May 16/Open interests in both gold and silver remain at high levels and that necessitated another raid orchestrated by our criminal bankers/Deutsche bank needs to offer 5% yield for 3 months on deposits/China’s largest bank purchases Barclay’s gold vault (can store up to 2,000 tonnes of gold)/China’s largest bank now owns 2/3 of the major vaults in London England/The top 300 executives in England are voting to leave the EU/Venezuela in total anarchy/

Good evening Ladies and Gentlemen:

Gold:  $1,273.40 UP $1.50    (comex closing time)

Silver 17.14  UP 2 cents

In the access market 5:15 pm

Gold $1274.25

silver:  17.16

 

Today we witnessed gold and silver rising throughout last night, and during the early comex hours.  However once London was put to bed, the crooks raided gold and silver/

In gold over 18,000 contracts were supplied at the comex by the criminal bankers over a 10 minute period  (over 2.3 billion dollars worth of gold) and this knocked gold down from $1287.80 down to $1273.00.  The bankers supplied enough paper to knock out all bids driving the price to its low point of the day.We are going to see continual raids like this as our banker friends are quite paranoid with gold’s strength.  We need to see gold rise and pierce the $1308.00 level: (the previous high for gold in January 2015). The gold will be off to the raceway!

 

Let us have a look at the data for today

.

At the gold comex today we had a GOOD delivery day, registering 28 notices for 2800 ounces for gold,and for silver we had 8 notices for 40,000 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 236.257 tonnes for a loss of 67 tonnes over that period

.

In silver, the open interest fell by 1214 contracts down to 204,742 as the price was silver was UP  by 3 cents with respect to Friday’s trading. A very tiny contraction compared to the raid we had on Friday. In ounces, the OI is still represented by just over 1 BILLION oz i.e. .1.023 BILLION TO BE EXACT or 146% of annual global silver production (ex Russia &ex China)

In silver we had 8 notices served upon for 40,000 oz.

In gold, the total comex gold OI rose by 1,375 contracts up to 579,746 as the price of gold was up $1.60 with FRIDAY’S TRADING(at comex closing).

 

As far as the GLD, we had no changes in the GLD. The new inventory rests at 851.13 tonnes. 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 1214 contracts DOWN to 204,742 as the price of silver was UP by 3 cents with FRIDAY’S trading. The gold open interest ROSE by 1,375 contracts as  gold was up $1.60 ON FRIDAY. 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;

(Harvey)

 

3. ASIAN AFFAIRS

.i)Late  SUNDAY night/ MONDAY morning: Shanghai closed UP  BY 23.75 PTS OR 0.84%  /  Hang Sang closed UP 164.62 OR 0.84%. The Nikkei closed UP 54.19 POINTS OR 0.33% . Australia’s all ordinaires  CLOSED UP 0.56% Chinese yuan (ONSHORE) closed DOWN at 6.5225.  Oil ROSE to 47.14 dollars per barrel for WTI and 48.84 for Brent. Stocks in Europe  MOSTLY IN THE RED . Offshore yuan trades  6.54640 yuan to the dollar vs 6.5225 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE REMAINS CONSTANT.

REPORT ON JAPAN  SOUTH KOREA AND CHINA

 

a) REPORT ON JAPAN

none today

b) REPORT ON CHINA

For the past 5 years, a massive 110 billion USA has left China to buy USA real estate:

( zero hedge)

 

4.EUROPEAN AFFAIRS

i)Something is going on with DB.  They are now offering 5% yields if they lock up their money for 3 months!!  This is going on with the ECB policy of NIRP!!

( zero hedge)

 

ii)A great synopsis of the folly between the Troika and Greece:

( Mish Shedlock)

iii)Over 300 chief executives of British companies are backing a BREXIT stating that the EU are stifling their growth and they are correct!.

( zero hedge)

5.RUSSIAN AND MIDDLE EASTERN AFFAIRS

i) The USA continues to agitate Russia:

( zero hedge)

 

ii)The USA is continually losing control over Russian and other eastern nations.  Despite sanctions the Russian bond yields are now below pres sanction levels:

( zero hedge)

iii)Saudi Arabian is not going to be happy with this release from one of the 9.11 commission members, John Lehman. He states that there were 6 Saudi officials working in the ISA that supported the 9/11 attack and most importantly:

“our report should never have been read as an exoneration of Saudi Arabia,”
He is calling for the 28 redacted pages to be declassified and released in full
( Charles Kennedy/ OilPrice.com)

EMERGING MARKETS

Venezuela is in complete anarchy:

4 stories from zero hedge:

i) (Story No 1)  Anarchy inside Venezuela

 

ii)Story No 2: Maduro declares a State of Emergency!  (no kidding)
 (zero hedge)

iii)Story no 3:  USA officials are concerned at a complete Venezuelan meltdown

 (zero hedge)

iv)Story no 4:  the failed Tinaco -Anaco Railway Line where China extended loans of 37 billion dollars to Venezuela.  There is nothing left of the project as looters stole everything. China may initiate default proceedings

( zero hedge)

v)Today, we have country in country, South Africa, as it seems that the Finance  Minister is to arrested.  He is trying to stop massive corruption in his country and Zuma want to put an end to his rant!

( zero hedge)

OIL ISSUES

i)Two more USA energy companies go bust:  Breitburn and Sandridge.

As they enter Chapter 11 they will emerge with lower costs:

( zero hedge)

 

ii)As the price of oil rose, the hedgers decided to hedge their bets.  Hedging activity is at 5 yr highs.  If the price of oil falls, this will probably be quite deleterious to the banks:

( zero hedge)

 

PHYSICAL MARKETS

i)An extremely important audio between Craig Hemke and Andrew Maguire explaining the changing landscape in the  gold trading.  The Chinese fix is a physical fix and it is now beginning to dominate the paper game. Most importantly he warns about the $1308 level for gold.  Once it pierces that level gold will proceed immediately to 1400 and beyond as the bankers resistance at that level will be blown up
a must listen to…
( Craig Hemke/Andrew Maguire/audio tape)

ii)Dave Kranzler on today’s bombing of gold/silver:(courtesy Dave Kranzler/IRD)

iii) Zero hedge on today’s bombing of gold/silver

(zeor hedge)

iv) Bill Holter’s commentary tonight is entitled:

“It’s a small club …All Roads Will Lead To Gold!”

v)Steve St Angelo describes the official deficit of silver from 2004 onward of 1.3 billion oz.

Since there is no above ground silver anywhere he begs the question:  where did this silver come from?
I can only think of one sovereign who could have possibly had this quantity and that would be China

( Steve St Angelo/SRSRocco)

vi)Last yr ICBC , China’s largest bank bought Deutsche bank’s 1500  tonne capacity gold vault in London:  the location of which is secret.  The purchase of London gold vaults did not end there: they just bought Barclay’s 2,000 tonne gold vault and the transaction is to be completed in July.

That leaves only one gold gold vault left in London, the HSBC, besides the Bank of of England’s vault.

Obviously the guilty plea by Deutsche bank is having an effect:

(courtesy zero hedge)

USA MARKETS AND THEIR INFLUENCE ON GOLD/SILVER TRADING)

i)The State of ILLINOIS is in one complete mess.  It still cannot pass a budget bill:

(courtesy zero hedge)

 

ii)The all important NY manufacturing index (Empire index0crashes once again

( NY Manufacturing index/(Empire)

Let us head over to the comex:

The total gold comex open interest ROSE to an OI level of 579,746 for a GAIN of 1375 contracts AS  THE PRICE OF GOLD WAS UP $1.60 with respect to FRIDAY’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 53 contracts DOWN to 1141. We had 73 notices filed ON FRIDAY so we gained 20 gold contracts or an additional 2000 gold ounces will stand for delivery. The next big active gold contract is June and here the OI FELL by 3,320 contracts DOWN to 330,125 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 215,432. The confirmed volume  yesterday (which includes the volume during regular business hours + access market sales the previous day was GOOD at 196,314 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 28 notices filed for 2800 oz in gold.

 

And now for the wild silver comex results. Silver OI fell by 1214 contracts from 205,956 DOWN to 204,742 as  the price of silver was UP BY 3 cents with FRIDAY’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 FELL by 150 contracts DOWN to 758. We had 119 notices filed ON FRIDAY so we LOST 31 contracts or AN ADDITIONAL  155,000 oz of silver will NOT stand for delivery in this active month of May. The next non active month of June saw its OI FALL by 12 contracts DOWN to 719 OI.The next big delivery month is July and here the OI FALL by 2201 contracts DOWN to 138,747. The volume on the comex today (just comex) came in at 45,141 which is EXCELLENT. The confirmed volume YESTERDAY (comex + globex) was AGAIN EXCELLENT AT 52,727. Silver is not in backwardation. London is in backwardation for several months.
THE HIGH OPEN INTEREST FOR THE ENTIRE COMPLEX PLUS THE HIGH OI FOR THE FRONT MAY CONTRACT MUST BE SCARING OUR BANKERS TO NO END.
 
We had 8 notices filed for 40,000 oz.
 

MAY contract month:

INITIAL standings for MAY

May 16.
Gold
Ounces
Withdrawals from Dealers Inventory in oz   nil
Withdrawals from Customer Inventory in oz  nil  386.57 OZ

MANFRA

SCOTIA

9 KILOBARS

Deposits to the Dealer Inventory in oz NIL

 

Deposits to the Customer Inventory, in oz    33,963.510 OZ

BRINKS

MANFRA

SCOTIA

 

No of oz served (contracts) today 28 contracts
(2800 oz)
No of oz to be served (notices) 1113 CONTRACTS

111,300 OZ

Total monthly oz gold served (contracts) so far this month 960 contracts (96,000 oz)
Total accumulative withdrawals  of gold from the Dealers inventory this month   nil
Total accumulative withdrawal of gold from the Customer inventory this month  212,247.8 OZ

Today we had 0 dealer deposit

 

total dealer deposit: NIL oz

Today we had 0 dealer withdrawals:

total dealer withdrawals:  nil oz

Today we had 2 customer withdrawals:

i) Out of Manfra:  289.35 oz (9 kilobars)

ii) Out of Scotia:  97.22 oz

total customer withdrawals: 386.57 OZ

 

Today we had 3 customer deposits:

 

i) Into Brinks:  4899.91 oz

ii) Into Manfra:  803.75 oz  25 kilobars

iii) Ino Scotia: 28,259.85 oz  879 kilobars

Total customer withdrawals:  33,963.510 oz

Today we had 0 adjustment:

 

 

Today, 0 notices was issued from JPMorgan dealer account and 0 notices were issued from their client or customer account. The total of all issuance by all participants equates to 28 contracts of which 5 notices was stopped (received) by JPMorgan dealer and 0 notices were stopped (received)  by JPMorgan customer account. 
To calculate the initial total number of gold ounces standing for the MAY contract month, we take the total number of notices filed so far for the month (960) x 100 oz  or 96,000 oz , to which we  add the difference between the open interest for the front month of MAY (1141 CONTRACTS) minus the number of notices served upon today (28) x 100 oz   x 100 oz per contract equals 207,300 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 (960) x 100 oz  or ounces + {OI for the front month (1141) minus the number of  notices served upon today (28) x 100 oz which equals XXX oz standing in this non  active delivery month of MAY(6.4479 tonnes).
WE GAINED 20 CONTRACTS OR AN ADDITIONAL 2000 OZ WILL STAND FOR DELIVERY IN THIS NON ACTIVE DELIVERY MONTH OF MAY.
Since the comex allows GLD shares to be used for settling, it may take quite a while for the physical gold to enter the comex vaults.  So far I have seen little evidence of any settling of contracts but I will continue to monitor it for you. 
 
We thus have 6.4479 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 6.4479 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  = 20.8951 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) =7,595,686.896 or 236.257 tonnes 
 
Several months ago the comex had 303 tonnes of total gold. Today the total inventory rests at 236.257 tonnes for a loss of 67 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 6.4479 tonnes of gold is standing.  What is different from other months is that the bankers cannot offer any fiat to those standing. They want the real stuff. We are extremely close to the all time highs in both gold and silver OI.
 end
And now for silver
 

MAY INITIAL standings

 May 16.2016

Silver
Ounces
Withdrawals from Dealers Inventory nl oz
Withdrawals from Customer Inventory  716,415.379 oz

CNT, SCOTIA

DELAWARE

Deposits to the Dealer Inventory  NIL

 

Deposits to the Customer Inventory  1,070,603.200 OZ

SCOTIA,JPM,

No of oz served today (contracts) 8 CONTRACTS 

40,000 OZ

No of oz to be served (notices) 750 contracts

3,750,000 oz

Total monthly oz silver served (contracts) 2049 contracts (10,245,000 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  5,472,548.4 oz

today we had 0 deposit into the dealer account

 

total dealer deposit:NIL oz

we had 0 dealer withdrawals:

total dealer withdrawals:  nil

we had 2 customer deposits:

i) Into JPM: 588,484.300 oz

ii) Into SCOTIA:  482,117.900 OZ

Total customer deposits: 1,070,603.200 oz.

We had 3 customer withdrawals

i) out of CNT: 635,592.496 oz

ii) Out of SCOTIA: 60.679.68 oz

:

total customer withdrawals:  716,415.379 oz

 
 

 

 we had 0 adjustment

 

The total number of notices filed today for the MAY contract month is represented by 8 contracts for 40,000 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 (2049) x 5,000 oz  = 10,245,000 oz to which we add the difference between the open interest for the front month of MAY (758) and the number of notices served upon today (8) x 5000 oz equals the number of ounces standing 
 
Thus the initial standings for silver for the MAY contract month:  2049 (notices served so far)x 5000 oz +(758{ OI for front month of MAY ) -number of notices served upon today (8)x 5000 oz  equals 13,995,000 oz of silver standing for the MAY contract month.
WE LOST 31 CONTRACTS OR AN ADDITIONAL 155,000 OZ WILL NOT STAND FOR DELIVERY.
 
Total dealer silver:  30.282 million
Total number of dealer and customer silver:   153.461 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.
end
And now the Gold inventory at the GLD
May 16./ today we had no changes in inventory at the GLD/Inventory rests at 851.13 tonnes
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 6 SURPRISINGLY WE HAD ANOTHER HUGE DEPOSIT OF 8.65 TONNES OF GOLD INTO THE GLD/ INVENTORY RESTS AT 834.19 TONNES
May 5/SURPRISINGLY WE HAD A HUGE DEPOSIT OF 3.90 TONNES OF GOLD WITH THE PRICE OF GOLD DOWN???
May 4/ we had a small deposit of .6 tonnes of gold into the GLD/inventory rests at 825.54 tonnes
May 3/no change in gold inventory at the GLD/Inventory  rests at 824.94 tonnes
May 2/a hugechange in gold inventory at the GLD a deposit of 20.80/Inventory rests at 824.94 tonnes
April 29/no change in gold inventory at the GLD/Inventory rests at 804.14 tonnes
April 28/we gained 1.49 tonnes of gold at the GL/Inventory rests at 804.14
April 27/no change in gold inventory at the GLD/rests at 802.65 tonnes
aPRIL 26/ a withdrawal of 2.38 tonnes of gold/inventory rests at 802.65 tonnes
April 25.2016: no change in gold inventory/rests tonight at 805.03 tonnes
April 22/ no changes in gold inventory/rests tonight at 805.03 tonnes
April 21/no change in gold inventory/rests tonight at 805.03 tonnes
April 20/no change in gold inventory/rests tonight at 805.03 tonnes
April 19./we had a huge withdrawal of 7.43 tonnes from the GLD/Inventory rests tonight at 805.03 tonnes
April 18.2016/a huge addition of 6.38 tonnes of gold  in gold inventory at the GLD/Inventory rests at 812.46
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

May 16.:  inventory rests tonight at 851.13 tonnes

end

 

ETF gold holdings are rising at the fastest pace since 2009.  However in all probability the GLD inventory is paper and not real:

(courtesy zeor hedge)

 

ETF Gold Holdings Rise At The Fastest Pace Since 2009 As Central Banker Credibility Plunges

As Eric Peters explained a few days ago, by pushing prices to overvaluation and reducing yields on every investment asset, central banks have destroyed investors ability to create a portfolio that can withstand even the slightest economic disruption. Peters correctly describes it as “the most obvious disaster in finance.”

By reducing the yield on every investment asset, pushing prices to overvaluation, this policy also destroyed the ability of investors to build diversified portfolios capable of withstanding even the slightest economic disruption. Which ultimately results in reduced private sector risk-taking; the lifeblood of every economy. “This is the most obvious disaster in finance. Central bankers don’t quite understand it.”

As a result of such practices Peters touched upon (ie: negative interest rate environment and concerns over a struggling global economy), two things have occurred. First, gold has become one of the top performing assets YTD through April.

 

Secondly, total gold ETF holdings is seeing its fastest rise since 2009, with total holdings at a level not seen since 2013.

 

ETF holdings have risen along with spot prices…

 

As Bloomberg notes, China, Russia, and Kazakhstan have also been substantial and consistent buyers of gold. The World Gold council estimates that nations are expected to buy 400 to 600 tons this year, compared with 566.3 tons in 2015.

While it must be painful for those who have such disdain for the pet rock, the fact is that central banks are losing credibility with the market, and gold is one way of expressing that. As Elliott Management’s Paul Singer said last month regarding investor confidence in the central planners: “If judgement continues to weaken, the effect on gold could be very powerful.” Perhaps the markets are starting to wake up to the fact that the all-knowing central planners literally have no idea what they’re doing, and if so, we’ll let investors borrow our tinfoil hat.

end
Now the SLV Inventory
May 16./no changes in silver inventory at the SLV/Inventory rests at 335.073 million oz
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 6/ SURPRISINGLY WE HAD A WITHDDRAWAL OF 1.142 MILLLION OZ FROM THE SLV
INVENTORY RESTS AT 336.119 MILLION OZ
MAY 5.2016: NO CHANGE IN INVENTORY/rests tonight at 337.261 million oz
May 4/we had a good size withdrawal of 1.553 million oz from the SLV/Inventory rests at 337.261 million oz
May 3: we had another huge deposit of 1.807 million oz/inventory rests at 338.814 million oz
May 2/a huge in silver inventory at the SLV/a deposit of 1.49 million oz/Inventory rests at 337.007 million oz
April 29.2016/no change in silver inventory at the SLV/Inventory rests at 335.580
April 28/no change in silver inventory at the SLV/Inventory rests at 335.580 million oz
April 27/we had another addition of 856,000 oz into the SLV/Inventory rests at 335.580
aPRIL 26/no change in silver inventory at the SLV/Inventory rests at 334.724 million oz.
April 25.2016/ No change in silver inventory/rests tonight at 334.724 million oz.
April 22/ no changes in silver inventory/rests tonight at 334.724 million oz
April 21/no change in silver inventory/rests at 334.724 million oz/
April 20/no change in inventory/rests at 334.724 million oz
April 19./we had a huge inventory deposit of 1.437 million oz/inventory rests at 334.724
.
May 16.2016: Inventory 335.073 million oz
end
 
1. Central Fund of Canada: traded at Negative 4.5 percent to NAV usa funds and Negative 4.6% to NAV for Cdn funds!!!!
Percentage of fund in gold 61.3%
Percentage of fund in silver:37.3%
cash .+1.4%( May 16/2016).
2. Sprott silver fund (PSLV): Premium RISES   to +.36%!!!! NAV (MAY 16.2016) 
3. Sprott gold fund (PHYS): premium to NAV  RISES 1.69% to NAV  ( MAY 16.2016)
Note: Sprott silver trust back  into POSITIVE territory at +36% /Sprott physical gold trust is back into positive territory at +1.69%/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 +.36%.  Remember that Eric is to get 75 million dollars worth of silver in a new offering.
 
 
 

END

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

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

Gold Plunges After “Someone” Suddenly Decides To Dump Over $2.3 Billion Notional In 10 Minutes

A modest blip higher in the USD…

 

And commodities suddenly accelerated to the downside, led by precious metals.

 

While Copper and Crude are giving up gains, gold and silver and being monkey-hammered on heavy volume..

 

Over 18,000 contracts – or over $2.3 billion notional of gold has been dumped in the last 10 minutes…

 

Thank you London Fix.

end

Dave Kranzler on today’s bombing of gold and silver:
An extremely important audio between Craig Hemke and Andrew Maguire explaining the changing landscape in the  gold trading.  The Chinese fix is a physical fix and it is now beginning to dominate the paper game. Most importantly he warns about the $1308 level for gold.  Once it pierces that level gold will proceed immediately to 1400 and beyond as the bankers resistance at that level will be blown up
(courtesy Craig Hemke/Andrew Maguire/audio tape)
a must listen to…
By Turd Ferguson | Friday, May 13, 2016 at 11:39 am

As most of you know, each week I assist the good folks at Sprott Money with their “Weekly Wrap-up” segment. With Eric unavailable this week, I was able to line up a special guest appearance from our pal, Andrew Maguire. The resulting audio is an absolute must listen for everyone at TFMR and the greater metals community, at large.

Just a few of the topics addressed by Andy in this podcast:

  • The resilience of paper prices, supported by the steady rise of wholesale prices in London
  • The importance of the $1308 level in gold
  • How physical-only exchanges like the SGE and ABX are changing the global gold market landscape
  • The impact the new Shanghai Fixes are having on the spot market
  • And much, much more.

Again, please take the time to listen and re-listen to this audio. The global gold market is far more vast than the Comex-centric wave-counters would have you believe. To understand it, you need wisdom and experience and we should all be grateful to Andy for sharing some of his with us today.

TF

Sprott Money Link: https://www.sprottmoney.com/blog/may-13-2016.html?mw_aref=f4acdd227eeba8…

 

END

 

Dave Kranzler on today’s bombing of gold/silver:

(courtesy Dave Kranzler/IRD)

 

The Fed Is Desperate To Keep Gold From Exploding Higher

The Federal Reserve’s “invisible hand” in the markets is no longer “invisible.”  It’s become obvious to most market participants that the Fed is working hard to keep the stock market from collapsing and the price of gold below $1300.  But why?

The price of gold moved up $15 overnight from the time the Asian markets opened until the Comex gold pit opened.  Shortly after the Comex paper gold market trading was underway, an avalanche of paper contracts was dumped onto the Comex – both the electronic trading system and the floor.  This is what it looked like (click to enlarge):

Untitled1

Gold’s path looks like Niagra Falls in the graph above because shortly after the Comex opened this morning because “someone” decided to dump over 55,000 contracts onto the Comex.  55k contracts translates into 5.5 million ounce of theoretical gold.

“Theoretical” because it’s only in theory that the Comex has 5.5 million ounces of gold to deliver.   Currently the Comex is reporting a little over 697k ounces that are available to be delivered into the paper gold contracts that the banks print up and dump on the market.  The Comex vaults are showing a little over 7 million ounces in total in the vaults.  This is highly theoretical because most of the gold is accounted for the big bullion banks.  I use “accounted for” loosely because there is no mechanism in place to hold the banks accountable for what they are reporting.

In other words, the amount of “physical”  gold reported by the Comex is likely nothing more than a “suggestion.”

Untitled2

In the graph to the left (click to enlarge) there’s been a definitive trading pattern that doesn’t take Einstein’s eyes and brain to see. For the last three trading days, gold has moved higher prior to the opening of the Comex floor in NYC only to be price-smashed with a deluge of paper contracts representing little more that theoretical gold.

Untitled1 (2)

But I prefer the real thing. I actually welcome these price hits because it enables me to move theoretical electronic currency from my bank account into a bona fide gold currency in a BITGOLD account. When gold moves higher, my net worth will be the beneficiary of the Fed’s market interventions. I look at it as grabbing my share of the wealth being transferred by the Fed/Government from the besotted middle class to those who know what’s going on.

Of course, the more interesting question begs to know the real reasons the Fed is compelled to make its market intervention activities so blatant.  One look at the economic reports being released from non- Government sources and the condition of the U.S. Government’s balance sheet readily answers that question…

http://investmentresearchdynamics.com/the-fed-is- desperate-to-keep-gold-from-exploding-higher/

 

end

 

Last yr ICBC , China’s largest bank bought Deutsche bank’s 1500  tonne capacity gold vault in London:  the location of which is secret.  The purchase of London gold vaults did not end there: they just bought Barclay’s 2,000 tonne gold vault and the transaction is to be completed in July.

 

That leaves only one gold gold vault left in London, the HSBC, besides the Bank of of England’s vault.

Obviously the guilty plea by Deutsche bank is having an effect:

(courtesy zero hedge)

 

China’s Largest Bank Is Quietly Cornering The Market For London Physical Gold

We have followed the ownership changes of London’s massive vaults with keen interest ever since our December 2014 article when we reported that Deutsche Bank’s gold vaule was for sale in “Massive 1,500 Ton Gold Vault For Sale In The Heart Of London, One Previous Owner, Asking £4,500,000 O.B.O.” The fate of that particular vault was revealed earlier this year when Reuters reported that none other than China’s largest bank, ICBC Standard Bank, was buying the lease on Deutsche Bank’s London gold and silver vault, “enlarging its footprint in the city’s bullion market”

The Chinese and South African lender is aiming to fill the gap left by Western banks, which are retreating from commodities to cut costs and reduce regulatory burden. “They (ICBC Standard Bank) have taken on the lease for the vault,” the first source said.

Deutsche Bank’s vault became operational in June 2014 and has a capacity of 1,500 tonnes. It was built and is managed by British security services company G4S. “The figure that was initially talked about may have been around $4 million, but it’s way lower now,” a second source said, without disclosing the figure paid for the vault.

 

We thought that ICBC would be content with its purchase of one of London’s biggest vaults but that appears to not have been the case. Earlier today, ICBC Standard Bank reported that it was also buying Barclays’ London precious metals vault, giving the Chinese bank the capacity to store gold worth more than US$80bn in the secret location.

The vault, which can store 2,000 tons of gold and other precious metals such as silver, platinum, palladium, was opened by Barclays in 2012 and took more than a year to build. The location of the vault is secret, but the lender has said it’s within the M25 road that orbits London.

“This is an exciting acquisition for the Bank. This enables us to better execute on our strategy to become one of the largest Chinese banks in the precious metals market,” Mark Buncombe, head of commodities at ICBC Standard Bank, said in the statement. “The acquisition of a precious metals vault allows us to expand our services in clearing and processing.”

Barclays’ decision to exit the business comes as U.S. and European Union regulators investigate whether at least 10 banks, including Barclays, JPMorgan Chase & Co. and Deutsche Bank AG — manipulated prices of precious metals such as silver and gold.

Barclays Chief Executive Officer Jes Staley said in January that the bank was assessing “various options” to exit its precious metals business while vowing to speed up disposals from the bank’s non-core unit, which houses 51 billion pounds ($73 billion) of toxic and otherwise unwanted assets.

As Bloomberg reports, China’s (and the world’s) largest bank expects the purchase of the vaulting business and related contracts to be completed in July, it said in an e-mailed statement Monday. No financial details were given.

About $5 trillion of transactions are cleared every year in London’s gold market, which Barclays is exiting as it pulls out of precious metals.

The purchase follows last week’s acceptance of the ICBC Standard into London’s precious-metals clearing system after last month it won classification as a market maker by the London Bullion Market Association.

With this latest takeover by a Chinese bank of a London mega vault, it leave only the HSBC gold vault (profiled here recently) where the inventory of the GLD is also stored not in Chinese hands, as well as, of course, the vault of the Bank of England.

As side from its boilerplate statement according to which the state-backed ICBC seeks to “expand our services in clearing and processing” as of this moment, the real explanation behind China’s increasingly more clear intentions of becoming the dominant provider of London physical gold vaulting services remains undeclared.

end
Steve St Angelo describes the official deficit of silver from 2004 onward of 1.3 billion oz.
Since there is no above ground silver anywhere he begs the question:  where did this silver come from?
I can only think of one sovereign who could have possibly had this quantity and that would be China
(courtesy Steve St Angelo/SRSRocco)

OFFICIAL SOURCE: Global Silver Supply Deficit Surges On Revised Data

Filed in Precious Metals by SRSrocco on May 15, 2016

If the cumulative global silver deficit since 2004 of one billion ounces wasn’t large enough, a data revision published by the Silver Institute shows the actual figure was much higher. How much higher? A great deal when the additional revised amount would totally wipe out all the silver at the Comex and Shanghai Futures Exchange warehouses.

The Silver Institute receives its figures from the GFMS Team at Thomson Reuters. The GFMS Team also puts out the World Silver Surveys. Some of the data from the World Silver Surveys are published on the Silver Institute website.

Before I get into the details of this deficit revision, I want to discuss the notion put forth by many precious metals investors that “NONE” of the information from the Silver Institute should be trusted. These folks claim that “ALL” the data is manipulated.

While I agree that this data is being researched, quantified and published by Thomson Reuters, one of the largest data-news organizations in the world, there is a lot of good information in these World Silver Surveys. Matter-a-fact, much of the silver mine supply data is taken from government sources such as the USGS in the United States.

Of course, some precious metals investors will say this government mining data shouldn’t be trusted either. Well, if that is true, then the person we are married to or in a relationship with may actually be an alien from some foreign planet. The conspiracy mantra can go to absurd levels. While I believe conspiracies do indeed take place, not everything is manipulated or a conspiracy.

For example, government mining data is pretty accurate because it’s done by bureaucrats who are just doing their job. Furthermore, we can check silver mine supply which is reported by private and public companies and then match it up with the government data. For the most part, this jives nicely.

Of course there are still some precious metals investors who believe all the public and private mining data is manipulated. They may believe that the companies are either under-reporting production or there are a bunch of hidden out-of-the-way mines that are not included in the data. Sure, there could be some mines that are missed or excluded on purpose, but this would be a small amount. We must remember, there are State and Federal taxes that are collected from these mines. Neither the State nor the Federal Govt will forgo receiving taxes just to keep a mine hidden (for the most part).

Lastly, if we look at the trend of all metals production since 1900, they have all gone up exponentially in the same fashion and to the same degree. Regardless, the World Silver Survey is the best information source we can go by, much better than the CPM Group’s Silver Yearbook… in my opinion.

The Cumulative Global Silver Deficit Surges On Revised Data

When the Silver Institute first published their global silver supply and demand table for 2014 in May 2015, it showed a net balance surplus for 2014 (in green):

According to the GFMS Team, the world suffered net annual silver deficits from 2005 to 2013. However, this became a small surplus of 2.6 Moz in 2014. Again, this was published back in May of 2015. When they provided their Nov. 2015 Silver Interim Report, they revised their figures to show a 27.5 Moz net deficit for 2014 and a 21.3 Moz deficit for 2015:

So, now the GFMS Team shows continued annual net silver deficits since 2006. The net deficits did occur in 2004 and 2005, however they were not included in this table. I took the data from this chart as well as the figures for 2004 and 2005 and made my own chart below:

Going by this forecast for 2015, including new data for 2014, the world suffered a cumulative 1,021 Moz net silver supply deficit since 2004. These figures represent changes in Exchanges & ETF’s. The Physical Surplus or Deficit figure shown two lines above the Net Balance figure in the GFMS data tables do not include inventory changes in the Exchanges (Comex & Shanghai Futures Exchange) or the many Electronically Traded Funds (ETF’s). Thus, this net balance figure is the most accurate.

That being said, let’s get to the large global silver supply deficit revision. I mentioned in previous articles, that I had an email exchange with the GFMS Team on the subject of “Private Silver Bars & Rounds” not being included in their figures. They responded by letting me know they were working on including private rounds and bars, but I thought it wouldn’t be for a few years. However, they included private silver rounds and bars in their 2016 World Silver Survey.

Not only did the inclusion of private silver bars and rounds change the figure for 2015, it revised it higher for many years. Which means, physical demand was even higher causing higher deficits. Here is the Silver Institute’s newest 2015 Supply and Demand Table:

Taking this new revised data and updating my chart, the cumulative global silver net deficit increased 263 Moz to 1,284 Moz, or nearly 1.3 billion oz:

According to their Silver Bar & Coin revisions, about half of the total demand increase came from this segment of the silver market. The GFMS Team also revised Jewelry and Industrial demand higher for certain years. So, half of that 263 Moz net silver deficit increase came in the past few years and most of that figure came from adding Private Bars & Rounds to the data.

NOTE: there are 153 Moz of silver stored at the Comex and 63 Moz at the Shanghai Futures Exchange for a total of 216 Moz. Thus, the GFMS data revision of an additional 283 Moz net balance deficit would totally wipe out all inventory at the Comex and Shanghai Futures Exchange.

Okay, the question going through many readers minds right now is… “Where are they getting all that silver?” My simple answer is, “I don’t really know.” However, it’s likely coming from stockpiles gained during surplus years in the 1980’s and 1990’s. Most of this surplus during the past decades came from old official silver coinage that was too valuable to be used in a fiat monetary system.

It is impossible to know how much of this “Unreported Above-Ground” silver stocks have been depleted and how much remain. Regardless, at some point these remaining silver stocks will be totally overrun. I tried to explain this in my last article, The Foundation Of The Financial Markets Took A Big Hit In 2015, but very few people read it. Unfortunately, most of the sites that refer my work, only do so if I stick to writing about the precious metals.

This is very unfortunate as the energy data is even more important than the precious metals information. I was contemplating adding that article to the bottom of this one so more readers would look at it, but I decided instead just to republish one chart:

This chart shows that the world spent a lot of capital in 2015 to find 2.8 billion barrels of new oil. Unfortunately, the world consumed 10 times more than that amount at 29 billion barrels. This is extremely bad news for those who believe business as usual will continue forever.

Furthermore, some readers of my work can’t CONNECT THE DOTS. I see this from reading some of their comments of my work on various websites. They say, “If the price of oil does not rise due to future shortages, then why would the price of silver go to $100+?” They are trying point out inconsistencies in my work.

LET ME REPEAT MYSELF on this issue. While I have written in length and made many charts showing the oil-silver price connection in the past, it will be IRRELEVANT in the future. Why? Because of the collapse in value of most paper assets. Paper assets need a growing energy supply to give them value. Falling oil supply will destroy the value of most paper assets (and physical ones including Real Estate).

Which means…. investors will flood into silver and gold to protect what wealth they can from the collapse of paper assets. So, yes… the price of silver can rise to $100 or more even if the price of oil remains low. The price of silver will be based on its HIGH-QUALITY STORE OF VALUE rather than its current COMMODITY-PRICED mechanism.

If more of my followers would read my energy articles, they would realize this. However, the BLINDFOLDS stay on as they continue to just be interested in one aspect of the precious metals market. This is PURE FOLLY.

Lastly, if you haven’t checked out our new PRECIOUS METALS INVESTING page, I highly recommend you do.

-END-

Dave from Denver…

 

Bill Holter…

 

It’s a small club …All Roads Will Lead To Gold!

For many years we have warned of the dangers of derivatives.  We were laughed at leading up to the 2008 financial debacle when Lehman broke and nearly took the entire system down.  That turned out to be no laughing matter and here we are again at exactly the same situation where derivatives threaten to melt the financial system again.  The difference now of course is the “saving ammunition” has already been spent where sovereign treasuries and central banks have destroyed their own balance sheets.
  Two weeks ago, the Fed announced a “48 hour stay in place” provision for for collateral of any derivative contracts where the big banks are involved.   http://www.bloomberg.com/news/articles/2016-05-03/fed-expected-to-drag-hedge-funds-into-plan-to-halt-next-lehman  The idea here is to prevent collateral being pulled by the survivor for 48 hours should the bank counterparty become insolvent.  This will give the Fed a window of time to get the fire hose of liquidity out and reliquefy a large bank’s balance sheet before they can break the derivatives chain.  But what does this really do?  Does it make derivatives any more sound or does it really just add more risk to central bank balance sheets and thus the currencies themselves?
It is very important to understand just how important derivatives have become.  Derivatives have been used to push, pull, manhandle and outright price many global markets.  They have been used to paint a picture as “proof” the Alice in Wonderland markets are in fact real.  Not even one single market can get out of control because “truth” anywhere will lead to TRUTH everywhere!  Even one single market left alone to Mother Nature will lead to questions that cannot be logically answered.
First, these provisions being proposed by the Fed are not set to begin until August 2017.  I cannot imagine markets holding together this long, in fact, I would give less than 50/50 odds the U.S. actually has an election this November, rigged or not.  Next and more importantly, the Fed is actually saying “we will be the backstop” to ALL of the derivatives given the 48 hour window to “fix” the problem at a specific bank.
  It does need to be pointed out, if any derivative of any size does fail then someone, somewhere, is “exposed”.  In reality, since few if any of the derivatives can actually perform …the entire world is swimming naked and already completely exposed!  How can I say this?  Forget about CDS on something as unpayable as a U.S. default, can the big banks really pony up $300+ billion if Greece were to fail?  The real number is probably 10 times this amount as “neighbors” are allowed to purchase insurance on their neighbor’s home.  What better incentive to strike a match?  Or what about another 10 times that amount if Italy defaulted?  My point is this, EVERYTHING, EVERYWHERE is “insured” via derivatives.  Many markets and assets have more (or even many times over) “insurance” than the actual market has value, the “coverage” is simply unpayable.
The only response to a breakdown of derivatives will be exactly what it always has been, print more and more via QE or other method.  This is obviously destructive to currencies as they will be diluted to zero.  Whether you look at this picture from the micro standpoint of individual currency dilution, or from the macro standpoint of “solvency” …all roads will lead to gold.  Real physical gold cannot be diluted nor can it default.  Gold will be viewed for exactly what it is. 
  We have said gold will be the “last man standing” in a failure chain of fiat currencies, it will also be viewed as the ONLY protective hedge in a world completely unhedged.  As it stands right now, the belief is that everything is hedged …in reality NOTHING is hedged.  Once it becomes understood that no insurance anywhere has the ability to pay up, the world will collectively “change insurance companies” and move toward the only one with the ability to pay, GOLD!

  Switching gears but I believe very connected to the above, what is to be made of Deutsche Bank offering 3 month accounts paying an annualized FIVE PERCENT interest?!!! 

  To state the obvious, Deutsche Bank needs money (liquidity) badly and they need it now!  Think about this, why would they do such a thing in a world where nearly a third of all debt carries a negative interest rate?  Why didn’t they go to the ECB’s feeding trough and snort up some zero percent funds?  Or, why didn’t they just go to the market place and issue bills for 90 days at 1/4% or less?  WHY WHY WHY?
  Unless DB is pulling some sort of late April fools joke, they obviously need money and are “willing” (being forced) to pay 5%.  Is it possible they have been shut out”?  Please remember, DB pleaded criminally guilty to manipulating the gold and silver fixes.  Part of their alleged settlement was turning state’s evidence and aiding regulators in tracking down other perpetrators.  Is it possible the clan of monster derivatives banks is a very small club and Deutsche Bank “ain’t a member anymore” because they turned rat?
  Other than not having access to capital anywhere else, I cannot think of any reason they would offer 5%?  If this has become their only source of funding then we just learned something very interesting.  This number of 5% is the REAL and unsubsidized interest rate!  Do you see the ramifications?  The world has “valued” everything with a basic discount rate of “0%”, what does it mean if rates to raise real capital from the markets is 5% rather than free?  Might stock markets be overvalued? …and real estate? …not to mention the foundation to EVERYTHING …BONDS???
   This certainly bears watching because if Deutsche Bank has been kicked out of the gentlemen’s club, they have been allowed to carry the red button kill switch called derivatives with them!  I am not really sure what to make of this all.  Surely the powers that be would not kick the largest (or second largest) holder of derivatives off the reservation, would they?  The only possible reason I can imagine is something has already blown up behind the scenes that is too big to be fixed or hidden.  The “blame” for a financial meltdown may very well be hoisted around Deutsche Bank’s neck!
  To finish, please do not roll your eyes at this.  If you have a logical explanation as to why DB would offer 500 basis points for three month money if they could get it cheaper elsewhere, I would love to hear it!  Anyone who tells me Deutsche Bank is making this offer because they feel sorry for the elderly savers earning nothing on their life’s savings will go into my spam box forever.
This was a public article, if you would like to read all of our work, please follow the link to subscribe:  https://www.jsmineset.com/membership-account/membership-levels/
Standing watch,
Bill Holter
Holter-Sinclair collaboration
Comments welcome  bholter@hotmail.com
end

Your early MONDAY 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 6.5225 ( DEVALUATION ) / Shanghai bourse  CLOSED UP 23.75 OR 0.84%  / HANG SANG CLOSED UP 164.62 OR 0.84%

2 Nikkei closed UP 54.19 OR 0.33% /USA: YEN RISES TO 108.85

3. Europe stocks opened MOSTLY IN THE RED  /USA dollar index FLAT to 94.57/Euro UP to 1.13250

3b Japan 10 year bond yield: FALLS   TO -.106%     !!!!(Japan buying 100% of bond issuance)/Japanese yen vs usa cross now at 108.85

3c Nikkei now WELL BELOW 17,000

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

3e WTI::  47.14  and Brent: 48.84

3f Gold UP  /Yen DOWN

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

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

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

3i European bond buying continues to push yields lower on all fronts in the EMU. German 10 yr bund FALLS to 0.123%   German bunds in negative yields from 8 years out

 Greece  sees its 2 year rate RISE to 9.04%/: 

3j Greek 10 year bond yield RISE to  : 7.42%   (YIELD CURVE NOW DEEPLY INVERTED)

3k Gold at $1282.25/silver $17.30(7:45 am est) BROKE RESISTANCE AT 16.52 

3l USA vs Russian rouble; (Russian rouble UP 43 in  roubles/dollar) 65.02-

3m oil into the 47 dollar handle for WTI and 48 handle for Brent/

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

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

30 SNB (Swiss National Bank) still intervening again in the markets driving down the SF. It is not working: USA/SF this morning .9761 as the Swiss Franc is still rising against most currencies. Euro vs SF is 1.1054 well above the floor set by the Swiss Finance Minister. Thomas Jordan, chief of the Swiss National Bank continues to purchase euros trying to lower value of the Swiss Franc.

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

3r the 8 Year German bund now  in negative territory with the 10 year FALLS to  + .123%

/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 1.708% early this morning. Thirty year rate  at 2.556% /POLICY ERROR)

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

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

Futures Flat Despite China Scare As Oil Rebounds Over $47

The main risk over the weekend was that markets, which have now dropped for three consecutive weeks the longest negative streak since January, would focus their attention on the latest batch of negative Chinese economic news released over the weekend, which missed expectations across the board, most prominently in Retail Sales (10.1% vs. Exp. 10.6%, down from 10.5%) and Industrial Production (6.0% vs. Exp. 6.5% down from 6.8%), and following Friday’s disappointing new credit loan data, would sell off as the Chinese slowdown once again becomes a dominant concern. However, after some initial weakness, the risks were all but gone when first the USDJPY jumped on another round of deflationary Japanese economic data (PPI Services -4.2%, Exp. -3.7%) which led to renewed hopes of more BOJ easing and a jump in the USDJPY and thus US futures.

Shortly thereafter a bearish report on oil by Goldman was misreported as bullish on oil prices (Goldman explicitly stated that the global rebalancing is taking longer than expected, but recent supply disruptions have taken off more oil from the market than expected, as a result of which Goldman cut its 2017 forecast prices while pushing up near-term expectations, a move that will also assure that 2017 prices are lower as more near-term production comes online.

With few upside anchors, traders and analysts quickly focused on oil as the driver of risk on strength: “The firmer oil price is helping emerging-market equities today despite the weaker China data over the weekend,” said Michael Wang, a strategist at hedge fund Amiya Capital LLP. “Oil is being driven by what’s happening in Nigeria at the moment – that’s changed sentiment towards Brent and has brought an expected recovery forward,” said John Meyer, an analyst at broker SP Angel Corporate Finance LLP in London. “Rising oil prices tend to support the commodities complex.”

As a result of the confusion, Brent rose to a six-month high, leading a rebound in commodities and boosting the ruble and mining companies, as supply disruptions in Nigeria added to production woes, while WTI was trading above $47 for the first time since November. Precious metals rallied with aluminum and commodity producers climbed, while almost all of the other industry groups in the Stoxx Europe 600 Index fell. Irish bonds advanced, outperforming their euro-area peers, while the Polish zloty strengthened after favorable reports from Moody’s Investors Service. Asian stocks rose from a one-month low.

And so, after last week’s US market losses and renewed recession concerns, the selloff was halted courtesy of the pickup in raw-materials prices which, as Bloomberg wrote, provides support for global equities after about $1.8 trillion was wiped off the value of the securities in the first two weeks of May amid weaker economic data and disappointing earnings reports.

“Concerns over the strength of the global economy are back on investors’ minds,” said Jasper Lawler, a London-based analyst at CMC Markets Plc. “The resources and oil sectors have been outperforming since the February low and both of them are performing OK today. But they need to continue to outperform for us to have a sustained rally.”

Elsewhere, China’s central bank issued a weekend statement saying monetary policy would continue to support growth, after data on new lending, retail sales, industrial production and fixed-asset investment missed economists’ estimates. A Friday report showing a jump in American retail sales bolstered the case for the Federal Reserve to raise interest rates.

Across global stock markets, the Stoxx Europe 600 Index declined 0.4 percent, falling for a third time in four days. German and Swiss markets were among those shut for the Whit Monday holiday, and volume of shares changing hands was about 45 percent lower than the 30-day average. Almost all industry groups in the Stoxx Europe 600 Index dropped after Chinese reports on new lending, retail sales, industrial production and fixed-asset investment missed economists’ estimates. The volume of Stoxx 600 shares changing hands was 44 percent lower than the 30-day average as German and Swiss markets were among those shut for a holiday

The MSCI Emerging Markets Index added 0.2 percent after falling as much as 0.4 percent. Benchmark gauges in Russia, Poland, South Africa and the Philippines climbed at least 0.9 percent. Shenzhen and Hong Kong stocks climbed amid speculation the start date of an exchange trading link between the two cities will be announced this week.

Futures on the S&P 500 Index expiring next month added 0.1% after the gauge completed a third weekly decline, its longest streak since January.  Announced stock buybacks dropped 38 percent to $244 billion in the last four months, the biggest decline since 2009, data compiled by Birinyi Associates and Bloomberg show. Is the buyback spree officially coming to an end?

Global Market Snapshot

  • S&P 500 futures up less than 0.1% to 2045
  • Stoxx 600 down 0.4% to 333
  • FTSE 100 down 0.3% to 6121
  • S&P GSCI Index up 0.9% to 364.9
  • MSCI Asia Pacific up 0.4% to 126
  • Nikkei 225 up 0.3% to 16466
  • Hang Seng up 0.8% to 19884
  • Shanghai Composite up 0.8% to 2851
  • S&P/ASX 200 up 0.6% to 5359
  • US 10-yr yield up 1bp to 1.71%
  • German 10Yr yield down less than 1bp to 0.12%
  • Italian 10Yr yield up less than 1bp to 1.48%
  • Spanish 10Yr yieldunchanged at 1.6%
  • Dollar Index up 0.02% to 94.63
  • WTI Crude futures up 2% to $47.13
  • Brent Futures up 1.9% to $48.74
  • Gold spot up 0.7% to $1,282
  • Silver spot up 1.2% to $17.32

Top Overnight News

  • Konecranes Soars After Deal to Buy $1.3 Billion Terex Unit
  • Uber China Rival Didi Said to Consider U.S. IPO in 2017
  • Oil Climbs to Highest Since November as European Shares Retreat
  • Fed May Push Back Rate Hike With Brexit, U.S. Election: Pimco
  • Lawsuits Mount as Energy Transfer’s Williams Takeover Unravels
  • Saudi Arabia, Bahrain Ratings Cut by Moody’s on Lower Oil Prices

Looking at the overnight regional markets, Asia shrugged off the early cautious tone from Friday’s losses on Wall Street and poor Chinese data over the weekend, with Nikkei 225 (+0.3%) initially outperforming on reports that PM Abe will postpone the April 2017 sales tax hike despite Chief Cabinet Secretary Suga later denying these claims. Japanese exporters were also bolstered by JPY weakness amid increased hopes for BoJ action after declining PPI figures, however the Nikkei pared gains as JPY reclaimed some ground against the USD. ASX 200 (+0.6%) was led higher by the health care sector after PM Turnbull announced a resolution to the funding dispute with pathologists. Shanghai Comp (+0.8%) was in positive territory Industrial Production, Retail Sales & lending figures missing expectations as the data increases hopes for future measures. 10yr JGBs saw subdued trade with prices in mildly negative territory amid the risk-on sentiment in Japan with participants side-lined ahead of this week’s key Japanese GDP data and the upcoming 5yr/20yr bond auctions.

Top Asian News

  • China Slowdown Shows Debt Addiction Will Be Tough to Shake: Industrial output, retail, investment all missed estimates
  • Singapore Home Sales Fall as Mortgage Curbs Cool Housing Demand: Developers sold 745 units last month versus 843 in March
  • Bank of Singapore Sees Asia Rich Shift to Paying Fees for Advice: Wealth managers to rely less on transaction-based fees
  • Thailand’s Economy Expands More Than Expected in First Quarter: 1Q GDP Expands 3.2% y/y vs est. +2.8%
  • Emerging Currencies at March Low on Rallying Dollar, Weak China: S. Korean won leads decline followed by Malaysia’s ringgit
  • Bonds Trounce Stocks as Aussie Yield Latest to Drop to a Record: Australian 10-year bond yield drops to record 2.22%
  • Uber China Rival Didi Said to Consider U.S. IPO in 2017: Didi said to raise $3 billion in current round of funding
  • Konecranes Buys Terex Unit for $1.3 Billion After Merger Dropped: Zoomlion interested in buying remaining Terex business

In Europe, the week has kicked off in a subdued fashion in terms of both newsflow and volumes with much of Europe away for Whit Monday. The European equity indices that are open this morning (with the likes of DAX and SMI closed) have spent the morning in the red, weighed on by the downside seen in the US on Friday, combined with the miss on Exp. seen from Chinese data over the weekend Despite the negative trade seen in much of Europe, the energy and materials sectors trade in the green, with the former benefitting from the upside seen in WTI and Brent.  Fixed income markets have also been impacted by low liquidity, with Bunds relatively unchanged on the day. However, today has seen the long end underperforming, with the steepening in the yield curve attributed by some to the upside seen in oil.

Top European News

  • Philips Lighting IPO Could Raise as Much as $1.1 Billion: To sell stock at EU18.50-EU22.50 a share, values business at as much as EU3.38b, expected to start trading May 27
  • Telecom Italia Raises Cost-Cut Target to $1.8 Billion by 2018: Almost tripled its target for reducing expenses to EU1.6b by 2018; cuts will include EU800m in operating costs and EU800m in capital spending
  • Lonmin Turns Cash-Positive as Cost Cuts Meet Higher Platinum: Net cash was $114m at March 31, compared with net debt of $185m at Sept. 30; has cut 5,400 jobs to stay alive
  • ICAP to Become NEX Group to Begin Life After Voice Broking: Will be called NEX once it completes the sale of its voice- broking business to Tullett Prebon, transforming itself into a specialist in electronic markets and post-trade services.
  • Carney Defying Brexit Critics Sees U.K. in Early 1990s Quandary: Defended the Bank of England against critics furious at his warnings about the dangers posed by a European Union exit; British Business Sees Brexit Effect as Growth Forecasts Cut

In FX it is a very quiet start to the week, with plenty of data ahead. The Bloomberg Dollar Spot Index held near its highest close since March as the greenback gained 0.3 percent versus the Japanese yen. U.S. retail sales climbed in April by the most in 13 months and a gauge of consumer confidence surged in early May to an almost one-year high, reports showed Friday. Perhaps due to market holidays in Europe, both Asia and early London have seen some extremely range bound trade in the FX majors, but the fact that we have seen limited follow through from the strong US retail sales number on Friday suggests the USD may be in for some consolidation ahead of the FOMC minutes on Wednesday.

AUD/USD has found a base in the mid .7200’s ahead of the RBA minutes in the overnight session ahead, but USD/CAD has seen limited downside despite WTI piercing $47.0. EUR/USD lows under 1.1300 have held in today’s session so far, as has the Cable zone from 1.4350-20, though we did eat into this a little either side of the weekend. EUR/GBP is threatening to push higher though, but this is more likely to send EUR/USD higher again rather than Cable lower in the current climate. USD/JPY is a trade many are staying away from given the erratic risk sentiment in the market. The mid 108.00’s holding for now, but the quest for 110.00 held off as equities struggle.

In Commodities, Brent rose 1.8 percent to $48.70 a barrel at 10:48 a.m. in London, reaching the highest since November, after Friday’s 0.5 percent loss. China’s refineries processed crude at record rates in April, helping ease a supply glut as the number of active rigs in the U.S. declines. West Texas Intermediate climbed 1.8 percent to $47.06. Goldman Sachs raised its oil-price forecast for the second half to $50, from a March estimate of $45.

Aluminum rose 0.3 percent in London after weekend data showed China’s primary output of the metal slipped 1.2 percent in April from a year earlier. Gold added 0.6 percent after data showed holdings in exchange-traded funds increased to the highest since 2013. Silver gained 1.1 percent. Platinum gained 0.3 percent to $1,054.92 an ounce as the industry gathered in London for the annual Platinum Week meeting. The metal may climb 20 percent by the end of next year, according to a Bloomberg survey of 12 traders and analysts.

It’s a particularly quiet start to the week today with no data of note due out of Europe and just Empire manufacturing and the NAHB housing market index of note in the US session this afternoon.

Overnight Media Digest from Bloomberg and RanSquawk

  • European market closures for Whit Monday have led to subdued trade in the region with equities lower in what has been a relatively quiet session
  • WTI crude futures have reclaimed USD 47.00 while Brent eyes USD 49.00 alongside GS backtracking on some of their bearish oil calls
  • Looking ahead, highlights include US Empire Manufacturing Data and Fed’s Kashkari (Non Voter, No Stance)
  • Treasuries slip during overnight trading, led by 2Y, with rise in Asian equities amid report Japanese Prime Minister Abe will postpone a 2 percentage point increase in the sales tax and Chinese data missed estimates, creating the possibility of more stimulus.
  • China’s run of disappointing April data underscore the bind facing policy makers seeking to cut capacity from the worst- performing sectors and curb credit excesses in recovering ones without stalling the economy
  • A sudden plunge by Chinese stocks in Hong Kong had traders scrambling to find a trigger for the slump that coincided with a surge in futures volumes.
  • Holdings in gold exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide
  • Investors are fleeing and volumes are falling due to extreme valuations amid global uncertainties related to monetary policy and political decisions made in wake of the 2007-2009 financial crisis. It’s a flight that’s creating a negative feedback loop
  • Swedish hedge fund Informed Portfolio Management is disregarding risks from a potential Brexit and political turmoil from Brazil to South Africa, instead using an approach of looking at fundamentals and placing narrow bets on how assets perform against each other
  • Mark Carney defended the Bank of England against critics furious at his warnings about the dangers posed by a European Union exit, and described the British economy as facing similar uncertainty to the early 1990s.
  • Sovereign 10Y yields mixed; Asian equities higher while European stocks mostly lower; U.S. equity-index futures higher. WTI crude oil and precious metals rise

DB’s Jim reid concludes the overnight wrap

China will dominate the headlines for different reasons this morning after a soft monthly batch of data released over the weekend. Industrial production grew +6.0% yoy in April (vs. +6.5% expected) and +5.8% ytd (vs. +6.8% yoy in March and +5.8% in Jan-March). Growth of fixed asset investment edged down from +10.7% for Jan-March to +10.5% (vs. +11.0% expected) for Jan-April, with implied monthly growth slowing from +11.2% yoy in March to +10.1%. Nominal growth of retail sales also dropped to +10.1% yoy (vs. +10.6% expected), from +10.5% in March and +10.2% in Jan-Feb.

The property market remained firm though and DB’s Zhiwei Zhang suggests that Q2 growth could still be stronger than Q1 as funds available for investment continued to improve. However net-net (adding in the weak M2 number from Friday), our economists think the risks to their 7% Q2 forecast is to the downside partly because the authorities seems to be shifting from aggressive easing to neutral earlier than expected. Their forecasts for Q3 and Q4 remain at 6.6% and 6.4% respectively.

Markets this morning initially opened a touch weaker in China, but have since bounced back along with other bourses in Asia having been supported by a decent rebound in Oil. Indeed the Shanghai Comp is currently +0.23% after initially falling as much as -0.80%, while elsewhere the Nikkei (+1.33%), Hang Seng (+1.22%), Kospi (+0.10%) and ASX (+0.54%) are also up. Stocks in Japan (Nikkei) are also being helped by a report suggesting that Japan’s government might be considering a delay in the sales tax hike. Meanwhile credit markets are a bit more mixed, while WTI has rallied +1.34% and more than wiped out Friday’s loss to hover just south of $47/bbl. There’s been little in the way of data this morning although it is worth highlighting some rating action from the weekend when Moody’s downgraded a number of Gulf nations including Saudi Arabia (by one notch to A1), in light of lower oil prices.

Moving along. Last week saw markets finish on a somewhat mixed note on Friday. European equities had initially closed with some modest gains (Stoxx +0.47%) which was enough to see the majority of bourses end with a positive return week. That said a bounce for the US Dollar (Dollar index +0.49%) following the much better than expected retail sales data weighed on assets in the US. The S&P 500 eventually closed -0.85% and as a result finished with three consecutive daily declines to take in into negative territory (-0.51%) over the five days.

There was a fair bit of focus going into that retail sales data given some of the soft department store earnings from earlier in the week, so it came as a bit of a surprise to see headline sales print at +1.3% mom for April, a big gap over the +0.8% consensus. All of the other component groups beat as well. Ex autos printed at +0.8% mom (vs. +0.5% expected), ex auto and gas at +0.6% mom (vs. +0.3% expected) and the control group an impressive +0.9% mom (vs. +0.4% expected). The surge in headline sales was actually the most in a single month in 13 months (and included upward prior month revisions) with auto sales a big contributor to the surge, although in fairness the vast majority of categories did report growth.
In terms of how markets responded, that data kick-started the rally for the Dollar while US 2y Treasury yields also marched higher, at one stage touching 0.784% (and 4bps off the lows) before giving up that move into the close to finish close to unchanged on the day at 0.746%. 10y yields, while also temporarily moving higher, actually closed 5.2bps lower at 1.701% meaning the yield curve had interestingly bull flattened by the end of the day. Meanwhile, the odds of a June rate hike ended the day unchanged at 4% based on futures pricing (did get up to 6% at one stage) with a July hike currently at 17% which is also unchanged relative to prior to the data. Those moves also came despite comments from the Fed’s Williams who said that 2-3 rate hikes this year may still make some sense. That said the data did, however, help to lift the Atlanta Fed’s Q2 GDP forecast up to 2.8% from 2.2%, although in contrast the NY Fed’s Q2 GDP forecast is sitting at a much lower 1.2% (from 0.8%).

That wasn’t the only other data out on Friday however. There were also some positive signs to take from the provisional May reading for the University of Michigan consumer sentiment data. The headline index rose an impressive 6.8pts to 95.8 (vs. 89.5 expected) which is the highest level since June last year. The expectations component was actually up 9.9pts at 87.5 (vs. 78.0 expected) while the current conditions component rose 1.9pts to 108.6 (vs. 106.0 expected). That said the data did show a decline in 1y inflation expectations to the tune of three-tenths to 2.5%, although 5-10y inflation expectations nudged up one-tenth to 2.6%. Elsewhere, headline PPI came in a touch lower than expected at +0.2% mom (vs. +0.3% expected) with the core up +0.1% mom as expected. Finally business inventories rose a greater than expected +0.4% mom in March (vs. +0.2% expected).

Prior to this in Europe it was all about the GDP reports. Regionally we saw Germany print a slightly better than expected +0.7% qoq for Q1 (vs. +0.6% expected) with YoY growth now slated at +1.3%. Italy’s Q1 GDP growth came in in-line at +0.3% qoq although the reading for the wider Euro area was revised down a modest one-tenth to +0.5% qoq (in actual fact from 0.55% to 0.52%), with Spain producing the fastest rate of growth (+0.8% qoq) of the core countries.

Last week was a bumper one for new issuance in credit markets. Indeed over the five days last week just over €21bn of corporate issuance was priced in the European market across 30 tranches. Adding in a further €8bn of financials and just over €12bn of SSA issuance meant the €42bn of issuance was the fourth busiest week this year. This week looks set to be a tad lighter in Europe but the forecast range is still €8bn-€12bn. It was much the same in the USD market too where some $50bn was priced. With a bumper deal from Dell already announced and expected to price this week, it’s expected to be another busy week. While we’re with credit, a reminder that we published a Credit Bites at the back end of the week on whether there is now a resistance at zero yields for corporate bonds in Europe.

end

ASIAN AFFAIRS

i)Late  SUNDAY night/ MONDAY morning: Shanghai closed UP  BY 23.75 PTS OR 0.84%  /  Hang Sang closed UP 164.62 OR 0.84%. The Nikkei closed UP 54.19 POINTS OR 0.33% . Australia’s all ordinaires  CLOSED UP 0.56% Chinese yuan (ONSHORE) closed DOWN at 6.5225.  Oil ROSE to 47.14 dollars per barrel for WTI and 48.84 for Brent. Stocks in Europe  MOSTLY IN THE RED . Offshore yuan trades  6.54640 yuan to the dollar vs 6.5225 for onshore yuan.THE SPREAD BETWEEN ONSHORE AND OFFSHORE REMAINS CONSTANT.

FIRST  REPORT ON JAPAN  SOUTH KOREA AND CHINA

a) JAPAN ISSUES

end

b) CHINA ISSUES

For the past 5 years, a massive 110 billion USA has left China to buy USA real estate:

(courtesy zero hedge)

 

What Capital Controls? Chinese Buyers Flood US Real Estate Market With $110 Billion

We’ve chronicled extensively the capital flight taking place out of China and into anything that is perceived to hold value as fears that the yuan will devalue persist (here, here, and here). We’ve have also covered the massive debt bubble that has been created during China’s ferocious attempt to prove those who say a hard landing is inevitable wrong. George Sorosand Kyle Bass also agree that China will inevitably have to devalue its currency in order to soften a crash landing, certainly not without its consequences.

We know that Chinese buyers have taken over the Canadian real estate market, and we’ve witnessed the massive amount of corporate M&A being done in the name of preserving shareholder capital. Now we’re able to learn, courtesy of a study done from the Asia Society and Rosen Consulting Group, just how much individual wealth has been poured into the United States real estate market over the past few years.

According to the study (which excludes most purchases by companies and trusts), Chinese buyers have invested a massive $110 billion into the US real estate market between 2010-2015. The $110 billion is broken out into two parts, commercial and residential real estate, absorbing $17 billion and $93 billion respectively. Furthermore, despite the speculation that China will find a way to clamp down even harder on capital controls, the study estimates that for the second half of this decade the number will likely double to $218 billion.

Geographical areas of concentration were New York, Los Angeles, San Francisco, and Seattle, with Chicago, Miami, and Las Vegas also seeing significant investment as well. The impact of course is that real estate prices are being significantly distorted as Chinese buyers are paying huge premiums to ensure deals go through. According to the study,last year Chinese buyers paid on average $832,000 per home in the US, while the overall average for all foreign purchases was just $499,600.

As China continues to flood its economy with new loans, albeit down recently, and the subprime debt bubble gets ready to burst, the race to perceived safety is on for those Chinese buyers fortunate enough to have capital to preserve. As the study suggests,billions more will find its way out of China before the government truly puts a stop to it once and for all.

Average:

0

EUROPEAN ISSUES

Something is going on with DB.  They are now offering 5% yields if they lock up their money for 3 months!!  This is going on with the ECB policy of NIRP!!

(courtesy zero hedge)

Liquidity Problems? Deutsche Bank Offers 5% Yields If Depositors Lock Up Their Money For Three Months

One of the reasons why central banks around the globe have flooded the financial system with trillions in excess reserves is to make sure that banks no longer have to rely on potentially fleeting short term deposits (and is also why negative interest rates have become the norm in so many part of the world, that $10 trillion in bills and bonds now trade with a negative yield). As a result of years of such central bank policy, banks – mostly in Europe – no longer need to compete with each other for deposits: after all why offer tempting deposit rates in an age of NIRP when banks can get all the liquidity they need straight from the ECB and in some cases even get paid on it.

Furthermore, the whole point of NIRP is to slowly unleash negative, not positive, interest rates in order to discourage savings.

Which is why we were surprised to find that in a promotional offer by Europe’s biggest, and by many accounts most insolvent, bank, Germany’s Deutsche Bank is not only not rushing to penalize depositors, on the contrary it is offering its Belgian clients a 5% gross return for new €10,000 – €50,000 deposits if this money is locked up for the next three months. The offer is only valid for the next 40 days, until June 24.

Why the offer? All else equal it would appear as if Deutsche Bank suddenly needs liquidity quite urgently (but only enough per person so that in a worst case scenario the amount is fully insured by the government) with a 3 month lock up; so urgently it is willing to pay sn interest which is higher than on some European junk bonds.

It begs the question: how is it that DB can’t get a far, far cheaper deal in the bond market, or using short-term unsecured funds?

Here is Deutsche Bank’s offer to Belgian clients to open a DB Invest Plus account (google translated):

Open a term account and get 5% gross annual Deutsche Bank will always offer the best offer on the market. Therefore, you can now 3 months 5% gross annualized receive when you open a DB Invest Plus deposit account.

An excellent opportunity to increase your returns

Deutsche Bank, you may be demanding for money. Proof? Stop by one of our Financial Centers. You now get a clear 3 months 5% gross per annum for new amounts from 10,000 to 50,000 euros, if you go for June 24, 2016 opens a DB Invest Plus deposit account (subject to early closing).

Please note that this promotion is only valid for the injection of fresh money, ie amounts previously never been in an account with Deutsche Bank AG Branch Brussels were (between 10,000 and 50,000 euros per person and per family and only at the Financial Centers Deutsche Bank AG Branch Brussels. offer reserved for Belgian residents).

5% in all simplicity

You receive a guaranteed rate of 5% gross per annum for 3 months for each new deposit of 10,000 to 50,000.

5% and a maximum efficiency

After deduction of withholding tax of 27% 1 provides the DB Invest Plus deposit account (a deposit account under Belgian law) a net return of 3.65% per annum for 3 months (fees apply to physical persons residing in Belgium).

5% in any flexibility

This account is designed for people who do not need immediate or within three months of their money and are looking for a fixed interest returns.To be clear: after 3 months will release your money and you can do whatever you want.

Which is certainly a great guaranteed return in this age of ZIRP/NIRP day and age; however the question is: why does Deutsche Bank need this money so urgently, and especially over the next three months.

And while we were pondering this, we noticed a new addition to the generic risk factors boilerplate language, where in addition to the usual stuff, we now see a warning about the infamous “bail in.”

In case of bankruptcy or risk of bankruptcy of financial institution, the saver is at risk of losing their savings or may be subject to a reduction / conversion into shares (bail-in) of the amount of the claim that he has the financial setting on top of the amount covered by the double German guarantee scheme for deposits.

We wonder if DB will be alone in going against the ECB’s grain with such scandalously high rates, or if this turns out to be a systemic issue and suddenly every other bank will likewise rush to attract deposits at a time when the ECB would like nothing more than to have a minus sign in front of the 5%.

Finally, we must admit that we are especially amused by the google translator’s twisted humor when it comes to captioning the picture this especially enticing offer appeared on.

end
A great synopsis of the folly between the Troika and Greece:
(courtesy Mish Shedlock)

Pure Troika Idiocy – The Greek Debt Slavery Regime Through 2059

Submitted by Michael Shedlock via MishTalk.com,

Irreconcilable Positions

Greece owes the Troika over €11 billion in bailout repayments through the end of July. Greece is unable make those payments unless the Troika releases the funds.

Position 1: “We need a big debt restructuring, no more kicking the can,” says Greece’s Minister of State.

Position 2: Germany offers a possibility of unspecified debt relief, at a future point in time, only if necessary. First, Greece must make another round of budget cuts on top of the pension cuts its just made.

Greece has caved in every time, and in the most humiliating ways. Greece even caved in on pension cuts last week.

Why should anyone believe Greek demands now?

Please consider Greek Bailout Deal Must Have Concrete Debt Relief, State Minister Says.

Greece will not accept a bailout deal without a concrete agreement for debt relief from the country’s European creditors, a top aide to Prime Minister Alexis Tsipras said.

“We want real solutions, not interim solutions,” Nikos Pappas, Greece’s Minister of State, said in an interview Friday after several days of talks with senior U.S. officials. “No more kicking the can down the road.”

Without fresh bailout funds, Greece faces bankruptcy in July at the latest. That could revive risks across the eurozone, which is already grappling with a migration crisis, a movement in the U.K. to leave the European Union and the rise of populist parties across the continent.

European powerhouse Germany is pushing Greece and the IMF to accept another bailout agreement based on possible debt relief in the future. The fund, trying to regain credibility it lost in the first two failed Greek bailouts, is taking a firm stand on debt restructuring.

“There are disagreements between the IMF and our European partners,” Mr. Pappas said. “But we have made our position clear that we need a big debt restructuring.…There should be no delay.”

U.S. Treasury Secretary Jacob Lew said Friday he’s pushing Germany to accept some form of restructuring. “I have very much communicated to all the parties that debt relief is necessary,” he said.

But Mr. Lew signaled that the IMF and Greece would also need to compromise. The IMF is pressing for Greece to commit to wage and pension cuts if the country doesn’t meet its budget targets in the coming years. Athens has instead said it would approve across-the-board reductions in spending, a proposal the fund says isn’t credible.

Are Greek Threats Credible?

Greek threats are not credible. Greece has little say in this matter. Nor does U.S. Treasury Secretary Jacob Lew.

However, there is a major difference this time. The IMF wants debt haircuts or it threatens to back out of the deal.

Germany’s insistence all along is the IMF must remain a partner.

This is a battle between the IMF and Germany. No one else’s opinion counts.

Greece Short-Term Debt Timeline

Greece Debt Obligations1

Can Greece come up with €11,235,558,147 in June and July?

Of course not. That is not the way the “bailout” works.

In practice, the Troika gives Greece the money and Greece hands the money right back to the Troika plus a tiny bit extra from now until 2059.

The repayment calculation assumes Greece can maintain a budget surplus of 3.5% of GDP from 2017 until then, a ridiculous belief to say the least.

Greece Long-Term Debt Timeline

Greece Debt Obligations2

Total Debt Owed

  • EFSF: €131 Billion
  • Eurozone Governments: €53 Billion
  • Private Investors: €36 Billion
  • ESM: €25 Billion
  • ECB: €20 Billion
  • Treasury Bill Holders: €15 Billion
  • IMF: €14 Billion

Synopsis

  1. Greece needs to come up with €11,235,558,147 thru the end of July.
  2. Under the current “bailout” scheme, Greece needs to repay nearly  €300 billion between now and 2059.
  3. Starting 2017, Greece is supposed to run a primary account surplus of 3.5% through 2059.
  4. The IMF proposes a primary surplus of 1.5%. That proposal, stand-alone would stretch debt payments well beyond the already ridiculous 2059 date.
  5. In conjunction with a new primary surplus target of 1.5%, the IMF threatens to back out of the whole deal unless there is debt relief.
  6. Realistically, Greece is not going to maintain a primary surplus of 1.5% either.
  7. Germany does not want debt relief and its constitution does not allow transfer mechanisms.
  8. The ECB which is owed €20 billion, most of that due in the next three years, cannot allow debt relief on its portion.
  9. Merkel does not want another crisis on top of the Greek refugee crisis she has now.
  10. The EU does not want another crisis ahead of the Brexit vote.

Another Greek Bluff? An IMF Bluff?

On its own, Greek demands are meaningless, unless this isn’t a bluff.

Would Greece walk away this time after what we have seen in the past? Is Greece secretly printing Drachmas?

Regardless, something has to bend (or break), if the IMF genuinely sticks to its guns.

If the IMF does back out, would Germany enforce the terms of the deal as demanded by the third bailout?

There are a lot of questions here and no one really knows how far Germany will bend or how firm the IMF will be.

Another Can-Kicking Exercise?

Despite Greece’s demand “We need a big debt restructuring, no more kicking the can”, the most likely outcome is a trivial debt restructuring “can kicking” compromise to get past the Brexit vote.

“Likely” and “guaranteed” are not the same. There are other forces in play: the refugee crisis, Brexit, Merkel’s declining popularity.

Unless Greece is willing to return to the Drachma, this squabble is between Germany and the IMF.

After seeing one can kicking exercise after another, after another, for years on end, and after the amazing cave-in by the Greek government that lead to the third bailout, no one seems remotely concerned this effort will fail.

Perhaps this is the effort that fails or at least leads to a major position change by Germany. The outcome may come down to this question:

Is the IMF bluffing, or is it serious?

end
Over 300 chief executives of British companies are backing a BREXIT stating that the EU are stifling their growth and they are correct!.
(courtesy zero hedge)

UK Establishment Stunned As Over 300 CEOs Back Brexit: “Business, Not Government, Creates Wealth”

In a shocking slap in the face for UK PM Cameron, more than 300 business leaders are calling on Britain to vote to leave the European Union, saying that the country’s “competitiveness is being undermined by our membership.”As The Telegraph reports, the letter, signed bysome of Europe’s most senior business executives, claims Brussels “red tape stifles growth” and a Brexit would “create more jobs” exclaiming that “it is business – not government – which generates wealth.”

Perhaps this explains why Cameron, Osborne, Obama, and almost every other establishment politician and lackey has embraced ‘Project Fear’ when it comes to Brexit, proclaiming World War 3’s imminence and all the worst parts of the bible will occur should the great unwashed masses exercise their right to vote for democracy (as opposed to a tyrannical superstate).

In an attempt to redress the balance after the Bank of England and the International Monetary Fund last week warned that a Brexit would damage Britain’s economy, theletter in the Telegraph is signed by 306 business leaders in a personal capacity (and also signed by hundreds of people linked to small and medium-sized businesses). In total the backers of the letter are from businesses employing hundreds of thousands of members of staff.

SIR – Britain is the fifth biggest economy in the world and, on current projections, will overtake Germany to become Europe’s powerhouse. Britain is America’s largest inward investor, and our openness and dynamism mean we attract more inward investment than any other European country.

Three of the world’s top 10 universities are British, we speak the international language of business, our legal system is trusted round the world and we have an unrivalled reputation for innovation and creativity.

These are just some of the reasons we believe that Britain is world-class. However, we also believe that Britain’s competitiveness is being undermined by our membership of a failing EU.

Year-on-year the EU buys less from Britain because its economies are stagnant and millions of people are unemployed. According to Mervyn King, the former governor of the Bank of England, the euro “might explode”. Brussels’ red tape stifles every one of Britain’s 5.4 million businesses, even though only a small minority actually trade with the EU.

It is business – not government – which generates wealth for the Treasury and jobs for our communities. Outside the EU, British business will be free to grow faster, expand into new markets and create more jobs. It’s time to vote leave and take back control.

Signatories of the letter include Peter Goldstein, a founder of Superdrug, Steve Dowdle, the former vice president Europe of technology firm Sony, David Sismey, a MD of Goldman Sachs and Sir Patrick Sheehy, the former chairman of British American Tobacco.

The polls remain very close… 

Finally, no lesser luminary than Lord Farmer, the former Treasurer of the Conservative Party, writes:

Warnings of disaster if we leave are misguided. Britain, the world’s fifth-biggest economy, should be confident that others will want to trade freely with it especially if, like the EU, they already do so. Europe has a surplus of nearly £70bn with us and no reason to put up barriers.

Nor will EU countries want to restrict their access to the London markets. Canary Wharf alone does more business than Frankfurt and we are Europe’s financial outlet to the world. Everyone benefits when London booms.

“We can see the possibility now for a bright new beginning. By voting to leave, we will be taking back democracy and this will benefit everyone.By ending a decades-old deception, we will be leading the way for the continent to become more democratic and less intrusive. Brussels will moan, but I suspect the peoples of Europe will be pleased.”

The choice, as it appears to us is simple:

Vote Yes To Brexit, Regain Sovereignty, or

Vote No To Brexit, Saying Yes To Undemocratic Superstate!

end

RUSSIAN AND MIDDLE EASTERN AFFAIRS

The USA continues to agitate Russia:

(courtesy zero hedge)

Here We Go Again: Yet Another U.S. Spy Plane Brushes Russian Border

Here we go again. After all of the incidents that have taken place over the last few months between the U.S. and Russia, capped by NATO moving 4,000 troops to the Russian border, one would assume that the antagonizing would stop, at least for the time being.

Then again, the U.S. will do whatever it pleases.

As Sputnik reportsyet another U.S. surveillance plane flew close to the Russian border earlier today, although as of right now it is not clear if it was again intercepted by a Russian flanker.

USAF RC-135V 64-14844 c/s ELGIN33 airborne over southern Baltic sea. Prob. intercepted by Flanker. Transponder is on.

At least this time it appears that the reconnaissance plane had its transponder on,which Russia had in no uncertain terms suggested takes place if the U.S. plans to continue to fly near its borders.

What the end game is regarding all of this isn’t exactly clear, but one thing is certain, and that is the US continues to agitate Russia on purpose, something we touched upon last week when we noted that Russia has gone so far as to warn of a “nuclear war” in response to the US launch of an ICBM-missile defense shield which was finally activated in Romania after many years of delays this past week.

 

 end
The USA is continually losing control over Russian and other eastern nations.  Despite sanctions the Russian bond yields are now below pres sanction levels:
(courtesy zero hedge)

The End Of Hegemony? Russian Bond Yields Plunge Below Pre-US Sanctions Levels

With Russian stocks among the best performing in 2016 – and up dramatically since The White House issued its “sell” rating…

It appears another key element of American’s hegemony is also breaking down. When the US (and its European vassal states) unleashed sanction on Russia in July 2014, it sent bond yields spiking from 9% to over 14% as political and social risks were priced in (as demanded by Treasury). However, despite the ongoing sanctions and the pressure (whether implicit or explicit from Washington) on oil prices, Russian bond yields have disobeyed America and are back below 9% – the lowest level of risk since before sanctions were imposed.

As Bloomberg reports, the political risk associated with Russian sanctions has disappeared from benchmark government bonds.

Yields on local-currency notes due in 10 years have fallen to 8.84 percent amid a recovery in oil and confidence the central bank is closer to meeting inflation targets.

That’s less than the 8.99 percent rate reached the day after the U.S. blocked some of the biggest state companies from capital markets in response to Moscow’s involvement in the Ukraine conflict.

With The Fed’s impotence on show for all to see, did The Treasury’s jawboning and Washington’s control over the world just lose its power?

end

Saudi Arabian is not going to be happy with this release from one of the 9.11 commission members, John Lehman. He states that there were 6 Saudi officials working in the ISA that supported the 9/11 attack and most importantly:
“our report should never have been read as an exoneration of Saudi Arabia,”
He is calling for the 28 redacted pages to be declassified and released in full
(courtesy Charles Kennedy/ OilPrice.com))

9/11 Commission Member: 6 Saudi Officials Supported Terror Attack

Submitted by Charles Kennedy via OilPrice.com,

Six Saudi officials are believed to have actively supported al-Qaida members in the run-up to the 9/11 attacks on America, former 9/11 Commission member and investigator John Lehman has disclosed.

Lehman, who was a member of the 9/11 Commission between 2003 and 2004, said there is documented evidence against employees of the Saudi Ministry of Islamic Affairs, and specifically against individuals who worked for the Saudi Embassy in the U.S., Saudi charities and the Saudi government-funded King Fahd Mosque in California.

“There was an awful lot of participation by Saudi individuals in supporting the hijackers, and some of those people worked in the Saudi government,”said Lehman, stressing that these individuals had strong ties with the Saudi government in Riyadh.

The issue is resurfacing now as pressure builds to release the 28 pages of the 9/11 Commission investigation that had been redacted. Lehman’s disclosure of this information to the media is expected to increase this pressure.

Lehman’s disclosures also come at a time when the long-standing relationship between the U.S. and Saudi Arabia is being questioned and re-evaluated.

The Commission member’s disclosures contradict previous statements from other Commission members.

The Commission’s chair and vice chairs, former Republican New Jersey Gov. Tom Kean and former Democratic Rep. Lee Hamilton of Indiana, released a statement in April saying that“only one employee of the Saudi government was implicated in the plot investigation.”

Still, Lehman—former Navy secretary under Ronald Reagan–stressed that “we have found no evidence that the Saudi government as an institution or senior Saudi officials individually funded the organization.”

Despite that, “our report should never have been read as an exoneration of Saudi Arabia,” Lehman said, referring to the final document of the commission issued in 2004.

He also implored the pubic to remember that 15 of the 19 9/11 attackers were from Saudi Arabia. He is now calling for a new, thorough investigation into the extent of Saudi involvement. But more immediately, Lehman is calling for the remaining 28 pages of the redacted 9/11 Commission report to be declassified—a move that could spur along the already partial break in U.S.-Saudi relations.

end

EMERGING MARKETS

Venezuela is in complete anarchy:

4 stories from zero hedge:

(Story No 1)

Scenes From The Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking For Food

Over the last several years we have documented with clockwork regularity Venezuela’s collapse into failed state status, which was cemented several weeks ago when news hit that “Venezuela had officially run out of money to print new money.”  At that point the best one could do was merely to step back and watch as local society and civilization turned on itself, unleashing what would ultimately turn into Venezuela’s own, sad apocalypse.

Last night we showed what Caracas, looks like this week:

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

As pure desperation has set in, crime has becomes inevitable. A man accused of mugging people in the streets of Caracas was surrounded by a mob of onlookers, beaten and set on fire, who published a pixeled-out but still graphic video of the man burning as mob justice is now the supreme arbiter of who lives and who dies:

“Roberto Fuentes Bernal, 42, was reportedly caught trying to mug passersby in the Venezuelan capital, and before police arrived at the scene, the crowd took the law into their own hands.” The video can be seen here.

Now, in the latest shocking development, Venezuela saw a new wave of looting this week that resulted in at least two deaths, countless wounded, and millions of dollars in losses and damages.

According to Panampost, on Wednesday morning, a crowd sacked the Maracay Wholesale Market in the central region of Venezuela.  According to the testimonies of merchants, the endless food lines that Venezuelans have been enduring to do groceries could not be organized that day.

As time went by, desperate Venezuelans grew anxious over not being able to buy food. Then they started jumping over the gates and stormed the supermarket.

“They took milk, pasta, flour, oil, and milk powder. There were 5,000 people” one witness told Venezuela outlet El Estímulo.

People from across the entire state came to the supermarket because there were rumors that some products not found anywhere else would be sold there.

As a result of the massive crowd, the authorities were unable to preserve the peace. “There were 250 people for each National Guard officer… lots of people and few soldiers. At least one officer was beat up because he tried to stop the crowd,” another source told El Estímulo.

Other food dispensaries run by the government were also looted by the people.

Far from the promised socialist paradise, as the massive group of people moved, an entrance gate collapsed under the weight of the crowd, leaving several wounded.

The image below shows a human stampede over rice.

Over the last two weeks, several provinces have hosted scenes of looting in pharmacies, shopping malls, supermarkets, and food delivery trucks. In several markets, shouts of “we are hungry!” echoed. On April 27, the Venezuelan Chamber of Food (Cavidea)reported that the country’s food producers only had 15 days left of inventory.

PanamPost adds that lootings are becoming an increasingly common occurrence in Venezuela, as the country’s food shortage resulted in yet another reported incident of violence in a supermarket — this time in the Luvebras Automarket located in the La Florida Province of Caracas.

Venezuelans lost control this week when offered small portions

Videos posted to social media showed desperate people falling over each other trying to get bags of rice. One user claimed the looting occurred because it is difficult to get cereal, and so people “broke down the doors and damaged infrastructure.”

In the central province of Carabobo, residents ransacked a corn warehouse located in the coastal city of Puerto Cabello. They reportedly broke down the gate because workers were giving away small portions.

“There’s no rice, no pasta, no flour,” resident Glerimar Yohan told La Costa, “only hunger.”

* * *

Social Collapse Is Inevitable

With the economy dead, the only thing remaining is to watch as society implodes. To that end, Oscar Meza, Director of the Documentation Center for Social Analysis (Cendas-FVM),said that measurements of scarcity and inflation in May are going to be the worst to date. “We are officially declaring May as the month that [widespread] hunger began in Venezuela,” he told Web Noticias Venezuela. … “As for March, there was an increase in yearly prices due to inflation — a 582.9 percent increase for food, while the level of scarcity of basic products remains at 41.37 percent.”


“We are officially declaring May as the month that hunger began
in Venezuela,” says an NGO that measures inflation and scarcity

Meza said the trigger for the crisis is the shortage of bread and other foods derived from wheat.

“Prices are so high that you can’t buy anything, so people don’t buy bread, they don’t buy flour. You get porridge, you see the price of chicken go up and families struggle … lunch is around 1,500 bolivars… People used to take food from home to work, but now you can’t anymore because you don’t have food at home.”

The is why, Español Ramón Muchacho, Mayor of Chacao in Caracas, said the streets of the capital of Venezuela are filled with people killing animals for food“Muchacho reported that in Venezuela, it is a “painful reality” that people “hunt cats, dogs and pigeons” to ease their hunger.”

Subsquently, Muchacho warned that Caribbean islands and Colombia may suffer an influx of refugees from Venezuela if food shortages continue in the country.

“As hunger deepens, we could see more Venezuelans fleeing by land or sea to an island,” Muchacho said.

And that is how all socialist utopias always end.

* * *

Meanwhile, as civil war appears inevitable, as we reported last night there are factions vying to oust Maduro, but signs that he may hang on and force his population to endure more of this socialist nightmare. One can only hope that these shocking scenes remain relegated to the streets of offshore socialist paradises, although Americans should always prepare for the worst in case they eventually manage to make their way into the country.

END
Story No 2: Maduro declares a State of Emergency!  (no kidding)
(courtesy zero hedge)

Maduro’s Last Stand: Venezuela Declares State Of Emergency

From extending the weekendto rationing electricityto running out of money to print money, we’ve been covering the real-time events that have occurred in Venezuela as it devolved into a completely failed state.

Sadly, last night as starving citizens looted marketplaces in search of food, we predicted that a civil war was almost inevitable, and that Nicolas Maduro would do what he could to hang on for dear life (literally). Today we learn, with his entire socialist utopia literally crumbling beneath him, Venezuelan president Maduro has declared a 60-day state of emergency.

Additionaly, as a last ditch effort to extend whatever is left of his time as president, Maduro is trying to drum up sympathy claiming that the United States was responsible for the chaos in his country.

“Washington is activating measures at the request of Venezuela’s fascist right, who are emboldened by the coup in Brazil.” Maduro said.

Maduro gave no further details on the “threats” that led him to declare the state of emergency, but the idea of a coup was naturally downplayed by opposition lawmaker Tomas Guanipa.

“Today Maduro has again violated the constitution. Why? Because he is scared of being recalled.” Guanipa opined.

*  *  *

Unfortunately for the people of Venezuala, whatever turn this saga takes will be ugly to say the least…

If people needed yet another textbook example of how socialist utopias ultimately end, Venezuela would be a good place to start.

end
Story no 3:  USA officials are concerned at a complete Venezuelan meltdown
(courtesy zero hedge)

“There’s A Crisis Coming” US Officials Increasingly Concerned At Venezuelan Meltdown

 As Venezuela gives the world a first hand look at how socialism ends, the U.S. is growing more and more concerned about how everything is going to play out once the meltdown is complete.

The concern of course is valid, as at this point, the immediate future looks quite grim. Looters have taken to the streets, clearing supermarket shelves of all available food as the country begins to starve, and in order to try and preserve the what little time he has left, president Maduro recently declared a 60-day state of emergency.

According to Reuters, senior U.S. officials doubt that President Maduro will be able to complete his term, which ends after elections in late 2018. As the U.S. kicks around possible scenarios for how this will all end, from a referendum vote to military coup, one thing is becoming more and more certain: “You know there’s a crisis coming.”

The United States is increasingly concerned about the potential for an economic and political meltdown in Venezuela, spurred by fears of a debt default, growing street protests and deterioration of its oil sector, U.S. intelligence officials said on Friday.

In a bleak assessment of Venezuela’s worsening crisis, the senior officials expressed doubt that unpopular leftist President Nicolas Maduro would allow a recall referendum this year, despite opposition-led protests demanding a vote to decide whether he stays in office.

But the two officials, briefing a small group of reporters in Washington, predicted that Maduro, who heads Latin America’s most ardently anti-U.S. government and a major U.S. oil supplier, was not likely to be able to complete his term, which is due to end after elections in late 2018.

They said one “plausible” scenario would be that Maduro’s own party or powerful political figures would force him out and would not rule out the possibility of a military coup. Still, they said there was no evidence of any active plotting or that he had lost support from the country’s generals.

The officials appeared to acknowledge that Washington has little leverage in how the situation unfolds in Venezuela, where any U.S. role draws government accusations of U.S.-aided conspiracies. Instead, the administration of President Barack Obama wants “regional” efforts to help keep the country from sliding into chaos.

“You can hear the ice cracking. You know there’s a crisis coming,” one U.S. official said. “Our pressure on this isn’t going to resolve this issue.”
A crisis isn’t “coming”, to be clear it has already arrived. Following the state of emergency, which extended a decree granting Maduro extended powers to act in the face of a deep economic crisis, the president threatened to take over idle factories and jail their owners who are trying to “sabotage the country” by halting production. Of course, “sabotage” may be the wrong word to use. Last month, Empresas Polar, the country’s largest food and beverage distributor, shut down its last beer plant due to its inability to access dollars needed to pay foreign suppliers. Perhaps Maduro forgot that the currency exchange process is controlled by the government.

Further evidence of deterioration comes from the fact that Caracas is filled with both pro-government and anti-government crowds arguing back and forth whether or not the 1.8 million signatures collected in favor of a referendum are valid enough to move forward with.

“If you obstruct the democratic way, we do not know what could happen in this country. Venezuela is a bomb that could explode at any moment.” Said opposition leader Henrique Capriles.

On the other side of things, Maduro ally Jorge Rodriguez claims there will be no recall referendum, as “they got signatures from dead people, minors and undocumented workers.”

As the crisis deepens, the protests and violent clashes will intesify. To survive, Maduro is taking the only path available right now, which is to grab as much power as possible and try to hang on until the bitter end.

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* * *

As an added bonus for readers, we remind everyone that the world’s favorite banker stepped up back in 2014 to become Venezuela’s loan shark as the country was on its way to liquidating whatever assets it could in order to generate cash flow. At that time, Goldman Sachs purchased $4bn worth of oil debt (for 41% of its value) from Venezuela that was owed by the Dominican Republic in the ultimate example of factoring. We find ourselves wondering just what else Goldman managed to get themselves into prior to Venezuela’s complete implosion.

end

Story no 4:  the failed Tinaco -Anaco Railway Line where China extended loans of 37 billion dollars to Venezuela.  There is nothing left of the project as looters stole everything. China may initiate default proceedings
(courtesy zero hedge)

The Tinaco-Anaco Railway Line: A Look At How China Overextended In A Failed Venezuela

With nearly $37 billion loaned to Venezuela since 2008, China (via its China Development Bank) had long been a source funding for the socialist country. It was easy to see how a partnership between the two would be mutually beneficial, as China would have a closer relationship with the country that as of 2015 supplied 4%-5% of its oil import needs, while Venezuela would have a virtual piggy bank to fund projects such as infrastructure.

One project the two countries partnered on was touted as South America’s first high speed train. The Tinaco-Anaco Railway, a $7.5 billion project that was supposed to have a consortium of Chinese companies display to the world their engineering and construction capabilities. A glorious 300 mile long railway was to be built in Venezuela, moving 5 million passengers and 9.8 million metric tons of cargo a year, at speeds of up to 135mph. Today, however, the project is dormant. All that ended up on display, however, is simply a broken down arch that is at the entrance of the railroad workers complex. A symbol of both a failed Venezuelan state, and a carefree China lending program.

AP explains

It was once billed as a model of socialist fraternity: South America’s first high-speed train, powered by Chinese technology, crisscrossing Venezuela to bring development to its backwater plains. Now all but abandoned, it has become a symbol of economic collapse — and a strategic relationship gone adrift.

 

Where dozens of modern buildings once stood, cattle now graze on grass growing amid the rubble of the project’s gutted and vandalized factory. A red arched sign in Chinese and Spanish is all that remains of what until 16 months ago was a bustling complex of 800 workers.

 

That’s when the project’s Chinese managers quietly cleared out.

 

As with many unfinished politically motivated projects dotting Venezuela — government critics call them “red elephants” — the decaying infrastructure contrasts with the railway’s promising beginnings.

 

A decade ago then-President Hugo Chavez dreamed up the Tinaco-Anaco railway as a way to populate the plains and attract development from long-dominant coastal areas. Stretching 300 miles (468-kilometers), it was intended to move 5 million passengers and 9.8 million metric tons of cargo a year at speeds up to 135 miles (220 kilometers) per hour.

 

Chavez turned to China, one of his closest ideological allies, for engineering and financing for the project, part of a $7.5 billion deal that has made Venezuela the world’s top recipient of Chinese loans. A consortium of state-run companies led by China Railway Group Ltd, the world’s largest train maker, was tasked with carrying out construction.

 

But completion is four years overdue, and work, when it happens at all, has slowed to a crawl. At one barracks facility visited by The Associated Press, half a dozen workers huddled under the shade of a giant cement mixer, while two shirtless managers lounged at a control panel smoking cigarettes.

 

Nowhere are the project’s declining fortunes more visible than in Zaraza, a sweltering crossroads town of 75,000 where what used to be an arena-sized factory churning out concrete railroad ties was located. In government news reels from 2013, the complex can be seen towering over manicured lawns and outdoor basketball courts where Chinese and Venezuelan workers socialized.

 

Shortly after the last Chinese managers left in January 2015, a mob of local residents — some of them armed — ransacked the site and hauled away everything of value. First to go were power generators, computers and air conditioners on the back of pick-up trucks. Vandals then tore apart dozens of buildings to scavenge for metal siding, copper wiring and ceramic tiles, some of which are now on sale at roadside stalls.

 

Jesus Eduardo Rodriguez, who owns and lives on the sprawling ranch where the factory was built, said the plundering lasted two weeks.

Several witnesses who declined to be named for fear of reprisals said the looting took place in plain view of National Guard troops, who they allege were on the take and working in collaboration with the town’s pro-government mayor, Wilfredo Balza, which is why the incident never garnered media attention.

 

Balza did not return repeated phone calls and text messages seeking comment and was said to be unavailable when AP journalists visited City Hall.

 

“They destroyed everything,” said Rodriguez, who eventually moved giant cinder blocks to cut off road access to the derelict property, which had become a haven for criminal gangs. “We just came to the house and almost cried, watching what they were doing.”

 

E-mails to China Railway in Beijing went unanswered and the company didn’t comment despite phone calls and two visits to its office in Caracas

In a poetic turn of events, just as Goldman Sachs was trying to capitalize on Venezuela’s failing economy, China was starting to walk away from it. While China has been working with Venezuela on restructuring debt, with oil prices continuing to struggle, a default may be imminent given what is taking place in the country today.

It remains unclear what the vampire squid’s current exposure to the failed Latin American state is, but it would be safe to say say that Goldman unloaded all its risk long before most realized how terminal Venezuela’s endgame truly was.

end
Today, we have country in country, South Africa, as it seems that the Finance  Minister is to arrested.  He is trying to stop massive corruption in his country and Zuma want to put an end to his rant!
(courtesy zero hedge)

The Rand Is Crashing As South African FinMin Arrest Looms

The last 2 days have seen South African Rand plunge 5% relative to the USDollar, back to 2 month lows, after reports that police are set to arrest Finance Minister Pravin Gordhan over alleged irregularities at the nation’s revenue service.

As Bloomberg reports,

Gordhan is aware of plans to arrest him and described them as an effort to thwart his campaign to end government corruption, Beeld newspaper reported on Monday.

 

President Jacob Zuma’s office on Sunday denied the minister would be arrested,rejecting a report in the Johannesburg-based Sunday Times newspaper that a special police unit investigating Gordhan has sent prosecutors the docket of its probe of his alleged involvement in a special agency set up within the national revenue service.

But it seems the market is less confident…

 

“We’re looking at a tough trajectory for USD-ZAR going into the second
half of the year as the bearish political narrative in South Africa only
coincides with chinks in the global macro armor,
” said Roxana Hulea, an
emerging market strategist at Societe Generale in London.

 

“We certainly
haven’t seen the last episode of the long-drawn battle, but it should
be clear to the markets that Gordhan’s continuity is not a given fact.”

 

“People are getting tired of the circus and investors don’t like uncertainty,” said Warrick Butler, head of emerging market spot trading at Standard Bank in Johannesburg. “The emerging market universe has been a loser again today. The rand is the poor cousin because of the politics.”

Of course, don’t forget the ZARpocalypse warning…

 

end

OIL ISSUES

Two more USA energy companies go bust:  Breitburn and Sandridge.

As they enter Chapter 11 they will emerge with lower costs:

(courtesy zero hedge)

 

Two More US Energy Companies Go Bankrupt: Breitburn, Sandridge File Chapter 11

Just days after the latest two shale casualties filed for bankruptcy protection when both Linn Energy and Penn Virginia announced prepackaged Chapter 11, moments ago Sandridge announced it too was entering bankruptcy court when it filed a voluntarily petition under Chapter 11 in U.S. Bankruptcy Court for Southern District of Texas to consummate a pre-arranged reorganization.

This follows just hours after Breitburn Energy Partners announced it had filed Chapter 11 as it hopes to negotiate a restructuring of its balance sheet in court, continuing talks with creditors that began a month ago, CEO Hal Washburn said in a release.

Combined the two filings would push the total YTD defaulted bond tally higher by another $7.4 billion, as a result of $4 billion in Sandridge debt and $3.4 billion for Breitburn. According to a Reuters tally, some 28 publicly traded North American oil and gas producers have sought bankruptcy protection since early 2015

As the WSJ writes, Breitburn’s decision to file for bankruptcy was made when it became “abundantly clear that those negotiations could not be concluded and an appropriate restructuring consummated on an out-of-court basis” in time to avert a cascade of defaults that would have squeezed Breitburn’s liquidity, James Jackson, chief financial officer of a Breitburn subsidiary, wrote in a court filing.

About $3 billion of Breitburn’s debts are bank and bond debt, topped by $1.25 billion in loans from lenders led by Wells Fargo Bank, NA. Breitburn is carrying $650 million of senior secured second-lien bonds and $1.1 billion in unsecured bonds. Breitburn said it has been in talks with bondholders about a balance-sheet restructuring. The company has lined up $75 million in bankruptcy financing, and is in talks with senior lenders about bankruptcy emergence financing.

Breitburn’s hedging assets, contracts that cushion the company’s cash holdings against price volatility, will be a central factor in restructuring talks, according to the court papers. The company estimates proceeds of its hedging agreements could be up to $500 million. Outside bankruptcy, hedges are “a significant source of liquidity.”

In bankruptcy, however, a dispute is brewing with Breitburn’s senior lenders, many of whom are also counterparties to the hedge agreements. The company hopes negotiations will avoid litigation over the question of whether it is entitled to use the hedging proceeds, according to court papers. Meanwhile, Breitburn has come to terms with senior lenders on financing arrangements that will support normal operations in bankruptcy.

As the WSJ adds, the Los Angeles company joined a crowd of oil-and-gas firms in bankruptcy, including Linn Energy LLC, which also attracted investors with partnership tax benefits. In April, Breitburn suspended distributions to preferred investors and skipped bond interest payments. Distributions to common shareholders were cut, then suspended last year, as Breitburn took steps to get its finances in line with plunging oil prices.

Citing the “prolonged decline in commodity prices,” Mr. Washburn said Breitburn’s existing debt is unsustainable. In papers filed in the U.S. Bankruptcy Court in New York, Breitburn reported assets of $4.7 billion and debts of $3.4 billion as of March 31.

Shares of the energy exploration and production company have plummeted over the past year, as the price of oil sank and losses mounted. Breitburn’s estimated proven reserves, which were valued at $4.5 billion at the end of 2014, were worth only $1.3 billion as of the end of 2015.

* * *

Today’s other filer, Sandridge, listed total assets of $7.01 billion and total debt of $4 billion as of March 31 in a court filing. SandRidge, which has been in talks with creditors on a restructuring deal, said last Wednesday it would not be able to file financial results for the quarter ended March 31 on time.

As Bloomberg adds, Sandridge entered into an agreement with holders of ~98% in principal amount outstanding under reserve-based lending facility (RBL), 79% in principal amount of 2nd lien notes, 55% in principal amount senior unsecured notes. The agreement contemplates RBL facility and the equitization of ~$3.7b other funded indebtedness. Sandridge’s pro forma capital structure will consist of $425m in 1st lien RBL debt (maturing in 2020), $300m in mandatorily convertible debt.

The company projects having “ample” liquidity to fund ongoing operations, capital programs throughout Chapter 11/upon emergence, without need for debtor-in-possession financing or other added capital.

In other words, both Breitburn and Sandridge plan on continuing operations under bankruptcy, as has largely been the case for all other recent chapter 11 defaults.

 

 end
As the price of oil rose, the hedgers decided to hedge their bets.  Hedging activity is at 5 yr highs.  If the price of oil falls, this will probably be quite deleterious to the banks:
(courtesy zero hedge)

Oil Driller Hedges Soar To Five Year Highs

One recurring theme observed throughout the oil rally since the February 13 year lows, has been increasingly more aggressive hedging action by producers, who are willing to give up upside gains in order to protect from yet another swoon lower in prices. And, as Goldman cautions in its latest note on ongoing imbalances in the oil market, “the rally in long-dated prices has taken prices to levels ($50/bbl in 2017) where hedging activity is ramping up which suggests it will soon stall.”

This can be seen in the following chart of overall hedging activity by oil explorers which as of this moment is the highest since mid-2011.

Overnight Bloomberg confirmed this trend when it reported that producers and merchants increased their short position in WTI by 3.8% for the week ended May 10 to the highest since September 2011. It adds that “oil producers are taking advantage of the rebound in crude markets to lock in protection against another slump. They increased their bets on falling prices to the highest level in 4 1/2 years as U.S. inventories of stored oil remained near an 87-year high, while a natural disaster in Canada and militant attacks in Africa curtailed output. Negative sentiment among the group expanded for a third consecutive week, the longest streak since February.”

Energy companies from EOG Resources Corp. to Chesapeake Energy Corp. used financial instruments such as futures, swaps and collars to guard against another fall in prices. West Texas Intermediate oil, the benchmark U.S. crude, has gained more than 75 percent since hitting a 12-year low in mid-February.

As Again Capital’s John Kilduff chimes in producers “have been getting more and more active in hedging ever since the first initial jump,” adding that they “appear to be drawn to this market as everyone tries to stay alive through the downturn.”

For now, however, the market is less focused on what oil producers themselves are expect from the future price of oil, and far more concerned with transitory oil disruptions in the crude market as highlighted by Goldman, and which as we observed earlier, has taken out about 1.5 million barrells from the market for the time being.

 

At some point in the coming days, attention will return to oil hedging, which appeared to be finally driving prices last week, although today’s news have pushed oil to fresh 6 month highs. “The failure to rally on bullish news was a bearish indicator, at least for a handful of sessions,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “The market still looks relatively overbought.”

As Evans adds, “Some subset of managed accounts have been trying to pick a top in crude. We’ve been rallying for months so the question is, ‘Are we in the middle or late stages of the rally?'”

Our own view is one we shared a month ago: the price action this summer will closely follow that of the summer of 2015, at which point all the relentless hedging will allow US production to be unleashed, and crush Goldman’s near-term rebalancing thesis, and lead to millions more barrels coming online, potentially at the same time as all the temporary oil market disruptions are also normalized. Unless, of course, some central bank openly admits it will begin monetizing oil in which case all bets are off.

On the other hand, one oil and gasoline prices anniversary their base effect and start rising, it will be interesting to watch the Fed and central banks respond as energy prices suddenly spike, sending various CPI indicators far higher and forcing a return of the infamous tightening language.

Average:

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

Euro/USA   1.1325 UP .0024 ( STILL REACTING TO USA FAILED POLICY)

USA/JAPAN YEN 108.85 UP .389 (Abe’s new negative interest rate (NIRP), a total DISASTER/SIGNALS U TURN WITH INCREASED NEGATIVITY IN NIRP/JAPAN OUT OF WEAPONS TO FIGHT ECONOMIC DISASTER

GBP/USA 1.4361 UP .0007 (STILL THREAT OF BREXIT)

USA/CAN 1.2905 DOWN .0029

Early THIS MONDAY morning in Europe, the Euro ROSE by 24 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 UP BY 23.75 PTS OR 0.84% / Hang Sang CLOSED UP 54.10 OR  0.33%   / AUSTRALIA IS HIGHER BY 0.56% / 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 MONDAY morning: closed UP 54.19 OR 0.33% 

Trading from Europe and Asia:
1. Europe stocks ALL THE RED AS  THEY START THEIR DAY

2/ CHINESE BOURSES / : Hang Sang CLOSED UP 164.62 PTS OR 0.84% . ,Shanghai CLOSED  UP 23.75 OR 0.84%/ Australia BOURSE IN THE GREEN: /Nikkei (Japan) CLOSED IN THE GREEN/India’s Sensex IN THE GREEN

Gold very early morning trading: $1282.55

silver:$17.33

Early MONDAY morning USA 10 year bond yield: 1.708% !!! PAR in basis points from FRIDAY night in basis points and it is trading WELL BELOW resistance at 2.27-2.32%. The 30 yr bond yield FALLS to 2.556 PAR in basis points from FRIDAY night.

USA dollar index early MONDAY morning: 94.56 PAR from FRIDAY’s close.(Now below resistance at a DXY of 100.)

This ends early morning numbers MONDAY MORNING

END

 

And now your closing MONDAY NUMBERS

Portuguese 10 year bond yield:  3.14% DOWN 2 in basis points from FRIDAY

JAPANESE BOND YIELD: -.104% UP 1/4 in   basis points from FRIDAY

SPANISH 10 YR BOND YIELD:1.60% PAR IN basis points from FRIDAY

ITALIAN 10 YR BOND YIELD: 1.47  PAR IN basis points from FRIDAY

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

GERMAN 10 YR BOND YIELD: .143% UP 2  IN BASIS POINTS ON THE DAY

END

 

IMPORTANT CURRENCY CLOSES FOR MONDAY

 

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

 

Euro/USA 1.1318 UP .0017 (Euro =UP 17 basis points/ represents to DRAGHI A COMPLETE POLICY FAILURE/reacting to dovish YELLEN/ANOTHER FALL IN USA;YEN CROSS TODAY

USA/Japan: 108.99 UP 0.532 (Yen DOWN 53 basis points )

Great Britain/USA 1.4391 UP .0035 Pound UP 35 basis points/

USA/Canada 1.2901 DOWN 0.0033 (Canadian dollar UP 33 basis points with OIL FALLING a bit(WTI AT $47.84).

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

This afternoon, the Euro was UP by 17 basis points to trade at 1.1318

The Yen FELL to 108.99 for a LOSS of 53 basis points as NIRP is STILL a big failure for the Japanese central bank/

The pound was UP 35 basis points, trading at 1.4391

The Canadian dollar ROSE by 33 basis points to 1.2901, WITH WTI OIL AT:  $47.84

The USA/Yuan closed at 6.5285

the 10 yr Japanese bond yield closed at -.104% UP 1/4 IN BASIS  points in yield/

Your closing 10 yr USA bond yield: UP 5  IN basis points from FRIDAY at 1.748% //trading well below the resistance level of 2.27-2.32%) HUGE policy error

USA 30 yr bond yield: 2.593 UP 4 in basis points on the day ( HUGE POLICY ERROR)

Your closing USA dollar index, 94.54 DOWN 3 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 MONDAY

London:  CLOSED UP 12.90 OR 0.21%
German Dax :CLOSED FOR HOLIDAY
Paris Cac  CLOSED DOWN 7.71  OR 0.18%
Spain IBEX CLOSED DOWN 39.40 OR 0.45%
Italian MIB: CLOSED UP 7.57 OR 0.04%

The Dow was UP 175.39  points or 1.00%

NASDAQ UP 57.79 points or 1.22%
WTI Oil price; 47.84 at 4:30 pm;

Brent Oil: 48.99

USA DOLLAR VS RUSSIAN ROUBLE CROSS:  64.89 (ROUBLE UP 55/100 ROUBLES PER DOLLAR FROM YESTERDAY) AS THE PRICE OF BRENT FELL AND WTI FELL

TODAY THE GERMAN YIELD ROSE TO .143  FOR THE 10 YR BOND

.

END

 

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

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

WTI CRUDE OIL PRICE 5 PM:47.85

BRENT: 49.05

USA 10 YR BOND YIELD: 1.751%

USA DOLLAR INDEX: 94.56 DOWN 1 cent

 

END

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

Trading Today in Graph form;  VERY IMPORTANT FOR YOU TO VIEW ALL THE CHARTS TODAY

Investors Dump Bonds, Bullion For Safety Of Biotech Stocks After Dismal China Data

A broad-based miss across the spectrum of Chinese data with loan growth collapsing was just what the bullish algos needed to BTFD at Sunday night’s open…

 

You knew it was going to be an odd day after China’s flash-crash overnight…

 

Deja vu all over again from last Tuesday…No Volume meltup off VWAP

 

Futures show the day’s reality best…

 

Nasdaq and Small Caps led the way today..

 

As VIX was smashed back to a 14 handle…

 

Shorts squeezed out of the gate but stopped as Europe closed…

 

AAPL shares gained over 4% – the best day in 4 months – after Tim Cook’s selfies and Buffett’s buying (as every other hedgie dumps to him)…

 

“Investors” dump bonds and bullion for the safe haven of Biotech stocks…best 2 days in 6 weeks…

 

Good job the consumer is spending… oh wait…

 

Treasury yields rose today – long-end underperforming…

 

But remains entirely decoupled from Atlanta Fed’s newly revised exuberant model projections…

 

The USD Index ended the day practically unchanged as JPY weakness offset commodity currency strength…

 

Even JPY wasn’t buying the stock move…

 

Shortly after US stocks opened, it appears someone decided it was an opportune time to dump commodities en masse.. note that Gold actually ended the day green – even after its clubbing

 

Crude soared on a day when Goldman downgraded it despite every idiot on TV trying to call Goldman’s note bullish…oh and Nigeria

 

But gold and silver saw another vertical price shift – puke…

 

Charts: Bloomberg

end

 

The State of ILLINOIS is in one complete mess.  It still cannot pass a budget bill:

(courtesy zero hedge)

Incompetence Personified: Illinois Has Devolved To One-Off Funding Bills As It Still Can’t Pass A Budget

As Illinois struggles to get its fiscal house in order (good luck with that), it has devolved into funding key programs with one-off stopgap measures rather than approving an overall comprehensive budget. The state remains the only remaining state without a 2016 plan.

Most recently, lawmakers overwhelmingly approved $700 million to fund social service programs, however, as the Chicago Sun Times reports, the bill is likely to sit on Governor Bruce Rauner’s desk as he tries to push lawmakers to come to an agreement on a balanced budget instead of one-off solutions.

“The administration remains focused on enacting a truly balanced budget alongside meaningful reforms, and the Governor will continue negotiating in good faith toward a bipartisan agreement” said Rauner spokeswoman Catherine Kelly.

The bill included enough money to provide about 46% of what social service providersand programs such as Catholic Charities received from the state last year, and lawmakers such as Democrat Greg Harris are pushing to have the money released immediately.

“This is a $700 million piece of legislation that would help the neediest at the time when they need help the most. This is money that is available to be dispersed immediately.”

Legislators are haggling over a budget that under its current proposal would increase tax revenues by $5.4 billion by raising personal income tax rates from 3.75% to as much as 4.85%, cut spending by $2.5 billion, and borrow $5 billion in order to pay anexpected $10 billion deficit by the time the fiscal year ends July 1.

All of this is just another example of the state of complete disarray that municipalities, cities, and states are in all across the U.S. Between pension funds going insolvent, states missing budget projections by a billion dollars, and in Illinois’ case, flat out inability to even know where to begin to solve the massive amount of accumulated debt, the pressure is building on Congress to start talking up bailout programs – because right now, helicopter money is literally the only thing that can save everyone from defaulting all at once.

end
The all important NY manufacturing index crashes once again
(courtesy NY Manufacturing index/(Empire)

Empire Fed Manufacturing Outlook Crashes Back To Reality

The March/April dead cat bounce in Empire Fed Survey is back deep into contraction territory.Having surged to +9.6, May saw respondents entirely lose faith and crash back to -9, massively missing expectations of a +6.5 print (the biggest drop since Oct 2014). Under the surface everything plunged (except the number of employees which inched higher) as New Orders, Workweek, and Prices received all contracted drastically. Even hope tumbled with future CapEx expectationscollapsing by the most since June 2013.

The bounce is dead…

 

Business activity contracted for New York manufacturing firms, according to the May 2016 survey.  Following a brief foray into positive territory in March and April, the general business conditions index fell back below zero, declining nineteen points to -9.0. Nineteen percent of respondents reported that conditions had improved over the month, while 28 percent reported that conditions had worsened. The new orders index also turned negative, its seventeen point drop to -5.5 signaling a decrease in orders. The shipments index, down twelve points to -1.9, showed that shipments were flat, and the unfilled orders index fell to -6.3. The delivery time index, at -6.3, pointed to shorter delivery times, and the inventories index, at -7.3, suggested that inventory levels were lower.

The new orders and shipments indexes also fell below zero, pointing to a decline in both orders and shipments. Survey results indicated that inventory levels were lower and delivery times shorter. The prices paid index edged down to 16.7—a sign that moderate input price increases were continuing—and the prices received index fell below zero, suggesting a small drop in selling prices. Employment levels appeared to be little changed, while the average workweek index pointed to a decline in hours worked. The six-month outlook was somewhat less optimistic than in April, and the capital spending index plummeted to 3.1, its lowest reading in more than two years…

 This collapse is probably transitory though as yet another Fed speaker proclaimed the US economy doing “rather well” and expects 2 to 3 rate cuts this year…

end

 Well that about does it for tonight
I will see you tomorrow night
Harvey
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