, some look to also up unhedged purchases. However, others appear sceptical of the prospects for a yen turnaround, and will only consider altering hedging ratios if they grow more confident that the JPY will weaken. We remain of the view that liquid and highly rated markets offering an attractive FX-hedged yield pickup vs. JGBs, like USTs and OATs, should be key beneficiaries.

So the next time Eric Rosengren says that the bond market is way too pessimistic about growth or how awesome The Fed is – tell him to blame his Keynesian frontrunning fools in Japan for “reaching for yield” into USTs and dumping JGBs – if Eric really wants to saee what happens to his bond market, maybe try NIRP – just as Yellen said was on the table tonight.

OH OH! is Japan expecting a Lehman type of shock  They just postponed their tax hike scheduled for April 2017:
(courtesy zero hedge)

Is A “Lehman-Style Shock” Coming: Abe Announces Sales Tax Delay

Over the past several months, a recurring topic about Japan’s economy has been whether Abe would delay Japan’s planned consumption tax due in April 2017.

As a reminder, in late 2014, Abe caught markets and voters off-guard when he postponed an unpopular sales tax hike and called a snap election. And, as Reuters wrote in March, “less than two years later, the only surprise will be if he doesn’t repeat the play. With consumption weak, wage growth limp and emerging economy slowdowns clouding Japan’s growth, economists bet Abe will again delay raising the tax to 10 percent from 8 percent. Currently due in April 2017, the hike is seen by fiscal conservatives as vital to rein in bulging public debt and social security costs.”

Furthermore, breaking an end-2014 promise not to delay the tax hike again would give Abe cause to call an election for parliament’s lower house to coincide with a July poll for the upper chamber. His ruling bloc already holds a super majority in the lower house.

What is more surprising, is that also over the past few months Abe insisted that he would not delay the consumption tax this time, explaining repeatedly that the increase would go ahead “unless a global economic contraction or a Lehman-style market shock jolted Japan’s economy.

Inquiring minds want to know if a Lehman-style economic contraction is about to hit Japan because moments ago Nikkei just reported what many had expected for months, to wit: “Japanese Prime Minister Shinzo Abe has decided to postpone a consumption tax increase set for next April, judging it to threaten efforts to pull the world’s third-largest economy out of deflation.”


Abe is expected to announce the delay after further consideration, including talks with fellow Group of Seven leaders at a summit in Japan later in the month. The economic impact of April’s earthquakes in southern Japan has become clear, adding to uncertainty over domestic and global growth.


The prime minister informed senior government and ruling coalition officials Friday of his intention to postpone the tax hike a second time. The 8% rate was originally scheduled to go up to 10% last October, following the 3-percentage-point rise of April 2014.


How long Abe wants to delay the increase this time is unclear. Some officials say that if Japan waited until April 2019, it could count on a more buoyant economy thanks to the Summer Olympics in Tokyo the following year.

Curiously, the economic impact of every recent olympic games has been to lead to an economic crisis, either before or after, although somehow Japan will be different.

Junior coalition member Komeito had wanted to go ahead with the April 2017 hike as scheduled to fulfill a campaign promise of introducing a reduced tax rate on food and other necessities.


“If that’s the prime minister’s decision, there’s nothing we can do,” a senior Komeito official said.


Abe will hold a news conference June 1 following the close of the current legislative session. Government and ruling coalition officials see this as a possible opportunity to announce his decision.


Postponing the hike does not require a referendum, but voters would have an indirect opportunity to weigh in on the move in an upper house election already set for July. Abe does not intend to call a snap lower house election for the same day.


Legislation needed to delay the tax increase would follow during a special session sometime after the election.

The USA/Yen originally liked the news, but with the USDJPY suddenly sliding it appears that the market is now asking the same question as we posed in the title.



The big unwind begins as the entire bubble just exploded in China: Steel crashed the most since 2009 as did other commodities.  This will certainly blow up their banking system:

Also the ‘easing’ game inside China is over!

(courtesy zero hedge)

Chinese Commodity Carnage Unwinds Entire Bubble – Steel Futures Crash Most Since 2009

Well that de-escalated quickly…


As Reuters reports,

Chinese steel futures were on course for their biggest weekly fall since 2009 on Friday, as a selloff in the country’s commodities showed signs of spreading to other global markets for raw materials such as palm oil and base metals.


Weakening fundamentals along with strong measures by Chinese exchanges to stamp out speculative activity have helped reverse momentum in China’s massive commodity futures markets from bullish to bearish in less than a month.


The deepening losses have started to weigh on global markets elsewhere, in a similar manner to the boom and bust cycle in the country’s stock markets last year.

This is what government-intervention-driven malinvestment-creating unintended consequences look like…





and just consider what signals the rally sent to the world?


Rising levels of open interest, or open contracts, in China’s steel and iron ore futures, as prices fall deeper suggest investors are looking at more downside risk.

The sentiment is very bearish now, and investors are looking for opportunities to take more short positions,” said Wu Wei, an analyst at Yong’an Futures in China’s Hangzhou city.


The softer outlook for the Chinese economy, rising steel production and waning seasonal demand have fueled the sharp losses in steel-linked futures, said Wu.


“We are now kind of at or past the peak in seasonal demand so prices are coming down. And maybe since we overshot on the upside so we can undershoot on the downside,” said Ian Roper, commodity strategist at Macquarie.

And with “authoritative persons” now saying no more stimulus, things do not look good for the “china is recovering” narrative…

As we conclude previously, In general, the “anonymous authory”’s main thesis is that China needs to put structural reform on top of investment driven stimulus and control the risk from high leverage.

Say good bye to the aggressive easing in Q1 and China will enter couple quarters’ “reform” period, until the government cannot stand with the pain and has to use “investment driven stimulus” again.

We knew this was going to happen!!  China’s credit growth went to absolute zero  and zero hedge explains why this is important..a must read.
(courtesy zero hedge)

China’s Credit Growth Grinds To A Screeching Halt: Why This Is Very Important

Last night, when previewing the most important macro event of the day – far more important than US retail sales which predictably tried to refute the gloomy reality reported by actual retailer CEOs – namely China’s montly loan creation number, we said that “according to MarketNews, Chinese bank loan growth is expected to slow sharply in April compared with March as the pillar of bank lending, mortgage loans, slowed as the property market cooled.” Citing bank officials, MNI said that combined new loans in April by the Big Four state-owned banks were more than halved from March’s level.

This is precisely what happened just a few hours later, when the PBOC reported April credit growth and monetary data all of which came solidly below expectations, to wit:

  • New CNY loans: Rmb 556 bn in April (RMB loans to the real economy: Rmb 564 bn) vs consensus: Rmb 800 bn. and down steeply from March’s new CNY loans of Rmb 708bn.
  • More importantly, Total social financing plunged nearly 70% to Rmb 751 bn in April vs. consensus of Rmb 1300 bn, and down from March’s near record Rmb 2336 bn.
  • Outstanding CNY loan growth: 14.4% yoy in April (13.2% SA ann mom, estimated by GS); March 14.7% yoy (11.2% SA ann mom).


The chart below from Axiom shows not only the sharp slowdown in TSF, but that at CNY751BN, it was effectively unchanged from a year ago, something China can not afford as the only way China’s economy will keep growing is if its total loan growth grows at a substantial pace above GDP.

Perhaps most important was the substantial slowdown in the growth rate of China’s all important M2, which rose 12.8% yoy in April (3.2% SA ann mom) vs. consensus: 13.5% yoy. and down from March: 13.4% yoy.


This is Goldman’s take on the data:

Slower credit growth in April was likely the partial result of tighter liquidity conditions in the interbank market. Administrative controls might have played some role as well. Higher yields and credit spread may also contributed given the decrease in corporate bond net issuance under TSF. There were also some crowding out effects of very large amount of local government bond issuance which were mostly bought by banks.


Fiscal deposit change was a major drag on M2 growth. Fiscal revenue growth was as high as 14.4%, mainly because of attempts by the government to collect the last month’s operation tax before they are abolished and changed to VAT. Fiscal expenditure growth slowed after very strong growth in March, which was impossible to maintain. FX flows were likely relatively stable with no major outflow nor inflows.


April money and credit data indicate that tweaking of the policy stance likely started in April, before the late April Politburo meeting and early May People’s Daily editorial suggesting less stimulative policies. Such a change is unsurprising given the rebound in activity growth,rising concerns about inflation and leverage. To what extent the latest policy comments will have additional impact on policy in May and beyond is uncertain, but we believe 2Q policy as a whole is most likely to be less supportive than 1Q. Domestic investment demand growth as a result will likely receive less support.

Goldman may not have visibility into May, but MarketNews did. As we quoted MNI last night, “it appears the situation is even worse into May. Shenzhen saw house sales in the first week of May plummet another 49% when compared with the previous week, dragging year-to-date sales into a 1% drop in terms of floor space.”

But the biggest concern for China, and the world, is that now that China’s credit impulse is gone, it means that the it is only a matter of time before the impetus behind Chinese, and global growth, evaporates as per the timeline persented in the following Goldman chart, which explained the surge in Q1 economic activity, and which now anticipates a steep slowdown in the second and subsequent quarters unless China manages to stoke its unsustainable credit growth once again.

Putting it all together, we repeat our conclusion from last night: “China finds itself between a rock and a hard place – should it unleash another massive credit impulse, it will find itself scrambling to contain the NPL fallout; should it taper the credit growth, it will see its economy suddenly swoon lower, resulting in even more currency devaluation and even more capital outflows (and even higher Vancouver real estate prices).”

In the meantime, here is the summary from Axiom’s Gordon Johnson: “this is a greenlight to short commodities.”


Wow!  1st quarter  GDP fell off a cliff falling- .4% Q/Q instead of growth of .1%
Real Estate prices are plummeting inside Hong Kong
(courtesy zero hedge)

China Hard Landing Spreads: Hong Kong GDP Tumbles At Fastest Pace Since Financial Crisis

In the latest indication of contracting global growth, overnight Hong Kong reported that its Q1 GDP fell off a cliff 0.4% qoq, widly missing estimates of 0.1% growth as retail sales plummeted and the property market continued its collapse. On a y/y basis, the economy grew only 0.8% when compared to the same period last year, less than half the 1.9% y/y growth reflected in Q4.


Hong Kong’s economy grew only 2.4% in 2015, half the pace of 2011, as a slowdown in mainland China and a weaker yuan curbed Chinese spending, while a volatile stock market also hit domestic consumption.

“At least over the next five to six months, we don’t see any positive growth driver that can help lift GDP growth substantially,” said Raymond Yeung, an economist at Australia & New Zealand Banking Group Ltd. in Hong Kong.

“Hong Kong’s economy is facing myriad headwinds, including an increasingly acute residential property price correction and significant linkages with the slowing Chinese economy,” said Andrew Wood, head of Asia country risk at BCI research. He added that “while we do not envisage the economy tipping into full-scale recession in 2016, the risks of such an event are rising.”

We, on the other hand, envisage the Hong Kong economy tipping into a recession, as we have since early 2016.

One ddriver for the weakness is that Hong Kong’s tourist arrivals dropped 20.5% in February, and slid 4.3% from a year earlier to 4.21 million in March. Mainland visitors, which accounted for 72 percent of the total, fell 6.9% to 3.02 million, perhaps the best indication of just how pressured the Chinese consumer truly is.

Kelvin Lau, a senior economist at Standard Chartered Bank in Hong Kong, told Reuters that “given its highly open nature, Hong Kong was not insulated from these external headwinds, which weighed on consumer and investor sentiment,” he said.

We noted the epic retail sales collapsed in March, which according to a MasterCard survey contracted 18.5% on a year over year basis, and marked the thirteenth straight month of declines according to Bloomberg.

Regarding the property market, we’ve covered its spectacular collapse in detail, and as Kyle Basssummarizes in explaining the property market’s free fall: “Hong Kong’s in a worse position than it was in prior to the ’97 crisis today.” Apartment prices are down by 12% from a September high and accelerating lower, while investment banks predict a further 20 percent decline in coming months. Property sales tumbled to a 25-year low in February as prices continued to slide. The number of the city’s homeowners with apartments worth less than their mortgages soared 15 times in the first quarter, according to the Hong Kong Monetary Authority.

While headlines may read that Hong Kong’s economic contraction was “unexpected”, it was certainly anything but. As we’ve said before, given what we’re seeing in Hong Kong, one can only imagine what the true conditions are in mainland China.



none today


Russia hints at nuclear war after the USA deploys ballistic missile shield;

(courtesy zero hedge)

Russia Hints At Nuclear War After US Deploys Ballistic Missile Shield

In a dramatic development for the global nuclear balance of power, yesterday we reported that starting today, the United States would launch its European missile defense system dubbed Aegis Ashore at a remote airbase in the town of Deveselu, Romania, almost a decade after Washington proposed protecting NATO from Iranian rockets and despite repeated Russian warnings that the West is threatening the peace in central Europe.

As Robert Bell, a NATO-based envoy of U.S. Defense Secretary Ash Carter explained “we now have the capability to protect NATO in Europe. The Iranians are increasing their capabilities and we have to be ahead of that. The system is not aimed against Russia,” he told reporters, adding that the system will soon be handed over to NATO command.

We also noted that the Kremlin, which for years has warned that it would have no choice than to escalate proportionally, was “incensed at such of show of force by its Cold War rival in formerly communist-ruled eastern Europe where it once held sway.” Moscow said that the U.S.-led alliance is trying to encircle it close to the strategically important Black Sea, home to a Russian naval fleet and where NATO is also considering increasing patrols. Russia has good reason to be worried: the US move is a clear defection from the carefully established Game Theory equilibrium in the aftermath of the nuclear arms race, one which potentially removes a Russian first strike threat, thereby pressuring Russia.

We added that “the precarious nuclear balance of power in Europe has suddenly shifted, and quite dramatically: despite U.S. assurances, the Kremlin says the missile shield’s real aim is to neutralize Moscow’s nuclear arsenal long enough for the United States to make a first strike on Russia in the event of war.”

In conclusion we said that “what makes this step particularly dangerous is that Russia will now be forced to retaliate and since it does not have a comparable defensive technology, Putin will have no choice but to deploy more ICBMs on Russia’s borders, which in turn will exponentially escalate the threat of an “inadvertent” launch. Although considering how the “market” responds to newsflow these past few years, this may also be seen as a bullish catalyst for stocks.”

* * *

Fast forward to today when as American and allied officials celebrated the opening of a long-awaited missile defense system in Europe with a ribbon cutting and a band…

…. the reaction in Moscow on Thursday was darker: a public discussion of how nuclear war might play out in Europe and the prospect that Romania, the host nation for the United States-built system, might be reduced to “smoking ruins.

As expected, Russia was furious. The NYT cites Kremlin spokesman Dmitri Peskov who told reporters in a conference call that “we have been saying right from when this story started that our experts are convinced that the deployment of the ABM system poses a certain threat to the Russian Federation.”

Of course, the US and NATO are well aware of this, which is why they have proceeded with this latest provocation, one which however has far more profound implications to the peace in Europe than the occasional barrel-roll in a fighter plane fly by.

“Measures are being taken to ensure the necessary level of security for Russia,” he said. “The president himself, let me remind you, has repeatedly asked who the system will work against.”

Russian Foreign Ministry spokeswoman, Maria Zakharova, said Russian defense experts consider the site a threat. “We still view the destructive actions of the United States and its allies in the area of missile defense as a direct threat to global and regional security.” She said that the Aegis Ashore launchpad was “practically identical” to a system used aboard Aegis warships that is capable of launching Tomahawk cruise missiles.

As the NYT adds, while the United States says it has no Tomahawk missiles at the site in Romania, the launchpad violates a 1987 treaty intended to take the superpowers off their hair-trigger nuclear alert, the Intermediate-Range Nuclear Forces Treaty, by banning land-based cruise and medium-range missiles with a range from 300 to 3,400 miles.

The problem, as we wrote yesterday, is that the short flight time of these missiles diminished to mere minutes the window Soviet leaders would have had after a warning to decide whether to launch a second strike, raising the risks of mishaps. Any redeployment of nuclear-capable missiles in Central Europe, the NYT writes, would roll the clock back to this nerve-racking 1980s status quo.

And now the ball is in Russia’s court.

“We have to announce this openly, without any additional diplomatic formulations,” Zakharova said of the Russian assertion the site violates the intermediate-range missile ban. “We are talking about violation of this treaty.” Previously Putin has warned that an American antimissile deployment in Eastern Europe could prompt Russia to withdraw from the treaty. The United States last year accused Russia of violating the treaty by failing to declare the true range of two missile types.

One potential response Russia will implement, is a nuclear-armed drone submarine. Last fall, Russian security officials appeared to drop hints of this military response to the missile defense system hinting through the leak that Russia has options. The drone, according to easily decipherable text accompanying the design drawing, would be capable of carrying a large nuclear device into coastal waters and detonating it, touching off a radioactive tsunami to flood and contaminate seaside cities.

In short, the kind of stuff that unleashes new all time highs in stock markets when it all goes wrong.

The submarine would “defeat important economic objects of an enemy in coastal zones, bringing guaranteed and unacceptable losses on the country’s territory by forming a wide area of radioactive contamination incompatible with conducting military, economic or any other activities there for a long period of time,” it said.

As the NYT adds, a Russian commentator, Konstantin Bogdanov, wrote on, a news portal, that the antimissile sites in Eastern Europe might even accelerate the slippery slope to nuclear war in a crisis.

This is precisely what we said yesterday as well.

Bogdanov added that the missile sites would inevitably become priority targets in the event of nuclear war, possibly even targets for preventive strikes. Countries like Romania that host American antimissile systems might be the only casualties, he wrote, whereas the United States would then reconcile with Russia “over the smoking ruins of the East European elements of the missile defense system.”

* * *

There is, of course, a far simpler response. Recall that in November 2008, then Russian president Dmitry Medvedev made a stark warning to NATO: “Russia will deploy Iskander missile systems in its enclave in Kaliningrad to neutralize, if necessary, the anti-ballistic missile system in Europe.” We also reported in 2013 that in a seeming escalation as the ballistic shield appeared on its way to completion, there were unconfirmed reports that Russia had deployed a “double-digit” amount of SS-26 mobile units within Kaliningrad.

This time, we are absolutely certain, another nuclear ICBM deployment in the proximity of central Europe is imminent as Russia has no choice but to respond and this time it will be very much confirmed.



As stock markets are manipulated daily, the big question is who is buying and who is selling.  It seems that the smart money is selling and buying gold. Below is a good commentary as the Bank of America charts where investor funds are heading:

(courtesy zero hedge/Bank of America)

Everyone Is Still Selling: Biggest Monthly Outflow From Global Stocks Since US Downgrade

One recurring question over the past few weeks has been “who is buying” stocks in a world inwhich not only the smart money, but everyone else too is selling. The latest Lipper data will not provide the answer because as BofA reports, in the latest week there was another $7.4bn in outflows (the 5th straight week) driven by $4.8bn in mutual fund outflows and $2.7bn ETF outflows, leading to a $44bn equity exodus past 5 weeks, which as Michael Hartnett points out is the “largest redemption period since Aug’11”, or when the US downgrade sent US stocks into a bear market tailspin.

Digging into equity flows we find the following:

  • Europe: $3.9bn outflows (14 straight weeks = longest streak since Feb’08)
  • EM: $2.3bn outflows (largest in 16 weeks)
  • Japan: ekes out $88mn inflows (ends 8 straight weeks of outflows)
  • US: $2.2bn outflows (outflows in 4 of past 5 weeks)

By sector, 12 straight weeks of REITs inflows ($0.8bn); 4 straight weeks of tech outflows ($0.2bn); first outflows from financials in 4 weeks ($0.4bn)

Some other fund flow findings:

  • Bonds: $3.5bn inflows (inflows in 10 of past 11 weeks)
  • Precious metals: $1.0bn inflows (inflows in 17 of past 18 weeks)
  • Money-markets: $10.9bn inflows (largest in 13 weeks)

Michael Hartnett summarizes the longer term flow trends: bonds & gold over stocks, IG over HY, TIPS & munis over Treasuries; Big $2.3bn EM equity outflow (largest in 16 weeks); accelerating outflows from Europe; 4th consecutive week of redemptions from tech funds, 12th week of inflows to REITs; Risk-off $10.9bn inflows to money market fund.

Trend from active to passive continues apace ($1.2tn to equity ETFs, $0.9tn from mutual funds since 2007 – Chart 1)

BofAML private client allocations to bond & equity ETF’s up from 3% of AUM in 2009 to 9% today

In conclusion, here is Michael Hartnett’s take on markets whilch “look” better than they “feel”

YTD returns: stocks 1%, bonds 7%, commodities 11%, US dollar -5%

YTD winners: oil, gold, Brazil, Russia, Canada (weak $ plays) & JGBs (deflation play)

YTD losers: US dollar & Italian & Chinese banks (despite ECB & PBoC credit stimuli)

Trading ranges set & holding: SPX 1850-2100; GT5 1.2-1.8%, VIX 12-20, DXY 92-100

But cross-asset price action deflationary: JGB’s, German bunds, Amazon, US utilities, US staples all at all-time highs…while key cyclical indices struggling: SOX, TRAN, DAX, OMX, NKY

Best tactical bull catalyst = policy success = new highs in High Yield (H0A0, HW00) …rotation to stocks…best played via oversold Europe/China banks & US tech Best tactical bear catalyst = policy failure = global PMI’s <50 & -ve EPS growth follows ECB/PBoC credit & Fed “weak dollar” stimuli…best played via bonds & volatility as global yields plunge toward zero.

BofA’s summary: “We stay cautious: Positioning = “grind higher”; Policy & Profits = “summer of shocks”.



Iran offers huge discount on Asian crude, the highest discount since 2007.  Saudi Arabia is not pleased:


(courtesy I. Slav/Oil

Iran Hits Saudis Where It Hurts, Offers Biggest Discount On Asian Crude Since 2007

Submitted by Irina Slav via,

Iran has extnded its discount on the June contract for its heavy crude going to Asia, just a few days after Saudi Arabia announced a price increase for its own June contract for the continent. With this new discount,Iranian oil will be noticeably cheaper for Asian clients than both Saudi and Iraqi crude.

The motivation behind Iran’s move is easy to see. The country is starving for oil revenues. It has a lot of work to do on its oil production and transport infrastructure to boost production, and it has just begun to recover from years of harsh sanctions.

Asia is a priority destination for its crude, so Iran has been lowering prices in parallel with pumping more oil. In March, for example, its exports to Asia marked a 50 percent increase on the year. Even factoring in the sanctions that were in effect last March, a 50 percent increase is a substantial achievement.

Saudi Arabia’s price increase is harder to interpret. Riyadh is currently sending a lot of mixed signals. Its deputy crown prince recently announced a comprehensive economic reform plan that aims to reduce the kingdom’s dependence on oil over the next 14 years. At the same time, Saudi Aramco—the state-run oil behemoth—has said it will continue to increase production despite the market depression.Now the Saudis are raising prices for Asia because they say they expect a pickup in demand.

Saudi Arabia and Iran are playing a game of barrels. Asia is the ultimate prize, not just because of China, but because global economic forecasts peg emerging economies as the main driver of overall growth in the medium term. Oil demand in the developed world is likely to fall over the medium- and long-term as vehicles become more efficient.

Iran’s strategy makes sense—lowering prices will allow it to capture more market share. Plus, Iran needs any revenues it can get its hands on.

Iran’s heavy crude, as Reuters points out, will now trade at a $0.30 discount to the Saudi Arab Medium, the widest gap since 2007. Refineries generally prefer light crude because it’s easier to process, but China’s teapots have made do with whatever crude comes their way, so they are very flexible in this respect, which is good news for Iran.


Iran is also putting the finishing touches on a new oil industry investment contract that is bound to draw interest both big and small players. E&Ps need reserve replacement, and Iran’s vast oil reserves are enticing. Iran needs oil infrastructure and production investments, and seems to be willing to sweeten any deal that comes its way by foregoing its stringent oil field ownership and buy-back rules from the past. So while Iran has succeeded in ramping up oil production in the short-term, it is also positioning itself for growth in the years ahead.



USA rig counts continue to crash land:
(courtesy zero hedge)

US Rig Count Continues To Crash

The total US rig count declined yet again this week, down 9 to 406 – a new record low. The last four times rig counts collapsed anything like this, the US economy was in recession.


Oil rigs dropped 10 to a new cycle low at 318, but appear near a turning point if lagged oil prices remain any indication…

We have been warning you that by June, Cushing OK will be at full capacity.
And lo and behold it is:
(courtesy zero hedge)

Genscape: “Inventories At Cushing Are Close To Maximum Operating Capacity”

By Dylan White of Genscape

Cushing, OK, Crude Stocks, USGC Exports Hit Record Highs after U.S. Midcontinent Refinery Work

Cushing, OK, crude inventories reached a record high May 3, 2016 of more than 70mn bbls after refinery outages in the U.S. Midcontinent displaced barrels to both storage tanks and the U.S. Gulf Coast. Without significant new storage capacity, Midcontinent stocks could reach maximum operating capacity this year, according to Genscape.

Cushing inventories increased 1.3mn bbls week-on-week following the spring maintenance season, which also caused Patoka, IL, stocks to climb 1.4mn bbls to a record high above 11mn bbls week ending April 29, 2016.

Meanwhile, along the Gulf Coast, waterborne loadings to international and domestic destinations recently hit a 2016 high while stocks increased in the Midcontinent.

– See more at:…

Cushing stocks border maximum capacity utilization

Inventories at Cushing are close to maximum operating capacity, and on May 3, 2016 reached utilization just shy of 80 percent, a record high since Genscape began monitoring the hub in 2009. Genscape has never observed capacity utilization higher than 80 percent based on historical data, though utilization may breach 80 percent depending on the utilization of merchant capacity, or capacity that is leased by an owner to other users.

Utilization of operational capacity has remained above 70 percent at Cushing since November 2015. Storage capacity at six of 16 operators at Cushing was utilized above 80 percent as of May 3, 2016.

There is little help on the horizon from new storage capacity to prevent Cushing from hitting maximum operating capacity. There are two tanks under construction at Cushing, totaling 540,000 bbls. No tank construction projects are underway at Patoka.

The record high May 3, 2016 was almost 600,000 bbls higher than the previous record high set March 15, 2016 and 5.0mn bbls more than the highest point reached in 2015.

Storage data reflecting Cushing and Patoka inventories for week ending May 5, 2016 was released to customers on May 9. The May 3, 2016 Cushing record high was the fifteenth this year, as stocks continue to grow.

Patoka stocks also reached a record high after increasing two consecutive weeks, up 2.2mn bbls between April 15 and April 29, 2016. The record high was 488,000 bbls higher than the previous record high of 10.6mn bbls reached November 13, 2015.

Capacity utilization at Patoka terminals was at 65 percent for the week of April 29, 2016, just below the record high utilization rate of 67 percent set April 2013. Capacity utilization at Patoka has fallen below 50 percent once in 2016.

In 2016, crude storage in Texas increased as storage capacity in the Midcontinent became scarce. Total monitored crude stocks in the Gulf Coast and West Texas region increased 18.5mn bbls between February 12 and March 18, 2016 to a record high above 122mn bbls. Stocks in the region remained just below the record high for the next month before dropping 2.4mn bbls the week ending April 29, 2016, coinciding with higher waterborne loadings out of the Gulf Coast.

Record-high exports ship from USGC

More than 4.5mn bbls of waterborne shipments left the Gulf Coast for foreign destinations the week ending April 29, 2016, the most since Genscape began monitoring in August 2014. On a weekly basis, crude exports from the Gulf Coast averaged about 888,000 bbls higher in March and April compared to January and February 2016.

Total U.S. Gulf Coast waterborne loadings reached a 2016 high of 7.5mn bbls week ending April 29, 2016, and have also increased since March 2016. Weekly loadings in March and April averaged 1.3mn bbls higher than in January and February 2016.

Waterborne loadings out of the Gulf Coast reach 2016 high for
week ending April 29.

During the week ending April 29, 2016, two export shipments left from St. James: one to Brazil and one to the Canadian East Coast, totaling 1.4mn bbls. In addition, more than 1.0mn bbls moved from Beaumont-Nederland, TX, to Caribbean locations. Total shipments from there increased to 1.9mn bbls. In Corpus Christi, TX, an export loaded from the Valero West refinery dock, expected to bring about 441,000 bbls to Pembroke, U.K. Total domestic loadings from Corpus Christi fell 501,000 bbls.

Total loadings also decreased from Houston, falling 630,000 bbls to 1.17mn bbls, which offset a 654,000-bbl increase from the previous week. A 550,000-bbl loading left Enterprise’s Houston Terminal for Bullen Bay, Curacao, on April 28, 2016, and 500,000 bbls loaded the next day from HFOTCO for Gibralter, U.K.

Midcontinent refinery utilization dips during seasonal maintenance

Refineries typically use the spring months to perform necessary repairs and maintenance on infrastructure before gearing back up for summer driving season. Units at several major refineries in the Midcontinent shut beginning in late February 2016. Primary processing utilization rates decreased 15 percent from the end of February to a 2016 low of 82 percent reached April 8, 2016.

The Midcontinent refinery maintenance season is coming to a close as several units return to service. Primary processing utilization rates were back to 93 percent week ending April 29, 2016. Record-high storage levels could decline if run rates continue to increase.

A 204,000 bpd crude distillation unit was brought back online at Marathon’s 206,000 bpd Robinson, IL, refinery April 28, 2016, after being offline since March 2, 2016. Activity at all monitored units at Husky’s 155,000 bpd Lima refinery has increased since April 27, 2016, after being shut since mid-March for a planned turnaround.

Although maintenance is being completed at several refineries, further outages are expected elsewhere. BP and Husky’s 160,000 bpd Toledo, OH, refinery recently started shutting units in preparation for 11 weeks of planned maintenance. The turnaround will reduce operating capacity at the facility by 75 percent.


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




USA/CAN 1.2863 UP .0021

Early THIS  FRIDAY 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 8.75 PTS OR 0.31% / Hang Sang CLOSED DOWN 196.17 OR  0.99%   / AUSTRALIA IS LOWER BY 0.54% / ALL EUROPEAN BOURSES ARE ALL IN THE RED  as they start their morning/

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

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

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

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

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

The NIKKEI: this FRIDAY morning: closed DOWN 234.13 OR 1.41% 

Trading from Europe and Asia:

2/ CHINESE BOURSES / : Hang Sang CLOSED DOWN 196.17 PTS OR 0.99% . ,Shanghai CLOSED  DOWN 8,75 OR 0.31%/ Australia BOURSE IN THE RED: /Nikkei (Japan) CLOSED IN THE RED/India’s Sensex IN THE RED

Gold very early morning trading: $1274.00


Early FRIDAY morning USA 10 year bond yield: 1.724% !!! DOWN 3 in basis points from THURSDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.575 DOWN 3 in basis points from THURSDAY night.

USA dollar index early FRIDAY morning: 94.32 UP 15 cents from THURSDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers FRIDAY MORNING



And now your closing FRIDAY NUMBERS

Portuguese 10 year bond yield:  3.16% DOWN 7 in basis points from THURSDAY

JAPANESE BOND YIELD: -.109% UP 1 in   basis points from THURSDAY

SPANISH 10 YR BOND YIELD:1.60% DOWN 2 IN basis points from THURSDAY

ITALIAN 10 YR BOND YIELD: 1.47  DOWN 4 IN basis points from THURSDAY

the Italian 10 yr bond yield is trading 13 points lower than Spain.




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

Euro/USA 1.1300 DOWN .0074 (Euro =DOWN 74 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 108.69 UP 0.403 (Yen up 40 basis points )

Great Britain/USA 1.4362 down .0081 Pound DOWN 81 basis points/

USA/Canada 1.2942 DOWN 0.0100 (Canadian dollar DOWN 100 basis points with OIL FALLING a bit(WTI AT $46.18.  CANADA IS GETTING KILLED BY THAT HUGE FIRE IN ALBERTA)


This afternoon, the Euro was DOWN by 74 basis points to trade at 1.1300

The Yen ROSE to 108.69 for a GAIN of 40 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was DOWN 81 basis points, trading at 1.4362

The Canadian dollar FELL by 100 basis points to 1.2942, WITH WTI OIL AT:  $46.21

The USA/Yuan closed at 6.5280

the 10 yr Japanese bond yield closed at -.109% UP 1 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: DOWN 5  IN basis points from THURSDAY at 1.709% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.55 DOWN 5 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.64 UP 47 CENTS ON THE DAY/4 PM

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

London:  CLOSED UP 34.31 OR 0.56%
German Dax :CLOSED UP 90.78 OR 0.92%
Paris Cac  CLOSED UP 26.72  OR 0.62%
Spain IBEX CLOSED UP 58.40 OR 0.67%
Italian MIB: CLOSED UP 78.09 OR 0.44% (BANKING CRISIS)

The Dow was DOWN 185.18  points or 1.04%

NASDAQ DOWN 19.66 points or 0.41%
WTI Oil price; 46.32 at 4:30 pm;

Brent Oil: 47.86





This ends the stock indices, oil price, currency crosses and interest rate closes for today

Closing Price for Oil, 5 pm/and 10 year USA interest rate:


BRENT: 47.90

USA 10 YR BOND YIELD: 1.700%

USA DOLLAR INDEX: 94.64 UP 48 cents



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


Stocks Bloody On Friday 13 As Treasury Curve Crashes To 9 Year Lows

Scared… you should be…

These guys were…

Trannies plunged back to unchanged year-to-date…


On the week, bad news was bad news and good news was worse news…Nasdaq could not cling on to green but Trannies were trounced…


Once again – the 4th time – S&P 500 was “bounced” off unchanged year-to-date, thanks to some VIX action…


Head-and-shoulders, touch your ties…


Worst 4-week drop for Retail Stocks since Sept 2011…


AAPL is back at 2 year lows – suffered its biggest 4-week crash since Lehman…


Bonds are beating stocks post-payrolls now…


And stocks are catching down to yields this week…


Treasury yields plunged after jerking higher on “good” news this morning…it seems good news is bad news (short-end sells off as good news means higher risk of rate hike and long-end rallies betting on policy failure)


The short-end of the bond market ain’t buying it…


Don’t forget this is the “growth” that bonds are looking at and that is in peril if The Fed hikes…


With the curve flattening dramatically on the week…2s10s now flattest since Dec 2007!!


Rsuming its plunge a la 2006…


Bank-buyers starting to worry?


The USD Index surged today driven by commodity currency weakness and JPY tumbling after Abe opened his mouth… the USD Index is up 8 of thelast 9 days…The biggest 9-day rise since Oct 2015…


USDJPY seems to be unable to break 109.50 no matte rhow much they jawbone…


Crude bucked the trend across commodities which all suffered both liquidation from China’s bubble unwind and a stronger dollar…


Crude is just funny…


Charts: Bloomberg

Bonus Chart: Bonds get it…


Bonus Bonus Chart: How long before the horde calls for Facebook to replace Apple in The Dow?





More junk released by the USA as they state that April retail sales soared??? With a complete collapse at Macy’s and Nordstrom?


(courtesy zerohedge)


April Retail Sales Soar Most In 13 Months Despite Retailers Slashing Guidance In May

Following March’s plunge in retail sales (dragging YoY to just +1.6% – recessionary territory) as Auto sales tumbled, April retail sales printed a large 1.3% surge (versus expectations of a 0.8% rise). This is the 3rd biggest MoM rise since 2010, which is odd given the utter collapse in retailers earnings and most crucially outlooks! Soaring gas prices helped but auto sales rebounded as did Amazon non-store retailers.


After retailers reported abysmal earnings, it is only logical that tomorrow’s retail sales report will be a big beat


YMoM this was the 3rd biggest jump since 2010… it appears Retailers cutting forecasts were unaware that according to the government in April things picked up



YoY bounced to +3.0%, but remains near recessionary territory…


The breakdown shows that auto sales and gas sales surged


This is now being spiun as the beginning of a new trend… Here is Bloomberg with the positive spin…

Eleven of 13 major retail categories showed increases last month, indicating the advance was broad-based. Demand at auto dealers climbed by the most in a year and sales at grocery stores and online merchants rose by the most in almost two years.


“Consumers still should have money to spend,” Gennadiy Goldberg, U.S. strategist at TD Securities LLC in New York, said before the report. They “have been saving quite a bit, so they do have a fairly substantial cushion.”

We shall see…


Here is the best summary of the congitive dissonance between these two sets (we would call it propaganda, but that would not be polite):


The following is a big story!!  The business inventories have now risen from last month’s 1.36 up to 1.41.  The superb indicator of a recession/depression
(courtesy zero hedge)

This Won’t End Well – Business Inventories Signal Recession Imminent

Autos & parts inventories-to-sales ratios soared to 2.30x from 2.18x – levels that have only been higher during the financial crisis. This, combined with a rise in clothing inventories to sales, held overall business inventories at their highest to sales since the crisis and deep in pre-recessionary territory.

Retail inventories rose 1.0% MoM despite a 0.3% drop in sales (with motor vehicles inventories up 2.3% as sales tumbled 3.2%) leaving the inventories to sales ratio at cycle highs…


Simply put, this won’t end well.

U. of Michigan consumer confidence hits an 11th month high on just the hope subset:
(courtesy zero hedge)

“Hope” Spikes Most Since 2011 As UMich Consumer Confidence Hits 11 Month Highs

Consumer Expectations, according to University of Michigan, soared by the most since Dec 2011 in May’s preliminary data – spiking from 77.6 to 87.5. Despite a modest rise in current confidence, this spike in “hope” was enough to send the headline confidence print to 95.8, 11-month highs and well above expectations of just 89.5. Despite confidence rising, inflation expectations tumbled (1Y from 2.8% to 2.5%).

Hope is not a strategy…


Soaring confidence driven by hope…

Here is one group that you do not want to offend:  the Teamsters.  These guys read the tea leaves and they know that there is a shortfall in the Central States Pension Fund.  They are demanding a taxpayer bailout….good luck!
(courtesy zero hedge)

Here Come A Lot Of Angry Teamsters: One Of America’s Largest Pension Funds Demands A Taxpayer Bailout

Over the past few months, we have covered the unfolding saga (here and here) of the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, all the way throughKenneth Feinberg’s rejection of the proposal to cut benefits on behalf of the Treasury.

When the proposal was rejected, we said that the final resolution will be in the form of an inevitable taxpayer-funded bailout

If the Treasury won’t allow any pension cuts, and the government created safety net won’t be there to keep the benefits flowing, how will the cash continue to flow to members? With the precedent now set by the Treasury that no cuts will be allowed, the answer will likely come in the form of a massive bailout.

As it turns out, that is precisely what fund director Thomas Nyhan believes as well. Nyhan said the rejection means the CSPF likely won’t be able to offer another proposed fix without getting funding from Congress, either directly or through the Pension Benefit Guaranty Corp.

However with the PBGC also on its way to insolvency, and unable to shoulder the additional burden in world of zero and negative rates, that leaves us with… drum roll please… the US taxpayers, aka Congress, footing the bill.

“There are only two solutions. Either the plan receives more money or has to have fewer benefits. I’m hopeful that come probably 2017, we can actually all get to work on something that can provide a solution. If there is no legislation at any time, we’re going to end up going to insolvency.” Nyhan said. 

The full-court press is now on, as now everyone involved is calling on congress to step in. Visitors to CSPF’s website this morning were greeed with a banner directing to a rescue plan website.

Before you could enter the rescue site a pop-up message is shown, simply saying that since congress effectively shut down the proposal, they can now stand up and pass legislation to bail the fund out.

Central States strongly urges these members to act now to pass legislation that protects the pension benefits of the over 400,000 participants of Central States Pension Fund”

With the Treasury denying the possibility of pension cuts, the ball is now in Congress’ court to initiate a bailout.

When it does, because it will, the flood gates will be open for the rest of the insolvent funds to come knocking with their hands out, and we can formally welcome the arrival of helicopter money – whether Yellen wants it or not – in the United States.

What follows is Tom Nyhan testifying before congress back in 2013, laying it out in very plain terms that without funding, or significant benefit cuts, the game is over.

“Unless the fund substantially reduces its liabilities, or receives a large influx of assets, it’s projected become insolvent within ten or fifteen years, and at this point our options are very limited.”

Nobody listened, and now – in this bold new age of pension fund crushing zero and negative interest rates – it is game over.

Let us close the week with this wrap up with Greg Hunter of USAWatchdog
(courtesy Greg Hunter/USAWatchdog)

Global War Tensions Rise, Economy Getting Worse and MSM Totally Unfair to Trump



There was a new missile defense system installed in Romania. The U.S. says it is to protect Europe from an attack from a “rogue state.”  Russia says this new missile defense site is a “direct threat to global and regional security.”  Russia also says this is a “destructive action.”  One Russian commentator said the missile deployment “. . . might even accelerate the slippery slope to nuclear war in a crisis.” 

Meanwhile, there is a new face-off in the South China Sea between China and the U.S. Navy. The U.S. says that China is making “excessive maritime claims” in important international waters used for massive amounts of shipping.  China disagrees and says its island building is fine and says the presence of U.S. Navy ships threatens its sovereignty.  It also says navigation is not being interfered with by China.  The U.S. sent a guided missile destroyer within 12 nautical miles of China’s disputed man-made islands.  China says the U.S. action was a “threat to peace.” 

In Iraq, ISIS has been on a bombing campaign, and at least three were set off this week. In just one attack involving a vehicle, 80 people were killed and hundreds were wounded.  Territory and gains against ISIS have been made in recent weeks, and this is how ISIS is responding.  There is no end to the bloodshed and fighting in sight.

On the economic front, things are not getting better. In fact, all the headlines seem to show things are getting worse.  Likewise, pundits and money managers are striking an increasingly gloomy tone.  You know it’s bad when this stuff starts bubbling out in the mainstream press.  The stinking economy is too bad to continue hiding.

The mainstream media (MSM) continues to show it’s distain for the presumptive GOP presidential nominee. The Washington Post is reportedly putting 20 reporters to work digging up dirt on Donald Trump.  Meanwhile, they barely cover the Hillary Clinton email server story where her top aides are interviewed by the FBI as part of an ongoing criminal investigation.  Even Hillary Clinton herself is going to be interviewed soon.  There has never been a front runner under FBI investigation only a few months away from a presidential election.  So, the MSM passes on a real ongoing story about the Democratic front runner to try to dig up dirt on the Republican front runner.  Talk about unfair and biased, this is why the MSM is dying, and it is digging its own grave.



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